Financial Performance - Q3-25 sales decreased to $1,307 million from $1,437 million in Q3-24, representing a decline of 9% year-over-year[25] - Adjusted EBITDA for Q3-25 was $(144) million, compared to $62 million in Q3-24, indicating a significant decrease[25] - Operating earnings for Q3-25 were $(275) million, a decline from $72 million in Q3-24[25] - Q3-25 sales decreased to $1,307 million from $1,532 million in Q2-25, primarily due to lower OSB and lumber pricing[26] - Q3-25 earnings reported a loss of $204 million, a significant decline from a loss of $24 million in Q2-25[26] - Lumber segment sales in Q3-25 were $551 million, down from $639 million in Q2-25, with operating loss increasing to $169 million from $31 million[27] - Adjusted EBITDA for the Lumber segment was $(123) million in Q3-25, a decrease of $138 million compared to Q2-25[27] - Adjusted EBITDA for the NA EWP Segment decreased by $83 million compared to Q2-25, decreased by $137 million compared to Q3-24, and decreased by $440 million from YTD-24[69] - Sales in the Pulp & Paper Segment decreased to $82 million in Q3-25 from $92 million in Q2-25 and from $86 million in Q3-24[71] - Operating earnings for the Pulp & Paper Segment decreased by $5 million compared to Q2-25, $8 million compared to Q3-24, and $13 million from YTD-24[81] - Q3-25 Adjusted EBITDA was $(144) million, a decrease from $84 million in Q2-25 and $62 million in Q3-24[180] - Year-to-date (YTD) Adjusted EBITDA for 2025 stands at $135 million, compared to $533 million in YTD 2024[180] Market Conditions - The U.S. housing starts averaged 1.31 million units in August 2025, showing a decrease from 1.37 million units in 2024[11] - The company anticipates that aging housing stock will stimulate renovation and repair spending in the medium to long term[12] - The North American wood products industry is experiencing a protracted period of oversupply, impacting future supply capabilities[13] - The company expects medium to long-term demand for new home construction in North America to be supported by improved housing affordability and an aging housing stock[113] - In Europe and the U.K., the company anticipates industry demand to improve but remain challenging in the near term, with long-term growth expected as OSB use increases[115] Production and Operations - The Henderson, Texas lumber manufacturing facility is expected to reach a capacity of 275 MMfbm, doubling the existing mill's capacity[23] - A fire at the Cowie production facility during Q3-25 caused a five-week shutdown of particleboard production[24] - SPF production in Q3-25 was 650 MMfbm, comparable to Q2-25, while shipments were 684 MMfbm, slightly down from 696 MMfbm in Q2-25[29] - OSB production volumes decreased due to incremental reductions in operating schedules and higher downtime related to capital projects and weather impacts[65] - OSB shipment volumes decreased to 1,619 MMsf in Q3-25 from 1,710 MMsf in Q2-25, reflecting weaker demand[64] - The ramp-up of the new Henderson mill is expected to contribute to incremental production levels in the near term[195] Costs and Expenses - The final ADD rate of 9.65% and CVD rate of 16.82% resulted in an incremental duty expense of $67 million[16] - Export duty expense increased to $87 million in Q3-25, up from $21 million in Q2-25, primarily due to the finalization of AR6 duty rates[43] - Cost of products sold decreased from Q2-25 by $13 million, attributed to lower shipment volumes and a favorable inventory valuation adjustment[35] - Cost of products sold increased in Q3-25 due to higher NBSK shipment volumes, higher repairs and maintenance costs, and higher labor costs, partially offset by a $4 million favorable impact from inventory valuation adjustments and CAD weakening against USD[77] - The cost of products sold in the Pulp & Paper Segment decreased to $73 million in Q3-25 from $76 million in Q2-25[71] Shareholder Returns and Liquidity - As of September 26, 2025, available liquidity was $1,566 million, down from $1,685 million at the end of 2024[138] - The company has repurchased 1,240,030 common shares under the 2025 NCIB program as of October 21, 2025[150] - The total anticipated cash payment of dividends in 2025 is $101 million based on the latest declared quarterly dividend rate of $0.32 per share[130] - The company has paid a dividend in every quarter since becoming public in 1986 and expects to continue this practice[130] - The company returned $40 million and $121 million to shareholders through common share repurchases in Q3-25 and year-to-date 2025, respectively, compared to $39 million and $117 million in the same periods of 2024[165] Debt and Financing - Total debt increased to $367 million in September 2025 from $265 million in December 2024, resulting in a total debt to capital ratio of 5%[186] - The company’s credit facilities include a $1 billion committed revolving credit facility, which was renewed and extended to May 2030[141] - The company received $100 million from the amendment of its term loan facility, increasing the total to $300 million, maturing in May 2028[164] Strategic Outlook and Risks - The company aims to maintain a strong balance sheet and return capital to shareholders while pursuing opportunistic acquisitions and larger-scale growth initiatives[195] - The company is facing uncertainties related to housing affordability and demand for its products due to potential increases in interest rates and inflation[196] - Risks associated with international trade, including tariff actions and government policies, could significantly impact the company's profitability and operational results[197] - The company is monitoring geopolitical conflicts and their potential impact on demand and pricing for its products[195] - The anticipated capital expenditures for 2025 remain in the range of $400 million to $450 million, focusing on optimization and automation projects[126] - The company plans to focus on optimization and automation projects, as well as greenhouse gas emissions reduction in its capital expenditures[191]

Core Viewpoint - West Fraser Timber Co. Ltd. reported significant challenges in the third quarter of 2025, including supply and demand imbalances for wood-based products, elevated mortgage rates affecting housing affordability, and new tariffs on Canadian softwood lumber. The company remains committed to its strategy of maintaining operational flexibility and controlling costs while seeking long-term shareholder value [1][2]. Financial Performance - Third quarter sales were $1.307 billion, down from $1.532 billion in the second quarter of 2025. - The company reported a loss of $204 million, or $(2.63) per diluted share, compared to a loss of $24 million, or $(0.38) per diluted share in the previous quarter. - Adjusted EBITDA for the third quarter was $(144) million, a decline from $84 million in Q2-25 [2][12]. Tariffs and Trade - The U.S. administration imposed a 10% Section 232 tariff on imported softwood timber and lumber effective October 14, 2025, in addition to existing duties on Canadian lumber [3]. - Canadian softwood lumber exports to the U.S. have faced trade disputes and tariffs since April 2017, impacting the company's operations [2]. Liquidity and Capital Allocation - Cash and short-term investments decreased to $546 million as of September 26, 2025, from $641 million at the end of 2024. - Capital expenditures in Q3-25 were $90 million, and the company paid $25 million in dividends, maintaining a dividend of $0.32 per share for the fourth quarter [5][6]. Market Outlook - The company anticipates medium to long-term demand for new home construction in North America due to factors such as improved housing affordability, a large population cohort entering home-buying age, and an aging housing stock [7][8]. - The seasonally adjusted annualized rate of U.S. housing starts was 1.31 million units in August 2025, with permits issued for the same number, indicating stable construction activity despite near-term uncertainties [9]. Operational Insights - The Lumber segment faced muted demand in Q3-25, leading to a reduction in shipment targets for both SPF and SYP products [11]. - Adjusted EBITDA for the Lumber segment was $(123) million, which included $67 million in export duty expenses [12][34]. Regional Demand - In Europe and the U.K., demand is expected to improve but remain challenging in the near term, with long-term growth anticipated due to the increasing use of OSB as an alternative to plywood [10]. - The global pulp market is experiencing disruptions due to U.S. tariffs, creating demand uncertainty in Chinese markets, although NBSK pricing is expected to remain stable [15].

Core Viewpoint - The transportation sector, particularly trucking, is facing price pressures from trade tariffs, leading to a slowdown in business activity. However, this situation presents buying opportunities for investors willing to take a contrarian approach [1][2]. Group 1: Industry Overview - The trucking industry is experiencing a rare combination of slowing activity and rising prices, influenced by trade tariffs that favor Canadian timber imports. This has resulted in a decline in stock prices for companies like Landstar Systems and West Fraser Timber [2][3]. - Executive commentaries within the services PMI index indicate that the trucking industry is in a worse state than during the 2008 financial crisis, contributing to Landstar's stock being discounted to 64% of its 52-week high [3][4]. Group 2: Company-Specific Insights - Landstar Systems Inc. - Landstar Systems operates not only as a trucking company but also provides logistics software, which is becoming increasingly important as efficiency is prioritized amid slowing volumes and rising prices [8]. - Financial metrics indicate that Landstar is operating at 280% of its baseline capacity, significantly higher than the industry average of 75.8%, suggesting that the company is not oversubscribed in trucking but rather in its software services [9]. - Wall Street analysts maintain a consensus price target of $145.17 for Landstar, indicating a potential upside of 16.8% from current trading levels. Institutional investors have also increased their holdings in Landstar, reflecting confidence in its future performance [10][11]. Group 3: Company-Specific Insights - West Fraser Timber Co. - The American housing market is currently facing challenges, with declining building permits and mortgage applications, leading to reduced demand for building products, including Canadian timber [5][6]. - Despite the housing slowdown, recent interest rate cuts by the Federal Reserve may positively impact demand for housing, which could benefit West Fraser if timber demand increases [6]. - West Fraser's stock is trading at 71% of its 52-week high, with analysts projecting a price target of $100 per share, suggesting a potential upside of 40.7% from current levels. The recent decline in short interest indicates a potential shift in market sentiment towards the stock [15].

Core Points - The Government of British Columbia has approved a new First Nations Woodland Licence in the Smithers area, marking a significant milestone in the partnership between West Fraser Timber Co. Ltd. and Lake Babine Nation Forestry Limited Partnership [1][2] - This new licence is a result of contributions from West Fraser and LBN Forestry, aimed at enhancing timber tenure collaboration in British Columbia's forest sector [1][5] Company Overview - West Fraser is a diversified wood products company with over 50 facilities across Canada, the United States, the United Kingdom, and Europe, focusing on sustainable forest practices [8] - The company produces a variety of products including lumber, engineered wood products, pulp, and newsprint, which are utilized in home construction and industrial applications [8] Indigenous Partnership - The partnership between West Fraser and Lake Babine Nation is designed to integrate Indigenous knowledge with modern forestry practices, ensuring sustainable resource management and economic opportunities for the Lake Babine Nation [3][4] - Lake Babine Nation has established its forestry company in 2016, emphasizing the importance of growing its role in forestry and forest management [9] Economic Impact - The collaboration is expected to create jobs and strengthen the forest economy in British Columbia, benefiting local communities [8] - The new licence builds on previous agreements, including a Joint Development Agreement signed in April 2024 and a Log Supply and Forest Management Agreement signed in January 2025, indicating a long-term commitment to this partnership [7]

Financial Data and Key Metrics Changes - West Fraser generated $84 million of adjusted EBITDA in Q2 2025, representing an approximate 6% margin, continuing to operate within a cyclical downturn [4] - The company exited Q2 with nearly $1.7 billion of available liquidity and a strong cash position net of debts [5][6] - Cash flow from operations was $85 million in Q2, with a net cash balance of $310 million, up from $156 million in the prior quarter [9] Business Line Data and Key Metrics Changes - The lumber segment posted adjusted EBITDA of $15 million in Q2, down from $66 million in Q1, primarily due to lower pricing and higher fiber costs [8] - The North America EWP segment generated $68 million of adjusted EBITDA in Q2, down from $125 million in Q1, driven by lower OSB pricing [8] - The Pulp and Paper segment generated negative $1 million of adjusted EBITDA in Q2, compared to $7 million in Q1, largely due to an inventory write-down [8] - The European business posted $2 million of adjusted EBITDA in Q2, improving from negative $2 million in Q1, linked to higher OSB pricing and shipments [8] Market Data and Key Metrics Changes - U.S. housing starts averaged 1,320,000 units on a seasonally adjusted basis in Q2, reflecting a decline in new home construction due to elevated mortgage and interest rates [4] - Repair and remodeling demand remained subdued, impacted by broader macro factors [5] Company Strategy and Development Direction - The company aims to maintain a strong balance sheet and liquidity profile, allowing for counter-cyclical investments and growth opportunities [6] - West Fraser is focused on controlling costs and optimizing its mill portfolio to create a more resilient company [13] - The company is prepared to support discussions regarding softwood lumber tariffs and is actively scenario planning for various trade-related outcomes [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges with housing affordability and repair and remodeling markets, leading to modified shipment guidance for 2025 [10] - The company remains optimistic about the longer-term prospects for the industry despite a cloudy near-term outlook due to global trade complexities [17] Other Important Information - The U.S. Department of Commerce released preliminary combined rates for softwood lumber duties at 26.05%, which could result in an expense of $65 million if confirmed [12] - The company successfully amended and extended its $1 billion credit facility and increased its $300 million term loan [9] Q&A Session Summary Question: What have you learned about the substitutability between SPF and SYP? - Management noted that price spreads between products tend to close during high demand and separate during low demand, driven by supply and demand dynamics [20][21] Question: What are your views on a possible lumber export quota? - Management indicated that all options are on the table for discussions regarding lumber and that they are prepared to support the government in these discussions [24][25] Question: Are you cash flow positive in the North American lumber and OSB business? - Management refrained from discussing specific segment cash flow but emphasized the strength of their diversified product portfolio and counter-cyclical investments [27][29] Question: What do you need to do to improve the European business? - Management expressed confidence in their European assets and team, noting that they are well-positioned for recovery as demand improves [47][49] Question: What is the M&A opportunity set looking like? - Management stated they are ready to acquire quality assets if they become available, emphasizing a focus on quality and synergies rather than opportunistic purchases [68][70]

Financial Data and Key Metrics Changes - West Fraser generated $84 million of adjusted EBITDA in Q2 2025, representing an approximate 6% margin, indicating a decline due to a cyclical downturn in the market [4][5] - The company exited Q2 with nearly $1.7 billion of available liquidity and a strong cash position net of debts [5][6] - Cash flow from operations was $85 million in Q2, with a net cash balance increasing to $310 million from $156 million in the prior quarter [10] Business Line Data and Key Metrics Changes - The lumber segment posted adjusted EBITDA of $15 million in Q2, down from $66 million in Q1, primarily due to lower pricing and higher fiber costs [8] - The North America EWP segment generated $68 million of adjusted EBITDA in Q2, down from $125 million in Q1, driven by lower OSB pricing [8] - The Pulp and Paper segment generated negative $1 million of adjusted EBITDA in Q2, compared to $7 million in Q1, largely due to an inventory write-down [8] - The European business posted $2 million of adjusted EBITDA in Q2, an improvement from negative $2 million in Q1, linked to higher OSB pricing and shipments [9] Market Data and Key Metrics Changes - U.S. housing starts averaged 1.32 million units on a seasonally adjusted basis in Q2, reflecting a decline in new home construction due to elevated mortgage and interest rates [4][5] - Repair and remodeling demand remained subdued, impacted by broader macroeconomic factors [5] Company Strategy and Development Direction - The company aims to maintain a strong balance sheet and liquidity profile, allowing for counter-cyclical investments and growth opportunities [6][14] - West Fraser is focused on controlling costs and optimizing its mill portfolio to create a more resilient company [14][15] - The company is actively monitoring trade policies and is prepared to support discussions regarding softwood lumber tariffs [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the near-term outlook remains cloudy due to ongoing complexities in global trade, but they are optimistic about the longer-term prospects for the industry [18] - The company is committed to transparency and regular communication with stakeholders regarding potential changes in the operating environment [17] Other Important Information - The U.S. Department of Commerce released preliminary CVD rates for softwood lumber, with a combined rate of 26.05%, which could result in an expense of $65 million if confirmed [12][13] - The company successfully amended and extended its $1 billion credit facility and increased its $300 million term loan [10] Q&A Session Summary Question: What have you learned about the substitutability between SPF and SYP? - Management noted that price spreads between products fluctuate based on demand, with substitution occurring when products are unavailable [21][22] Question: What are your views on a possible lumber export quota? - Management stated that all options are on the table for discussions regarding trade, and they are prepared to support the government in these negotiations [26][27] Question: Are you cash flow positive in the North American lumber and OSB business? - Management refrained from discussing specific segments but emphasized their ability to weather cycles and drive cash flow even in difficult markets [30][31] Question: What do you need to do to improve the European business? - Management expressed confidence in their European assets and team, noting that they are well-positioned for recovery as demand improves [49][51] Question: What is the current state of contractor availability for CapEx projects? - Management indicated that contractor backlogs are shrinking, allowing for better access to contractors and equipment for ongoing projects [67][68] Question: What does the M&A opportunity set look like in the current market? - Management stated they are ready to acquire quality assets if they become available, focusing on opportunities that enhance their portfolio [72][73]

Financial Performance & Outlook - Q2 2025 adjusted EBITDA was $84 million, with an adjusted EBITDA margin of 6%[7] compared to $195 million and 13% in Q1 2025[7] - The company lowered its 2025 guidance for SPF shipments to 2,600-2,800 MMfbm, SYP shipments to 2,400-2,600 MMfbm, and North American OSB shipments to 6,300-6,500 MMsf 3/8"[15] - Capital expenditures for 2025 are projected to be $400-$450 million[15] Market Dynamics & Strategy - North American lumber end use in 2024 was 32% new residential, 38% R&R, 23% industrial, and 6% non-residential & other[35] - North American OSB end use in 2024 was 57% new residential, 24% R&R, 10% industrial, and 9% non-residential[35] - West Fraser is shifting lumber capacity to lower-risk, lower-cost regions, with US South accounting for approximately 53% of capacity in 2024, compared to 11% in 2004[40] Capital Allocation & Shareholder Value - From 2016 through YTD June 2025, West Fraser reinvested 35% of cash in existing operations and growth, returned 49% to shareholders, and retained 10% for leverage reduction[84] - Cumulative investment in share repurchases reached $4549 million by H1 2025[87] - The company has a net duty receivable of $372 million[105] Production & Capacity - West Fraser's 2024 lumber capacity was 66 billion board feet[26] - West Fraser's North American OSB capacity is 8060 MMsf 3/8"[26] - West Fraser's European OSB capacity is 1515 MMsf 3/8"[26]

Management's Discussion & Analysis [Introduction](index=1&type=section&id=INTRODUCTION) This section introduces the Management's Discussion and Analysis (MD&A) for the second quarter ended June 27, 2025, specifying that it should be read with other IFRS financial statements, clarifying fiscal periods, non-GAAP measures, and forward-looking statements * This **MD&A** covers the **financial performance** for the **three and six months ended June 27, 2025**[1](index=1&type=chunk)[2](index=2&type=chunk) * The **financial statements** are prepared in accordance with **International Financial Reporting Standards (IFRS)**[1](index=1&type=chunk) * The report utilizes **Non-GAAP financial measures**, including "**Adjusted EBITDA**", and contains **forward-looking statements**[3](index=3&type=chunk)[4](index=4&type=chunk) [Our Business and Strategy](index=1&type=section&id=OUR%20BUSINESS%20AND%20STRATEGY) West Fraser is a diversified wood products company operating in North America and Europe, focused on cost control, a strong balance sheet, and balanced capital allocation to navigate industry cycles and economic sensitivities * **West Fraser** is a **diversified wood products company** manufacturing **lumber**, **engineered wood products (EWP)**, **pulp**, and other related products with facilities in **Canada**, the **U.S.**, the **U.K.**, and **Europe**[6](index=6&type=chunk) * The company's **strategy** emphasizes **cost control**, **financial conservatism**, and maintaining a **strong balance sheet** to manage **business cycles**[7](index=7&type=chunk)[10](index=10&type=chunk) * **Earnings** are highly sensitive to **world economic conditions**, particularly the **U.S. housing market**, **commodity price fluctuations**, and **foreign exchange rates**[8](index=8&type=chunk)[9](index=9&type=chunk) [Recent Developments](index=3&type=section&id=RECENT%20DEVELOPMENTS) U.S. new home construction slowed to **1.32 million units** annualized in **June 2025** due to high mortgage rates, while the company renewed its **$1 billion credit facility** and upsized its **term loan** to **$300 million** in **May 2025**, amidst ongoing Canadian softwood lumber and U.S. Section 232 timber import disputes [Markets](index=3&type=section&id=Markets) * The **seasonally adjusted annualized rate** of **U.S. housing starts** averaged **1.32 million units** in **June 2025**, down from **1.37 million** in **2024**, indicating a **slowdown** in new construction[11](index=11&type=chunk) * Demand from **repair and remodeling applications** remains subdued, pressured by historically low rates of **existing home sales**[12](index=12&type=chunk) * **North American lumber supply** is contracting in key regions, offsetting new capacity additions in the **U.S. South**[13](index=13&type=chunk) [Credit Facility & Term Loan Renewals](index=5&type=section&id=Credit%20Facility%20%26%20Term%20Loan%20Renewals) * In **May 2025**, the company renewed its **$1 billion revolving credit facility**, extending the maturity to **May 2030**[17](index=17&type=chunk) * The company also **increased** its **term loan facility** from **$200 million** to **$300 million** and extended its maturity to **May 2028**[17](index=17&type=chunk) [Tariffs](index=5&type=section&id=Tariffs) * **Canadian softwood lumber exports** to the **U.S.** have been subject to **countervailing and antidumping duties** since **April 2017**[18](index=18&type=chunk) * A **Section 232 investigation** by the **U.S. Department of Commerce** into the **national security effects** of **timber imports** is **ongoing**, creating further **uncertainty**[18](index=18&type=chunk)[19](index=19&type=chunk) [Second Quarter 2025 Results](index=6&type=section&id=SECOND%20QUARTER%20RESULTS) The company reported a **net loss** of **$24 million** in **Q2 2025**, a sharp downturn from a **$42 million profit** in **Q1 2025** and a **$105 million profit** in **Q2 2024**, driven by lower product pricing, significant inventory write-downs, and increased fibre costs, leading to **Adjusted EBITDA** of **$84 million** Q2 2025 Financial Summary | Metric | Q2-25 ($M) | Q1-25 ($M) | YTD-25 ($M) | Q2-24 ($M) | YTD-24 ($M) | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | 1,532 | 1,459 | 2,990 | 1,705 | 3,332 | | Operating (loss) earnings | (45) | 64 | 19 | 132 | 180 | | Earnings (loss) | (24) | 42 | 18 | 105 | 139 | | Adjusted EBITDA | 84 | 195 | 279 | 272 | 472 | * The **decrease in earnings** from **Q1-25** to **Q2-25** was primarily attributed to the impact of **lower product pricing**, **inventory write-downs**, and **higher fibre costs**[23](index=23&type=chunk) [Discussion & Analysis by Product Segment](index=7&type=section&id=Discussion%20%26%20Analysis%20by%20Product%20Segment) The **Lumber** segment swung to an **operating loss** of **$31 million**, **North America EWP** segment's **operating earnings** declined to a **loss** of **$5 million**, and **Pulp & Paper** also reported an **operating loss** of **$5 million**, while **Europe EWP** narrowed its **operating loss** to **$8 million** due to improved pricing and higher volumes [Lumber Segment](index=7&type=section&id=Lumber%20Segment) Lumber Segment Q2-25 Performance | Metric | Q2-25 ($M) | Q1-25 ($M) | Q2-24 ($M) | | :--- | :--- | :--- | :--- | | Sales | 713 | 674 | 697 | | Operating (loss) earnings | (31) | 21 | (100) | | Adjusted EBITDA | 15 | 66 | (51) | * **Operating earnings decreased by $52 million** compared to **Q1-25**, primarily due to **lower product pricing** and a **$26 million unfavorable inventory valuation adjustment**[25](index=25&type=chunk)[35](index=35&type=chunk)[46](index=46&type=chunk) * **Export duties and tariffs** totaled **$21 million** in **Q2-25**, slightly down from **$22 million** in **Q1-25** but up from **$15 million** in **Q2-24**[43](index=43&type=chunk) * The company is a "**mandatory respondent**" in the **U.S. softwood lumber dispute investigations**, receiving **company-specific duty rates**[50](index=50&type=chunk) [North America Engineered Wood Products (NA EWP) Segment](index=11&type=section&id=North%20America%20Engineered%20Wood%20Products%20Segment) NA EWP Segment Q2-25 Performance | Metric | Q2-25 ($M) | Q1-25 ($M) | Q2-24 ($M) | | :--- | :--- | :--- | :--- | | Sales | 612 | 598 | 811 | | Operating (loss) earnings | (5) | 52 | 236 | | Adjusted EBITDA | 68 | 125 | 308 | * **Operating earnings fell by $57 million** from **Q1-25**, driven by a **$48 million negative price variance** from **lower OSB pricing** and an **$18 million unfavorable inventory valuation adjustment**[61](index=61&type=chunk)[67](index=67&type=chunk)[71](index=71&type=chunk) * **OSB shipment volumes increased** compared to **Q1-25**, benefiting from **higher production** and recovery from previous **weather-related transportation delays**[62](index=62&type=chunk) [Pulp & Paper Segment](index=13&type=section&id=Pulp%20%26%20Paper%20Segment) Pulp & Paper Segment Q2-25 Performance | Metric | Q2-25 ($M) | Q1-25 ($M) | Q2-24 ($M) | | :--- | :--- | :--- | :--- | | Sales | 92 | 85 | 92 | | Operating (loss) earnings | (5) | 3 | 0 | | Adjusted EBITDA | (1) | 7 | 9 | * **Operating earnings decreased by $8 million** from **Q1-25**, impacted by **higher costs**, including a **$6 million unfavorable inventory valuation adjustment**[79](index=79&type=chunk)[83](index=83&type=chunk) * **Financial comparisons** are affected by the **sale of three pulp mills** in **2024** and the company attaining **sole control** of **Cariboo Pulp & Paper (CPP)** in **Q1-24**[75](index=75&type=chunk)[76](index=76&type=chunk) [Europe Engineered Wood Products (Europe EWP) Segment](index=14&type=section&id=Europe%20Engineered%20Wood%20Products%20Segment) Europe EWP Segment Q2-25 Performance | Metric | Q2-25 ($M) | Q1-25 ($M) | Q2-24 ($M) | | :--- | :--- | :--- | :--- | | Sales | 130 | 117 | 119 | | Operating loss | (8) | (13) | (6) | | Adjusted EBITDA | 2 | (2) | 6 | * The **operating loss narrowed by $5 million** compared to **Q1-25**, driven by **higher OSB product pricing**, **increased shipment volumes**, and the **favorable impact** of a **stronger British pound (GBP)**[86](index=86&type=chunk)[92](index=92&type=chunk) [Discussion & Analysis of Specific Items](index=16&type=section&id=Discussion%20%26%20Analysis%20of%20Specific%20Items) **Selling, general, and administration (SG&A) costs** decreased to **$69 million**, a **$5 million recovery** in **equity-based compensation** was recorded, **net finance income** fell to **$4 million**, and the company reported a **tax recovery** of **$19 million** with an **effective tax rate of 44%** due to currency effects and valuation allowances * **Selling, general and administration (SG&A) costs** were **$69 million** in **Q2-25**, a **decrease** from **$73 million** in **Q1-25**[94](index=94&type=chunk) * A **recovery of $5 million** was recorded for **equity-based compensation** in **Q2-25**, primarily due to a **decrease in the company's common share price**[100](index=100&type=chunk) * **Net finance income decreased to $4 million** in **Q2-25** from **$6 million** in **Q1-25**, partly due to the **amendment of the term loan facility**[101](index=101&type=chunk)[102](index=102&type=chunk) * The company recorded an **income tax recovery of $19 million** in **Q2-25**, resulting in an **effective tax rate of 44%**, which was impacted by **functional currency differences** and **changes in valuation allowances**[106](index=106&type=chunk)[107](index=107&type=chunk) [Outlook and Operations](index=18&type=section&id=OUTLOOK%20AND%20OPERATIONS) The company anticipates continued near-term market headwinds, lowering **2025 shipment targets** for **lumber** and **North American OSB**, while the ongoing **softwood lumber dispute** poses a significant risk with a potential **26.05% combined cash deposit rate**, yet **capital expenditure** forecasts remain at **$400 million to $450 million** with continued capital returns to shareholders [Business Outlook](index=18&type=section&id=Business%20Outlook) * **Medium and longer-term demand** for **wood products** is expected to be supported by **favorable demographics** and an **aging U.S. housing stock**[113](index=113&type=chunk)[114](index=114&type=chunk) * **Near-term demand** faces **uncertainty** from **high mortgage rates** and **housing affordability challenges** in **North America**, and **geopolitical and economic risks** in **Europe**[115](index=115&type=chunk)[117](index=117&type=chunk) * The **softwood lumber dispute continues**, with **preliminary AR6 rates for 2023** indicating a potential **combined duty rate of 26.05%**, which would result in a **$65 million expense** if confirmed[120](index=120&type=chunk) [Operations](index=20&type=section&id=Operations) * Due to a **slower demand environment**, **2025 lumber shipment targets** have been **reduced** to **2.6-2.8 billion board feet** for **SPF** and **2.4-2.6 billion board feet** for **SYP**[122](index=122&type=chunk) * The **2025 North American OSB shipment target** has been **lowered** to **6.3-6.5 billion square feet (3/8-inch basis)** due to **slowing demand** and **trade policy uncertainty**[124](index=124&type=chunk) * The **global pulp market** is facing **demand uncertainty**, particularly from **China** due to **U.S. tariffs**, which is expected to cause **NBSK pricing weakness**[126](index=126&type=chunk) [Cash Flows and Capital Allocation](index=22&type=section&id=Cash%20Flows%20and%20Capital%20Allocation) * **Expected capital expenditures for 2025** remain in the range of **$400 million to $450 million**[128](index=128&type=chunk) * The company renewed its **Normal Course Issuer Bid (NCIB)** in **February 2025**, allowing for the **repurchase** of up to **3.87 million common shares**[130](index=130&type=chunk) * The company expects to continue paying its **quarterly dividend**, currently set at **$0.32 per share**[132](index=132&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of **June 27, 2025**, **West Fraser** maintained **$1,692 million** in **available liquidity**, prioritizing a **strong, investment-grade balance sheet**; financing activities included renewing a **$1 billion credit facility** and increasing its **term loan** to **$300 million**, while **cash from operations** declined due to lower earnings, and capital was returned to shareholders via repurchases and dividends [Capital Management and Liquidity Measures](index=23&type=section&id=Capital%20Management%20and%20Liquidity%20Measures) * The company's **capital management policy** prioritizes maintaining a **strong balance sheet** and an **investment-grade credit rating**[135](index=135&type=chunk)[137](index=137&type=chunk) Liquidity Summary | Metric ($ millions) | June 27, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 646 | 641 | | Available operating lines | 1,046 | 1,044 | | **Available liquidity** | **1,692** | **1,685** | | Net debt to total capital | (5%) | (6%) | [Credit Facilities and Debt](index=24&type=section&id=Credit%20Facilities%20and%20Debt) * In **May 2025**, the company renewed its **$1 billion committed revolving credit facility**, extending its maturity to **May 2030**[142](index=142&type=chunk)[143](index=143&type=chunk) * The **term loan facility** was **increased to $300 million** with a new **maturity date of May 2028**[146](index=146&type=chunk) [Shareholder's Equity and Repurchases](index=25&type=section&id=Shareholder's%20Equity%20and%20Repurchases) * Under its **2025 Normal Course Issuer Bid (NCIB)**, the company has **repurchased 741,748 common shares** as of **July 22, 2025**[152](index=152&type=chunk) * Since the **Norbord acquisition** in **February 2021**, the company has **repurchased 82% of the shares** issued for that transaction[131](index=131&type=chunk) [Cash Flow Analysis](index=25&type=section&id=Cash%20Flow%20Analysis) * **Cash provided by operating activities** was **$285 million** in **Q2-25**, a **decrease** from **$378 million** in **Q2-24**, primarily due to **lower earnings**[159](index=159&type=chunk)[160](index=160&type=chunk) * **Financing activities provided $32 million in cash** during **Q2-25**, mainly from the **$100 million proceeds of the upsized term loan**[159](index=159&type=chunk)[165](index=165&type=chunk) * **Investing activities used $70 million in cash** in **Q2-25**, which included **$78 million in capital expenditures**[159](index=159&type=chunk)[167](index=167&type=chunk) [Risks and Uncertainties](index=28&type=section&id=RISKS%20AND%20UNCERTAINTIES) This section refers readers to the company's **Annual MD&A** and other **public filings** for a comprehensive discussion of the various **risks and uncertainties** affecting its business * The company's business is **subject to a number of risks and uncertainties** that are detailed in its **Annual MD&A** and other **public filings**[169](index=169&type=chunk) [Controls and Procedures](index=28&type=section&id=CONTROLS%20AND%20PROCEDURES) Management confirms responsibility for establishing and maintaining **disclosure controls and procedures (DC&P)** and **internal control over financial reporting (ICFR)**, reporting no material changes to its **ICFR** during **Q2 2025** * **Management is responsible** for establishing and maintaining adequate **disclosure controls and procedures**, as well as **internal control over financial reporting**[170](index=170&type=chunk)[172](index=172&type=chunk) * There were **no changes in internal control over financial reporting** during **Q2 2025** that have **materially affected**, or are likely to **materially affect**, these controls[173](index=173&type=chunk) [Definitions, Reconciliations, and Other Information](index=28&type=section&id=DEFINITIONS%2C%20RECONCILIATIONS%2C%20AND%20OTHER%20INFORMATION) This section defines and reconciles **non-GAAP** and other specified **financial measures** like **Adjusted EBITDA** and **available liquidity**, provides a glossary of key terms, and includes a **cautionary note** on **forward-looking statements** [Non-GAAP and Other Specified Financial Measures](index=28&type=section&id=Non-GAAP%20and%20Other%20Specified%20Financial%20Measures) * The report uses **non-GAAP financial measures** (e.g., **Adjusted EBITDA**), **capital management measures** (e.g., **available liquidity**), and **supplementary financial measures** (e.g., **expected capital expenditures**)[175](index=175&type=chunk) * **Adjusted EBITDA is defined as earnings** adding back **finance income/expense**, **taxes**, **amortization**, **equity-based compensation**, **restructuring charges**, and **other income/expense**[178](index=178&type=chunk) * **Reconciliations are provided** for **Non-GAAP measures** like **Adjusted EBITDA** to their most directly comparable **IFRS measures**, such as **earnings or operating earnings**[177](index=177&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [Glossary of Key Terms](index=33&type=section&id=Glossary%20of%20Key%20Terms) * Provides **definitions for abbreviations and terms** used in the **MD&A**, such as **OSB (Oriented strand board)**, **SPF (Spruce/pine/balsam fir lumber)**, and **USDOC (United States Department of Commerce)**[195](index=195&type=chunk)[196](index=196&type=chunk) [Forward-Looking Statements](index=35&type=section&id=Forward-Looking%20Statements) * This section contains a **cautionary note** that the **MD&A** includes **forward-looking statements** regarding the company's **strategy**, **market conditions**, **operational outlook**, and **financial performance**[197](index=197&type=chunk)[198](index=198&type=chunk) * It lists numerous **assumptions, risks, and uncertainties** that could cause **actual results to differ materially** from these statements, including **economic conditions**, **trade restrictions**, and **operational disruptions**[199](index=199&type=chunk)[200](index=200&type=chunk)

Core Insights - West Fraser Timber Co. Ltd. reported a decline in demand for wood-based building products in Q2-25, particularly in the North America Engineered Wood Products (NA EWP) segment, due to lower-than-expected spring building activity and ongoing housing affordability challenges [3][4][12] - The company experienced a decrease in sales and earnings compared to Q1-25, with Q2-25 sales at $1.532 billion and a net loss of $24 million, or $0.38 per diluted share [5][10] - Adjusted EBITDA for Q2-25 was $84 million, down from $195 million in Q1-25, reflecting the impact of reduced demand and pricing pressures [5][10] Financial Performance - Q2-25 sales were $1.532 billion, an increase from $1.459 billion in Q1-25 [5] - Q2-25 earnings were a loss of $24 million compared to a profit of $42 million in Q1-25 [5] - Adjusted EBITDA for Q2-25 was $84 million, representing 6% of sales, down from $195 million in Q1-25 [10][41] Market and Demand Outlook - The U.S. housing market showed a seasonally adjusted annualized rate of 1.32 million housing starts in June 2025, with permits issued at 1.40 million units, indicating potential for future demand despite near-term uncertainties [14] - Long-term demand for wood products is expected to be supported by improved housing affordability, stabilization of inflation and interest rates, and an aging U.S. housing stock [13][15] - In Europe, demand for wood products is anticipated to grow in the long term, although near-term challenges persist due to geopolitical developments and inflationary pressures [15] Operational Adjustments - The company is taking steps to ensure operational flexibility and cost control in response to the current demand environment [4] - Capital expenditures in Q2-25 were $78 million, with expected total capital expenditures for 2025 projected to be between $400 million and $450 million [9][22] - The company has reduced its shipment targets for both SPF and SYP lumber due to slower demand and uncertainties related to tariffs [16][18] Segment Performance - Adjusted EBITDA for the Lumber segment was $15 million, while the NA EWP segment reported $68 million [10][42] - The Pulp & Paper segment experienced a slight loss with an Adjusted EBITDA of $(1) million [10][42] - The Europe EWP segment reported an Adjusted EBITDA of $2 million, indicating stable performance amidst market challenges [10][42]

Core Viewpoint - West Fraser Timber Co. Ltd. is set to hold an analysts' conference call to discuss its second quarter 2025 financial and operating results on July 24, 2025 [1][2]. Group 1: Conference Call Details - The conference call will be chaired by Mr. Sean McLaren, President and Chief Executive Officer of West Fraser [2]. - Participants can join the call by dialing a toll-free number or through a webcast [1][2]. - The financial and operating results will be released on July 23, 2025, one day prior to the call [2]. Group 2: Company Overview - West Fraser is a diversified wood products company with over 50 facilities across Canada, the United States, the United Kingdom, and Europe [3]. - The company promotes sustainable forest practices and produces a variety of products including lumber, engineered wood products, pulp, and newsprint [3]. - West Fraser's products are utilized in home construction, repair and remodeling, as well as in industrial applications and paper products [3].