Financial Data and Key Metrics Changes - Consolidated third-quarter sales were $1.7 billion, down 3% from Q3 2024 [3] - Net income was $21.8 million, or $0.58 per share, compared to $91 million, or $2.33 per share, in the year-ago quarter [3] - Wood product sales were $396.4 million, down 13% compared to Q3 2024, with segment EBITDA of $14.5 million compared to $77.4 million in the prior year [5] - BMD sales were $1.6 billion, down 1% from Q3 2024, with segment EBITDA of $69.8 million compared to $87.7 million in the prior year [5][6] - Gross margin was 15.1%, a 60 basis point year-over-year decline [9] Business Line Data and Key Metrics Changes - Wood products experienced lower sales volumes and competitive pricing pressure, particularly in EWP and plywood [3][4] - I-joist and LVL volumes were down 10% and 7% respectively compared to the year-ago quarter [6] - BMD's commodity sales decreased 3%, while general line product sales increased 6% [8] - EWP volumes were down 15% sequentially, with pricing pressures leading to declines of 6% and 5% for I-joist and LVL respectively [7][9] Market Data and Key Metrics Changes - U.S. housing starts data for September 2025 was not released, but total U.S. housing starts increased 2% when comparing July and August 2025 to the same periods in 2024 [3] - Single-family housing starts decreased 3% [3] - BMD's daily sales pace in October was approximately 5% below the Q3 sales pace [16] Company Strategy and Development Direction - The company remains focused on executing strategic priorities, including a two-step distribution model and enhancing product offerings [4][10] - Capital expenditures for the first nine months of 2025 were $187 million, with a commitment to a capital spending range of $230-$250 million for the year [11][12] - The company anticipates a cautious market in the first half of 2026, with gradual improvement expected later in the year [18][20] Management's Comments on Operating Environment and Future Outlook - Management noted demand weakness, trade policy uncertainties, and seasonal factors will influence financial results [13][15] - EWP prices have stabilized, and management expects low single-digit sequential declines due to market adjustments [15] - The company is confident in long-term demand drivers for residential construction, including housing supply shortages and demographic trends [19][20] Other Important Information - The company paid $27 million in regular dividends in the nine months ended September 30, 2025, and repurchased approximately $120 million of common stock [12] - A new share repurchase program of up to $300 million was authorized [12] Q&A Session Summary Question: Can you talk about share gains in the general line part of the business? - Management highlighted strong demand in general line product categories and significant investments in capacity to support growth [22][23] Question: What are the competitive dynamics in EWP? - Management noted price stabilization and a focus on maintaining cycle times for builders as key factors influencing EWP pricing [25][28] Question: What are the constraints for generating higher margins in BMD? - Management expressed confidence in maintaining gross margins above 15% and emphasized the importance of enriching the product mix [33][34] Question: How is the company planning to balance M&A with share repurchases? - Management stated that capital allocation priorities remain focused on investing in existing assets and pursuing organic growth, with share repurchases expected to continue in the absence of meaningful M&A [73]

Financial Data and Key Metrics Changes - West Fraser Timber Co. Ltd. reported an adjusted EBITDA of negative $144 million for Q3 2025, indicating continued operation within an extended cycle trough [3][4] - The lumber segment's adjusted EBITDA was negative $123 million, a significant decline from $15 million in Q2 2025, primarily due to lower pricing and a $67 million duty expense [6][8] - Cash flow from operations was $58 million, with a net cash balance of $212 million, down from $310 million in the previous quarter [9] Business Line Data and Key Metrics Changes - The North America EWP segment posted negative $15 million in adjusted EBITDA for Q3 2025, down from $68 million in Q2, driven by lower OSB pricing [6] - The pulp and paper segment reported negative $6 million in adjusted EBITDA, compared to negative $1 million in Q2, largely due to a maintenance shutdown [7] - The Europe business generated $1 million in adjusted EBITDA, similar to the $2 million reported in the previous quarter [8] Market Data and Key Metrics Changes - U.S. housing starts averaged 1.31 million units annually through August, reflecting stable but uninspiring levels of new home construction [4] - The company noted subdued demand in repair and remodeling, continuing a trend observed in previous quarters [4] Company Strategy and Development Direction - The company has removed 820 million board feet of capacity, approximately 12% of its lumber capacity, to optimize its asset portfolio and create a more resilient business [11][12] - West Fraser aims to maintain a flexible operating strategy to meet customer needs while focusing on cost reduction and safety [12][13] - The company plans to continue a balanced capital allocation strategy, investing in value-enhancing projects and pursuing opportunistic growth [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic conditions and shifting trade policies but expressed confidence in the company's strong financial position to navigate these difficulties [11] - The company remains optimistic about the long-term prospects for the industry despite a challenging year-to-year outlook [16] Other Important Information - The U.S. Department of Commerce announced final combined duty rates of 26.5% for softwood lumber, with West Fraser having the lowest duty rate in the Canadian industry [10] - The company confirmed its 2025 capital expenditure guidance range of $400 to $450 million [9] Q&A Session Summary Question: Approach to managing production in a tough market - Management emphasized actions taken early in the cycle, including mill closures and adjustments to shift configurations, to remain nimble in production management [18][19] Question: Implied Q4 operating rate for OSB - The implied operating rate for OSB in Q4 is expected to be around 80%, with maintenance shutdowns strategically scheduled during this weaker seasonal period [20][21] Question: M&A opportunities in the current down cycle - Management reiterated a quality-first approach to M&A, emphasizing the importance of asset quality and the company's flexibility to pursue growth opportunities [22][24] Question: Federal support for the lumber industry - Management noted ongoing discussions with the government regarding support measures for the lumber industry, but specific details were not disclosed [28][29] Question: Inventory levels in the U.S. channel - Management indicated that their own inventory levels are intentionally lean, but they do not have visibility into customer inventory levels [30][32] Question: Conditions in the Canadian market - The Canadian market remains competitive, but it does not drive demand as significantly as the U.S. market [44][45] Question: Capital expenditures outlook for 2026 - Management indicated that they will provide 2026 capital expenditure guidance in February, noting that they have been busy with major projects [47] Question: State of the Caribou Pulp facility - The Caribou Pulp facility has been repaired and is back up and running after a recent incident [48]