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]