Q4 2024 Interfor Corp Earnings Call

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Speaker Change: Thank you Mr. For Linda you May begin your conference.

Speaker Change: Thank you operator, and thank you everyone for joining us this morning.

Speaker Change: With me on the call I have Rick pause upon executive Vice President and Chief Financial Officer, embark Bender senior Vice president of sales and marketing.

Speaker Change: I'll start off by providing a brief recap of 2024, and our Q4 quarter before passing the call to Rick embark.

Speaker Change: 2024, it was a year, where we again strengthened our company and our portfolio.

Rick: During another down market year, which saw persistent low lumber prices, we continued delivering on the controllable.

Rick: <unk> positive operating cash flow of $144 million.

Rick: I thought a few notables were worth mentioning number one solid synergy achievements were made with our log and lumber inventory targets achieving year over year reductions of 25% and 16% on a value basis, respectively.

Rick: Number two.

Rick: We completed a new planer project at our Thomas in Georgia Mill, which met all Kpis targets within 30 operating days.

Rick: Number three we achieved mill conversion cost reductions across most regions, even with significant market related curtailments.

Rick: Number four.

Rick: Our employee turnover rates improved across our platform.

Unnamed Speaker: Number one, solid synergy achievements were made with our log and lumber inventory target. achieving year-over-year reductions of 25% and 16% on a value basis, respectively.

Rick: Number five.

Solid synergy achievements were made with our log and lumber inventory targets.

Rick: We continue to the divestiture of our beef BC coast tenures.

Rick: <unk> executed on a 10 year sales for gross proceeds of $67 million.

Cheating year over year reductions of 25% and 16% on a value basis, respectively.

Rick: Number six we streamlined our admin functions.

Unnamed Speaker: Number two, we completed a new planar project at our Thomason, Georgia mill, which met all KPI targets within 30 operating days. Number three, we achieved mill conversion cost reductions across most regions, even with significant market-related curtailment. Number four, our employee turnover rates improved across our platform.

Number two.

Rick: And closed our offices in both Montreal and Japan.

We completed a new planer project at our Thomasville, Georgia Mill, which met all K P. I targets within 30 operating days.

Rick: Number seven we adjust addressed higher cost noncore mills by selling a mill in Oregon to saw mills, and one <unk> plant in Quebec and.

Number three we achieved mill conversion cost reductions across most regions, even with significant market related curtailments.

Rick: And indefinitely curtailing two mills in the U S South.

Rick: Turning to our Q4 results all of our operating regions in Canada, and the U S. We're EBITDA positive, resulting in adjusted EBITDA of $80 million for Q4.

Number four.

Our employee turnover rates improved across our platform.

Unnamed Speaker: Number five. We continue the divestiture of our B.C. Coast tenures. and executed on eight tenure sales for gross proceeds of $67 million.

Number five.

We continue to the divestiture of our beef BC coast tenures.

Rick: 2025 will be hard to predict.

And executed on a 10 year sales for gross proceeds of 67 million.

Rick: However, we are well positioned to deal with uncertainty.

Unnamed Speaker: Number six, we streamlined our admin functions. and closed our offices in both Montreal and Japan.

Rick: With only 25% of our lumber subject to duties or tariffs.

Number six we streamlined our admin functions.

Rick: We expect more BC coast 10 year sales this year.

Those are offices in both Montreal and Japan.

Unnamed Speaker: Number seven, we addressed higher cost non-core mills by selling a mill in Oregon, two sawmills, and one remand plant in Quebec. and indefinitely curtailing two mills in the U.S.

We have approximately 900000 cubic meters to sell and the majority of the remaining sales are expected to transact in 2025.

Number seven we address address higher cost noncore mills by selling a mill in Oregon.

Two saw mills and one reman plant in Quebec.

We are maintaining our conservative capital spending plan for 2025.

And indefinitely curtailing two mills in the U S South.

Ian Fillinger: so. Turning to our Q4 results, all of our operating regions in Canada and the U.S. were EBITDA positive, resulting in adjusted EBITDA of $80 million for Q4.

Rick: Pace of single family starts has been solid with four of the last five months above 1 million starts.

Turning to our Q4 results.

All of our operating regions in Canada, and the U S were EBITDA positive, resulting in adjusted EBITDA of $80 million for Q4.

Rick: We see homebuilders continued use of incentives likely to continue given where rates are currently at.

Ian Fillinger: 2025 will be hard to predict. However, we're well positioned to deal with uncertainty. with only 25% of our lumber subject to duties or tariffs. We expect more BC Coast tenure sales this year. We have approximately 900,000 cubic meters to sell, and the majority of the remaining sales are expected to transact in 2025. We are maintaining our conservative capital spending plan for 2025. The pace of single-family starts has been solid with four of the last five months above one million starts. We see homebuilders' continued use of incentives likely to continue given where rates are currently at.

2025, it would be hard to predict.

Rick: European imports have dropped considerably with 21% year over year reduction in log cost reportedly increasing heading into 2025.

However, we are well positioned to deal with uncertainty.

With only 25% of our lumber subject to duties or tariffs.

We expect more BC coast 10 year sales this year.

Rick: As a political situations both in the U S and Canada unfold.

We have approximately 900000 cubic meters to shell and the majority of the remaining sales are expected to transact in 2025.

Rick: And until we know the impacts to the economy, we will continue to be careful with our capital allocation.

Rick: Our foundations are strong we're diversified and we continue to see great opportunities to improve operations without spending major capital.

We are maintaining our conservative capital spending plan for 2025.

The pace of single family starts has been solid with four of the last five months above 1 million starts.

Rick: Pass the call now over to Rick.

Rick: Thank you Ian and good morning, all please refer to cautionary language regarding forward looking information in our Q4 MD&A.

We see homebuilders continued use of incentives likely to continue given where rates are currently at.

Unnamed Speaker: European imports have dropped considerably with 21% year over year reduction and log costs reportedly increasing heading into 2025.

Rick: From a financial standpoint fourth quarter was a step in the right direction for our business.

European imports have dropped considerably with 21% year over year reduction in log costs reportedly increasing heading into 2025.

Rick: Average lumber prices improved notably driven by the substantial production curtailments across the industry in 2024 and supported by a relatively strong demand from single family home construction.

Unnamed Speaker: As the political situations both in the U.S. and Canada unfold, and until we know the impacts to the economy, we will continue to be careful with our capital allocation. Our foundations are strong, we're diversified, and we continue to seek great opportunities to improve operations without spending major cap.

As a political situations both in the U S and Canada unfold.

And until we know the impacts to the economy.

Rick: The higher lumber prices drove positive cash flow from operations in the quarter as Ian just mentioned.

We'll continue to be careful with our capital allocation.

Rick: As a result financial leverage remained flat quarter over quarter at 36%.

Our foundations are strong we're diversified and we continue to see great opportunities to improve operations without spending major capital.

Rick: Available liquidity grew to over $380 million.

Rick: Looking through the fourth quarter, we expect ongoing volatility in our industry with uncertain economic and political environments, raising the potential for impacts on both lumber supply and demand over the near term.

Unnamed Speaker: Pass the call now over to Rick. Thank you, Ian, and good morning, all.

Rick: Pass the call now over to Rick.

Rick: Thank you Ian and good morning, all please refer to cautionary language regarding forward looking information in our Q4 M D N a.

Rick: Please refer to cautionary language regarding forward-looking information in our Q4MDNA. From a financial standpoint, fourth quarter was a step in the right direction for our business. Average lumber prices improved notably, driven by the substantial production curtailments across the industry in 2020. and supported by relatively strong demand from single family home construction. The higher lumber prices drove positive cash flow from operations in the quarter, as Ian just mentioned. As a result, financial leverage remained flat quarter-over-quarter at 36%, while available liquidity grew to over $380 million.

Speaker Change: From a financial standpoint fourth quarter was a step in the right direction for our business.

Rick: With respect to Q4 earnings and therefore generated adjusted EBITDA of $80 million on total revenue of $747 million.

Speaker Change: Average lumber prices improved notably driven by the substantial production curtailments across the industry in 2024.

Rick: Revenue increased by 8% quarter over quarter, driven by a 16% increase in the average realized price of lumber.

Speaker Change: Supported by relatively strong demand from single family home construction.

Rick: Volume of lumber sold was relatively flat over the same period.

Speaker Change: The higher lumber prices drove positive cash flow from operations in the quarter as Ian just mentioned.

Rick: On the cost side reported production cost per unit of lumber sold fell 5% quarter over quarter reflective of a more normal operating cadence and an incremental $9 million reduction in the reserve against inventories.

Speaker Change: As a result financial leverage remained flat quarter over quarter at 36%.

Speaker Change: Our available liquidity grew to over $380 million.

Rick: Looking through the fourth quarter, we expect ongoing volatility in our industry, with uncertain economic and political environments raising the potential for impacts on both lumber supply and demand over the near term. With respect to Q4 earnings, Interfor generated a just EBIT dollar of $80 million on total revenue of $747 million. Revenue increased by 8% quarter over quarter, driven by a 16% increase in the average realized price of lumber. The volume of lumber sold was relatively flat over the same period. On the cost side, reported production costs per unit of lumber sold fell 5% quarter over quarter, reflective of a more normal operating cadence and an incremental $9 million reduction in the reserve against inventory.

Speaker Change: Walking through the fourth quarter, we expect ongoing volatility in our industry with uncertain economic and political environments, raising the potential for impacts on both lumber supply and demand over the near term.

Rick: The significant strengthening of the US dollar against the Canadian dollar was also notable factor in the quarter. This drove a positive effect on EBITDA as large majority of our sales are priced in U S dollars.

Speaker Change: With respect to Q4 earnings and therefore generated adjusted EBITDA of $80 million on total revenue of $747 million.

Rick: And bind with the revaluation of U S dollar denominated working capital and duty deposit balances.

Rick: Ultimately a net loss of $50 million was recorded in the quarter, which includes a $42 million foreign exchange loss, mostly unrealized in relation to cross border intercompany funding denominated in U S dollars.

Speaker Change: Revenue increased by 8% quarter over quarter, driven by a 16% increase in the average realized price of lumber.

Speaker Change: The volume of lumber sold was relatively flat over the same period.

Speaker Change: On the cost side reported production cost per unit of lumber sold fell 5% quarter over quarter reflective of a more normal operating cadence and an incremental $9 million reduction in the reserve against inventories.

Rick: Turning to cash flows $75 million of operating cash flow in the quarter helped fund $11 million of Capex in the $35 million debt repayment.

Looking ahead to Q1 of this year.

Rick: The significant strengthening of the U.S. dollar against the Canadian dollar was also a notable factor in the quarter. This drove a positive effect on EBITDA as the large majority of our sales are priced in U.S. dollars, combined with the revaluation of U.S. dollar-denominated working capital and duty deposit balance. Ultimately, a net loss of $50 million was recorded in the quarter, which includes a $42 million foreign exchange loss, mostly unrealized in relation to cross-border intercompany funding denominated in U.S. dollars.

Speaker Change: The significant strengthening of the U S dollar against the Canadian dollar is also notable factor in the quarter. This drove a positive effect on EBITDA as the large majority of our sales are priced in U S dollars combined with the revaluation of U S dollar denominated working capital and duty deposit balances.

Rick: Divestiture of the Quebec operation closed in January and improved our net cash position by $16 million.

Rick: We expect the sale of coastal BC for US 10 years to continue generating net cash flow estimated to be in the range of 20% to $25 million for the current year.

Regarding capital allocation, we will continue our conservative approach focused on reducing financial leverage.

Speaker Change: <unk> net loss of $50 million was recorded in the quarter, which includes a $42 million foreign exchange loss, mostly unrealized in relation to cross border intercompany funding denominated in U S dollars.

Rick: As part of this we've refined our guidance for capital expenditures in 2025 to be approximately $85 million.

Rick: Turning to cash flows, $75 million of operating cash flow in the quarter helped fund $11 million of CapEx and a $35 million debt repayment. Looking ahead to Q1 of this year, the divestiture of the Quebec operation closed in January and improved our net cash position by $16 million. We expect the sale of coastal BC forest tenures to continue generating net cash flow, estimated to be in the range of $20 to $25 million for the current year. Regarding capital allocation, we will continue our conservative approach focused on reducing financial leverage. As part of this, we've refined our guidance for capital expenditures in 2025 to be approximately $85 million.

Speaker Change: Turning to cash flows $75 million of operating cash flow in the quarter helped to fund $11 million of Capex and a $35 million debt repayment.

Rick: To wrap up <unk> Q4 earnings were a significant improvement over the prior quarter driven by improved lumber prices reflective of Titan Titan supply.

Looking ahead to Q1 of this year the divestiture of the Quebec operation closed in January and improved our net cash position by $16 million.

Rick: <unk> is well positioned with its high quality and geographically diverse operations to navigate successfully through the current economic and political uncertainty.

Speaker Change: We expect the sale of coastal BC forest tenures to continue generating net cash flow.

Bart: That concludes my remarks, I'll now turn the call over to Bart.

Bart: Thanks, Rick reflecting on 2024 of the diversity strategy is paying off I joist SPF in East New Brunswick.

Speaker Change: <unk> made it to be in the range of $20 million to $25 million for the current year.

Speaker Change: Regarding capital allocation, we will continue our conservative approach focused on reducing financial leverage.

Bart: That coupled with our PNW in southern yellow pine production allows us the level of customer diversity.

Speaker Change: Part of this we've refined our guidance for capital expenditures in 2025 to be approximately $85 million.

Bart: Business diversity, which puts us in a great position to service, our customers and realize higher margins.

Rick: To wrap up, Interfor's Q4 earnings were a significant improvement over the prior quarter, driven by improved lumber prices reflective of Titan's supply. Interfor is well positioned with its high quality and geographically diverse operations to navigate successfully through the current economic and political uncertainty.

Speaker Change: To wrap up <unk> Q4 earnings were a significant improvement over the prior quarter driven by improved lumber prices reflective of Titan Titan supply.

Bart: In the near term lumber markets in North America remain uncertain Canadian lumber is facing headwinds for shipments to the U S markets with all other softwood lumber duties expected to double.

Speaker Change: And therefore is well positioned with its high quality and geographically diverse operations to navigate successfully through the current economic and political uncertainty.

Bart: The potential tariff of 25% on top of that the U S lumber market will need to absorb significant cost increases.

Bart: That concludes my remarks, and I'll turn the call over to Bart. Thanks, Rick. Reflecting on 2024, the diversity strategy is paying off.

Bart: That concludes my remarks, and I'll turn the call over to Bart.

Bart: With Canada, representing 24% of the U S market supply this will come in the form of either increased lumber prices.

Bart: Thanks, Rick reflecting on 2024, the diversity strategy is paying off I joists SPF in East New Brunswick.

Bart: Reduced lumber supply.

Bart: I, Joyce, SPF in the East, New Brunswick. That coupled with our P&W and Sudden Yellow Pine production allows us a level of customer diversity. business diversity which puts us in a great position to service our customers and realize higher In the near term, lumber markets in North America remain uncertain. Canadian lumber is facing headwoods for shipments to the U.S. markets with all other softwood lumber duties expected to double. potential tariff of 25% on top of that, the U.S. lumber market will need to absorb significant costs. With Canada representing 24% of the U.S. market supply, this will come in the form of either increased lumber prices.

Bart: Most likely both.

Bart: We expect the price of lumber to be volatile for the balance of 2025, however, with an inflationary til.

Bart: That coupled with our PNW in southern yellow pine production allows us the level of customer diversity and.

Bart: In business diversity, which puts us in a great position to service, our customers and realize higher margins.

Bart: Lumber demand is hard to read three months back it felt different somewhat predictable and on an improving trend today, we feel demand is showing signs of decline however, mostly due to the economic uncertainties we.

Bart: In the near term lumber markets in North America remain uncertain Canadian lumber is facing headwinds for shipments to the U S markets with all other softwood lumber duties expected to double.

Bart: We feel this is short term and looked for markets to settle in 2025.

Bart: A potential tariff of 25% on top of that the U S lumber market will need to absorb significant cost increases.

Bart: We are well diversified with approximately 60% of our production in the U S. Putting us in a position to be a reliable consistent supplier to our customers.

Bart: With Canada, representing 24% of the U S market supply this will come in the form of either increased lumber prices.

Speaker Change: From an inventory standpoint, when markets are uncertain, we see our customers take risk off the table by buying less and driving down their existing inventories. We feel that we are at historical lows in the distribution channel and as Ian mentioned in Florida has been proactive in reducing our own inventory levels.

Bart: reduced lumber supply, or most likely... We expect the price of lumber to be volatile for the balance of 2025, however, with an inflationary Lumber demand is hard to read. Three months back, it felt different, somewhat predictable, and on an improving trend. Today, we feel demand is showing signs of decline, however, mostly due to the economic We feel this is short term and look for markets to settle. We are well diversified, with approximately 60% of our production in the U.S., putting us in a position to be a reliable, consistent supplier to our customers. From an inventory standpoint, when markets are uncertain, we see our customers take risk off the table by buying less and driving down their existing inventory.

Bart: <unk> lumber supply or most likely book.

Bart: We expect the price of lumber to be volatile for the balance of 2025, however, with an inflationary tone.

Bart: Lumber demand is hard to read three months back it felt different somewhat predictable and on an improving trend today we.

Bart: Logistics capacity remains consistent and stable.

Speaker Change: For shorter lead times for restocking.

Bart: Demand is showing signs of decline however, mostly due to the economic uncertainties.

Speaker Change: Longer term, we continue to feel very good about the need for housing demographics household balance sheets repair and remodel opportunities.

Bart: We feel this is short term and looked for markets to settle in 2025.

We were well diversified with approximately 60% of our production in the U S. Putting us in a position to be a reliable consistent supplier to our customers.

Speaker Change: We expect affordability to continue to drive the demand side of the equation and once the economy settles, we expect demand to improve.

Speaker Change: As always we will focus on aligning our production to market demand and we will look for markets to settle through 2025.

Bart: From an inventory standpoint, when markets are uncertain, we see our customers take risk off the table by buying less and driving down their existing inventories. We feel that we were at a historical lows in the distribution channel and as Ian mentioned in her four has been proactive in reducing our own inventory levels.

Speaker Change: Back to you in.

Bart: We feel that we are at historical lows in the distribution channel, and as Ian mentioned, Interfor has been proactive in reducing our own. Logistics capacity remains consistent and stable, allowing for shorter lead times for restock. Longer term, we continue to feel very good about the need for housing, demographics, household balance sheet. We expect affordability to continue to drive the demand side of the equation. And once the economy settles, we expect demand. As always, we'll focus on aligning our production to market demand and we'll look for markets to settle through.

Thanks Bart.

Speaker Change: Operator, we're ready to take questions from analysts.

Speaker Change: Ladies and gentlemen asked Nathan if you would like to ask a question. Please press star followed by one on your Touchtone phone you said, Dan here, a prompt that Johan has been raised and again to decline from a process. Please press star followed by two if you're using a speakerphone you will need to lift the handset before pressing any keys.

Bart: Logistics capacity remains consistent and stable, allowing for shorter lead times for restocking.

Bart: Longer term, we continue to feel very good about the need for housing demographics household balance sheets repair and remodel opportunities.

Bart: We expect affordability to continue to drive the demand side of the equation and once the economy settles, we expect demand to improve.

Speaker Change: Please go ahead MS Star one now if you have a question.

Speaker Change: First we will hear from Ben Isaac at Scotia Bank. Please go ahead ma'am.

Bart: As always we'll focus on aligning our production to market demand and will look for markets to settle through 2025.

Speaker Change: Good morning, everyone.

Speaker Change: So just on the net debt to capitalization, it's been very stable at 35%, 36% for a number of quarters and Ian you mentioned that all planned through EBITDA positive. So the question is do you need to pull on non operational levers to pull.

Ian Fillinger: Back to you, Ian. Thanks, Bart.

Bart: Back to you.

Speaker Change: Thanks, Bart operator, we're ready to take questions from analysts.

Operator: Operator, we're ready to take questions from analysts. Thank you, sir. Ladies and gentlemen, as stated, if you would like to ask a question, please press star followed by 1 on your touch-tone phone. You should then hear a prompt that your hand has been raised. And again, to decline from the process, please press star followed by 2. And if you're using a speakerphone, you will need to lift a handset first before pressing any key. Please go ahead and press star 1 now if you have a question.

Speaker Change: Thank you, Sir ladies and gentlemen, estimated if you would like to ask a question. Please press star followed by one on your Touchtone phone you said down here a prompt that Johan has been raised and again to decline from the process. Please press star followed by two.

Speaker Change: Revenge net debt or to prevent your net debt ratio from rising. So the reason why I'm asking is you have this AAC available for sale.

Speaker Change: It does risk of terrorists makes that make the market value less and does it make sense to defer that if you.

Speaker Change: A speaker phone you'll need to lift the handset before pressing any keys. Please go ahead and ask star one now if you have a question.

Speaker Change: If you are stable on year on your leverage ratio. Thank you.

Ben Isaacson: First, we will hear from Ben Isaac at Scotiabank. Please go ahead, Ben. Good morning, everyone. So just on the net debt to capitalization, it's been very stable at 35-36% for a number of quarters. And Ian, you mentioned that all plants were EBITDA positive.

Speaker Change: First we will hear from Ben Isaacson of Scotia Bank. Please go ahead.

Speaker Change: That's a good question, Ben and one that we've talked about and viewed but our view is that the impact of pulling that non operational lever of coast tenure sales.

Speaker Change: Good morning, everyone.

Speaker Change: Just on the net debt to capitalization, it's been very stable at 35, 36% for a number of quarters and Ian you mentioned that all plants are EBITDA positive. So the question is do you need to pull on non operational levers to prevent net debt or to prevent your net debt ratio from rising but at least.

Speaker Change: <unk> is not impacted with the tariff.

Ian Fillinger: So the question is, do you need to pull on non operational levers to prevent net debt or to prevent your net debt ratio from rising? The reason why I'm asking is, you have this AAC available for sale. is does risk of tariffs make that make the market value less and does it make sense to defer that if you're if you're stable on your on your leverage ratio.

Speaker Change: Threats that are that are out there now.

The the sales largely follow the BC government Mandy <unk>.

Speaker Change: Why I'm asking is you have this AAC available for sales.

Speaker Change: <unk> first nations ownership or value added ownership, which really is off.

Speaker Change: It does risk of tariffs make that make the market value less and does it make sense to defer that if you're if you're a stable on year on your leverage ratio. Thank you.

Speaker Change: The dimensional market so at this point.

Number of those sales in 2025 that we have lined up already.

Ian Fillinger: Thank you. That's a good question, Ben, and one that we've talked about and viewed, but our view is that the impact of pulling that non-operational lever of cost tenure sales is not impacted with the tariff. you know, threats that are out there now. The sales largely follow the B.C. government's mandate. towards First Nations ownership or value-added ownership, which really is off the dimensional market. So at this point, a number of those sales in 2025 that we have lined up are already. you know, fairly advanced and in different stages, so no, we feel good about selling in this environment, and we don't see a value hit because of the tariff threat on that.

Speaker Change: Yeah. That's a good question, Ben and one that we've talked about and viewed but our view is that the impact of pulling that non operational lever of of coast tenure sales.

Speaker Change: Fairly advanced and in different stages. So no.

Speaker Change: No we feel we feel good about selling in this environment and we don't see a value.

Speaker Change: Hit because of the tariff threat on them on that and on the coast Ben.

Speaker Change: It is not impacted with the tariff.

Speaker Change: The species.

Speaker Change: Threats that are that are out there now.

Speaker Change: Really isn't tied to necessarily the U S housing market as closely as.

Speaker Change: The the sales largely followed the BC government mandate.

Speaker Change: SPF or syp's volumes.

Speaker Change: Towards first nations ownership or value added ownership, which really is after that.

Speaker Change: We're talking here in <unk>.

Speaker Change: Hemlock and infer that that's on the coast, which really are high value type products.

Speaker Change: The dimensional market so at.

Speaker Change: Got it. Thank you for that and then just as a follow up.

Speaker Change: At this point.

Speaker Change: A number of those sales in 2025 that we have lined up already.

Speaker Change: In advance of the threat of tariffs.

Speaker Change: We had heard about homebuilders stockpiling various items.

Speaker Change: You know fairly advanced and in different stages. So.

Speaker Change: We feel we feel good about selling in this environment and we don't see a value hit because of the tariff threat on upon that and on the coast Ben.

Speaker Change: In advance of that.

Speaker Change: But I just wanted to clarify did you see that customers are buying less and then what stockpiling I just want to understand that dynamic. Thank you.

Ian Fillinger: And on the coast, Ben, the... The species, you know, really isn't tied to, you know, necessarily the U.S. housing market as closely as SPF or SYP volumes. You know, we're talking cedar and hemlock and fir that's on the coast, which really are high-value type products.

Speaker Change: The species.

Speaker Change: Yes.

Speaker Change: So leading up I guess, if you go back into January leading up to the.

Speaker Change: Really isn't tied to necessarily the U S housing market as closely as.

Speaker Change: First threat of tariffs were coming on we Didnt, we werent seeing very much activity out of the marketplace.

Speaker Change: S P F or S y P volumes.

Speaker Change: We're talking here in hemlock and infer that that's on the coast, which really are high value type products.

Speaker Change: In fact, there was there was a level of complacency I think.

Speaker Change: At the distribution side of things.

Unnamed Speaker: Thank you for that.

Speaker Change: Got it. Thank you for that and then just as a follow up.

Ben Isaacson: And then just as a follow-up, in advance of the threat of tariffs, we had heard about homebuilders stockpiling various items in advance of that, but I just want to clarify, Bart, did you say that customers are buying less and they're not stockpiling? I just want to understand that dynamic.

Speaker Change: <unk> now has changed slightly.

Speaker Change: In advance of the threat of tariffs.

Speaker Change: But we think that that some of the activity that we're seeing today is feeling and what they didn't buy in January.

Speaker Change: <unk> heard about homebuilders stockpiling various items.

Speaker Change: In advance of that.

Speaker Change: Plus you've got some seasonality factors to think about.

Speaker Change: But I just wanted to clarify did you say that customers are buying less and they're much stockpiling I just want to understand that dynamic. Thank you.

Speaker Change: So.

Speaker Change: So yes, no I think that there have.

Bart: Thank you. Yeah, so leading up, I guess if you go back into January, leading up to when the first threat of tariffs were coming on, we weren't seeing very much activity. out of the marketplace. In fact, there was a level of complacency, I think, at the distribution side of things. That now has changed slightly, but we think that that some of the activity that we're seeing today is filling in what they didn't buy in January. Plus, you've got some seasonality factors to think about. So yeah, no, I think that there have, it's our position that the inventories remain low in the marketplace.

Speaker Change: Our position as the inventories remain low in the marketplace. They remain low at the operating levels.

Speaker Change: Yeah, we so leading up I guess, if you go back into January leading up to.

Speaker Change: And I, just don't see I don't I'm not seeing the stockpiling.

Speaker Change: First threat of tariffs were coming on we Didnt, we werent seeing very much activity.

Certainly at the distribution level and it would be news to me that that's taking place at the actual builder level, where it's frankly, a little bit harder to do because they don't have the infrastructure in place to store inventories. So.

Speaker Change: Out of the marketplace.

Speaker Change: In fact, there was there was a level of complacency I think.

Speaker Change: With it at the distribution side of things.

Speaker Change: That now has changed slightly.

Speaker Change: No I think the market is Scott.

Speaker Change: But we think that that's some of the activity that we're seeing today is filling in what they didn't buy in January.

Speaker Change: It's got a degree of attention to it its got some uncertainty.

Speaker Change: And it's it's.

Speaker Change: Going to be interesting to navigate this in the next couple of months.

Speaker Change: Plus you've got some seasonality factors to think about.

Speaker Change: Great. Thanks, so much.

Thanks Pat.

Speaker Change: So.

So yeah, no I I think that there have I, it's our position that the inventories remain.

Speaker Change: Next question will be from Matthew Macmillan RBC capital markets. Please go ahead Matthew.

Speaker Change: LOE in the marketplace they remain low at the operating levels.

Bart: They remain low at the operating levels. And I just don't see, I'm not seeing the stockpiling, certainly at the distribution level. And it would be news to me that that's taking place at the actual builder level, where it's frankly a little bit harder to do because they don't have the infrastructure in place to store inventories. So no, I think the market has got a degree of tension to it.

Matthew Macmillan: Hey, good morning, Thanks for taking my questions and I appreciate all the comments so far in demand and inventory.

Speaker Change: And I, just don't see I don't I'm not seeing the stockpiling.

Maybe just following on that last one that I wouldn't think the weather has been favorable through most of the U S. So far in Q1, but.

Speaker Change: Certainly at the distribution level and it would be news to me that that's taking place at the actual builder level, where it's frankly, a little bit harder to do because they don't have the infrastructure in place to store inventory. So.

Matthew Macmillan: Framing lumber composite is about as high now as it was pretty much any point last year. So.

Matthew Macmillan: I guess I'd be curious to hear what your sense of it.

Speaker Change: No I think the market is.

Matthew Macmillan: How tight the market could get if we see demand pick up a little bit here into the busier season.

Speaker Change: Got a degree of attention to it its got some uncertainty and it's.

Unnamed Speaker: It's got some uncertainty, and it's gonna be interesting to navigate this in the next couple of years. Great.

Matthew Macmillan: Flexibility you might have to respond with higher production levels over the next quarter. It seems maybe the south Pacific Northwest in particular should stipulate demand and pricing.

Speaker Change: It's going to be interesting to navigate this in the next couple of months.

Unnamed Speaker: Thanks so much.

Speaker Change: Great. Thanks, so much.

Matthew Mckellar: Thanks, Ben. Next question will be from Matthew McKellar at RBC Capital Markets. Please go ahead, Matthew.

Pat: Thanks Pat.

Speaker Change: Next question will be from Matthew Mckellar RBC capital markets. Please go ahead Matthew.

Speaker Change: Yeah, Hey, Matt Ian here I'll I'll take it and then Mark.

Matthew Macmillan: Can jump in if I missed anything but.

Matthew Mckellar: Good morning. Thanks for taking my questions and appreciate all the comments so far on demand and inventory. Maybe just following on that last one, and I wouldn't think the weather's been too favourable through most of the US so far in Q1, but... Framing number composite is about as high now as it was pretty much any point last year.

Matthew Mckellar: Hey, good morning, Thanks for taking my questions and I appreciate all the comments so far in demand and inventory.

Matthew Macmillan: Yes, good question, yes for sure.

Matthew Macmillan: The winter storms in mid January across the whole south was pretty tough and obviously in the northeast with with what's been going on so.

Matthew Mckellar: Maybe just following on that last one that I wouldn't think the weather has been favorable through most of the U S. So far in Q1, but.

Matthew Macmillan: Weather has not been that favorable the way.

Matthew Mckellar: Framing lumber composite is about as high now as it was pretty much any point last year or so.

Okay.

Ian Fillinger: So I guess I'd be curious to hear what your sense of how tight the market could get if we see demand pick up a little bit here into the busier season, and what flexibility you might have to respond at higher production levels in the next quarter to the south and the Pacific Northwest in particular, should you get the right demand and price signals. Yeah, hey, Matt, Ian here. I'll, I'll take it. And then Bart can jump in if I've missed anything. But yeah, good question. Yeah, for sure. You know, the winter storms in in, you know, mid January across the whole, you know, south was pretty tough.

Matthew Macmillan: That I think I or we think about this also is.

I guess I'd be curious to hear what your sense of how tight the market could get if we see demand pick up a little bit here into the busier season.

Matthew Macmillan: If you kind of accepted that maybe 2024, which was not.

Matthew Macmillan: Not a great year from lumber pricing.

Matthew Mckellar: But what flexibility you might have to respond with higher production levels over the next quarter. It seems maybe the south Pacific Northwest in particular, Shouldnt jeopardized demand and pricing.

Matthew Macmillan: Standpoint.

Matthew Macmillan: Was even the same for 2025.

Matthew Macmillan: But I don't think its been realized is the 10%.

Ian: Yeah, Hey, Matt Ian here Al.

Matthew Macmillan: Permanent capacity.

I'll take it and then Bart <unk>.

Matthew Macmillan: Or semi permanent capacity, that's been removed that really hasnt.

Speaker Change: Jumping if I've missed anything but yes.

Ian: Yeah. Good question, yes for sure.

Matthew Macmillan: It really hit traction most of that happened between August and December.

Speaker Change: The winter storms in mid January.

Ian: <unk> across the whole south was pretty tough and obviously in the northeast with with what's been going on so.

Matthew Macmillan: So if you kind of accepted that.

Ian Fillinger: And obviously in the north what's been going on so you know weather has not been that favorable. The way the way that that I think I or we think about this also is You know, if you, you know, kind of accepted that maybe 2024, which was, you know, not not a great year from lumber prices. standpoint, was even the same for 2025. What I don't think has been realized is the 10%, you know, permanent capacity or semi-permanent capacity that's been removed, that really hasn't hit traction. Most of that happened between August and December. And so if you kind of accepted that 2025, even at a 2024 price, that capacity that's been removed really hasn't come to light yet.

Matthew Macmillan: 2025, even at at 2020 for price.

Whether it has not been that favorable the way the way that that I think I or we think about this all toys.

Matthew Macmillan: That capacity Thats been removed really hasnt come to light yet and then you throw on I think what youre, referring to some.

Ian: If you.

Ian: Kind of accepted that maybe 2024, which was not.

Matthew Macmillan: Some tough weather conditions and heading into the spring.

Ian: Not a great year from lumber pricing.

Matthew Macmillan: Those are all factors.

Ian: Endpoint.

Matthew Macmillan: We're keeping an eye on our ability to.

Ian: Was even the same for 2025.

Matthew Macmillan: Respond to <unk>.

Ian: I think it's been realized is the 10%.

Matthew Macmillan: Demand either positive or negative.

Ian: Permanent capacity.

Matthew Macmillan: Think we've proven that over the last several years we can.

Or semi permanent capacity, that's been removed that really hasn't.

Matthew Macmillan: Move one way or torque the other way.

Ian: Hit traction most of that happened between August and December and so if you if you kind of accepted that.

Matthew Macmillan: And it doesn't take much which I think Q4.

Matthew Macmillan: Yeah.

Matthew Macmillan: Proved out that.

Ian: 25, even at at 2020 for price.

Matthew Macmillan: A little bit of a.

Matthew Macmillan: <unk> and lumber price.

Matthew Macmillan: I think the way that <unk> is now positioned.

Ian: That capacity, that's been removed really hasnt.

Matthew Macmillan: From where it was a number of years ago really does have.

Ian: Come to light yet and then you throw on I think what youre, referring to some.

Ian Fillinger: And then you throw on, I think what you're referring to, some tough weather conditions and heading into the spring. You know, those are all factors that we're keeping an eye on. Our ability to, you know, respond to... Demand either positive or negative. I think we've proven that over the last several years. We can move one way or torque the other way. And it doesn't take much, which I think Q4. you know, you know, proved out that, you know, a little bit of a tick in lumber price, you know, I think the way that Interfor is now positioned.

Matthew Macmillan: Good impact.

Ian: Some tough weather conditions and heading into the spring.

Matthew Macmillan: On us.

Matthew Macmillan: There is a slight slight.

Matthew Macmillan: Slight improvement in lumber prices, we really.

Ian: Those are all factors that.

Matthew Macmillan: Enjoy the diversity that we have with <unk>.

Ian: We're keeping an eye on our ability to you know risk.

Matthew Macmillan: With all the different regions, we operate in.

Ian: To respond to <unk>.

Ian: Demand either positive or negative.

Matthew Macmillan: The only other thing I could add to that is that I think the.

Ian: Think we've proven that over the last several years we can.

Matthew Macmillan: The market has realized at the pine prices that we're seeing today could represent the lows of the year.

Ian: Move one way or towards the other way.

Ian: And it doesn't take much which I think Q4.

Matthew Macmillan: We've got.

Some cost additions that are coming into the into the Canadian shipments and so when you look at all the regions together and you look at the pricing that we have today.

Ian: You know proved.

Ian: Proved out that you know a little bit of a tick.

Ian: <unk> and lumber price.

Ian: I think the way that tier four is now positioned.

Ian Fillinger: from where it was a number of years ago really does have a good impact on us when there's a slight improvement in lumber prices. you know, enjoy the diversity that we have with, you know, with all the different regions we operate in. The only other thing I could add to that is that I think the market has realized that the pine prices that we're seeing today could represent the lows of the year. uh... you know we've got cost additions that are coming into the Canadian shipment. So when you look at all the regions together and you look at the pricings that we have today, Sun Yellow Pine represents value.

Matthew Macmillan: <unk> represents value and I think that people are feeling comfortable that buying now is a good idea.

Ian: From where it was a number of years ago really does have a good impact.

Ian: On us.

Ian: There's a slight pause.

Matthew Macmillan: That's really helpful. Thanks for all the color there just one more for me.

Ian: Improvement in lumber prices, we really.

Ian: Enjoy the diversity that we have with our with.

Speaker Change: How have you seen your loss cost trend in the U S.

Ian: With all the different regions, we operate in.

Speaker Change: The southeast there following hurricane season did you get much help from lower log prices in the back of salvage activity in Q4, and do you have any sense of how things trend over the next couple of quarters.

Ian: The only other thing I could add to that because I think the.

Ian: The market has realized at the pine prices that we're seeing today could represent the lowest of the year.

Matt Ian: Yeah, Matt good question.

Speaker Change: We did but it was very localized.

Ian: We've got.

Ian: Cost additions that are coming into the into the Canadian shipments and so when you look at all of the regions together and you look at the pricing that we have today.

Matt Ian: So.

Matt Ian: We are the largest lumber producer in the state of Georgia.

Matt Ian: And.

Helene: Helene went through obviously.

Ian: <unk> represents value and I think that people are feeling comfortable that buying now is a good idea.

Ian Fillinger: And I think that people are feeling comfortable that buying now is.

Impacted a few of our mills.

Helene: And so in that area in those areas.

Matthew Mckellar: That's really helpful. Thanks for all the color there.

Ian: That's really helpful. Thanks for all the color there just one more for me.

Helene: <unk> wood cost.

Matthew Mckellar: Just one more for me. How have you seen your log cost trend in the U.S. southeast there following hurricane season? Did you get much help from lower log prices in the back of salvage activity in Q4? And do you have any sense of how things trend over the next couple of quarters? Thanks.

Helene: Favorable.

Ian: How have you seen your log cost trend in the U S.

Helene: No.

Helene: It's a small part of the overall platform.

Ian: Southeast they're following hurricane season did you get much help from lower log prices in the back of salvage activity in Q4, and do you have any sense of how things trend over the next couple of quarters.

Helene: 28 operations across both.

Helene: Both countries, but there were a few mills that.

Ian Fillinger: Yeah, Matt, good question. We did, but it was very localized. You know, so You know, we are the largest lumber producer in the state of Georgia, and, you know, when that hilline went through, obviously, you know, impacted a few of our mills. And so in that area, in those areas, the salvage wood cost, you know, was favorable. Now, you know, it's a small part of the overall platform of, you know, 28 operations across, you know, both countries, but there were a few mills that were able to have lower costs, but very short-lived. And I believe most of it's probably been work through here now.

Helene: We're able to.

Matt: Yeah, Matt good question.

Helene: Have lower costs, but very short lived.

Matt: It did but it was very localized.

Helene: And I believe most of it's probably been work it worked through here now but.

Matt: So.

Matt: We are the largest lumber producer in the state of Georgia.

Helene: Oh, that's a good question and we did we did see some wild.

Matt: And.

Helene: While cost decrease because of that in those areas.

Matt: Helene went through obviously.

Helene: Thanks, very much I'll turn it back.

Matt: Impacted.

Helene: Yeah.

Matt: <unk> of our mills.

Speaker Change: Thank you next question will be from mentor at BMO capital markets. Please go ahead.

Matt: And so in that area in those areas.

Matt: The salvage wood cost was favorable now.

Speaker Change: Good morning, and thank you for taking my question.

Matt: It's a small part of the overall platform of <unk>.

Speaker Change: Maybe just start with Mark I wanted to come back to your comments around kind of demand, where you said if I heard you correctly is showing some signs of decline was Bob.

Matt: 28 operations Cros.

Matt: Both countries, but there were a few mills that.

Matt: We're able to.

Speaker Change: I understand the seasonal element.

Matt: Have lower costs, but very short lived.

But could you talk to how your demand it's trading trending on a year over year.

Matt: And I believe most of it has probably been working it worked through here now but.

Matthew Mckellar: That's a good question and we did see some log cost decrease because of that in those areas. Thanks very much. I'll turn it back. Thank you.

Matt: That's a good question and we did we did see some.

Speaker Change: Both on the new residential side of the business on August one the battery module side of the business. Thank you.

Matt: While costs decrease because of that in those areas.

Matt: Thanks, very much I'll turn it back.

Speaker Change: Okay.

Speaker Change: No problem I think those comments are largely informed by conversations with their customers and what they're seeing from their site side of things and I think that there has been.

Matt: Yeah.

Ketan Mamtora: Next question will be from Ketan Mamtora at BMO Capital Markets. Please go ahead. Good morning and thank you for taking my question.

Matt: Thank you next question will be from mentor.

Matt: <unk> capital markets. Please go ahead.

Speaker Change: Good morning, and thank you for taking my question.

Ketan Mamtora: Maybe to start with, Bart, I want to come back to your comments around, you know, kind of demand where you said, if I heard you correctly, it's showing some signs of decline to start the year. I understand sort of the seasonal element, but could you talk to how your demand is trending on a year-over-year basis, both on the new residential side of the business and also on the repair remodeling side of the business? Thank you. Okay, no problem. I think those comments are largely informed by conversations with our customers and what they're seeing from their side of things.

Speaker Change: Maybe to start with Mark I wanted to come back to your comments around kind of demand, where you where you said if I heard you correctly is showing some signs of decline.

Speaker Change: The line on on on the kind of business that theyre seeing from.

Speaker Change: From there from the builders.

Speaker Change: And we saw that at the beginning of the year I mean January was slower year.

Speaker Change: I thought the.

Speaker Change: I understand the seasonal element.

Speaker Change: But could you talk to how your demand is trading trending on a year over year basis.

Speaker Change: Sorry solar month.

Speaker Change: But we thought that that was perhaps more due to the uncertainties to anything and I think in my opening comments I was.

Speaker Change: Both on the new residential side of the business and also on the refinery margin side of the business. Thank you.

Speaker Change: Wanted to make that point that.

Speaker Change: <unk>.

Speaker Change: The decline in demand is I don't think its fundamental I think it's more based on just the economic uncertainties of what's going to happen over the next couple of months.

Speaker Change: Okay.

Speaker Change: No problem I think those comments are largely informed by conversations with their customers and what they're seeing from their site side of things and I think that there has been.

Bart: And I think that there has been You know, a decline on the kind of business that they're seeing from the builders. And we saw that at the beginning of the year. I mean, January was a bit of a slower year, or sorry, slower month, but we thought that that was perhaps more due to the uncertainties than anything. And I think in my opening comments, I wanted to make that point that, you know, the decline in demand is, I don't think it's fundamental. I think it's more based on just the economic uncertainties of what's going to happen over the next couple of months.

Speaker Change: So that's largely on the builder side, so call that new home construction.

Speaker Change:

Speaker Change: The line on on on the kind of business that theyre seeing from.

Speaker Change: On the repair and remodel side very hard to put your finger on exactly what's happening there other than we can just look at our own business and our own comps.

Speaker Change: From there from the builders.

Speaker Change: And we saw that at the beginning of the year I mean January was slower year, Oh, sorry solar month.

Speaker Change: Month over month, and I would say that side of the business has been steady.

Speaker Change: And I think that if if if affordability remains in check in.

Speaker Change: But we thought that that was perhaps more due to the uncertainties of anything and I think in my opening comments I was.

Speaker Change: The uncertainties settle down we expect that both.

Speaker Change: On the new home construction side, and the repair and remodel side will improve as we go through the year I just think.

Speaker Change: I wanted to make that point that the.

Speaker Change: The decline in demand is I don't think it's fundamental I think it's more based on just the economic uncertainties of what's going to happen over the next couple of months.

Speaker Change: I really want to make the point that those comments are based on a very short term outlook.

Speaker Change: A fair amount of uncertainty as we started the year.

Bart: So, that's largely on the builder side, so, you know, call that the new home construction. On the repair and remodel side, you know, very hard to put your finger on exactly what's happening there other than we can just look at our own business and our own comps month over month. And I would say that side of the business has been steady. And you know, I think that if affordability remains in check and, you know, the uncertainty settled down, we expect that both on the new home construction side and the repair and remodel side will improve as we go through the year.

Speaker Change: So that's largely on the builder side, so call that new home construction.

Speaker Change: And I still and I think we still have it I mean, obviously, we've got the potential of tariffs coming in in bigger.

Speaker Change: On the repair and remodel side very hard to put your finger on exactly what's happening there other than we can just look at our own business and our own comps.

Speaker Change: Beginning of March and so.

Speaker Change: That's going to have a material impact on the market.

Speaker Change: Month over month, and I would say that side of the business has been steady.

Speaker Change: Positive everyone I think.

Speaker Change: Okay.

Speaker Change: And you know I think that if if if affordability remains in check in.

Speaker Change: Yeah, Hey, Dan I'll, just jump in with Bart here too.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: The way that I think we're seeing demand is.

Speaker Change: The uncertainties settle down we expect that both on the new home construction side and the repair and remodel side will improve as we go through the year I just think.

Speaker Change: Yes, you get a threat of a tariff people kind of pause for a few days something changes then they load out and then they pause and then they load up and so right now it's almost a week to week.

Bart: I just think, you know, I really want to make the point that those comments are based on a very short-term outlook. I mean, it's... a fair amount of uncertainty as we started the year, and I think we still have it. I mean, obviously, we've got the potential of tariffs coming in. beginning of March and so, you know, that's going to have a material impact on the market. and Paz is everyone.

Speaker Change: Really want to make the point that those comments are based on a very short term outlook.

Speaker Change: People just.

Speaker Change: A fair amount of uncertainty as we started the year.

Speaker Change: Our customers are willing to take risks or even build inventory if they think that prices will be lower now than a potential tariff everybody's just.

Speaker Change: And I still and I think we still have it I mean, obviously, we've got the potential of tariffs coming in and.

Speaker Change: Beginning of March and so.

Speaker Change: Treating it that way so we will get.

Speaker Change: That's that's going to have a material impact on the market.

Speaker Change: Days, where a.

Speaker Change: Positive everyone I think.

Speaker Change: A couple of days, where I think things are a little bit slow on the demand and then.

Ian Fillinger: Ketan, I'll just jump in with Bart here too. The way that I think we're seeing demand is... You know, you get a threat of a tariff, people kind of pause for a few days, something changes, then they load up, and then they pause, and then they load up. And so right now, it's almost a week-to-week, you know, people just, you know, our customers aren't willing to take risk or even build inventory if they think that, you know, even prices will be lower now than the potential tariff, everybody's just, you know, treating it that way. So, you know, we'll get, you know, days where, you know, a couple of days where I think things are a little bit slow on the demand, and then, you know, they'll pop.

Ken: Ken I'll just.

Speaker Change: Hey, Dan I'll, just jump in with Bart here too.

Speaker Change: So it's a real week to week fluid situation right now but.

Ken: Yes.

Ken: The way that I think we're seeing demand is yes.

Speaker Change: Yes.

Speaker Change: Overall.

Ken: Yes, you get a threat of a tariff people kind of pause for a few days something changes then they load out and then they pause and then they load up and so right now it's almost a week to week.

Speaker Change: Barry.

Speaker Change: To do that.

Speaker Change: There is less supply on the market.

Speaker Change: Our inventories are.

Speaker Change: Super Lean and it appears that the supply chain is Lee.

Ken: People just.

Ken: Our customers are willing to take risks or even build inventory if they think that EBIT prices will be lower now than a potential tariff everybody's just.

Speaker Change: Thanks Tien <unk>.

Speaker Change: For perspective, and then.

Speaker Change: As we think about <unk>.

Speaker Change: If prices and opine.

Ken: Treating it that way so yeah, we will get.

To the extent that this contract.

Speaker Change: And what that is.

Ken: Days, where a.

Ken: A couple of days, where I think things are a little bit slow on the demand and then they'll pop. So it's a real week to week fluid situation right now but.

Speaker Change: Bush's SPF prices higher I'm, just curious from a practical standpoint.

Ketan Mamtora: So it's a real week-to-week fluid situation right now, but, you know. Overall, we're very, you know, positive that, you know, there's less supply on the market. Our inventories are super lean, and it appears that the supply chain Thanks, Ian and Bud, that's a helpful perspective.

Speaker Change: How much.

Speaker Change: Obstetrician could happen.

Speaker Change: <unk> might be because we know that those generally tend to prefer SBF grade so.

Overall.

Ken: Paul.

Ken: There is less supply on the market.

Speaker Change: Is it possible that.

Ken: Our inventories are super lean.

Speaker Change: Incrementally.

Speaker Change: Buyers kind of open to taking that might be immuno exponential or does it kind of opened the door to more European imports.

Ken: And it appears that the supply chain is weak.

Speaker Change: Thanks, Ian in Baghdad, that's helpful perspective, and then.

Ian Fillinger: And then, you know, one more, as we think about, you know, SPF prices and Southern Yellow Pine, and to the extent that this uncertainty and duties and potential tariffs, you know, pushes, you know, SPF prices higher, I'm just curious from a practical standpoint, how much substitution could happen into SYP? Because we know that builders generally tend to prefer SPF grade. So, you know, is it possible, you know, that we see incrementally buyers kind of open to taking SYP in new residential, or does it kind of open the door to more European imports? We strongly believe that SPF, you know, is going to be and continues to be, you know, the preferred, you know, and they're all very well positioned with our Eastern Canadian operations in Ontario and New Brunswick.

Ken: As we think about SPF prices and southern yellow.

Speaker Change: We.

Speaker Change: We strongly believe the SPF.

Speaker Change: Mine too.

Speaker Change: The extended at this time.

Speaker Change: Is going to be and continues to be that.

Speaker Change: <unk> and potentially that is.

Speaker Change: Referred.

Bush's SPF prices higher I'm, just curious from a practical standpoint.

Speaker Change: Bcf for builders.

Speaker Change: And we're very well positioned with our eastern Canadian operations in Ontario, <unk>, New Brunswick, there could be obviously, some substitution with <unk> two.

Speaker Change: How much.

Speaker Change: Obstetrician could happen.

Speaker Change: <unk>, because we know that those generally Denver prefer SPX, great. So you're not.

Speaker Change: Is it possible you know.

Into that but <unk> I think is largely into.

Speaker Change: Back incrementally.

Speaker Change: Repair remodel treating those type of products, but builders do prefer.

Buyers kind of open to taking that might be in your residential or does it.

Speaker Change: <unk>.

Speaker Change: Open the door to more European imports.

Speaker Change: And there probably will be some substitution on the margin.

Speaker Change: We.

Speaker Change: Right.

Speaker Change: If you are building a home.

Speaker Change: We strongly believe the SPF.

Yeah.

Speaker Change: The view is SPF as really the preferred product easier to deal with much lighter.

Speaker Change: Is going to be and continues to be the preferred.

Speaker Change: Yeah.

Speaker Change: In weight.

Speaker Change: Species for builders.

Speaker Change: This BC and we see it as a preferred product for for the homebuilder.

Speaker Change: And we're very well positioned with our eastern Canadian operations in Ontario, and New Brunswick.

Speaker Change: Okay. That's very helpful I'll jump back in the queue. Good luck.

Ketan Mamtora: There could be obviously some substitution with SYP to... you know, into that. But, you know, SYP, I think, is largely into, you know, repair, remodel, treating those type of products. But builders do prefer SPF. And there probably will be some substitution on the margin. But, you know, if you're building a home, You know, the view is SPF is really the preferred product. Easier to deal with, much lighter in weight. as a specie and we see it as a preferred product for the home builder. Got it. That's very helpful. I'll jump back in the queue. Good luck.

Speaker Change: Could be obviously, some substitution with <unk> two.

Speaker Change: Once again, ladies and gentlemen, as a reminder, if you do have any questions. Please press star followed by one on your Touchtone phone.

Speaker Change: Into that but <unk> I think is largely into <unk>.

Speaker Change: Repair remodel treating those type of products, but builders do prefer SPF.

Speaker Change: Next question will be from <unk> Patel of <unk>.

Speaker Change: Capital markets. Please go ahead.

Speaker Change: There probably will be some substitution on the margin but.

Speaker Change: Hi, yes, good morning.

Speaker Change: And when you think about the.

Speaker Change: The potential for <unk>.

Speaker Change: If you're building a home.

Speaker Change: In a four and maybe the U S south industry as a whole to increase output over the near term.

Speaker Change: The view is SPF as really the preferred product easier to deal with much lighter in weight.

Speaker Change: I know.

Speaker Change: In the past talked about labor constraints, but.

Speaker Change: As a species and we see it as a preferred product for for the homebuilder.

Speaker Change: What do you think your own ability and maybe for the industry more broadly.

Speaker Change: Got it that's very helpful I'll jump back into queue. Good luck.

Speaker Change: This.

Speaker Change: Turn up supply out of so.

Speaker Change: Yeah.

Speaker Change: Well, thanks, Samir, we always kind of look back to what did the industry do in Covid.

Operator: Once again, ladies and gentlemen, as a reminder, if you do have any questions, please press star followed by one on your touchtone phone.

Speaker Change: Once again, ladies and gentlemen, as a reminder, if you do have any questions. Please press star followed by one on your Touchtone phone.

Speaker Change: Lumber prices were through the roof.

Hamir Patel: Next question will be from Hamir Patel at CIBC Capital Markets. Please go ahead. Hi, good morning.

Speaker Change: So.

Speaker Change: Next question will be from <unk> Patel.

Speaker Change: The best the industry did was I think it was around 3% somewhere around there.

Speaker Change: <unk> capital markets. Please go ahead.

Speaker Change: Hey, good morning.

Hamir Patel: Ian, when you think about the potential for Interfor and maybe the US sales industry as a whole to increase output over the near term, I know we've often in the past talked about labor constraints, but what do you think is your own ability and maybe for the industry more broadly to turn up supply out of sale? Well, thanks, Amir. We always kind of look back to, you know, what did the industry do in COVID? where lumber prices were through the roof. And so the best the industry did was, I think it was around 3%, somewhere around there.

Speaker Change: So the ability to to throttle.

Speaker Change: And when you think about.

Speaker Change: The potential for <unk>.

Up in the U S.

Speaker Change: In a four and maybe the U S south industry as a whole to increase output over the near term I'm you know I know.

Speaker Change: So.

Speaker Change: As probably you had an hour here or there to your shift or run a saturday or something like that.

Speaker Change: But incrementally it's pretty small.

Speaker Change: In the past.

Speaker Change: Alex about labor constraints, but.

Speaker Change: Pacific Northwest is.

Speaker Change: Interesting.

Speaker Change: Or do you think your own ability and maybe for the industry more broadly.

Speaker Change: If.

Speaker Change: If you think about northern British Columbia, which will be the stud producers.

Speaker Change: Turn up supply out itself.

Speaker Change: There's a lot of.

Speaker Change: Well, thanks, Samir, we always kind of look back to what did the industry do in Covid.

Speaker Change: Production out of Washington, and Oregon.

Speaker Change: Areas of which we were part of.

Speaker Change: <unk> prices were through the roof until.

Speaker Change: And if you throw tariffs on too.

Speaker Change: The best the industry did was I think it was around 3% somewhere around there.

Speaker Change: Northern BC.

Speaker Change: I think the Pacific northwest.

Ian Fillinger: So the ability to throttle up in the U.S. So it's probably you add an hour here or there to your shift or run a Saturday or something like that. But incrementally, it's pretty small. The Pacific Northwest, you know, is interesting. If you think about northern British Columbia, which would be the stud producers, there's a lot of stud production out of the Washington and Oregon areas of which we were part of. And if you throw tariffs onto, you know, northern BC, you know, I think the Pacific Northwest. look at throttling up production given that they'll have the pass-through and lower costs.

Speaker Change: So the ability to to throttle.

Speaker Change: Look at throttling up production.

Speaker Change: Up in the U S.

Speaker Change: Even that bill.

Speaker Change: So as.

Speaker Change: The pass through and lower costs.

Speaker Change: As probably you add an hour here or there to your shift or run a saturday or something like that.

But it's hard to do Amir.

Speaker Change: But incrementally it's pretty small.

Speaker Change: Our turnover rates are in the U S. South are improving in a number of our mills, which is great to see.

Speaker Change: Pacific Northwest is.

Speaker Change: Interesting.

Speaker Change: If if you think about northern British Columbia, which would be the stud producers.

Speaker Change: The ability to quickly bring sawmills, new saw mills online et cetera.

Speaker Change: Hard to do and if you do it quick attendant compromise.

Speaker Change: There's a lot of production out of the Washington and Oregon.

Speaker Change: Operating metrics in the long term so.

Speaker Change: Areas of which we were part of.

Speaker Change: We think that.

Speaker Change: The best in the industry could do is.

Speaker Change: And if you throw tariffs on too.

Speaker Change: Incremental percentages.

Speaker Change: The northern BC.

Speaker Change: Okay. Great. Thanks, that's helpful. And then when we think about maybe the potential for <unk>.

Speaker Change: I think the Pacific northwest.

Speaker Change: Look at throttling up production.

Speaker Change: Offshore imports to go up.

Speaker Change: Given that.

Speaker Change: They'll have that pass through and lower costs. So.

Speaker Change: What's your sense as to European suppliers.

Ian Fillinger: But it's hard to do, Hamir. Our turnover rates in the US South are improving in a number of our mills, which is great to see. The ability to, you know, quickly bring sawmills, new sawmills online, etc. hard to do, and if you do it quick, you tend to compromise operating metrics in the long term. You know, the best the industry could do is. incremental percentage. Okay, great. Thanks, Ian. That's helpful.

Speaker Change: They've obviously got domestic customers too and their equipment.

Amir: But it's hard to do Amir.

Amir: Our turnover rates are in the U S. South are improving in a number of our mills, which is great to see.

Speaker Change: Sir.

Speaker Change: The portion that they service North America, maybe.

Speaker Change: Maybe they're perhaps mixed confirmed give a sense as to maybe whats the maximum.

Amir: The ability to quickly bring sawmills, new sawmills online et cetera.

Speaker Change: Uplift, we could see in terms of offshore imports from Europe. If we did have tariffs on supply and then also.

Amir: Hard to do and if you do it quaky attendant compromise operating metrics in the long term so we.

Amir: We think that.

Speaker Change: The boat.

Amir: The best in the industry can do is incremental.

Speaker Change: We're in Ukraine, if that comes through and then do you think we'd see.

Amir: Incremental percentages.

Speaker Change: More of that European volume staying closer to home.

Speaker Change: Okay. Great. Thanks, that's helpful. And then when we think about maybe the potential for <unk>.

Hamir Patel: And then when we think about maybe the potential for offshore imports to go up, you know, what's your sense as to, you know, European suppliers, have obviously got domestic customers too, and their equipment's not, you know, sort of the portion that they service North America, maybe they're, they're perhaps mixed in strength. Do you have a sense as to maybe what's the maximum Uplift, we could see in terms of offshore imports from Europe if we did have tariffs on Canadian supply and then also, you know, with the war in Ukraine, if that comes to an end, do you think we'd see more of that European volume staying closer to home?

Speaker Change: Yes, it's interesting to think about here.

Speaker Change: Offshore imports to go up.

Speaker Change: Our RM.

Speaker Change: <unk> is the log cost increases in Europe are going up significantly so that's a headwind for sure.

Speaker Change: What's your sense as to European suppliers.

Speaker Change: They've all received got domestic customers too and their equipment not.

Speaker Change: Youre right on the.

Speaker Change: Sir.

Speaker Change: The portion that they service North America, maybe there perhaps mix can stream do you have a sense as to maybe whats the maximum.

Speaker Change: European mills to be able to convert to dimension products. Our understanding is that's.

Speaker Change: Uplift, we could see in terms of offshore imports from Europe. If we did have tariffs on Canadian supply and then also.

Speaker Change: Not easy to do.

Speaker Change: Got to reconfigure your sawmill setups and equipment to do that.

Speaker Change: So.

Speaker Change: Without.

Speaker Change: Yes.

Or in Ukraine, if that comes to an end and do you think we'd see.

Speaker Change: I would say that.

Speaker Change: We're probably.

Speaker Change: More of that European volume staying closer to home.

Speaker Change: <unk>.

Speaker Change: We're going to see where we're at today I mean, if there was.

Ian Fillinger: Yeah, it's interesting to think about, Hamir. Our info is that log cost increases in Europe are going up significantly, so that's a headwind for sure. You're right on the... The European mills to be able to convert to dimension products, our understanding is that's not easy to do. You've got to reconfigure your sawmill setups and equipment to do that. You know, I would say that, you know, were probably. you know, going to see where we're at today. I mean, if, if there was An opportunity to sell into the U.S. today. You know, they would be, and we're seeing a pretty big, you know, drop year over year in European imports.

Speaker Change: Yes, it's interesting to think about here.

Speaker Change: An opportunity to sell into the U S. Today.

Our our info is the log cost increases in Europe are going up significantly so that's a headwind for sure.

Speaker Change: Yes.

Speaker Change: It would be and we're seeing.

Speaker Change: Pretty big draw.

Speaker Change: Drop year over year in European imports.

Speaker Change: Youre right on the <unk>.

Speaker Change: So maybe back to that traditional level, 345%, Max but generally around three years, what we've seen on a trend basis. During COVID-19 I think it was around there also so if prices do increase in the in the U S for sure as Heck domestic mills are going to try to capture that before the European import.

Speaker Change: European mills to be able to convert to dimension products our understanding is.

Speaker Change: That's not easy to do.

Speaker Change: Got to reconfigure.

Speaker Change: Samuel setups and equipment to do that.

Speaker Change: So.

Speaker Change: <unk>.

Speaker Change: Yes.

Speaker Change: I would say that you know.

Speaker Change: Great. Thanks, Ian.

Speaker Change: We're probably.

Speaker Change: Got it.

Speaker Change: The only thing I would add to that is that if you look at 2024 for the European producers in North American market would have been one of their better markets.

Speaker Change: Going to see.

Speaker Change: Where we're at today I mean, if there was.

Speaker Change: An opportunity to sell into the U S. Today.

Speaker Change: They would be and we're seeing a pretty big.

Relatively speaking.

Speaker Change: And in that environment there their total shipments were off 21% and so it tells you that the log side of the equation is just.

Speaker Change: Drop year over year in European imports.

Ian Fillinger: So maybe back to that traditional level, you know, three, four, 5% max, but generally around three is what we've seen on a trend basis and during COVID, I think it was around there also. So if prices do increase in the US, well, sure as heck domestic, you know, males are gonna try to capture that before the European impact. Great, thanks Ian.

Speaker Change: So maybe back to that traditional level, 345%, Max but generally around three years, what we've seen on a trend basis. During COVID-19 I think it was around there also so if prices do increase.

Speaker Change: As much as that demand is going up the log costs are following it and so the margins are under pressure.

Speaker Change: And I think that Thats, the big constraint on how much how much would dose into North America.

Speaker Change: In the U S for sure.

Speaker Change: Sure as heck domestic mills are going to try to capture that before the European imports.

Speaker Change: Great. Thanks, that's all I had I'll turn it over.

Speaker Change: Thank you next question will be from Sean Stewart of TD Cowen. Please go ahead.

Speaker Change: Okay great.

Ian Fillinger: The only thing I would add to that is that, you know, if you look at 2024 for the European producers, the North American market would have been one of their better And in that environment, their total shipments are off 21%. And so it tells you that the long side of the equation is just. As much as that demand is going up, the log costs are following it, and so the margins are under pressure. And I think that that's the big constraint on how much wood they'll send to North Dakota. Great. Thanks.

Speaker Change: Ian.

Speaker Change: Sure.

Speaker Change: The only thing I would add to that is that if you look at 2024 for the European producers in North American market would have been one of their better markets.

Sean Stewart: Thanks, Good morning, everyone.

Sean Stewart: Thanks for all the thoughtful commentary on markets.

Sean Stewart: Ian question on the Capex budget of $85 million.

Speaker Change: Relatively speaking.

Ian Florida: I guess I'm trying to gauge how locked in that is and if.

Speaker Change: And in that environment there their total shipments are off 21% and so it tells you that the log side of the equation is just as much as that demand is going up the log costs are following it and so the margins are under pressure.

Sean Stewart: <unk> tariffs.

Sean Stewart: <unk> add pressure to that budget.

Sean Stewart: Can you give us some perspective on on that.

Speaker Change: Yes, no problem Shawn it's easy question.

Speaker Change: And I think that Thats, the big constraint on how much how much would dose into North America.

Speaker Change: Discretionary component all the equipment was bought over the last two years, it's sitting on ground now no risk there.

Speaker Change: Okay, great. Thanks, that's all I had I'll turn it over.

Hamir Patel: That's all I had. I'll turn it over.

Speaker Change: Rest of it is maintenance basically so the.

Unnamed Speaker: Thank you.

Speaker Change: The equipment is.

Sean Stewart: Next question will be from Sean Stewart at TD Cowen. Please go ahead. Thanks. Good morning, everyone. Thanks for all the thoughtful commentary on markets. Ian, question on the CapEx budget of $85 million. I'm trying to gauge how locked in that is, and if... deal tariffs.

Speaker Change: Thank you next question will be from Sean Stewart of TD Cowen. Please go ahead.

Speaker Change: Undercover purchased paid for.

Speaker Change: And in the install mode, now and Thats largely a thomason at the sawmill.

Sean Stewart: Thanks, Good morning, everyone.

Sean Stewart: Thanks for all the thoughtful commentary on markets.

Speaker Change: So very very very little risk.

Speaker Change: Ian question on the Capex budget of $85 million.

Speaker Change: Good to hear thanks for that.

Speaker Change: I guess I'm trying to gauge how locked in that is and if the steel tariffs.

Speaker Change: Another tariff question here if.

Ian Fillinger: Roshni Luthra, Roshni Luthra, Roshni Luthra, Richard Pozzebon, Benjamin Isaacson, Ketan Mamtora, Ketan Mamtora, Nikolai Goroupitch, Interfor Corporation The rest of it's maintenance, basically. So the equipment is. Undercover, purchased, paid for, and in the install mode now. And that's largely at Thomaston at the summit. So, you know, very, very, very little red. to hear.

Speaker Change: Sure.

Speaker Change: Surely add pressure to that budget.

Pete.

Speaker Change: What are your thoughts on the federal or provincial governments stepping up with local support programs.

Speaker Change: Can you give us some perspective on on that.

Sean Stewart: Yes, no problem Shawn it's easy question the discretionary component all the equipment was bought over the last two years, it's sitting on ground now no risk.

Speaker Change: With any expectations, there and any concerns that that sort of.

Speaker Change: The rest of it's baked into basically so.

Speaker Change: Equipment is.

Speaker Change: Undercover purchased paid for.

Speaker Change: In the install mode now and that's largely a thomas thin at the sawmill.

Speaker Change: In our business planning at all.

Speaker Change: So very very very little risk.

Speaker Change: Good to hear thanks for that.

Speaker Change: However, we're obviously participating in I would say <unk>, probably a lead participator in discussions with both provincial and federal governments.

Speaker Change: Another tariff question here if.

Ian Fillinger: Ferris, proceed. What are your thoughts on the federal or provincial governments stepping up with local support programs? any expectations there and any concerns that that sort of... bolsters the US subsidization argument and potentially affects countervailing duties, broader thoughts on what the industry in Canada could expect in terms of support from the government. We're not counting on any support in our business planning at all from provincial or federal government. However, we're obviously participating, and I would say Interfor is probably a lead participator in discussions with both provincial and federal governments on the file, whether it's... standing SLA, you know, agreement or the new administrative threat of tariffs.

Speaker Change: Tariffs proceed.

Speaker Change: What are your thoughts on the federal or provincial governments stepping up with local support programs.

Speaker Change: Government on that file.

Speaker Change: Standing SLA.

Speaker Change: Any expectations, there and any concerns that that sort of.

Speaker Change: Agreement or the new administrative threat of tariffs.

Speaker Change: Bolsters the U S subsidization argument and potentially flex countervailing duties that broader thoughts on what the industry in Canada could expect in terms of support from the governance.

Speaker Change: Yes.

Speaker Change: If.

Speaker Change: There is an executive order that.

Speaker Change: Does imply or put tariffs on our industry, we see it is.

Speaker Change: Our non subsidy.

Speaker Change: Well, we're not counting on any support.

Speaker Change: That would be our view and to low risk too.

Speaker Change: In our business planning at all.

Speaker Change: From Prudential or federal government.

Speaker Change: The government.

Speaker Change: Seeing this as somehow.

Speaker Change: However, we're obviously participating in I would say <unk>, probably a bead participator in.

Speaker Change: Our subsidy by the Canadian government. If there were some backstop measures that were put in place but Sean.

Speaker Change: Were.

Speaker Change: Discussions with both provincial and federal.

Speaker Change: I don't really have much more than that other than we're at the table.

Speaker Change: Government on that file.

Speaker Change: Having regular conversations.

Speaker Change: Whether it's.

Speaker Change: Standing SLA.

Speaker Change: In strategy discussions with Covid.

Speaker Change: Agreement or the new administrative threat of tariffs.

Speaker Change: Provincial and federal.

Speaker Change: Governments.

Ian Fillinger: You know, if... You know, there's an executive order that does imply or put tariffs on our industry. We see it as a non-subsidy, you know, that would be our view, and so low risk to, you know, the government. saying this is, you know, somehow a subsidy by the Canadian government if there were some backstop measures that were put in place, but, you know, Sean, we're... You know, I don't really have much more than that, other than we're at the table having regular conversations. and strategy discussions with provincial and federal governments. I would say when you look at Interfor, we've got BC, Ontario, and New Brunswick.

Speaker Change: Hey.

Speaker Change: When you look at <unk>, we've got BC, Ontario in New Brunswick.

Speaker Change: Yeah.

Speaker Change: If.

Speaker Change: There is an executive order that does imply or put tariffs on our industry. We see it is.

Speaker Change: Or view.

Speaker Change: On that we have three jurisdictions from across Canada.

Speaker Change: Our non subsidy.

Speaker Change: I think that we have a strong voice at the table when it comes to talking through some of these scenarios.

Speaker Change: That would be our view and so low risk too.

The government.

Speaker Change: You're saying this is somehow.

Speaker Change: Understood.

Speaker Change: Our subsidy by the Canadian government. If there were some backstop measures that we're putting in place, but Sean were.

Speaker Change: Okay, guys Thats all I have for now thanks very much.

Speaker Change: Thanks, John.

Speaker Change: And at this time Mr. <unk>, we have no further questions. Please proceed with closing remarks.

Speaker Change: I don't really have much more than that other than we're at the table.

Speaker Change: Having regular conversations.

Speaker Change: Okay. Thank you operator.

Speaker Change: Thank you everybody for spending time with US. This morning, if you have any questions feel free to reach out to Rick Bart or myself. Thank you and have a great day bye. Thank.

Speaker Change: In strategy discussions with <unk>.

Speaker Change: <unk> in federal.

Speaker Change: Governance, I would say you know when.

Speaker Change: When you look at <unk>, we've got BC, Ontario in New Brunswick.

Ian Fillinger: Our view, you know, on that, you know, we have three jurisdictions. across Canada. Let's see. I think that we have a strong voice at the table when it comes to talking through some of these scenarios.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we ask that you. Please disconnect your lines have a good weekend.

Speaker Change: In our view.

On that we have three jurisdictions from across Canada, I would say that.

Speaker Change: I think that we have a strong voice at the table when it comes to talking through some of these scenarios.

Speaker Change: Yeah.

Speaker Change: Understood.

Sean Stewart: Okay guys, that's all I have for now. Thanks very much.

Speaker Change: Okay, guys Thats all I have for now thank you very much.

Operator: Thank you. And at this time, Mr. Fillinger, we have no further questions.

Speaker Change: Thanks, Sean.

Speaker Change: And at this time Mr. <unk>, we have no further questions. Please proceed with closing remarks.

Unnamed Speaker: Please proceed with closing remarks. Okay, thank you, operator. And thank you, everybody, for spending time with us this morning. If you have any questions, feel free to reach out to Rick, Bart, or myself. Thank you and have a great day. Bye. Thank you, sir.

Speaker Change: Okay. Thank you operator, and thank you everybody for spending time with US. This morning, if you have any questions feel free to reach out to Rick Bart or myself. Thank you and have a great day bye.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we ask that you. Please disconnect your lines have a good weekend.

Operator: Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending, and at this time we ask that you please disconnect your lines. Have a good weekend.

Speaker Change: Okay.

Speaker Change: Okay.