Q4 2024 West Fraser Timber Co Ltd Earnings Call
Speaker Change: Good morning ladies and gentlemen and welcome to the West Fraser Q4 2024 results conference call.
Speaker Change: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, February 13, 2025.
Speaker Change: During this conference call, West Fraser's representatives will be making certain statements about West Fraser's future financial and operational performance, business outlook, and capital plans.
Speaker Change: These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws
Speaker Change: Such statements involve certain risks and uncertainties and assumptions, which may cause Westfacers' actual or future results and performance to be materially different from those expressed or implied in these statements.
Speaker Change: Additional information about these risk factors and assumptions is included both in accompanying webcast presentation and in our 2024 Annual MD&A and Annual Information Form which can be accessed on Wes Fraser's website or through CDERplus for Canadian investors and EDCAR for United States investors.
Speaker Change: And I would now like to turn the conference over to Mr. Sean McLaren. Thank you. Please go ahead.
Thank you, Elin.
Speaker Change: Good morning everyone, and thank you for joining our fourth quarter 2024 earnings call. I am Sean McLaren, President and CEO of West Fraser, and joining me today are Chris Virostek, Senior Vice President and Chief Financial Officer, Matt Tobin, Senior Vice President of Sales and Marketing, and other members of our leadership team.
On the earnings call this morning
Speaker Change: I will begin with a brief overview of West Fraser's Q4 and fiscal 2024 financial results.
and then pass the call to Chris for additional comments.
Speaker Change: before I share some thoughts on our outlook and offer concluding remarks.
Speaker Change: Wes Fraser generated $140 million of adjusted EBITDA in the fourth quarter of 2024, representing a 10% margin.
Speaker Change: Results were varied across our business American engineered wood products segment and stronger than expected demand for SPF lumber offset by reduced Southern Yellow Pine lumber volumes.
Speaker Change: In the fourth quarter, levels of new home construction in the U.S. showed further signs of improved stability on the back of recent U.S. Central Bank rate cuts that appeared to be supportive of housing, as well as demand for OSB and SPF lumber.
Speaker Change: That said, mortgage and interest rates remain relatively elevated and we believe this continues to shape existing home sales activity and repair and remodeling spending.
Speaker Change: For full year 2024, we generated $673 million of adjusted EBITDA, representing an 11% margin and a meaningful improvement from the $561 million reported in 2023.
Speaker Change: This level of 2024 EBITDA, while still below our view of mid-cycle EBITDA, was able to cover our capital expenditures, dividends, and much of our share buyback program.
Speaker Change: On a pro forma basis, with the inclusion of Norboard, our 2024 EBITDA was approximately $430 million higher than that of the significant down cycle in 2019.
Speaker Change: reflecting positive synergies from the NOR Board acquisition, benefits from our capital investment program, proactive acquisitions, and finally mill portfolio optimization initiatives to improve performance and lower costs.
Speaker Change: In terms of our balance sheet, we had nearly $1.7 billion of available liquidity at year-end, which offers us the financial flexibility and strength to support a consistent capital allocation strategy through the cycle.
Chris Virostek: With that overview, I'll now turn the call to Chris for additional detail and comments.
Chris Virostek: Thank you, Sean, and good morning, everyone. A reminder that we report in U.S. dollars, and all my references are to U.S. dollar amounts, unless otherwise indicated.
Chris Virostek: The lumber segment posted adjusted EBITDA of $21 million in the fourth quarter compared to $62 million adjusted EBITDA in the third quarter.
Chris Virostek: This is a significant sequential improvement, even after excluding the $32 million export duty expense in the third quarter, which had related to the 2022 calendar year.
Chris Virostek: Our North America EWP segment achieved $127 million of adjusted EBITDA in the fourth quarter, up slightly from $121 million in the third quarter.
Chris Virostek: The pulp and paper segment incurred a $10 million adjusted EBITDA loss in the fourth quarter compared to $2 million of positive EBITDA reported in the third quarter.
Chris Virostek: The Q4 loss for this segment was largely owing to the previously disclosed major maintenance shutdown at the mill, the first we've undertaken at Caribou since obtaining 100% control of the facility. With this catch-up on investment, we expect the mill to be well positioned moving forward.
Chris Virostek: In our Europe business, adjusted EBITDA was $2 million in the fourth quarter versus $1 million in the third quarter, as that business continues to face relatively tempered demand markets.
Chris Virostek: You will also have seen that we reported a $70 million non-cash impairment of goodwill in this segment in the fourth quarter, which was driven primarily by weaker macroeconomic conditions in the UK and Europe and expectations of an extended recovery to mid-cycle profitability for the business.
Chris Virostek: In terms of our overall results, higher product prices were the largest factor for the sequential EBITDA improvement across our lumber and North American engineered wood products businesses, partially offset by lower North American OSB shipments.
Chris Virostek: As noted in recent quarters, our lumber business continued to benefit from the actions we took earlier in 2024 to curtail production at three of our higher cost mills.
Chris Virostek: Essentially replacing that higher cost volume with production from other lower cost mills, which is positive for our overall cost structure.
Chris Virostek: Specifically in the U.S. South, our 2024 SYP shipments declined more than 10% from 2023 levels.
Chris Virostek: With regard to softwood lumber duties, late in the fourth quarter, the U.S. Department of Commerce issued a tolling notice extending the deadlines for certain ADD and CBD proceedings.
Chris Virostek: including softwood lumber, of up to 90 days. This extension affects the AR6 preliminary and final determination deadlines for both ADD and CBD cases.
Chris Virostek: As a result of this extension, the Preliminary Determination Decision for AR-6 anti-dumping is expected to be published February 20, 2025, and the CBD Preliminary Determination Decision is anticipated to be published May 7, 2025.
Chris Virostek: Cash flow from operations was $173 million in the fourth quarter, with our cash balance, net of debts, debt and lease obligations at $412 million, moderately below the $463 million reported last quarter.
Chris Virostek: The sequential decrease in our net cash balance reflects higher operating cash flows being more than offset by 156 million of capital expenditures and approximately 50 million of cash deployed towards share buybacks and dividends.
Chris Virostek: In terms of our outlook for 2025, we are providing initial operational guidance for the year as shown on slide 7 and detailed further in our earnings release where we discuss targeted ranges for key product shipments.
Chris Virostek: We are also providing our forecast for capital expenditures in the range of $400 million to $450 million.
Chris Virostek: This reflects a moderate decrease from 2024 capital spending levels, but is still aligned with our strategy of counter-cyclical investing, representing significant investment in our assets above sustaining capital needs of approximately $225 million per year.
Chris Virostek: I would note that as the U.S. administration's tariffs and other policies evolve, we will evaluate the impact of the tariffs on our operations and consider whether any revisions to our 2025 forecasts are warranted.
Sean McLaren: With that overview, I will pass the call back to Sean.
Thank you, Chris.
Speaker Change: We remain confident in our strategy and proud of the company we have built, with the geographic and product diversification that has allowed us to weather the challenging lumber markets we've experienced over the last two years.
Speaker Change: As Chris mentioned earlier, and as shown on the left side figure on slide 8, we generated $673 million of adjusted EBITDA in 2024, an improvement of nearly three times the level of pro forma EBITDA we saw at the bottom of the last lumber industry downturn in 2019.
Speaker Change: A key reason for this strong relative performance was the diversity in our wood building products offering specifically led by the strength of our North American EWP segment which has experienced healthy levels of demand during a period of challenging cyclical conditions for our other segments.
Speaker Change: Turning to liquidity on slide 9, we have a strong balance sheet with nearly half a billion of net cash and total liquidity approaching 1.7 billion exiting 2024. This financial strength provides a shock absorber.
Speaker Change: the potential economic issues that may unfold in the face of looming tariffs and trade wars while still allowing us to pursue cost improvement objectives and the return of surplus capital to shareholders.
Speaker Change: Before I shift to my concluding remarks, I want to briefly reflect upon the history of attractive returns generated for our shareholders.
Speaker Change: As you can see in the figure at the bottom of slide 10, our shareholders have been rewarded for their patience as we have continued to execute on our plans to grow the business,
Speaker Change: optimize our portfolio through dispositions and or closures of highly variable or underperforming assets and return surplus capital through dividends and buybacks.
Speaker Change: With a total annuitized return approaching 10% since the beginning of 2006, which includes share price appreciation and reinvested dividends, we remain proud of what the West Fraser team has been able to accomplish.
Speaker Change: And you should expect us to do more of the same on our journey to create future shareholder value.
I'll now shift to our Outlook and add
Speaker Change: We remain encouraged that the Fed's rate hiking cycle appears to be in the rearview mirror despite the risk of inflationary pressures from a potential trade war between the U.S. and some of the largest trading partners.
Speaker Change: At West Fraser, we currently view our overall inflation risk to be relatively modest, with costs having stabilized across much of our supply chain.
Speaker Change: In fact, in some instances, such as labor availability and capital equipment lead times, we have seen modest improvements in supply chain tension, which is likely to offer disinflationary effects.
Speaker Change: As such, and based on what we can see today, we do not currently expect to experience meaningful upward cost pressures over the near term.
Speaker Change: For our lumber operations in the U.S. South, as we described last quarter, we continue to make progress refining and optimizing our operations by removing costs and looking for additional margin opportunities.
Speaker Change: And although market conditions for Southern Yellow Pine remain challenging today, we continue to reduce costs, execute on our modernization program, and have our assets well-positioned for when supply and demand returns to balance.
Speaker Change: In Canada, demand for our SPF products continues to improve relative to Southern Yellow Pine, as new housing markets appear to be proving more resilient than repair and remodeling markets, in which we tend to see a greater demand pull for our Southern Pine products.
Speaker Change: As a reminder, our Portfolio Optimization Strategy has included the reduction of higher cost capacity across our lumber platform.
through permanent shift reductions.
mill closures and indefinite curtailments.
Speaker Change: of more than 800 million board feet since the beginning of 2022.
Speaker Change: We have also reduced the number of shifts or hours of operations at various lumber mills across our platform as a means to manage cost.
Speaker Change: Taking a proactive approach to portfolio management like this has continued to strengthen our cost position and competitiveness.
Speaker Change: In our North American EWP business, we continue to ramp up production at our Allendale OSB mill.
Speaker Change: where we are pleased with the cost progression of that facility.
Speaker Change: We expect that mill to be among our lowest cost OSB facilities when it achieves full operating rate.
Speaker Change: In conclusion, there is considerable macrouncertainty in the form of potential tariffs and global trade that may impact inflation expectations and demand for our products.
Speaker Change: However, we believe our low-cost platform and diverse portfolio of lumber and OSB mills situated in the U.S. will help mitigate some of this risk.
Speaker Change: In the meantime, we continue to take positive actions that we expect will make us even stronger for the period when industry demands begin to rebound from the current downturn.
Speaker Change: We will continue to focus on operational excellence in order to build more robust and sustainable business through the cycle, while maintaining the type of financial strength that gives us the flexibility to be able to take advantage of growth opportunities if and as they arise.
Speaker Change: We remain optimistic about the longer-term demand prospects for West Fraser and look forward to continuing to build one of the world's leading wood product building companies.
Speaker Change: And now, before we wrap up our prepared remarks, I'd like to briefly address the elephant in the room, which is the prospect of the U.S. administration's new tariffs that were announced earlier this month.
Speaker Change: and that, while on pause for now, have created considerable uncertainty for the outlook of our business.
Speaker Change: I expect many of you have questions about these potential tariffs and the implications for West Fraser.
Speaker Change: And while it's fair to say we have many questions too, as this situation continues to evolve, what we can say is the following.
Speaker Change: We can confirm that we are taking a number of actions within the company to prepare for potential tariffs.
first
We are ensuring that we remain policy current.
Speaker Change: This situation is fluid and considerable time and effort is being set being spent separating fact from fiction So that we may better prepare actionable analysis
Speaker Change: This includes maintaining close communications with our provincial and federal governments to ensure we have a handle on the latest engagements between Canada and the U.S.
Speaker Change: Second, we are actively scenario planning to prepare for a range of outcomes, including U.S. tariffs, Canadian countermeasures, and other possibilities.
Speaker Change: Third, we are preparing our business operations and updating our operational plans so they can be quickly aligned to various scenarios. We have long maintained a variable operating strategy and recognize certain tariff scenarios may require us to action such plans.
Speaker Change: And finally, we are preparing and engaging our employees, our communities, and our customers.
Speaker Change: for what may lie ahead. While we are unable to provide any kind of certainty to our stakeholders, we believe it's important to be as transparent as possible and to commit to regular communication should events warrant.
Speaker Change: Thank you, and with that, we'll turn the call back to the operator for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker Change: Your first question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.
Ben Isaacson: Thank you very much and good morning everyone. I have a two-part question on tariffs.
So, the first question is.
Speaker Change: stockpiling right now. Can you talk about kind of how the channel is positioning for terrorists?
Speaker Change: Yeah, good morning Ben. I'll maybe make a comment or two here and then Matt to step in.
Speaker Change: First off, it's very difficult for us to see exactly what others are doing. I would say from our perspective, we have maintained below normal inventory levels.
Speaker Change: We are, you know, selling normally in the market every day.
Get good visibility on
Speaker Change: channel inventories and I would say our buying patterns up here are selling patterns appear to be within normal ranges.
Speaker Change: And I would say our focus is really being, you know, having our ability to be flexible with our operating schedules, given whatever scenarios may or may not may come to pass. But with that, maybe I'd ask Matt to add anything I missed, sir.
Matt Tobin: Thanks Sean. No, I think that's exactly right. Customer purchasing just appears to be within normal range that we would normally that we see. You know, no shifts there and I would just make a comment maybe that generally uncertainty doesn't drive purchasing.
Speaker Change: Thank you. And then this is my second follow-up question. In your scenario planning for the tariffs,
Speaker Change: What is the kind of general frame of mind that you have in terms of the U.S. portfolio versus the Canadian portfolio? Do you expect the U.S. portfolio to meaningfully benefit? I mean, I know we don't know exactly what's going to come, but just from a high level, will the U.S. portfolio largely offset any risk in Canada?
He had been, you know, really, you know, really
Speaker Change: difficult to nail that one. I would say, unfortunately, we do have quite a bit of experience dealing with duties.
Speaker Change: and in particular anti-dumping duties, which can move quite quickly depending on the price in the marketplace and we react accordingly in our business depending on the demand of our customers. There's a lot of moving parts here.
Speaker Change: you know, of course, what actually will be in place, what are customer preferences.
Speaker Change: We feel like we're, whatever comes, we're well positioned to not only react in Canada if we need to but have some reaction in the U.S. as well to try to meet the needs of our customers.
Thanks so much, I appreciate it.
Speaker Change: Thank you. And your next question comes from the line of Shans DeWaar from TD Colwenn. Please go ahead.
Speaker Change: Thanks, good morning guys. A couple questions also starting with with tariff potential.
Speaker Change: I just want to understand, the SPF and OSB volume guidance for 2025, the bottom end of those ranges do not have any consideration for tariffs. Is that the correct read?
Speaker Change: You know, I'm going to let Chris to tack on here what I missed, but I think when we thought about the guidance for the year, we thought of current conditions. I think once you overlay any change to a border measure, you know, we have not tried to build in and speculate what that may or may not be. Chris, anything to add to that?
Speaker Change: No, that's exactly right and I think as we've done in the past as the year goes on and situations evolve I think we know both of these markets are fluid and have been fluid the last kind of two or three years with interest rate changes and
Speaker Change: of where we think the range is for the year and very difficult to to sort of piece in, you know, one item versus another when when there's not even clarity on how some of those uncertainties are going to get resolved so.
Speaker Change: That's the guidance as it stands today, and as the situation evolves, as we said, if there's a need to update that guidance, then we would update that guidance.
Okay, thanks for that guys.
Speaker Change: increase prices immediately to fully offset a tariff if it were to be imposed.
I guess I'd be interested in your perspective on...
Speaker Change: that ability. There's seemingly still slack in wood product markets in North America. Perspective on the supply response for lumber or OSB that might be needed to
Speaker Change: fully offset the tariffs in terms of passing it on to customers.
Sean McLaren: You know, Sean, I'll make a couple of comments here and then ask Matt to just add on or fill in what I missed, you know, so, so really not...
Sean McLaren: prepared to talk about pricing in any kind of detail. What I would say
Sean McLaren: is that, you know, there's a lot of things that go into the cost floor in, you know, across North America. You know, fiber costs, duty rates, exchange rates, tariffs are another element to that.
Sean McLaren: and all those things impact what people are prepared to buy at, what people are prepared to sell at, and ultimately those two things have to find each other, find a trading level. So really, really hard to say exactly how it's going to play out. I would say that additional cost is generally not helpful. You know, it's going to add to the cost floor and drive different decisions across the supply chain. So maybe I'll just leave it there and Matt, anything else we might want to add there?
Matt Tobin: No, I think, you know, for your comments, we're monitoring the situation and talk to our customers, but it's just really too early to say until we have clarity, and I think whatever the outcome of the tariffs, our focus is supplying customers with the products that we make and meeting their needs.
Understood. One last quick one. Sean, you mentioned...
Speaker Change: ...potential for modest labor cost relief, which, a little surprising and encouraging...
Speaker Change: I guess our perception was it was still a really tight labor market in the U.S. in particular. A little more context on what you're seeing, I assume it's specific to the U.S. market, relief that you're seeing there, expected magnitude of
cost reduction on labor for those sawmills in particular.
Speaker Change: It feels like this is pretty minor, but any additional context you can give us there?
Speaker Change: Much to add to that comment. I think it's probably against the backdrop of what we've just come through, which was a lot of pressure on labor, a lot of pressure on cost, a lot of pressure on finding people. We still have, in the US South in particular, meeting our labor needs, but it doesn't feel like it has the last two or three years. So,
I think that's probably context on that comment.
That's great. Thanks very much, Sean.
Thank you and the next question.
Speaker Change: Thank you. And the next question comes from the line of Ketan Mamtara from BMO Capital Market. Please go ahead.
Ketan Mamtara: Good morning and thanks for taking my question. Maybe to start with, can you give us a little bit of sort of context in terms of, you know, we are seeing a number of these pulp mill closures in the U.S. What sort of an impact that is having on the residual income, you know, the chip residues as you think about sort of the U.S. South sawmill?
Yeah, thanks, thanks Keaton and good morning.
Ketan Mamtara: As North American lumber supply is contracted in other regions, it's come on in the U.S. So, you have more chip volume and, you know, and less kind of pulp.
or pulp capacity or chip consumption.
Ketan Mamtara: You know, saying that, it is very regional, so it'll be, if you happen to be next to one of those pulp mills, the impact is going to be more significant on that particular mill.
Ketan Mamtara: But I do think it's important, unlike Western Canada and other parts
Ketan Mamtara: of Canada. You know, the U.S. soap is still, the pulp mills are still largely run on pulp wood.
Ketan Mamtara: So, chips make up the minority, not majority, of the furnishing of pulp mills, so there is replacement, but what happens is it takes more freight, it takes a lower price, so there is pressure on chip pricing down, and we've seen that now for the last three or four years as chip volumes have ramped up in the South.
Speaker Change: Understood. That's helpful. And then just switching to kind of 2025, and correct me if I misunderstood here, but from what I heard, it sounded like your volume guidance does not take in
Speaker Change: Any potential tariff impact yet? So, as I think about the low end and the high end of the guidance change, both in lumber and in OSB, can you tell us what you are kind of baking in, in terms of new residential construction growth and R&R in the U.S.?
Speaker Change: Yeah, I think, you know, I'm going to ask Matt, Chris, to just fill in a little bit more here. I would say we're largely, our guidance largely reflects
sort of how we
Speaker Change: you know, finished the second half of last year and started this year, which is relatively flat, Keaton. So I think what you see in our guidance is is kind of our run rates with some expected, you know, volume changes in our portfolio, but it's largely, we're not baking in a big move one way or the other in the demand levels, and we sure haven't tried to speculate on what may or may not be a border measure and what that might do to our volumes.
You know, Chris, anything else there on the guidance?
Chris Virostek: No, that's a that's a good summary of it, right? I mean, we're not we're not forecasting substantial changes in the underlying demand drivers from where they exist today or or any of these other
Chris Virostek: sort of externalities that are hovering out there that have yet to be resolved and you know as I said as the year goes on we always tighten that band and
Chris Virostek: and probably now we're dealing with more externalities than we normally do at this point in time of the year. So, you know, I think it's pretty hard to attribute a hundred million board feet to, you know, one thing or another as to being included or excluded. So, it's quite reflective of the, you know, the runway that we think we're at right now.
Speaker Change: Got it. That's very helpful. I'll jump back in the queue. Good luck.
Thanks, Gene.
Speaker Change: Thank you and your next question comes from the line of Matthew McKellar from RBC Capital Markets. Please go ahead.
Matthew Mckellar: Hi, good morning. Thanks for all the details so far and for taking my questions. First for me, what are your hopes or expectations for the outcome of the B.C. government's review of its timber sales program, please?
Good morning, Matthew. I'll make a couple comments on this.
You know, I think we always remain hopeful.
Speaker Change: you know, I would say in British Columbia, there is a, you know, we are not
harvesting.
and get more.
Speaker Change: more visibility and more stability on on timber coming to our mills, which is for for long-term viability for our people, for investment, for the industry, that's what's needed. So hopeful and we're prepared to do our part and and we'll just see what happens.
Speaker Change: Okay, great. Thanks for the color there. Switching gears a bit and just looking at your quarter over quarter waterfall on I think it's slide six and focusing on costs.
Speaker Change: Are you able to give us a sense of how much of that $30 million headwind quarter-on-quarter was attributable to each of engineered wood products and lumber? And then regarding the low log inventory issue, can you give us a sense of how this has evolved into Q1, please?
Chris, do you want to take that one?
Speaker Change: Yeah I think Matthew there's some there's some some more details in the MD&A and and I recognize you know that was a whole pile of documents we laid on people yesterday afternoon and maybe haven't had the chance to kind of get through all them yet but I would say you know there's a couple things flagged there in in lumber
Speaker Change: You know, as we finished our planting season through the summer, there was.
Speaker Change: There was some additional civiculture cost that came through. I think that's flagged in the MD&A as well. Expect that to be largely behind us as well.
Speaker Change: And then, you know, in the fourth quarter, you know, in EWP.
Speaker Change: We plan most of our maintenance downtime in EWP in the fourth quarter, and so that results in those fixed costs kind of just flowing straight through in the fourth quarter because we don't have as much production in the fourth quarter.
Speaker Change: With respect to the low log inventory, I would say, just in simple terms, how it affects...
Speaker Change: When you're feeding the logs directly into the mill almost as you get them, that's not as an efficient way as if you've been able to organize your log yard and feed the mill efficiently with the diameter and the specie that you want on a more consistent basis.
Speaker Change: You know, I think it's been, it was a slow start to the logging season. I think we're trying really hard to make up ground here with some colder weather recently.
Speaker Change: But, you know, still, you know, still, you know, challenging around challenges around access and things like that. So, you know, we think we're making we're making improvements and we're catching up on that log inventory, but there's still still another month and a half to go here before we hit break up.
Speaker Change: Great, very helpful. Thank you. And if I could just sneak in one last cleanup.
Speaker Change: It just looks like expected capex at Henderson is up about $20 million. Could you just help us understand the moving parts there, please?
Speaker Change: Yeah, you bet Matthew. Yeah, so I would say, so that project, I mean these projects are big and they take a long time to bring to fruition.
you know, and largely there's kind of a couple areas.
Speaker Change: I would say, you know, there has been more civil work early in the project than we expected. And it really was the timeline of the project, the construction, the civil work, was really impacted by heavy rains we experienced in East Texas right through the first half of last year.
General Contractor Availability Improved
Speaker Change: equipment delivery times improve. The one area that seems to not have, you know, we're not seeing the same type of improvement is the electrical installation. So those are the two main issues.
Speaker Change: the civil work, delay due to rain and some weather conditions, as well as pressure on electrical costs relative to what we had planned them to be a couple of years ago.
Speaker Change: Okay, thanks very much for the help. I'll turn it back.
Speaker Change: Thank you. Once again, should you have a question, please press star 4 by the 1 on your telephone keypad. Your next question comes from the line of Hamir Patel from CIBC. Please go ahead.
I good morning
Speaker Change: additional tariffs applied, would you expect a greater discount if any for Canadian customers?
Speaker Change: I'm going to hand this one over to Matt to make a few comments on Canada.
Matt Tobin: You know, I guess I would say about that is really, you know, Canada is an important market for us and certainly we have to compete in that market every day for our customer spend and, you know, we're going to focus on doing that through whatever, you know, situation.
tariff or situations that we find ourselves in.
Speaker Change: Okay, fair enough. But over the course of the current dispute, has there been much of a discount?
Speaker Change: You know I would say I guess the price fluctuates over you know over a normal course of business and and you know we really just have to focus on each market to compete and so those things I guess just change over time.
Speaker Change: And I would say, Jamiro, I'd add a little more to that, Jamiro, that, you know, clearly as it gets more expensive to go across the border into the U.S., whether that's duties, tariffs, what-have-you, you know, there's, you know, there is separation between those markets.
Speaker Change: Are you able to tell us how much of your Canadian OSB goes to the U.S.? I know on the lumber side, I think you disclosed it looks like it was 60% in 2024. I'm just curious on the OSB side.
Speaker Change: Yeah, and I don't have the exact disclosure in front of me, so Chris, just help me out here, but, you know, 40% of our production volumes in Canada
Speaker Change: 90% of our total North American production ends up in the U.S. So you can infer from that a large majority of our Canadian production crosses the border. I don't think we disclosed the exact number, but that's what our disclosure is. Chris, any more on that one?
Speaker Change: Yeah, we added a couple, you know, anticipating that this was going to be sort of point of interest for folks. There's a disclosure there in the AIF around that, you know, about 40% of our OSB capacity is in Canada.
Speaker Change: and then the destination of shipments of OSB is in the MD&A. That's not sort of historically been there, but it's been added in, so I think there's enough there between those two data points that you can...
Speaker Change: you can get to pretty close to what the what the number is there and it does it does fluctuate from time to time based on you know the relative strength and the different markets and seasonal factors and and things like that but I think there's enough there to piece it together.
Speaker Change: Okay, great. Thanks, Chris. And just the last question I had was, again, kind of tariff related. You know, Sean, if we did see tariffs come in, do you think we could see adjustments to provincial stumpage systems with respect to how they kind of incorporate product pricing?
Sean McLaren: talk about. It's really too soon to predict any policy changes as it relates to tariffs.
Fair enough. Thanks, Atul Ehad. I'll turn it over.
Thanks, Ramiro.
Thank you.
Sean McLaren: There are no further questions at this time. I will now hand the call back to Mr. Sean McLaren for any closing remarks.
Sean McLaren: Thank you, Lynn. As always, Chris and I are available to respond to further questions, as is Robert Winslow, our Director of Investor Relations and Corporate Development. Thank you for your participation today. Stay well, and we look forward to reporting on our progress next quarter.
Sean McLaren: Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.