Q1 2026 West Fraser Timber Co Ltd Earnings Call

April 30, 2026

Operator: Good morning, ladies and gentlemen, welcome to the West Fraser Q1 2026 Results Conference Call. 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, 30 April 2026. 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. These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws. Such statements involve certain risks, uncertainties, and assumptions which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements.

Operator: Good morning, ladies and gentlemen, welcome to the West Fraser Q1 2026 Results Conference Call. 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 zero for the operator. This call is being recorded on Thursday, 30 April 2026. 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. These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws. Such statements involve certain risks, uncertainties, and assumptions which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements.

Speaker #2: 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.

Speaker #2: This call is being recorded on Thursday, April 30, 2026. 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 #2: These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws. Such statements involve certain risks, uncertainties, and assumptions which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements.

Speaker #2: Additional information about these risk factors and assumptions is included both in accompanying webcast presentation and in our 2025 annual MD&A and annual information form as updated in our quarterly MD&A which can be accessed on westfraser's website or through Cedar Plast for Canadian investors, and Edgar for United States investors.

Operator: Additional information about these risk factors and assumptions is included both in accompanying webcast presentation and in our 2025 annual MD&A and annual information form, as updated in our quarterly MD&A, which can be accessed on West Fraser's website or through SEDAR+ for Canadian investors and EDGAR for United States investors. I would now like to turn the conference over to Sean McLaren. Please go ahead.

Speaker #2: I would now like to turn the conference over to Sean McLaren. Please go ahead. Thank you, Ena. Good morning, everyone, and thank you for joining our first quarter 2026 earnings call.

Sean McLaren: Thank you, Ina. Good morning, everyone, and thank you for joining our Q1 2026 earnings call. I am Sean McLaren, President and CEO of West Fraser, and joining me on the call today are Chris Virostek, Executive 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, I will begin with a brief overview of West Fraser's Q1 and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks. As we entered 2026, we saw a seasonal improvement in the lumber market. Southern yellow pine in particular, saw a better balance between available supply and seasonal demand.

Speaker #2: I am Sean McLaren, President and CEO of West Fraser, and joining me on the call today are Chris Verostic, Executive Vice President and Chief Financial Officer; Matt Tobin, Senior Vice President of Sales and Marketing; and other members of our leadership team.

Speaker #2: On the earnings call this morning, I will begin with a brief overview of West Fraser's first quarter and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks.

Speaker #2: As we entered 2026, we saw seasonal improvement in the lumber market. Southern Yellow Pine, in particular, saw better balance between available supply and seasonal demand.

Speaker #2: While underlying demand for new residential construction and repair and remodel remained subdued, we experienced healthier market conditions compared with the second half of 2025.

Sean McLaren: While underlying demand for new residential construction and repair and remodel remained subdued, we experienced healthier market conditions compared with H2 2025. In OSB, Q1 market conditions remained challenging, though modest signs of improvement began to appear toward the end of the quarter as seasonal demand increased. Against this backdrop, West Fraser saw a positive sequential turnaround in Q1 results led by stronger lumber pricing and operational progress. We generated -$66 million of Adjusted EBITDA, this result includes $114 million of prior period duty adjustments, which Chris will get into shortly. Removing the impact of these adjustments, the underlying business generated $48 million, with all three of our segments, lumber, North American Engineered Wood Products, and Europe contributing to the positive results.

Sean McLaren: While underlying demand for new residential construction and repair and remodel remained subdued, we experienced healthier market conditions compared with H2 2025. In OSB, Q1 market conditions remained challenging, though modest signs of improvement began to appear toward the end of the quarter as seasonal demand increased. Against this backdrop, West Fraser saw a positive sequential turnaround in Q1 results led by stronger lumber pricing and operational progress. We generated $-66 million of Adjusted EBITDA, this result includes $114 million of prior period duty adjustments, which Chris will get into shortly. Removing the impact of these adjustments, the underlying business generated $48 million, with all three of our segments, lumber, North American Engineered Wood Products, and Europe contributing to the positive results.

Speaker #2: In OSB, Q1 market conditions remained challenging, though modest signs of improvement began to appear toward the end of the quarter as seasonal demand increased.

Speaker #2: Against this backdrop, West Fraser saw positive sequential turnaround in first-quarter results led by stronger lumber pricing and operational progress. We generated negative 66 million of adjusted EBITDA but this result includes 114 million of prior period duty adjustments which Chris will get into shortly.

Speaker #2: Removing the impact of these adjustments, the underlying business generated $48 million, with all three of our segments—Lumber, North American Engineered Wood Products, and Europe—contributing to the positive results.

Speaker #2: This reflects a significant improvement from the 79 million loss in the fourth quarter representing a turnaround of over 120 million dollars. We continued to high-grade our portfolio during the quarter.

Sean McLaren: This reflects a significant improvement from the -$79 million loss in Q4, representing a turnaround of over $120 million. We continued to high grade our portfolio during the quarter. We have completed production activities at our High Level OSB mill in Alberta and are 4 months into the production ramp-up at our new Henderson lumber mill in Texas. Our US lumber portfolio optimization continues to lower our cost structure with 5 mill closures and 2 brownfield modernizations over the past 5 years. Our balance sheet remains strong, providing us with the flexibility through the cycle and optionality for the future. We ended the quarter with liquidity close to $900 million. The change in Q1 reflects the normal seasonal buildup of log inventory in Western Canada, which is consistent with our typical working capital cycle.

Sean McLaren: This reflects a significant improvement from the $-79 million loss in Q4, representing a turnaround of over $120 million. We continued to high grade our portfolio during the quarter. We have completed production activities at our High Level OSB mill in Alberta and are four months into the production ramp-up at our new Henderson lumber mill in Texas. Our US lumber portfolio optimization continues to lower our cost structure with 5 mill closures and 2 brownfield modernizations over the past 5 years. Our balance sheet remains strong, providing us with the flexibility through the cycle and optionality for the future. We ended the quarter with liquidity close to $900 million. The change in Q1 reflects the normal seasonal buildup of log inventory in Western Canada, which is consistent with our typical working capital cycle.

Speaker #2: We have completed production activities at our high-level OSB mill in Alberta and our four months into the production ramp-up at our new Henderson Lumber Mill in Texas.

Speaker #2: Our US lumber portfolio optimization continues to lower our cost structure with five mill closures and two brownfield modernizations over the past five years. Our balance sheet remained strong providing us with the flexibility through the cycle and optionality for the future.

Speaker #2: We ended the quarter with liquidity close to $900 million. The change in Q1 reflects the normal seasonal buildup of log inventory in Western Canada, which is consistent with our typical working capital cycle.

Speaker #2: We expect this inventory investment to reduce in the second and third quarters as our mills work through their log inventories. We continue to operate with a strong balance sheet, allowing us to execute our capital allocation strategy.

Sean McLaren: We expect this inventory investment to reduce in Q2 and Q3 as our mills work through their log inventories. We continue to operate with a strong balance sheet, allowing us to execute our capital allocation strategy. Our financial position also provides optionality for value-creating opportunities should they arise. As always, we will be disciplined on execution and returns. With that high-level overview, I'll now turn the call to Chris for additional detail and comments.

Speaker #2: Our financial position also provides optionality for value-creating opportunities should they arise. As always, we will be disciplined on execution and returns. With that high-level overview, I'll now turn the call to Chris for additional detail and comments.

Speaker #2: Thank you, Sean, and good morning, everyone. A reminder that we report in US dollars and all my references are to US dollar amounts unless otherwise indicated.

Chris Virostek: Thank you, Sean. Good morning, everyone. A reminder that we report in US dollars and all my references are to US dollar amounts unless otherwise indicated. In Q1, we generated -$66 million of Adjusted EBITDA. As Sean discussed, we had 2 large softwood lumber duty-related adjustments in Q1, totaling $114 million. Both adjustments are non-cash in nature. The first is based on preliminary rates released by the United States Department of Commerce for the 2024 calendar year, and the second, due to a change in our estimate of amounts recoverable and payable as a result of the liquidation process covering H2 of 2017. I would point you to our news release of 16 April and our Q1 MD&A and financials for further details.

Speaker #2: In Q1, we generated negative 66 million of adjusted EBITDA. As Sean discussed, we had two large softwood lumber duty-related adjustments in Q1 totaling 114 million dollars.

Speaker #2: Both adjustments are non-cash in nature. The first is based on preliminary rates released by the US Department of Commerce for the 2024 calendar year.

Speaker #2: And the second, due to a change in our estimate of amounts recoverable and payable as a result of the liquidation process covering the last half of 2017.

Speaker #2: I would point you to our news release of April 16 and our first-quarter MD&A and financials for further details. The lumber segment posted adjusted EBITDA of negative 84 million in the first quarter but removing the duties impact results in positive 30 million compared to negative 57 million in the fourth quarter.

Chris Virostek: The lumber segment posted Adjusted EBITDA of -$84 million in Q1, but removing the duties impact results in +$30 million compared to -$57 million in Q4, an improvement of $87 million. This improvement is largely a result of higher SYP and SPF pricing. North America EWP Segment delivered $11 million of Adjusted EBITDA in Q1, an improvement from the prior quarter's -$24 million. This $35 million improvement is due largely to better OSB pricing in the quarter. In Europe, we generated $10 million of Adjusted EBITDA in Q1, more than doubling the $4 million we generated in Q4, and we've seen an improved environment in Europe with better demand and higher prices. This marks the highest level of Adjusted EBITDA in Europe since Q2 2023.

Speaker #2: An improvement of 87 million. This improvement is largely a result of higher SYP and SPF pricing. North America EWP segment delivered 11 million of adjusted EBITDA in the first quarter an improvement from the prior quarter's negative 24 million.

Speaker #2: This 35 million improvement is due largely to better OSB pricing in the quarter. In Europe, we generated 10 million of adjusted EBITDA in the first quarter more than doubling the 4 million we generated in the fourth quarter and we've seen an improvement improved environment in Europe with better demand and higher prices.

Speaker #2: This marks the highest level of adjusted EBITDA in Europe since the second quarter of 2023. We have moved our previously named pulp and paper segment to Other in the first quarter, as the business has become a less significant part of our total operations and we will no longer be specifically addressing the results of that segment.

Chris Virostek: We have moved our previously named pulp and paper segment to other in Q1 as the business has become a less significant part of our total operations and will no longer be specifically addressing the results of that segment. Bridging our results from Q4 to Q1, a majority of the improvement came from higher prices in lumber in North American EWP. Higher volumes in US lumber in Europe and a favorable inventory adjustment represented the biggest variances. Costs were flat relative to Q4. Lower SYP costs were offset by repair costs due to the fire at Blue Ridge. In North American OSB, we saw higher costs from resin and energy-related inputs. Resin plays a significant role in our panel cost structure, and the recent rise in methanol-based resin pricing is a factor we anticipate will be more visible in our Q2 results.

Speaker #2: Bridging our results from Q4 to Q1, a majority of the improvement came from higher prices in lumber in North American EWP. In addition, higher volumes in US lumber in Europe and a favorable inventory adjustment represented the biggest variances.

Speaker #2: Costs were flat relative to Q4. Lower SYP costs were offset by repair costs due to the fire at Blue Ridge and in North American OSB, we saw higher costs from resin and energy-related inputs.

Speaker #2: Resin plays a significant role in our panel cost structure and the recent rise in methanol-based resin pricing is a factor we anticipate will be more visible in our Q2 results.

Speaker #2: Our US lumber business continues to show improved operating efficiency stemming from the actions we have taken. In the US South, total cost per 1,000 board feet have reduced by approximately 6% in the last two years.

Chris Virostek: Our US lumber business continues to show improved operating efficiency stemming from the actions we have taken. In the US South, total cost per thousand board feet have reduced by approximately 6% in the last 2 years. During this period, we have closed 5 lumber mills, completed a full brownfield modernization, and successfully completed a number of smaller but significant capital projects and cost reduction initiatives. This better enables us to react to changes in the external environment and improves our ability to compete more effectively and help provide low-cost supply to our customers. In Q1, our SYP shipments were 4% higher than Q4 on better operating efficiencies. Excluding the impact of the downtime at Blue Ridge in Q1, our overall shipment volumes remained consistent with expectations. We saw higher shipments in both North American OSB and European OSB.

Speaker #2: During this period, we have closed five lumber mills, completed a full brownfield modernization, and successfully completed a number of smaller but significant capital projects and cost reduction initiatives.

Speaker #2: This better enables us to react to changes in the external environment and improves our ability to compete more effectively and help provide low-cost supply to our customers.

Speaker #2: In Q1, our SYP shipments were 4% higher than Q4 on better operating efficiencies. Excluding the impact of the downtime at Blue Ridge in Q1, our overall shipment volumes remained consistent with expectations.

Speaker #2: We saw higher shipments in both OSB and in both North American OSB and European OSB, North American volumes increased due to the normal seasonal patterns, and in Europe, we increased shipments to meet higher demand.

Chris Virostek: North American volumes increased due to the normal seasonal patterns, and in Europe, we increased shipments to meet higher demand. Cash flow from operations was impacted by the seasonal builds in working capital, resulting in -$170 million in Q1 and a net debt position of $457 million. We expect this working capital position to reverse in Q2 and Q3. Net debt was influenced by two dividend payments made during the quarter, which occurred as a result of our fiscal quarter ending on 3 April rather than 31 March. Our net debt to capital ratio remains in single digits, and our balance sheet is robust. With respect to share repurchases, we did not repurchase shares in Q1 as we prioritize liquidity through the cycle.

Speaker #2: Cash flow from operations was impacted by the seasonal build and working capital, resulting in negative 170 million in the first quarter. And a net debt position of 457 million.

Speaker #2: We expect this working capital position to reverse in the second and third quarters net debt was influenced by two dividend payments made during the quarter which occurred as a result of our fiscal quarter ending on April 3rd rather than March 31st.

Speaker #2: Our net debt to capital ratio remains in single digits and our balance sheet is robust. With respect to share repurchases, we did not repurchase shares in the first quarter as we prioritize liquidity through the cycle.

Speaker #2: Our commitment to returning capital to shareholders through a combination of both dividends and tactical share repurchases has not changed. Regarding our operational outlook for 2026, we have made no changes to our shipment guidance across our main products as well as our capital expenditure range.

Chris Virostek: Our commitment to returning capital to shareholders through a combination of both dividends and tactical share repurchases has not changed. Regarding our operational outlook for 2026, we have made no changes to our shipment guidance across our main products, as well as our CapEx range. Transportation and resin costs have been influenced by evolving geopolitical dynamics, and we expect these factors to be more fully reflected in our Q2 results as we manage through the current environment. Due to the fluidity of the situation, it is hard to quantify what that impact may be, but we are actively managing where we can. With that overview, I'll pass the call back to Sean.

Speaker #2: Transportation and resin costs have been influenced by evolving geopolitical dynamics and we expect these factors to be more fully reflected in our second-quarter results as we manage through the current environment.

Speaker #2: Due to the fluidity of the situation, it is hard to quantify what that impact may be but we are actively managing where we can.

Speaker #2: With that overview, I'll pass the call back to Sean. Thank you, Chris. I'll now shift to our general outlook and offer some concluding remarks.

Sean McLaren: Thank you, Chris. I'll now shift to our general outlook and offer some concluding remarks. Our Q1 results showed a solid improvement relative to the H2 of 2025. The $120 million turnaround relative to Q4 shows what the underlying potential of our business is. Our strong balance sheet and a well-invested, diversified portfolio positions us well to adapt to changing market conditions and capitalize on operating leverage while also mitigating downside risk. We manage for the long run by reinvesting in our business and are improving our operating efficiency. In Q1, we continued to advance our heat, energy and dryer project at Bemidji, a project that, when complete, will improve safety, increase throughput, lower costs, and lower energy usage and emissions.

Speaker #2: Our first-quarter results showed a solid improvement relative to the last half of 2025. The 120 million turnaround relative to Q4 shows what the underlying potential of our business is.

Speaker #2: Our strong balance sheet and a well-invested, diversified portfolio positions us well to adapt to changing market conditions and capitalize on operating leverage while also mitigating downside risk.

Speaker #2: We managed for the long run by reinvesting in our business and improving our operating efficiency. In the first quarter, we continued to advance our heat energy and dryer project at Bemidji, a project that, when complete, will improve safety, increase throughput, lower costs, and lower energy usage and emissions.

Speaker #2: For our lumber assets in the US South, as Chris discussed, we are seeing the results of the continued portfolio optimization work we are doing by removing costs increasing margins and repositioning our production to lower cost and more efficient mills.

Sean McLaren: For our lumber assets in the US South, as Chris discussed, we are seeing the results of the continued portfolio optimization work we are doing by removing costs, increasing margins, and repositioning our production to lower cost and more efficient mills. We continue to ramp up our modernized Henderson Mill, which we believe is positioned to be one of the lowest cost mills in our fleet once it achieves full operating rates. In Canada, production at Blue Ridge was temporarily paused due to a fire, and the mill has since resumed full operational capacity. We have also seen preliminary duty rates poised to come down later this year by approximately 6% with the release of the proposed AR7 rates, and we continue to hold a cost advantage in SPF relative to other Canadian exporters.

Speaker #2: We continue to ramp up our modernized Henderson mill which we believe is positioned to be one of the lowest-cost mills in our fleet once it achieves full operating rates.

Speaker #2: In Canada, production at Blue Ridge was temporarily paused due to a fire, and the mill has since resumed full operational capacity. We have also seen preliminary duty rates poised to come down later this year by approximately 6% with the release of the proposed AR-7 rates.

Speaker #2: And we continue to hold the cost advantage in SPF relative to other Canadian exporters. In our North American EWP business, the indefinite curtailment of our high-level Alberta OSB mill is complete.

Sean McLaren: In our North American EWP business, the indefinite curtailment of our High Level OSB mill is complete. Our wind down of High Level, a less competitive and higher cost mill representing approximately $860 million square feet, will allow us to focus our operations on our most efficient production. In Europe, we are encouraged by the progress achieved in Q1 and continue to navigate market dynamics, including managing energy and fiber costs. We are focused on operational improvements and cost reduction and expect our European operations to continue to be competitive through the cycle. Of course, this takes place in a dynamic environment influenced by developments in the Middle East. Against this backdrop, global market conditions remain fluid, and we continue to assess how broader trends may influence end market demand and energy-related cost inputs across our business.

Speaker #2: Our wind down of high level a less competitive and higher-cost mill representing approximately 860 million square feet will allow us to focus our operations on our most efficient production.

Speaker #2: In Europe, we are encouraged by the progress achieved in Q1 and continue to navigate market dynamics. Including managing energy and fiber costs. We are focused on operational improvements and cost reduction and expect our European operations to continue to be competitive through the cycle.

Speaker #2: Of course, this takes place in a dynamic environment influenced by developments in the Middle East. Against this backdrop, global market conditions remain fluid. And we continue to assess how broader trends may influence end-market demand and energy-related cost inputs across our business.

Speaker #2: In the near term, we expect cost to be influenced by inputs linked to energy prices, and we are adapting our logistics approach to reflect the current operating environment.

Sean McLaren: In the near term, we expect cost to be influenced by inputs linked to energy prices, and we are adapting our logistics approach to reflect the current operating environment. We continue to closely monitor these developments and remain focused on managing controllable costs, maintaining operational flexibility, and supporting our customers as conditions evolve. We are realistic about the demand environment. Housing remains challenged in the near term. However, we believe the longer-term demand drivers remain favorable. Since the start of the conflict, long-term mortgage rates have moved above 6% and gas prices have risen, reflecting current economic conditions that continue to shape consumer sentiment. Despite ongoing macroeconomic and affordability pressures, lumber pricing improved modestly on a sequential basis in Q1. While uncertainties remain, the seasonally better supply-demand balance, combined with our cost reduction focus, gives us cautious confidence as we navigate near-term uncertainties.

Speaker #2: We continue to closely monitor these developments and remain focused on managing controllable costs maintaining operational flexibility and supporting our customers as conditions evolve. We are realistic about the demand environment.

Speaker #2: Housing remains challenged in the near term. However, we believe the longer-term demand drivers remain favorable. Since the start of the conflict, long-term mortgage rates have moved above 6% and gas prices have risen.

Speaker #2: Reflecting current economic conditions that continue to shape consumer sentiment. Despite ongoing macroeconomic and affordability pressures, lumber pricing improved modestly on a sequential basis in Q1.

Speaker #2: While uncertainties remain, the seasonally better supply-demand balance combined with our cost reduction focus gives us cautious confidence as we navigate near-term uncertainties. To summarize, first, our Q1 results demonstrate the operating leverage in our business as markets improve.

Sean McLaren: To summarize, first, our Q1 results demonstrate the operating leverage in our business as markets improve. Second, our balance sheet and diversified portfolio are strengths that continue to differentiate us in this environment. Third, we are focused on lowering costs and investing in capital projects that improve the quality of our portfolio. Thank you again for your time and continued interest. We look forward to updating you next quarter. With that, we will turn the call back to the operator for questions.

Speaker #2: Second, our balance sheet and diversified portfolio are strengths that continue to differentiate us in this environment. And third, we are focused on lowering costs and investing in capital projects that improve the quality of our portfolio.

Speaker #2: Thank you again for your time and continued interest. We look forward to updating you next quarter. With that, we'll turn the call back to the operator for questions.

Speaker #2: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by the one on your telephone keypad.

Operator: Your first question comes from the line of Sean Steuart from TD Cowen. Please go ahead.

Speaker #2: And should you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker #2: One moment, please, for your first question. Thank you. And your first question comes from the line of Sean Stewart from TD Cowen. Please go ahead.

Operator: Your first question comes from the line of Sean Steuart from TD Cowen. Please go ahead.

Speaker #3: Thanks. Good morning, everyone. A few questions. Sean, hoping we can pull apart the cost inflation piece a little bit. And the freight part—I think I understand.

Sean Steuart: Thanks. Good morning, everyone. A few questions. Sean, hoping we can pull apart the cost inflation piece a little bit. You know, the freight part I think I understand, but I'm hoping you can give a little bit more perspective around the magnitude of resin cost pressure and how that flows through, and how higher diesel will feed into delivered wood costs as well.

Speaker #3: But I'm hoping you can give a little bit more perspective around the magnitude of resin cost pressure and how that flows through. And how higher diesel will feed into delivered wood costs as well.

Speaker #4: Okay. Good morning, Sean. Well, I'm going to make a few comments here, then ask Chris to add anything more or fill in what I miss.

Sean McLaren: Okay. Good morning. Good morning, Sean. Well, I'm gonna make a few comments here then ask Chris to add anything more, fill in what I miss. First off, on the magnitude, you know, I would say, you know, a few comments here. First off, I would talk geographically that it's different in Europe than it is in North America. We saw the impact more quickly in Europe. Our team in Europe, you know, quickly began navigating through that. Hard to really have a lot of exact visibility on Q2, other than the pressure continues to build and our team continues to react and kinda navigate through that cost structure.

Speaker #4: So first off, on the magnitude, I would say a few comments here. First off, I would talk geographically. That it's different in Europe than it is in North America.

Speaker #4: We saw the impact more quickly in Europe. But our team in Europe quickly began navigating through that. Hard to really have a lot of exact visibility on Q2.

Speaker #4: Other than the pressure continues to build and our team continues to react and kind of navigate through that cost structure. And our assets in Europe are this affects everybody.

Sean McLaren: Our assets in Europe are, all of this affects everybody, so our assets are well-positioned to compete in this environment of higher costs. In North America, I think we're still seeing that evolve. We've got, you know, obviously, large relationships with our suppliers, and we're working with them to navigate the impact of that. You know, again, difficult to quantify for Q2. Resin is a significant component of, you know, of OSB costs. To date, we've been able to navigate it effectively and to be determined to see how significant that is in the coming months.

Speaker #4: So our assets are well positioned to compete in this environment of higher costs. In North America, I think we're still seeing that evolve. We've got, obviously, large relationships with our suppliers, and we're working with them to navigate the impact of that.

Speaker #4: Again, difficult to quantify for Q2. Resin is a significant component of OSB costs. But to date, we've been able to navigate it effectively and to be determined to see how significant that is in the coming months.

Sean McLaren: You know, on diesel pricing, again, in Western Canada, our wood supply is delivered, so this will be a Q3 issue as we begin to replenish log inventories. We'll see where things are at that moment. In the south, I think so far, we've been able to navigate that through, and have not seen a material change in our cost structure yet, but it's something we're monitoring and watching closely. Chris, anything to add to that?

Speaker #4: On diesel pricing, again, in Western Canada, our wood supplies delivered. So this will be a Q3 issue as we begin to replenish log inventories.

Speaker #4: So we'll see where things are at at that moment. And in the south, I think so far, we've been able to navigate that through and have not seen a material change in our cost structure yet.

Speaker #4: But it's something we're monitoring and watching closely. Chris, anything to add to that? No, that's a great summary. Thank you.

Chris Virostek: No, that's a great summary. Thank you.

Speaker #3: Okay. Thanks for those details. Second question I have is, is around chip offtake for your sawmills. We saw a recent announcement of a pulp mill closure in the south.

Sean Steuart: Okay. Thanks for those details. The second question I have is around chip offtake for your sawmills. We saw a recent announcement of a pulp mill closure in the south, and I am not asking you to speak to that initiative specifically, but Sean, can you give us general comfort with respect to the strength of your wood chip offtake agreements across your sawmill system?

Speaker #3: And I'm not asking you to speak to that initiative specifically. But, Sean, can you give us a general comfort with respect to the strength of your wood chip offtake agreements across your sawmill system?

Speaker #4: Yeah, you bet, Sean. And I know we've maybe spoke about this on prior calls. But clearly, over the last several years, both in the US and in Canada, the restructuring of the pulp industry has implications not only on sawmills but on landowners but on any number of areas where they operate and those closures happen.

Sean McLaren: Yeah, you bet, Sean. I know we've maybe spoke about this on prior calls, you know, clearly over the last several years, both in the US and in Canada, you know, the restructuring of the pulp industry has implications not only on sawmills, but on landowners, but in any number of areas where they operate and those closures happen. From a West Fraser perspective, I'd maybe leave you with a few comments. One is our diverse portfolio, not only geographically between Western Canada and the US South, but across both of those regions, particularly in Western Canada as we're integrated in British Columbia with Cariboo Pulp and Paper.

Speaker #4: From a West Fraser perspective, I'd maybe leave you with a few comments. One is our diverse portfolio. Not only geographically between Western Canada and the US south, but across both of those regions.

Speaker #4: And particularly in Western Canada as we're integrated in British Columbia with Caribou Pulp. So we've got lots of optionality depending on where the impacts happen, on how we reposition our production or our residuals and react to that.

Sean McLaren: You know, we've got lots of optionality depending on where the impacts happen on how we reposition our production or our residuals and react to that. In the South, we have a number of long-term relationships as well as a number of other kind of offtake agreements that we look to, and we've been successfully able to navigate each of these changes. Does it create pressure and pinch points? Absolutely. Our team's doing a terrific job, navigating that. Finally, just as a reminder that as pulp mills restructure our OSB business also purchases pulpwood, so we have an offset or a hedge in our system that is, allows us to press on costs where those opportunities present themselves.

Speaker #4: In the south, we have a number of long-term relationships as well as a number of other kind of offtake agreements that we look to.

Speaker #4: And we've been successfully able to navigate each of these changes. Does it create pressure and pinch points? Absolutely. But our team's doing a terrific job navigating that.

Speaker #4: And then finally, just as a reminder, that as pulp mills restructure, our OSB business also purchases pulp wood. So we have an offset or a hedge in our system that is that allows us to press on costs where those opportunities present themselves.

Speaker #3: Okay. That's great detail. That's all I have for now. Thanks very much, Sean.

Sean Steuart: Okay. That's great detail. That's all I have for now. Thanks very much, Sean.

Speaker #4: Thank you.

Sean McLaren: Thank you.

Speaker #2: Thank you. And your next question comes from the line of Keaton Mantora from BMO Capital Markets. Please go ahead.

Operator: Thank you. Your next question comes from the line of Ketan Mamtora from BMO Capital Markets. Please go ahead.

Speaker #5: Good morning and thanks for taking my question. Maybe to start with, and not trying to put too fine a point on the resin issue, but Sean, to the extent it's possible, can you talk about sort of how you all are navigating this dynamic environment?

Ketan Mamtora: Good morning, thanks for taking my question. I am not trying to put too fine a point on the resin issue. Sean, to the extent it is possible, can you talk about, you know, sort of how y'all are navigating this dynamic environment? Is it using, you know, different types of resins in manufacturing OSB? If it is possible at all to, you know, maybe just give us some rough sensitivity in terms of what it means, you know, for, I don't know, like a 10% move in resin costs. Is there a way for us to think about it?

Speaker #5: Is it using different types of resins in manufacturing OSB? And if it's possible at all to maybe just give us some rough sensitivity in terms of what it means for, I don't know, like a 10% move in resin costs.

Speaker #5: Is there a way for us to think about it?

Speaker #4: Yeah. Good morning, Keaton. And this might again be a little repetitive from the last question because it's really hard to there's a lot of moving parts as you can imagine within this.

Sean McLaren: Good morning, Ketan. This might again be a little repetitive from the last question. There's a lot of moving parts, as you can imagine within this. You know, resin, I think, is roughly 25% of the cost structure in OSB mill. The saying that, there are different types of resins, there are different ways for the team to be able to build the board. First and foremost is us working with our resin suppliers to navigate through this period. This is an issue that affects sort of everybody, you know, the same. Like, it's not a unique West Fraser issue.

Speaker #4: So resin, I think, is roughly 25% of the cost structure of an OSB mill. The saying that there are different types of resins. There are different ways for the team to be able to build the board.

Speaker #4: And first and foremost is us working with our resin suppliers to navigate through this period. And this is an issue that affects sort of everybody the same.

Speaker #4: It's not a unique West Fraser issue. So I think it all comes back to how we feel our assets are positioned on the cost curve.

Sean McLaren: I think it all comes back to how we feel our assets are positioned on the cost curve, and we feel like they're positioned pretty well, and we're gonna be able to navigate this and compete through.

Speaker #4: And we feel like they're positioned pretty well, and we're going to be able to navigate this and compete through.

Speaker #5: Understood. Okay. And then just maybe looking back at Q1, the price differential or not just the price differential, but the change in prices in Southern Yellow Pine versus SPF that we saw in Q1, can you talk about sort of what drove that?

Ketan Mamtora: Understood. Okay. Just maybe looking back at Q1, the price differential or not just the price differential, but the change in prices in Southern yellow pine versus SPF that we saw in Q1, can you talk about sort of what drove that, particularly against the backdrop of sort of what's going on with supply cuts? I'm curious whether you are seeing any signs that Southern Yellow Pine is gaining share in the new residential market.

Speaker #5: Particularly against a backdrop of sort of what's going on with supply cuts? And I'm curious whether you are seeing any signs that Southern Yellow Pine is gaining share in the new residential market?

Speaker #4: I'm going to turn it over to Matt to make a few comments on that, Keaton.

Chris Virostek: I'm gonna turn it over to Matt to make a few comments on that, Ketan.

Speaker #6: Sure. Good morning. Yeah, we saw Southern Yellow Pine prices rise off a low point from Q4. And this has been a pretty typical, I'd say, seasonal uplift with tree activity picking up in their first quarter.

Matt Tobin: Sure. Good morning. Yeah, we saw Southern yellow pine prices rise off a low point from Q4, and this has been a, you know, pretty typical, I'd say, seasonal uplift with trigger activity picking up in their Q1. It's something we've seen, I'd say, the last few years is that rise in Q1 demand. You know, I think that watching it and talking to customers, we don't see a structural shift in demand. I'd say it's just typical seasonal activities in the Q1 around SYP.

Speaker #6: So it's something we've seen I'd say the last few years is that rise in the first first quarter demand. And I think that watching it and talking to customers, we don't see a structural shift in demand, I'd say.

Speaker #6: It's just typical seasonal activities in the first quarter around SYP.

Speaker #5: Understood. Okay. And then just last question from me. Chris, you talked about on the repurchase side, prioritizing liquidity. How should we think about sort of your approach over the next in the coming quarters?

Ketan Mamtora: Understood. Okay. Just last question from me. Chris, you talked about on the repurchase side, you know, prioritizing liquidity. How should we think about sort of your approach over the next and the coming quarters, against the backdrop of, you know, kind of weaker than expected housing demand? Should we expect that in the near term, this is on pause, or is it sort of something that you are evaluating every quarter?

Speaker #5: Against a backdrop of kind of weaker than expected housing demand, should we expect that in the near term, this is on pause? Or is it sort of something that you are evaluating every quarter?

Speaker #4: I think, Keaton, the best guide would be to look at what we've done historically, right? We take a lot of pride in having a durable capital allocation strategy.

Chris Virostek: I think, Ketan, the best guide would be, you know, to look at what we've done historically, right? We take a lot of pride in having a durable capital allocation strategy. You know, throughout this cycle, which, you know, we're 3 years in lumber now, we've been very disciplined in what we've done, right? With whether that's share repurchases or the level of the dividend or the management of the debt, the debt load and the cash balance. Look, we came through 2 negative quarters in the back half of last year. Q1's turned positive the way that we look at it, excluding this $114 on the duties. Clearly there's a lot of uncertainty out there. You know, how we look at the intrinsic value of the company hasn't changed.

Speaker #4: So, throughout this cycle—which we're three years in, in lumber now—we've been very disciplined in what we've done, right? Whether that's share repurchases, the level of the dividend, or the management of the debt.

Speaker #4: The debt load and the cash balance. And so look, we came through two negative quarters in the back half of last year. First quarters turned positive.

Speaker #4: The way that we look at it, excluding this 114 on the duties, clearly, there's a lot of uncertainty out there. But how we look at the intrinsic value of the company hasn't changed.

Speaker #4: And we're not a buyer necessarily at all times, but we're a buyer opportunistically when the flexibility is at a level on our balance sheet that we think is right.

Chris Virostek: You know, we're not a buyer necessarily at all times, but we're a buyer opportunistically when the flexibility is at a level on our balance sheet that we think is right and the shares are priced attractively. I think you can count on us to continue to operate that way, no differently today than over the past two or three years.

Speaker #4: And the shares are priced attractively. And I think you can count on us to continue to operate that way. No differently today than over the past two or three years.

Speaker #5: Got it. No, that's helpful perspective. I'll turn it over. Good luck.

Ketan Mamtora: Got it. No, that's helpful perspective. I'll turn it over. Good luck.

Speaker #4: Thank you, Keaton.

Chris Virostek: Thank you, Ketan Mamtora.

Operator: Thank you. Your next question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.

Speaker #2: Same. You and your next question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.

Speaker #7: Thank you very much. And good morning, everyone. I just wanted to extend Keaton's question you talked about SYP but didn't talk about SPF. Can you talk about whether you were surprised at the relative underperformance of SPF to SYP?

David Brown: Thank you very much, and good morning, everyone. I just wanted to extend Ketan's question. You talked about SYP but didn't talk about SPF. Can you talk about whether you were surprised at the relative underperformance of SPF to SYP, or was it kind of consistent with your thinking and why?

Ben Isaacson: Thank you very much, and good morning, everyone. I just wanted to extend Ketan's question. You talked about SYP but didn't talk about SPF. Can you talk about whether you were surprised at the relative underperformance of SPF to SYP, or was it kind of consistent with your thinking and why?

Speaker #7: Or was it kind of consistent with your thinking and why?

Matt Tobin: Good morning. I would say in the SPF, I mean, we saw steady markets, you know, some slight price improvement over the Q1. I would say a seasonally kind of normal tightening of those spreads in the Q1, like I said, more, more to do with trigger activity. You know, I think we see those, those dislocations or and price changes change, you know, relative to their kind of regional supply or their end user supply demand structure. I would say, you know, not necessarily unexpected to see, you know, a pickup in SYP and SPF just to continue to be steady.

Speaker #6: Good morning. I would say in the SPF, I mean, we saw steady markets. Some slight price improvement over the quarter. I would say seasonally kind of normal tightening of those spreads in the first quarter.

Speaker #6: Like I said, more to do with tree activity. I think we see those dislocations and price changes change relative to their kind of regional supply, or their end-user supply-demand structure.

Speaker #6: And so I would say not necessarily unexpected to see a pickup in SYP and SPF just to be continued to be steady.

Speaker #5: Thank you for that. My second question is coming back to this cost pressure. I was just hoping you could frame it or provide some goal posts.

David Brown: Thank you for that. My second question is coming back to this cost pressure. I was just hoping you could frame it or provide some goalposts. If nothing were to change from today, can you give some magnitude in terms of the goalposts for cost? I mean, should we expect a $30 to 50 per MBF change or $0 to 10? I mean, how should we be thinking about it?

Ben Isaacson: Thank you for that. My second question is coming back to this cost pressure. I was just hoping you could frame it or provide some goalposts. If nothing were to change from today, can you give some magnitude in terms of the goalposts for cost? I mean, should we expect a $30 to 50 per MBF change or $0 to 10? I mean, how should we be thinking about it?

Speaker #5: If nothing were to change from today, can you give some magnitude in terms of goal posts for cost? I mean, should we expect a 30 to 50 dollar per MBF change or 0 to 10 dollars?

Speaker #5: I mean, how should we be thinking about it?

Speaker #4: Yeah. I'll make a few more comments here than Chris, please fill in if we can add more. Again, very I know the conflicts a few months here.

Sean McLaren: You know, I'll make a few more comments here then Chris, please fill in if we can add more. You know, again, very, you know, I know the conflict's a few months here. You know, we've been able to navigate these pressures so far, you know. The pressure is building, and it's hard to predict, you know, where energy fuel prices might go. I'm very reluctant to speculate on magnitude because we just don't know, we won't do that. What I would say is we've been so far able to navigate through the cost pressure. Chris, would you add anything to that? Not really. You know, I think as Sean indicated, you know, resin is about 25% of the input cost in OSB manufacturing.

Speaker #4: We've been able to navigate these pressures so far. But the pressure is building. And it's hard to predict where energy fuel prices might go.

Speaker #4: So I'm very reluctant to kind of kind of speculate on magnitudes. We just don't know. So we won't do that. What I would say is we've been so far able to navigate through the cost pressure.

Speaker #4: Chris, would you add anything to that?

Speaker #6: Yeah, not really. I think, as Sean indicated, resin is about 25% of the input cost in OSB manufacturing. I think the other factors that he's raised—that, look, this isn't something that uniquely affects West Fraser.

Chris Virostek: Not really. You know, I think as Sean indicated, you know, resin is about 25% of the input cost in OSB manufacturing.

Chris Virostek: I think the other factors that he's raised that, you know, look, this isn't something that uniquely affects West Fraser. It affects the entire industry because everybody uses resin to make OSB. There's not, you know, in our view, a disproportionate impact in one aspect, right? Like, our fleet of assets and how they exist in different markets and make different products gives us a degree of flexibility that operators with smaller fleets may not have in order for us to mitigate more of this impact, you know, as we navigate this. I think very difficult to speculate when you see oil price moving around the way that it's moving around on a day-to-day, week-to-week basis.

Speaker #6: It affects the entire industry, because everybody uses resin to make OSB. So there's not, in our view, a disproportionate impact in any one aspect, right?

Speaker #6: Our fleet of assets and how they exist in different markets and make different products gives us a degree of flexibility that operators with smaller fleets may not have, in order for us to mitigate more of this impact as we navigate this.

Speaker #6: I think it's very difficult to speculate when you see oil prices moving around the way that they're moving on a day-to-day, week-to-week basis. Trying to pin a number on this and say, 'This is discretely what it's going to be in Q2,' there's as much likelihood that we're wrong as we're right in trying to give that guidance.

Chris Virostek: you know, trying to pin a number on this-And say this is discreetly what it's gonna be in Q2. There's as much likelihood that we're wrong as we're right in trying to give that guidance. I think it goes back to, look, we've throughout this cycle, we've made investments to lower costs consistently, which gives us more headroom to deal with these shocks when they happen. We like how we're positioned to be able to deal with this.

Speaker #6: So I think it goes back to, look, we've throughout this cycle, we've made investments to lower costs consistently which gives us more headroom to deal with these shocks when they happen.

Speaker #6: And we like how we're positioned to be able to deal with this.

Speaker #5: Thank you. And my final question, Sean, can you just give a quick outlook for OSB as it relates to North America versus Europe? How are you feeling about each of those regions?

David Brown: Thank you. My final question, Sean, can you just give a quick outlook for OSB as it relates to North America versus Europe? How are you feeling about kind of each of those re-regions? Thanks.

Ben Isaacson: Thank you. My final question, Sean, can you just give a quick outlook for OSB as it relates to North America versus Europe? How are you feeling about kind of each of those re-regions? Thanks.

Speaker #5: Thanks.

Speaker #4: Yeah, no, no. Thank you. Thank you, Ben. Yeah, maybe just a few comments. First off, in Europe, as Chris mentioned in his comments, our best quarter since mid-2023.

Sean McLaren: No, no, thank you. Thank you, Ben. Maybe just a few comments. First off, in Europe, as Chris mentioned in his comments, our best quarter since mid 2023. It's been 3 years. The macro in Europe continues to be difficult like North America. Saying that, our 2 OSB assets over in Europe are pretty well positioned. We have a terrific management team. We're located in good markets, good raw material areas. Our cost position, we feel quite good about. At the same time, there's cost pressure in other regions that have resulted, we believe, in better market conditions over in Europe.

Speaker #4: So it's been three years. And the macro in Europe is continues to be difficult like North America. Saying that, our two OSB assets over in Europe are pretty well positioned.

Speaker #4: We have a terrific management team. We're located in good markets, good raw material areas. So our cost position, we feel quite good about. And at the same time, there's cost pressure in other regions.

Speaker #4: That has resulted, we believe, in better market conditions over in Europe. It's still hard—again, the macro continues to be challenging over there. But we've seen some good sequential improvement in those markets over the last 12 to 18 months.

Sean McLaren: Again, the macro continues to be challenging over there, but some good sequential improvement in those markets over the last 12 to 18 months. In North America, again, a lot of uncertainty, and I can tell you again, from West Fraser's perspective, we are just leaning into the things that we can control. Our asset ramp up at Allendale, the work we've done at Chambord, the adjustments we made at High Level, all those things make our platform in OSB stronger and continue to push down costs, continue to give us the ability to navigate, like Chris talked about, the spike in resins costs or whatever comes our way. Hard to say on the market.

Speaker #4: And then in North America, again, a lot of uncertainty and I can tell you, again, from West Fraser's perspective, we are just leaning into the things that we can control.

Speaker #4: Our asset ramp up at Allendale the work we've done at Chambord, the adjustments we made at high level, all those things make our platform in OSB stronger.

Speaker #4: And continue to push down costs, continue to give us the ability to navigate like Chris talked about the spike in resin's costs or whatever comes our way.

Speaker #4: Hard to say on the market. All I would say is without any change, we're putting ourselves in a better position to compete.

Sean McLaren: Alls I would say is, without any change, we're putting ourself in a better position to compete.

Speaker #5: Great. Thank you very much.

David Brown: Great. Thank you very much.

Ben Isaacson: Great. Thank you very much.

Speaker #1: Thank you once again. Should you have a question, please press *1 on your telephone keypad. Your next question comes from the line of Nikolai Gorovich from CIBC Capital Markets.

Operator: Thank you. Once again, should you have a question, please press star followed by the one on your telephone keypad. Your next question comes from the line of Nikolai Goropich from CIBC Capital Markets. Please go ahead.

Speaker #1: Please go ahead.

Speaker #7: Hi. Good morning. Given the attractive margin dynamics for lumber in the US South, do you suspect that meaningful production has already come back online across the industry in the region?

Nikolai Goropich: Hi. Good morning. Given the attractive margin dynamics for lumber in the US South, do you suspect that meaningful production has already come back online across the industry in the region?

Nikolai Goroupitch: Hi. Good morning. Given the attractive margin dynamics for lumber in the US South, do you suspect that meaningful production has already come back online across the industry in the region?

Speaker #4: Good morning. Nikolai. Again, hard for us to speculate on what others are doing. I'll only maybe speak to our platform. And we were navigating to the demands of our customers the last two quarters, the second half of last year.

Sean McLaren: Good morning, Nikolai. You know, again, hard for, you know, for us to speculate on what others are doing. I'll only maybe speak to our platform and, you know, and we were navigating to the demands of our customers the last two quarters to the second half of last year. You know, as Matt touched on, things improved seasonally, so we were able to respond to that. Saying that, our ability to add, other than the ramp ups we're in, the capital execution we're in, our operating excellence focus, you know, our ability to quickly react, you know, I think you saw that in Q1. You know, if you look compared to Q3 and Q4, you see the difference there. You know, others may be in a little different spot.

Speaker #4: As Matt touched on, things improved seasonally. So we were able to respond to that. Saying that our ability to add other than the ramp-ups we're in, the capital execution we're in, our operating excellence focus, our ability to quickly react I think you saw that in Q1.

Speaker #4: If you look compared to Q3 and Q4, you see the difference there. So others may be in a little different spot, hard for me to speculate on that.

Sean McLaren: Hard for me to speculate on that, but, you know, I know from our perspective, we're gonna continue to be cautious and we, you know, haven't seen a fundamental change in the underlying fundamentals, so we'll continue to manage our business against that backdrop.

Speaker #4: But I know from our perspective, we're going to continue to be cautious, and we haven't seen a fundamental change in the underlying fundamentals. So we'll continue to manage our business against that backdrop.

Nikolai Goropich: Great. I see. Any more color you could provide what you're hearing from customers regarding the health of our and our demand?

Nikolai Goroupitch: Great. I see. Any more color you could provide what you're hearing from customers regarding the health of our and our demand?

Speaker #7: Great. I see. And any more color you could provide what you're hearing from customers regarding the health of our demand?

Speaker #4: I might ask Matt to maybe comment on that.

Sean McLaren: Might ask Matt to maybe comment on that.

Speaker #6: Sure. I'd say customers are mixed. I'd say you get some customers thinking it's going to be flat, others are more positive. But I would say across the customer base, it really is kind of mixed visibility there.

Matt Tobin: Sure. I'd say, you know, customers, you know, are mixed. You know, I'd say you get some customers, thinking it's gonna be flat, others are more positive. I would say, you know, across the customer base, really kind of mixed visibility there. From what we see with our treated customers that we think are a decent lens into that market, you know, it remains subdued.

Speaker #6: And from what we see, with our treated customers that we think are a decent lens into that market, it remains subdued.

Speaker #7: Okay. I see. Thanks. I'll turn it over.

Nikolai Goropich: Okay. I see. Thanks. I'll turn it over.

Nikolai Goroupitch: Okay. I see. Thanks. I'll turn it over.

Speaker #4: Thank you.

Sean McLaren: Thank you.

Speaker #1: Thank you. And your next question comes from the line of Matthew McKellar from RBC Capital Markets. Please go ahead.

Operator: Thank you. Your next question comes from the line of Matthew McKellar from RBC Capital Markets. Please go ahead.

Speaker #8: Good morning. Thanks for taking my questions. And thanks, too, for all the details so far, particularly on costs. I'd like to, I guess, follow on that theme just a little bit, but from a slightly different angle and ask about capital equipments.

Matthew McKellar: Good morning. Thanks for taking my questions, and thanks to you for all the details so far, particularly on costs. I'd like to, I guess, follow on that theme just a little bit, but from a slightly different angle, and ask about capital equipment. Can you provide any perspective on if or how capital costs to build, or even maintain lumber and OSB mills in the US specifically, may have evolved over the past few quarters, what with new tariffs and tariffs that have changed in scope and magnitude? Thanks.

Speaker #8: Can you provide any perspective on if or how capital costs to build or even maintain lumber in OSB mills in the US specifically may have evolved over the past few quarters, what with new tariffs and tariffs that have changed in scope and magnitude?

Speaker #8: Thanks.

Speaker #4: Yeah. Good morning, Matthew. Maybe just a few comments on that. First comment I would make is we've done a lot of work, a lot of capital work the last three, four years.

Sean McLaren: Yeah. Good morning, Matthew. Maybe just a few comments on that. You know, first comment I would make is, you know, you know, we've done a lot of work, a lot of capital work the last three, four years. We're really in the mode of operationalizing that capital in startup, getting the benefit from all the money we've spent. Our exposure to some of those costs today are considerably less than they've been the last couple of years. You know, the one big project we have underway is Bemidji. That equipment is largely delivered. You know, again, our exposure there is. We have very little exposure left on that project.

Speaker #4: And we're really in the mode of operationalizing that capital, in startup getting the benefit from all the money we've spent. So our exposure to some of those costs today are considerably less than they've been the last couple of years.

Speaker #4: The one big project we have underway is Bemidji. And that equipment is largely delivered. And so, again, our exposure there is—we have very little exposure left on that project.

Sean McLaren: Saying that, I don't think it's fundamentally different today if you were gonna do a major project and then you add on the potential of steel and other tariff issues for equipment that comes from outside of the US. Pressure's probably higher, but we're largely into the operational phase of our capital program.

Speaker #4: Saying that, I don't think it's fundamentally different today if you were going to do a major project. And then you add on the potential of steel and other tariff issues for equipment that comes from outside of the US.

Speaker #4: So, pressure's probably higher, but we're largely into the operational phase of our capital program.

Speaker #8: Great, thanks. Thanks very much. Just one more for me. Appreciate, I guess, that diesel's pushing transportation costs higher pretty generally and that the impact remains hard to quantify.

Matthew McKellar: Great. Thanks, thanks very much. Just one more from me. Appreciate, I guess, that diesel's pushing transportation costs higher pretty generally, and that the impact remains hard to quantify. Are you seeing any actual scarcity of capacity beyond that would potentially create any bottlenecks for you or your customers? Thanks.

Speaker #8: Are you seeing any actual scarcity of capacity beyond that that would potentially create any bottlenecks for you or your customers? Thanks.

Speaker #4: Maybe I'll turn that one over to Matt.

Sean McLaren: Maybe I'll turn that one over to Matt.

Speaker #6: Sure. Good morning. I would say it's been a challenging market in the freight market. And I think if we look back to the end of last year, there's been quite a few publications to talk about the uptick in bankruptcies in trucking companies to end '25.

Matt Tobin: Sure. Good morning. I would say, you know, it's been a challenging market in the freight market, and I think if we look back to the end of last year, you know, there's been, you know, quite a few publications talk about, you know, the uptick in bankruptcies in trucking companies to end 2025. You know, I'd say logistics, you know, will always kinda correct to the size of the demand. You know, we've definitely seen a little bit more tightness when you layer on top of as well, you know, end of Q1, early Q2 is a seasonally tight period for trucks anyway. You get uptick in produce and other things.

Speaker #6: And I'd say logistics will always kind of correct to the size of the demand. And so we've definitely seen a little bit more tightness.

Speaker #6: And when you layer on top of as well, end of Q1, early Q2 is a seasonally tight period for trucks anyway. You get uptick in produce and other things.

Speaker #6: And so, you layer on a spike in fuel, and it's certainly created tightness in the market. We're working with our vendors and our customers to try to continue to provide on-time shipments of our products every day.

Matt Tobin: You know, you layer on a spike in fuel, and it's certainly created tightness in the market. You know, we're working with our vendors and our customers to try to continue to provide on-time shipments of our products every day.

Speaker #8: Thanks very much for the color. I'll turn it back.

Matthew McKellar: Thanks very much for the color. I'll turn it back.

Speaker #4: Thank you.

Sean McLaren: Thank you.

Speaker #1: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Sean McLaren for any closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Sean McLaren for any closing remarks.

Speaker #4: Thank you, Eno. As always, Chris and I are available to respond to further questions, as is Anil Agarwala, our new director of Treasury and Investor Relations.

Sean McLaren: Thank you, Ina. As always, Chris and I are available to respond to further questions, as is Anil Agarwala, our new Director of Treasury and Investor Relations. Thank you for your participation today, stay well, and we look forward to reporting on our progress next quarter.

Speaker #4: Thank you for your participation today. Stay well. And we look forward to reporting on our progress next quarter.

Operator: This concludes today's call. Thank you for participating. You may all disconnect.

Q1 2026 West Fraser Timber Co Ltd Earnings Call

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