Good morning, ladies and gentlemen, and welcome to the West Fraser Q4 2024 Results Conference Call. This call is being recorded on Thursday, February 13, 2025. 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. Additional information about these risk factors and assumptions is included both in the accompanying webcast presentation and in our 2023 annual MD&A and annual information form, 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. Thank you. Please go ahead.

Thank you, Alaine. 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, I will begin with a brief overview of West Fraser's Q4 and fiscal 2024 financial results before I pass the call to Chris for additional comments and subsequently share some thoughts on our outlook and offer concluding remarks. West Fraser generated $140 million of adjusted EBITDA in the fourth quarter of 2024, representing a 10% margin. Results were varied across our business in Q4 with strength in our North American Engineered Wood Products segment and stronger-than-expected demand for SPF lumber, offset by reduced Southern Yellow Pine lumber volumes. 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. 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. 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. 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. On a pro forma basis, with the inclusion of Norbord, our 2024 EBITDA was approximately $430 million higher than that of the significant down cycle in 2019, reflecting positive synergies from the Norbord acquisition, benefits from our capital investment program, proactive acquisitions, and, finally, mill portfolio optimization initiatives to improve performance and lower costs. 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. With that overview, I'll now turn the call to Chris for additional detail and comments.

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. The lumber segment posted adjusted EBITDA of $21 million in the fourth quarter, compared to $62 million adjusted EBITDA in the third quarter. This is a significant sequential improvement even after excluding the $32 million export duty expense in the third quarter, which was related to the 2022 calendar year. Our North America EWP segment achieved $127 million of adjusted EBITDA in the fourth quarter, up slightly from $121 million in the third quarter. The Pulp & 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. The Q4 loss for this segment was largely due to a previously disclosed major maintenance shutdown at the mill, the first we've undertaken at Cariboo since obtaining 100% control of the facility. With this catch-up on investment, we expect the mill to be well positioned moving forward. 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. 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 U.K. and Europe and expectations of an extended recovery to mid-cycle profitability for the business. 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. 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, essentially replacing that higher cost volume with production from other lower-cost mills, which is positive for our overall cost structure. Specifically, in the U.S. South, our 2024 SYP shipments declined more than 10% from 2023 levels. 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 CVD proceedings, including softwood lumber, of up to 90 days. This extension affects the AR6 preliminary and final determination deadlines for both ADD and CVD cases. As a result of this extension, the preliminary determination decision for AR6 antidumping is expected to be published February 20, 2025, and the CVD preliminary determination decision is anticipated to be published May 7, 2025. Cash flow from operations was $173 million in the fourth quarter, with our cash balance net of debt and lease obligations at $412 million, moderately below the $463 million reported last quarter. 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. In terms of our outlook for 2025, we are providing initial operational guidance for the year, as shown on slide seven and detailed further in our earnings release, where we discuss targeted ranges for key product shipments. We are also providing our forecast for capital expenditures in the range of $400 million to $450 million. This reflects a moderate decrease from 2024 capital spending levels but is still aligned with our strategy of countercyclical investing, representing significant investment in our assets above sustaining capital needs of approximately $225 million per year. 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. With that overview, I will pass the call back to Sean.

Thank you, Chris. 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. As Chris mentioned earlier, and as shown on the left side figure on slide eight, we generated $673 million of adjusted EBITDA in 2024, an improvement of nearly three times the level pro forma EBITDA we saw at the bottom of the last lumber industry downturn in 2019. 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. Turning to liquidity on slide nine. We have a strong balance sheet with nearly $0.5 billion of net cash and total liquidity approaching $1.7 billion exiting 2024. This financial strength provides a shock absorber and 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 return surplus capital to shareholders. Before I shift to my concluding remarks, I want to briefly reflect upon the history of attractive returns generated for our shareholders. 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 our plans to grow the business, optimize our portfolio through dispositions and/or closures of highly variable or underperforming assets, and return surplus capital through dividends and buybacks. With the 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. 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 some concluding remarks. 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. At West Fraser, we currently view our overall inflation risk to be relatively modest, with costs having stabilized across much of our supply chain. 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. 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. 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. 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 demand returns to balance. 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. 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 of more than 800 million board feet since the beginning of 2022. 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. Taking a proactive approach to portfolio management like this has continued to strengthen our cost position and competitiveness. In our North American EWP business, we continue to ramp up production at our Allendale OSB mill, where we are pleased with the cost progression of that facility. We expect that mill to be among our lowest-cost OSB facilities when it achieves full operating rate. In conclusion, there is considerable macro uncertainty in the form of potential tariffs and global trade that may impact inflation expectations and demand for our products. 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. In the meantime, we continue to take positive actions that we expect will make us even stronger for the period when industry demand begins to rebound from the current downturn. 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. 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. 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. And that, while on pause for now, have created considerable uncertainty for the outlook of our business. To say we have many questions, too. As this situation continues to evolve, what we can say is the following. 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. This situation is fluid, and considerable time and effort is being spent separating fact from fiction so that we may better prepare actionable analysis. 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. Second, we are actively scenario planning to prepare for a range of outcomes, including U.S. tariffs, Canadian countermeasures, and other possibilities. 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. And finally, we are preparing and engaging our employees, our communities, and our customers 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. Thank you. And with that, we'll turn the call back to the operator for questions.

Your first question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.

Thank you very much and good morning everyone. I have a two-part question on tariffs. So the first question is, what are you doing and what are you seeing from both your peers and those downstream in terms of preparing for the tariffs? Are you seeing lumber move differently than you would normally see it? Are you seeing a stockpiling right now? Can you just talk about how the channel is positioning for tariffs?

Yes, good morning Ben. I'll maybe make a comment or two here and then Matt will step in. First off, it is very, very difficult for us to see exactly what others are doing. I would say from our perspective, we have maintained normal low inventory levels. We are selling normally in the market every day. It's hard to really get good visibility on the channel inventories. I would say our buying patterns and selling patterns appear to be within normal ranges. Our focus is really on having flexibility with our operating schedules given whatever scenarios may or may not come to pass. But with that, maybe I'd ask Matt to add anything I missed there.

Thanks, Sean. No, I think that's exactly right. Customer purchasing just appears to be within the normal range that we would typically see. No shifts there. And I would just make a comment that generally uncertainty doesn't drive purchasing.

And then just as my second follow-up question. In your scenario planning for the tariffs, 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?

Yes, Ben. Really difficult to nail that one down. Unfortunately, we do have quite a bit of experience dealing with duties, and in particular antidumping duties, which can move quite quickly depending on the price in the marketplace. We react accordingly in our business depending on the demand of our customers. There are a lot of moving parts here. Of course, what actually will be in place, what our customer preferences are, and what substitutions are available make it really hard to predict. I would say we feel that 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.

Thank you. And your next question comes from the line of Sean Steuart from TD Cowen. Please go ahead.

Thanks, good morning, guys. A couple of questions also starting with tariff potential. Just want to understand the SPF and OSB volume guidance for 2025. The bottom end of those ranges does not have any consideration for tariffs. Is that the correct read?

I'm going to let Chris tackle 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, we have not tried to build in and speculate what that may or may not be. Chris, would you add anything to that?

No, that's exactly right. And I think as we've done in the past, as the year goes on and situations evolve, we know both of these markets are fluid and have been for the last couple of years with interest rate changes and shifting demand profiles. We will update that guidance as the year progresses. What we've got out there is our target range for the year, and it is difficult to piece in one item versus another when there is no clarity on how some of those uncertainties will be resolved. So that's the guidance for now, and as the situation evolves, we can update that if needed.

Okay, thanks a lot guys. Just a follow-on. It was reported that when it felt like tariffs were imminent at the beginning of the month, you were telling customers that your intent was to increase prices immediately to fully offset tariff if it were to be imposed. I guess I'd be interested in your perspective on 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 fully offset the tariffs in terms of passing it on to customers?

Sean, I'll make a couple of comments here and then ask Matt to just add on or fill in what I miss. We're really not prepared to talk about pricing in detail. What I can say is that there are many factors that contribute to the cost floor across North America, including fiber costs, duty rates, exchange rates, and tariffs. These elements impact what people are willing to buy at and what they are willing to sell at. Ultimately, those two factors need to align to establish a trading level. Additional costs typically are not helpful and can raise the cost floor, influencing decisions across the supply chain. So I will leave it there. Matt, do you have anything else to add?

No. I think per your comments, we're monitoring the situation and talking 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 on supplying customers with the products that we make and meeting their needs.

Understood. One last quick one. Sean, you mentioned the potential for modest labor cost relief, which is a little surprising and encouraging. I guess our perception was that it was still a really tight labor market in the U.S. in particular. Can you provide a little more context on what you're seeing? I assume it's specific to the U.S. market, and what is the expected magnitude of cost reduction on labor for those sawmills in particular?

Not much to add to that comment. I think it's in the context of what we've just experienced, which was significant pressure on labor, costs, and meeting the labor needs. In the U.S. South, we are still meeting our labor needs, but it does feel different than the last two or three years.

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

Good morning and thanks for taking my question. Maybe to start with, can you give us a little bit of context in terms of we are seeing a number of pulp mill closures in the U.S., what sort of impact that is having on the residual income, the chip residues as you think about the U.S. South sawmills?

Yes. Thanks, Ketan. Yes, it is an issue across the U.S. South, and there are really two parts to it. One, you read about the pulp mill closures, but also as North American lumber supply contracts in other regions, it has increased in the U.S. South. So there is more chip volume and less pulp capacity or chip consumption. That being said, it is very regional. So if you happen to be next to one of those pulp mills, the impact will be more significant on that particular mill. Unlike Western Canada and other parts of Canada, the U.S. South’s pulp mills are still largely run on pulp wood; therefore, chips only account for a minority of the furnish in those mills. Although there is replacement, it requires more freight, and prices are lower. We have seen that trend continuing over the last three or four years as chip volumes have ramped up in the South.

Understood. That's helpful. Regarding 2025, could you clarify if your volume guidance accounts for any potential tariff impacts? As I consider the lower and upper ends of the guidance range for both lumber and OSB, could you share your assumptions regarding new residential construction growth and repair and remodel trends in the U.S.?

Yes. I think, and I'm going to ask Matt and Chris to fill in a little bit more here. I would say our guidance largely reflects how we finished the second half of last year and started the year, which is relatively flat, Ketan. So I think what you see in our guidance is kind of our run rate with some expected volume changes in our portfolio. But largely, we're not baking in a significant shift in demand levels, and we haven't attempted to speculate on what a border measure might do to our volumes. Chris, anything else on the guidance?

No, that's a good summary of it. We're not forecasting substantial changes in the underlying demand drivers from where they exist today or any of these other externalities that are hovering out there that have yet to be resolved. As I said, as the year progresses, we always tighten that band. And probably now we're dealing with more externalities than we usually do at this point in time of the year, making it difficult to attribute future volumes to one thing or another. So it's quite reflective of the run rate that we think we're at right now.

All right. That’s very helpful. I’ll jump back in the queue. Good luck.

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

Hi, good morning. Thanks for all the detail and for taking my questions. First for me, what are your hopes or expectations for the outcome of the BC government's review of its timber sales program?

Hey good morning, Matthew. I'll make a couple of comments on this. I think we always remain hopeful. I would say in British Columbia, we are not harvesting the level of available fiber, and access and stability in our communities is a significant issue. We are working with the BC government to play whatever role we can to improve that access and visibility on timber coming to our mills, which is crucial for long-term viability for our people, for investment, and for the industry. We're hopeful, and we're prepared to do our part; we'll just see what happens.

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 6, focusing on costs. 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 or...?

Yes. I think, Matthew, there's more detail in the MD&A, and I recognize that was a whole pile of documents we laid on people yesterday afternoon, so maybe you haven't had the chance to go through all of them yet. But there were a couple of things flagged there in lumber. In lumber, there was a past service pension adjustment that was one-time in nature that came through on Canadian lumber, mainly around staying competitive in the labor market. As we finished our planting season through the summer, there were some additional silviculture costs incurred. I think that's flagged in the MD&A as well. Expect that to be largely behind us. And then in the fourth quarter, as you know, in EWP, you'll see it reflected in the lower shipments, that's where most of our maintenance is planned because it's a seasonally softer quarter from a demand standpoint. Therefore, the fixed costs flow straight through in the fourth quarter, as we don't have as much production occurring. Regarding the low log inventory, simply put, how it affects costs relates to efficiency; feeding logs directly into the mill as they arrive isn't as efficient as having a well-organized log yard with consistent species and diameter. It was a slow start to the logging season, and we're working hard to make up ground. We believe we're improving our log inventory but still face challenges.

Great. Very helpful. Thank you. And if I could just sneak in one last cleanup. It appears that expected CapEx at Henderson is up about $20 million. Can you help us understand the moving parts there?

Yes, you bet, Matthew. Yes. So that project is significant and takes a long time to be completed. There are a couple reasons for the increase. We've encountered more civil work than anticipated early in the project. The construction timeline was affected by heavy rains experienced in East Texas during the first half of last year. Although we’ve seen improvements regarding general contractor availability and equipment delivery times, electrical installation costs have not improved comparably to what we had planned a couple of years ago. Those are the two primary issues causing the increase.

Okay, thanks very much for your help. I’ll turn it back.

Thank you. Your next question comes from Hamir Patel from CIBC. Please go ahead.

Hi, good morning. Sean, over the course of the current lumber dispute, have lumber customers in Canada generally paid the same prices as U.S. customers? Or has there been a discount there at times, just given where the duties are? And then, kind of related to that, if there are additional tariffs applied, would you expect a greater discount for Canadian customers?

I'm going to hand this one over to Matt to make a few comments on Canada.

Canada is an important market for us, and we have to compete there daily for our customers' business, even with the tariff or situations we currently face. Ultimately, we need to focus on being competitive in that market.

Okay. Fair enough. But over the course of the current dispute, has there been much of a discount?

The price fluctuates naturally over the course of business. We have to focus on competing within each market. Those elements change over time.

I would add that as it becomes more expensive to transport products across the border into the U.S., whether due to duty tariffs or other fees, there is a natural separation between those markets.

Right. Okay. Fair enough. And then 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 was around 60% in 2024, but I'm curious about the OSB side.

I don't have the exact disclosure in front of me, but typically, about 40% of our production volumes in Canada and about 90% of our total North American production end up in the U.S. You can infer from this data that a large majority of our Canadian production crosses the border. Chris, do you have more detail on this?

Yes. We added some details anticipating that this would be a point of interest for folks; the disclosure regarding approximately 40% of our OSB capacity being in Canada and the destination of OSB shipments is in the MD&A. It's not historically been there, but we’ve added it. There’s enough data between those two points for you to come close to what the number is. It does fluctuate based on the strength of different markets and seasonal factors.

Okay. Great. And just the last question I had was, again, tariff-related. Sean, if we did see tariffs come in, do you think we could see adjustments to provincial stumpage systems with respect to how they incorporate product pricing?

It's really too early to discuss that. What I would say is that the government, both federally and provincially, will likely consider broad-based tariffs across all industries, and discussing specific measures for one industry may or may not happen. However, there are many discussions to consider, and it's too soon to predict any policy changes related to tariffs.

Sure enough. Thanks! I’ll turn it over.

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.

Thank you, Alaine. 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.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.