Good morning, ladies and gentlemen, and welcome to the West Fraser Q4 2024 Results Conference Call. [Operator Instructions] 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, 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 the 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 and then pass the call to Chris for additional comments before I 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 had 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. Q4 loss for this segment was largely owing to 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…

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 of 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 on 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…

[Operator Instructions] 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 kind of how the channel is positioning for tariffs?

Yes, good morning Ben. I'll maybe make a comment or two here and then Matt to step in. First off, very, very difficult for us to see exactly what others are doing. I would say from our perspective, we have maintained normal -- low normal inventory levels. We are selling normally in the market every day. Hard to really kind of get good visibility on the channel inventories. And I would say our buying patterns appear -- selling patterns appear to be within normal ranges. And I would say our focus is really being having our ability to be flexible with our operating schedules given whatever scenarios may or -- may 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 normal range that we would normally -- that we see. No shifts there. And I would just make a comment maybe 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. I would say, 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. And we react accordingly in our business depending on the demand of our customers. There's a lot of moving parts here. Of course, what actually will be in place, what our customer preferences, what substitution is available? So it's really hard to predict. I would say we feel like we're -- whatever comes, we're well positioned to not only react in Canada, if we need to, but have some reaction in the U.S. as well to try to meet the needs of our customers.

Thanks so much. I appreciate it.

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 do not have any consideration for tariffs. Is that the correct read?

I'm going to let Chris to tack on here what I missed. But I think when we thought about the guidance for the year, we thought of current conditions. I think once you overlay any change to a border measure, we have not tried to build in and speculate what that may or may not be. Chris, would anything to add 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, I think we know both of these markets are fluid and have been fluid the last kind of two years or three years with interest rate changes and demand profile. And we update that guidance as the year goes on as the situation clarifies. So what we've got out there is our target of where we think the range is for the year and very difficult to sort of piece in one item versus another when there's not even clarity on how some of those uncertainties are going to get resolved. So that's the guidance as it stands today. And as the situation evolves, as we said, if there's a need to update that guidance, then we would update that guidance.

Okay, thanks 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. So really not prepared to talk about pricing in any kind of detail. What I would say is that there's a lot of things that go into the cost floor in -- across North America, fiber costs, duty rates, exchange rates, and tariffs are another element to that. And all those things impact what people are prepared to buy at, what people are prepared to sell at. And ultimately, those two things have to find each other, find a trading level. So really, really hard to say exactly how it's going to play out. I would say that additional cost is generally not helpful. It's going to add to the cost floor and drive different decisions across the supply chain. So maybe I'll just leave it there. And Matt, anything else we might want to add there?

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 supplying customers with the products that we make and meeting their needs.

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

Much to add to that comment. I think it's probably against the backdrop of what we've just come through, which was a lot of pressure on labor, a lot of pressure on cost, a lot of pressure on finding people. We still have in the U.S. South, in particular, kind of meeting our kind of labor needs. But there does feel -- it doesn't feel like it has the last two or three years. So I think that's probably context on that comment.

That’s great. Thanks very much Sean.

Thank you. And 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 sort of context in terms of -- we are seeing a number of these 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 sort of the U.S. South sawmills?

Yes. Thanks, Ketan. Yes, it is an issue across U.S. South, and there's really two parts to it. One, you read about the pulp mill closures, but also as North American lumber supply is contracted in other regions, it's come on in the U.S. South. So you have more chip volume and less kind of pulp -- pulp capacity or chip consumption. Saying that, it is very regional. So it will be -- if you happen to be next to one of those pulp mills, the impact is going to be more significant on that particular mill. But I do think it's important, unlike Western Canada and other parts of Canada, the U.S. South is still -- the pulp mills are still largely run on pulp wood. So chips don't make -- they make up the minority, not majority of the furnish in the pulp mills. So there is replacement, but what happens is it takes more freight, it takes a lower price. So there is pressure on chip pricing down. And we've seen that now for the last three years or four years as chip volumes have ramped up in the South.

Understood. That's helpful. And then just switching to kind of 2025 -- and correct me if I misunderstood here, but from what I heard, it sounded like your volume guidance does not bake in any potential tariff impact yet. So as I think about the low end and the high end of the guidance range, both in lumber and in OSB, can you tell us what you are kind of baking in, in terms of new residential construction growth and R&R in the U.S.?

Yes. I think -- and I'm going to ask Matt, Chris to just fill in a little bit more here. I would say we're largely -- our guidance largely reflects sort of how we finished the second half of last year and started this 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 it's largely -- we're not baking in a big move one way or the other in the demand levels, and we sure haven't tried to speculate on what may or may not be a border measure and what that might do to our volumes. Chris, anything else there on the guidance?

No, that's a good summary of it, right? I mean we're not forecasting substantial changes in the underlying demand drivers from where they exist today or any of these other sort of externalities that are hovering out there that have yet to be resolved. As I said, as the year goes on, we always tighten that band. And -- and probably now we're dealing with more externalities than we normally do at this point in time of the year. So I think it's pretty hard to attribute 100 million board feet to one thing or another as to being included or excluded. So it's quite reflective of the run rate that we think we're at right now.

Allright. 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 [Indiscernible] 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, please?

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, there is a -- we are not harvesting the level of available fiber and access and stability in -- at least in our communities, is a significant issue. And I know we are rolling up our sleeves with the BC government to play whatever role we can to help improve that and improve access. And you'll see a number of initiatives we are doing inside of West Fraser with our indigenous partners to try to improve access and get more visibility and more stability on timber coming to our mills, which is for long-term viability for our people, for investment, for the industry, that's what's needed. So hopeful, and we're prepared to do our part, and 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 and 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 some more details in the MD&A, and I recognize that was a whole pile of documents we laid on people yesterday afternoon and maybe haven't had the chance to kind of get through all of them yet. But I would say there's a couple of things flagged there in lumber. In lumber, there was a past service pension adjustment that was onetime in nature that came through on Canadian lumber really around staying competitive in the labor market. As we finished our planting season through the summer, there was some additional silviculture costs that came through. I think that's flagged in the MD&A as well. Expect that to be largely behind us as well. And then in the fourth quarter, as you know, in EWP, and you'll see it reflected in the lower shipments, that's a bigger portion of where all of our maintenance is done because it's a seasonally softer quarter from a demand standpoint. So we plan most of our maintenance downtime in EWP in the fourth quarter. And so that results in those fixed costs kind of just flowing straight through in the fourth quarter because we don't have as much production in the fourth quarter. With respect to the low log inventory, I would say, just in simple terms, how it affects the cost is really on the efficiency side is when you're feeding the logs directly into the mill almost as you get them, that's not as an efficient way as if you've been able to organize your log yard and feed the mill efficiently with the diameter and the species that you want on a more consistent basis. So I think it's been -- it was a slow start to logging season. I think we're trying really hard to make up ground here with some colder weather recently, but still challenging -- challenges around access and things like that. So we think we're making improvements and we're catching up on that log inventory, but there's still -- still another 1.5 months to go here before we hit breakout.

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

Yes, you bet, Matthew. Yes. So I would say -- so that project, I mean these projects are big and they take a long time to bring to fruition. And largely, there's kind of a couple of areas. I would say there has been more civil work early in the project than we expected. And it really was the time line of the project, the construction, the civil work was really impacted by heavy rains we experienced in East Texas right through the first half of last year. That, combined with -- even though we have seen general contractor availability improve, equipment delivery times improve. The one area that seems to not have -- we're not seeing the same type of improvement is the electrical installation. So those are the two main issues. The civil work delay due to rain and some weather conditions as well as pressure on electrical costs relative to what we had planned them to be a couple of years ago.

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

Thank you. [Operator Instructions] Your next question comes from the line of Hamir Patel from CIBC. Please go ahead.

Hi, good morning. Sean, over the course of the current lumber 5 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, if any, for Canadian customers?

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

I guess I would say about that is really Canada is an important market for us. And certainly, we have to compete in that market every day for our customer spend, and we're going to focus on doing that through whatever tariff or situations that we find ourselves in.

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

I would say, I guess, the price fluctuates over a normal course of business. And we really just have to focus on each market to compete. So those things, I guess, just change over time.

And I would say, Hamir -- I'd add a little more to that, Hamir, that clearly, as it gets more expensive to go across the border into the U.S., whether that's duty tariffs, what have you, there is 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 sort of -- it looks like it was 60% in 2024, but just curious on the OSB side.

Yes. And I don't have the exact disclosure in front of me. So Chris, just help me out here, but 40% of our production volumes in Canada, 90% of our total North American production ends up in the U.S. So you can infer from that a large majority of our Canadian production crosses the border. I don't think we disclosed the exact number, but that's what our disclosure is. Chris, any more on that one?

Yes. We added a couple anticipating that this was going to be sort of point of interest for folks. There's a disclosure there in the AIF around that 40% of our -- about 40% of our OSB capacity is in Canada. And then the destination of shipments of OSB is in the MD&A. That's not sort of historically been there, but it's been added in. So I think there's enough there between those two data points that you can -- you can get to pretty close to what the number is there. And it does fluctuate from time to time based on the relative strength in the different markets and seasonal factors and things like that. But I think there's enough there to piece it together.

Okay. Great. And just the last question I had was, again, kind of 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 kind of incorporate product pricing?

I think really too early to talk about that. What I would say, as you can imagine, the government is, I'm sure, both federally and provincially with the prospect of broad-based tariffs across all industries doing specific measures for one particular industry, not that, that might not happen, but I think that there's so many things to talk about. It's really too soon to predict any policy changes as it relates to tariffs.

Sure enough. Thanks [Indiscernible] turn 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.