Western Announces First Quarter 2025 Results
Press Release
May 6, 2025 – Vancouver, British Columbia – Western Forest Products Inc. (TSX: WEF) (“Western” or the “Company”) reported improved financial results in the first quarter of 2025, as compared to the same period last year. Net income was $13.8 million in the first quarter of 2025, as compared to a net loss of $8.0 million in the first quarter of 2024, and a net loss of $1.2 million in the fourth quarter of 2024. Adjusted EBITDA was $3.5 million in the first quarter of 2025, as compared to negative $4.2 million in the first quarter of 2024, and Adjusted EBITDA of $14.4 million in the fourth quarter of 2024.
Net debt significantly declined from the fourth quarter of 2024 due to proceeds from non- core asset sales of $76.5 million completed in the first quarter of 2025. Net debt to capitalization was 4% at the end of the first quarter of 2025, as compared to 12% at the end of the fourth quarter of 2024, and 13% at the end of the first quarter of 2024.
First Quarter 2025 Financial and Operational Summary
⦁ Lumber production of 134 million board feet (versus 145 million board feet in Q1 2024).
⦁ Lumber shipments of 137 million board feet (versus 131 million board feet in Q1 2024).
⦁ Cedar lumber shipments of 31 million board feet (versus 30 million board feet in Q1 2024).
⦁ Specialty lumber mix of 51% (versus 61% in Q1 2024).
⦁ Average lumber selling price of $1,533 per mfbm (versus $1,351 per mfbm in Q1 2024), primarily due to improvements in lumber markets and a stronger US Dollar (“USD”) to Canadian Dollar average exchange rate.
⦁ Average BC log sales price of $134 per m3 (versus $129 per m3 in Q1 2024), on a stronger sales mix.
Accelerating the Transition to Higher Value Products
⦁ Continue to advance two continuous dry kilns, with site preparation underway. The kilns are expected to be completed and commissioned in early 2026.
⦁ Entered into an agreement with the Province of British Columbia through the BC Manufacturing Jobs Fund, to reimburse eligible expenses related to kiln and other capital projects up to a maximum of $7.5 million, subject to certain milestones. Received the first milestone payment of $1.4 million in April 2025.
Balance Sheet and Cash Flow
⦁ Extended the maturity of our $250 million credit facility to July 21, 2028.
⦁ Ended the quarter with liquidity of $195.4 million and a net debt to capitalization ratio of 4%, compared to $144.6 million of liquidity and a net debt to capitalization ratio of 12% as at December 31, 2024.
⦁ 2025 capital expenditure spending is anticipated to be between $60 and $65 million, which includes approximately $30 million of planned spending on the two continuous dry kilns and one thermal kiln. We may reduce our 2025 planned capital expenditure spending depending on market and financial conditions, with a near-term priority on maintaining a strong balance sheet and financial flexibility.
Other Items
⦁ Completed the sale of private timberlands on northern Vancouver Island to a Canadian affiliate of the Eastwood Climate Smart Forestry Fund I LP for gross proceeds of $69.2 million in February 2025, resulting in a gain of $23.7 million.
⦁ Completed the sale of our Alberni Pacific Division for gross proceeds of $7.3 million in February 2025, resulting in a gain of $0.2 million.
Softwood Lumber Dispute
During the first quarter of 2025, the US Department of Commerce (“DoC”) announced its preliminary determination for countervailing and anti-dumping rates resulting from its sixth administrative review (“AR”) for shipments in 2023, indicating a combined rate of 34.45%, compared to the current combined rate of 14.40%. The DoC may revise these rates between the preliminary and the final determination, which is expected to be released in the second half of 2025.
If the final sixth AR rates are unchanged from the preliminary sixth AR rates, Western will record a non-cash export tax expense of USD$43.0 million, plus accrued interest of approximately USD$7.0 million, when the final sixth AR rates are published in the second half of 2025. This amount will be partially offset against the current long-term duty receivable of USD$58.2 million on the Company’s balance sheet as at March 31, 2025. Cash deposits continue at the combined duty rate of 14.40% until the final determinations are published, after which the final 2023 rate will apply.
Market Outlook
North American markets are expected to be volatile due to concerns around the economic impact caused by potential further US tariffs and retaliatory tariffs. The spring building season which typically leads to gains in softwood lumber demand could be more muted than previous expectations given the uncertain economic environment.
In Japan, the spring housing demand is stronger than expected and channel inventories have declined. However, an overall cautious approach continues as housing starts are expected to decline later in the year. Pricing has improved and we are cautiously optimistic that pricing will strengthen further as the Japanese Yen strengthens relative to the USD.
Demand for our Industrial lumber products in North America are expected to strengthen as supply remains tight across all species. In China, significant US tariffs on Chinese exports has caused some concerns within the economy. However, this may be partially offset by a Chinese ban on imported US logs that will reduce overall supply of softwood lumber into the market, which may lead to an increase in demand for Canadian lumber.
Management Discussion & Analysis (“MD&A”)
Readers are encouraged to read our Q1 2025 MD&A and interim consolidated financial statements and accompanying notes which are available on our website at www.westernforest.com and “SEDAR+” at www.sedarplus.ca.
Risks and Uncertainties
Risk and uncertainty disclosures are included in our 2024 Annual MD&A, as updated in the disclosures in our Q1 2025 MD&A, as well as in our public filings with securities regulatory authorities. See also the discussion of “Forward-Looking Statements” below.
Non-GAAP Financial Measures
Reference is made in this press release to the following non-GAAP measures: Adjusted EBITDA, Adjusted EBITDA margin, Net debt to capitalization, and total Liquidity are used as benchmark measurements of our operating results and as benchmarks relative to our competitors. These non-GAAP measures are commonly used by securities analysts, investors and other interested parties to evaluate our financial performance. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. The following table provides a reconciliation of these non-GAAP measures to figures as reported in our audited annual consolidated financial statements:
(millions of Canadian dollars except where otherwise noted)
Conference Call
Wednesday, May 7, 2025 at 12:00 p.m. PST (3:00 p.m. EST)
To participate in the teleconference please dial 416-340-2217 or 1-800-952-5114 (passcode: 7987300#). This call will be taped, available one hour after the teleconference, and on replay until June 4, 2025 at 8:59 p.m. PDT (11:59 p.m. EDT). To hear a complete replay, please call 905-694-9451 / 1-800-408-3053 (passcode: 5066894#).
About Western Forest Products Inc.
Western is an integrated forest products company building a margin-focused log and lumber business to compete successfully in global softwood markets. With operations and employees located primarily on the coast of British Columbia and Washington State, Western is a premier supplier of high-value, specialty forest products to worldwide markets. Western has a lumber capacity of 780 million board feet from six sawmills, as well as operates four remanufacturing facilities and two glulam manufacturing facilities. The Company sources timber from its private lands, long-term licenses, First Nations arrangements, and market purchases. Western supplements its production through a wholesale program providing customers with a comprehensive range of specialty products.
For further information, please contact:
Glen Nontell
Chief Financial Officer
(604) 648-4500
IBF4
