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spk01: Good morning, ladies and gentlemen, and welcome to the West Fraser Q3 2021 results conference call. During this conference call, West Fraser's representatives will be making certain statements about potential future developments. These forward-looking statements include certain statements about West Fraser's future financial and operational performance, including the impact of foreign exchange rates, credit ratings, and mill maintenance shutdowns. West Fraser's business outlook, including forecasted U.S. housing starts, market conditions, demand for products and available supply, and expectations concerning costs, West Fraser's capital plans, including the completion and ramp-up of capital projects and the benefits of such projects, the softwood lumber dispute, including adjustments to duty rates and related proceedings, the integration of Norboard into the West Fraser business and expected synergies, and recent developments, including the impact of wildfires, the recently announced acquisitions of the Lufkin, Texas, SYP Lumber Mill and the Allendale, South Carolina, OSB Mill, and Wes Frazier's plans to restart the Allenby OSB Mill. These statements include forward-looking statements within the meaning of Canadian and United States securities laws and are intended to provide reasonable guidance to investors. The accuracy of these statements depends on a number of assumptions and is subject to various risks and uncertainties that may cause future events to differ materially from the events implied by these statements. Actual outcomes will depend on a number of factors that could affect the ability of the company to execute its business plans, including those matters described under risks and uncertainties in the company's annual management's discussion and analysis, as supplemented by other risks and uncertainties as set out in the company's quarterly MDNAs. These filings can be accessed on Wes Frazier's website or through CDAR for Canadian investors and EDGAR for United States investors. Accordingly, listeners should exercise caution in relying upon forward-looking statements. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, followed by 2. Thank you. I will now turn it over to Chris Vorostek. You may begin your conference.
spk04: Thank you, Chris. Good morning, everyone, and thanks for joining our Q3 2021 earnings call today. I'm Chris Vorostek, CFO, and I'm joined today in our Vancouver office by Ray Ferris, West Fraser's President and CEO, Chris McKeever, Senior Vice President, Marketing and Corporate Development, and several members of our executive team. This morning, I'll start with a brief recap of our Q3 financial results and then I'll pass the call to Ray, who will provide an update on the business, including a discussion about some of West Fraser's recent activities, the opportunities we see ahead for the company, followed by a few concluding remarks before we transition to Q&A. In the third quarter, we experienced a significant product price reduction from levels in the first half of the year across lumber, OSB, and plywood. In addition to softer demand in the third quarter, we faced several other challenges, including a very active wildfire season in BC, which affected our ability to access the land base and to ship our products, transportation availability constraints, and raw material and other input price challenges. We had three separate shutdowns in our pulp business, including an unscheduled outage at our caribou mill and an extended annual shut at Hinton Pulp. Higher power costs in the summer also negatively affected the pulp mills. We also faced disruptions from a log yard fire at our Chetwynd, BC lumber mill. Throughout the period, we adjusted the pace of our operations across our business to respond to these challenges. This resulted in a lower level of shipments than we experienced in the first half of the year. Despite these headwinds, in our core markets, the benefits of our product and geographic diversity of production were a significant advantage in the quarter. We had continued strong results in our EWP business, both in North America and in Europe, where we reported a record quarter. Ray will touch on this performance more in his comments. Our MDF, LBL, and plywood businesses that are part of our fiber integration strategy in Western Canada all performed well. While our financial results declined from the pace of the first half, we still recorded adjusted EBITDA of $786 million in the third quarter, which represents a margin of 33% of sales. The majority of the change in adjusted EBITDA from the prior quarter is attributable to price, with the volume reductions playing a small part and cost headwinds also moderating the results. Cash flow from operations was $914 million, and after repurchasing Canadian $1 billion of shares in our substantial issuer bid and continuing to execute on our normal course issuer bid, our cash balance, net of debt, declined only modestly to $1.6 billion. With the recent announcements of the two acquisition transactions, we continue to deploy capital not only to shareholder returns, but also to attractive growth opportunities. In November, we expect the AR2 rates relating to the softwood lumber dispute to be finalized and set the new cash deposit rates for countervailing and anti-dumping duties for the Canadian softwood lumber industry. We expect our rate for cash deposits to change from 8.97% to 11.38%, whereas the rate for all other non-mandatory respondents in Canada will be 18.32%. These rates will be in place until at least August of 2022. With that financial overview, I'll now pass the call to Ray.
spk03: Thank you, Chris, and thanks to everyone for joining our call today. I will be referring to a few specific slides in our deck during comments today. As Chris has noted, Despite quite challenging operating conditions in several regions, I'm pleased to report that the third quarter 2021 was another strong quarter for West Fraser. As our team remained resilient and agile, working diligently to minimize COVID related business disruptions. In particular, our BC interior caribou, lumber and plywood operations were the most heavily impacted in the quarter due to wildfire activity. It's important to note that these operations are highly integrated and that we often extract both a plywood log and a saw log from the same tree. I'm proud of the agility of our BC team to manage the integrated wood, plywood and lumber and MDF products business in a responsible manner and overall profitable through a very challenging time. On February 1st of 2021, we acquired Norboard, And although we are just nine months removed, it is very exciting to see the benefits of the product and geographic diversity that the acquisition has brought to us for Azure. And although there are several areas that I could highlight, I thought I would just pick a few. So first, product diversity. Our OSB team experienced market and operational challenges while in Q3, yet despite these hurdles, our results were strong, driven in part by our continued growth in our specialty OSB business. So as you can see on slide three, the specialty business, which comprises sales of our OSB products into industrial and export markets, has continued to expand and now accounts for approximately 30% of our North American shipments, up from approximately 23% five years ago. Looking at the numbers, you'll see that this ongoing and strategic shift to specialty has reduced our relative exposure to commodity OSB by about 450 million square feet over that timeframe. This interestingly approximates to roughly one small scale OSB mill. I think it's important to note that this growth, particularly in the last 12 months, has been against the backdrop of record high commodity prices. Our specialty and industrial team has continued to grow these markets and look for new opportunities. We like the specialty business, which typically experiences less pricing volatility, more stable margins, and volumes than our commodity OSP business through the cycle. And we expect to continue to grow this business and similar businesses. Another area that I would like to highlight is geographic diversity. So moving to slide four in Europe. As Chris noted in Q3, it was a record quarter for our European EWP operations, where we generated $90 million of adjusted EBITDA, more than doubling our previous best quarter for that business. This, too, reflects the benefits of geographic diversification of our company today, as our customer demand in Europe is typically delinked from North American markets. We see continued demand growth for West Fraser's wood-based panel products in Europe, with the opportunity for our domestically produced panels to continue to gain share over imported plywood. In order to meet that demand growth, we expect to continue to ramp production and shipments from our Phase 2 investment at our Inverness mill in Scotland over the coming period. Our Europe business is well managed and executing at a high level, and we are encouraged about potential future opportunities. I want to now talk about some of our other activities during the period, specifically two transactions in our building products business that occurred subsequent to the period. That being the acquisitions of a lumber mill and of a currently idled OSB mill. Our optimism about the future of wood products demand is supported by a robust balance sheet and has allowed us to continue to allocate capital toward attractive M&A growth opportunities. So on slide five, I'll start with the Angelina Forest Products lumber mill, which is located near Lufkin, Texas. We are very excited about this opportunity and are confident we'll be able to obtain the necessary regulatory approvals required to close the transaction. Although the headline price of approximately $300 million, or $276 million after tax attributes, is a very healthy price to pay for this mill, as it is, we are quite pleased with the outcome. We expect this mill to be one of the company's lowest cost lumber mills when ramped up. We see significant strategic value in the Angelina Mill as a modern turnkey operation located in a low cost and abundant fibre basket near growing markets in the US South. We expect the mill to contribute to cash flows immediately after the deal closing, shaving considerable time from what one would expect required to achieve strong cash flows for a similar greenfield project. We typically, and still do, take quite a conservative view in our analysis when calculating returns. Saying that, given our views on North American lumber supply and demand, we believe this acquisition not only has strategic long-term value for West Fraser, but is largely de-risked as a greenfield alternative. Moving to slide six. Moving to our announced acquisition of Georgia Pacific's OSB Mill near Allendale, South Carolina. Similar in many ways to the Angelina Mill acquisition, we are excited about the opportunity to close on the Allendale Mill after we receive the necessary regulatory approvals. Like Angelina, Allendale is close to a low-cost abundant fiber and to growing end markets. We estimate that we'll have to spend another $70 million to update and optimize the mill in preparation for its restart, but when that investment is complete, we anticipate Allendale will be well positioned as one of the lowest cost OSB mills in the company's portfolio. Further, as for Angelina, and based on current market demand, we expect to be able to achieve expected production and cash flows much sooner for Allendale than we would if we were to build a greenfield mill, which we estimate requires at least three years to get to that first panel and would require significantly more capital investment and would expose us to greater construction and execution risks. Next, I want to touch just briefly on wood products and sustainability. I'm happy to share that we recently released our 2020 sustainability report and that over the summer, West Fraser planted its two billionth tree as part of our reforestation program. We believe a thoughtful ESG strategy is our foundation for building a company that has financial resilience for the long term. Key to establishing these goals must be a clear, credible action plan and well-defined metrics as part of an ongoing commitment to the environment and the sustainability of the communities in which we operate. The wood products industry is a natural fit in a circular economy and will contribute to the collective goal of supporting carbon sequestration and global climate change. Forests, wood, and wood products have an important and vital role to play in the fight against climate change. And as the world demands more sustainable and renewable building materials, so do we believe that new products and uses of wood products will grow. Further to that point, and on slide 8, I thought I would highlight an area that has been experiencing growth in North America. And just a caution, first, we're not planning on moving into mass timber production or CLT at this time at West Razor, but I thought it's important to kind of acknowledge the growth. But we are eager to supply those needs and to meet those needs. So according to the Softwood Lumber Board, in 2018 there were 74 mass timber projects in North America. Just three short years later, in 2021, that number has risen to more than 1,240. through the end of September, reflecting impressive early growth. Further, the Softwood Lumber Board expects meaningful longer-term future growth for mass timber, with potential to add incremental lumber demand of somewhere between 3 to 6 billion board feet. This represents the equivalent demand of approximately 300,000 to nearly 600,000 new housing starts. Time will tell. It's early days, but we are optimistic and believe this type of medium to longer-term demand dynamic is in addition to conventional housing and repair and remodel demand and stands to provide important tailwinds for the North American wood products industry for years to come. In summary, we are pleased with our results this quarter despite a number of market and operational changes. After repurchasing $1 billion Canadian worth of our shares and a substantial issuer bid, and a further US$100 million to our normal course issuer bid, we exited the quarter with strong liquidity. We have continued to move forward with strategic capital projects while also pursuing acquisitive growth, providing even more resilience and durability to meet the needs of our customers and whatever the market challenges come next. Looking forward, we expect a less eventful fourth quarter, and we believe we are seeing the early signs of demand recovery after a soft third quarter, and we remain optimistic on the longer-term fundamentals of the wood products space generally. We will continue to focus on operational excellence, operationalizing the benefits of strategic capital and executing on current growth projects at Dudley, Chambord, Inverness, while looking to close on the Angelina and Allendale acquisitions. And we will continue to provide enhanced ESG disclosures as we look to define or refine a credible and thoughtful ESG strategy that fuses our aspirational goals with believable plans. And we will take the time to get that right. Finally, I'd like to recognize Peter Weinbergen, our president of Engineered Wood Products, that he will be retiring from West Fraser at the end of this year after a long and distinguished career. Having joined what was then called Miranda Forest Sales in 1987, Peter has spent his entire career in the OSB and wood products business and helped build Norboard into the world's largest OSB company. Peter led Norboard as CEO since 2014 before joining West Fraser earlier this year. Frankly, the success built by Peter and his OSB team was a key aspect of what led West Fraser to acquire the company earlier this year. I am thankful and glad that Peter made the choice to join our company and help guide and support a smooth and successful integration into West Fraser. It has gone better and faster than what we would have expected, and Peter's leadership and involvement has been key to this. On behalf of the company and myself personally, I want to thank Peter for taking this on and helping us with the integration of Norbord into West Fraser. His knowledge and passion for the business will be missed. Later this year, we will be allocating Peter's roles and responsibilities within the organization. Until that time, Peter will continue in his current role. I have great confidence that our team is able to meet the challenge going forward. With that, we'll turn the call back to the operator for questions.
spk01: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star, followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Mark Wild, BMO. Mark, please go ahead.
spk07: Thanks. Good morning, Ray. Good morning, Chris.
spk06: To start out, I wondered, Ray, could you just give us a little perspective on the rally that we've seen in the wood products markets over the last eight weeks and, you know, some of your thoughts on, you know, where you see us going through the balance of the year?
spk03: Well, good morning, Mark, and perspective, that's a good one. So I'm going to ask Chris to weigh in on that, but I... Go ahead, Chris.
spk08: Good morning, Mark.
spk06: Hi, Chris.
spk08: Yeah. Just, you know, I mean, I think there's a few things. Housing, you know, it slowed down sort of in the second quarter, late second quarter, late third quarter. But the really big change for us was around R&R and DIY. And we've really seen both of those sectors come back very strongly as prices have backed off in both OSB and lumber. And housing is still struggling a little bit, I think, with supply chain issues, but the underlying demand is there. So I think it's a combination of all those. I think the big factor for the drop in pricing, which, by the way, we fully expected sometime, was that it was really the R&R and DIY, not as much the single-family housing back-off. And as it's come back and people have kind of re-engaged, we've seen a pretty good rally into a spot where we think that for the next little while, we will see some sort of seasonal slowdown we expect in the next month or two, but in all those sectors, we see the demand, future demand is pretty strong.
spk06: Okay, that's helpful. Ray, the second question I had is, you know, for as long as I've dealt with Wes Frazier over many years, you know, the The thing you've always talked about is the importance of, you know, being vertically integrated out in Western Canada. And I'm just curious whether your experience in the southern U.S. and in Europe, where you're not vertically integrated, is leading you to kind of rethink the strategy in Western Canada at all.
spk03: Well, thanks, Mark. And... You know, well, I think we've said before, I mean, as we look, you know, particularly in the U.S., where I think there's some very significant differences between our Western Canadian operations, is that, you know, the need to be vertically integrated in the U.S., south in Europe, you know, there's frankly a lot more markets and opportunities for chips, residuals, and those types of things. When you think about how the company started and how it's grown and how we were very much a BC, Western Canada-centric, you needed to control or be involved and have those outlets. It's less important in these other areas or regions of market, so it hasn't been key to our strategy. And, you know, so as going forward, I mean, you know, our Canadian business remains to be integrated. And, you know, we like that platform. But in the U.S. and Europe, you know, it's just not that important. And it's not part of our focus on being vertically integrated in those other regions.
spk06: Okay. All right. And then the last one is... One for Chris Rostec. I wondered, Chris, if you could just talk about the input cost pressures you're seeing because, you know, the third quarter number, I mean, $50 million is not insignificant, but, you know, given what's going on in transportation, you know, given sort of some of the upheavals we've seen in areas like residence, I might have actually expected that number would have been a bit bigger. So can you give us just some perspective on the third quarter and what you're expecting in the fourth quarter?
spk04: Sure, we'll try to give a bit more colour on that, I guess. You know, we operate in a number of different fibre baskets and the dynamics of how those fibre prices move is kind of different in each of those things. And I think the other thing to remember is that in the case of the fibre procurement in the regions that we operate in the north, it's not a sort of linear procurement of fibre throughout the year. So, you know, there's a big seasonal element to that. And a lot of those things are linked to the commodity prices with varying degrees of lag. So, you know, I think we're starting to see in some regions on the fiber costs some relief. In other regions like BC, it's going to be into the first quarter before we start to see that relief. On the other inputs like energy, transportation, We've dealt with challenges there for a while. It's just the order of magnitude of those. Transportation, it's been availability has been a challenge there. I think we're starting on power as we move into the winter. It's probably getting a little better. But we've got to manage through these things all the time, right? And fiber being the biggest element, we think, particularly in B.C., There's one more quarter before we turn the corner on BC Fiber. That's in the public domain in terms of the stumpage, but the others, we've got to work our way through that every time.
spk06: Chris, has the energy issue over in Europe been big enough to cause any disruptions for you in the European operations?
spk03: it's been a cost pressure. It's not disrupted us or taken us off our operating. I think recently they've started to ease, but operationally no impact, certainly an impact on cost, but hopefully that's an answer for it, but it does look like things are easing somewhat. Energy prices around the world are, quite frankly, an issue. I think from a From a company point of view, kind of how I think through that, Mark, is sometimes hard to predict what will happen, whether it's in China or Europe or Alberta or U.S. South on some of these types of things. But what I do like is our diversity, is that platform and that portfolio we have allows us to kind of shift things around as needed. to respond to the market and or mute the impact of those issues.
spk06: Yeah, okay. That's helpful, Ray. I'll turn it over. Thank you. Thanks, Mark.
spk01: Thank you. Your next question comes from Sean Stewart, TD Securities. Sean, please go ahead.
spk09: Thanks. Good morning, guys. If he's listening in, congratulations to Peter on a really great run. A couple questions. Europe was exceptional this quarter and very strong price momentum across your product portfolio there. Can you give us a sense of how that's trended into the fourth quarter? There was in the MD&A wording around strength continuing into Q4 and Should we read that as prices continuing to improve or leveling off at really high levels? How should we think about the trajectory near term?
spk03: So good morning, Sean. And so listen, Peter's sitting right here beside me, so thank you for that. And with respect to Europe and, you know, things have softened a little bit in the fourth quarter, but, you know, I think that's – You know, third quarter was exceptionally strong. Maybe the markets have softened a little bit, whether it's seasonal or other. Leave that to others. But I think the message really is that, you know, our operations continue to strengthen there, that we're well positioned to kind of execute on the opportunities that are there. And, you know, I think our view is that, you know, that it's a strong business as we look forward to kind of into 2022, we, you know, we kind of expect that, uh, you know, uh, with reasonable markets to perform quite well.
spk09: And with the strength in Europe, has the M&A opportunity set there changed in light of how strong markets have been, especially through the back part of this year?
spk03: Um, I'm not sure I can answer that. Well, Sean, I think, uh, You know, I think any time, whether it's Europe or wherever you are, I think strong pricing, good results, you know, brings stuff to the market. So, you know, I can't say whether it's changed or whether it's the same, but I do think these sort of times do encourage, you know, probably more opportunities. But I'm not sure that's relative to change from quarter to quarter sort of thing.
spk09: Okay, last question for me. Allendale, it was our impression that the current owner of the asset, part of the reason to take the mill down was labor issues in that region. How do you guys assess the labor availability in South Carolina, and does that inform the pace at which you expect to restart the asset? Any context on that issue?
spk03: So what I would say is that, look, I, you know, we're very excited that this opportunity came up. And I, you know, we think about, you know, the locate, well, A, the quality of the asset. Notwithstanding, there's some debodlenecking that we need to do, and we're going to invest. Peter and his team are, you know, I think they've got their arms around that, and we're confident on our plan. you know, the fiber basket, proximity to markets, you know, proximity to our other businesses, those types of things, you know, we feel very strong about. You know, labor markets are difficult everywhere. And so I, you know, whether it's throughout the U.S. South or in northern, you know, Canada, these are challenges. I think... I think we've talked about this, the critical mass that we have, particularly in the U.S. South, I think our people are well suited to take on the challenge of overcoming a difficult labor market. I think that's part of our underlying strategy to quite frankly achieve our expectations in the U.S. South. So I wouldn't draw a circle around Allendale. I'd say that that's a challenge that we have in every one of our operations, and I think the team has done a very good job demonstrating that they're up to that challenge.
spk09: That's useful detail. Thanks very much, Ray. That's all I have.
spk03: Thanks, Sean.
spk01: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star 1 on your touchtone phone. Your next question comes from Paul Quinn, RBC. Paul, please go ahead.
spk05: Yeah, thanks very much. Morning, guys. Morning. Morning, Paul. Interesting quarter. You did a lot lower in lumber than I anticipated, but a lot better in OSB. Maybe just to start on the lumber side, you were down over 90% sequentially versus a competitor who's got a less favourable geographic footprint when it was down in North America only 76%. Is there something that happened within your lumber operations in the quarter that was problematic for you?
spk03: Well, that's a good question, Paul, and I'll try and address it here. I'd say the BC wildfires activity was heavily concentrated in the areas which we operate, and we were significantly impacted. And so, saying that, we did continue to ship at some of our operations, even though our sawmills were down. with a lot of our mills down and that increases costs significantly even though we were still able to ship out some of these regions and kind of bringing our inventories down. The other part of it is that I think if you recall the record high pricing that we saw in our lumber markets a few months ago. You know, when we think about what the stumpage that was being paid in Alberta, which was very, very high, a lot of those costs were still in our Alberta operations, even though markets had dropped. So there's a couple of things that I think that we think are very short-term that we'd expect as we go into Q4 and Q1 of next year that shouldn't replicate. But it's a little bit of the lag in Alberta, and quite frankly, the significant impact West Fraser saw in British Columbia around wildfires and what happened there.
spk05: Okay, that's really helpful. Maybe just discussing Angelina's acquisition. I mean, it's an expensive acquisition. On your investor day, you highlighted Dudley, which was this idea of building a new sawmill adjacent to existing. And it sounded like you had a runway of those opportunities. Why do you pick Angelina as opposed to a Dudley-like do-over?
spk03: It's not one or the other. It's both. I'd say no, we do have other projects like the Dudley project. We're eager to continue on on that path. The opportunity for Angelina came up and so we don't dictate when those things come available and but it's, it's not one or the other, it's really both. And so, um, and I, I think we're, should those similar opportunity come up, uh, in the next year where, you know, uh, we do want to do another Dunley and, uh, gosh, if there was another Angelina, I, I'd hope we'd be there doing, doing both of them again.
spk05: Okay. And then, uh, moving over to OSB, uh, I'd like to offer my congratulations, uh, to Peter for the making it to retirement. Um, and just maybe a, a question for him. Cause, uh, On the Allendale facility, the $70 million you guys are spending there, what is the issue with that mill? And everybody in the industry has wondered why it hasn't been brought up in the last number of years. But the majority of the $70 million, is there a big bucket item that needs to be replaced or fixed in that?
spk00: Good morning, Paul. Well, I think this mill has a very solid press and finishing line. forming press and finishing. It is, in our view, overly complex feeding into that part of the process. And so this $70 million, it really has two intentions. One is this mill has been idle for a number of years and needs a bunch of maintenance. But more importantly, we would like to take that complexity out of the system so that the mill is more easily operatable. Is that a word? Yeah. And that also will help us with that earlier question around hiring people to operate a mill. So that's the intent.
spk03: Peter and Kevin have convinced us, and the rest of the team, not convinced us, but world-class back end, and I think Peter and the team have a Very good idea. Well, not a very good idea. I know exactly what we're going to do in order to kind of fix the front end and transform this mill. But it is front end versus back end. Great. That's helpful.
spk05: Thanks, guys. Best of luck. Thank you.
spk01: Thank you. Your next question comes from Mark Wild, BMO. Mark, please go ahead.
spk07: Thanks.
spk06: Ray, just toggling to your other acquisition, the Angelina, Is it possible to get a sense of, like, why it would take three or four years to get a mill that's already been running for almost two years? Why would it take that long to get it ramped up to full production?
spk03: Mark, I'm agreeing with you. I think that's too long. And so I think you're bang on. I think, you know, I would say that, look, we – Believe it or not, we're pretty conservative in how we do analysis and how we look at doing some of this stuff. That's probably too conservative, and our expectations would be to do it much quicker than that. To me, that's too long, but that's how we looked at it when we were assessing the opportunity.
spk06: Okay. I wanted to also just talk a little bit about kind of southern fiber prices, which have been really, really low for the last 12 or 14 years. I am picking up some stuff from large land managers that we are starting to see some pockets of acceleration, maybe central Alabama and some other places where there's a lot of new demand that's coming to the market. First, I'm curious, are you seeing any of that? And then secondly, when you've looked at deals across the South in lumber, have you been underwriting at anything close to current log price levels going forward?
spk03: I might need help on the second one here, but on the first one on fiber prices, Look, yes, we've seen, I don't know if it's different than years past, but we've certainly seen pockets where there's been significant, you know, short-term log price spikes. It's much less about kind of supply and demand. It's more about weather, and it's become more around contractors investing The number of contractors, the amount of supply, and when you have extreme weather events, which we saw in that Florida, Georgia region for an extended period of time, the industry can't respond. The logs are out there, but can often have a difficult time responding to get back to inventory levels. But I'd say primarily driven by wet weather, and then once weather returns, because the logs are there generally, we typically see the prices come back. But there's no question we're seeing pockets of issues. But weather, and then the second part of it is constraints on suppliers, contractors, and labor.
spk04: On the second question, Mark, I think, you know, when we do these evaluations, it's very specific to the regions. And, you know, I think we have pretty good insights in the regions that we operate and the regions that we look at around, you know, long-term fiber availability and security, right? And that's part of the calculus that we do. I think as both of you have framed it, it's very region-specific. And we take those region-specific considerations into consideration when we're looking at whether it's M&A or whether it's organic capital. It's that region-specific fiber availability that's always part of the calculus.
spk06: Okay. All right. Last one for me. Just possible to get an update on the ramp-up at Sham Board?
spk03: Sure, so Mark, I think we're ahead of our startup schedule and Peter may want to jump in here, but we've been certified across pretty much all of our key products and thicknesses from an APA point of view, but we're on track or ahead of track of what our forecast was. It's proceeding well, and I'm not sure that's a great answer to your question, but the startup's gone well to this point.
spk06: Okay. Well, let me just add my congratulations to the other folks, to Peter. It's really been a great thing to see kind of the transformation of Norboard over the last several years and then the combination with West Fraser.
spk02: Thank you.
spk07: Thank you. There are no further questions at this time.
spk01: Please proceed.
spk03: Well, look, thank you everyone for joining us today, and we'll look forward to talking to you in the fourth quarter. Thanks, everyone.
spk01: Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect.
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