Western Forest Products Inc.

Good morning, ladies and gentlemen. Welcome to WestGen Forest Products' fourth quarter 2025 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. Following prepared remarks, there will be an opportunity for analysts to ask questions. To join the question queue, please press star then one on your telephone keypad. Should anyone need assistance during the conference call, they may reach an operator by pressing star then zero. During this conference call, Western's representatives may make forward-looking statements within the meaning of applicable securities laws. These statements can be identified by words like anticipate, plan, estimate, will, and other references to future points. Although these forward-looking statements reflect management's reasonable beliefs, expectations, and assumptions, they are subject to inherent uncertainties and actual results may differ materially. There are many factors that could cause actual outcomes to be different, including those factors described under risks and uncertainties in the company's annual MDMA, which can be accessed on CDAR and is supplemented by the company's quarterly MD&A. Forward-looking statements are based only on information currently available to Western and speak only as of the date on which they are made. Except as required by law, Western undertakes no obligation to update forward-looking statements. Accordingly, listeners should exercise caution in relying on forward-looking statements. I would now like to turn the meeting over to Mr. Stephen Hofer, President and CEO of Western Forest Products. Mr. Hofer, please go ahead.

Thank you, Galen, and good morning, everyone. I'd like to welcome you to Western Forest Products 2025 fourth quarter conference call. Joining me on the call today is Glen Mantel, our Chief Financial Officer. Before we get started, I'd just like to extend our thoughts and prayers to the community of Tumblr Rich, to all the victims and all the families impacted. We issued our 2025 fourth quarter and full year results yesterday. I will provide you with some introductory comments and then ask Glenn to take you through our financial results. I will follow Glenn's review with our Outlook section before we open the call to your questions. Despite more challenging markets and higher softwood lumber duties and tariffs in 2025, we entered 2026 with a significantly improved balance sheet to navigate the expected near-term market uncertainty. We also continue to execute on our strategic priorities to accelerate our transition to higher value products. Some highlights over the last year include Surpassing our health and safety targets for the company's medical incident rate, achieving an MIR of 2.7 in 2025 compared to our target of 2.87 and 3.84 in 2024. We are also proud to report several operations achieved zero recordable incidents in 2025. In timberlands, we continue to focus on improving log sort stratification to drive incremental margin. These efforts, alongside a disciplined focus on log inventory management, has resulted in an 11% improvement in log inventory turnover since 2023. In manufacturing, we have improved our operational uptime to 86% in 2025 compared to 85% in 2024. Our Duke Point facility achieved a 92% uptime in the fourth quarter. We also continue to focus on log and lumber recovery, while improving lumber inventory turnover by 9% year over year. In sales and marketing, we continued our customer focus, developing value-added products and programs targeted with the end user in mind. Specialty products comprised 52% of sales in 2025, and we increased kiln dried sales to a record 41% of total sales in 2025, compared to 37% in 2024. In addition, we achieved improved on-time shipping performance of 88% in 2025, compared to 84% in 2024. We made significant progress advancing our strategic capital investments in kilns to support higher value products. Our two continuous kilns and one thermal kiln at our value added division are expected to be commissioned in 2026. These investments will allow for more kiln dried lumber production, generating higher margins than green lumber. From a labor perspective, we completed a six year collective agreement that covers the company's USW hourly employees. The agreement is one of the longest term agreements in the history of the BC Coastal Forest Sector. And finally, we strengthened our balance sheet and liquidity position through $76 million in non-core asset sales and the extension of our $250 million credit facility to July 2028. Overall, I am proud of the significant contributions across our entire organization, which have provided a strong foundation to build from in 2026. I'll now turn it over to Glenn to review our key financial results.

Thanks, Steven. Fourth quarter adjusted EBITDA was negative $6.2 million as compared to $14.4 million in the same period last year. As compared to the prior year, results in the fourth quarter were impacted by a 26% reduction in lumber shipments, a 34% reduction in log shipments given lower harvest volumes, and higher softwood lumber duties, with a combined duty and tariff rate of 45% compared to 14% in the same period last year. This was partially offset by higher log prices on cedar and fir saw logs and lower stumpage expense. We closed the fourth quarter with approximately 50 million board feet of lumber inventory and 649,000 cubic meters of log inventory. Turning to CAPEX. Our 2026 total capex spending is expected to be between $45 to $50 million, which includes approximately $16 million related to two previously announced continuous kilns and one thermal kiln at our value-added division. From a balance sheet perspective, we ended the fourth quarter with liquidity of approximately $212 million and a net debt-to-cap ratio of 7%. Touching on our Columbia Vista sawmill, we have made the difficult decision not to rebuild at the site and listed the property for sale in December. We have received significant interest for the property, receiving multiple offers above the asking price of U.S. $10.6 million to date. We will look to finalize the sale of the property late in the first quarter or early in the second quarter of 2026. In addition, we are working with the insurance adjuster to finalize available property insurance proceeds. We plan to use proceeds from the property sale and insurance to initially repay debt to further deleverage our balance sheet. Turning to first quarter seasonality, in typical first quarters, our timber harvesting activity can be periodically interrupted by winter weather. Harvest volumes are typically skewed to the end of the quarter when the weather and light conditions support greater activity. From a market perspective, sales typically accelerate through the quarter. We plan to continue to manage production to market demand and available log supply. Stephen, that concludes my comments.