Western Forest Products Inc.

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 periods. 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. Thank you for watching. Listeners should exercise caution in relying upon forward-looking statements. I would now like to turn the meeting over to Mr. Steven Hofer, President and CEO of Western Forest Products. Mr. Hofer, please go ahead.

Thank you, Gary, and good morning, everyone. I would like to welcome you to Western Forest Products' 2026 Second Quarter Conference Call. Joining me on the call today is Glen Nontell, our Chief Financial Officer, and Bruce Alexander, our Senior Vice President of Sales, Marketing and Manufacturing. We issued our 2026 second quarter results yesterday. I will provide you with some introductory comments and then ask Glen to take you through our financial results. Bruce will follow with our market outlook section before we open the call to your questions. We saw modest improvements in lumber pricing and seasonal demand in the second quarter. We continue to demonstrate clear progress in advancing our strategic priorities while also solidifying a strong balance sheet to manage through near-term volatility. Since our last call, this has included completing our strategic kiln-drying investments at our value-added division, with the commissioning of the second continuous dry kiln and our thermal kiln. With three highly modern, low-cost continuous dry kilns operating on the BC coast with a capacity of 206 million board feet, Western's investment will support higher margin, value-added kiln-dried lumber production and enable the expansion of our global customer base. In addition, we are also upgrading our autograder technology at our Duke Point planar facility. The new autograder uses AI technology to grade each piece of lumber, resulting in more precision grading than manual grading, leading to higher margin potential. The $4.1 million investment is anticipated to be commissioned in early 2027. This will complement the autograder technology previous deployed in the Duke Point sawmill facility. From an operational perspective, our timberlands group continued to focus on managing costs and log margin opportunities. Harvest volume increased by 35% compared to the same quarter last year due to improved permit approvals and more favorable weather conditions. In manufacturing, we improved our operational uptime to 88% in the second quarter of 2026, compared to 87% in both the first quarter of 2026 and the second quarter of 2025. This is an all-time high for Western Force Products' manufacturing sector. 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 57% of sales in the second quarter of 2026, compared to 52% in the same quarter last year. From a cash flow and balance sheet perspective, we collected the Columbia Vista property insurance proceeds of 22.8 million U.S. dollars in the second quarter and completed the sale of the sawmill site for $14.7 million in July. We look to finalize the Columbia Vista business interruption insurance process in the third quarter, and we continue to advance the $80 million sale of our Stillwater Forest Operations, which is anticipated to close in the second half of 2026. Assuming the completion of all these items, we expect to end the year with a pristine balance sheet. which will be in a net cash position. Looking ahead, we remain focused on executing our strategy and maintaining a strong balance sheet. We see gradual improvements to lumber markets over the midterm. However, in the near term, due to persistently weak market conditions, high softwood lumber duties and tariffs, and factors relating to the BC operating environment, We plan to curtail our Cowichan-based sawmill for the remainder of 2026. I will now turn it over to Glen to review our key financial results.

Thanks, Steven. Second quarter adjusted EBITDA was $0.4 million, as compared to $0.5 million in the same period last year. Second quarter EBITDA in 2026 included $2.3 million in share-based compensation due to a 20% increase in our share price. As compared to the prior year, results in the second quarter benefit from improved lumber pricing across many product lines, a strong specialty lumber sales mix, more favorable harvesting conditions, and a strong external log sale mix. This was primarily offset by a 25% reduction in lumber shipments due to softer demand and loss of sales from our Columbia Vista division, and Higher Softwood Lumber Duties and Tariffs with a combined duty and tariff rate of 45% compared to 14% in the same period last year. We closed the second quarter with approximately 67 million board feet of lumber inventory and 622,000 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 $20 million related to two previously announced continuous kilns and one thermal kiln at our value-added division and the auto grader at Duke Point. From a balance sheet perspective, our Q2 ending net debt declined by $14.4 million and liquidity improved compared to the end of the first quarter. We ended the second quarter with a net debt to capitalization ratio of 6% compared to 9% at the end of the first quarter. After the end of the second quarter, we completed the sale of the Columbia Vista sawmill site for $14.7 million U.S. dollars. With the planned sale of our Stillwater Forest Operations, which is anticipated to close in the second half of 2026, we expect to be in a net cash position at the end of the year. Turning to third quarter seasonality, typical third quarters can be challenging operationally, as hot, dry weather can restrict logging activity, reducing harvest volumes, and impacting costs. While we have yet to experience any significant forest fires in our areas of operation, hot and dry conditions may impact harvest levels through the summer. I will now turn it over to Bruce to go through the market outlook.