West Fraser Timber Co. Ltd.

Good morning, ladies and gentlemen. Welcome to Wes Frazier's second quarter 2023 results conference call. Please note that all lines have been placed on mute to prevent any background noise. 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 one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. During this conference call, Wes Frazier's representatives will be making certain statements about Wes Frazier'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, and assumptions which may cause Wes Frazier'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 2022 annual MD&A and annual information form, which can be accessed on Wes Frazier's website or through CDAR for Canadian investors and EDGAR for United States investors. Thank you. I will hand the call over to Mr. Chris Verostek. You may begin your conference.

Thank you, Hilda. Good morning, everyone, and thank you for joining our second quarter 2023 earnings call. I'm Chris Verostek, Chief Financial Officer of West Fraser, and joining me today are Ray Ferris, our President and CEO, and Sean McLaren, our Chief Operating Officer, and other members of the executive team. I'll begin with a brief overview of Wes Fraser's Q2 2023 financial results, and then pass the call to Ray, who will give an update on the business, as well as provide a few concluding remarks before we transition the call to Q&A. As a reminder, we report in U.S. dollars, and all my references today will be the U.S. dollar amounts, unless otherwise indicated. West Fraser generated $80 million of adjusted EBITDA in the second quarter, improving from the 58 million of adjusted EBITDA reported in the first quarter. Our North American EWP segment generated 126 million of adjusted EBITDA, up from 31 million in the prior quarter, a period that had included a $15 million inventory write-down. OSB prices that began to rise strongly midway through the quarter drove the majority of the sequential EBITDA improvement. The lumber segment posted $10 million of adjusted EBITDA this quarter, up from nil the prior quarter, with lumber demand showing signs of improvement as the second quarter came to a close. The pulp and paper segment struggled in the second quarter, with negative $74 million of adjusted EBITDA versus $7 million in the prior quarter. The second quarter included a $24 million inventory write-down, as a result of significantly declining pulp prices through the quarter. It's worth noting that this quarter was marked by considerable disruption within the pulp segment, with all four of our pulp mills taking downtime. In particular, caribou pulp and paper was down for a month in response to fiber availability constraints. Slade Lake pulp took intermittent downtime due to energy prices. And we had month-long maintenance outage at Hinton pulp, which was significantly longer than originally anticipated. Pulp segment challenges notwithstanding, the mill shots are now behind us, and we have been especially pleased with the performance of our two BCTMP mills since they've come out of their shots. In Europe, adjusted EBITDA was 19 million in the second quarter, as demand showed signs of weakness later in the period. These results were in line with 20 million in the first quarter. In summary, Lower prices and maintenance downtime in our pulp business created a headwind this quarter, while improving pricing across our North American EWP business was the largest positive contributor to the company's sequential EBITDA improvement. In addition, continued strong contributions from our non-OSB panels businesses also helped.

Cash from operations was $272 million for the quarter,