West Fraser Timber Co. Ltd.

Good morning, ladies and gentlemen. Welcome to West Frayser Q1 2024 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 the number two. During this conference call, West Fraser's representatives will be making certain statements about West Fraser'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 West Fraser's actual or future results and performance to be materially different from 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 2023 annual MD&A and annual information form, which can be accessed on Wes Frazier's website or through CEDAR Plus for Canadian investors and EDGAR for United States investors. Please note that today's call is being recorded. I would now like to turn the call over to Mr. Sean McLaren, President and Chief Executive Officer. Please go ahead.

Thank you, Lara. Good morning, everyone, and thank you for joining our first quarter 2024 earnings call. I am Sean McLaren, President and CEO of West Fraser, and joining me today in our Quesnel office on the day of our annual general meeting are Chris Vrostek, our Senior Vice President and Chief Financial Officer, Matt Tobin, our Senior Vice President of Sales and Marketing, and other members of our leadership team. As just mentioned, later today we will be holding our AGM, where among other things we plan to discuss our progress with sustainability initiatives, some of the broader challenge that the North American lumber industry continues to face adding meaningful supply, our recent track record allocating capital, including capital returns through buybacks and dividends, and the attractive long-term total returns realized by West Fraser stockholders. On the earnings call this morning, I will begin with a brief overview of West Fraser's Q1 2024 financial results and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks. West Fraser generated $200 million of adjusted EBITDA in the first quarter of 2024. representing a 12% margin. We experienced mixed results across our business again in Q1, with strength in our North American engineered wood product segment as well as SPF lumber markets partially offset by continued soft demand for SYP lumber products and in our European business. While new home construction in the U.S. remained resilient through the quarter, supporting demand for OSB and to a large extent SPF lumber, continued elevated mortgage rates appear to be constraining existing home sales activity and tempering repair and remodeling spending, which had a greater impact on SYP lumber demand. On a trailing four-quarter basis, adjusted EBITDA was $703 million, up from the $561 million we reported for fiscal 2023. On a pro forma basis, With the inclusion of Norboard, this level of trailing four-quarter adjusted EBITDA is approximately $460 million higher than that of the down cycle in 2019, reflecting synergies from the Norboard transaction, the benefits of our capital investment program, as well as the acquisitions and strategic initiatives we've undertaken in recent years. Finally, our resilient balance sheet and $1.8 billion of total liquidity at quarter end remain strong, offering the financial flexibility with which to support our capital allocation strategy. With that overview, I'll now turn the call to Chris for additional detail and comments.

Thank you, Sean, and good morning, everyone. And a reminder that we report in U.S. dollars, and all my references are to U.S. dollar amounts, unless otherwise indicated. The lumber segment posted $10 million of adjusted EBITDA in the first quarter, improving from negative 51 million in the fourth quarter. Our North American EWP segment generated 188 million of adjusted EBITDA in the first quarter, up from 143 million in the fourth quarter. The pulp and paper segment generated 3 million of adjusted EBITDA in the first quarter, similar to the 2 million reported in the fourth quarter, while in Europe, Adjusted EBITDA was a negative $1 million in the first quarter versus $3 million in the fourth quarter. Higher prices were the largest driver for the sequential EBITDA increase across our North American lumber and engineered wood products businesses, while increased shipments of SPF products also contributed meaningfully to the sequential improvement. Further, our lumber business benefited from the actions we took in January to curtail production at two higher-cost mills. In effect, we replaced that volume with production from other lower-cost mills. Cash flow from operations was negative 41 million in the first quarter, with our cash balance net of debt still at a healthy 174 million versus 361 million last quarter. The relative decrease in our cash balance reflects a combination of the typical seasonal build in working capital, 122 million of capital expenditures, plus the approximate $31 million of cash deployed towards share buybacks and dividends. With that brief financial overview, I will pass the call back to Sean.