West Fraser Timber Q2 Earnings Call Highlights

West Fraser reported a stronger second quarter: Sales reached approximately $1.4 billion and adjusted EBITDA was $59 million, supported by improved lumber and European pricing, higher shipments and a favorable $13 million duty adjustment. Operational performance improved across key segments. Lumber benefited from higher realizations, shipment growth and the ramp-up of the Henderson mill, while engineered wood and European operations generated positive EBITDA; however, seasonal logging costs, transportation constraints and higher resin expenses remained headwinds. Cash generation strengthened the balance sheet. West Fraser produced $192 million in operating cash flow, reduced net debt by $140 million and ended the quarter with approximately $1 billion in liquidity, while maintaining its 2026 capital-spending and shipment guidance despite tariff uncertainty.

West Fraser Timber NYSE: WFG reported second-quarter 2026 sales of approximately $1.4 billion and adjusted EBITDA of $59 million, supported by improved lumber and European pricing, higher shipment volumes and positive contributions from its core operating segments. Chief Financial Officer Chris Virostek said the quarterly EBITDA result included a $13 million favorable softwood lumber duty adjustment and represented an adjusted EBITDA margin of about 4%. The company reported sales of roughly $1.3 billion and adjusted EBITDA of negative $66 million in the first quarter, though that prior-quarter figure included a $114 million non-cash duty adjustment related to prior periods. Excluding duty adjustments, Virostek said underlying consolidated performance was stable sequentially.

The lumber segment generated $41 million in adjusted EBITDA during the second quarter, compared with reported adjusted EBITDA of negative $84 million in the first quarter. Excluding the first-quarter duty adjustment, the segment posted a modest sequential improvement, according to Virostek. The company cited higher mill net realizations and shipment volumes as contributors. Canadian spruce-pine-fir shipments increased 18% from the first quarter, aided by the mid-March restart of the Blue Ridge, Alberta, facility. Southern yellow pine shipments rose 5%, despite transportation shortages in the U.S. South.

President and CEO Sean McLaren said West Fraser produced about the same amount of southern yellow pine in the first half as it did a year earlier despite operating one fewer mill. He attributed that performance to productivity gains and continued optimization of the company’s U.S. lumber portfolio. McLaren also said production at the company’s new Henderson mill more than doubled in the second quarter from the first quarter and was regularly exceeding production levels at the former mill. West Fraser expects additional production gains and lower unit costs as the facility continues to ramp through the rest of 2026. Lumber results were partly affected by the seasonal timing of Canadian logging costs during spring breakup and inventory valuation adjustments tied to quarter-end pricing. Looking ahead, McLaren said Canadian lumber supply has been shrinking, which the company expects will limit pressure on fiber inputs. He also noted that duty rates are expected to decline following the AR7 review when the new rates take effect later this year.

West Fraser’s North America engineered wood products segment generated $13 million in adjusted EBITDA, compared with $11 million in the first quarter. North American...