Western Forest Products (WEF) investor relations material

Executive summary

• Lumber pricing improved in Q1 2026, but demand was soft for some products; strategic priorities advanced and balance sheet strengthened to manage near-term uncertainty.

• Adjusted EBITDA was negative CAD 13.6 million in Q1 2026, down from positive CAD 3.5 million in Q1 2025 and negative CAD 6.2 million in Q4 2025, impacted by a CAD 2.8 million one-time inventory accounting expense and CAD 1.9 million share-based compensation expense.

• Net loss was CAD 19.9 million in Q1 2026, compared to net income of CAD 13.8 million in Q1 2025 and net loss of CAD 17.5 million in Q4 2025.

• Announced sale of Stillwater Forest Operation for CAD 80 million, with a long-term fiber supply agreement to support BC manufacturing; transaction expected to close in H2 2026.

• Finalized a CAD 28.8 million property insurance claim for Columbia Vista sawmill and submitted a business interruption claim; progressing on sale of sawmill property.

Financial highlights

• Q1 2026 adjusted EBITDA was negative CAD 13.6 million, down from positive CAD 3.5 million in Q1 2025; net loss was CAD 19.9 million.

• Revenue declined to CAD 201.5 million from CAD 262.5 million year-over-year.

• Results included a one-time CAD 2.8 million inventory accounting expense and CAD 1.9 million share-based compensation due to a 34% share price increase.

• Lumber shipments fell 28% and log shipments dropped 29% year-over-year, with higher duties (45% vs. 14% last year) impacting results.

• Ended Q1 with 63 million board feet of lumber inventory and 500,000 cubic meters of log inventory, the lowest log inventory in over a decade.

Outlook and guidance

• Lumber pricing and demand improved late in Q1; further price increases expected in Q2 as building activity rises, but high interest rates and oil prices may limit demand.

• Anticipates continued near-term volatility due to combined duties and tariffs of 45%.

• Lumber demand in Japan is recovering, supported by higher housing starts; China shows renewed demand post-Lunar New Year, with modest price increases expected.

• Q2 order file stands at approximately 103 million board feet; expects sequential volume increase to 130–145 million board feet in Q2.

• CapEx for 2026 projected at CAD 45–50 million, mainly for kiln investments.