Western Forest Products (WEF) Q2 2024 earnings summary

Executive summary

• Returned to positive adjusted EBITDA of CAD 9.4 million in Q2 2024, up from a loss in the prior year, driven by operational execution and safety focus.

• Net loss of $5.7 million in Q2 2024, improving from $20.7 million loss in Q2 2023 and $8.0 million loss in Q1 2024.

• Revenue increased to $309.5 million, up from $276.0 million in Q2 2023 and $239.5 million in Q1 2024.

• Leadership transition announced: Glenn Nontell appointed as CFO, with Steve Williams remaining EVP until year-end before moving to an advisory role.

• Completed start-up of a new continuous dry kiln at Saltair sawmill, exceeding performance targets.

Financial highlights

• Adjusted EBITDA of CAD 9.4 million in Q2 2024, compared to CAD -12 million in Q2 2023.

• Adjusted EBITDA margin improved to 3% from -4% in Q2 2023 and -2% in Q1 2024.

• Operating loss before restructuring was $4.3 million, better than $25.1 million loss in Q2 2023.

• Ended Q2 with 75 million board feet of lumber inventory and 777,000 cubic meters of log inventory.

• Received CAD 23 million income tax refund post-quarter, used to reduce debt.

Outlook and guidance

• 2024 CapEx revised to approximately CAD 40 million, with most kiln-related spending deferred to 2025.

• Q3 expected to face operational challenges from hot, dry weather and permit delays, potentially impacting harvest volumes.

• Cedar demand and prices stable; cedar decking firm, but trim products soft; Japan and China markets expected to be weak in near term.

• Order file for Q3 stands at approximately 108 million board feet.

• North American commodity lumber demand and prices expected to remain volatile.