Western Forest Products (WEF) Q2 2025 earnings summary

Executive summary

• Achieved positive adjusted EBITDA of $0.5 million in Q2 2025 despite challenging markets, operational headwinds, and a $3.6 million inventory provision expense due to lumber price declines.

• Net loss widened to $17.4 million in Q2 2025 from $5.7 million in Q2 2024, reversing a net income of $13.8 million in Q1 2025.

• Revenue decreased to $289.1 million in Q2 2025 from $309.5 million in Q2 2024, but increased sequentially from $262.5 million in Q1 2025.

• Focused on operational efficiency, cost management, and maintaining a strong balance sheet.

• Proactively adjusted production schedules and deferred capital spending to align with market demand.

Financial highlights

• Adjusted EBITDA declined to $0.5 million from $9.4 million year-over-year, with margin at 0% in Q2 2025 compared to 3% in Q2 2024.

• Operating loss before restructuring and other items was $12.3 million in Q2 2025, compared to $4.3 million in Q2 2024.

• Inventory at quarter-end: 69 million board feet of lumber and 698,000 cubic meters of logs.

• Log and lumber turnover ratios improved by 2% and 11% year-over-year, respectively.

• Diluted loss per share was $1.62 in Q2 2025, compared to $0.40 loss in Q2 2024 and $1.33 earnings in Q1 2025.

Outlook and guidance

• North American lumber markets expected to remain volatile and weak through Q3 2025, with increased duties, high interest rates, and economic uncertainty impacting demand.

• Anticipates price increases for specialty products like Western Red Cedar, Hemlock, and Douglas Fir in Q3 2025.

• Plans to reduce lumber production by 25 million board feet in Q3 due to market and supply constraints, including a full-quarter curtailment at Chemainus.

• Additional operating curtailments possible at key mills if labor disruptions persist.

• Completion of the first continuous dry kiln expected in early 2026; second kiln deferred to mid-2026.