Western Forest Products (WEF) investor relations material

Executive summary

• Modest improvements in lumber pricing and seasonal demand supported progress on strategic priorities and a strong balance sheet in Q2 2026.

• Strategic investments in kiln-drying and AI auto-grader technology aim to boost value-added production and margins.

• Operational uptime reached an all-time high of 88%, with specialty products comprising 57% of sales, up from 52% year-over-year.

• Net income reached $10.5 million in Q2 2026, reversing a net loss of $17.4 million in Q2 2025, driven by a $31.3 million property insurance recovery.

• Cowichan Bay sawmill will be curtailed for the rest of 2026 due to weak markets and high tariffs.

Financial highlights

• Adjusted EBITDA was $0.4 million in Q2 2026, down slightly from $0.5 million in Q2 2025, including $2.3 million in share-based compensation from a 20% share price increase.

• Revenue for Q2 2026 was $239.6 million, down from $289.1 million in Q2 2025.

• Improved lumber pricing and specialty sales mix offset by a 25% drop in lumber shipments and higher duties/tariffs (45% vs. 14% last year).

• Q2 ending inventories: 67M board feet of lumber, 622,000 cu m of logs.

• Operating loss prior to restructuring and other items was $13.6 million in Q2 2026.

Outlook and guidance

• Gradual midterm improvements in lumber markets expected; near-term remains challenged by weak demand and high tariffs.

• North American lumber markets expected to remain stable through Q3 2026, with housing affordability and economic uncertainty weighing on demand.

• Japanese market stable with improved demand; Chinese demand expected to soften in Q3.

• Q3 and Q4 lumber shipments expected to remain consistent with H1 2026 levels.

• 2026 CapEx forecasted at $45–50M, including major kiln and auto-grader investments.