Western Forest Products (WEF) Q1 2025 earnings summary

Executive summary

• Delivered significantly improved Q1 2025 results year-over-year, including net income of $13.8M, reversing a net loss of $8.0M in Q1 2024 and $1.2M in Q4 2024, driven by execution on strategic priorities and debt reduction.

• Adjusted EBITDA improved to $3.5M from negative $4.2M in Q1 2024, but down from $14.4M in Q4 2024.

• Revenue rose to $262.5M, up from $239.5M in Q1 2024, but down from $273.2M in Q4 2024.

• Ratified a new six-year collective agreement, completed non-core asset sales for CAD 76.5 million, and extended a CAD 250 million credit facility to July 2028.

• Net debt reduced to $21.2M, with net debt to capitalization at 4% versus 13% a year ago.

Financial highlights

• Adjusted EBITDA for Q1 2025 was CAD 3.5 million, up from -CAD 4.2 million in Q1 2024.

• Adjusted EBITDA margin improved to 1% from -2% in Q1 2024.

• Liquidity increased to $195.4M from $142.1M at Q1 2024 and $144.6M at Q4 2024.

• Inventory turnover ratios improved: log turnover up 6%, lumber turnover up 12% year-over-year.

• Ended Q1 with 66 million bd ft of lumber and 753,000 cubic meters of log inventory.

Outlook and guidance

• 2025 CapEx expected between $60M and $65M, with $30M for kiln projects; may adjust spending based on market and financial conditions.

• North American markets expected to remain volatile due to tariff concerns and economic uncertainty, potentially muting spring building season.

• Anticipates improved lumber shipments to Japan in Q2 and strengthening North American industrial lumber demand; Japanese demand strong in spring but housing starts expected to decline later in 2025.

• Monitoring U.S. trade policy and tariffs; focus remains on maintaining a strong balance sheet and executing strategic priorities.

• Chinese demand may rise due to US log import ban.