[Management View]
West Fraser reported a negative $144 million adjusted EBITDA for Q3 2025, primarily due to lower product pricing and a $67 million out-of-period duty expense. The company emphasized maintaining high liquidity, countercyclical investments, and capital returns despite lower operating cash flow. Strategic priorities included optimizing the asset portfolio through capacity reductions and selective acquisitions.

[Outlook]
The company narrowed its shipment guidance for SPF and SYP lumber for 2025 and maintained the North American and EU OSB guidance. CapEx guidance for 2025 was reaffirmed at $400 million to $450 million. Management signaled that further CapEx guidance for 2026 will be provided in February.

[Financial Performance]
- Adjusted EBITDA: Negative $144 million, including a $67 million duty expense.
- Lumber Segment Adjusted EBITDA: Negative $123 million, down from $15 million in Q2.
- North America EWP Segment Adjusted EBITDA: Negative $15 million, down from $68 million in Q2.
- Pulp and Paper Segment Adjusted EBITDA: Negative $6 million, compared to negative $1 million in Q2.
- Europe Segment Adjusted EBITDA: $1 million, roughly flat to the prior quarter.
- Cash Flow from Operations: $58 million, with net cash at $212 million, down from $310 million in Q2.

[Q&A Highlights]
Question 1: How is West Fraser managing production in both lumber and North America OSB given the current demand environment?
Answer: The company maintains a variable operating strategy based on economics and customer demand needs. Decisions are made continuously within the platform to manage production effectively.

Question 2: What is the implied Q4 operating rate for OSB?
Answer: The implied operating rate for OSB in Q4 is around 80%, considering the heavy maintenance shuts typically taken during this weaker seasonal period.

Question 3: How does West Fraser view M&A opportunities in the current down cycle?
Answer: The company prioritizes quality in M&A opportunities and remains flexible due to its strong balance sheet. Inorganic growth has always been part of the company's strategy, focusing on high-quality assets that enhance strength at the bottom of the cycle.

Question 4: What is the status of federal support for the lumber industry?
Answer: The federal government has provided some support measures, including funding for exploring different markets. West Fraser continues to support these measures while maintaining its strong balance sheet.

Question 5: How are customer inventory levels and reorder rates affecting West Fraser's operations?
Answer: The company does not have visibility into customer inventory levels but maintains lean inventories in both SYP and SPF lumber to manage uncertain market conditions.

Question 6: Are there more M&A opportunities emerging in the current lumber downturn?
Answer: There has not been a significant change in the availability of high-quality assets. The company remains focused on quality and enhancing strength at the bottom of the cycle.

Question 7: How is West Fraser managing North American supply in the current cycle?
Answer: The company evaluates each asset's performance during the down cycle and makes decisions to optimize the operating model and lower costs.

Question 8: How have conditions in the Canadian market evolved, and are competitors behaving differently since higher U.S. duties took effect?
Answer: The Canadian market remains competitive, with no significant changes in competitor behavior. The company continues to compete daily to service customers.

Question 9: What is the outlook for CapEx in 2026, and what is the status of the Cowie facility?
Answer: CapEx guidance for 2026 will be provided in February. The Cowie facility has been repaired and is operational after the fire-related downtime.

Question 10: Are there signs of increased European lumber imports due to improved competitive positions?
Answer: There is no significant visibility or meaningful change in European lumber imports.

Question 11: How is OSB demand faring in Europe?
Answer: The company is seeing some price and demand improvement in OSB in Europe, with a more optimistic outlook for the next few quarters.

Question 12: How is West Fraser managing working capital, and is there room for further reductions?
Answer: The company has focused on managing credit, receivables, and inventories effectively. There is potential for further improvements in working capital management.

[Sentiment Analysis]
The tone of the management was cautious but optimistic about the long-term prospects. Analysts' questions focused on production management, M&A opportunities, and market conditions, reflecting concerns about the current industry challenges.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 |
|---------------------------------|---------------|---------------|
| Adjusted EBITDA | -$144 million | -$15 million |
| Lumber Segment Adjusted EBITDA | -$123 million | $15 million |
| North America EWP Adjusted EBITDA | -$15 million | $68 million |
| Pulp and Paper Adjusted EBITDA | -$6 million | -$1 million |
| Europe Segment Adjusted EBITDA | $1 million | $2 million |
| Cash Flow from Operations | $58 million | $310 million |

[Risks and Concerns]
- Continued soft demand in new home construction and repair and remodeling markets.
- Impact of lower product pricing and increased tariffs.
- Decreased cash balance due to lower earnings, capital expenditures, and shareholder returns.
- Potential for further capacity curtailments and asset closures.

[Final Takeaway]
West Fraser is navigating a challenging industry environment with strategic adjustments, including capacity reductions and selective acquisitions. Despite a tough Q3, the company maintains a strong balance sheet and liquidity, allowing for continued investments and capital returns. Management remains focused on optimizing the asset portfolio and staying agile in response to market conditions. Investors should monitor the company's ability to manage production, pursue M&A opportunities, and adapt to shifting trade policies.