The following is a summary of the Western Forest Products Inc. (WFSTF) Q4 2023 Earnings Call Transcript:
Financial Performance:
Western Forest Products reported Q4 adjusted EBITDA of negative $1.2 million, compared to negative $11.9 million in the same period last year.
The Company ended the year with 64 million board feet of lumber inventory and 964,000 cubic meters of log inventory.
Approximately $219 million in duties on deposit and market capitalization stands at approximately $200 million.
They expect total CapEx of approximately $65 million for 2024, including $35 million for business and road maintenance and $30 million in strategic CapEx.
Proceeds of $35.9 million from the sale of a 34% ownership interest in Mid-Island forest operations and an income tax refund of approximately $23 million are expected in 2024.
The company ended the year with liquidity of approximately $148 million and a net debt to cap ratio of 13%.
WFSTF shipment volumes to Japan doubled compared to the same time last year, due to fire-related curtailments at one of Japan's largest sawmills.
The engineered wood products business generated EBIT of approximately $7 million in 2023 and EBITDA margins in excess of 20%.
The strategic CapEx for 2024 includes approximately $15 million for new kilns at Duke Point and value-added divisions.
Business Progress:
The company is transitioning to higher-value products, with the announced installation of two new continuous dry kilns at Duke Point sawmill and Chemainus. These investments will support increased production of approximately 140 million board feet of kiln-dried lumber products.
They completed the installation of a machine stress-rated lumber grader at Duke Point and are commissioning a new continuous dry kiln at the Saltair lumber operation in 2023.
WFSTF is advancing First Nations partnerships and has signed agreements with 4 Vancouver Island First Nations.
They are focusing on returning to profitability while transitioning to higher-value products through strategic capital investments.
It is expected that lumber prices in Japan will modestly improve in 2024 and demand for their industrial lumber products will remain stable. Demand and prices in China are also expected to marginally improve.
Western Forest Products plans to manage its manufacturing operating schedules to match production to market demand.
Cedar business is anticipated to recover throughout the year, with stable demand and strong prices in timbers and clears. Decking is showing signs of improvement while trim and fencing are expected to remain soft.
Industrial business is projected to remain stable with a focus on value-added programs in commodities, despite expected volatility. The product mix should be similar to Q1 throughout the year.
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