West Fraser Timber Co Ltd T.WFG

Alternate Symbol(s): WFG

Forest Products Lumber & Wood Production

West Fraser Timber Co. Ltd. is a diversified wood products company. The Company is engaged in manufacturing, selling, marketing and distributing lumber, engineered wood products, including oriented strand board (OSB), laminated veneer lumber (LVL), medium-density fiberboard (MDF), plywood, particleboard, pulp, newsprint, wood chips and other residuals and renewable energy. Its products are used in home construction, repair and remodeling, industrial applications, paper, tissues, and box materials. Its segments include Lumber, North America engineered wood products (NA EWP), Pulp & Paper and Europe EWP. Its business comprises lumber mills, OSB facilities, renewable energy facilities, pulp and paper mills, plywood facilities, MDF facilities, particleboard facilities, LVL facility, treated wood facility, and veneer facility. The Company operates approximately 58 facilities in Canada, the United States, the United Kingdom and Europe. It also offers wood preservation services.

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West Fraser Timber Co Ltd

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Post by retiredcfon Jun 09, 2021 6:54am

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Post# 33353592

TD

Currently have a US$113.00 target. GLTA

West Fraser Timber Co. Ltd.

(WFG-N, WFG-T) US$70.99 | C$85.95

West Fraser Raises Regular Dividend and Amends NCIB Event

Yesterday, after market close, West Fraser announced an increase in the regular dividend and amended its normal course issuer bid (NCIB). The regular quarterly dividend has increased 25% to C$0.25/share from C$0.20/share (payable on July 6 to shareholders of record on June 21). The revised share buyback program allows for the incremental repurchase of 3.5 million shares above the previous authorization (total remaining potential repurchases of 5.7 million shares).

Impact: SLIGHTLY POSITIVE

The higher regular dividend is still relatively modest. The revised annual dividend of C$1.00/share has increased 25%, but, in our view, the pro forma annual yield of 1.2% remains conservative.
West Fraser is expected to remain busy on share repurchases. The amended NCIB allows for total incremental repurchases of up to 5.7 million shares until February 16, 2022 (5% of the current total outstanding). Under previous NCIB terms, West Fraser has repurchased almost 3.9 million shares for more than $266 million since mid-February at a weighted average share price 2% above the current level.
Returns of capital to shareholders were identified as a component of allocation plans in recent management presentations. West Fraser exited Q1/21 with net cash on its balance sheet and available liquidity of $2.551 billion. With an extended well-above trend commodity cycle for North American wood products (even as lumber prices correct from the peak), we expect that the capital position will improve over the mid-term. Management is planning to complement capital returns to shareholders with more aggressive discretionary capex and debt repayments.
Capex guidance for 2021 is $450 million — raised in early-May from previous guidance of $430 million and roughly 1.6x trough spending levels for the combined West Fraser/Norbord in 2020. Management has pointed to a runway for sawmill and OSB modernization initiatives in the U.S. South.
Lumber price correction ongoing. Mid-week prices published last evening indicate Western SPF 2x4 cash prices of $1,375/Mfbm — down 6% from last Thursday and 16% below the recent peak three weeks ago. Reports referenced sluggish demand from the U.S. retail channel as well as treaters, and order file lengths of 3-4 weeks (less than half the peak length several weeks ago)