West Fraser Timber Co Ltd WFG

Primary Symbol: T.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 Jul 28, 2022 7:55am

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Post# 34856230

TD

Looks like a beat and they currently have a US$120.00 target. GLTA

West Fraser Timber Co. Ltd.

(WFG-N, WFG-T) US$94.35 | C$120.93

Strong Q2/22 Results; Tempered Shipment Guidance Event

West Fraser reported Q2/22 results yesterday evening after market close. Adjusted EBITDA of $1.124 billion exceeded our estimate of $976.7 million and the consensus forecast of $1.049 billion. Adjusted Q2/22 EPS of $7.59 was similarly above our forecast of $6.33 and the consensus estimate of $6.88.

Conference call at 11:30 a.m. ET today: 1-888-390-0605 or westfraser.com.

Impact: SLIGHTLY POSITIVE

Reductions to 2022 shipment guidance ranges across several segments are notable, but, we are encouraged by impressive Q2/22 operating results. West Fraser's Q2/22 earnings declined on both y/y and q/q bases, but adjusted EBITDA was still 2.9x our estimate of trend (mid-cycle) quarterly potential as wood product price realization declines lagged the average cash commodity price collapse during the quarter.

Sawmill and North American EWP margins were better than expected. Strong contributions from the North American wood product segments (resilient price realizations plus a larger-than-expected sawmill inventory decline) more than offset ongoing pulp & paper losses and sequential pressure on European panel earnings.
Management lowered 2022 shipment guidance. The company expects that 2022 western Canadian lumber shipments will be towards the bottom end of the previous 2.8-3.0 billion board feet range. North American OSB shipment guidance for 2022 is now 5.9-6.2 billion square feet (down 3% from previous guidance). 2022 Europe OSB shipment guidance is now 1.0-1.2 billion square feet (down 9% from the previous range).
West Fraser retains a flexible balance sheet despite an accelerating pace of capital deployment. The company ended Q2/22 with net cash of $782 million and available liquidity of $2.334 billion. This is after Q2/22 share buybacks of $1.475 billion. Capex guidance for 2022 remains $500$600 million, but management expects the total to end up towards the low end of the range. Activity under the NCIB was suspended for the duration of the SIB, but the company has 3.5 million shares remaining under the authorization.
To no surprise, management did not address recent press speculation that Kronospan and CVC Capital are prepared to bid for the company. We also expect that this topic will be avoided on today's conference call.