Bullboard - Stock Discussion Forum 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... see more

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TSX:WFG - Post Discussion

West Fraser Timber Co Ltd > TD

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Post by retiredcf on Oct 28, 2021 8:10am

TD

As this is a flash report, there's potential for them to raise their current target of US$110.00. GLTA

West Fraser Timber Co. Ltd.

(WFG-N, WFG-T) US$81.21 | C$100.49

Strong Panel Margins Drive Better-than-Expected Q3 Results Event

West Fraser reported Q3/21 results yesterday after market close. Aggregate adjusted EBITDA of $786 million was above our estimate of $621 million and, to a lesser extent, also exceeded the consensus forecast of $768 million. Q3/21 EPS of $4.20 was similarly above our forecast of $2.97 and the consensus forecast of $3.97.

Conference call at 11:30 a.m. ET today: 1-888-390-0605 or link to webcast.

Impact: POSITIVE

West Fraser's Q3/21 earnings pulled back sharply from Q2/21 record results, but were still comfortably above our forecasts and our assessment of the company's mid-cycle potential. In some respects, trends underlying operating metrics echoed Canfor's Q3/21 results released a day prior: 1) European wood product operating margins were exceptional and surprised to the upside, and 2) lumber price realization declines were less pronounced than we expected.

Contributions from West Fraser's engineered wood product (EWP) operations were impressive. Lower North American commodity OSB and Canadian plywood prices negatively affected EBITDA by $445 million relative to Q2 (we had expected more severe pressure). The contribution from the European panel segment set a quarterly record, led by accelerating price gains. Weaker- than-expected lumber segment results were partly a function of higher than a higher-than-expected lumber duty provision. West Fraser's B.C. sawmills ran at 79% of capacity in Q3 and contributed positive EBITDA.
West Fraser retains exceptional balance sheet flexibility despite accelerating capital deployment. Quarter-ending net cash stood at $1.61 billion and available liquidity was $3.13 billion (down marginally from $3.39 billion at the end of Q2/21). The company retained a flexible capital structure despite aggressive share buybacks during Q3 ($892 million to buyback 10% of total shares outstanding). Subsequent to quarter-end, West Fraser announced separate agreements to acquire a sawmill in Texas and an OSB mill in South Carolina.
North American wood product markets are settling after a recent sharp rebound. The Western SPF 2x4 benchmark price closed Tuesday night flat compared with last Thursday at US$622/Mfbm - breaking a string of nine consecutive weekly gains. The current benchmark North Central OSB price of $500/Msf is unchanged week-over-week, up 28% versus the mid-August low.