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West Fraser Announces 2021 Third Quarter Results

General News
West Fraser Timber Logo - Lumber Mill

West Fraser Timber Co. Ltd. (“West Fraser” or the “Company”) reported the third quarter results of 2021. All dollar amounts in this news release are expressed in U.S. dollars unless noted otherwise.

The results of operations presented and discussed below include those of Norbord from February 1, 2021, the date of the completion of the acquisition of Norbord.

Third Quarter Highlights

– Sales of $2.358 billion and earnings of $460 million, or 20% of sales

– Adjusted EBITDA of $786 million, representing 33% of sales

– Record Adjusted EBITDA of $90 million for Europe EWP segment

– Repurchased $100 million of WFG Common shares for cancellation under normal course issuer bid (“NCIB”)

– Completed CAD$1.0 billion substantial issuer bid (“SIB”)

– Finished the quarter with liquidity at $3.130 billion and net debt to total capital ratio of (27)%

– Hosted virtual Analyst & Investor Event

– Published 2020 Sustainability Report

– Announce agreement to acquire Angelina Forest Products lumber mill for approximately $300 million and Georgia Pacific OSB mill for approximately $280 million, both subsequent to quarter-end

“Despite a number of challenges, the third quarter of 2021 was one of West Fraser’s strongest quarter ever,” said Ray Ferris, West Fraser’s President & CEO. “We operated responsibly across the business, managing the complexities of transportation and mill disruptions in the face of higher duties and B.C. stumpage and softer demand in a cyclical commodity environment.”

“The benefits of product and geographic diversification following the Norbord acquisition were especially evident this quarter in the relative strength of our North American OSB results and the record performance from Europe EWP, where Adjusted EBITDA more than doubled quarter-over-quarter. While demand for a number of our products softened in the third quarter, fundamentals for housing remain favourable and we are seeing early signs of a recovery in repair and remodelling demand. As always, we remain focused on the health and safety of our employees and will manage the business to be flexible to meet the changing needs of our customers.”

Operational Results Summary

Our Lumber segment generated operating earnings in the quarter of $52 million (Q2-21 – $955 million) and Adjusted EBITDA of $93 million (Q2-21 – $994 million). Adjusted EBITDA decreased due to lower lumber prices, lower shipment volumes and increased duty rates. Our British Columbia lumber mills operated at 79% of stated capacity in the quarter. Adjusted EBITDA was also negatively affected by higher manufacturing costs due in part to increased SPF log costs, higher expenditures related to increased employee costs in the U.S. South associated with managing through COVID-19 impacts and other input cost inflation.

Our NA EWP segment generated operating earnings in the quarter of $539 million (Q2-21 – $1,017 million) and Adjusted EBITDA of $612 million (Q2-21 – $1,106 million). Adjusted EBITDA decreased due to lower OSB and plywood prices and lower shipment volumes as a result of reduced demand and due to wildfires in British Columbia, which disrupted transportation services. Higher log costs from increased B.C. stumpage rates and higher resin costs also negatively impacted Adjusted EBITDA.

Our Pulp & Paper segment generated operating earnings in the quarter of negative $15 million (Q2-21 – $17 million) and Adjusted EBITDA of negative $7 million (Q2-21 – $25 million) while the Europe EWP segment generated record operating earnings in the quarter of $67 million (Q2-21 – $15 million) and record Adjusted EBITDA of $90 million (Q2-21 – $39 million). The increase in Europe EWP segment Adjusted EBITDA was driven by higher panel prices, partially offset by higher resin costs.

Capital Allocation

Available liquidity decreased slightly to $3,130 million at the end of the third quarter from $3,392 million at the end of the prior quarter. The balance sheet remains strong and continues to afford significant flexibility to undertake strategic capital investments, repay debt and repurchase shares.

Share Repurchases

In the third quarter of 2021, we repurchased approximately 1.3 million shares under the NCIB at an average share price of CAD$97.56 ($77.60) for aggregate consideration of $100 million. All shares purchased by the Company under the NCIB will be cancelled.

On July 12, 2021, we commenced a substantial issuer bid pursuant to which the Company offered to purchase from shareholders for cancellation up to CAD$1.0 billion of common shares. On August 20, 2021, the SIB was completed and a total of 10,309,278 common shares were taken up and purchased for cancellation at a price of CAD$97.00 ($76.84) per share.

Acquisition of Texas Lumber Mill and South Carolina OSB Mill

On October 12, 2021, we announced our entry into an agreement to acquire the Angelina Forest Products’ SYP lumber mill located in Lufkin, Texas for approximately $300 million subject to certain post-closing adjustments. We intend to fund this acquisition using cash on hand. The new turn-key facility began construction in 2018 and commenced operations in late 2019. The facility is expected to progress toward production capacity of approximately 305 million board feet over the next three to four years. The transaction is anticipated to close following successful completion of U.S. regulatory reviews and satisfaction of customary closing conditions.

On October 26, 2021, we announced our entry into an agreement to acquire Georgia Pacific’s OSB mill located near Allendale, South Carolina for approximately $280 million. We intend to fund this acquisition using cash on hand. The Allendale facility commenced production in 2007, has been idle since late 2019 and has an estimated stated capacity of approximately 760 million square feet (3/8-inch basis). The Company intends to invest an estimated $70 million of additional capital to upgrade and optimize the facility in preparation for its restart. The transaction is anticipated to close following successful completion of U.S. regulatory reviews and satisfaction of customary conditions.

Dividend Currency Change

As the majority of our shareholder base is now outside Canada, and the majority of our cash flows are denominated in U.S. dollars, we have decided that future dividends will be declared and payable in U.S. dollars. Registered shareholders who wish to continue to receive their dividends in Canadian dollars (“CAD”) will be able to elect to do so with our transfer agent (see “Notice of Change of Transfer Agent and Registrar” below). Beneficial shareholders who wish to continue to receive their dividends in CAD should contact their brokers. Further information will be posted on our website at when available.



The most significant uses for our lumber and OSB products are residential construction, repair and remodelling, and industrial applications. Low mortgage rates, low volumes of homes available for resale and increasing acceptance of remote working appear to be positively influencing the demand for new housing in North America. An aging housing stock and repair and renovation spending should also continue to drive lumber, plywood and OSB demand. Growing market penetration of mass timber in industrial and commercial applications also stands to support medium-to-longer term demand growth for wood building products.

The demand for our European products is expected to continue to be robust as demand for OSB as an alternative to plywood in Europe continues to grow. An aging European housing stock is also expected to drive repair and renovation spending, supporting the growing demand for our wood building products.

Our balance sheet remains strong and well equipped to face potential volatility in our markets over the coming quarters, to support capital expenditure plans and to return capital to shareholders.


Due to wildfires in British Columbia, slowing orders for forest products, constraints on the availability of resins used in the manufacture of panel products, transportation service interruptions and overall inventory levels, output was reduced at West Fraser’s British Columbia SPF, U.S. South SYP, North American OSB and Canadian plywood facilities in the third quarter of 2021. West Fraser has since begun to increase operating schedules and anticipates increasing operating rates through the remainder of the fourth quarter, depending on developments relating to the factors noted above as well as economic log supply, weather conditions and availability of labour due to the continuing impacts of COVID-19.

On January 1, 2021, stumpage rates increased in B.C. due to the market-based adjustments related to lumber prices and purchase log costs. Further increases in B.C. stumpage rates occurred on July 1, 2021 and October 1, 2021, but we expect B.C. stumpage to decrease on January 1, 2022. In Alberta and Ontario, stumpage rates have declined from levels earlier in the year, as they are closely linked to the price of lumber and OSB and respond rapidly to changes in lumber and OSB prices. We expect SYP log costs to increase modestly in the fourth quarter. We also have routine maintenance outages planned for the fourth quarter at several of our EWP facilities.

British Columbia Wildfires

British Columbia faced extreme heat and dry ground conditions, resulting in a significant number of wildfires in the second and third quarters of 2021. By September 30, approximately 869,000 hectares of area were burned from wildfires in British Columbia in 2021, trailing only the provincial area lost from wildfires in 2017 and 2018. The near-to-medium-term impact of these losses on our future production and shipments is still to be determined.

Strategic Capital Program

We continue to expect to move forward with approximately $180 million of additional capital projects identified under West Fraser’s strategic capital program. Work on these projects has begun and will continue through 2023. This investment program will support safety, cost improvements and strategic growth initiatives as we continue our focus on capital execution and operational excellence. The average project payback period for this strategic capital program is expected to be three to four years. Notwithstanding the addition of these capital projects, as a result of lengthening lead times on projects currently underway, we are narrowing our 2021 capital expenditure target to be approximately $400 million, which is at the low end of the range of our prior guidance of approximately $400 million to $450 million.

Norbord Integration Update

The integration of the Norbord business is progressing well and continues to be a Company focus. We remain on track to achieve targeted annual synergies of $61 million by the end of 2022.

For the full third quarter results, click here.

About West Fraser

West Fraser is a diversified wood products company with more than 60 facilities in Canada, the United States, the United Kingdom, and Europe. From responsibly sourced and sustainably managed forest resources, the Company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser’s products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials.


Robert B. Winslow – Director, Investor Relations & Corporate Development – – (416) 777-4426

Source: West Fraser Timber Co. Ltd.