Hamir Patel

Hamir Patel asked about the drivers behind recent lumber and OSB price improvements, specifically whether they reflect curtailments or underlying demand, and the potential for a production response in Southern lumber given current pricing. He also inquired about any constraints preventing a more meaningful production response.

Answer

CEO Devin Stockfish explained that price improvements are primarily supply-side driven due to curtailments and reduced Canadian volumes, with a small seasonal demand pickup. He noted that Southern lumber prices are above cash flow break-even for most, with some production flex, but conversion to Southern Yellow Pine is key, and he expects further room for Southern lumber prices to run.

Hamir Patel asked about the drivers behind recent improvements in lumber and OSB pricing, questioning whether it's due to curtailments or underlying demand, and inquired about potential constraints on Southern lumber production despite prices moving above break-even.

Answer

CEO Devin Stockfish attributed the pricing improvement primarily to curtailment activity and reduced Canadian volumes, with a minor seasonal demand pickup. He noted that Southern lumber prices are above cash flow break-even for most, with some production flex, but emphasized less volume from Canada and the ongoing conversion of SPF markets to Southern Yellow Pine.

Hamir Patel asked about reports of Canada being more open to a quota-based solution for the softwood lumber dispute and whether there was any corresponding movement on the U.S. side.

Answer

CEO Devin Stockfish acknowledged the ongoing high-level discussions between the U.S. and Canadian governments but stated he had no specific insight into progress on a resolution. He commented that while a deal will eventually be reached, the details are complex, and he does not expect a resolution in the very near term.

Hamir Patel requested more detail on the customers and regions showing interest in transitioning from SPF to Southern Yellow Pine (SYP). He also asked if the repair and remodel (R&R) market is expected to achieve growth in 2025 despite a slow start.

Answer

CEO Devin Stockfish identified the Midwest as a key region for SYP interest, with inquiries coming from a broad customer base including dealers and home improvement retailers. He attributed this to long-term supply shifts. For R&R, he expressed optimism for a pickup later in the year, driven by high home equity and deferred projects, and stated that despite near-term uncertainty, the company still expects a good year overall.

Hamir Patel of CIBC Capital Markets asked about the operating rates for lumber and OSB in Q4, comparing U.S. and Canadian operations, and inquired about the company's flexibility to increase harvest levels if tariffs were to boost U.S. production.

Answer

CEO Devin Stockfish stated that Q4 operating rates were in the low 80% range for lumber, high 90s for OSB, and low-to-mid 70s for EWP, with no material difference between U.S. and Canadian operations. He added that while Weyerhaeuser has some flexibility in harvest levels, it does not flex them significantly to maintain sustainability. However, he noted there is adequate fiber availability in the U.S. South to support increased manufacturing if needed.

Hamir Patel asked Ken Seitz if Nutrien foresees any other meaningful opportunities for non-core asset sales in the coming year, beyond the strategic alternatives review of phosphate, the situation in Trinidad, and previously announced divestitures.

Answer

Ken Seitz, President and CEO, stated that for the time being, Nutrien's focus remains on the phosphate review, assessing options for Trinidad, and continuing the improvement plan in Brazil. He indicated that these three areas represent the primary focus for 2026, with no other *meaningful* non-core asset sales anticipated.

Hamir Patel asked if there are any other meaningful opportunities for non-core asset sales over the coming year, beyond the phosphate review, Trinidad, and already announced divestitures.

Answer

Ken Seitz, President and CEO, stated that the company's primary focus for the time being remains on the phosphate strategic review, assessing options for Trinidad operations, and continuing the improvement plan in Brazil. He indicated that any other potential divestitures would likely be smaller, non-material assets.

Hamir Patel inquired about the M&A pipeline for retail, including the scale of opportunities and vendor price expectations, and asked if the 2026 retail EBITDA target of $2 billion could be achieved with the existing platform.

Answer

President and CEO Kenneth Seitz expressed confidence in reaching the 2026 target of $1.9-$2.1 billion in retail EBITDA, driven by proprietary product growth and cost savings, not just acquisitions. Executive Jeff Tarsi noted he expects M&A opportunities to increase post-planting season, particularly in the U.S. Corn Belt and Australia, with valuations becoming more disciplined. CFO Mark Thompson added that high-quality tuck-ins are being valued at 6-7x pre-synergy EBITDA.

Hamir Patel asked if West Fraser was observing any signs of increasing European lumber imports into the U.S., given their improved competitive position due to duty and tariff changes. He also inquired about OSB demand conditions in Europe, specifically for new residential construction and repair & remodeling.

Answer

President and CEO Sean McLaren and SVP of Sales and Marketing Matt Tobin stated that without U.S. trade data, they lacked visibility into European lumber import changes and had not observed any meaningful shifts. Sean McLaren noted that despite the Cowie incident, there has been some sequential price and demand improvement in European OSB, leading to a more optimistic outlook for the region over the next few quarters.

Hamir Patel asked if West Fraser observed any signs of increasing European lumber imports into the U.S., given their improved competitive position, despite the U.S. trade data shutdown. He also requested comments on OSB demand in Europe, covering both new residential and R&R segments.

Answer

Sean McLaren, President and CEO, and Matt Tobin, SVP of Sales and Marketing, stated they had no significant visibility or observed meaningful changes regarding European lumber imports without the trade data. Sean McLaren, President and CEO, noted some price and demand improvement in European OSB, expressing optimism for the next few quarters, with previous progress having been overshadowed by the Caribou Pulp incident.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been near breakeven, asking about plans for improvement and the possibility of a sale. He also asked how West Fraser would prefer to see potential lumber quotas allocated among provinces and companies.

Answer

CEO Sean McLaren stated that the European business faces the same macro headwinds as North America but is well-positioned with good assets and a strong team, showing recent modest improvement in OSB. He affirmed the company is pleased to have the European assets. On quota allocation specifics, McLaren declined to comment on hypotheticals, emphasizing the immediate priority is the inclusion of wood products in broader trade talks.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been near breakeven, and asked how West Fraser would prefer to see a potential lumber quota allocated among provinces and companies.

Answer

President and CEO Sean McLaren stated that the European business faces the same macro headwinds as North America but is well-positioned with good assets and is seeing modest improvement. He affirmed the company is pleased to have the European assets. On the topic of quota allocation, McLaren declined to comment on hypothetical details, emphasizing the current focus is on supporting the government to include lumber in broader trade discussions.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been near breakeven, and asked about the company's preferred method for allocating potential lumber quotas among provinces and companies.

Answer

CEO Sean McLaren stated that the European business faces the same macro headwinds as North America but is well-positioned with good assets and a strong team for an eventual market recovery. He affirmed the company is pleased to have the European operations. Regarding quotas, McLaren declined to comment on hypothetical allocation details, emphasizing the immediate focus is on including lumber in broader trade negotiations.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been near breakeven, and asked how West Fraser would prefer to see potential lumber quotas allocated among provinces and companies.

Answer

President and CEO Sean McLaren affirmed the company's commitment to its European assets, attributing recent performance to macro challenges similar to North America and noting the business is well-positioned for a recovery. He declined to speculate on the detailed mechanics of a hypothetical quota allocation, emphasizing the immediate goal is to include lumber in broader trade talks.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been near breakeven, and asked if a sale would be considered. He also inquired about how West Fraser would prefer to see potential lumber quotas allocated among provinces and companies.

Answer

President & CEO Sean McLaren affirmed the company's commitment to its European business, stating it faces the same macro headwinds as North America but is well-positioned with good assets and people for an eventual market recovery. Regarding quota allocation specifics, McLaren declined to comment on hypothetical details, reiterating that the immediate focus is on ensuring lumber is part of broader trade negotiations.

Hamir Patel of CIBC Capital Markets questioned the strategy for the European business, which has been hovering around breakeven, and asked about the company's preferred method for allocating potential lumber quotas among provinces and companies.

Answer

CEO Sean McLaren defended the European operations, attributing the performance to macroeconomic challenges similar to North America and expressing confidence in the assets and team for when the market recovers. He stated the company is pleased to have the European business. Regarding quota allocation specifics, Mr. McLaren declined to comment on hypothetical details, emphasizing the immediate goal is to ensure wood products are part of broader trade negotiations.

Hamir Patel questioned whether tariff-related uncertainty and cost escalation could slow down OSB capacity projects across the industry. He also asked if there were signs of builders substituting Southern Yellow Pine (SYP) for SPF lumber.

Answer

President and CEO Sean McLaren declined to comment on other companies' projects but affirmed that for West Fraser, any future major OSB projects would fully account for all equipment costs and potential inflation before being approved. SVP of Sales and Marketing, Matt Tobin, responded to the substitution question, stating it was 'too early to say' if a significant shift from SPF to SYP was occurring, noting that customer purchasing patterns have been normal and it is something they continue to monitor.

Hamir Patel from CIBC Capital Markets asked about historical pricing differentials between Canadian and U.S. lumber customers, the proportion of Canadian OSB shipped to the U.S., and the possibility of provincial stumpage system adjustments in response to tariffs.

Answer

SVP of Sales and Marketing Matt Tobin and President and CEO Sean McLaren noted that Canada is a competitive market and that increased costs to cross the border can create separation between markets. CFO Christopher Virostek directed him to new disclosures in the AIF and MD&A that show approximately 40% of OSB capacity is in Canada and that the vast majority of total North American production is sold in the U.S. McLaren stated it was too early to predict any policy changes to provincial stumpage systems.

Hamir Patel asked for clarification on whether recent SYP mill closures in the industry are being dismantled or simply idled, and inquired about the factors needed to restore profitability in the European panels business.

Answer

President and CEO Sean McLaren explained that for West Fraser, an 'indefinite' closure is a long-term decision, and restarting a mill would require a significant reinvestment plan to make it competitive at the bottom of the cycle, not a short-term move. Regarding the European business, he noted that Q3 results were impacted by a major planned shutdown at an MDF facility. He stated that a broader European economic recovery is needed for a return to normal profitability, but expressed confidence in the company's well-invested assets in the region.

Hamir Patel inquired about Methanex's outlook for the ammonia market following the OCI acquisition and the company's natural gas hedging strategy for the new assets.

Answer

President, CEO & Director Rich Sumner stated that while it is early, the ammonia market is performing as modeled during the acquisition, representing 3-5% of sales. He also explained that with the new assets, the company is now comfortably at its 50% short-term hedging target for North American gas and is opportunistically adding longer-term hedges.

Hamir Patel inquired about the progress of regulatory approvals for the OCI acquisition and the current output levels from the Iranian methanol industry.

Answer

President and CEO Rich Sumner confirmed that the OCI deal's regulatory process is progressing as planned, with an expected close in Q2 2025. Regarding Iran, he noted that tracking import flows into China indicates a significant reduction in Iranian production through December and January due to a domestic energy crisis, with supply constraints likely to persist through the winter and possibly into Q2.

Hamir Patel of CIBC Capital Markets requested a comparison of lumber sales returns between Europe and North America and questioned the company's fiber sourcing strategy for its Celgar mill if U.S. chips were subjected to Canadian counter-tariffs.

Answer

Juan Bueno (Executive) and Richard Short (Executive) noted that while U.S. lumber prices have seen a sharper recent increase (nearly 20%), the European market, particularly the U.K., shows consistent positive evolution. Regarding Celgar, which sources 40% of its chips from the U.S., Bueno expressed confidence in their sourcing flexibility and ability to secure more U.S. fiber if needed. He argued that it's unlikely Canada's counter-tariffs would target their specific chip imports, as it's a very small and specific trade code with little impact on the broader trade dispute.