Mr. Sean McLaren reports

WEST FRASER ANNOUNCES FOURTH QUARTER 2023 RESULTS

West Fraser Timber Co. Ltd. has released the fourth quarter results of 2023. All dollar amounts in this news release are expressed in U.S. dollars unless noted otherwise.

Fourth quarter highlights:

• Sales of $1,514-million and loss of $153-million, or ($1.87) per diluted share;
• Adjusted earnings before interest, taxes, depreciation and amortization of $97-million, representing 6 per cent of sales;
• Lumber segment adjusted EBITDA of ($51-million);
• North America engineered wood products segment adjusted EBITDA of $143-million;
• Pulp and paper segment adjusted EBITDA of $2-million;
• Europe engineered wood products segment adjusted EBITDA of $3-million;
• Repurchased 1,495,000 shares for aggregate consideration of $104-million;
• Completed acquisition of Spray Lake Sawmills located in Cochrane, Alta., and associated timber tenures.

Annual highlights:

• Sales of $6,454-million and loss of $167-million, or ($2.01) per diluted share;
• Adjusted EBITDA of $561-million, representing 9 per cent of sales;
• Lumber segment adjusted EBITDA of $2-million, including $62-million of export duty recovery attributable to finalization of AR;
• NA EWP segment adjusted EBITDA of $589-million;
• Pulp and paper segment adjusted EBITDA of ($77-million);
• Europe EWP segment adjusted EBITDA of $46-million;
• Repurchased 1,835,000 shares for aggregate consideration of $129-million.

Subsequent to quarter-end:

• Effective Jan. 1, 2024, Sean McLaren succeeded Ray Ferris as president and chief executive officer, and joined the board of directors;
• Announced permanent closure of lumber mill in Maxville, Fla., and indefinite curtailment of operations at lumber mill in Huttig, Ark.;
• Announced permanent closure of lumber mill in Fraser Lake, B.C., following an orderly wind-down;
• Completed sale of Hinton pulp mill.

"The fourth quarter of 2023 saw continued weakness in demand for our North American lumber and European panel products. In contrast, demand for our North American OSB, plywood and other engineered products experienced resilient demand as new home construction markets were surprisingly robust with mortgage rates showing signs of stabilizing after moving meaningfully higher earlier in the year," said Sean McLaren, West Fraser's president and chief executive officer. "On balance, while 2023 was a challenging year financially, it was also a period marked by significant progress in our ongoing portfolio optimization strategy, which we advanced through acquisitions, announced divestitures, mill curtailments and major capital investments.

"Although demand markets face a measure of uncertainty in the near term, we will continue to look for opportunities that improve West Fraser over the longer term. We have been prudent and purposeful in preparing the company for what may lie ahead as we transition into 2024, and we believe our people and our culture combined with our diversified manufacturing platform and financial flexibility will continue to provide competitive advantages that are important to the business and our stakeholders, and that will allow us to continue to successfully execute our business strategy."

Outlook

Markets

Several key trends that have served as positive drivers in recent years are expected to continue to support medium- and longer-term demand for new home construction in North America.

The most significant uses for its North America lumber, OSB and engineered wood panel products are residential construction, repair and remodelling, and industrial applications. Over the medium term, improved housing affordability from stabilization of inflation and interest rates, a large cohort of the population entering the typical home buying stage, and an aging U.S. housing stock are expected to drive new home construction and repair and renovation spending that supports lumber, plywood and OSB demand. Over the longer term, growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America.

The seasonally adjusted annualized rate of U.S. housing starts was 1.46 million units in December, 2023, with permits issued of 1.50 million units, according to the U.S. Census Bureau. While there are near-term uncertainties for new home construction, owing in large part to interest rate expectations and the direction of changes to mortgage rates and the resulting impact on housing affordability, unemployment remains relatively low in the United States, and central bankers across North America have indicated that the current rate hiking cycle appears to be nearing its end. However, demand for new home construction and its wood building products may decline in the near term should the broader economy and employment slow or interest rates remain elevated or increase further than currently expected, impacting consumer sentiment and housing affordability.

Although it continues to experience near-term softness, it expects demand for its European products will grow over the longer term as use of OSB as an alternative to plywood grows. Further, an aging housing stock supports long-term repair and renovation spending and additional demand for its wood building products. Near-term risks, including relatively high interest rates, continuing geopolitical developments and the lagged impact of recent inflationary pressures, may cause further temporary slowing of demand for its panel products in the United Kingdom and Europe. Despite these risks, it is confident that it will be able to navigate through this period and capitalize on the long-term growth opportunities ahead.

In the pulp and paper segment, the Hinton pulp sale transaction closed on Feb. 3, 2024, following the completion of the customary regulatory reviews and closing conditions. Activities in respect of the closing conditions for the sale of Quesnel River pulp mill and Slave Lake pulp mill are proceeding, and it continues to anticipate closing of the transaction in early 2024.

Operations

The company is providing the following operational guidance for 2024:

• Spruce-pine-fir shipments are expected to be 2.6 billion to 2.8 billion board feet.
• Southern yellow pine shipments are expected to be 2.7 billion to 2.9 billion board feet.
• NA OSB shipments are expected to be 6.3 billion to 6.6 billion square feet (three-eighth-of-an-inch basis).
• European OSB shipments are expected to be 900 million to 1.1 billion square feet (three-eighth-of-an-inch basis).
• Costs and availability constraints for transportation, raw materials such as resins and chemicals, and energy are expected to moderate over the near term, while labour availability and some capital equipment lead times are expected to remain challenging.
• Capital expenditures are expected to be $450-million to $550-million.

Dividend declared

The board of directors of the company has declared a dividend of 30 cents per share on the common shares and the Class B common shares in the capital of the company, payable on April 4, 2024, to shareholders of record on March 15, 2024. Dividends are designated to be eligible dividends pursuant to Subsection 89(14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends. Dividends are declared and payable in U.S. dollars. Shareholders may elect to receive their dividends in Canadian dollars. Details regarding the election procedure are available on its website in the investors/stock information/dividends section.

Management's discussion and analysis

Its 2023 annual MD&A, audited annual consolidated financial statements and accompanying notes are available on its website, and the SEDAR+ and EDGAR websites under the company's profile.

Sustainability report

West Fraser's 2022 sustainability report is available on the company's website. This report summarizes its environmental, social and governance performance with a focus on its people, communities and role of its products in the carbon cycle. It is aligned with the Sustainable Accounting Standards Board, Global Reporting Initiative, the Task Force on Climate-related Financial Disclosures and CDP (formerly the Carbon Disclosure Project).

Conference call

West Fraser will hold an analyst conference call to discuss the company's fourth quarter 2023 financial and operating results on Thursday, Feb. 15, 2024, at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time). To participate in the call, please dial: 1-888-390-0605 (toll-free North America) or 416-764-8609 (toll) or connect on the webcast. The call and an earnings presentation will also be available through West Fraser's website. Please let the operator know you wish to participate in the West Fraser conference call chaired by Mr. McLaren.

Following management's discussion of the quarterly results, investors and the analyst community will be invited to ask questions. The call will be recorded for webcasting purposes and will be available on the West Fraser website.

About West Fraser Timber Co. Ltd.

West Fraser is a diversified wood product 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.

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