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Western Forest Prod (TSE:WEF)
:WEF

Western Forest Prod (WEF) AI Stock Analysis

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Western Forest Prod

(TSX:WEF)

Rating:52Neutral
Price Target:
C$0.50
▲(25.00%Upside)
The overall score reflects Western Forest Products' mixed performance. Financial stability is counterbalanced by weak profitability and modest cash flow improvements. The technical outlook is neutral, and while strategic initiatives offer some promise, operational and market challenges persist. The fire incident further clouds the company's near-term outlook.

Western Forest Prod (WEF) vs. iShares MSCI Canada ETF (EWC)

Western Forest Prod Business Overview & Revenue Model

Company DescriptionWestern Forest Products Inc. engages in the timber harvesting, sawmilling logs into specialty lumber, value-added lumber remanufacturing, and lumber purchasing and wholesaling businesses. Its products have applications in outdoor living; exterior appearance; interior living; and structural applications. The company sells its products in Canada, the United States, China, Japan, Europe, and internationally. Western Forest Products Inc. was founded in 1955 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyWestern Forest Products Inc. generates revenue primarily through the sale of its wood products. The company's key revenue streams include the harvesting and sale of logs, as well as the production and sale of lumber products. It operates several sawmills and remanufacturing facilities, enabling it to produce a wide array of wood products tailored to customer needs in various sectors, such as construction and homebuilding. The company benefits from its access to high-quality timber resources in British Columbia and leverages strategic partnerships and long-term customer relationships to maintain a steady demand for its products. Additionally, Western Forest Products' focus on sustainable forestry practices and certifications helps enhance its market position and appeal to environmentally conscious buyers.

Western Forest Prod Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: -4.76%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant improvements in financial performance and strategic achievements, such as debt reduction and operational efficiency gains. However, challenges remain with softwood lumber duties, harvest permitting delays, and potential US tariffs. Despite these challenges, the company's strong balance sheet and strategic plans position it well for future growth.
Q1-2025 Updates
Positive Updates
Significantly Improved Q1 2025 Results
Western Forest Products reported a significant improvement in Q1 2025 compared to the same period last year, including a reduction in debt and positioning for future growth.
Strategic Achievements
Ratified a new six-year collective agreement with the USW, completed non-core asset sales for $76.5 million, and extended a $250 million credit facility to 2028.
Operational Efficiency Improvements
Achieved 90% operational uptime with improved lumber and grade recovery at the Duke Point sawmill and continuous kiln at Saltair Sawmill achieved 99% uptime.
Improved Financial Metrics
First quarter adjusted EBITDA was $3.5 million, compared to negative $4.2 million last year. Improved inventory turnover ratios: log turnover improved by 6% and lumber turnover by 12%.
Successful Strategic CapEx Plans
Advanced site preparation for two continuous dry kilns with an agreement for $7.5 million reimbursement from the BC Manufacturing Jobs Fund.
Negative Updates
Challenges with Softwood Lumber Duties
Preliminary combined softwood lumber duty rate of approximately 34% may result in a non-cash duty expense of approximately US$43 million in the second half of 2025.
Harvest Permitting Delays
Delays in harvest permitting led to lean log inventories for certain BC sawmills, impacting log availability.
Potential Impact of US Tariffs
Uncertainty around potential US tariffs and trade measures, including Section 232 review, could impact the company's operations and financials.
Company Guidance
During Western Forest Products' Q1 2025 results call, the company provided guidance on various financial and operational metrics. The first quarter saw significant improvements, with adjusted EBITDA reaching $3.5 million compared to a negative $4.2 million in the same period last year. The company successfully reduced its net debt-to-cap ratio to 4% and extended its $250 million credit facility to 2028. Western reported the sale of non-core assets for $76.5 million and secured a $7.5 million reimbursement agreement with the BC government for kiln investments. Despite mechanical downtime at the Duke Point sawmill, operational uptime improved to 90%, and the Saltair Sawmill achieved a 99% uptime. Lumber inventory stood at approximately 66 million board feet, with log inventory at 753,000 cubic meters. The company forecasts 2025 CapEx spending between $60 million to $65 million, including $30 million for continuous kilns, and anticipates lumber shipment growth of 28% year-over-year. Looking forward, Western expects North American markets to remain volatile due to potential tariffs, while anticipating increased demand in Japan and North America, with a Q2 order file of approximately 116 million board feet.

Western Forest Prod Financial Statement Overview

Summary
Western Forest Prod is facing operational challenges with negative profitability margins over the TTM period. Despite a modest revenue increase, profitability remains a concern. The balance sheet is strong with low leverage and a high equity ratio, but negative returns on equity due to net losses are a downside. Cash flow improvements are visible but remain limited, reflecting liquidity management concerns. Overall, while the company exhibits financial stability, operational efficiencies and profit margins need significant attention.
Income Statement
45
Neutral
The company's TTM (Trailing-Twelve-Months) gross profit margin stands at 6.21%, which is significantly lower compared to historical figures, indicating declining profitability. The net profit margin is negative due to ongoing net losses, reflecting continued financial strain. Revenue growth is modest at 2.16% compared to the previous year-end, but EBIT and EBITDA margins remain negative, pointing to operational challenges.
Balance Sheet
60
Neutral
The debt-to-equity ratio is 0.08, indicating low leverage and financial stability. However, the return on equity is negative due to net losses, impacting overall investor returns. The equity ratio is 66.45%, which shows a strong equity base relative to assets, providing a buffer against potential liabilities.
Cash Flow
50
Neutral
The TTM free cash flow is positive but marginal at $4.7 million, showing some improvement from the previous negative trend. Operating cash flow to net income ratio is positive, suggesting better cash generation relative to net income. However, free cash flow growth rate is not particularly strong, indicating potential liquidity constraints.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.09B1.06B1.02B1.44B1.42B964.90M
Gross Profit67.50M90.20M50.60M254.50M399.00M171.60M
EBITDA19.70M13.70M-35.10M137.00M317.70M107.00M
Net Income-8.70M-30.40M-68.50M61.70M201.40M33.10M
Balance Sheet
Total Assets860.70M915.50M915.40M932.80M959.00M852.20M
Cash, Cash Equivalents and Short-Term Investments4.80M7.90M2.30M15.80M130.00M2.90M
Total Debt45.90M105.00M104.60M20.60M18.30M93.70M
Total Liabilities280.90M349.20M347.50M281.10M341.80M346.60M
Stockholders Equity571.90M558.20M565.00M647.20M612.10M504.50M
Cash Flow
Free Cash Flow4.70M-13.30M-78.20M-56.80M248.50M61.70M
Operating Cash Flow42.40M20.10M-33.80M-10.30M281.60M80.40M
Investing Cash Flow38.30M3.00M-38.60M-59.90M38.70M-14.50M
Financing Cash Flow-78.40M-17.50M58.90M-44.00M-193.20M-65.10M

Western Forest Prod Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price0.40
Price Trends
50DMA
0.40
Negative
100DMA
0.41
Negative
200DMA
0.43
Negative
Market Momentum
MACD
>-0.01
Negative
RSI
51.68
Neutral
STOCH
65.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WEF, the sentiment is Neutral. The current price of 0.4 is above the 20-day moving average (MA) of 0.40, below the 50-day MA of 0.40, and below the 200-day MA of 0.43, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 51.68 is Neutral, neither overbought nor oversold. The STOCH value of 65.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:WEF.

Western Forest Prod Peers Comparison

Overall Rating
UnderperformOutperform
Sector (43)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSWEF
52
Neutral
C$126.70M-1.51%9.47%85.29%
43
Neutral
AU$1.39B-6.14-40.74%4.06%-3.45%-41.77%
$54.14M-16.05%
WFWFG
$6.00B6,496.670.03%1.69%
TSADN
75
Outperform
C$321.24M16.255.85%6.49%12.30%-36.60%
$498.71M-16.90%
$1.23B-18.19%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:WEF
Western Forest Prod
0.40
-0.04
-9.09%
ICLTF
GreenFirst Forest Products
2.40
-0.72
-23.08%
WFG
West Fraser Timber Co
77.96
1.98
2.61%
TSE:ADN
Acadian Timber
17.93
1.88
11.71%
IFSPF
Interfor
9.96
-1.62
-13.99%
CFPZF
Canfor
10.80
0.61
5.99%

Western Forest Prod Corporate Events

Business Operations and StrategyFinancial Disclosures
Western Forest Products to Release Q2 2025 Results and Host Conference Call
Neutral
Jul 1, 2025

Western Forest Products Inc. announced the release date for its second quarter 2025 financial and operating results, which will be available on August 7, 2025. The company will host a conference call on August 8, 2025, featuring discussions by key executives, including the CEO, CFO, and Senior Vice President, on the results and a Q&A session with analysts. This announcement is significant for stakeholders as it provides insights into the company’s performance and strategic direction, potentially impacting its market position and investor confidence.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Delistings and Listing ChangesStock Split
Western Forest Products Announces Share Consolidation
Neutral
Jul 1, 2025

Western Forest Products Inc. has announced the implementation of a share consolidation, consolidating its common shares on a 1-for-30 basis, following shareholder approval. This move, pending final regulatory approval, aims to streamline the company’s share structure, potentially impacting its market positioning and shareholder value.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Business Operations and Strategy
Fire Renders Western Forest Products’ Columbia Vista Sawmill Inoperable
Negative
Jun 30, 2025

Western Forest Products Inc. announced that its Columbia Vista Division sawmill in Vancouver, Washington, has been extensively damaged by a fire, rendering it inoperable. The mill, which produced 53 million board feet of lumber in 2024, primarily focused on Douglas Fir specialty products for Japan and U.S. markets. While no injuries were reported, the incident may impact the company’s operations and market supply, necessitating an investigation and assessment to determine the next steps.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Shareholder MeetingsStock Split
Western Forest Products Announces Shareholder Meeting Results and Share Consolidation Approval
Neutral
May 8, 2025

Western Forest Products Inc. held its Annual General and Special Meeting of Shareholders, where the re-election of its board of directors was confirmed, and a special resolution was approved to authorize a share consolidation. The share consolidation, which aims to adjust the company’s share structure, will be executed at a ratio determined by the board within a range of one post-consolidation share for every 25 to 40 pre-consolidation shares, subject to market conditions and regulatory approval. This move is expected to impact the company’s market operations and shareholder value, with further details to be provided in future communications.

Business Operations and StrategyFinancial Disclosures
Western Forest Products Reports Strong Q1 2025 Results Amid Market Challenges
Positive
May 6, 2025

Western Forest Products Inc. reported a significant improvement in its financial performance for the first quarter of 2025, achieving a net income of $13.8 million compared to a net loss in the previous year. The company reduced its net debt substantially through non-core asset sales, enhancing its liquidity and financial flexibility. Additionally, Western is advancing its transition to higher-value products by investing in continuous dry kilns and has extended its credit facility maturity to 2028. However, the company faces potential challenges from increased countervailing and anti-dumping rates announced by the US Department of Commerce, which could impact its export expenses.

Private Placements and FinancingBusiness Operations and Strategy
Western Forest Products Extends $250 Million Credit Facility
Positive
May 1, 2025

Western Forest Products Inc. has announced the amendment and extension of its $250 million syndicated credit facility, now maturing on July 21, 2028. This move ensures financial stability and supports the company’s strategic operations in the competitive global softwood market, maintaining unchanged security and financial covenants.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 01, 2025