Western Announces First Quarter 2026 Results

• Financial Performance: Western Forest Products reported a net loss of $19.9 million for Q1 2026, compared to a net income of $13.8 million in Q1 2025 (text typo corrected from 2005). Adjusted EBITDA turned negative at -$13.6 million versus positive $3.5 million in the prior year period.
• Revenue Decline: Revenue dropped to $201.5 million from $262.5 million in Q1 2025, representing a significant volume and price contraction. Lumber shipments fell to 113 million board feet from 156 million in the prior year period.
• Asset Disposition: Confirmed agreement to sell 100% of Stillwater Forest Operation for $80.0 million to an entity controlled by Tla'amin Nation, with closing expected in H2 2026. This follows the February 2026 announcement.
• Financing: Entered into a new $30 million bilateral term loan with Royal Bank of Canada (RBC) to repay outstanding drawings on the existing Credit Facility. Maturity is July 21, 2028.
• Regulatory Headwinds: US Department of Commerce preliminary determination indicates AD rate of 10.66% and CV rate of 14.17%. Potential non-cash export tax expense of $26.0 million plus interest if final rates remain unchanged.
• Operational Updates: Commissioned first continuous dry kiln; second expected mid-2026. Labor relations resolved with ratification of a new six-year collective bargaining agreement ending the strike that began Q2 2025.

• Earnings Deterioration: The shift from net income to a significant net loss ($19.9M) and negative EBITDA (-$13.6M) is a clear deterioration compared to Q1 2025. However, this aligns with the trend established in Q4 2025 (Net Loss $17.5M) and Q3 2025 (Net Loss $61.3M). The market has been pricing in losses since late 2025; therefore, while negative, it is not a surprise shock but rather a confirmation of the ongoing operational struggle.
• Liquidity vs. Profitability: Despite the operating loss, liquidity remains robust at $229.4 million. The company has successfully secured additional debt ($30M term loan) and locked in an asset sale ($80M). This mitigates immediate solvency risk despite the negative cash flow from operations.
• Strategic Shift: The sale of Stillwater Forest Operation supports the strategic pivot to higher-value product manufacturing (dry kilns, specialty lumber mix up to 57%). However, revenue decline suggests volume cuts are outpacing value-add benefits in the short term.
• Duty Exposure: The softwood lumber duty exposure remains a material overhang. While preliminary rates are known, final determination could increase costs further, impacting margins significantly if not hedged or passed on.

• Company: Western Forest Products Inc. is a vertically integrated forestry company operating sawmills in British Columbia (BC), Canada.
• Flagship Projects/Operations:
  • Cedar Lumber Operations: Focus on high-value cedar lumber, which commands premium pricing ($193/m3 log sales price).
  • Value-Added Manufacturing: Investment in continuous dry kilns and thermal kilns to increase specialty lumber mix (currently 57%).
  • Stillwater Forest Operation: Previously a major timber supply asset (~154,000 hectares), now being divested to Tla'amin Nation.
• Development Status: Transitioning from volume-based production to value-added manufacturing. Operations are currently curtailed at Saltair and Ladysmith sawmills due to market conditions.