Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: We've seen a recent uptick in lumber prices. Is this more supply-driven due to curtailments, or are there pockets of improved demand? Also, is there a new cost support level for high-cost producers? A: Eric Cremers, President and CEO, explained that the recent uptick in lumber prices is largely supply-driven, with significant capacity reductions and hurricane impacts. He noted that the industry is losing money, which is unsustainable, leading to price support. Additionally, duties increased from 8% to 14%, and the Federal Reserve's interest rate cuts are expected to boost demand. Regarding cost support, he mentioned that the median mill in British Columbia has a breakeven around $400, which could rise due to upcoming duty increases.
Q: Southern sawlog prices have been flat despite inflation. Can you discuss the potential for price improvement in the South? A: Wayne Wasechek, CFO, stated that Southern sawlog prices are expected to improve as lumber markets recover, particularly in regions with more market tension. He anticipates price increases in the Southeast as lumber production rises, driven by an optimistic outlook for 2025.
Q: Can you clarify the Northern sawlog pricing outlook, considering the density component? A: Wayne Wasechek confirmed that the 2% to 3% increase in Northern sawlog prices is net of the density factor, which accounts for seasonally heavier logs. This reflects an overall increase in indexed sawlog prices, offset slightly by the density factor.
Q: What is the timeline for solar option contracts to impact the P&L, and has there been any change in customer approach due to the elections? A: Eric Cremers expressed optimism about solar, driven by global net-zero goals. He noted strong demand for solar options, with execution timelines extending to 2028. While some contracts may trickle in earlier, significant P&L impact is expected in 2026. He sees no change in customer approach due to elections.
Q: What are your expectations for manufacturing costs in the Wood Products segment with the Waldo ramp-up? Could we see breakeven EBITDA in Q4? A: Eric Cremers indicated that processing costs will drop significantly in Q4 as the Waldo mill ramp-up progresses. He is optimistic about profitability in the fourth quarter, driven by improved lumber prices and reduced start-up costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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