West Fraser Timber Co. Ltd.
壓縮合並資產負債表
(以百萬美元爲單位，除非另有說明 - 未經審計)
| 9月27日, | 12月31日 | ||||||||||
| 單張債券 | 2024 | 2023 | |||||||||
| 資產 | |||||||||||
| 流動資產 | |||||||||||
現金及現金等價物 | $ | 997 | $ | 900 | |||||||
應收賬款 | 366 | 311 | |||||||||
應收所得稅款項 | 27 | 93 | |||||||||
存貨 | 5 | 800 | 851 | ||||||||
預付費用 | 60 | 40 | |||||||||
| 待售資產 | 6 | — | 182 | ||||||||
| 2,249 | 2,377 | ||||||||||
資產：固定資產 | 3,819 | 3,835 | |||||||||
木材許可證 | 362 | 376 | |||||||||
商譽及其他無形資產 | 2,270 | 2,307 | |||||||||
出口關稅存款 | 17 | 389 | 377 | ||||||||
其他 | 146 | 137 | |||||||||
遞延所得稅資產 | 7 | 6 | |||||||||
| $ | 9,243 | $ | 9,415 | ||||||||
| 負債 | |||||||||||
| 流動負債 | |||||||||||
應付賬款和應計負債 | $ | 616 | $ | 620 | |||||||
開多次數 | 7 | 500 | 300 | ||||||||
| 森林再造和退役義務的流動部分 | 58 | 60 | |||||||||
應付所得稅 | 59 | 7 | |||||||||
| 與待售資產相關的負債 | 6 | — | 63 | ||||||||
| 1,234 | 1,050 | ||||||||||
長期債務 | 7 | — | 199 | ||||||||
其他負債 | 8 | 260 | 260 | ||||||||
遞延所得稅負債 | 631 | 683 | |||||||||
| 2,125 | 2,193 | ||||||||||
| 股東權益 | |||||||||||
股本 | 10 | 2,559 | 2,607 | ||||||||
保留盈餘 | 4,836 | 4,913 | |||||||||
累計其他綜合損失 | (277) | (297) | |||||||||
| 7,118 | 7,223 | ||||||||||
| $ | 9,243 | $ | 9,415 | ||||||||
2024年10月22日，普通股和B類普通股的流通數量爲80,245,852股。
-1-
West Fraser Timber Co. Ltd.
綜合損益表及綜合損益表
(以百萬美元爲單位，除非另有說明 - 未經審計)
| 三個月之內結束 | 九個月結束 | |||||||||||||||||||
| 9月27日, | 2023年9月29日 | 9月27日, | 2023年9月29日 | |||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||
| 銷售 | $ | 1,437 | $ | 1,705 | $ | 4,769 | $ | 4,940 | ||||||||||||
| 費用和支出 | ||||||||||||||||||||
| 銷售產品成本 | 1,072 | 1,128 | 3,322 | 3,568 | ||||||||||||||||
| 運費和其他配送成本 | 200 | 217 | 635 | 682 | ||||||||||||||||
| 淨出口稅 | 17 | 35 | (39) | 65 | — | |||||||||||||||
| 攤銷 | 136 | 132 | 412 | 405 | ||||||||||||||||
| 銷售及行政費用 | 67 | 73 | 213 | 227 | ||||||||||||||||
| 以股票爲基礎的補償 | 15 | (4) | 15 | 11 | ||||||||||||||||
| 重組和減值費用 | 11 | 18 | 13 | 34 | 145 | |||||||||||||||
| 1,545 | 1,521 | 4,697 | 5,036 | |||||||||||||||||
| 營業收益（損失） | (108) | 184 | 72 | (97) | ||||||||||||||||
| 財務收益，淨額 | 12 | 7 | 21 | 21 | 37 | |||||||||||||||
| 其他費用收益 | 13 | (8) | 11 | (13) | 35 | |||||||||||||||
| 稅前盈利（虧損） | (109) | 215 | 80 | (25) | ||||||||||||||||
| 稅收追回（撥備） | 14 | 26 | (56) | (24) | 11 | |||||||||||||||
| 盈利（損失） | $ | (83) | $ | 159 | $ | 57 | $ | (14) | ||||||||||||
每股盈(虧)利 （美元） | ||||||||||||||||||||
| 基本 | 15 | $ | (1.03) | $ | 1.91 | $ | 0.70 | $ | (0.16) | |||||||||||
| 稀釋的 | 15 | $ | (1.03) | $ | 1.81 | $ | 0.70 | $ | (0.18) | |||||||||||
| 綜合收益（損失） | ||||||||||||||||||||
| 盈利（損失） | $ | (83) | $ | 159 | $ | 57 | $ | (14) | ||||||||||||
| 其他全面收益 | ||||||||||||||||||||
| 可能重新分類爲收益的項目 | ||||||||||||||||||||
| 不同功能貨幣操作的翻譯收益（損失） | 31 | (21) | 20 | 7 | ||||||||||||||||
不會重新分類爲收益的項目 | ||||||||||||||||||||
| 退休福利的精算收益（損失），稅後 | 9 | (12) | 30 | 14 | 22 | |||||||||||||||
| 19 | 9 | 34 | 29 | |||||||||||||||||
| 綜合收益（損失） | $ | (64) | $ | 168 | $ | 91 | $ | 16 | ||||||||||||
-2-
West Fraser Timber Co. Ltd.
未實現損益
(以百萬美元爲單位，除非另有說明 - 未經審計)
| 三個月之內結束 | 九個月結束 | |||||||||||||||||||
| 9月27日, | 2023年9月29日 | 9月27日, | 2023年9月29日 | |||||||||||||||||
| 單張債券 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| 股本 | ||||||||||||||||||||
| 期初餘額 | $ | 2,573 | $ | 2,667 | $ | 2,607 | $ | 2,667 | ||||||||||||
| 發行普通股 | 10 | 1 | — | 1 | — | |||||||||||||||
| 回購普通股以取消 | 10 | (15) | (11) | (49) | (11) | |||||||||||||||
| 期末餘額 | $ | 2,559 | $ | 2,656 | $ | 2,559 | $ | 2,656 | ||||||||||||
| 保留盈餘 | ||||||||||||||||||||
| 期初餘額 | $ | 4,978 | $ | 5,053 | $ | 4,913 | $ | 5,283 | ||||||||||||
| 養老金責任準則的已實現損益，淨額稅後 | 9 | (12) | 30 | 14 | 22 | |||||||||||||||
| 回購普通股以取消 | 10 | (21) | (14) | (71) | (14) | |||||||||||||||
| 本期盈利（損失） | (83) | 159 | 57 | (14) | ||||||||||||||||
| 3,341,700 | (26) | (25) | (76) | (75) | ||||||||||||||||
| 期末餘額 | $ | 4,836 | $ | 5,203 | $ | 4,836 | $ | 5,203 | ||||||||||||
| 累計其他綜合損失 | ||||||||||||||||||||
| 期初餘額 | $ | (308) | $ | (304) | $ | (297) | $ | (332) | ||||||||||||
| 不同功能貨幣的營運翻譯收益（損失） | 31 | (21) | 20 | 7 | ||||||||||||||||
| 期末餘額 | $ | (277) | $ | (325) | $ | (277) | $ | (325) | ||||||||||||
| 股東權益 | $ | 7,118 | $ | 7,535 | $ | 7,118 | $ | 7,535 | ||||||||||||
-3-
West Fraser Timber Co. Ltd.
簡明的綜合現金流量表
(以百萬美元爲單位，除非另有說明 - 未經審計)
| 三個月之內結束 | 九個月結束 | |||||||||||||||||||
| 9月27日, | 2023年9月29日 | 9月27日, | 2023年9月29日 | |||||||||||||||||
| 單張債券 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| 經營活動產生的現金流量 | ||||||||||||||||||||
| 盈利（損失） | $ | (83) | $ | 159 | $ | 57 | $ | (14) | ||||||||||||
| 調整 | ||||||||||||||||||||
| 攤銷 | 136 | 132 | 412 | 405 | ||||||||||||||||
| 重組和減值損失 | 11 | 18 | 13 | 34 | 145 | |||||||||||||||
| 財務收益，淨額 | 12 | (7) | (21) | (21) | (37) | |||||||||||||||
| 匯率期貨（獲利）損失 | — | 1 | (4) | (2) | ||||||||||||||||
出口關稅 | 17 | 21 | (53) | 21 | (41) | |||||||||||||||
| 退休福利費用 | 19 | 16 | 53 | 51 | ||||||||||||||||
| 養老福利計劃的淨繳款 | (16) | (11) | (44) | (44) | ||||||||||||||||
| 稅項準備金（收回） | 14 | (26) | 56 | 24 | (11) | |||||||||||||||
| 收到的所得稅 | 14 | 17 | 11 | 3 | ||||||||||||||||
| 電力掉期的未實現虧損（收益） | 9 | (4) | 14 | (25) | ||||||||||||||||
| 其他 | (15) | (22) | (19) | (11) | ||||||||||||||||
| 9,365 | ||||||||||||||||||||
| 應收賬款 | 35 | (5) | (55) | (48) | ||||||||||||||||
| 存貨 | 47 | 41 | 63 | 162 | ||||||||||||||||
| 預付費用 | (1) | 2 | (20) | (22) | ||||||||||||||||
| 應付賬款和應計負債 | (1) | 34 | (38) | (83) | ||||||||||||||||
| 150 | 355 | 488 | 429 | |||||||||||||||||
| 籌集融資活動所用現金 | ||||||||||||||||||||
償還租賃負債 | (4) | (3) | (10) | (11) | ||||||||||||||||
支付的財務費用 | (2) | (3) | (17) | (15) | ||||||||||||||||
回購普通股以進行註銷 | 10 | (39) | — | (117) | — | |||||||||||||||
發行普通股 | 1 | — | 1 | — | ||||||||||||||||
分紅派息 | (26) | (25) | (75) | (75) | ||||||||||||||||
| (70) | (31) | (217) | (101) | |||||||||||||||||
| 投資活動所用現金 | ||||||||||||||||||||
紙漿廠銷售收益 | 6 | — | — | 124 | — | |||||||||||||||
資本資產增加 | (107) | (115) | (331) | (320) | ||||||||||||||||
| 利息收入 | 12 | 12 | 32 | 33 | ||||||||||||||||
| 其他 | — | — | 2 | — | ||||||||||||||||
| (95) | (104) | (174) | (288) | |||||||||||||||||
| 現金及現金等價物淨變動額 | (15) | 220 | 97 | 39 | ||||||||||||||||
| 匯率期貨對現金及現金等價物的影響 | 8 | (10) | — | 2 | ||||||||||||||||
| 現金及現金等價物-期初餘額 | 1,004 | 994 | 900 | 1,162 | ||||||||||||||||
| 現金及現金等價物 - 期末餘額 | $ | 997 | $ | 1,204 | $ | 997 | $ | 1,204 | ||||||||||||
-4-
West Fraser Timber Co. Ltd.
簡明合併財務報表註釋
截至2024年9月27日和2023年9月29日的三個月及九個月
（金額以百萬美元計，除非另有說明-未經審計）
1.業務性質
西弗雷澤木材公司Ltd.（「West Fraser」、「公司」、「我們」 或 「我們的」）是一家多元化的木製品公司，在加拿大、美國、英國和歐洲擁有60多家工廠，在其運營中促進可持續森林實踐。該公司生產木材、工程木製品（OsB、LVL、中密度纖維板、膠合板和刨花板）、紙漿、新聞紙、木片、其他殘留物和可再生能源。West Fraser 的產品用於房屋建築、維修和改造、工業應用、紙張、紙巾和盒子材料。 我們的行政辦公室位於不列顛哥倫比亞省溫哥華市西喬治亞街 885 號 1500 號套房。West Fraser是由合併條款組成的 《商業公司法》 （不列顛哥倫比亞省）並在加拿大不列顛哥倫比亞省註冊。我們的普通股在多倫多證券交易所（「TSX」）和紐約證券交易所（「NYSE」）上市交易，代碼爲WFG。
2.做法的基礎
這些簡明綜合財務報表是根據國際會計準則委員會制定的國際財務報告準則（「IFRS會計準則」）編制的，適用於編制中期財務報表，在國際會計準則34號下， 會計原則變更和披露 這些簡明綜合財務報表採用與最近審計的年度綜合財務報表相同的會計政策。
These condensed consolidated interim financial statements were authorized for issue by the Audit Committee of the Company’s Board of Directors on October 23, 2024. These condensed consolidated interim financial statements should be read in conjunction with our audited annual consolidated financial statements for the year ended December 31, 2023.
Our fiscal year is the calendar year ending December 31. Effective January 1, 2023, our fiscal quarters are the 13-week periods ending on the last Friday of March, June, and September with the fourth quarter ending December 31. References to the three months ended September 27, 2024 and the third quarter of 2024 relate to the 13-week period ended September 27, 2024 and references to the nine months ended September 27, 2024 relate to the 39-week period ended September 27, 2024.
Figures have been rounded to millions of dollars to reflect the accuracy of the underlying balances and as a result certain tables may not add due to rounding impacts.
Assets and liabilities transferred as a result of the sales of the Hinton pulp mill, Quesnel River Pulp mill, and Slave Lake Pulp mill were presented as part of assets held for sale and liabilities held for sale respectively as at December 31, 2023 (see note 6) and are not included in the other balance sheet amounts presented.
Application of new and revised accounting standards
In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1). The amendments clarify that the classification of liabilities as current or non-current should be based on rights that exist at the end of the reporting period. The amendments also clarify the definition of a settlement and provide situations that would be considered as a settlement of a liability. In October 2022, the IASB issued Non-current Liabilities with Covenants (Amendments to IAS 1). These further amendments clarify how to address the effects on classification and disclosure of covenants that an entity is required to comply with on or before the reporting date and covenants that an entity must comply with only after the reporting date. We have adopted these amendments effective January 1, 2024. These amendments did not have a material impact on our consolidated financial statements.
-5-
Accounting standards issued but not yet applied
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements ("IFRS 18"), which replaces IAS 1, Presentation of Financial Statements. IFRS 18 introduces new requirements to improve comparability in the reporting of financial performance to give investors a better basis for analyzing and comparing entities. The standard impacts the presentation of the financial statements and notes, in particular the income statement where entities will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. IFRS 18 will also require management-defined performance measures to be explained and included in a separate note within the financial statements. IFRS 18 is effective for reporting periods beginning on or after January 1, 2027. We are currently assessing the impact of this amendment on our consolidated financial statements.
3.Business combinations
Cariboo Pulp & Paper
We attained sole control of Cariboo Pulp & Paper (“CPP”) during Q1-24 in relation to an agreement (“the CPP agreement”) with Mercer International Inc. (“Mercer”) to dissolve our 50/50 joint venture in Cariboo Pulp & Paper (“CPP JV”). No termination or other amounts are payable by either company in connection with the CPP agreement.
CPP produces northern bleached softwood kraft (“NBSK”) pulp, related by-products, and energy. Prior to the CPP agreement, we accounted for the CPP JV under IFRS Accounting Standards by recognizing our share of the assets, liabilities, revenues, and expenses related to this joint operation.
Prior to the CPP agreement, the CPP JV was a joint operation under IFRS Accounting Standards that met the definition of a business. Accordingly, we applied the requirements for a business combination achieved in stages in accordance with IFRS 3, Business Combinations.
This required us to first remeasure the carrying value of our 50% interest in the CPP JV to fair value and then recognize an additional 50% interest in CPP at fair value in accordance with the requirements of IFRS 3.
The determination of the fair value of identifiable assets and liabilities required management to use estimates that contain uncertainty and critical judgments. We applied the income approach in determining the fair value of property, plant, and equipment. Cash flow forecasts were based on internal estimates for 2024 through 2027 and estimated mid-cycle earnings for subsequent years. Assumptions included production volume, product pricing, raw material input cost, production cost, terminal multiple, and discount rate. Key assumptions were determined using external sources and historical data from internal sources.
We recognized a net gain on the business combination as the estimated fair value of 100% of CPP’s identifiable assets and liabilities exceeded the carrying value of our 50% interest in the CPP JV prior to the CPP agreement.
| Fair value of identifiable assets and liabilities (100% interest in CPP): | |||||
| Cash | $ | 2 | |||
| Accounts receivable | 3 | ||||
| Inventories | 35 | ||||
| Prepaid expenses | 1 | ||||
| Property, plant and equipment | 59 | ||||
| Payables and accrued liabilities | (39) | ||||
| Other liabilities | (14) | ||||
| Deferred income tax liabilities | (1) | ||||
| 44 | |||||
| Less: Carrying value of our previously held 50% interest in the CPP JV | (43) | ||||
| Net gain resulting from the CPP agreement | $ | 1 | |||
The net gain resulting from the CPP agreement was recognized as other income.
-6-
Spray Lake Acquisition
On November 17, 2023, we acquired 100 percent of the shares in Spray Lake Sawmills (1980) Ltd., which operates a lumber mill located in Cochrane, Alberta, and the associated timber licenses (“Spray Lake Acquisition”) for cash consideration of $101 million (CAD$139 million). This acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3 Business Combinations. We have allocated the purchase price based on our estimated fair value of the assets acquired and the liabilities assumed as follows:
| West Fraser purchase consideration: | |||||
| Cash consideration | $ | 101 | |||
| Fair value of net assets acquired: | |||||
| Cash | $ | 1 | |||
| Accounts receivable | 3 | ||||
| Inventories | 24 | ||||
| Prepaid expenses | 1 | ||||
| Income taxes receivable | 1 | ||||
| Property, plant and equipment | 58 | ||||
| Timber licenses | 41 | ||||
| Payables and accrued liabilities | (8) | ||||
| Other liabilities | (3) | ||||
| Deferred income tax liabilities | (18) | ||||
| $ | 101 | ||||
4.Seasonality of operations
Our operating results are subject to seasonal fluctuations that may impact quarter-to-quarter comparisons. Consequently, interim operating results may not proportionately reflect operating results for a full year.
Market demand varies seasonally, as home building activity and repair-and-remodelling work are generally stronger in the spring and summer months. Extreme weather conditions, including wildfires in Western Canada and hurricanes in the U.S. South, may periodically affect operations, including logging, manufacturing and transportation. Log inventory is typically built up in the northern regions of North America and Europe during the winter to sustain our lumber and EWP production during the second quarter when logging is curtailed due to wet and inaccessible land conditions. This inventory is generally consumed in the spring and summer months.
5.Inventories
| September 27, | December 31, | |||||||
| As at | 2024 | 2023 | ||||||
| Manufactured products | $ | 333 | $ | 363 | ||||
| Logs and other raw materials | 219 | 257 | ||||||
| Materials and supplies | 248 | 231 | ||||||
| $ | 800 | $ | 851 | |||||
Inventories at September 27, 2024 were subject to a valuation reserve of $35 million (December 31, 2023 - $31 million) to reflect net realizable value being lower than cost.
-7-
6.Disposal of pulp mills
Sale of Hinton pulp mill
On July 10, 2023, we announced an agreement to sell our unbleached softwood kraft pulp mill in Hinton, Alberta to Mondi Group plc (“Mondi”). The transaction closed on February 3, 2024 following the completion of regulatory reviews and satisfaction of customary closing conditions.
Under the terms of the agreement, Mondi purchased specified assets, including property, plant and equipment and working capital, and assumed certain liabilities related to the Hinton pulp mill in exchange for a base purchase price of $5 million prior to working capital and other adjustments specified in the asset purchase agreement. Pursuant to the transaction, we will continue to supply fibre to the Hinton pulp mill under long-term contract, via residuals from our Alberta lumber mills.
An impairment reversal of $1 million in relation to the sale of the Hinton pulp mill is included in Restructuring and impairment charges for the nine months ended September 27, 2024 (see note 11). The impairment reversal relates to the remeasurement of working capital adjustments specified in the asset purchase agreement.
Sale of Quesnel River Pulp mill and Slave Lake Pulp mill
On September 22, 2023, we announced an agreement to sell our two bleached chemithermomechanical pulp (“BCTMP”) mills, Quesnel River Pulp mill in Quesnel, B.C. and Slave Lake Pulp mill in Slave Lake, Alberta to an affiliate of a fund managed by Atlas Holdings (“Atlas”). The transaction closed on April 20, 2024 following the completion of regulatory reviews and satisfaction of customary closing conditions.
Under the terms of the agreement, Atlas purchased specified assets, including property, plant and equipment, working capital, and certain timber licenses in Alberta, and assumed certain liabilities related to the mills and timber licenses in exchange for a base purchase price of $120 million prior to working capital adjustments specified in the asset purchase agreement. Pursuant to the transaction, we will continue to supply fibre to the Quesnel River Pulp mill under long-term contract.
An impairment loss of $4 million in relation to the sale of the Quesnel River Pulp mill and Slave Lake Pulp mill is included in Restructuring and impairment charges for the nine months ended September 27, 2024 (see note 11). The impairment loss relates to the remeasurement of estimated working capital adjustments specified in the asset purchase agreement.
7.Operating loans and long-term debt
Operating loans
As at September 27, 2024, our credit facilities consisted of a $1 billion committed revolving credit facility which matures July 2028, $25 million of uncommitted revolving credit facilities available to our U.S. subsidiaries, a $20 million (£15 million) credit facility dedicated to our European operations, and a $11 million (CAD$15 million) demand line of credit dedicated to our jointly‑owned newsprint operation.
As at September 27, 2024, our revolving credit facilities were undrawn (December 31, 2023 - undrawn) and the associated deferred financing costs of $2 million (December 31, 2023 - $2 million) were recorded in other assets. Interest on the facilities is payable at floating rates based on Prime Rate Advances, Base Rate Advances, Bankers’ Acceptances, or Secured Overnight Financing Rate (“SOFR”) Advances at our option.
In addition, we have credit facilities totalling $137 million (December 31, 2023 - $133 million) dedicated to letters of credit. Letters of credit in the amount of $39 million (December 31, 2023 - $43 million) were supported by these facilities.
All debt is unsecured except the $11 million (CAD$15 million) jointly-owned newsprint operation demand line of credit, which is secured by that joint operation’s current assets.
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Long-term debt
| September 27, | December 31, | |||||||
| As at | 2024 | 2023 | ||||||
| Senior notes due October 2024; interest at 4.35% | $ | 300 | $ | 300 | ||||
| Term loan due July 2025; floating interest rate | 200 | 200 | ||||||
| 500 | 500 | |||||||
| Less: deferred financing costs | — | (1) | ||||||
| Less: current portion | (500) | (300) | ||||||
| $ | — | $ | 199 | |||||
On October 15, 2024, we repaid the principal and accrued interest on our $300 million senior notes on maturity with cash on hand (see note 19).
The fair value of the long-term debt at September 27, 2024 was $500 million (December 31, 2023 - $494 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.
Interest rate swap contracts
We have interest rate swap contracts that have the effect of fixing the interest rate on the $200 million term loan disclosed in the long-term debt table above. In January 2024, these interest rate swaps were amended to extend their maturity from August 2024 to July 2025. Following this amendment, the weighted average fixed interest rate payable under the contract was 2.61% (previously 0.91%).
The interest rate swap contracts are accounted for as a derivative, with the changes in their fair value included in other income or expense in our consolidated statements of earnings. For the three and nine months ended September 27, 2024, a loss of $2 million and a loss of $3 million (three and nine months ended September 29, 2023 - a loss of $2 million and a loss of $4 million) were recognized in relation to the interest rate swap contracts. The fair value of the interest rate swap contracts at September 27, 2024 was an asset of $3 million (December 31, 2023 - asset of $6 million).
8.Other liabilities
| September 27, | December 31, | ||||||||||
| As at | Note | 2024 | 2023 | ||||||||
Retirement liabilities | $ | 98 | $ | 106 | |||||||
| Non-current portion of reforestation obligations | 34 | 53 | |||||||||
Non-current portion of decommissioning obligations | 22 | 16 | |||||||||
Non-current portion of lease obligations | 26 | 26 | |||||||||
| Export duties | 17 | 44 | 24 | ||||||||
| Electricity swaps | 11 | 12 | |||||||||
| Other | 23 | 22 | |||||||||
| $ | 260 | $ | 260 | ||||||||
9.Retirement benefits
We maintain defined benefit and defined contribution pension plans covering most of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.
In Q3-24, we entered into buy-out annuity purchase agreements to settle $80 million of our defined benefit obligations by purchasing annuities using our plan assets. These agreements transferred the pension obligations of retired employees under certain pension plans to financial institutions. The difference between the cost of the annuity purchases and the
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liabilities held for these pension plans was reflected as a settlement cost of $1 million in Other income (expense) (see note 13).
We used a discount rate assumption of 4.80% at September 27, 2024 (4.69% at December 31, 2023).
The actuarial gain (loss) on retirement benefits, included in other comprehensive earnings, is as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, | September 29, | September 27, | September 29, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| Actuarial gain (loss) | $ | (17) | $ | 40 | $ | 17 | $ | 30 | |||||||||
| Tax recovery (provision) | 5 | (10) | (3) | (8) | |||||||||||||
| $ | (12) | $ | 30 | $ | 14 | $ | 22 | ||||||||||
10.Share capital
Authorized
400,000,000 Common shares, without par value
20,000,000 Class B Common shares, without par value
10,000,000 Preferred shares, issuable in series, without par value
Issued
| September 27, 2024 | December 31, 2023 | ||||||||||||||||
| As at | Number | Amount | Number | Amount | |||||||||||||
| Common | 77,964,374 | $ | 2,559 | 79,439,518 | $ | 2,607 | |||||||||||
| Class B Common | 2,281,478 | — | 2,281,478 | — | |||||||||||||
| Total Common | 80,245,852 | $ | 2,559 | 81,720,996 | $ | 2,607 | |||||||||||
For the three and nine months ended September 27, 2024, we issued 5,240 and 12,550 Common shares under our share option plans (three and nine months ended September 29, 2023 - 383 Common shares) and no Common shares under our employee share purchase plan (three and nine months ended September 29, 2023 - no Common shares).
Rights and restrictions of Common shares
The Common shares and Class B Common shares are equal in all respects, including the right to dividends, rights upon dissolution or winding up and the right to vote, except that each Class B Common share may at any time be exchanged for one Common share. Our Common shares are listed for trading on the TSX and NYSE under the symbol WFG, while our Class B Common shares are not. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B Common shares on a separate class by class basis.
Share repurchases
On February 27, 2024, we renewed our normal course issuer bid (“2024 NCIB”) allowing us to acquire up to 3,971,380 Common shares for cancellation from March 1, 2024 until the expiry of the bid on February 28, 2025.
For the three and nine months ended September 27, 2024, we repurchased for cancellation 446,460 and 1,487,694 Common shares (three and nine months ended September 29, 2023 - 340,000 Common shares) at an average price of $78.67 and $78.83 per share under our 2023 NCIB and 2024 NCIB programs.
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11.Restructuring and impairment charges
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
Impairment and restructuring related to Canadian and U.S. lumber operations | 18 | — | 29 | — | |||||||||||||
| Impairment loss (reversal) related to Hinton pulp mill | $ | — | $ | (4) | $ | (1) | $ | 118 | |||||||||
| Impairment loss related to Quesnel River Pulp mill and Slave Lake Pulp mill | — | 17 | 4 | 17 | |||||||||||||
| Other restructuring charges | 1 | — | 2 | 3 | |||||||||||||
| Impairment related to equity accounted investment | — | — | — | 7 | |||||||||||||
| $ | 18 | $ | 13 | $ | 34 | $ | 145 | ||||||||||
In the three months ended September 27, 2024, we recorded restructuring and impairment charges of $18 million related to the announcement of the indefinite curtailment of operations at our lumber mill in Lake Butler, Florida.
In the nine months ended September 27, 2024, we recorded restructuring and impairment charges of $29 million associated with our permanent closures and indefinite curtailments of lumber mills to better align our capacity with expected future demand.
In Q1-24, we recorded restructuring and impairment charges of $12 million associated with the announcement of the permanent closure of our Fraser Lake lumber mill and the permanent closure of our lumber mill in Maxville, Florida and the indefinite curtailment of operations at our lumber mill in Huttig, Arkansas.
In the nine months ended September 27, 2024, we recorded an impairment reversal of $1 million in relation to the sale of the Hinton pulp mill (see note 6). In addition, we recorded an impairment loss of $4 million in relation to the sale of the Quesnel River Pulp mill and Slave Lake Pulp mill (see note 6).
In the nine months ended September 27, 2024, we recorded restructuring and impairment charges of $2 million related to the restructuring of certain functions at our regional corporate offices.
12.Finance income, net
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
| Interest expense | $ | (7) | $ | (6) | $ | (22) | $ | (18) | |||||||||
| Interest income on cash and cash equivalents | 13 | 13 | 33 | 33 | |||||||||||||
| Net interest income on export duty deposits | 1 | 14 | 13 | 21 | |||||||||||||
| Finance income (expense) on employee future benefits | (1) | — | (2) | 1 | |||||||||||||
| Other | 1 | — | (1) | — | |||||||||||||
| $ | 7 | $ | 21 | $ | 21 | $ | 37 | ||||||||||
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13.Other income (expense)
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
| Gain (loss) on electricity swaps | $ | (10) | $ | 9 | $ | (17) | $ | 30 | |||||||||
| Loss on interest rate swap contracts | (2) | (2) | (3) | (4) | |||||||||||||
| Foreign exchange gain (loss) | — | (1) | 4 | 2 | |||||||||||||
| Settlement gain (loss) on defined benefit pension plans | (1) | 2 | 1 | 6 | |||||||||||||
| Gain resulting from the CPP agreement | — | — | 1 | — | |||||||||||||
Other | 5 | 3 | 1 | 1 | |||||||||||||
| $ | (8) | $ | 11 | $ | (13) | $ | 35 | ||||||||||
14.Tax recovery (provision)
The tax recovery (provision) differs from the amount that would have resulted from applying the B.C. statutory income tax rate to earnings (loss) before tax as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
| Income tax recovery (provision) at statutory rate of 27% | $ | 29 | $ | (58) | $ | (22) | $ | 7 | |||||||||
| Rate differentials between jurisdictions and on specified activities | (4) | 4 | (2) | 3 | |||||||||||||
| Non-taxable amounts | (3) | 2 | (2) | 1 | |||||||||||||
| Other | 4 | (4) | 2 | ||||||||||||||
| Tax recovery (provision) | $ | 26 | $ | (56) | $ | (24) | $ | 11 | |||||||||
15.Earnings (loss) per share
Basic earnings (loss) per share is calculated based on earnings (loss) available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.
Certain of our equity-based compensation plans may be settled in cash or Common shares at the holder’s option and for the purposes of calculating diluted earnings (loss) per share, the more dilutive of the cash-settled and equity-settled method is used, regardless of how the plan is accounted for. Plans that are accounted for using the cash-settled method will require adjustments to the numerator and denominator if the equity-settled method is determined to have a dilutive effect as compared to the cash-settled method.
The numerator under the equity-settled method is calculated based on earnings (loss) available to Common shareholders adjusted to remove the cash-settled equity-based compensation expense or recovery that has been charged or credited to earnings (loss) and deducting a notional charge using the equity‑settled method, as set out below. Adjustments to earnings (loss) are tax-effected as applicable. The denominator under the equity-settled method is calculated using the treasury stock method. Share options under the equity-settled method are considered dilutive when the average market price of our Common shares for the period exceeds the exercise price of the share option.
The cash-settled method was more dilutive for the three and nine months ended September 27, 2024 and therefore no adjustment was required for the numerator and denominator. The equity-settled method was more dilutive for the three and nine months ended September 29, 2023 and an adjustment was required for the numerator and denominator.
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A reconciliation of the numerator and denominator used for the purposes of calculating diluted earnings (loss) per share is as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
| Earnings (loss) | |||||||||||||||||
Numerator for basic EPS | $ | (83) | $ | 159 | $ | 57 | $ | (14) | |||||||||
| Cash-settled recovery included in earnings | — | (6) | — | 3 | |||||||||||||
Equity-settled expense adjustment | — | (2) | — | (5) | |||||||||||||
Numerator for diluted EPS | $ | (83) | $ | 152 | $ | 57 | $ | (15) | |||||||||
Weighted average number of shares (thousands) | |||||||||||||||||
Denominator for basic EPS | 80,346 | 83,499 | 81,078 | 83,537 | |||||||||||||
Effect of dilutive equity-based compensation | — | 300 | — | 297 | |||||||||||||
Denominator for diluted EPS | 80,346 | 83,799 | 81,078 | 83,834 | |||||||||||||
Earnings (loss) per share (dollars) | |||||||||||||||||
Basic | $ | (1.03) | $ | 1.91 | $ | 0.70 | $ | (0.16) | |||||||||
Diluted | $ | (1.03) | $ | 1.81 | $ | 0.70 | $ | (0.18) | |||||||||
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16.Segment and geographical information
| Three Months Ended | Lumber | NA EWP | Pulp & Paper | Europe EWP | Corporate & Other | Total | ||||||||||||||
| September 27, 2024 | ||||||||||||||||||||
| Sales | ||||||||||||||||||||
| To external customers | $ | 583 | $ | 657 | $ | 83 | $ | 115 | $ | — | $ | 1,437 | ||||||||
| To other segments | 10 | 3 | 3 | — | (16) | — | ||||||||||||||
| $ | 593 | $ | 660 | $ | 86 | $ | 115 | $ | (16) | $ | 1,437 | |||||||||
| Cost of products sold | (494) | (429) | (70) | (96) | 16 | (1,072) | ||||||||||||||
| Freight and other distribution costs | (92) | (87) | (12) | (10) | — | (200) | ||||||||||||||
| Export duties, net | (35) | — | — | — | — | (35) | ||||||||||||||
| Amortization | (46) | (71) | (4) | (12) | (3) | (136) | ||||||||||||||
| Selling, general and administration | (34) | (23) | (2) | (8) | — | (67) | ||||||||||||||
| Equity-based compensation | — | — | — | — | (15) | (15) | ||||||||||||||
| Restructuring and impairment charges | (18) | — | — | — | (1) | (18) | ||||||||||||||
| Operating earnings (loss) | $ | (126) | $ | 50 | $ | (2) | $ | (11) | $ | (19) | $ | (108) | ||||||||
| Three Months Ended | Lumber | NA EWP | Pulp & Paper | Europe EWP | Corporate & Other | Total | ||||||||||||||
| September 29, 2023 | ||||||||||||||||||||
| Sales | ||||||||||||||||||||
| To external customers | $ | 681 | $ | 776 | $ | 126 | $ | 121 | $ | — | $ | 1,705 | ||||||||
| To other segments | 16 | 1 | 2 | — | (19) | — | ||||||||||||||
| $ | 697 | $ | 777 | $ | 128 | $ | 121 | $ | (19) | $ | 1,705 | |||||||||
| Cost of products sold | (551) | (386) | (107) | (101) | 17 | (1,128) | ||||||||||||||
| Freight and other distribution costs | (100) | (80) | (27) | (10) | — | (217) | ||||||||||||||
| Export duties, net | 39 | — | — | — | — | 39 | ||||||||||||||
| Amortization | (46) | (67) | (4) | (12) | (3) | (132) | ||||||||||||||
| Selling, general and administration | (41) | (22) | (6) | (6) | 2 | (73) | ||||||||||||||
| Equity-based compensation | — | — | — | — | 4 | 4 | ||||||||||||||
| Restructuring and impairment charges | — | — | (13) | — | — | (13) | ||||||||||||||
| Operating earnings (loss) | $ | (2) | $ | 222 | $ | (29) | $ | (8) | $ | 2 | $ | 184 | ||||||||
| Nine Months Ended | Lumber | NA EWP | Pulp & Paper | Europe EWP | Corporate & Other | Total | ||||||||||||||
| September 27, 2024 | ||||||||||||||||||||
| Sales | ||||||||||||||||||||
| To external customers | $ | 1,942 | $ | 2,160 | $ | 325 | $ | 342 | $ | — | $ | 4,769 | ||||||||
| To other segments | 33 | 7 | 8 | — | (48) | — | ||||||||||||||
| $ | 1,975 | $ | 2,167 | $ | 333 | $ | 342 | $ | (48) | $ | 4,769 | |||||||||
| Cost of products sold | (1,609) | (1,227) | (253) | (282) | 49 | (3,322) | ||||||||||||||
| Freight and other distribution costs | (296) | (250) | (57) | (32) | — | (635) | ||||||||||||||
| Export duties, net | (65) | — | — | — | — | (65) | ||||||||||||||
| Amortization | (145) | (212) | (10) | (36) | (8) | (412) | ||||||||||||||
| Selling, general and administration | (109) | (73) | (9) | (22) | — | (213) | ||||||||||||||
| Equity-based compensation | — | — | — | — | (15) | (15) | ||||||||||||||
| Restructuring and impairment charges | (29) | (1) | (3) | — | (1) | (34) | ||||||||||||||
| Operating earnings (loss) | $ | (278) | $ | 403 | $ | 1 | $ | (31) | $ | (24) | $ | 72 | ||||||||
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| Nine Months Ended | Lumber | NA EWP | Pulp & Paper | Europe EWP | Corporate & Other | Total | ||||||||||||||
| September 29, 2023 | ||||||||||||||||||||
| Sales | ||||||||||||||||||||
| To external customers | $ | 2,123 | $ | 1,943 | $ | 457 | $ | 417 | $ | — | $ | 4,940 | ||||||||
| To other segments | 57 | 5 | 7 | — | (69) | — | ||||||||||||||
| $ | 2,180 | $ | 1,948 | $ | 464 | $ | 417 | $ | (69) | $ | 4,940 | |||||||||
| Cost of products sold | (1,694) | (1,184) | (435) | (322) | 69 | (3,568) | ||||||||||||||
| Freight and other distribution costs | (312) | (248) | (89) | (33) | — | (682) | ||||||||||||||
| Export duties, net | — | — | — | — | — | — | ||||||||||||||
| Amortization | (137) | (204) | (21) | (36) | (7) | (405) | ||||||||||||||
| Selling, general and administration | (121) | (69) | (19) | (18) | — | (227) | ||||||||||||||
| Equity-based compensation | — | — | — | — | (11) | (11) | ||||||||||||||
| Restructuring and impairment charges | (9) | — | (136) | — | — | (145) | ||||||||||||||
| Operating earnings (loss) | $ | (92) | $ | 242 | $ | (236) | $ | 7 | $ | (18) | $ | (97) | ||||||||
The geographic distribution of external sales based on the location of product delivery is as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, | September 29, | September 27, | September 29, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| United States | $ | 949 | $ | 1,184 | $ | 3,187 | $ | 3,265 | |||||||||
| Canada | 293 | 287 | 924 | 844 | |||||||||||||
| U.K. and Europe | 117 | 121 | 346 | 421 | |||||||||||||
| Asia | 78 | 113 | 298 | 407 | |||||||||||||
| Other | — | — | 14 | 3 | |||||||||||||
| $ | 1,437 | $ | 1,705 | $ | 4,769 | $ | 4,940 | ||||||||||
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17.Countervailing (“CVD”) and antidumping (“ADD”) duty dispute
Additional details, including our accounting policy, can be found in note 26 - Countervailing (“CVD”) and antidumping (“ADD”) duty dispute of our audited annual consolidated financial statements for the year ended December 31, 2023.
Developments in CVD and ADD rates
We began paying CVD and ADD duties in 2017 based on the determination of duties payable by the United States Department of Commerce (“USDOC”). The CVD and ADD cash deposit rates are updated upon the finalization of the USDOC’s Administrative Review (“AR”) process for each Period of Inquiry (“POI”), as summarized in the tables below. On March 5, 2024, the USDOC initiated AR6 POI covering the 2023 calendar year. West Fraser was selected as a mandatory respondent, which will result in West Fraser continuing to be subject to a company-specific rate.
On September 24, 2024, the USDOC finalized the duty rate for AR5, resulting in the recognition of an export duty expense of $32 million plus interest expense in earnings, an increase in export duty deposits payable, and a decrease in export duty deposits receivable.
The Cash Deposit Rates and the West Fraser Estimated ADD Rate for the periods presented are as follows:
| Effective dates for CVD | Cash Deposit Rate | ||||
AR6 POI1 | |||||
| January 1, 2023 - July 31, 2023 | 3.62 | % | |||
| August 1, 2023 - September 29, 2023 | 2.19 | % | |||
AR7 POI2 | |||||
| January 1, 2024 - August 18, 2024 | 2.19 | % | |||
| August 19, 2024 - September 27, 2024 | 6.85 | % | |||
1.The CVD rate for the AR6 POI will be adjusted when AR6 is complete and the USDOC finalizes the rate, which is not expected until 2025.
2.The CVD rate for the AR7 POI will be adjusted when AR7 is complete and the USDOC finalizes the rate, which is not expected until 2026.
| Effective dates for ADD | Cash Deposit Rate | West Fraser Estimated Rate | ||||||
AR6 POI1 | ||||||||
| January 1, 2023 - July 31, 2023 | 4.63 | % | 10.40 | % | ||||
| August 1, 2023 - September 29, 2023 | 7.06 | % | 10.40 | % | ||||
AR7 POI2 | ||||||||
| January 1, 2024 - August 18, 2024 | 7.06 | % | 4.42 | % | ||||
August 19, 2024 - September 27, 20243 | 5.04 | % | 4.42 | % | ||||
1.The ADD rate for the AR6 POI will be adjusted when AR6 is complete and the USDOC finalizes the rate, which is not expected until 2025.
2.The ADD rate for the AR7 POI will be adjusted when AR7 is complete and the USDOC finalizes the rate, which is not expected until 2026.
3.On September 24, 2024, the USDOC amended West Fraser's finalized ADD rate to 5.04%. The amendment was retroactively applied to August 19, 2024.
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Impact on results
The following table reconciles our cash deposits paid during the period to export duties, net:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 27, 2024 | September 29, 2023 | September 27, 2024 | September 29, 2023 | ||||||||||||||
Cash deposits1 | $ | (14) | $ | (14) | $ | (44) | $ | (40) | |||||||||
Adjust to West Fraser Estimated ADD rate2 | 10 | (9) | 10 | (22) | |||||||||||||
| Export duties, net | $ | (4) | $ | (24) | $ | (33) | $ | (62) | |||||||||
Duty recovery attributable to AR43 | — | 62 | — | 62 | |||||||||||||
Duty expense attributable to AR54 | (32) | — | (32) | — | |||||||||||||
| Export duty (expense) recovery | (35) | 39 | (65) | — | |||||||||||||
| Net interest income on export duty deposits | 1 | 14 | 13 | 21 | |||||||||||||
1.Represents combined CVD and ADD cash deposit rate of 11.89% for August 19 to September 27, 2024, 9.25% for January 1 to August 18, 2024, 9.25% for August 1 to September 29, 2023 and 8.25% for January 1 to July 31, 2023.
2.Represents adjustment to the annualized West Fraser Estimated ADD rate of 4.42% for Q3-24 and YTD-24 and 10.40% for Q3-23 and YTD-23.
3.$62 million represents the duty recovery attributable to the finalization of AR4 duty rates for the 2021 POI. The final CVD rate was 2.19% and the final ADD rate was 7.06% for AR4.
4.$32 million represents the duty expense attributable to the finalization of AR5 duty rates for the 2022 POI. The final CVD rate was 6.85% and the final ADD rate was 5.04% for AR5.
As of September 27, 2024, our export duties paid and payable on deposit with the USDOC were $880 million.
Impact on balance sheet
Each POI is subject to independent administrative review by the USDOC, and the results of each POI may not be offset but the results within a POI in respect of ADD and CVD may be offset.
Export duty deposits receivable is represented by:
| Nine Months Ended | |||||
| September 27, | |||||
| Export duties receivable | 2024 | ||||
| Beginning of period | $ | 377 | |||
| Adjustment to duty deposits receivable for estimated AR7 ADD rate | 10 | ||||
| Adjustment to duty deposits receivable for finalized AR5 rates | (16) | ||||
| Interest income recognized on duty deposits receivable | 18 | ||||
| End of period | $ | 389 | |||
Export duties payable is represented by:
| Nine Months Ended | |||||
| September 27, | |||||
| Export duties payable | 2024 | ||||
| Beginning of period | $ | 24 | |||
| Duty deposits payable on adjustment to finalized AR5 rates | 15 | ||||
| Interest expense recognized on export duties payable | 5 | ||||
| End of period | $ | 44 | |||
Appeals
Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administration review process is complete and the related appeal processes are concluded.
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18.Contingencies
We are subject to various investigations, claims and legal, regulatory and tax proceedings covering matters that arise in the ordinary course of business activities, including civil claims and lawsuits, regulatory examinations, investigations, audits and requests for information by governmental regulatory agencies and law enforcement authorities in various jurisdictions. Each of these matters is subject to uncertainties and it is possible that some of these matters may be resolved unfavourably. Certain conditions may exist as of the date the financial statements are issued, which may result in an additional loss. In the opinion of management none of these matters are expected to have a material effect on our results of operations or financial condition.
19.Subsequent events
On October 15, 2024, we repaid the principal and accrued interest on our $300 million senior notes on maturity with cash on hand.
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