West Fraser Timber Co. Ltd. (WFG) Earnings Call Transcript & Summary

There's an executive management team are joining us there. On behalf of the Board of Directors and the management team, I'm pleased to welcome you to the 2021 Annual General Meeting at West Fraser. Due to COVID-19, this meeting is being held virtually through the Lumi platform, allowing us to reduce the risks post by in-person gathering and to help protect the health and safety of our shareholders, directors, public health authorities. Thank you to all of you for joining us virtually. Before we commence the formal business of the meeting, on behalf of the Board, I'd like to acknowledge and thank our Director, John Kethcen, will be retiring from the Board for his long service and contributions to the company over the years. We'll first deal with the formal items of business. At the end of the meeting, our President and CEO, Ray Ferris, who will provide an update on the company's operations. As this meeting is being held virtually, we'd like to set out a few procedures for the orderly conduct of the meeting. Questions in respect of a motion can be submitted by any registered shareholder or duly appointed proxy holder using instant messaging service of the virtual interface. Please note that there may be a slight delay in questions being submitted to us. Questions on the formal media items will be addressed as each item's table. Any questions received of a more general nature will be addressed under the meeting. If we're unable to address your general questions during the meeting, a representative West Fraser will reach out to you following the meeting with a response. Shareholders may start submitting their questions now should they have an for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot for those shareholders who have not submitted a proxy or for those who have submitted a proxy and wish to change their goal. To allow sufficient time for electronic voting, the polls will be opened at the beginning of the meeting, and you will receive a message on the virtual interface requesting you to start registering your vote. I'll remind you that only registered shareholders and duly appointed proxy holders who are properly logged in with their control numbers or user name will be able to see on the screen, all motions to be brought for at this meeting and will be asked to vote on each business item. I would also like to remind you that if you are a registered shareholder and you've already voted by proxy, you need not vote again unless you wish to change your goal. If you plan to vote at the meeting, you may choose to vote on each resolution immediately or wait to capture ballot vote until after an item is discussed or following the conclusion of discussions on all voting matters. To vote, simply click on your choice for, withhold or against as applicable. The confirmation message will appear to ensure your vote has been received to change your goal to simply change our selection. The vote shares submitted on each holding item at the time the poll closes will be reported. As with any new technology, unexpected bridges may occur by our service providers for this platform at Lumi should be able to assist as needed. Those in favor with or against as applicable for each resolution item will be counted by the Scrutineer once the voting is completed. I'll introduce the motions and request that each motion be proposed in accordance with the articles of the company, no motion be seconded. For the benefits of the meeting, I know the shareholders voting by proxy overwhelmingly agreed to authorize me as a proxy holder to vote in favor of the matters to be voted on by shareholders today. I am voted in accordance with these instructions, and therefore, these proxy roles will be reflected in the voting results for the meeting in accordance with the voting instructions of the shareholders. The notice calling this meeting, the management information circular and the formal proxy were mailed to shareholders longer around March 16, 2021. I will dispense with the reading of the notice of the meeting. Copies of the notice of meeting, management information circular and other meeting materials are available under the company's profile on SEDAR, EDGAR and on the company's website. Our transfer agent, AST Trust Company, has attested to the proper mailing of the notice calling this meeting. The secretary of the company has also confirmed that notice calling the meeting was mailed to all shareholders of the company entitled to receive such notices, an AST Trust Company shareholders an importance with the requirements of the company's articles, the British Home Business Corporation and Canadian Securities Laws. The articles of the company require the quorum be present to ensure the meeting is properly constituted. I've been informed by the Scrutineer that we have the shareholders present or represented by proxy, who hold the sufficient number of shares to constitute for. I, therefore, declare that there is a forum at this meeting. The Scrutineer's report will be kept by the second period with the records of the meeting. The notice of the meeting having been duly delivered and a quorum being present, I now declare this meeting to be duly called and regularly constituted for the transaction business. I also now declare the online ballot opening -- online balloting open. I now table and submit to you with the report of the auditor, PricewaterhouseCoopers LLP and the financial statements for the year ended December 31, 2020. We have mailed to requesting shareholders a copy of the annual report, containing the auditor's report and the financial statements with the notice of the meeting, and it has been filed on SEDAR and EDGAR and is available on our reside. I declare that the financial statements and auditor's report have been received by the shareholders as submitted to this meeting. We will now proceed with the election of directors for the upcoming year. The number of directors will be elected as 12. The company has implemented an advanced notice policy requiring shareholders to provide advanced nerves of any additional director nominations. The secretary of the company has advised that no nomination has been received other than those persons named as Director nominees in the information circular for this meeting mailed to shareholders. I would now like to introduce and nominate following individuals to both offices, the drivers of the company until the next Annual General Meeting. Reid Carter, Ray Ferris, John Floren, Kellis Ketcham Johnson, Brian Kenny, Marian Lawson, Colleen McMorrow, Gerald Miller, Bob Phillips, Janice Rennie, Gillian Winckler; and myself, Henry Ketcham. These persons or management's notes for the election to the Board has stated in the information circular for this meeting. With there be no further nominations I did before the nominations closed. I now move to shareholders approve the election of directors for the upcoming year. I would like to remind you that we have previously voted on this matter by proxy and do not wish to change your vote, no further action is required. I'll pause briefly to allow for voting. [Voting]

Thank you. PricewaterhouseCoopers LLP is currently the auditor of the company. I'm now hope that shareholders approved the appointment of PricewaterhouseCoopers LLP chartered accounts as auditors of the company, had a remuneration to be fixed by the directors. I would like to remind you that if you have previously voted on this matter by proxy and do not wish to change or vote, no further action is required. I will pause briefly to allow for voting. [Voting]

Thank you. The next item of the business is for shareholders reported the company's approach for executive compensation, also known as the say-on-pay advisory resolution. Our executive compensation philosophy and policy and programs to align the interest of our executives, we built our shareholders. This compensation approach allows us to attract and retain high-performing executives will be strong incentives to create value for our shareholders on a sustainable basis. I now move that shareholders approve the company's say-on-pay and advisory resolution as more fully described in the information circular. I would like to remind you that we have previously voted on this matter by proxy and do not wish to change your vote, no further actions required. I will pause briefly to allow for voting. [Voting]

Thank you. I now ask the shareholders to finalize their votes if needed within the next 30 seconds before online voting validates close. Again, I would like to remind shareholders that have been previously voted by proxy, but they may not have to vote unless a wish to result with a previously submitted vote. Balloting is closed. As a vice presenter here that ballots and proxies are causative for the meeting indicate that each director nominee received a majority of yes votes, and I declare them duly elected to act as directors of the company for the 2 year. And to other resolutions that is the appointment of the auditor and the advisory resonation on the company's approach to executive compensation that have been approved. I direct that the results of the poll will be included with the minutes of this meeting and the results of the voting will be announced in the news release, reports with TSX and New York Stock Exchange policies and filed on SEDAR and EDGAR. A formal items of business are set out in the notice of the meeting are now being helped with unless there is no further business on comp before the meeting, I declare the formal part of the meeting to be concluded. I now call are Ray Ferris, President and CEO of the company, to provide an update on the company's operations.

Thank you, Hank, and thank you to our shareholders who have voted by proxy to reduce the number of in-person attendees at the meeting. Thank you for your cooperation and understanding during these challenging times. I will now provide a brief update on our company for those listening in. We also have a presentation that I will be referring to for those who are logging virtually. It is now mid-April 2021, and as I reflect on 2020, currently, it has been a very eventful past 16 months. 2020 was, again, another year that demonstrated the resiliency, the notability and long-term investment focus of West Fraser. Every social and economic [indiscernible] set of our lives has been impacted by the COVID-19 pandemic. Perhaps we have never relied more on our culture perseverance and innovation to keep our workplaces and communities safe. Our organization, discover new, safer and more efficient methods to conduct our business, which we believe will have further improved our workplaces for all of our places and will result in long-term value creation for our shareholders. Despite a global pandemic, extreme volatility in demand, the company not only prospered, but also completed the major acquisition of [ Norman ], reinforcing our position in a globally leader in [indiscernible] and now engineered wood. Our goals are straightforward and lasting. Excellence in performance and people, leadership in [indiscernible], challenging satisfaction, for employees, responsibility in our communities, profitability and growth. Our strategy remains simple and unchanged, the low cost, and high [indiscernible], reinvest in our operations and people and maintain a prudent balance sheet. How we execute on these goals is the important detail of how we wish to manage the company. Ultimately, how we manage these objectives is the key to achieving sustainable, strong returns for our shareholders. Often, it's a lot of little things that turn out to be meaningful. Our straightforward business plan, our loyal employees and conservative financial management have consistently supported its long-term value creation for our shareholders. Executing on our business plan remains our first priority. In particular, I want to highlight our safety performance. Safety is a core guide and a business priority for West Fraser. In 2010, we achieved new motto of the lowest recorded rate in our history. We achieved a 26% reduction in serious hand injuries and an overall decline of 28% fewer injuries across our facilities in period of 2019. This is a necessary step toward our goal of eliminating serious incidents and injuries in our workplace. I see some of these points more in detail in a moment. With the completion of the acquisition of [ Norbord ] in early 2021, West Fraser add more speed to its building products portfolio. With now, I'll close to 11,000 employees [indiscernible], OSC, ply, pulp, Landair [indiscernible], we had [indiscernible] board, bioenergy and [indiscernible] This increased scale and greater geographic diversity sets the company on a solid platform to supply our customers. We like trees, and we like the products that can be sustainably produced from our renewable resource. So being able to supply our customers with an even wider range of building products will result in increased efficiency and improve the supply chain. As now, a top global producer for both lumber and OSB, it positions West Fraser as a global wood product supplier. This best-in-class platform further positions West Fraser well for future growth and value enhancement with established operations and expanded platform in North America, the United Kingdom and Europe. Combining these 2 low costs and high-performance teams, we expect to generate more stable and resilient earnings through the cycle. And we are pleased to welcome Norbord's skilled employees to our West Fraser team. Housing is a key indicator of the economy and housing starts, rightfully so, receive a high profile. But it is important to note that, that new residential construction represents roughly 30% of overall lumber demand. With industrial and repair and renovation, combined to be over 60% is the larger and more stable consumers of wood products. After a temporary slowdown at the start of COVID-19, new housing demand has recovered to levels greater than the beginning of the pandemic and higher than the previous 2 years. This is in line with the forecasted long-term housing formations required to meet the major growing corporation. Aging housing [indiscernible], work from home requirements and the growing demand for sustainable renewable building products that can help transition the world to a lower carbon economy are anticipated to continue to drive strong lumber demand through 2021. Mass timber construction will only add to this demand. In 2005, the North American lumber industry was able to supply approximately $74 billion [indiscernible] into robust markets. Since that time, the impacts of the British Columbia online legal, significant wildfires to North America are for harvesting has limited the ability of the industry to meet the existing -- to meet the existing demand. West Fraser continues to grow and the best in the U.S. So today, the only region with the growing timber supply available to meet the needs of what appears to be an expanding economy. Timber supply constraints or regions outside the U.S. South and the lifetime [indiscernible] add new capacity, primarily in U.S. South headwinds to fully meet customer needs. With respect to OSB, the restart of current island facilities, such as our Chambord Vela, maybe required to be additional and higher demand. West Fraser is well prepared to meet the demand for ID products with our established a geographically diversified footprint at [indiscernible] slumber and OSV woods. West Fraser's sustainability story supports a bright future for our business. Our high efficiency, primary manufacturing not only recovers raw materials for a range of valuable secondary products, but also produces 75% of our energy as our renewable resources. This combination supports the carbon storing wood products, which assist an expanding market share, both close to home and abroad. Our business contributes to climate change mitigation by capturing carbon dioxide and force and storing the products that we make. Increasingly, when products are being chosen over competing products because the lighter carbon footprint and environmental attributes. Wood is [indiscernible] based sustainable forest management approach aims to increase the climate benefits for forest, creating additional economic opportunity and manage forestlands in a way that supports multiple other times, such as bio diversity, cultural use, conservation. As I mentioned earlier, our business strategy and value creation plan is simple. Lower costs, reinvesting in people and operations and maintain a prudent balance sheet. We have a proven track record of maintaining a balance of reinvestment that maintains or improves our competitive position while responsively returning capital to shareholders where appropriate. Our expectation is to continue our balanced and conservative approach. As I conclude and wrap up my comments, I would like to update our shareholders on 2 very exciting projects. Our [indiscernible] Georgia replacement saw an expansion project is now in [indiscernible] the [indiscernible] will be one of the most advanced in the U.S., allowing for not only a step change in productivity, but by also creating a better working environment for our employees with a climate control facility. When fully ramped up, the Norman will increase capacity from 170 million to 270 million board feet and approved longer yield from the same log by more than 20%. We also announced the plans spring restart of our Chambord, Québec [indiscernible] plan back in December of 2020. We now recently completed commissioning and is now shipping panels to customers well it continues to ramp up production. I am proud of West Fraser's position as a premier product company. And for our commitment to continuous improvement in all aspects of our business. All of this is not possible with a dedicated and high-performing employees. We invest in our people and operations to achieve best-in-class safety, environmental performance and productivity, while generating long-term value creation opportunities growth. It is our responsibility to ensure opportunities for all of our places to grow and progress and reach their potential. We can only achieve this with the steadfast commitment to diversity and inclusion of [indiscernible] operating. Through a challenging period, our people continue to demonstrate the resiliency and adaptability in business. It is why I have confidence that we will continue to seize the opportunities that the future allows works. I recognize and appreciate the collaboration and cooperation of our customers, our employees and our communities that are so vital. 2020 was a difficult mix of [indiscernible] and dollars, both personally and professionally for everyone. I want to acknowledge and thank every person for their contribution, their dedication and teamwork to enable the company to prosper despite those challenges. I think our Board of Directors for their guidance and expertise in supporting our management team, developing in a stronger company that is ready for its future. Hank, that concludes the meeting.

Thank you, Ray. And now I have some shareholders or duly appointed proxy holders, who would like to ask a question. Can you see instant messaging feature for the virtual interface to do so. We will answer as many questions as time permits. We will now get attending more to type in there on to the Board and management. Thank you to our shareholders, executives and directors for participating in this virtual meeting and your understanding during these challenging circumstances. With that, we can now end the meeting.