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West Fraser (WFG) to Close Sawmill Due to High Fiber Costs
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West Fraser Timber Co. (WFG - Free Report) announced that it would close its sawmill in Maxville, FL, and suspend operations in Huttig, AR, indefinitely, by the end of January. These moves better align the company's capacity in the United States with demand.
The shutdown of Maxville and the indefinite suspension of the Huttig sawmill will reduce WFG's U.S. lumber capacity by roughly 270 million board feet.
In aggregate, this will reduce West Fraser's U.S. lumber capacity by 270 million board feet. The company expects to incur restructuring and impairment charges of $50 million associated with this announcement in the fourth quarter of 2023.
The closure of Maxville Sawmill will impact 80 employees, while Huttig's operations will affect 140 employees. West Fraser plans to reduce the impacts on affected employees by providing job opportunities at other company operations.
Both mills' capacity to operate profitably has been hampered by high fiber costs at Maxville and the ongoing low-price commodity environment.
In the third quarter of 2023, WFG’s total sales were $1.7 billion compared with $1.6 billion in the year-ago quarter. The lumber segment’s adjusted EBITDA was $44 million.
The company continued to face challenging demand markets in the third quarter, particularly in the lumber segment, wherein it executed curtailments at several locations for planned capital upgrades and customer needs.
WFG expects total timber shipments in 2023 to be in line with that reported in 2022.
However, the company expects its financial flexibility and low cost position to continue to provide it with a competitive edge that will position it well to capitalize on the opportunities that lie ahead.
Price Performance
Shares of the company have gained 17% over the past year compared with the industry's 6.1% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
West Fraser currently carries a Zacks Rank #3 (Hold).
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 52 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP shares rallied 151.5% last year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 71.2% in a year.
The Zacks Consensus Estimate for Ternium’s 2023 earnings is pegged at $7.98 per share. It has an average trailing four-quarter earnings surprise of 38.6%. TX’s shares have gained 36.5% in a year.
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West Fraser (WFG) to Close Sawmill Due to High Fiber Costs
West Fraser Timber Co. (WFG - Free Report) announced that it would close its sawmill in Maxville, FL, and suspend operations in Huttig, AR, indefinitely, by the end of January. These moves better align the company's capacity in the United States with demand.
The shutdown of Maxville and the indefinite suspension of the Huttig sawmill will reduce WFG's U.S. lumber capacity by roughly 270 million board feet.
In aggregate, this will reduce West Fraser's U.S. lumber capacity by 270 million board feet. The company expects to incur restructuring and impairment charges of $50 million associated with this announcement in the fourth quarter of 2023.
The closure of Maxville Sawmill will impact 80 employees, while Huttig's operations will affect 140 employees. West Fraser plans to reduce the impacts on affected employees by providing job opportunities at other company operations.
Both mills' capacity to operate profitably has been hampered by high fiber costs at Maxville and the ongoing low-price commodity environment.
In the third quarter of 2023, WFG’s total sales were $1.7 billion compared with $1.6 billion in the year-ago quarter. The lumber segment’s adjusted EBITDA was $44 million.
The company continued to face challenging demand markets in the third quarter, particularly in the lumber segment, wherein it executed curtailments at several locations for planned capital upgrades and customer needs.
WFG expects total timber shipments in 2023 to be in line with that reported in 2022.
However, the company expects its financial flexibility and low cost position to continue to provide it with a competitive edge that will position it well to capitalize on the opportunities that lie ahead.
Price Performance
Shares of the company have gained 17% over the past year compared with the industry's 6.1% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
West Fraser currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Universal Stainless & Alloy Products, Inc. (USAP - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Ternium S.A. (TX - Free Report) . USAP and CRS sport a Zacks Rank #1 (Strong Buy), and TX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 52 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP shares rallied 151.5% last year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 71.2% in a year.
The Zacks Consensus Estimate for Ternium’s 2023 earnings is pegged at $7.98 per share. It has an average trailing four-quarter earnings surprise of 38.6%. TX’s shares have gained 36.5% in a year.