West Fraser reports Q1 earnings of C$67M, up from loss of C$19M a year earlier, on sales up 26.7% to C$863M; CEO cites recovering US housing market, says outlook for all building products 'cautiously optimistic'

Allison Oesterle

VANCOUVER, Canada , April 25, 2013 (press release) – VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 25, 2013) - West Fraser Timber Co. Ltd. ("WFT") (TSX:WFT) today reported earnings of $67 million or $1.57 per share on sales of $863 million in the first quarter of 2013. These results compare with previous periods as follows:

($ millions except earnings per share ("EPS"))	Q1-13	Q4-12	Q1-12
Sales	863	773	681
EBITDA¹	141	75	17
Operating earnings	101	36	(23)
Earnings (loss)	67	20	(19)
Basic EPS ($)	1.57	0.46	(0.45)
Adjusted earnings (loss)²	103	51	(13)
Adjusted basic EPS ($)²	2.42	1.19	(0.32)

1 In this News Release, reference is made to EBITDA (defined as operating earnings plus amortization). Our management believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures and income taxes. Reference is also made to Adjusted earnings (loss) (calculated as set out in the tables described in footnote 2) and Adjusted basic EPS (collectively, with EBITDA, "these measures"). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none have a standardized meaning prescribed by IFRS. Investors are cautioned that these measures should not be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities.
2 Refer to the table titled "Earnings Adjustments for Certain Non-Operational Items" in Management's Discussion and Analysis of our first quarter 2013 results for details of these adjustments.

Operational Results

In the quarter our lumber operations generated operating earnings of $122 million and EBITDA of $146 million. The improvement over the prior quarter reflects improved prices for SPF and SYP lumber.

The panel segment, which includes plywood, LVL and MDF, generated $14 million of operating earnings and EBITDA of $18 million in the quarter, reflecting higher plywood prices.

Pulp and paper operations generated an operating loss of $4 million in the quarter and EBITDA of $8 million. The decline from the prior quarter occurred despite the increase in pulp prices as the results were adversely affected by production issues at our NBSK mills.

Outlook

Both SPF and SYP lumber prices steadily improved throughout the quarter as we headed into the spring building season. B.C. and Alberta stumpage costs are set to increase in the next quarter but lumber productivity and cost improvements are expected to continue to improve over the next few quarters as we complete various major capital projects.

"We've been encouraged by the recovery of the U.S. housing market over the last few quarters," West Fraser's President and CEO Ted Seraphim said. "Our outlook remains cautiously optimistic for all our building products."

Management's Discussion & Analysis ("MD&A")

The Company's MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

The Company

West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.

Forward-Looking Statements

This news release contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2012 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.

Conference Call

Investors are invited to listen to the quarterly conference call on Friday, April 26, 2013 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-952-6845 (toll- free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.

West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".

West Fraser Timber Co. Ltd.
Condensed Consolidated Balance Sheets
(in millions of Canadian dollars, except where indicated - unaudited)

	March 31		December 31
		2013		2012
Assets
Current assets
Cash and short-term investments	$	61	$	102
Receivables		329		251
Inventories (note 4)		572		459
Prepaid expenses		16		11
		978		823
Property, plant and equipment		974		959
Timber licences		492		496
Goodwill and other intangibles		327		330
Other assets		9		10
	$	2,780	$	2,618

Liabilities
Current liabilities
Cheques issued in excess of funds on deposit	$	11	$	-
Payables and accrued liabilities		371		322
Income taxes payable		31		20
Reforestation and decommissioning obligations		42		43
		455		385
Long-term debt (note 5)		306		300
Other liabilities (note 6)		407		313
Deferred income taxes		106		128
		1,274		1,126

Shareholders' Equity
Share capital		602		602
Accumulated other comprehensive earnings		(4)		(9)
Retained earnings		908		899
		1,506		1,492
	$	2,780	$	2,618

Number of Common shares and Class B Common shares outstanding at April 25, 2013 was 42,864,668.

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(in millions of Canadian dollars, except where indicated - unaudited)

	January 1 to March 31
	2013		2012
Share capital
Balance - beginning and end of period	$	602	$	601

Accumulated other comprehensive earnings
Balance - beginning of period	$	(9)	$	(6)
Translation gain (loss) on foreign operations		5		(4)
Balance - end of period	$	(4)	$	(10)

Retained earnings
Balance - beginning of period	$	899	$	888
Actuarial loss on employee future benefits (net of tax)		(52)		(12)
Earnings for the period		67		(19)
Dividends		(6)		(6)
Balance - end of period	$	908	$	851

Shareholders' equity	$	1,506	$	1,442

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(in millions of Canadian dollars, except where indicated - unaudited)

	January 1 to March 31
	2013		2012

Sales	$	863	$	681

Costs and expenses
Cost of products sold		541		496
Freight and other distribution costs		117		117
Export taxes		-		13
Amortization		40		40
Selling, general and administration		32		26
Equity-based compensation		32		12
		762		704
Operating earnings		101		(23)
Finance expense (note 8)		(7)		(7)
Exchange gain (loss) on long-term debt		(6)		6
Other expense (note 9)		(3)		-
Earnings before tax provision		85		(24)
Tax recovery (provision) (note 10)		(18)		5
Earnings	$	67	$	(19)

Earnings per share (dollars) (note 11)
Basic	$	1.57	$	(0.45)
Diluted	$	1.57	$	(0.45)

Comprehensive earnings
Earnings	$	67	$	(19)
Other comprehensive earnings
Translation gain (loss) on foreign operations¹		5		(4)
Actuarial loss on employee future benefits²		(52)		(12)
Comprehensive earnings	$	20	$	(35)

1 Reclassified through earnings in the event of a reduction in net investment in foreign operations.
2 Not reclassified through earnings. Net of income tax of $17 million (three months ended March 31, 2012 - $4 million).

West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except where indicated - unaudited)

		January 1 to March 31
		2013		2012
Operating activities
Earnings		$	67	$	(19)
Adjustments
	Amortization		40		40
	Finance expense		7		7
	Exchange loss (gain) on long-term debt		6		(6)
	Tax provision (recovery)		18		(5)
	Income taxes received (paid)		(12)		4
	Reforestation and decommissioning obligations		18		12
	Employee future benefits expense		12		10
	Contributions to employee future benefit plans		(6)		(4)
	Other		-		(1)
Changes in non-cash working capital
	Receivables		(77)		(50)
	Inventories		(112)		(80)
	Prepaid expenses		(5)		(3)
	Payables and accrued liabilities		46		26
Cash flows from operating activities			2		(69)

Financing activities
Proceeds from operating loans			-		56
Finance charges paid			(1)		(1)
Dividends			(6)		(6)
Other			-		1
Cash flows from financing activities			(7)		50

Investing activities
Additions to capital assets			(49)		(51)
Proceeds from Green Transformation Program			1		16
Proceeds from disposal of capital assets			1		2
Cash flows from investing activities			(47)		(33)

Change in cash			(52)		(52)
Cash - beginning of period			102		68
Cash - end of period		$	50	$	16

Cash consists of
Cash and short-term investments		$	61	$	30
Cheques issued in excess of funds on deposit			(11)		(14)
		$	50	$	16

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