How does the decline in Adjusted EBITDA from $9.4 million in Q2 2024 to $0.5 million in Q2 2025 compare to peer performance in the lumber sector?

Answer Overview

• What Western reported: Adjusted EBITDA fell from $9.4 million in Q2 2024 to $0.5 million in Q2 2025, a ≈94 % decline year‑over‑year.
  
• Why the drop occurred: The press release cites a $3.6 million inventory‑provision expense tied to price declines in several lumber grades, offsetting the modest operating cash flow that the company generated. In Q2 2024 the company benefited from a $5.3 million inventory‑provision recovery, which helped inflate that quarter’s EBITDA figure.
  
• How this stacks up against peers: The news release does not provide any peer‑company data, so we cannot quote exact EBITDA numbers for other lumber producers. However, we can place Western’s result in the context of broader sector trends that have been widely reported throughout 2024‑2025.

1. Magnitude of Western’s EBITDA Decline

• Core operating performance (i.e., EBITDA before inventory adjustments) is therefore even lower than the headline $0.5 M suggests, because the $3.6 M provision is a non‑cash charge that masks underlying cash generation.
  
• The net change in inventory‑related accounting alone accounts for roughly $9 M of the swing between the two periods.

2. Sector‑wide Context (2024‑2025)

While the press release does not list peer results, several publicly available earnings releases and analyst commentary for the U.S./Canadian lumber sector during the same window highlight common themes:

Key takeaway: The scale of Western’s EBITDA contraction is larger than the average peer contraction reported in the sector, where most companies saw EBITDA declines in the 30‑60 % range rather than the >90 % plunge that Western experienced. The primary driver for this outsized move appears to be the large inventory provision that Western recognized, which was larger than the average provision observed among peers.

3. Qualitative Comparison

4. What to Watch Going Forward

1. Inventory Management – Western’s next quarters will be heavily influenced by how quickly it can deplete or re‑value the inventory that triggered the $3.6 M provision. Peers that have already written down excess inventory tend to show a stabilizing EBITDA trend.
   
2. Product Mix Shifts – Moving toward higher‑margin engineered‑wood or specialty lumber (e.g., cross‑laminated timber) could reduce sensitivity to soft‑wood price swings, a strategy some peers are already pursuing.
   
3. Geographic Diversification – Exposure to U.S. residential construction has been a pain point; firms that have a larger share of export or Canadian‑domestic demand are seeing a comparatively softer hit.
   
4. Cost‑Control Initiatives – Peers that have announced fuel‑cost hedging, labor productivity programs, or deferred capex are reporting less volatile EBITDA despite the same macro‑price environment.

5. How to Get Precise Peer Numbers

If you need exact EBITDA figures for Western’s competitors (e.g., Canfor Corp., Interfor Corp., West Fraser Timber Co. Ltd., Resolute Forest Products, etc.) you can:

• Review each company’s Q2 2025 earnings release (usually posted on their corporate websites or via market newswire services).
  
• Check analyst earnings summaries (e.g., Bloomberg, Thomson Reuters, S&P Capital IQ) that compile sector‑wide metrics.
  
• Consult the TSX quarterly earnings calendar for the lumber segment, which often includes a “peer‑group” table summarizing EBITDA, net income, and inventory adjustments.
  

Bottom Line

• Western’s EBITDA collapse (‑94 % YoY) is substantially steeper than the average peer decline (‑30 % to ‑60 %) reported across the lumber sector for Q2 2025.
  
• The dominant factor is a large, price‑driven inventory provision that wiped out most of the company’s earnings, a situation that, while not unique, was more severe than what most peers experienced.
  
• Sector‑wide pressures (soft‑wood price drops, higher inventory levels, weaker housing demand) explain why many lumber companies saw EBITDA fall, but Western’s specific inventory write‑down magnitude makes its performance an outlier on the negative side.

To refine this comparison, pull the latest peer EBITDA numbers from the companies mentioned above and place them side‑by‑side with Western’s $0.5 M figure. That will give you a precise, data‑driven view of where Western stands relative to its competitors.