Yesterday, Western Forest released their 3rd quarter results.

So far, the market seems to be reacting to Western Forest negatively,  the stock is down over 3% as of writing this.  Personally, I thought the earnings report was fine, and mostly as expected, I am still long on this stock.  You can view the FULL earnings release HERE.

Below are highlights & my thoughts.

3rd Quarter Highlights:

• Delivered third quarter adjusted EBITDA of $32.3 million and net income of $15.1 million
• Achieved Company record quarterly average realized lumber price of $1,124 per thousand board feet
• Increased internal saw log consumption to 82% from 76% in the third quarter of last year
• Accelerated capital invested to $20.7 million, including $5.9 million at our Arlington facility
• Entered into a new $250 million credit facility that includes an additional $100 million accordion feature
• Returned $8.8 million to shareholders via the Company’s recently increased quarterly dividend
• Completed $10.4 million of share repurchases, cancelling 4.6 million common shares

Year to date, EBITDA is up 10% from the same time last year.  Year to date net income is also up around 15%.

Western Forest knows that the current drop in share price (due to US trade relations & seasonal weakness/lower lumber prices) wont last forever. They have taken this opportunity to buy back over $10 million in share repurchases. Even with a dividend increase earlier this year, the dividend is easily covered by earnings and the company has no debt.  The stock has dropped 2.55% since earnings were released, I expect mostly due to decreased demand and the uncertainty with US trade relations.  I am still long on this stock, and think management should continue to buy back shares. I recently added to my position. You can read more about that purchase HERE

As of writing, Western Forest is trading at $1.91 per share.  This represents a discount of over 35% from its 52 week high.  On earnings, the stock looks cheap as well – currently trading at just 9.8x.

Summary:

As long as you are patient, you can sit back and enjoy a safe 4.59% yield while you wait for the stock price to come back up.

 

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