Western Forest Products Announces $9 Million Acquisition of US Lumber Mill

SEATTLE (Scrap Monster): The Vancouver, B.C.-based Western Forest Products Inc. (WFP) has signed a purchase agreement with Hampton Lumber Mills- Washington, Inc. As part of the agreement, WFP will purchase Hampton’s lumber processing and distribution center in Arlington, Washington. The purchase price of the transaction is around $9 million and the deal is expected to close by January this year.

Don Demens, president and CEO of Western stated the acquisition as a natural fit for the company as it allows boosting the production of finished lumber products. The strategic location of the warehousing and distribution facility will help the company to offer better and more effective services to its US customers. The proposed site offers tremendous benefits including convenient rail access and close proximity to key US markets. The acquisition is part of company’s efforts to strengthen its global competitiveness.

Further, the purchase of the US facility will help the company to offset the damaging effects caused by imposition of hefty duties on lumber exported into the US from Canada. It must be noted that the duties are calculated on the sales price of the products. Also, the transaction is not expected to impact the company’s unprocessed log exports as the new facility does not process logs.

This is the first purchase of a US lumber processing centre by the company till date, said company spokesperson.

The company has undertaken several measures to reduce costs and strengthen its competitiveness. Recently, WFP had announced its decision to shut down the Englewood logging train and use trucks for transporting logs from forestry operations in northern Vancouver regions to its mills spread across the province.

WFP had reported adjusted EBITDA of $32.6 million in Q3 ’17, as compared with the adjusted EBITDA of $35.7 million during the third quarter of 2016. The adjusted EBITDA had fallen by almost one-third over the prior quarter. The net income too had dropped sharply from $16.8 million a year before to $13.6 million in third quarter of 2017. WFP’s lumber revenue had fallen by nearly 10% over the previous year to $212.5 million. The overall lumber sales volume had declined by 13%. The total lumber production had tumbled by almost 19% from 248 million board feet in third quarter of 2016 to 201 million board feet. The company's third quarter results had also indicated 43% decline in total log shipments by the company.

The company is due to announce the Q4 and fiscal 2017 financial and operating results on February 16^th, 2018.