HispanicBusiness

First Quarter 2013

Overview

Our first quarter 2013 EBITDA of $31.9 million represents a $22.5 million improvement over the same period last year, and a $17.6 million increase from the previous quarter. Our EBITDA margins increased to 13.6% from 4.2% a year ago, and from 6.2% in the fourth quarter of 2012. The improvement in financial results was largely driven by lumber and log price increases, and good execution on the part of our operations.

The United States ("US") housing recovery continues to gain momentum, increasing the demand and price for lumber products. Benchmark KD SPF 2x4 commodity lumber prices for the first quarter of 2013 increased by 47% over the same quarter last year and by 17% over the fourth quarter 2012. Housing starts in the US in March 2013 climbed 7% to a 1.04 million annual rate, the most since June 2008, but still below historical levels. These improvements in the US lumber market are having a positive impact on offshore lumber prices in markets where we ship our product. Demand for lumber in both China and Japan has strengthened in the first quarter of 2013.

Log markets have also shown increased demand, with prices for logs with certain qualities increasing over the same period last year. In particular, prices for domestic peeler and shingle logs and also export logs have been stronger compared to the first quarter of 2012. In anticipation of stronger log markets, our operations group executed well on their plans to move volume quickly through our supply chain, delivering a higher value log mix to external markets, and at the same time supplying logs to our mills to maintain production levels.

During the quarter, revenues were $233.8 million, an increase of 5% over the first quarter of 2012. Net income for the first quarter of 2013 was $22.8 million, an increase of $21.1 million from net income of $1.7 million reported for the first quarter of 2012, and is also an increase from our net income of $14.3 million reported in the previous quarter. The increase in net income is principally because of the higher EBITDA generated in the current quarter.

Our liquidity position at March 31, 2013 increased to $207.0 million from $185.1 million at the end of the previous quarter, and from $114.9 million at March 31, 2012.

Our strategic capital plan continues to progress well. To date we have spent $11.3 million of the projected total cost of $38.0 million for the Saltair mill upgrade, which is expected to be approximately 60% complete in the third quarter of 2013. This capital project will make Saltair the largest, most efficient single line sawmill on the coast of British Columbia. The upgrades will increase production by approximately 15%, reduce the unit cost of production, and will increase our ability to provide a greater variety of finished products to our customers.

Our second project is the development and subsequent installation of automated coastal species lumber grading technology. We expect this project to be ready in the third quarter and the initial installation will be in our Alberni Pacific sawmill, which will yield benefits later in 2013. The technology will allow us to better tailor lumber grades to our customer needs and generally improve processing efficiency. We believe this will be the first application of this technology, now in common use in the British Columbia interior mills, on the more challenging coastal species.

On January 28, 2013, we announced that we had entered into a conditional agreement for the sale of our former Woodfibre Pulp Mill site located near Squamish, British Columbia for the gross purchase price of $25.5 million. Closing is subject to certain conditions, and Western will be responsible for satisfactorily remediating the property to applicable environmental standards prior to closing the sale. After incurring the estimated required remediation costs, Western anticipates receiving net proceeds from the sale and remediation of approximately $17 million. Work is currently in progress by our environmental engineers to prepare a detailed assessment of the remediation costs associated with the site. We expect to have the results of this assessment in the third quarter of 2013. We will continue to pursue further opportunities that may arise to sell non-core or other land assets as appropriate.