GreenFirst Forest Products Inc (ICLTF) Q4 2024 Earnings Call Highlights: Strategic Adjustments …

🗝️ Key Points

• Release Date: March 17, 2025For the complete transcript of the earnings call, please refer to the full earnings call transcript.
• Q & A Highlights Q: With the recent announcements around tariffs, what does GreenFirst management believe the impact will be on the industry?.
• A: Michel Lessard, President, explained that the Canadian industry has deposited over $7 billion in duties, and the new tariffs could impact cash flow and net income, reducing.

Release Date: March 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GreenFirst Forest Products Inc (ICLTF, Financial) significantly improved its debt position and strengthened its balance sheet in Q4 2024.
• The company raised over $25 million through a rights offering and generated approximately $55 million in cash during the quarter.
• GreenFirst Forest Products Inc (ICLTF) Achieved a reduction in the cost of goods sold by $15 per 1,000 FBM and lowered SGNA by $12 per 1,000.
• The company reported a positive year-over-year EBITDA improvement of $38 million and net income from continuing operations improved by $18 million versus 2023.
• GreenFirst Forest Products Inc (ICLTF) successfully executed the Cap Paper spin-out, allowing the company to focus on its core business of sawmills.

Negative Points

• The company ended the fourth quarter with a net loss from continuing operations, adjusted for one-time events.
• Revenue decreased by 1% quarter over quarter compared to Q3 2024, driven by a 12% increase in the average lumber price.
• The volume of lumber sold was down 12%, primarily due to weather-related conditions impacting the supply chain in Northern Ontario.
• GreenFirst Forest Products Inc (ICLTF) incurred losses of $16 million on the sale of non-core assets during the quarter.
• The company is pausing selected aspects of its $50 million strategic plan due to uncertainty surrounding potential US tariffs.

Q & A Highlights

Q: With the recent announcements around tariffs, what does GreenFirst management believe the impact will be on the industry?
A: Michel Lessard, President, explained that the Canadian industry has deposited over $7 billion in duties, and the new tariffs could impact cash flow and net income, reducing funds for reinvestment and modernization. The tariffs might also drive less demand due to higher prices, causing market confusion and a wait-and-see approach among buyers. The tight lumber supply chain has led to increased lumber futures prices, which means US customers will bear the tariff costs. The impact on the US economy is uncertain, given the significant housing shortage.

Q: Trump has stated that the US does not need lumber from Canada. Can the US lumber industry meet US demand?
A: Joel Fournier, CEO, stated that the US currently meets about 71% of its lumber demand, with Canada providing 24%. During the COVID-19 lumber market peak, US production only increased by 3% due to labor and resource constraints. Meeting the demand gap would require building 60 new sawmills, which is a long-term endeavor due to resource and manpower limitations.

Q: What will the company do to mitigate the impacts of the recently announced tariff?
A: Joel Fournier, CEO, mentioned that GreenFirst has built a solid balance sheet to execute its capital expenditure plan but will pause certain elements to understand the tariff impact better. The company has a strong customer base in Canada and is exploring international markets. They are also working closely with provincial governments and wood associations to support the industry.

Q: With the completion of the Cap Paper spin-out, how does this impact the company?
A: Joel Fournier, CEO, explained that the spin-out allows GreenFirst to focus on its core sawmill business. The company is now looking to improve Recovery and reduce log costs. Cap Paper remains a customer for wood chips, and GreenFirst has expanded its customer base for residues to mitigate risks.

Q: How does the announced slowdown of capital expenditures impact your mission to become a top quartile lumber producer in North America?
A: Joel Fournier, CEO, stated that the slowdown is temporary and prudent to understand the tariff impact. The goal remains to be a top quartile producer and the largest wood producer in Ontario, focusing on continuous improvements and high-payback projects.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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