Acadian Timber Corp.

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Good day, ladies and gentlemen. Thank you for standing by. And welcome to Acadian Timber second quarter 2022 analyst conference call and webcast. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1. Please be advised that today's conference may be recorded. I would now like to end the conference over to your speaker host, Susan Wood, financial officer. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's second quarter conference call. With me on the call today is Adam Szyparski, Acadian's president and chief executive officer. Before discussing Acadian's results, I will first remind everyone that in discussing our second quarter financial and operating performance, the outlook for the remainder of 2022, and responding to your questions, we may make forward-looking statements. These statements are subject to known and unknown risks and future results may vary materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on CDAR and on our website at AcadianTimber.com. I'll begin by outlining our financial highlights for our second quarter ended June 25th, 2022. Then Adam will comment on our operations, market conditions, and outlook for the remainder of the year. During the second quarter, Acadian benefited from strong demand for its products and increased prices. However, a later startup after the spring saw and limited contractor availability resulted in lower volumes as compared to the second quarter of 2021. Sales for the second quarter were $16.5 million. compared to $19.4 million in the prior year period. Sales volume, excluding biomass, decreased 21% compared to the prior year period. Weighted average selling price, excluding biomass, increased 18% year over year, benefiting from strong saw log prices and improved pulpwood prices driven by strong demand, as well as the partial recovery of rising fuel costs from our customers. Operating costs of $13.8 million in the quarter were $1.8 million lower than the prior year, reflecting lower harvesting activity and timber services, partially offset by higher fuel prices. Variable costs per cubic meter increased 33% as a result of higher fuel costs during the second quarter of 2022. Adjusted EBITDA totaled $2.7 million during the quarter, compared to $3.9 million in the prior period. Adjusted EBITDA margin for the quarter was 17% compared to 20% in the prior year period. Our net income for the second quarter was $4.5 million compared to $6 million in the prior year period. The variance in net income compared to the prior year period was primarily the result of lower sales volumes and the non-cash unrealized foreign exchange gain on long-term debt recorded in the prior year of $2.3 million. As a result of the application of hedge accounting effective January 1st, 2022, these adjustments are now recorded in other comprehensive income rather than through profit and loss. Reflecting the seasonality of the business, we generated $1.9 million of free cash flow and declared dividends of $4.9 million to our shareholders during the second quarter, or 29 cents per share. I'll now move into the second quarter results for our New Brunswick operations. Sales for our New Brunswick timberlands were $13.5 million compared to $15.9 million during the prior year period. Sales volume, excluding biomass, decreased by 17%, primarily due to the later start to operations and limited contractor availability previously mentioned, which also impacted timber services activity. Operating costs in the second quarter totaled $10.9 million compared to $12 million in the prior year period. The decrease in operating costs is a result of lower harvesting activity and timber services activity, partially offset by higher fuel prices. Weighted average variable cost per cubic meter increased 38% as a result of higher fuel costs compared to the prior year period. New Brunswick's adjusted EBITDA in the quarter was $2.7 million. compared to $3.9 million in the prior year period. Adjusted EBITDA margin decreased to 20% compared to 25% last year. Switching over to Maine. Sales during the second quarter totaled $2.9 million compared to $3.5 million in the same period last year. Sales volume excluding biomass decreased 33%, also reflecting a later start to operations compared to the prior year. and limited contractor availability at the start of spring operations. The weighted average selling price, including biomass in US dollar terms, increased 18% compared to the prior year with higher saw log and pulpwood prices benefiting from favorable market dynamics, as well as fuel cost recovery from customers. In Canadian dollar terms, prices increased 23%. Operating totaled $2.6 million in the quarter, compared to $3.1 million during the same period last year, primarily due to lower harvesting activity. Weighted average variable cost, excluding biomass, increased 20%, primarily as a result of higher fuel costs. Adjusted EBITDA for the quarter was $0.4 million, and adjusted EBITDA margin was 12%, both consistent with the same period last year. With respect to Acadian's financial position, it remained strong, ending the second quarter with a net liquidity position of $19.5 million, including a cash balance of $6.8 million, and our revolving credit facilities, which remain undrawn. Our first dividend with the drip in place occurred during the quarter and contributed $1.1 million to our liquidity. As a final note and as a reminder, in the current rising interest rate environment, Acadian's debt has fixed rate terms expiring in 2025 through 2030. With that, I'll turn the call over to Adam.