Canfor Corporation

Good morning. My name is Chris, and I'll be your conference operator today. Welcome to the Canfor and Canfor Pulp first quarter analyst call. All lines have been placed on mute to prevent any background noise. During this call, Canfor and Canfor Pulp's chief financial officer will be referring to a slide presentation that is available in the investor relations section of the company's website. Also, the companies would like to point out that this call will include forward-looking statements, so please refer to the press releases for the associated risks of such statements. I would now like to turn the meeting over to Mr. Don Kane, Canfor and Canfor Pulp's Chief Executive Officer. Please go ahead, Mr. Kane.

Thank you, Operator, and good morning, everyone. Thank you for joining the Canfor and Canfor Pulp Q1 2022 Results Conference Call. I'd like to start by introducing Kevin Edson, who joined Canfor Pulp as President and Chief Executive Officer in April. I've had the great pleasure of knowing Kevin for several years and Kevin most recently served as the President and Chief Executive Officer of Ecom Timber and has extensive experience across the forest sector, including pulp and paper, lumber, and engineered wood products. We're very pleased to have Kevin on board. I'm going to make a few comments before I turn things over to Kevin and Pat Elliott, our Chief Financial Officer of Canfor Corporation and Canfor Pulp, and our Senior Vice President of Sustainability. In addition, we are joined by Kevin Pankratz, Senior Vice President of Sales and Marketing, I would like to begin by acknowledging the hard work, dedication, and resilience of our employees over the last quarter. They continue to persevere in the face of the global supply chain crisis. The crisis started at the beginning of the COVID-19 pandemic and has worsened as the demand for goods has continued to rise. In addition, the supply chain is still experiencing significant COVID-related interruptions, and in British Columbia, we experienced extreme weather and wildfires last year that also disrupted the supply chain. The global supply chain crisis has had a significant impact to Canfor and Canfor Pulp in recent quarters. This has resulted in operational downtime with our sawmills in Western Canada currently running on a reduced schedule to manage excess inventories at our mills. Canfor Pulp has also experienced prolonged and significant operational impacts as Kevin will speak to. We anticipate that supply chain crisis will continue for several more months. Last week, we announced that we are implementing a comprehensive plan to achieve net zero carbon emissions by 2050. We have developed near-term science-based targets to reduce carbon emissions from our pulp and wood products operations by 42% by 2030. In addition, by 2024, we will measure and assess our global supply chain and woodlands emissions, which are defined as scope three, and set a science-based reduction target. We are pleased that forest products are increasingly being recognized for their ability to help mitigate climate change as the world continues to reduce its dependency on fossil fuel-based products. As outlined in October, as part of our sustainability strategy goals, we are focused on building comprehensive and meaningful relationships with our Indigenous partners upon whose traditional territories we operate. We believe we have a responsibility to work in partnership with Indigenous nations to better understand each nation's priorities and to develop opportunities to support those priorities. We are committed to having agreements with all willing Indigenous nations in our operating areas by 2030. Last week, the government of British Columbia announced a doubling of forest revenues shared with First Nations and committed to developing a new forestry revenue sharing model. We believe this is an important step forward with more work to be done to support the interests of Indigenous nations for a greater share of revenues generated from the land base. Turning to our financial results, our lumber business benefited from significantly improved sales realizations in the first quarter, a strong global demand outpaced available supply. While rising interest rates and inflationary pressure may temper lumber demand somewhat, market fundamentals remain strong led by solid repair and remodel activity, household balance sheets, and pent-up demand for new home construction in the United States. Our lumber business continues to be supported by our diversification strategy with our European operations generating another quarter of very strong earnings. With the current fiber supply in British Columbia anticipated to continue declining in the post-mountain pine beetle era, In addition to significant uncertainty brought on by several new and proposed policy changes, land use decisions, and legal decisions, we are pleased to have closed the acquisition of Miller Western Solid Wood assets in Alberta in the first quarter. This acquisition provides us with an expanded product offering, an increased footprint in Alberta, and provides additional supply of high-quality Western SPF lumber. We recently announced a significant capital investment in our Urbana sawmill in Arkansas, which will increase our Southern Yellow Pine production capacity by 115 million board feet. We continue to assess additional organic and value-added external growth opportunities as we look to grow our lumber business on a global basis. We are continuing to make progress on the construction of our Greenfield Mill in Louisiana and recently held a groundbreaking event with community leaders. I will now turn it over to Kevin to provide an overview of Canfor Pulp.

Thank you, Don, and good morning, everyone. Canfor Pulp had another difficult quarter, with results continuing to reflect the ongoing global supply chain crisis, which impacted our operating rate, shipment volumes, and sales realizations. In addition, results reflected the impact of capital-related downtime at Northwood to rebuild the lower furnace of RB1, which was completed on budget in mid-April. While pulp markets have improved significantly to start 2022, we anticipate the current transportation challenges to persist with the benefit of improved pulp pricing not anticipated to be fully realized until at least the end of the second quarter or well into the third quarter, given the extreme lag between shipments versus orders. We continue to closely manage inventory levels at our mills as we work to optimize available transportation. While we regret the impact the current supply chain crisis has had on our employees, contractors, and communities, we will continue to adjust future operating plans to match available logistics. With the rebuild of RB1 now behind us, our focus as a management team is to improve operational reliability and closely managing costs to preserve our strong balance sheet. I will now turn it over to Pat to provide an overview of our financial results.