Canfor Corporation

Good morning, my name is Michelle and I will be your conference operator today. Welcome to the Canfor and Canfor Pulse third quarter analyst call. All lines have been placed on mute to prevent any background noise. During this call, Canfor and Canfor Pulse 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 Corporation's President and Chief Executive Officer. Please go ahead, Mr. Kane.

Thanks, Operator, and good morning, everyone. Thanks for joining the Canfor and Canfor Pulse Q3 2022 Results Conference Calls. I'll make a few comments before I turn things over to Kevin Hedson, CanForce Pulp's President and CEO, and Pat Elliott, 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. The third quarter resulted in reduced margins in our lumber business as prices moved lower throughout the period. However, we continue to benefit from the diversification of our earnings stream as Europe and the U.S. South generated solid returns. Our strategic growth in regions that have strong and competitive fiber baskets, the U.S. South, Sweden, and Alberta, will allow us to generate more consistent earnings throughout the cycle. In British Columbia, the allowable annual cut continues to decrease due to the mountain pine beetle damage, government policy decisions, species at risk, and wildfires. We continue to assess our operating rates against the available fiber supply in the region and remain focused on producing higher value products and managing production to meet market demand in order to maximize the value of every consumed log. As a result, Canfor took operational downtime throughout the third quarter, with the majority of our BC sawmills continuing to operate today on a reduced basis. I want to acknowledge our employees for their ongoing hard work and dedication. Through the downtime, we have worked to support our employees and thank them for their flexibility. U.S. lumber demand in the repair and remodel sector remains solid throughout the quarter. However, with rising interest rates, ongoing inflationary pressures, and reduced housing affordability, slowing new home construction activity in the U.S. led to lower demand in that segment. In Europe, our largest lumber business generated solid financial results in the third quarter, despite the impact of seasonal downtime, principally in July. Rising interest rates, inflationary pressures and soaring energy costs in Europe have, however, contributed to a sharp decline in lumber consumption in recent months, particularly for the retail sector. Even though pricing is anticipated to remain relatively solid, we will continue to evaluate market activity levels and manage production as necessary through the fourth quarter to align with current demand. To date, the mills have taken minimal downtimes. Notwithstanding the current macroeconomic uncertainty, North American lumber prices continue to trade above pre-pandemic levels. Supported by lean inventories throughout the supply chain, steady underlying demand in the repair and remodel sector, and pent-up demand for new home construction in the United States. While inflationary pressures are anticipated to persist in the near term, we remain focused on growing our lumber business on a global basis, currently through three major capital projects in the U.S. South. I will now turn it over to Kevin to provide an overview of Canfor Pult.

Thank you, Don, and good morning, everyone. Canfor Pult had a strong third quarter. with solid financial results driven by sustained strength in global pulp pricing and an improved operational performance. This contributed to a 4% increase in pulp production despite planned maintenance downtime at Northwood and Intercon during the quarter. As previously discussed on these calls, the management team at Can4Pulp remains focused on improving asset reliability and running the mills more consistently. We have seen some positive momentum in this regard over the last few months and I expect continued progress over the coming quarters. Sourcing economic fiber remains a challenge in BC due to the decreasing residual chip supply and inflationary cost pressures on pulp blocks. As a result, we recently announced extended downtime at our intercom mill in order to better balance our chip supply for the winter. Transportation networks improved through the third quarter and in general, we're able to support our production volume. Our tailor mill continues to be faced with supply chain challenges, and at this time, we are not anticipating a restart before the spring of 2023. While we are encouraged by recent operational performance, we are prepared to adjust future operating plans to match available logistics and economically available fiber. We appreciate the resilience and dedication of our employees as we manage through these headwinds. I will now turn it over to Pat to provide an overview of our financial results. Thanks, Kevin, and good morning.