Canfor Corporation

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

Thank you, Operator, and good morning, everyone. Thank you for joining the Canfor and the Canfor Pulp Q3 2023 results conference call. I'm going to make a few comments before I turn things over to Kevin Edson, Canfor 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. I'd like to begin by acknowledging the devastating wildfire season in BC, Alberta and across Canada this summer. I want to thank the firefighters, the first responders, the military personnel and forestry contractors who worked tirelessly over the summer responding to record breaking wildfires. We are working with the provincial governments to assess the impact of the fires on the fiber supply, ensuring timely access to burnt fiber and discuss any lessons learned. We appreciate the government's willingness to have these open and honest discussions. While we saw an improvement in our cost structure in British Columbia in the third quarter, it remains a challenging jurisdiction as the fiber supply in the interior of British Columbia continues to be constrained due to the impacts of the wildfires, pest infestations, government policy and land use decisions. These factors, in combination with a lack of reliable access to economic fiber and weak market conditions, are resulting in a very challenging near-term outlook in British Columbia. While recognizing the significant current challenges, we remain committed to our strategy of having a smaller but stronger operating footprint in British Columbia. In September, we announced that we will build a new low cost, highly efficient facility in Houston that will be globally competitive. This investment decision came after careful review of the economically available fiber supply in the region and after extensive discussions with government and indigenous nations in the region. I had the opportunity to meet with many of our employees in Houston a few weeks ago. We certainly appreciate their patience and perseverance while we made the decision and they share our excitement to have a modern state-of-the-art facility in their community. We are now working on a detailed project engineering and permitting requirements While lumber prices are anticipated to remain under pressure in the short term due to affordability constraints and high interest rates, we do remain optimistic about the medium to longer term prospects of our industry. We continue to see the benefits of our diversification strategy through the third quarter, with strong earnings generated in the US South and solid earnings in Europe despite seasonal downtime. We are pleased with the ramp-up of our De Ritter facility, which added a second shift in August, and the progress of our other organic growth initiatives, including a rebuild of our Arkansas sawmill, second greenfield in Alabama, and organic growth in Sweden. We remain committed to our organic growth program, with the investments further improving our global diversification, reducing our cost structure, and significantly increasing our production capacity. Our balance sheet strength will support continued reinvestment in our operations. And while we are prepared to remain patient until the right opportunities present themselves, we continue to assess various external growth initiatives as we look to further grow our lumber business globally. I will now turn it over to Kevin to provide an overview of Camp Fort Polk.

Thank you, Don, and good morning, everyone. Canfor pulp had a challenging third quarter with continued weakness in global pulp markets and significant operational downtime weighing on our financial results. The Northwood pulp mill experienced the brunt of lost production due to a combination of the downtime related with the labor dispute at BC's ports, a planned maintenance shutdown late in the quarter, and then the struggles to restart after both of these curtailments. In total, third quarter production was reduced by approximately 65,000 tons with a further 30,000 tons will be lost in the fourth quarter. With regards to Northwood's planned maintenance shutdown, the key activity was a comprehensive inspection of recovery boiler number one. We are pleased that the results confirmed our expectation that RB1 remains in stable condition, thus removing any concerns about the need to advance the rebuild any earlier than 2025. We are also pleased with recent market developments with a resumption of demand supporting price increases in Asia and announcements recently in North America and Europe. We would note that our reduced output in Q3 and expected impact in Q4, the anticipated lag between market mill net realizations will extend such that we do not expect to see the impact of these increases until early in the new year. Previously, we announced the recapitalization program covering all three of our facilities, Northwood, Intercon, and Specialty Paper. We remain committed to this program, supported by cash generated from operations and existing liquidity. Though the market is improving, we are still cautious about the outlook, so our early guidance on capital will be for another modest year in 2024. I'd like to take this moment to acknowledge and extend our appreciation to the employees at Northwood and Intercon and Specialty Paper for their continued efforts, perseverance, and commitment to safety as we navigate the current challenges facing our business. And with that, I will turn it over to Pat to provide an overview of our financial results.