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spk00: Good morning, ladies and gentlemen, and welcome to Green First Q1 2022 Results Conference Call. Please note that all lines are muted to prevent any background noise. During this conference call, Green First representatives will be making certain statements about future financial and operational performance, business outlook, and capital plans. These statements may contain forward-looking information or forward-looking statements within the meaning of Canadian securities law. Such statements involve certain risks uncertainties and assumptions which may cause Green First's actual or future results and performance to be materially different from those expressed or implied in these statements. Additional information about these risks, factors, and assumptions is included both in the accompanying presentation and in our MD&A and the 2021 Annual Information Form, which can be accessed on the company's website or through CDAR. After the speaker's remarks, there will be a question and answer session. This presentation also contains certain non-GAAP measures which are not intended to replace measures of financial performance and liquidity reported in accordance with IFRS. For additional information regarding these non-GAAP measures, please refer to the company's MD&A for the first quarter of 2022. Mr. Doman, you may begin your conference.
spk04: Good morning. Bonjour. Thank you for joining our Q1 2022 earnings call. I am Rick Doman, CEO of Green First. and I am pleased to be joined today by Michelle Lessard, our president, and Alfred Koles, our CFO. Alfred recently joined us, and we welcome him to our team. Alfred has a strong background in commodities, and in the short time since he started, he has had a very positive impact on the company, and we're very appreciative. I will now touch on some key highlights for the company. We successfully completed our first quarter of 2022 with an adjusted EBITDA of $45 million. I will allow Alfred to further expand on this in his part of the presentation. Lumber markets were stable in Q1 and continue to be above historical trends to date. Accordingly, Q2 will likely be another very positive quarter for the company. We recently announced the potential relocation of our Kenora sawmill. Some equipment will be relocated to our other sawmills to help increase production and improve recovery. We also announced that we will restart our second paper machine at our paper mill in campus casing. We're looking forward to this. The operation can run better on two machines than it can on one, lowering operating costs. As a company, we continue to consciously integrate ESG into all aspects of our operations, and we expect to issue a full sustainability report in the second half of 2022. For those who may not know us, Green First is already one of Canada's top lumber producers, and we are working towards becoming a global leader through five strategies. First, integrating ESG into all aspects of our business. Second, we're committed to being an employer of choice, focused on creative hiring strategies. Third, low cost of production and operational excellence. I cannot express the importance of this enough. We are driven to maintain a sustainable and viable company and ensure long-term stable employment for our workforce. Fourth, accretive acquisitions. We are true value buyers as demonstrated by the Rainier and Kenora acquisitions. Lastly, rational capital allocation. We first look to optimize operations with little or no capital outlay, and then as cash flow from operations provides, we plan to make select capital investments that generate cost savings. We believe our strategies will lead to enhanced value for our stakeholders. Our current annual lumber production capacity is estimated at 905 million board feet a year, which includes Kenora operations. And we will work towards both maximizing our capacity and also expanding it. We have started our capital expenditures plan, which involves spending approximately $60 million over the next three years, excluding Kenora. As mentioned, we will also be using some of the parts and equipment from our Kenora sawmill operation, which should help make improvements to our lumber production capacity. COVID-19 was a factor in Q1. Production was down 12% from plan and 10% lower compared to Q4, mainly due to COVID-19. At some points during the quarter, we had over 11% of our workforce unavailable. Shipments were substantially lower in Q1, declining approximately 34% compared to Q4 and 22% compared to plan. Logistics Disruptions was our biggest challenge in Q1. These challenges led to lower sales volume and higher inventory levels. However, we are now seeing a significant improvement in shipments in Q2, and we hope that the railways improve also their ability to get us more rail cars and improve our shipments. Our goal is to monetize the 114-acre parcel of prime Lake of the Front Woods property in Kenora. In addition, the company owns a four-acre island adjacent to this land. This land is very prime property, and we look to monetize it in the future. With the planned restart of our second paper machine and campus casing in Q2, we expect to significantly reduce operating costs. Paper markets remain strong. We have successfully hired additional personnel for phase one of this machine's restart. The outlook for lumber prices remains favorable. Strong demand and lower supply are keeping prices elevated. U.S. housing starts forecast is encouraging for 2022. North American lumber prices are expected to be volatile but to remain above historical levels. In our operations, supply chain transportation and delivery services are currently experiencing a wide range of inflationary cost pressures and operational challenges. Many of these inflationary factors are beyond our control and are not unique to Green First. I'm confident we have taken proactive measures to mitigate the impact and continue to drive production as much as possible. We continue to provide opportunities for employment in communities we operate in. at our sawmill and paper operations. Housing prices can be substantially lower in these communities where we operate as opposed to cities like Toronto. So we think that will continue to allow us to attract people in these communities. I will now pass it over to our CFO, Alfred Kolas, to go over the financial highlights.
spk03: Alfred Kolas Thank you, Rick. I'm happy to report that our second successive quarter of operations generated net income of $34 million, or 18 cents per share, driven by net sales totaling $173 million. Now, just a short note about how Green First's first quarter was cut off. The company operates on a 13-week fiscal quarter, and the first quarter of 2022 includes results of operations from January 1st to March 26th. By contrast, Q4 of 21 included results from September 26th to December 31, which represented approximately a 14-week fiscal quarter. This is something to be borne in mind when comparing Q1 versus Q4. We continued to benefit from strong lumber prices in the first quarter, which more than made up for a harsh winter and lower rail capacity and volume of ships in the quarter. Our forest product segment had sales of $158 million last on 115 million board feet shipped, with a cost of sales of $90 million. We produced 134 million board feet during the quarter. Turning to our paper segment, for the first quarter we had net sales of $14.7 million, reflecting shipments of 18,400 metric tons, with cost of sales of $20.6 million. The company increased orders in the first quarter for delivery in Q2 and beyond, reflecting higher demand for all products. Along with higher demand, pricing has increased by $50 U.S. per metric ton from January to March. Another increase totaling a further $50 U.S. or $64 Canadian per metric ton has been announced for May. We've been progressing with the commissioning of the second paper machine, as Rick said earlier, which will be online during the second quarter and is expected to reach full production capacity during the second half of 2022. Selling general and administrative expenses were $6 million for the quarter, mainly reflecting personnel costs, costs related to the transitional services provided by Rainier, office-related and IT infrastructure costs, and costs incurred at Canora. SG&A expense did increase by $1 million compared to Q4, and this mainly reflects the ramp-up of hirings. So speaking of hirings, starting in the fourth quarter of 21 and continued in the first quarter, We were successful in hiring many of the corporate personnel required to transfer head office functions from Rainier to Green First. We were able to terminate most of the transitional services from Rainier at the end of February, with the balance expected to conclude by the end of May. Most of our new hires are located at our office in North Bay, Ontario, which we opened in the fourth quarter of 21, and where we had our board and committee meetings just yesterday. Our North Bay office has over 30 full-time employees in IT, accounting, and human resources, and is strategically located close to our operating sites. We recorded EBITDA of $46.4 million in the first quarter. Reconciling from net earnings include finance expenses, income tax expenses, and depreciation and amortization. Finished goods inventory in transit at the end of the first quarter led to a sales cutoff adjustment of a net $10 million and an associated estimated EBITDA impact of $5.6 million, which would have otherwise been added to EBITDA in the first quarter. Adjusted EBITDA was $44.9 million as it excluded an unrealized $1.5 million foreign exchange gain on our U.S. denominated long-term debt. After the first quarter in early April, we made a voluntary principal payment of $8.9 million U.S. dollars against the U.S. term debt and the outstanding principal balance currently stands at about $88 million. With shipments of lumber accelerating in Q2 and the drawdown of inventories, strong cash flows are projected for the remainder of the year, and we will continue to take opportunities to further reduce the long-term debt. Turning to the highlights from our balance sheet, our liquidity position at the end of Q1 was $89.1 million, composed of $39.1 million in cash on hand and $50 million available under our $65 million asset-backed loan, net of standby letters of credit. Our asset-backed loan has remained undrawn since acquisition to today. Almost $40 million of log inventory was built up during the first quarter, and this was fully funded from cash flows from operations. Log inventory buildup happens mostly during the frozen winter months in the first quarter. which also explains the high level of inventories at March 26th. We also have loss carry-forwards. We have $26 million in non-capital loss pools and $15 million in capital loss pools that would be available to reduce future taxable income. During the first quarter, we recognized a deferred tax asset of $7 million on the basis of the profits reported for Q1 and expected for the remainder of 2022. As spring advanced, rising interest rates in response to higher inflation represented a headwind to lumber demand. However, lumber market prices rebounded in late April, partly due to tightening lumber supply. While the pandemic seems to be abating, we expect COVID-19 to remain a concern through the remainder of 2022. And finally, Management and the board's investment in Green First shares aligns their interests with those of all shareholders. And this final slide shows that share ownership by management and directors comprises about 13% of the company, which is an important alignment of interests, as I said. Now, I'm happy to pass the floor to Michel.
spk02: Thank you, Alfred. Thanks, Alfred. Il est important de préciser que le succès de notre société dépend largement de la disponibilité des matières premières et de notre capacité d'avoir accès directement à ces matières et aussi de maintenir des opérations efficaces et rentables. It's important to recognize that the success of our business is largely contingent on the availability of and direct access to raw material as well as our ability to operate in a timely and cost-efficient basis. L'une des grandes forces de Green First est certainement notre équipe de gestion forestière. Dans mon intervention du trimestre précédent, j'avais mentionné au passage que nous avions remporté un prix du leadership en reconnaissance de notre gestion forestière responsable. L'aménagement forestier est au cœur de nos activités. Nos séries ont un accès de longue durée à quelques 3,7 millions de mètres cubes de matière ligneuse en vertu de permis d'aménagement forestier durable de l'Ontario et aussi de garantie d'approvisionnement du Québec. L'accès à ce volume de matières ligneuses nous sera suffisant pour accroître notre capacité de production de bois d'oeufs, comme nous avons prévu de le faire. Les plans d'aménagement forestier approuvés par les autorités provinciales ont été mis en œuvre et, sur cette base, nous pouvons récolter et renouveler nos forêts en appliquant des pratiques de gestion forestière durable. We have also implemented advanced analysis measures of our supply so that our plants are ensured of quality certified material and also at a reasonable cost. In addition to the volume granted on state land, Green First has about 203,000 acres of private forest in Ontario, south of our Kapuskasing installations. These lands are attractive assets for investors interested in carbon credits, as well as an important and sustainable source of wood supply. The company is currently evaluating the growing market for carbon credits and also the possibilities of bringing out the value of this asset. Green First is determined to rigorously apply solid environmental, social and governance practices because we are convinced that our long-term growth is closely linked to this type of practice. Et cet engagement vers l'environnement procure maintenant une valeur ajoutée à nos actionnaires. GreenFirst is committed to robust environmental, social, and governance practices, and we believe our long-term growth is closely tied to these practices. Being green now comes with added value to our shareholders. Les pratiques d'aménagement forestier durable de GreenFirst assurent le maintien de la biodiversité et de la santé forestière. Also, the use of wood as a construction material for residential, industrial, commercial and institutional buildings allows for the sequestration of carbon over a long period of time. Wood requires less energy for production and transport than spare materials. As for the derivatives of wood production, such as biomass, they can be used to produce energy without net carbon emissions. La responsabilité sociale de la société est centrée sur son engagement à maintenir un milieu de travail sûr, à promouvoir la diversité et à cultiver des liens à long terme avec les communautés autochtones et locales. Nous attachons énormément d'importance à notre responsabilité de société. We take our corporate responsibilities seriously. L'identité de Green First est articulée autour de notre nom et de nos quatre valeurs, les principes, les personnes, la planète et le progrès. Les pratiques qui sous-tendent ces valeurs soutiennent une culture de sécurité, une consommation et une production durables et des mesures sociales bénéfiques. En voici le résumé. Green First favorise des pratiques commerciales conformes aux principes de saine gouvernance, de transparence, d'inclusion and sharing prosperity with our employees, our stakeholders and the communities where we are present. We believe that our employees and our stakeholders are our most important assets. We promote diversity in our workplaces by creating an environment where everyone is welcome. We aim to become a global leader in sustainable development by conforming to recognized forestry practices knowing that trees are essential to fight climate change. Progress We focus on long-term value and create prosperity while having a positive impact on the environment and ensuring that our employees, our stakeholders and the communities where we are present benefit from our successes. Green First presents considerable growth opportunities. Recently, Nous avons mis l'accent sur des projets nécessitant peu ou pas de capitaux et assurant un rendement rapide. De plus, nous travaillons à des projets stratégiques prioritaires visant à améliorer notre efficacité opérationnelle. Des équipements ont été commandés. Les installations débuteront d ès cet été. La société a mis en œuvre un plan triennal de dépenses en immobilisation de quelques 60 millions de dollars, n'incluant pas le budget prévu pour Kenora. Le plan a pour but de mettre à niveau nos séries afin d'en accroître la productivité, d'améliorer la récupération et de réduire les coûts de transformation. Nous sommes conscients des enjeux d'approvisionnement actuels des équipements et c'est pourquoi nous avons hâté les commandes nécessaires afin de tenir compte des retards de livraison qui sont fortement plausibles. La combinaison des prix élevés du bois d'oeuvre et l'atteinte de réduction des coûts de transformation favorisera la croissance du flux de trésorerie disponible dont nous servirons pour réduire l'endettement et financer nos plans d'investissement en capital. Je vais maintenant repasser la parole à Rick for closing comments.
spk04: Rick? Thank you, Alfred and Michelle. It is great that Q1 was our second consecutive profitable quarter. It is exciting and very busy times at Green First, and we are proud of our accomplishments and focused on delivering more. Before closing, I did not I did want to recognize the advice and counsel that I've been given by Paul, Revette, our chairman, and the rest of the Green First Board. Their business experience and acumen have been invaluable to me as we build a leading global forest products company. I would also like to thank all of our approximately 1,500 colleagues that work with me, all the way from sales, operations, throughout the company and IT and accounting and so on. Without their hard work, we would not be where we are at, so we very much appreciate their efforts and dedication. We will now respond to your questions submitted online. Alfred?
spk00: This concludes the presentation portion of the call. If you'd like to ask a question on the web, please submit your question in the Q&A pod. Once ready, please identify the company you're from.
spk03: Thanks, Rick. So we've received some initial questions here. I'll read the first one here. What are your thoughts on the Inter4 transaction? Do you have a plan to work with them, and what would that look like?
spk04: We cannot speak for Inter4. We think their investment in us validates that Eastern Canada is a good place to do business. We are continuing on our current path, which has exciting growth prospects for the benefit of all grain first shareholders.
spk06: Okay, second question that I have here.
spk03: What is the update on Kenora? How much will this cost? Are you still looking for commitments from the government? And you mentioned you may want to sell the land in Kenora. How much is it worth?
spk02: Yeah, so I see that we're getting a few questions also from Kenora, so I'll try to answer to the maximum of them, and also Rick could help me also on these. So first, I see, how much will it cost to move? You know, the company is working on the best options for Kenora. That includes monetizing the property, as Rick mentioned earlier, and also the potential to move the sawmill to another site. On this specific, we're working with the government of Ontario and reviewing different opportunities to move the mill to other sites. In the meantime, we're currently planning to move some equipment from Kenora, again, as Rick mentioned earlier, to other sawmills. That will help also other mills to get access to good equipment that as we know, there's some delays to get access to it actually. So that would be very good outcome also for the sawmills. And then after that, we could order some new equipment eventually for the restart of Kenora. So on this specific, we're currently reviewing the cost and also the timing to do so. I don't know, Rick, if you would like to add on this.
spk04: You did a great job, Michel, but I'll add a little more. The Kenora property is the prime location on Lake of the Woods. The town of Kenora would like to see it further developed into higher-end uses. We think there is a significant value there to that property, so we worked hard with the government of Ontario and wish to thank them for the potential opportunity to move the sawmill to another site in Kenora. The key for us is, of course, wood supply, and we're working with the government on that. as we develop plans to look at that opportunity further in the coming months. The Canora equipment, as Michelle said, is a very key, important item. The Canora equipment that we are moving to our other sites as we reinvigorate and add capacity to our Ontario sawmills would normally cost about $30 to $40 million estimated if we had to get that equipment brand new. And rather, we're taking newer and refurbished equipment from Kenora and moving it to their sites with the opportunity to buy new equipment in the future for Kenora in our plans to the potential to rebuild the mill. So essentially, we're taking equipment immediately that would take up to two years to get delivery on because the markets are very strong for the equipment companies and the timing takes a lot of time. So we're very excited to move this equipment into our key Ontario sawmills and improve production and improve recovery.
spk02: Thanks, Rick. So another question that we got on Canara is, are there any more loans or any other funds coming? You know, outside of what previously announced, so there was an announcement that has been made in Canara a few weeks ago, so there's no other updates on that. Do we need more, if we need more wood fiber commitment from Ontario to make the mill viable? Yes, on that, yes, we need more wood supply, and we are in discussion actually with the government to get access to it, so more discussion to come. Can we get to 200 million bar feet of production with new fiber? You know, we can rebuild the sawmills for capacity of up to 150, 200 million bar feet, However, it depends also on the government of Ontario's ability to provide the fiber I just mentioned. Again, we're in discussion on that and we should have more news in the following, I would say, months. How much is the land worth? It's something Rick mentioned also that this land, it's a prime property in Kenora. We're not able to give you an estimate, but again, like I said, that is prime property. We see a lot of opportunity for the company and shareholders. Thanks, Michel.
spk03: I think there's another question that came in here, and I think it might be mine. Why was there such a buildup in inventory, and how does the company plan to monetize it? So as I mentioned in my remarks, first quarter, winter months, frozen land is typically the time of year when we do the most log harvesting. And we built up increased raw materials inventory by almost $40 million in the quarter. And that will be monetized, obviously, through being processed by our sawmills and then sold as lumber. But also, we had logistics disruptions during the first quarter, which had been commented on. And this in particular reduced our volume of lumber shifts. And the lumber in transit actually represented a $10 million increase in our finished goods inventory, which rolls into that inventory. And this has actually already been sold based on the strong resurgence of shipments that we've seen in April. And so monetizing all these inventories is all going to come out through our shipments, which are accelerating during the second quarter. So another question came in, and it is, can you provide any updates or commentary on your mill optimization plans? You've mentioned the ability to increase utilization with limited CapEx over the next 18 months. Based on Q1 production of 134 million board feet, you appear to have run approximately 70% utilization, excluding Kenora. Where can we expect utilization rates to get to in 2022 and onwards?
spk02: I can maybe start, and Rick, you could add on that. What we're doing actually is putting investments that will improve our recovery, that will also improve projections, and also that will decrease our processing costs. There's different projects actually to different sawmills in Quebec and Ontario. You know, I'm not going to go into the details there, but again, it's all related to these goals that I mentioned. So as per you know, we're looking for, if I can give some examples. So we're talking, Rick was mentioning also some equipment that we're looking to move, and there's a possibility, for example, with a planner that we could bring to Cochrane and also improve the one that we have there. There's some other equipment, you know, with continuous kiln There's also, like, we're looking to do more cut to land also and maybe modify certain in-feed relatively to that. And, again, some kilns upgrade, et cetera. So, again, the main goals is very important is to improve the recovery, improve also the production, decrease processing costs, and all that for sure in a safely manner because that remains also the priority for the company. Rick, something to add?
spk04: Yeah, Michelle, that's great. Just to add a little bit, just to give you a little history here, in 2010, when I was CEO of Ecom and we purchased the Domtar lumber assets, also in eastern Canada, we immediately, in an average 250 U.S. Western SPF market, started to do CapEx at all our sawmills and substantially increased over three years their production capabilities and reduced their costs significantly, again, in 250 U.S. Western SPF market. We are planning to do the same thing here. It will take time. Equipment orders do take time now because of the strong order files these equipment companies have. So having the Canora assets and equipment to move into our other mills is a significant positive for our company. On top of that, we've ordered some equipment, in addition, planers, and working on other equipment that we expect to come in over the next one to two years with a goal of significantly increasing our production capacity to maximize our very strong AAC that we have, noting we have 3.7 million cubic meters approximately of AAC, about 3 million in Ontario, 700,000 in Quebec, and we intend to fully utilize this AAC by improving our sawmills and increasing our production, improving recovery, and lowering our sawmill operating costs, which is key. We're very excited about this and Michelle and the team are doing a great job working hard on getting all this started and in process.
spk03: Another question here. Assuming the current lumber prices, what's an estimated range for free cash flow for fiscal year 2022? We don't really give public guidance on our cash flow, but it can be acknowledged that the strong lumber price environment that we have has seen our cash position uptick from $36 million to $39 million at Q1, while we invested $40 million in raw materials inventories. But I can say that we also paid $8.9 million U.S. dollars against our term loan, And repaying debt is going to be a priority. So as far as free cash flow, it's going to be utilized on debt repayment opportunities and on strategic capex. And we can't really give any guidance as far as a range at this point. But we're very encouraged by the lumber price and what it means for our business right now.
spk02: We have another question. Can you give us a sense of the volume needed at the paper mills to reach break-even? You know, that mill is running better on two machines. So that's why also that we're looking to restart the paper machine number four. So with the two machines, we'll have a production of 205,000 tons. So to be able also to produce that, we need to get access to 225,000 dry metric tons of chips. And on this specific also, we have the opportunity to have the chips or raw materials from our sawmills that are close to the paper mills. So it's a great advantage that we have. to have the facility that can again supply that paper mill and a very short also distance. So again, we're looking to reopen the PM4 and that's pretty critical for that mill to open with the two machines. Okay.
spk03: Thanks, Michel. Another question here. What are capital allocation priorities?
spk04: As I mentioned earlier, our priority is moving the equipment from Kenora to our other operations, Hearst, Cochrane, and Kappus casing. We're very excited about this because it allows us to utilize that equipment in the near term, which could have taken about two years to order new and at a cost new and installed of up to $30 to $40 million. It will cost us substantially less doing it the way we have planned. In addition, we have ordered new planers for some of our sawmills, which will be delivered in the next year or two, which is very encouraging. These are our priorities currently. While markets are very strong and we're generating good cash flow, we are still being very conservative with our CapEx and careful and doing it prudently.
spk03: Great. Another question here. Please repeat the amounts of the tax loss carry-forwards. So I'm happy to do so. We have $26 million in non-capital losses available to offset future taxable income, as well as $15 million of capital losses carried forward That was an easy one. Another question here. Will there be less inventory available for sale than planned after working through excess inventories discussed earlier due to less workers on site or due to COVID? In Q1.
spk02: Just a question again. OK, so sorry about that. Will there be less inventory available for sale? than planned after working through excess inventory discussed earlier. No, we do not have less inventory. There's no issue there. I would say that in the first quarter with the issue that we had in the shipping, So we built up a bit of inventory, lumber inventory there. But what we're looking also with the Q2, we see some good improvement on the shipping. So then we're catching up also in the surplus of inventory that we had. So that's looking good also. You know, less workers, it did not really – it affects, yeah, for sure, a bit the operation, but we were able to maintain the operation. So that's a very good thing. I was talking about safety a bit earlier and we were able to show during that COVID period of time that the safest place to be was in our saw mills. So we didn't have any close contacts or something happened or people that catch the COVID in our mills. So it's something we put a task force together. We wanted to have safety first and be sure again that the safest place was in our mills and that was accomplished. Yes, we were affected by COVID as everybody in all type of industry. But again, we were able to run, run all time, maintain operation. And again, we had some issues on shipping, but we're catching up on that. So now we're able to ship our production and we're able also to catch up on what has not been shipped in the previous quarter.
spk03: Okay, question here. What would EBITDA have been if you ended Q1 at the end of March versus when you did? And here, you know, we've commented a few times about the ending finished goods inventory, which we couldn't sell in Q1 because of the sales cutoff. And this was about $10 million of inventory or sales representing about $5.6 million of EBITDA. Now, it's hard to say whether those incremental you know, sort of five days would have allowed us, and by the way, that's 2 million board feed that are associated with that. I don't know whether those five days would have allowed us to ship and sell those 2 million board feed, but let's say the impact would have been something less than 5.6, but something north of maybe 2 million, I'm going to say. You know, this is a rough estimate, but, you know, Shipping logistics disruptions were a big factor for us in Q1, and so that was as big a factor. But we did mention the cutoff on the 26th was also a factor, really when comparing to Q4. But I think it's safe to say it would be at least a couple million in EBITDA that might have been realized if the month had cut off on the 31st. Okay.
spk02: A question also is what is the plan to turn around a new Sprint? You know, the new Sprint, it's continued to decrease and decreasing, you know, for years, and it's going to continue to decrease. But I would say that in our paper mill in Cap, and that's why we don't call that anymore a new Sprint mill. We call that a paper mill because we're doing also some food service bags, so we're producing a lot of that. There's more and more demand for that. We're also doing some bulky. We're doing also some 65 brides. So again, we are pretty diversified and we'll continue to do. We have some other projects that we're looking at to develop. There's a lot of research and technical work that is done on it. And again, we want to continue to diversify, knowing again that the new spring will continue to decrease. But again, we're producing products actually as a paperbacks, for example, that we call also underworld smart. that the demand is continued to increase. So it's a very bright future for these products.
spk03: So the question here, where does the RIAM dispute over transfer inventory stand? Any progress there? And on this front, we can say that we do have a difference of opinion with Rainier regarding some of the valuation factors behind that inventory. That was part of the opening balance. And so that has been moved to an arbitrator to help us find common ground. And that process is really starting Starting off, it's in the early stages, so it's really difficult to judge what the outcome will be, but that is where it stands right now.
spk06: It's an arbitration.
spk02: I have a I have a quick question also that about the whole Q2 is looking an operation perspective. So we spoke about things about Q1, but what we're looking also in Q2. So things are improving. So if we're looking also in a COVID point of view, so the things are improving a lot. So the number of cases are decreasing and I would say that their hiring also is getting better. So we put in place. our internal recruiting group. So they're doing a fantastic job to recruit, you know, locally, regionally, but also we're looking to recruit internationally. We're in touch with many organizations, with also the municipalities, and then it's something that we're pushing on. Projection also is getting better, as we said. So for COVID also, we had a tough winter. So now the temperature is getting better, so we see very interesting improvement in the production. And I just mentioned also earlier about the shipping that is also improving and that we're catching up.
spk04: Well, thank you for joining us on our call. That concludes our call for today. We really appreciate all the questions and hope we were able to answer them.
spk01: You can also send your questions to investors at greenfirst.ca and have a great day.
spk00: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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