GreenFirst Forest Products Inc.

Good afternoon, ladies and gentlemen, and welcome to the Green First Q2 2022 results conference call. Please note that all lines are muted to prevent any background noise. During the conference call, Green First representatives will be making 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 actual or future results and performance to be materially different from those expressed or implied in these statements. Mr. Doman will now begin the presentation.

Thank you very much. Good afternoon. Thank you for joining our Q2 earnings call. I am Rick Doman, CEO of Green First, and I'm pleased to be joined today by Michelle Lessard, our president, and Alfred Colas, our CFO. As we begin, I would like to acknowledge the dedication, hard work, and strength of our employees. Over the last quarter, they continued to persevere amidst a challenging operating environment. We completed our acquisition through COVID-19 last year, and I couldn't be prouder of this hardworking team and the challenges it has overcome. We are working towards a common goal, bearing in mind an unpredictable lumber market, one which needs to be closely and strategically adjusted accordingly. I'm pleased to report that Green First has another strong quarter with an adjusted EBITDA of $54.3 million in the second quarter. This was evidenced by lumber pricing remaining strong during Q2 and some improvements seen with the logistical challenges that impacted us in Q1. The company continues to work on further improving on the logistical issues by working closely with all key stakeholders. The company also saw an improvement in operations with higher production as a result of fewer COVID-19 cases compared to Q1. Minimal shutdowns and improved weather as we came out of the harsh winter conditions. Alfred will provide some details on financials later in this presentation. We continue to work on some of our top priority items. As we reported earlier, we intend to monetize our 203 acres of prime private forest land located south of Campus Casing, Ontario. The company is evaluating the growing market for carbon credits and opportunities to surface value from this asset. Additionally, the company continues to work on a potential relocation of its Kenora sawmill. The company is evaluating a proposal by the Ontario government to rebuild the sawmill at a different site in Kenora. The company is also evaluating its options to potentially sell the underlying 114-acre parcel of prime Lake of the Woods waterfront property in Kenora and a four-acre island adjacent to this land. The potential values that may be realized from the monetization of these properties may be materially different than the carrying values at which they are presently recorded. The company has commenced the dismantling of the equipment at Kenora and is preparing to move that equipment to our other sawmills. We expect North American lumber pricing to remain volatile as we see the impacts of inflation and rapidly increasing interest rates, putting pressure on demand and builder confidence. However, in our paper segment, we continue to see strong demand and have announced further price increases in Q3 2022. Interest rates and inflation also have a negative impact on our operations as we continue to see higher input costs. increases in stumpage rates, logging costs, fuel transportation costs, along with availability issues. I also want to point out that on August 3rd, the U.S. Department of Commerce reduced duty rates for Canada to 8.59% with publishing of the final determination for the third administrative review. However, green first continues to be assessed at a rate of 20.23% for the next 12 months. We are appealing this decision. I will now pass it over to Alfred for your remarks, Alfred.

Thank you, Rick. I'm happy to report that for the second quarter, Green first generated net income of $29.5 million, or 15 cents per share, based on net sales totaling $215 million. This was our third full quarter of forest operations since closing on our six sawmills and one paper mill late in Q3 2021. In the second quarter, we benefited from lumber selling prices that averaged 1,255 Canadian dollars per thousand board feet combined with improved shipping logistics. Our forest product segment had net sales of 192 million on 143 million board feed shipped, which by the way is 24% higher than what we shipped in the first quarter, with a cost of sales of $113 million. We produced 149 million board feed during the quarter. Turning to our paper segments, for the second quarter we had net sales of $22.7 million, reflecting shipments of 26,600 metric tons, with a cost of sales of $26 million. The company increased orders in the second quarter for delivery in Q3 and beyond, reflecting higher demand for all paper products. Along with higher demand, pricing increased during Q2 with another price increase of 50 US dollars announced for Q3. The commissioning of our second paper machine commenced during the second quarter and it is expected to reach full production capacity during the second half of 2022. Selling, general, and administrative expenses were $6.9 million in the second quarter, mainly reflecting personnel costs, office-related and IT infrastructure costs, and costs incurred related to the idle Kenora sawmill. SG&A expense increased by about $1 million compared to the first quarter, mainly reflecting additional hirings that enabled us to end our reliance on transitional services from Rainier, which happened in May. 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 $50.9 million for the second quarter. Reconciling items from net earnings include finance expenses, income tax expenses, and depreciation and amortization. adjusted EBITDA was $54.3 million, as remarked by Rick earlier, and this excluded an unrealized $4.1 million foreign exchange loss on our US dollar debt. Now, considering the impact of duties paid on US shipments, if we exclude the $22.3 million in duties that we expensed in the second quarter, second quarter adjusted EBITDA before duties was $76.6 million. Turning to our balance sheet, our liquidity position at the end of Q2 was $125 million, including $74 million in cash on hand and $51 million available under our $65 million asset-backed loan, which is net of standby letters of credit. Our asset-backed loan has remained undrawn since acquisition to today. After the seasonal buildup during the first quarter, Raw materials log inventory dropped by $28 million during the second quarter. We also 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 second quarter, we updated the basis of tax depreciation for 2022, which reduced the expected taxable profits and resulted in a deferred tax liability and no income tax is payable as at June 25, 2022, based on current estimates. Et alors, je repasse la parole à Michel.