GreenFirst Forest Products Inc.

Good morning, ladies and gentlemen, and welcome to GreenFirst's first quarter 2023 results conference call. Please note that all lines are muted to prevent any background noise. During the conference call, GreenFirst 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 2022 Annual Information Form which can be accessed on our website or through CDAR. After the speaker's remarks, there will be a question and answer session. Mr. Rivette, you may begin the conference.

Thank you very much, Sylvie. Good morning, everyone, and thank you for joining our first quarter call. I am Paul Rivette, the Interim CEO and Chair of the Board of Green First. Joined with me today are Michelle Lessard, our President, Alfred Koles, our Chief Financial Officer, and of course, Gwen Webster, our Chief of Staff. As a quick overview of our company, we are now exclusively based in Ontario, with four sawmills located in the heart of the province with approximately 2.5 million cubic meters of annual allowable fiber allocation. We directly employ approximately 1,000 people. If you would like to learn more about our corporate vision and strategy, please see the CEO letter filed earlier this year on CDAR and on our website at greenfirst.ca. Now for our first quarter highlights. Despite the currently low lumber price environment, we have several positive highlights to report on this quarter. First, on March 14th, we sold both our Quebec sawmills in Bern and La Salle. along with related forestry operations for approximately $94 million, subject to final adjustments. This sale allows us to focus our efforts in Ontario and reduce our average cost of production. Our Ontario mills continue to make productivity gains. We executed a non-binding letter of intent to sell 30 of our 118 acres of Kenora land to a regional institution for $8 million. The sale is subject to conditions including government funding. Given our downsizing from six to four mills, we have initiated cost reduction initiatives, which include the streamlining of shared service rules, headcount reductions, repositioning of key roles within the organization, and a critical review of expenditures in order to reduce SG&A. We also have significantly deleveraged our balance sheet by paying down $24 million towards our debt in 2023, including full repayment of our term loan with BMO. Low lumber prices in the first quarter of 2023 led Green First to report a net loss of approximately $20 million based on continuing operations, or a quarterly loss of $0.11 per share on a fully diluted basis. This result for the first quarter includes the impact of a 3.2 million net increase to the valuation provision for lumber and log inventories. Including this impact, adjusted EBITDA for the first quarter was negative 15.2 million. This will, of course, be discussed in further detail by Alfred, our CFO, shortly. Last month, our executive and sales teams were in attendance at the Montreal Wood Conventions. Consensus from the industry showed optimism in lumber prices increasing in the back half of 2023 and into 2024. This is based on many factors including the estimated U.S. housing shortage. The majority of U.S. builders are projecting growth in the back half of 2023 and in 2024. Residential improvements and U.S. housing starts came in stronger than we predicted in the first quarter. While inflation, rapidly increasing interest rates, and the threat of a recession are still having a negative impact on lumber markets, we saw some market support due to curtailments in BC and other regions of North America. If the prices continue to remain low, it is anticipated further curtailments or closures will occur. Although we are facing near-term volatility in lumber demand and pricing, we continue to believe longer-term fundamentals for lumber demand remain more favourable. Alfred will now walk through our financials.

Thanks, Paul. And good morning, everyone. As summarized by Paul, Green first navigated another challenging quarter to start 2023 and reported a net loss of $20.2 million on the basis of its continuing operations or a quarterly loss of 11 cents a share on a diluted basis, as just mentioned by Paul. Lumber sales in the first quarter reflect lower selling prices and lower sales volumes compared to Q4 of 22. The average selling price of lumber in the first quarter was $605 per thousand board feet compared to $644 in Q4 of 22. Lumber shipments sold in the first quarter were 93.3 million board feet compared to 99.7 million board feet sold in Q4 of 22. The net loss for Q1 includes the impact of a $3.2 million net increase to the valuation provision for lumber log inventories, which reflects the further drop in lumber prices through the first quarter and increased volumes. While our continuing operations exclude the results of the two Quebec sawmills, those discontinued operations, which were sold on March 13th, contributed about $6 million of negative adjusted EBITDA to the economics of Green First, during the first quarter. This was before the reversal of provisions driven by accounting rules, which created a $1.7 million net earnings for discontinued ops in the first quarter. Our paper shipments in the first quarter were 42,620 metric tons, which drove revenues of $37.8 million, both higher than the fourth quarter of 22, reflecting increased operating efficiency and production output at the second paper machine. Revenues were also driven by strong sales under key newsprint contracts. Cost of sales for the paper products was $36 million in the first quarter for an operating profit of $1.3 million, something that we've worked hard to achieve. Adjusted EBITDA for the first quarter was negative $15.2 million compared to a higher EBITDA loss of $27.4 million in the fourth quarter of last year. This was driven by better paper sales, lower SG&A, and a lower charge for incremental inventory valuation provision. Now, looking at the elements that are added back in calculating EBITDA, finance costs, which include interest and amortized debt costs, were about $900,000 in the first quarter, significantly lower than the $1.2 million in the fourth quarter of last year, and a fraction of the $3.6 million in the first quarter last year. These reductions reflect the lower interest rate under the new credit facility negotiated last September with BMO and debt payments made, which are expected to continue based on opportunities to apply surplus cash to debt. Income taxes are another add back for EBITDA, and I'm pleased to say that no cash taxes are expected to be paid this year. The company repaid $19 million of debt in the first quarter and $30 million in the fourth quarter of 22. The debt had an outstanding balance of $34.5 million at the end of the first quarter, but before further repayment of $5 million against debt early in the second quarter. As an asset-backed facility, the borrowing base is partially reduced by outstanding letters of credit. At April 1st, 2023, the outstanding letters of credit had been negotiated down to $5.4 million, which is significantly less than the $13.7 million outstanding one year earlier at Q1-22. Turning to liquidity, we ended the first quarter with a cash position of $24.9 million and $32.3 million in undrawn availability under our credit facility for a total liquidity of $57.2 million as of April 1st. Debt repayments have been made from part of the proceeds of the sale of the Quebec sawmills, which allows us to further reduce interest expense by paying down our asset back to credit facility. As it is a revolving credit facility, we can reduce interest costs while keeping the flexibility to draw on the available liquidity. Taking stock of where we have come from, we are now thankfully in a position with much lower debt, a lower interest rate, and no financial covenant ratios compared to a year ago. when we had over $125 million of high-cost term debt. The credit facilities are no longer subject to a minimum fixed charge coverage ratio covenant with the repayment of the term loan during the first quarter, as mentioned earlier. With our prudent management, the low level of our debt at April 1st, 2023 means that our net debt is down to only $9.6 million. We have responded to low lumber prices by executing several cost reduction measures. These include streamlining the organization to reduce overheads, driving cost reduction projects at the operations, which are reviewed weekly and are bolstered by management moving from the head office to our operating sites, conducting detailed reviews of accounts payable to scrutinize transactions, and focusing our strategic sourcing group where we seek savings through more competitive bids and selecting alternative contractors and suppliers. Progress on these measures has benefited greatly from excellent collaboration between the finance and operations teams. I now ask Michel to comment on the operational results in the first quarter.