GreenFirst Forest Products Inc.

Good morning, ladies and gentlemen, and welcome to Green First's fourth quarter and fiscal 2023 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 with 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 risk factors and assumptions is included in Green First's MD&A and AIF, 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. I'll now pass it over to Paul Rivett to begin the management presentation. Please go ahead.

Thank you very much, Joanne. Good morning, everyone, and welcome to our fourth quarter and fiscal 2023 earnings call. As Joanne said, I am Paul Brevet, the executive chair of Green First. Today, I'm joined by Joelle Fournier, our CEO, Terry Skippington, CEO of Cap Paper, Ankit Kapoor, our interim CFO, Michelle Lessard, our president, and of course, Gwen Webster, our chief of staff. The end of 2023 marked a significant year for us. We right-sized our balance sheet and our business, putting a focus on Ontario, decentralized our paper and lumber operations, and brought on board a new CEO, Joel, along with a leader for the paper operations, Terry. As we continue in 2024, I am confident that the steps we took in 2023 position us well, not just for 2024, but for the years to come. We are already starting to witness a positive trend in lumber prices, which bodes well for our future prospects. Despite high borrowing rates currently prevailing, there is a shift in momentum with the U.S. Federal Reserve and Bank of Canada indicating potential interest rates cuts at the end of this year. This boost is much needed for the lumber markets, as the significant rate increases in recent years have negatively impacted U.S. housing starts and, of course, buyer sentiment, resulting in a slowdown in housing construction. In the longer term, the lack of available housing inventory, record levels of immigration in the U.S. and Canada, as well as the growing demographic-driven demand for homes, are expected to have a positive impact on lumber markets. We are starting to see analysts and industry experts increasingly mentioning these factors, and we firmly believe that the lumber industry has passed the inflection point. We anticipate positive tailwinds in pricing in the upcoming quarters. Please also keep in mind there is a decrease in the supply of lumber in the market due to numerous closures in British Columbia and other parts of North America that is continuing in 2024. Green First is fortunate to operate in the business-friendly province of Ontario. On a more somber note, we are still facing continued pricing pressures on paper products, but we have tremendous faith in the abilities of Terry and his team to significantly increase productivity at Cap Paper. Our management team will take us through the results of the quarter and the year Starting off with Ankit, giving us the financial highlights. Over to you, Ankit.

Thanks, Paul, and good morning, everyone. The company's net loss in Q4 was $21.6 million, with an adjusted EBITDA of negative $18 million. This compares to a net loss from continuing operations in the third quarter of $2.7 million, where adjusted EBITDA was $8 million positive. The third quarter included a US $7 million recovery related to the 2021 duties paid, following the US Department of Commerce's final determination of its fourth administrative review. Net lumber sales recorded in the fourth quarter were 70.1 million compared to 63.6 million in Q3 or 10% higher. Lumber EBITDA compared to Q3 was impacted by lower pricing in Q4. Pricing lowered in the first half of Q4, however, we began to see a rebound in the back half of Q4. This was primarily due to positive sentiment from the Fed Reserve and Bank of Canada giving clear signs to hold interest rates. We also had higher volumes in Q4 as markets started to recover in the latter half. The paper segment was negatively impacted in Q4 due to maintenance-related activities that lowered the rate of production at the paper mill. Net sales in the paper segment were relatively flat at $33.1 million in the fourth quarter. Compared to Q4 of last year, net loss improved by approximately 4.3 million and adjusted EBITDA improved by 9.4 million. This is primarily due to a lower cost profile and duties paid in the lumber segment, partially offset by lower lumber prices and unfavorable results from the paper segment. For the fiscal year 2023, we saw a net loss of 48.8 million with an adjusted EBITDA of negative 30.2 million. This compares to a net loss of $4.1 million and adjusted EBITDA of positive $39.4 million in 2022. For the lumber segment, adjusted EBITDA was substantially lower compared to 2022. Net sales in lumber were $268.4 million versus $398.1 million in 2022. This was primarily due to the significant decline in pricing compared to the high seen in the first half of 2022 driven by monetary tightening. To partially compensate for the decline, our cost profile improved as a result of overall higher volumes produced and lower stumpage fees, which reduced as lumber prices declined. Additionally, the company recorded a US $7 million of duties recovery in 2023 and paid a lower duty rate on its shipments to the US from August 1st onward. Overall, 2023 volumes were also higher as there were less challenges related to logistics compared to 2022. For the paper segment EBITDA was higher compared to 2022. Net sales were 141 million versus 94 million in 2022. This was primarily driven by higher volume from the restarting of the second paper machine. 2023 saw significant improvement in unit costs from having two operational paper machines during the year. This was partially offset by decline in prices for paper products in 2023. The company saw positive results for the majority of the year in its paper segment. However, this trend was negatively impacted by maintenance and downtime in Q4. Corporate and SG&A improved due to lower setup related costs and the recovery of a previously written off AR balance in 2023. For 2023, finance costs were 2 million compared to 12.8 million in 2022. This was driven by having a lower debt balance and interest rates on its outstanding debt in 2023. For majority of 2022, the company paid interest on its previously held U.S. denominated high-yield debt. Our debt balance at the end of the year was $23 million as a result of net repayments for the year of $31 million. This included the repayment of the term loan portion of the credit facility, making the company no longer subject to financial covenant ratios under its credit agreement. We continue to manage our liquidity through the volatile lumber markets and harvesting season that requires significant investments in raw materials. We manage this prudently by ensuring tight inventory management at the mill level, supplemented by drawdowns against our asset-based lending facility for the seasonal spend. Our lending facility is supported by borings against our inventory. As such, higher levels of inventory are supported by the credit facility during the harvesting season. We also leveraged our credit facilities equipment financing portion in order to finance purchases under key strategic projects. This financing was accessed subsequent to year end. I will now pass it over to Joel first for his commentary on our lumber operations.