GreenFirst Forest Products Inc.

Good morning, ladies and gentlemen, and welcome to Green First's second quarter 2024 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. 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 in Green First MD&A, which can be accessed on the company's website or through CEDAR+. After the speaker's remarks, there will be a question and answer session. at which time you can submit web questions by typing them in the Q&A pod. Mr. Rivett, you may now begin your conference.

Thank you very much. Good morning, everyone, and welcome to our second quarter 2024 earnings call. I am Paul Rivett, the chair of Green First. Today I'm joined by Joelle Fournier, our CEO, Terry Skiffington, our CEO of Cap Paper, Michelle Lessard, our president, and Ankit Kapoor, our interim CFO. Since our last earnings call, we have made some significant strides in line with our strategy. We recently announced the planned spin-out of Cap Corporation, which would effectively deconsolidate the paper operations from Green First. The spin-out of the paper operations is part of the natural progression of the decentralization efforts we have been working on since 2023. The spin-out will enable Green First to focus on its core business of being a pure-play lumber producer. At the same time, the transaction will offer shareholders a stake in any future upside from the development of CAP by Terry and, of course, its assets. As a separate company, CAP will consider independent financing alternatives and partnerships for the future. We want to thank the province of Ontario for the support of CAP as we announce the $24 million financing agreement the province provided for CAP Corporation. It gives CAF the ability to and affords it the opportunity to focus on its long-term strategy as a stand-alone operation. CAF Paper is the only pulp and paper mill operating in northeastern Ontario and its operations are imperative to mitigate challenges related to diminishing chip consumption which is jeopardizing some sawmill operations in northern Ontario. We are happy to have CAF in our ecosystem, which helps us find a guaranteed home for chips from our sawmills. We continue to see the paper mill stabilize its operations and turning a corner from the challenges it faced at the end of last year and Q1 of this year. On the lumber side, we continue to fight through the prolonged bottom that we are now seeing in pricing. It has been a tough go for the industry. but we remained encouraged by long-term fundamentals for the lumber and as a whole. Our goal in the short term is to manage our liquidity rigorously and to help sustain these lows in lumber pricing. The Bank of Canada has changed course on its interest rate policy as we have seen two interest rate cuts this summer. We have yet to see that in the United States, but they're a strong indication that a cut may be coming soon. This is much needed for the rebound in lumber pricing. We recently also purchased a buyout group annuity that transfers approximately $26.5 million of defined benefit pension obligations to a Canadian insurance company, and there'll be more for us on those pension plans in the future to discuss. 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, please.

Thank you, Paul, and good morning, everyone. The company's net loss in Q2 was $14.5 million. Adjusted EBITDA for Q2 was negative $12.1 million. This compares to an adjusted EBITDA of negative $3.5 million in Q1 2024. For Q2, we had negative contribution from both our lumber and paper segments. Net lumber sales recorded in the quarter were $66 million compared to $69 million in Q1. This was due to lower volumes and lower pricing in Q2. Lumber demand continues to be impacted by housing affordability challenges driven by high interest rates. In addition, there remains an oversupply of lumber inventory despite curtailments in North America. Cost of sales in the lumber segment were $70 million compared to $62 million in Q1. This was primarily due to a $6 million swing in net realizable value adjustments as Q1 had a decrease to NRV provisions while Q2 had an expense. Compared to Q2 of last year, the company's net sales in the forest product segment declined by about 10%. This was driven by decreased field takeaways impacting volumes and due to an unexpectedly wet spring season in 2024. Cost of sales in the lumber segment improved by 6% compared to Q2 of last year, primarily due to significantly lower volume sold and gain deficiencies compared to the same period last year. This was partially offset by charges related to inventory net realizable value recorded in the current year compared to a recovery in the second quarter of 2023. Year-to-date sales were flat compared to the same period last year as lower volumes were offset by higher realized prices in 2024. The paper segment saw net sales of 28 million in Q2 versus 24 million in Q1. This was driven by volume increases as the paper mill had fewer production-related challenges compared to a tough Q1. By the same token, cost of sales for paper segment remained flat, even with these higher volumes as there was less maintenance costs in Q2. Compared to Q2 of last year, the company's net sales in the paper segment decreased by 26%. This was primarily driven by the lower volume due to production-related disruptions carried over from Q1 of this year and continued pricing pressure seen during the course of 2023 and into 2024. Costs of sales in the paper segment compared to Q2 of last year decreased by 7%. The decrease in cost of sales was primarily due to lower paper production and sales offset by higher costs driven by external events from Q1 of this year. SGA expenses of 4.5 million in Q2 were higher compared to 2.5 million in Q1. However, Q1 had a recovery of 1.3 million related to the difference between accrued and actual incentive payout for 2023 and credits related to fringe grant benefits. Excluding the impact of these one-time items in Q1, SG&E expenses were relatively flat in the second quarter of 2024, as lower salaries and benefits were offset by costs related to corporate reorganization efforts, including the planned spinoff of CAP. For Q2, finance costs were $1.1 million, primarily reflecting interest charges on the company's outstanding debt under the credit facility. During Q2 2024, the company received proceeds of $9 million from the cap term loan. The company utilized $6 million to repay the revolving portion of its credit facility. Additionally, the company received proceeds of $10.3 million related to its equipment-based term loan, of which it effectively repaid approximately $7.5 million to the revolving portion of the credit facility. As such, net proceeds from financing activities, including the cap term loan, was about $5 million. Subsequent to Q2, the company received the balance of the CAP term loan, of which $4 million was utilized to repay the revolving portion of the credit facility, netting the company an additional $11 million since Q2. The repayment of the credit facility from the CAP term loan essentially offsets the loss in borrowing base due to removal of CAP's assets from the credit facility, as they are now pledged under the loan agreement with the province of Ontario. The company also continues to monitor inventory levels and is accelerating certain initiatives to open up added liquidity. I will pass it over to Joel for his commentary on this and operations in general. Joel.