GreenFirst Forest Products Inc.

Good morning ladies and gentlemen and welcome to Green First third 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. 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 in Green First MD&A and Annual AIF, which can be accessed in the company website or through CEDAR+. Please, after the speaker's remark, there will be a question and answer session. Please submit your questions through the online portal. I will now pass it over to Joël Fournier to begin the management presentation. Please go ahead.

Thank you very much, Sylvie, and good morning, everyone, and welcome to our Q3 2024 earning call. I'm Joël Fournier, the Chief Executive Officer of Green First Forest Products. Today, I'm joined by Peter Ferrante, her new CFO, Therese Kiffington, CEO of Cap Paper, and Michel Lessard, her president. Since her last earning call, we've continued to make progress on her strategy. I'm pleased to announce that the spin-out of Cap Paper was completed in November as planned. Now, both entities are completely separated, and Green First Forest Products is a pure play lumber company that will focus on the future growth of its sawmills. CAP Corporation will continue to exist as a standalone paper mill operation with TERI and newly announced Board of Directors at the helm. On August 12, 2024, a new duty rate went into effect as a result of the U.S. Department of Commerce final determination of its fifth administrative review with respect to import of softwood lumber product. This determination assessed or new duty rate at 14.4%, which was lower than the company paid in 2022 at 20.2%. Based on this final rate, the company would stand to benefit from an approximate $14.2 million US or $19.2 million Canadian recovery on duty paid in 2022. We will continue to advocate for a shareholder to see a timely return on those overpayments. In addition, we continue to seek a fair settlement of all remaining duty deposits. These duties will be settled with the rest of the Canadian softwood lumber industry, and consequently, the amount of refund remains uncertain at this time. In addition to the duty receivable recognized in Q3 2024, we also announced the launch of the right offering in October that will allow the company to execute on its strategic plan. Green First continues to be in a unique situation where we have access to excess wood supply and through the execution of our strategic plan we're aiming to grow our annual capacity by using that wood supply. Our mission is to become a top quartile cost operation and we want to be one of the largest Ontario lumber producers. We firmly believe that executing a strategic CapEx plan off-cycle while market prices are low is key for the long-term profitability when markets rebound. There are many advantages to undertake such capital projects off-cycle. For example, project costs will be lower, startup time will be quicker for those CapEx projects, and we can maximize the return on every dollar we will spend. These investment opportunities will change the current profitability of Green First. As you can see in the slideshow, we are looking to spend approximately $50 million in 2025 and 2026, with an expected increased EBITDA of approximately $18 million per year. This investment will help reduce her costs by roughly 10% and increase her current capacity by 20%. It will also lower EBITDA break-even point by approximately 15% after the completion of the Phase 1 of our strategy. The company is looking to do a total of eight projects for the Phase 1 across the four sawmills in Ontario. Those projects will increase capacity, reduce cost, and improve EBITDA going forward. The company will continue to work with the Board of Directors to obtain approval on these initiatives. More detail will follow in subsequent press releases. The company finished the third quarter at a net loss from continuing operation, adjusted for one-time duty recovery. This was primarily due to operation in July, where pricing was at its lowest in conjunction with the company taking targeted curtailment in order to manage liquidity tightly. Towards the end of the quarter, we saw market improvement and we believe we hit the bottom for lumber price in July. July was our lowest month with pricing at $338 per thousand FBM on a Western basis. Since then, price has steadily increased month over month and we're now sitting at $445 a thousand FBM on a Western base. Under those current price, per mil are now positive EBITDA. The reduction in capacity recently announced by our competitor and the housing supply shortage in the United States are expected to continue to put pressure on pricing. Going forward, we believe the fundamentals that drive lumber price are favorable for green first and for the lumber industry. Aside from the targeted curtailment we had in July, Her operation did run smoothly in Q3, while certain locations were breaking production records. Green First continues to promote a culture of continuous improvement and has seen higher levels of efficiency when we compare to fiscal 2023. As you can see in the presentation, her sawmill continues to improve by increasing production, reducing costs overall, and our breakeven mill net EBITDA improved by 20% from 2022. Peter will now take us through the financial results of the quarter. Over to you, Peter.

Good morning, everyone. The company's net income from continuing operations, now excluding cap paper, in Q3 2024 was $14.8 million. Adjusted EBITDA from continuing operations from Q3 2024 was positive $15.9 million. This compares to an adjusted EBITDA of negative 6.1 million in Q2 2024. As Joelle previously shared, during the third quarter of 2024, the company recorded a recovery of approximately 14.2 million U.S. or 19.2 million Canadian related to duties paid, plus accrued interest of 2.3 million U.S. or 3.1 million Canadian. This recovery has positively impacted our net earnings and adjusted EBITDA in Q3 and on a year-to-date basis for 2024. For Q3 2024, we had positive contribution from continuing operation of approximately $1 million. Net sales recorded in the quarter were $70.8 million, closely compared to $69.6 million in Q2 2024. The increase in net sales is due to higher volume shift offset by lower pricing realized for the quarter. The industry continues to face lower demand as housing affordability continues to be significantly impacted by increased mortgage rates. In addition, an oversupply of lumber inventory, despite the tournaments in North America, continues to impact pricing. There continues to be low level of field inventory in the industry, and there were lower takeaways following the first half of the year. Cost of sales in the lumber segment were $69.8 million compared to $72.5 million in Q2 2024. The decrease in cost of sales in the third quarter was primarily due to lower charges related to inventory net realizable value recorded compared to the second quarter of 2024. In addition to inventory being sold during the third quarter, which was produced primarily in the previous quarter at a lower cost. Compared to Q3 of last year, the company's net sales increased by about 4%. This was driven by higher production in the quarter, offset by lower pricing realized in the current quarter. Demand in both periods were heavily impacted by weaker buyer sentiment, resulting from sustained interest rate increases, combined with pricing being being lower in the third quarter of 2024 compared to the same period last year. Cost of sales in the quarter improved by approximately 16% compared to Q3 of last year, primarily due to significantly higher volume sold and higher charges related to inventory net realizable value recorded in the third quarter of 2024 compared to a recovery in the third period of 2023. year over year on a year-to-date basis net sales increased by one percent due to higher average selling prices realized combined with higher volumes shipped selling general general and administrative expenses of 3.5 million in q3 2024 were lower compared to 3.9 million in q2 of 2024. this was primarily related to the company occurring higher third-party fees related to corporate re-organization efforts, including the planned spinoff of CAP paper in the second quarter of 2024. The company generated finance income of $1.9 million for Q3 2024 and incurred a finance cost or expense of $0.2 million for the three quarters on a year-to-date basis. This primarily represents interest income related to duties recovery recorded during the period offset by interest charges on the company's outstanding debt under the credit facility. During Q3 2024, the company made net repayments against its revolving portion of the credit facility of $4.2 million and $0.7 million related to its equipment term loan with the bank. The company continues to monitor inventory levels and is accelerating initiatives to open up additional liquidity in the short term through the recent announcement of a rights offering. I will now pass it back to Joël for his commentary on the operations of the business.