GreenFirst Forest Products Inc.

Good morning, ladies and gentlemen, and welcome to the Green First fourth quarter and year-end 2024 earnings conference call. All lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press 0 for the operator. This call is being recorded on Monday, March 17, 2025. I would now like to turn the conference over to Joelle Fournier, CEO. Please go ahead.

Thank you very much, Joanna. And good morning, everyone, and welcome to our Q4 2024 earning call. I'm Joël Fournier, the Chief Executive Officer of Green First for its product. And today I'm joined by Peter Ferrente, our CFO, and Michel Lessard, our President. Overall, much of the work started earlier in the year came to fruition during Q4. In fact, during the quarter, Green First significantly improved its debt position and strengthened its balance sheet. Many of the initiatives launched in previous quarter materialized in Q4. In Q4, we completed a right offering backstop by Raven Woods, Bob Rabadi, a value investor, raising over $25 million. We also sold our 2021 and 2022 duty for $24 million Canadian. And we also sold the Kenora land for another $5 million. So in total, We generate approximately $55 million in cash during the quarter, positioning ourselves for future growth. By the end of the quarter, we also have no drawdown on the ABL, and we held $27 million in cash on our balance sheet. So all of those things are a significant accomplishment from previous quarters. With the capital raised in Q4 and despite her readiness to execute her $50 million strategic plan, the company will pause selected aspects of the plan while we monitor and better understand the potential impact of the U.S. tariff. On a positive note, lumber futures have risen as high as $680 a thousand, covering the full potential 25% tariff expected in early 2025. indicating that it potentially absorbed the tariff. The company ended the fourth quarter with a net loss from continuing operation adjusted for one-time events. However, our EBITDA improved compared to Q3 2024 with a loss of $900,000 versus 4.9 million in Q3. To summarize the quarter relative to Q3 2024, our production was higher In fact, Q4 production reached 103 million FBM, higher than Q3 2024, and slightly above Q4 last year. However, the rate of improvement slowed down due to weather-related event. A mitigation plan has been implemented for next time. Our cost of goods sold was slightly higher due to lower sales volume, which was impacted by weather-related disruption of the supply chain typical in Northern Ontario. And to finish, the SG&E remained below our announced target of $40 per thousand. And we did finish the Q4 at $29 a thousand. So a significant improvement. If I want to focus a little bit more on the 2024 highlights. In addition to improving your debt position as mentioned previously, and rising cash through the initiative mentioned earlier, The company achieved several key milestone in 2024. Cost reduction. We did reduce the cost of goods sold by $15 per thousand FBM, a significant improvement. And we did also lower our SG&A by another $12 per thousand with future saving expected in 2025. Inventory management. We were able to reduce our log inventory without compromising our operation. On the products, quality and pricing, we didn't improve the quality of the product we produce leading to another $12 per thousand increase in our mill net due to better high quality mix or product we produce. Operational achievement. We successfully executed the cap paper spin out as we previously announced last year. And we did broke over 30 production record in 2024 in our sawmills. Manufacturing efficiency. We did achieve the lowest manufacturing cost in the company history in Q2 of 2024. Leadership and financing. We did hire a highly experienced CFO, Peter Ferente, and we did extend our ADL for an additional four years. Green First will continue to foster a culture of continuous improvement, which we see as essential for maximizing returns on capital investment. During our last earning call, as some of you recall, we announced a projected $8 million in potential cost saving with various initiatives. By year end, we exceeded this target, achieving $9.1 million in site improvement compared to 2023. And those improvements are excluding capex related. So it's purely initiative, non-capex driven. In addition, with everything mentioned above, the company improved its competitiveness by approximately $40 per thousand. So creating a culture of continuous improvement is essential in the lumber sector. And we intend to continue this momentum into 2025. The market did improve in Q4 compared to Q3, with strong price increase during the quarter. Price rose from $606 to $680 per thousand in Q4. The Western-based price also rebounded significantly, increasing from a low of $338 in July to $570 by March 10, so a significant increase. We are currently operating well above a break-even EBITDA. Housing start for January were slightly below expectation and lower compared to December, but we are forecasting a slight increase into 2025. The demand for repair and remodeling remains high compared to historical norm driven by higher home equity, aging housing stocks and other factors. Finally, as mentioned earlier, Greenpeace achieved significant improvement in 2024 compared to 2023, and we are well prepared to navigate the upcoming potential U.S. tariffs that have been mentioned. We have a comprehensive plan in place focusing on prudent cash flow management and government-related initiatives to support the industry. We remain committed to executing a strategy effectively. I will pass it over to Peter. Thank you.

Thank you, Joelle, and good morning to everybody. Please refer to the cautionary language regarding forward-looking information in our Q4 MD&A. The company reported a net loss from continuing operations of $26.6 million in the fourth quarter of 2024 with an adjusted EBITDA of negative $900,000 on total revenues of $70 million. While generating approximately $3 million from the sale of non-core assets during the quarter, we incurred losses of $16 million on the same sale of these assets, and a deferred tax expense of $4 million due to adjustments related to the defined pension plan. Excluding these two items, the company's net loss from continuing operations would have been $6.6 million. For the quarter, revenue decreased by 1%, quarter over quarter compared to Q3 2024, driven by a 12% increase in the average realized price per lumber, which averaged at approximately $680 million, $680, sorry, per 1,000 board feet in Q4 2024, compared to $606 per 1,000 board foot in Q3 2024. The shortening of the US dollar relative to Canadian dollar accounted for 14 of the 74 per thousand board flood increase. The volume of lumber sold was down 12%, primarily due to weather-related conditions impacting our supply chain in Northern Ontario, as Joelle previously described. Turning over to the fiscal 2024 year, we reported a net loss from continuing operations 21.6 million, along with an adjusted EBITDA of positive 15 million. Lumber sales increased by 9.3 million. Pricing had a positive impact of 17 million, with average prices for the year reaching $631 per thousand board foot in 2024, compared to $589 per thousand board foot in 2023. Included in these positive price impacts is the strengthening of the U.S. dollar relative to the Canadian dollar, which contributed $3 million, or $8 per thousand more foot. This was offset by volume, which had a negative impact of $8 million, as shipments dropped from 422 million board feet to 409 million board feet. The sale of byproducts had a negative impact of $11 million for the year, as the entire industry in Ontario is facing a challenge in finding homes for chips, following the closure of several pulp and paper mills lately. Our 2024 manufacturing cost profile improved, resulting in a reduction of $15 million in our cost of goods sold before depreciation. Higher production volumes, combined with several production records achieved across the sawmills, led to an average annual cost of sales of $674 per 1,000 board foot, in 2024, as compared to $689 per 1,000 board foot in 2023. This cost improvement contributed $7 million of the overall improvement, while $10 million of the improvement came from lower shipments. The company reported a year-over-year reduction in duties of $15 million. As a result of cash deposit rates starting at 2023, 20.23% in 2023 and decreasing to 8.05% in August of 23. These rates were then adjusted upwards to 14.4% in August-September of 2024, in line with other peers in our industry. 2024 included a U.S. dollar $14.2 million recovery related to 2022 duties paid following the U.S. Department of Commerce final determination of its fifth administrative review, while the similar recovery for 2023 was $6.9 million U.S. dollars regarding the 2021 duties paid. Early in 2024, the company implemented several initiatives, aimed at reducing selling general administrative expenses. As a result of these initiatives, we delivered a savings of approximately $5.8 million in selling general administrative expenses compared to 2024. The combination of these factors contributed to a positive year-over-year EBITDA improvement of $38 million and net income from continuing operations, an improvement of $18 million. versus 2023. From a cash flow perspective, excluding cash used by the discontinued operations of CAD paper, totaling $16.8 million in 2024, versus a cash provided of $300,000 in 2023, the company's cash used in operating activities from continued operations was $6.2 million in 2024, compared to $58.3 million in 2023. an improvement of over 50 million year-over-year. We closed 2024 with working capital of 64.4 million. This is inclusive of the 27.8 million of cash we had. As compared to 47.0 million and inclusive of 2.4 million cash from continuing operations last year, representing a year-over-year improvement of 17.5 million. In addition, As of December 31st, 2024, the availability under our revolving portion of our credit facility was 39.3 million, less 8.3 million in outstanding letters of credit with no borrowings at year end, resulting in a net undrawn amount of 31.0 million. As of December 31st, 2023, the availability under our credit The revolving portion of our credit facility was $51.9 million, less $5.4 million in outstanding letters of credit, and at the end of last year, 2023, we had drawn $23.0 million in drawings, resulting in a net undrawn of $23.5 million. This is an additional improvement of $7.5 million year over year. We also utilized the equipment financing portion of our credit facility to finance purchases for key strategic projects. As of December 31st, 2024, 13.7 million of the 25 million facility was drawn, leaving excess of the ability of 11.3 million in the months to come. We continue to manage our liquidity through this volatile market and harvesting season, which requires significant investments in raw materials. We do this prudently, by maintaining tight inventory management at the mill level, supplemented by drawdowns against our asset-based lending facility to cover seasonal expenses. Our lending facility, which was amended and extended to September 2028, is secured by borrowings against our inventory. As a result, higher inventory levels are supported by the credit facility during this harvesting season. This concludes my remarks and will now pass it over to Joanne.