GreenFirst Forest Products Inc.

Good morning, ladies and gentlemen, and welcome to Green First's third quarter of 2025 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 on the company website or through CDAR+. After the speaker's remarks, 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.

Thank you very much, Joanne, and good morning, everyone, and welcome to our Q3 2025 earning call. I'm Joël Fournier, the Chief Executive Officer of Green First. Today, I'm joined by Peter Ferrander, CFO, and Michel Lessard, our President. So, we ended up the quarter with a negative EBITDA of $47.2 million. However, the loss is mainly due to selected adjustment. First, we had a $33.8 million duty adjustment related to an underpayment from AR6 for duty paid in 2023. The second item is we recorded an NRV provision of $8.2 million as market dropped sharply from $508 per 1,000 board feet in July right down to 420 by the end of September. And the third item is we had to take a downtime at the Chapleau mill to install the new saw line. And this impacted the results by $4.6 million. Without those three adjustments, Green First would have been close to break even EBITDA for the quarter. I just want to mention that the Chapleau downtime is now behind us, and we're commissioning, and we're going through the commissioning of the new line right now. We expect to see the full benefit the first quarter of 2026. All those adjustments mentioned affected our cost of goods sold negatively as well. That said, excluding the NRV and the downtime impact we had during the quarter to install mainly the line at Chapleau, our cost per unit would have been better in the previous quarter. On a positive note, SG&A remained on target. at $32 per thousand board fee in Q3, which is below both last year and our year-to-date average. Another factor that affected us in the quarter was the increase in the duty rate in mid-August, which went up to 35.16% for all exports through United States. The increase in duty, along with the uncertainty around potential new tariffs during the quarter, created some hesitation with her customers. As a result, her sales volume declined to $93 million board fee compared to $109 million in Q2. This lower sales volume also reflects a reduction in production, as Q2, as some people recall, was a record quarter for output, while Q3 was impacted by the installation of the new saw line at Chapleau. As of Q3, we have not paid any new tariffs. However, for Q4, we are now subject to a 10% tariff on U.S. exports from Canada. This follows Section 232 from the United States-U.S. Administration, which resulted in the 10% tariff, a measure that is currently being challenged in court. Finally, from the recently announced federal government support, As it related to Canadian company impacted by both duty and tariffs, Green First is exploring how this new program will help her business going forward. I would like to give to people some highlight Q3 2025 versus Q2 2025. From a sales volume perspective, like we already mentioned, we ended up at 93 million versus 109 compared to Q2. and it was impacted by a market uncertainty and lower production due to the installation of the line at Chapleau. From a production perspective, we were lower. We finished the quarter with 90 million MFBM versus Q2 at 116. The main reason for the lower production is what I said. It's because we installed a new saw line at Chapleau and we had to take some downtime to do the installation. In addition to that, we did have also small downtime at Hurst and kept casing, maintenance related. Due to market uncertainty, we could not have had a better timing to install the new saw line at Chapleau. If people recall, we mentioned that we wanted to do capital expenditure off cycle, so we did not have better time to install the line at Chapleau this quarter because market was not good. On the quality side, we continue to see improvement in our wood quality versus 2024 as our product mix keeps improving. NRV, we did increase significantly from Q2 to Q3. Q2, we had a provision of $400,000 in Q2, and in Q3, this went up to $8.2 million. SG&E, as already mentioned, we continue to be better than our announced $40 per thousand target last year, and we ended up the quarter with $2.9 million in SG&E expense. In terms of cash position, at the end of the quarter, our excess liquidity improved from $22 million from last year, Q3, to $27 million this year. The company continues to manage the cash tightly. I would like to discuss a little bit. I mentioned the line at Chapleau a couple of times. I would like to discuss a little bit about their capital expenditure and continuous improvement plan. So the previously announced $50 million for phase one capital invested program aimed to improving company cost structure, Green First is proceeding only with selected strategic projects. As communicated in Q1 and Q2 this year, the main focus has been the installation of the new saw line at Chapleau. While the downtime of the mill impacted Q3 results to install the line, it was necessary to complete the installation at the optimal time when market conditions were low. It's not good to install a new saw line when the market is very good because it will increase your loss. In addition, we installed a new planer mill and completed major upgrades to the boiler and cogeneration plant at Chapleau Sawmill. So these projects are now in the ramp-up phase now, and we are already showing up, and we are already showing up, promising results in terms of revenue and cost improvement so far. Subsequent to quarter-end, starting mid-October, the shop-low line started up, and we are making steady progress each week. In the most recent Sunday shift last week, we processed 2,000 logs in a single shift, which is in line with the ramp-up target. The cogent and the boiler modification have already seen an increase in drying capacity by around 10%, and the new planer mill is incrementally increasing production every single week. We expect the saw line to be fully commissioned by the end of December, and we will be ready when the market turn around. Overall, we have committed to invest approximately $28 million at the Chapleau site to improve the site. These projects are expected to improve mill profitability with a payback period of under three years. Once completed, the mill will be well on its way to become a top quartile operation. We are planning to organize an investor tour in Q2 2026 with a focus on seeing the new saw line and shop low in operation. We will share more detail to the exact date very shortly. We will continue to focus on factors within our control and pursue opportunity to improve the business by focusing on continuous improvement. I would like to talk a little bit about market. Q3 market was a challenging quarter. So some customer, because of all the uncertainty, adopted a very cautious approach in response of the recent duty increase and the uncertainty around US tariff during the quarter. which are now in effect in Q4 this year. Resale volume, as already mentioned, was 93.3 million MFBM, a decrease of 17 million compared to previous quarter. The lower sales volume was mainly due to broader market headwind and downtime at the shop-low mill that translate into lower production or less finished goods available to sell. While housing start fell below expectation, we continue to see strong pull-through from our lumber for lumber from a key home center customer. In August, total housing start in Canada reached 1.3 million units, down 8.5 from July and 6% from August last year. Recent interest rate reductions are encouraging, but they did not materially impact Q3. On the capacity side, several curtailment announcements were made during Q3, mostly taking effect into Q4 this year. Around 50 salon mills will be impacted, removing approximately 400 to 500 million MFBM from the North American market. With this announcement, we anticipate a positive movement in terms of sale volume. This is a significant drop in capacity in North America. Pricing conditions were challenging as well, with Western Bay's price falling from $508 per thousand at the start of the quarter, down to $420 at the end of September. Despite all those challenges, there remains a major under-billed situation in both U.S. and Canada. As announced in previous quarter, the Canadian federal government has introduced measures to increase housing start to 500,000 units per year, which should support lumber demand going forward. Green First is well positioned to capitalize on this initiative from the government. For Q4, however, we remain cautious in our forecast, anticipating only modest price increase driven by recently announced competitor curtailment. In the short term, we expect demand to remain relatively flat, while capacity decrease should help balance the market a little bit. On a positive note, we had development shortly after quarter end in October regarding the government support for CAP paper. In addition to this announcement, we received interest from other CHIP customers to increase the volume. So those two news really helped the residue situation. Finally, I would like to say that Green First will remain committed to continuous improvements as a core strategy to enhance business performance. At the same time, we will maintain a prudent and disciplined approach to cash management to ensure the company is well positioned to navigate potential economic headwinds and emerging market challenges. I will pass over to you, Peter, for the financial section. Thank you.

Thank you, Joël, and good morning to everyone. Please refer to our cautionary language regarding forward-looking information in our 2.3.2025 management discussion and analysis. The company reported a net loss of $57.4 million in the third quarter of 2025, with an adjusted EBITDA of negative $47.2 million on total revenues of $70.2 million. Excluding the $39.6 million adjustment resulting from the finalization of duty rates in relation to 2023 duties paid, which includes both a $33.8 million in duty liability and a $5.9 million in related interest. Net loss would have been $17.7 million, and adjusted EBITDA would have been negative $13.4 million. When the three quarters ended September 27, 2025, reported a loss for the third quarter, a loss of $66.1 million, along with an adjusted EBITDA of negative $47.3 million, on total revenues of 226.6 million. Net loss and adjusted EBITDA both impacted negatively by the finalization of duty rates in relation to 2023 duties paid, as was just explained. Revenue decreased by 17% quarter over quarter compared to Q2 2025, driven by a decrease in shipments of approximately 17 million board fee, or 15%. resulting from a volatile lumber market experiencing macroeconomic deadlines, such as elevated interest rates, labor shortages, and geopolitical uncertainty. In addition, revenues were negatively impacted by a price decrease of $17.4 million, or 2%, reflecting a drop in benchmark prices in the back half of Q3 2025. Year-turn volatility is likely to continue with higher duty rates on Canadian lumber to the U.S., along with Section 232 tariffs totaling 45%. Sales of chips and other byproducts dropped by $1.1 million to $5.3 million versus $6.5 million in Q2 of 2025. This was due to lower volume of sales and a drop in average selling price. When the third quarter ended September 27, 2025, the company reported cost of sales of $75.6 million, compared to $80.1 million for the second quarter and the June 28, 2025, a decrease of approximately $5 million, or 6%. This decrease in cost of sales was primarily driven by a 15% decrease in shipment volumes, offset by the downtime of the installation of a large log line and selected other downtimes and control Additionally, in the current period, the company recorded a provision for the net realizable value of inventory of approximately $8.2 million related to decreases in benchmark prices. Lumber production for the third quarter of 2025 was 91 million boyd feet compared to 116 million boyd feet in the second quarter of 2025. This decrease primarily attributable to the reductions in production experienced during the period is in relation to the capital project installation at Chapleau, which are expected to return to normal levels in Q4 of 2025 with increased production in Q1 2026. During the third quarter of 2025, the amount of duties needed on our shipments of softwood lumber in three U.S. totaled $8.9 million, which is up $700,000 from the second quarter of 2025. Although shipments to the U.S. were down $12.6 million during the quarter versus prior quarter, duties paid on shipments did not decrease as much since our duties rates rose from 14% to 35% starting August 2025. In addition, during the third quarter of 2025, we recorded a $33.8 million duty liability related to the finalization of the countervailing duty and anti-dumping rates by the United States Department of Commerce following Administrative Review 6 for the 2022 viewing period. Selling general and administrative expenses for the third quarter of 2025 totaled $3 million compared to $4.6 million in the second quarter of 2025. This decrease is primarily attributable to non-cash expenses recorded during the second quarter. The combination of these factors during the third quarter of 2025 resulted in a negative EBITDA of $47.2 million, or $13.4 million, excluding the duty liability discussed previously, versus a negative $5.2 million in the prior quarter. Under the amended and restated credit agreement, the company's maximum borrowing capacity under the revolving portion of the credit facility is $60 million, and the equipment financing portion is $25 million. The company has made net borrowings $19 million on a year-to-date basis on September 27, 2025, against the revolving portion of the credit facility. Of this $19 million, $6.5 million was drawn during this quarter. As of September 27, 2025, there were $14.1 million of outstanding letters of credits issued, which reduces the amounts available to be drawn under the revolving credit facility. As such, approximately $27 million was still available to be drawn. Additionally, the company had net aggregate amount of $11.6 million drawn under the equipment financing portion of the credit facility in the form of a term loan, and an additional $13.4 million was available to be drawn. As a company, we continue to manage our liquidity through the volatile longer markets 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 and receivables. As a result of higher levels of inventory, Those help support our credit facility during the harvesting season. This concludes my remarks, and I will pass it over to Joao.