GreenFirst Forest Products Inc.

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Good morning, ladies and gentlemen, and welcome to Green First's fourth 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's MD&A and annual AIF 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. 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, Sylvie, and good morning, everyone, and welcome to our year-end and fourth quarter 2025 earning call. I'm Joël Fournier, the Chief Executive Officer of Green First. Today I'm joined by Peter Ferente, our Chief Financial Officer, and Michel Lessard, our President. The first point worth noting for a shareholder is the safety record of our employee achieved in 2025. All meals finish the year with their lowest severity and incident frequency rate in their history. These results position Green First among the best in the industry from a safety perspective and demonstrate a strong commitment to our safety culture. We did finish the quarter with a negative EBITDA of $21.7 million. This is mainly due to weaker market condition, whereby benchmark pricing was at its lowest point for the year in December. Additionally, this was the first full quarter the company was subject to the higher combined anti-dumping and countervailing duty rate of 35.16%. Furthermore, in October 2025, the U.S. administration imposed a 10% tariff on lumber under Section 232. To help with the situation, the federal Canadian government announced support programs for the forest industry in response to those tariffs. Through these programs, Green First secured a $30 million loan with its banking partner, BMO, under the softwood lumber program. Additional programs are available and we are exploring how the company can benefit from them. I will now go through some 2025 and Q4 highlights compared to last year. For sales volume, we finished the year with 401 million MFBM in 2025 versus 408 million MFBM in 2024. This was impacted by lower production for the year. For the quarter, we did finish with sales volume at 108 million MFBM, which was higher than previous quarter and higher than Q4 last year. Production. Production, we finished the year with 401 MFBM in 2025 versus 414 MFBM in 2024. For Q4, we produced 93 million MFBM, which was lower than previous quarter. The decrease was primarily due to the installation and ramp-up of the new saw line at Chapleau and also market-driven curtailment at other mills in December. Without this curtailment, production would have been higher in 2025 versus 2024. The production loss for the Chapleau line installation was expected. Quality. We made significant improvement in grading and quality in 2025 with the upper grade output increased by approximately 15% by year end. We expect continued benefit into 2026. Continuous improvement. Our employee identified and executed initiative generating approximately $7 million in EBITDA gain non-CAPEX related during the year of 2025. Now I'm going to speak a little bit about capital expenditure and continuous improvement. As part of previously announced $50 million capital investment program aim at improving our cost structure, Green First is proceeding with only selected strategic project at this time. As communicated in previous quarter in Q3 2025, the primary focus has been the installation of the new saw line at a new planer mill, and the cogeneration refurbishment. While the downtime impacted Q3 results, it allowed us to complete the installation during a period of weaker market conditions. Commissioning began in November and December, and ramp-up is continuing through Q1 2026. Currently, production is approximately 80% of target, while recovery rates are fully on target. The new planer mill is performing as expected with improved product and quality. The cogeneration refurbishment has delivered the anticipated benefit in drying capacity and energy production as well. These projects are now complete and fully operational, positioning us to capture the production gain expected from the new saw line as flow. I'm also pleased to report that the saw line project will be completed below budget cost, supported by $6 million in funding from the provincial government in form of a grant and loan. In the short term, our focus will remain on completing the commissioning of the shop-load line. We will defer additional strategic capital expenditure for now. In 2025, we also executed routine maintenance capital expenditure of around $9 million with no issue. I will now cover 2025 and Q4 lumber market. The lumber markets remain challenging through 2025 and Q4. Prices were stronger in the first quarter but declined steadily during the year, reaching their lowest point in December 2025. The Western-based price benchmark was at $380,000 in December compared to $492 in Q1 of 2025. We continue to see in 2025 market headwinds with lots of uncertainty around the market created by the geopolitical situation. We're still seeing high costs for housing. And even though the interest rate, the mortgage rate declined in 2025, there's still lots of uncertainty around those numbers. On the strategic side, Green First continued to strengthen its partnership with key home center customers, increasing volume with that segment by approximately 30% in 2025. The sales team will continue to explore additional opportunity in Canada where it makes sense strategically and economically. While Housing Star came and below expectation and declining during 2025, the repair and remodeling market show a modest growth during the year. This is one of the reasons Green First is pushing itself to increase exposure and business within that segment. For 2026, we remain cautious in our forecast, anticipating only modest price increase in the back half of 2026. In the short term, we expect demand to increase slightly following the seasonal trend with housing start. Over to you, Peter, for the financial section.

Thank you, Joelle, and good morning to everyone. Please refer to the cautionary language regarding forward-looking information in our Q4 2025 management discussion and analysis. For the fourth quarter ended December 31, 2025, total revenues were $76.9 million, up from $69.9 million in Q4 2024. Lumber sales increased to $70.7 million, while byproducts and other sales were slightly lower at $6.3 million. Shipment volumes were 108 million board feet, broadly in line with prior periods. Average selling prices in Q4 were $654, down from $680 in Q4 2024. While duties and tariffs are paid by Green First and included in the commodity prices charged to our customers, Earlier in the year, we saw price increases reflecting the temporary introduction of tariffs. In Q4, however, despite further duty increases in Section 232 tariffs, prices did not rise correspondingly, suggesting weaker market demand and limited pass-through ability. Total cost of sales for Q4 were $886 million, up from $67.3 million in Q4 2024, driven by inventory breakdowns, downtime associated with the chaff for a large log line, and other operational factors. Other expenses in the quarter included $15.1 million of duties, with combined duty and tariff rates reaching approximately $45 in Q4 2025 compared to 14% in Q4 2024. SG&A SG&A totaled 1.5 million. During the quarter, the company identified that certain costs previously capitalized to inventory and subsequently expense as cost of sales was more appropriately categorized as selling general and administrative expenses. during the year ended December 31st, 2024. The impact on the December 31st, 2024 inventory balance was not material and has not been adjusted in these consolidated financial statements. The company has recorded a reclassification of $4.8 million to reduce cost of sales and increase selling general administrative expenses in the year 2024 financial statements. This adjustment has no impact on net loss, the statement of cash flows, or the statement of changes in shareholders' equity. Year-over-year fluctuations otherwise primarily reflect inflationary pressures and the timing of corporate initiatives rather than structural changes. In addition, during 2025, the company identified indicators of impairment related to lumber operations driven by continuous weakness in market prices, macroeconomic conditions, and elevated duties and tariffs. As a result, the company performed an impairment assessment at the lumber operations cash generating units level, reflecting the integrated nature of its manufacturing and forest assets. Using a discounted cash flow approach over a five-year projection plus terminal value, the company determined that the recoverable amount of the cash-generated unit was $9 million lower than its carrying value, resulting in an impairment charge allocated to selected fixed assets on a pro-rata basis. Key assumptions included lumber prices, sales volumes, log and production costs, capital expenditures, duties and tariffs, terminal growth, and a post-tax discount rate of 12%. Sensitivity analysis confirmed that reasonable changes to these assumptions would not materially change the conclusion. This impairment contributed to pressure on net loss and EBITDA for the quarter. Leading to adjusted EBITDA from continual operations for Q4 was negative 21.7 million compared to negative 900,000 in Q4 2024. This reflects inventory write-downs, operational downtime, higher tariffs, while the underlying core manufacturing performance remained relatively stable. Turning over to liquidity and capital resources. As of December 31, 2025, the company maintained strong liquidity with total available borrowing capacity of approximately $107 million, including the revolver, equipment turn loan, and a $30 million software lumber program loan, which was finalized in January 2026 in terms of funding. Drawdowns at the end of the year totaled $28.9 million on the revolving credit facility, with letters of credit totaling $3.9 million, leaving approximately $74.4 million of available liquidity to support ongoing operations and working capital needs. For comparison purposes, at the end of December 31st, 2024, total borrowing capacity was $72 million, with $13.7 million drawn and letters of credit of $8.3 million, leaving approximately $50.1 million available liquidity. So at the end of December 31st, 2025, this shows approximately a $24 million addition. Year-over-year increases in available liquidity reflects both drawdowns on the revolver, equipment turn loan, and the potential benefit of the softwood lumber program financing, which would have significantly increased capacity had it been funded prior to year end. Overall, the company continues to maintain a conservative approach to leverage ensuring flexibility to manage working capital, operational downtime, and market volatility in the lumber sector. This financial flexibility allows MoonFirst to navigate seasonal harvesting cycles in addition to market volatility and capital project funding while maintaining a strong balance sheet. Overall, the fourth quarter mirrored the trends seen throughout 2025. with margin pressures from higher duties, market conditions, and operational disruptions, while operational performance remains consistent with expectations. This concludes my remarks. We will now pass it over to Joel.

Thank you very much, Peter. And finally, I would like to say Green First will remain committed to continuous improvement 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 through those potential economic headwinds and emerging market challenges. I would like to thank everyone for joining the call.

We will now answer any questions that have come through. Thank you. Okay, good morning, everyone.

We do have one question that came through. With the completion of the Chapleau large log line, have you seen any meaningful increase in production volumes or quality of output? When can we expect to see this reflective in the financial results? So I'm going to take this one. So far, we hit our target on lumber recovery, and we're still in ramp-up mode for production. Production is currently, like I said, around 80% range. of the expected target and we expect the ramp up to be completed in Q2. We also see better quality of lumber going through the planer in terms of overall quality and we saw a trim loss reduction and great improvement so far, so this is very encouraging. We also pleased to report that we expect the project to be under cost overall. In addition, we add the participation in the project from the provincial government. There's another question similar to this one that just came through. I'm going to answer it right away. It's what do you expect CAPEX spending to be in 2026? And can you break it out?