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GreenFirst announces financial results for the third quarter of 2023

GreenFirst Forest Products reported its results for the third quarter and three quarters ended September 30, 2023. The company’s interim financial statements and related Management’s Discussion and Analysis (MD&A) for the third quarter and three quarters ended September 30, 2023 are available on GreenFirst’s website.

Highlights from the results include the following:

• Third quarter 2023 net earnings from continuing operations was $2.7 million or $0.01 per share (diluted), compared to net loss of $9.7 million or a loss of $0.05 per share (diluted) in the second quarter of 2023 on the same basis.
• Average lumber prices for Q3 2023 were higher than Q2 2023, with an average selling price of $642/mfbm compared to $596/mfbm in Q2 2023. There was strong pricing momentum toward the latter half of the second quarter due to supply related concerns, which benefited results at the beginning of the third quarter. However, volumes in the third quarter were lower than Q2 2023 due to reduced demand given macroeconomic uncertainties.
• The valuation provision for lumber and log inventory was decreased to $1.9 million from $8.7 million at the end of Q4 2022, generating a $6.8 million credit to cost of sales in the three quarters ended September 30, 2023.
• The U.S. Department of Commerce’s Final Determination of its Fourth Administrative Review resulted in a final duty rate of 8.05 percent. The Company stands to benefit from an approximate US$6.9 million (CAD$9.2 million) recovery on duties paid in 2021, as recorded in Q3 2023. Additionally, the ongoing lower duty rate has positively impacted the Company’s earnings and free cash flow since August 1, 2023.
• There continues to be downward pressure on newsprint and paper products prices.
• A corporate reorganization was initiated this fall to separate the assets from the lumber mills and the paper mill. This reorganization aims to provide for increased alignment of incentives, cost control measures and focus on the unique aspects of each business.
• On November 6, 2023, the company appointed Joel Fournier as its new CEO.

“Our business showed resiliency in the third quarter, despite a low pricing environment,” said Paul Rivett, GreenFirst’s executive chair. “Our mill teams continue to focus on productivity gains, particularly the Chapleau team which has broken production records, and we expect further improvements in the coming quarters under the leadership of our new CEO, Joel Fournier.”

GreenFirst has benefited from improving results at its paper mill during 2023, compared to the prior year in which the mill’s contribution remained negative for all four quarters. For the three quarters ended September 30, 2023, the operating income from the paper products segment was $1.8 million compared to an operating loss of $11.6 million in the prior year three quarters ended September 24, 2022. This turnaround is primarily driven by the restart and efficiency gains of the second paper machine. However, the paper mill faces many headwinds, including pricing pressures, related to the secular decline of its paper products along with incremental supply pressures relating to wood chips.

GreenFirst’s paper mill operation has key operational and performance metrics that are very different from the lumber mill operations. The board of directors has determined to separate the lumber mill assets from the paper mill assets. It is believed that this separation of businesses and decentralization of management will provide for more expedient decision-making, better alignment of incentives and more entrepreneurialism. This corporate decentralization has been initiated and it will also result in further reductions of overhead and operating costs.