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GreenFirst announces results for quarter two of 2022

GreenFirst Forest Products reports its second-quarter results for 2022. All amounts are in thousands of Canadian dollars unless indicated otherwise.

Highlights from the second quarter of 2022

• Second quarter 2022 net earnings were $29.5 million or $0.15 per share (diluted), compared to $34 million or $ 0.18 per share in the first quarter of 2022. This was the company’s third full quarter operating its acquired forest-products assets.
• Q2 2022 Adjusted EBITDA was $54.3 million, a 21 percent increase compared to Adjusted EBITDA in Q1 2022. Adjusted EBITDA before duties expensed for Q2 2022 was $76.6 million, compared to $61.3 million in Q1 2022.
• The company made a voluntary repayment of US$8.9 million on its outstanding term debt during the second quarter of 2022.
• Asset-backed revolving loan facility of $65.0 million was undrawn at quarter end and has remained undrawn at August 10, 2022. Strong operating cash flow continues to fund working capital needs. Cash and equivalents ended Q2 2022 with a balance of $74.2 million.

“We were pleased to see positive lumber markets in Q2 which contributed to strong earnings,” said Rick Doman, CEO of GreenFirst. “Our earnings reflect the favourable pricing in lumber and improved transportation logistics, as we expect sales volumes to remain strong and inventory levels to continue to drop in the coming quarter. We continue to focus on investing in our operations to improve productivity and recovery.”

Acquisition of sawmills and paper mill

The company acquired one paper mill and six sawmills on August 28, 2021 from Rayonier Advanced Materials for aggregate consideration of $293.7 million. The company has measured and recorded the identifiable assets acquired and the liabilities assumed at management’s estimates of their acquisition-date fair values. As the acquisition is within the measurement period, the company and its external valuation experts are still assessing acquisition date fair value adjustments, including fair values of property, plant and equipment and related depreciation charges, leases and estimated final purchase price adjustments related to inventory and other items.

During Q2 2022 the company recorded net earnings of $29.5 million ($0.15 per share, diluted) and Adjusted EBITDA of $54.3 million. This was a decline of 13 percent and an improvement of 21 percent, respectively, compared to Q1 2022.

The company reported net sales of $214.6 million during Q2 2022, an improvement of $33.7 million or 21 percent, compared to Q1 2022. This increase was primarily due to higher volumes for lumber and paper sales as some of the logistics disruptions seen in Q1 2022 began to subside.

The company reported cost of sales of $139.1 million during Q2 2022, higher by $28.5 million or 26 percent, compared to Q1 2022. This increase correlates with higher lumber production and lumber sales in Q2 2022, compared to Q1 2022, which was impacted by harsh winter weather and increases in COVID-19 cases, both factors which improved in Q2 2022.

The company reported selling, general and administration expenses of $6.9 million during Q2 2022 which was an increase of $0.9 million compared to Q1 2022. This primarily reflected the ramp-up of the company’s corporate activities and associated growth in headcounts. This was partially offset by lower information technology set-up costs and lower costs related to transitional services.

Finance costs, which include interest and accretion on the company’s borrowings under the senior secured term credit facility, were $4 million in Q2 2022.