News Financial Reports & Markets Paper
GreenFirst shares financial results for the third quarter of 2022

GreenFirst Forest Products share results for the third quarter of 2022.

Highlights from the quarter are as follows.

• Third quarter 2022 net loss was $23.3 million or a $0.13 loss per share (diluted), compared to net earnings of $30.7 million or $0.16 per share in the second quarter of 2022. This quarter marked the one-year point for the company operating its acquired forest- products assets.
• Q3 2022 Adjusted EBITDA was a loss of $7.9 million, compared to Adjusted EBITDA in Q2 2022 of $54.3 million. Adjusted EBITDA before duties expensed for Q3 2022 was $5.1 million, compared to $76.6 million in Q2 2022.
• On September 23, 2022, the company entered into a credit agreement with a tier-1 Canadian bank for up to $140 million consisting of a term loan of $15 million and an asset-backed revolving credit facility of up to $125 million. This refinancing replaced a high-yield secured term loan (US$87.3 million outstanding at extinguishment)and a $65.0 million asset-backed loan facility (undrawn at the time of extinguishment).
• On November 7, 2022, the company announced the sale of its 203,000 acres of private forest land south of Kapuskasing, Ontario, to a third party for cash proceeds of $49.2 million.

“In the third quarter, we saw the global lumber markets softening, which along with higher softwood lumber duties is reflected in our results,” said Rick Doman, CEO of GreenFirst. “We will continue to monitor the external challenges we currently face, and work towards cost reduction and operational improvement.”

On August 28, 2021, the company acquired six sawmills and one paper mill from Rayonier Advanced Materials for aggregate consideration of $296.1 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.

During Q3 2022 the company recorded a net loss of $23.3 million ($0.13 loss per share, diluted) and Adjusted EBITDA loss of $7.9 million. These were declines compared to Q2 2022 where net earnings were $30.7 million ($0.16 per share, diluted) and Adjusted EBITDA was $54.3 million.

The company reported net sales of $153.4 million during Q3 2022, a decline of $61.1 million or 28 percent, compared to Q2 2022. This decrease was primarily due to declining lumber prices as the average selling price decreased to $780/mfbm compared to $1,255/mfbm in Q2 2022.

The company reported cost of sales of $150.9 million during Q3 2022, higher by $13.4 million or 10 percent, compared to Q2 2022. This increase correlates with higher volume of lumber and paper sales, in addition to price inflation in Q3 2022, compared to Q2 2022.

The company reported selling, general and administrative expenses of $5.9 million during Q3 2022 which was a decrease of $1 million compared to Q2 2022, primarily due to lower spending on information technology set-up related activities and lower costs related to transitional services that the company incurred in the first half of 2022.

Finance costs, which include interest and accretion on the company’s borrowings under the now extinguished term loan, was $4 million in Q3 2022.

In connection with the extinguishment of the term loan and the asset-backed loan facility, the company recognized a loss of $11.2 million, which primarily reflects the write-offs of $7.7 million and $1 million of remaining capitalized fees related to the term loan and the asset-backed loan facility, respectively. In addition, there was a $2.5 million prepayment premium related to the early extinguishment of the term loan.