GreenFirst Forest Products, currently valued at $70.03 million in market capitalization, reported a net loss for Q4 2024, while implementing strategic changes to improve its operational efficiency. The company generated $70 million in total revenues and a net loss of $26.6 million from continuing operations. Despite these challenges, GreenFirst achieved significant operational milestones, including record production levels and cost reductions. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, suggesting potential upside for investors willing to weather near-term challenges.
Key Takeaways
- GreenFirst reported a Q4 2024 net loss of $26.6 million.
- Total revenues for the quarter reached $70 million.
- The company achieved 30 production records in its sawmills during 2024.
- Strategic initiatives included reducing costs and a successful spin-out of Cap Papers.
- U.S. housing market dynamics, including a shortage of 4 million units, continue to influence demand.
Company Performance
GreenFirst Forest Products experienced a challenging Q4 2024, with a net loss from continuing operations amounting to $26.6 million. For the full year, the net loss was $21.6 million. Despite these financial setbacks, the company managed to generate $30 million from non-core asset sales, which contributed positively to its cash flow. The company also achieved a positive adjusted EBITDA of $15 million for the year, indicating an improvement in operational efficiency. InvestingPro data reveals the company maintains a healthy current ratio of 2.23, suggesting strong short-term liquidity, though its gross profit margin remains challenging at 2.53%.
Financial Highlights
- Revenue for Q4 2024: $70 million
- Net loss from continuing operations for Q4 2024: $26.6 million
- Adjusted EBITDA for Q4 2024: -$900,000
- Full-year 2024 net loss from continuing operations: $21.6 million
- Positive adjusted EBITDA for 2024: $15 million
Outlook & Guidance
Looking ahead, GreenFirst is pausing selected aspects of its $50 million strategic plan while closely monitoring potential impacts from U.S. tariffs. The company is exploring opportunities in Canadian and international markets and remains committed to continuous improvement and maintaining a strong balance sheet. The EPS forecast for FY2025 is 1.08 USD, with a significant increase projected for FY2026 at 4.0 USD. InvestingPro subscribers can access 10+ additional exclusive insights about GreenFirst’s financial health and growth prospects through the comprehensive Pro Research Report, which transforms complex financial data into actionable intelligence.
Executive Commentary
CEO Joel Fournier remarked, "We are currently operating well above our breakeven EBITDA," highlighting the company’s operational progress. Michel Lazar, President, noted the significant financial impact of U.S. duties, stating, "The Canadian industry deposited more than US$7 billion in duty." Fournier also expressed the company’s ambition to become the largest wood producer in Ontario.
Risks and Challenges
- Potential impacts from U.S. lumber tariffs could affect profitability.
- Fluctuating lumber prices may influence revenue stability.
- The competitive landscape, with U.S. and Canadian lumber production dynamics, could pose challenges.
- Supply chain disruptions could impact operational efficiency.
- Macroeconomic factors, such as housing market fluctuations, remain a concern.
GreenFirst Forest Products is navigating a complex market environment, balancing strategic initiatives with operational challenges to position itself for future growth. With an overall Financial Health score of "Fair" according to InvestingPro analysis, the company shows both opportunities and risks. Investors seeking deeper insights can access the full Pro Research Report, which provides comprehensive analysis of GreenFirst’s financial position, market opportunities, and growth potential among 1,400+ top stocks covered by InvestingPro’s expert analysis.
Full transcript - GreenFirst Forest Products Inc (GFP) Q4 2024:
Conference Operator: Good morning, ladies and gentlemen, and welcome to the GreenFirst Fourth Quarter and Year End twenty twenty four Earnings Conference Call. All lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Monday, 03/17/2025. I would now like to turn the conference over to Joao Fournier, CEO.
Please go ahead.
Joel Fournier, Chief Executive Officer, GreenFirst Products: Thank you very much, Joanna. And good morning, everyone, and welcome to our Q4 twenty twenty four earnings call. I’m Joel Fournier, the Chief Executive Officer of GreenFirst First Products. And today, I’m joined by Peter Ferrante, our CFO and Michel Lazar, our President. Overall, much of the work started earlier in the year came to fruition during Q4.
In fact, during the quarter, GreenFirst significantly improved its debt position and strengthened its balance sheet. Many of the initiatives launched in previous quarter materialized in Q4. In Q4, we completed a ride offering backstop by Ravin Woods, Bob Robotti, a value investor, raising over $25,000,000 We also sold our 2021 and 2022 duty for CAD24 million and we also sold the Ken O’Relland for another $5,000,000 So in total, we generate approximately $55,000,000 in cash during the quarter, positioning ourselves for future growth. By the end of the quarter, we also had no drawdown on the ABL and we held $27,000,000 in cash on our balance sheet. So all of those things are a significant accomplishment from previous quarter.
With the capital raise in Q4 and despite our readiness to execute our $50,000,000 strategic plan, the company will pause selected aspect of the plan while we monitor and better understand the potential impact of The U. S. Tariff. On a positive note, lumber future have risen as high as $680 a 1,000 covering the full potential 25% tariff expected in early twenty twenty five, indicating that it potentially absorbed the tariff. The company ended the fourth quarter with a net loss from continuing operations, adjusted for one time events.
However, our EBITDA improved compared to Q3 twenty twenty four with a loss of $900,000 versus $4,900,000 in Q3. To summarize the quarter relative to Q3 twenty four, our production was higher. In fact, Q4 production reached 103,000,000 FBM higher than Q3 twenty twenty four and slightly above Q4 last year. However, the rate of improvement slowed down due to weather related event. A mitigation plan have been implemented for next time.
Our cost of goods sold was slightly higher due to lower sales volume, which was impacted by weather related disruption of the supply chain typical in Northern Ontario. And to finish, the SG and A remained below an ounce target of $40 per thousand. And we did finish the Q4 at $29,000 so a significant improvement. If I want to focus a little bit more on the 2024 highlights. In addition to improving your debt position as mentioned previously and rising cash flow through the initiative mentioned earlier, the company achieved several key milestone in 2024.
Cost reduction. We did reduce the cost of goods sold by $15 per 1,000 FBM, a significant improvement. And we did also lower our SG and A by another $12 per 1,000 with future further saving expected in 2025. Inventory management, we were able to reduce our log inventory without compromising our operation. On the products, quality and pricing, we did improve the quality of the product we produce, leading to another $12 per thousand increase in our mill net due to better high quality mix or product we produce.
Operational achievement, we successfully executed the Cap Papers spin out as we previously announced last year And we did broke over 30 production record in 2024 in our sawmills. Manufacturing efficiency. We did achieve the lowest manufacturing cost in the company history in Q2 of twenty twenty four. Leadership and financing. We did hire a highly experienced CFO, Peter Ferrante, and we did extend the ABL for an additional four years.
GreenFirst will continue to foster a culture of continuous improvement, which we see as essential for maximizing returns on capital investment. During our last earnings call, some of you recall, we announced a projected $8,000,000 in potential cost savings with various initiatives. By year end, we exceeded this target, achieving $9,100,000 in site improvement compared to 2023. And those improvements are excluding CapEx related. So it’s purely initiative non CapEx driven.
In addition, with everything mentioned above, the company improved its competitiveness by approximately $40 per thousand. So creating a culture of continuous improvement is essential in the lumber sector and we intend to continue this momentum into 2025. The market did improve in Q4 compared to Q3 with strong price increase during the quarter. Price rose from $6.00 $6 to $680 per thousand in Q4. The Western base price also rebounded significantly, increasing from a low of $338 in July to $570 by March 10, so a significant increase.
We are currently operating well above our breakeven EBITDA. Housing start for January were slightly below expectation and lower compared to December, but we are forecasting a slight increase into 2025. The demand for repair and remodeling remains high compared to historical norm driven by higher home equity, aging housing stock and other factors. Finally, as mentioned earlier, Greenfield achieved significant improvement in 2024 compared to 2023, and we are well prepared to navigate the upcoming potential U. S.
Tariffs that have been mentioned. We have a comprehensive plan in place, focusing on prudent cash flow management and government relation initiative to support the industry. We remain committed to executing a strategy effectively. I will pass it over to Peter. Thank you.
Peter Ferrante, Chief Financial Officer, GreenFirst Products: Thank you, Joelle, and good morning to everybody. Please refer to the cautionary language regarding forward looking information in our Q4 MD and A. The company reported a net loss from continuing operations of $26,600,000 in the fourth quarter twenty twenty four with an adjusted EBITDA of negative $900,000 on total revenues of $70,000,000 dollars While generating approximately $30,000,000 from the sale of non core assets during the quarter, we incurred losses of $16,000,000 on the same sale of these assets and a deferred tax expense of $4,000,000 due to adjustments related to the fine pension plan. Excluding these two items, the company’s net loss from continuing operations would have been $6,600,000 For the quarter, revenue decreased by 1% quarter over quarter compared to Q3 twenty twenty four, driven by a 12% increase in the average realized price per lumber, which averaged at approximately $680,000,000 6 80 dollars per 1,000 board feet in Q4 twenty twenty four compared to $6.00 6 per 1,000 board foot in Q3 twenty twenty four. The strengthening of the U.
S. Dollar relative to Canadian dollar accounted for 14 out of the 74 per 1,000 board foot increase. The volume of lumber sold was down 12%, primarily due to weather related conditions impacting our supply chain in Northern Ontario, as Joelle previously described. Turning over to the fiscal twenty twenty four year. We reported a net loss from continuing operations of $21,600,000 along with an adjusted EBITDA of positive $15,000,000 Lumber sales increased by $9,300,000 Pricing had a positive impact of $17,000,000 with average prices for the year reaching $631 per 1,000 board foot in 2024 compared to May per 1,000 board foot in 2023.
Included in these positive price impact is the threatening of the U. S. Dollar relative to Canadian dollar, which contributed $3,000,000 or $8 per 1,000 board foot. This was offset by volume, which had a negative impact of $8,000,000 as shipments dropped from four twenty two million board feet to four zero nine million board feet. The sale of buying products had a negative impact of $11,000,000 for the year as the entire industry in Ontario is facing a challenge in finding homes for chips following the closure of several pulp and paper mills lately.
Our 2024 manufacturing cost profile improved, resulting in a reduction of $15,000,000 in our cost of goods sold before depreciation. Higher production volumes combined with several production records achieved across the sawmills led to an average annual cost of sales of $674 per 1,000 board foot in 2024 as compared to $6.89 per 1,000 board foot in 2023. This cost improvement contributed $7,000,000 of the overall improvement, while $10,000,000 of the improvement came from lower shipments. The company reported a year over year reduction in duties of $15,000,000 as a result of cash deposit rates starting at 20.23% in 2023 and decreasing to 8.05% in August of ’twenty three. These rates were then adjusted upwards to 14.4% in AugustSeptember of twenty twenty four, in line with other peers in our industry.
Additionally, 2024 included a $14,200,000 recovery related to 2022 duties pay while in the U. S. Department of Commerce final determination of its fifth administrative review, while the similar recovery for 2023 was US6.9 million dollars regarding the 2021 duties paid. Early in 2024, the company implemented several initiatives aimed at reducing selling, general and administrative expenses. As a result of these initiatives, we delivered a savings of approximately $5,800,000 in selling, general and administrative expenses compared to 2024.
The combination of these factors contributed to a positive year over year EBITDA improvement of $38,000,000 and net income from continuing operations, an improvement of $18,000,000 versus 2023. From a cash flow perspective, excluding cash used by the discontinued operations of Cat Paper totaling $16,800,000 in 2024 versus a cash provided of $300,000 in 2023, the company’s cash used in operating activities from continued operations was $6,200,000 in 2024 compared to $58,300,000 in 2023, an improvement of over $50,000,000 year over year. We closed 2024 with working capital of $64,400,000 This is inclusive of the $27,800,000 of cash we had as compared to $47,000,000 and inclusive of $2,400,000 cash from continuing operations last year, representing a year over year improvement of $17,500,000 In addition, as of 12/31/2024, the availability under our revolving portion of our credit facility was $39,300,000 less $8,300,000 in outstanding letters of credit with no borrowings at year end, resulting in a net undrawn amount of $31,000,000 As of 12/31/2023, the availability under our credit the revolving portion of our credit facility was $51,900,000 less $5,400,000 in outstanding letters of credit. And at the end of last year 2023, we had drawn $23,000,000 in drawings, resulting in a net undrawn of $23,500,000 This is an additional improvement of $7,500,000 year over year.
We also utilized the equipment financing portion of our credit facility to finance purchases for key strategic projects. As of 12/31/2024, ’13 point ’7 million dollars of the $25,000,000 facility was drawn, leaving excess of liability of $11,300,000 in the months to come. We continue to manage our liquidity through this volatile lumber market 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 a negative extended to September 2028, is secured by borrowings against our inventory.
As a result, higher inventory levels are supported by the credit facility during this harvesting season. This concludes my remarks and will now pass it over to Gerard.
Joel Fournier, Chief Executive Officer, GreenFirst Products: Thank you very much, Peter. I want to thank everyone for joining the call and we will now answer any questions that have come through. Okay. And Okay. Okay.
So, we do have a couple of questions here. This is Joel. I’ll start with the first one. With the recent announcement around tariffs, what does GreenFirst management believe the impact will be on the industry? I will pass this one over to Michel Lassar.
Michel Lazar, President, GreenFirst Products: Thanks, Joel, and thanks for the question. So I would start in mentioning that the Canadian industry deposited more than US7 billion dollars in duty. So that’s pretty big amount. So now about the new tariffs announced by President Trump, that could potentially impact the company’s directly on cash flow and net income. So that means less funds available to reinvest, modernize and also upgrade mills to remain competitive.
But in addition to that also this could potentially drive less demand due to the higher prices. But that being said, due to the uncertainty surrounding the imposition of tariffs and delays in their implementation. The lumber market is currently experiencing some confusion. So that leads some buyer to adopt the wait and see approach in the short term. About I would just add about the lumber supply chain that is very tight right now.
So when the tariffs were announced, we saw also the lumber future prices go up to compensate for the 25% tariffs. So, unfortunately, because of this, The U. S. Customers will be the one that’s going to have to pay or will pay the impact for these tariffs. So the greater question is what will the impact on The U.
S. Economy be knowing that there is an actual significant housing shortage that is estimated around 4,000,000 units. So the question is raised.
Joel Fournier, Chief Executive Officer, GreenFirst Products: Thank you, Michelle. We do have another question here. It’s around Trump and the tariff, no surprise here. So Trump has stated that The U. S.
Does not need lumber from Canada.
Michel Lazar, President, GreenFirst Products: I think we all heard that on
Joel Fournier, Chief Executive Officer, GreenFirst Products: the news. What is your opinion regarding whether The U. S. Lumber industry can meet U. S.
Demand? I will answer this question. I will start by sharing that The U. S. Market share represents 50,000,000,000 board feet.
So it’s a lot of wood. Currently, U. S. Lumber production meet around 71% of lumber demand in The United States. Canada provide approximately 24% and there is some lumber coming from offshore to complete the demand, Europe mainly and other place.
If some of you remember, in the best ever lumber market that we had during COVID, the U. S. Lumber industry was only able to increase their productivity by around 3%. So when the price of lumber were very, very high, some U. S.
Producer tried to increase their capacity, but they were not able to because of high turnover, difficult to find people and other factor. So it’s very difficult to see how they could add another 15,000,000,000 board feet of production or the equivalent of at least 60 brand new sawmill. And I put, so if The U. S. Wants to be auto sufficient and they want to fill the gap of 15,000,000,000 board feet, which is what Canada send them, building 60 new sawmill will take years and years to do.
Our past history told us that four to six sawmill can be built in one year. So it could take several years before we close that gap. In addition, they may not have the ability the availability, sorry, for wood supply. The manpower, we know it’s an issue and the mill to consume chip and byproduct is a challenge as well. So to do this, it will require a substantial amount of capital expenditure and resources, which would take a significant amount of time to establish and operate the mills.
We do have another question here. What will the company do or has already done to mitigate the impact of the recently announced tariff? I will continue and answer this one as well. The The company has built a solid balance sheet during 2024 to execute on its capital expenditure plan to grow the business, as we previously mentioned. However, going forward, we will pause certain elements of our plan temporarily to better understand the impact of the tariff and to continue to preserve our strong balance sheet.
We believe we have enough cash to face the upcoming potential tariff. The company has a strong customer base in Canada, and we will look at the opportunity to grow this market as well as explore international markets. However, The U. S. Remain our main market.
On a positive note, as already mentioned, when the tariff were announced, lumber price went up quickly and lumber futures caught up with the full 25% tariff. Finally, we are working very close with our provincial governments and Wood Association in ways to better support the industry with the potential tariff. The Ontario government have laid out a clear plan to support the industry. Okay. And This is Joel again.
We do have a couple of more questions. The one here is around cap paper. So with the completion of the cap paper spin out, how does this impact the company? And there’s also a subsequent question with Cap Paper regarding if anything happened to Cap Paper, what will be the situation with GreenFirst to find a place to send his wood chip? So I will start to answer the first part of the question.
This significant achievement will help GreenFirst to focus on its core business, which is the sawmill. We always wanted to separate the two entities, so they can focus specifically on their strategic plan and execute it. In the past, some of our assets were designed to produce wood chip for cap because it was the main driver. But with that spin out, it’s not the case anymore. We are now looking to improve our recovery and reduce our log cost in our mill as an example of better focus.
However, Cat Paper is still a customer of GreenFirst for wood chip and residue. We expanded our customers base for residue to include other provinces to mitigate the risk and achieve greater customer diversity. I will for the next question to elaborate on Chip and what will be the situation if something happens to cap paper, I will pass it over to Michel Lassard. Thanks, Joel. I would start to say that in
Michel Lazar, President, GreenFirst Products: the last twenty years, so the in all tire use only, so there were 22 pulp paper mills twenty years ago again, and that went down to three pulp paper mills that we see actually and Cat Pepper is the one of them and the only one also in the east of the province. So that remains a priority for the Ontario government to remain these pulp and paper company. Again, I don’t want to speak
Joel Fournier, Chief Executive Officer, GreenFirst Products: for the
Michel Lazar, President, GreenFirst Products: Ontario government, but it’s what we hear. And also that remains also a priority for the sawmills company to see these pulp paper company remains in operation. You saw so I was talking about government, you saw also the government support that cap paper got. So that’s a very good indication also for the support for government also to maintain that mill in long term. Talking about us specifically for GreenFirst, we have a long term contract also with Rainier Advanced Materials.
It’s something that we spoke in the past. So the contract also mentioned clearly that if Rainier Advanced Materials, they don’t use our chip supply, So then they have to dispose it. So they can bring it to somewhere. But it’s their responsibility to take care of it. The other thing I would add also is the decrease that we saw in the province of Quebec opened also some opportunities for us to be able to sell chips in Quebec.
And there is also a program that came out from the government to help on the longer distance also to be able to sell the chips there. So that’s again, that was a very great opportunity. And the last point I would mention is we’re looking also different our opportunities for our bioproducts. So again, there’s many things on the table. We remain very confident and we have different plan, different opportunities.
So we don’t see that as a problem in the future.
Joel Fournier, Chief Executive Officer, GreenFirst Products: Thank you, Michelle. We do have a couple of more questions here. I will go with the next one. With the slowdown of capital expenditure spend, how does this impact your mission to become one of the top quartile lumber producer in North America? I will answer this one quickly.
The announcement regarding the CapEx only temporarily paused selected project until we better understand the impact of the tariff. I think it’s prudent to put few projects on pause and see and understand what will be the impact of those potential upcoming tariffs in April. However, our goal remains the same. We aim to be top quartile producer and become the largest wood producer in Ontario. We’re going to continue and remain focused on continuous improvement and project with the high payback.
Quickly here, switching to another question. Do you see any trends in demands of SPF, Salton yellow pine versus Europe wood? I can take this one quickly as well. Eastern SPF, spruce pine fir, excuse me, has always been the preferred species for contractor and home centers in general. And this is what we produce at Greenfirs.
This species is stronger, lighter and easier to work with. In fact, it transact at a premium on the market over Southern Yellow Pine, which mainly are produced in United States. Over the past few years, we saw a slight increase in SPF production, but this was driven by lower availability, a slight decrease of SPF production, but this was driven by lower available log supply mainly in BC and Quebec. So we saw all the milk curtailment that happened in both of those province. In addition, due to shortage of supply, we have seen a slight increase with Europe and part into North America.
We do have another question here. How satisfied are you with the results of the various cash generating activities in the quarter such as the Kenora asset sale? I will pass this one over to Peter Ferrante.
Peter Ferrante, Chief Financial Officer, GreenFirst Products: Good morning, everyone, and very good question. I also see there’s another add on in terms of Kenora, so I’ll try to answer that question at the same time. As it relates to the Kenora transaction, yes, we were satisfied with the $5,000,000 transaction for the land portion of it. It’s one of our elements of our continued effort to sell non core assets at an acceptable value to our shareholders. So the add on question about a little bit more in terms of specifics on the sales and terms, we got 2,900,000 at the contract and the remaining $2,100,000 is an interest bearing vendor take back.
Dollars 500,000 is to be collected or received in July of this summer and the last $1,500,000 will be collected December 2034. Just to add on to this question in terms of some of our activities, in addition to the Silicanoa, we also sold during the quarter $17,000,000 of our entitlement to refunds including our crude interest to duties of 2021 and 2022 exports to The U. S. At a value comparable to what others in the industry also transacted. Our cash and liquidity generating activities during the quarter also consisted of $25,000,000 rights offering that Gerald shared and extension of our revolving portion of our credit facility.
So all of these activities that we’ve done in the quarter, I think the combination of all of this and also some other ones, we’ve strengthened our financial position while remaining focused on our core business and enhancing our ability to continue to pursue strategic CapEx initiatives. So generally, yes, we were satisfied with our activity in the last quarter.
Joel Fournier, Chief Executive Officer, GreenFirst Products: Okay. I think this is Joel. I think this concludes all the questions that we received on the call or most of the questions that we received on the call today. So I would like on behalf of GreenFirst and the team here, I would like to thank you very much for your time and have a good day. Thank you.
Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.
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