GreenFirst Forest Products Inc (ICLTF) Q2 2025 Earnings Call Highlights: Record Production ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
GreenFirst Forest Products Inc (ICLTF) achieved the highest production in company history with 1,160 million board feet, significantly reducing manufacturing costs.
The company reported a strong sales volume of 110 million board feet, despite market uncertainties.
GreenFirst Forest Products Inc (ICLTF) is actively working with the federal government on a $1.2 billion industry support plan, which could benefit the company.
The company is implementing strategic capital projects, including a new saw line and cogeneration plant, expected to improve cost structure and profitability.
GreenFirst Forest Products Inc (ICLTF) recorded a significant safety improvement, reducing the recordable incident rate by 50% compared to 2024.
Negative Points
GreenFirst Forest Products Inc (ICLTF) reported a net loss of $9.6 million in Q2 2025, with an adjusted EBITDA of negative $5.2 million.
The company faced higher costs of sales due to inventory adjustments and increased SG&A expenses.
Market uncertainty, including increased tariffs and duties, negatively impacted demand and pricing.
The company is subject to a higher duty rate of 35.19% for Canadian shipments to the US, which could increase costs.
Despite production records, the financial benefits have not yet been realized due to timing differences in cost of sales.
Q & A Highlights
Warning! GuruFocus has detected 2 Warning Sign with ICLTF.
Q: What are the company's thoughts on the recent announced duty increase from 14.4% to 35.19% for Canadian shipments to the US, and what will be the impact on the business? A: Michel Lassard, President: The increased duty rate is concerning, but historically, most of these costs have been passed on to the end consumer, increasing housing costs in the US. We are exploring different market opportunities and hope for a resolution soon, as the Canadian industry has already paid $7.5 billion in duties since 2017.
Q: Can you talk about current demand and pricing trends? A: Joel Fournier, CEO: Prices decreased in Q2, but recent duty rate announcements have led to an increase in lumber futures. Despite uncertainties, we shipped 110 million board feet, driven by strong relationships with home centers. Competitor mill curtailments may reduce supply and pressure prices upward.
Q: Why don't we see the benefits of record production in the financial statements? A: Peter Ferrante, CFO: The majority of lumber sold in Q2 was produced in the prior quarter, so those production costs are reflected in Q2's cost of sales. We expect the benefits of Q2 production to reduce costs in Q3 as we sell that inventory.
Q: Can you provide an update on the CapEx related to the Shale large log line project? A: Joel Fournier, CEO: We are installing a new large log line, planar mill, and cogeneration plant at the Shale sawmill. This will significantly improve profitability and cost efficiency, replacing a 40-year-old line with new technology, including AI.
Q: Why is GreenFirst subject to a higher 34% duty compared to 22% for smaller players? A: Michel Lassard, President: The duty rate is an average calculated from selected major lumber producers. GreenFirst, like other companies, receives this average rate.
Q: What is the company's plan if Section 232 tariffs are imposed? A: Joel Fournier, CEO: We have prepared scenarios for potential tariffs and paused half of our $50 million CapEx to maintain a strong balance sheet. We are also exploring international markets and local partnerships to diversify sales.
Q: How would a quota system impact GreenFirst's operations? A: Joel Fournier, CEO: A quota could impact us, but we are preparing by developing partnerships with local consumers in Toronto to diversify sales. We aim to reduce reliance on the US market.
Q: Will GreenFirst benefit from the Canadian government's $1.2 billion support program? A: Michel Lassard, President: We are pleased with the government's focus on the lumber industry and are in discussions to understand how we can benefit. We are ready to utilize available funds for projects once details are provided.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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