15-05-2025
GreenFirst Forest Products Inc (ICLTF) Q1 2025 Earnings Call Highlights: Navigating Tariff ...
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
GreenFirst Forest Products Inc (ICLTF) reported a positive EBITDA of $5.1 million and a net income of $920,000 for Q1 2025, marking an improvement from the previous quarter.
The company benefited from higher lumber prices, which helped absorb potential tariff risks.
GreenFirst Forest Products Inc (ICLTF) maintained a strong balance sheet with excess liquidity of $51.4 million, including both revolving and equipment portions of their credit facility.
The company successfully delivered $9.1 million in incremental EBITDA through operational improvements in 2024 and identified approximately $8 million in non-CapEx efficiency gains for 2025.
The repair and remodeling market segment remains strong, driven by increased home equity, aging housing stock, and favorable homeowner investment trends.
Shipment and production were lower than expected due to tariff uncertainties and winter-related disruptions in Northern Ontario.
The potential increase in combined duty rates from 14.4% to 34.45% could impact end consumers and increase housing costs in the US.
The lumber market experienced a decline in prices towards the end of Q1 2025, indicating potential volatility.
GreenFirst Forest Products Inc (ICLTF) faced reduced demand due to housing affordability challenges caused by elevated mortgage rates.
The company had to temporarily pause major capital initiatives to preserve a strong balance sheet in anticipation of potential economic headwinds.
Warning! GuruFocus has detected 1 Warning Sign with ICLTF.
Q: Can you speak to the high levels of inventory currently being held at the end of the quarter? Are you seeing any demand concerns from buyers due to this potential increase in duty and tariff? A: (Joel Fournier, CEO) Our raw material inventory increased by $23 million from Q4 2024, aligning with our expectations due to seasonal harvesting. Economic uncertainty led to a temporary increase in lumber inventory by $10 million, but we expect a decrease during Q2.
Q: Pricing has started to decline towards the back half of the quarter. Can you talk about what you are seeing in demand right now, both on the repair and remodeling side and new residential construction? A: (Joel Fournier, CEO) The average price was $492 per 1,000 US for Q1, currently at $437 per 1,000. US housing starts showed resilience, and the repair and remodeling market remains strong, driven by increased home equity and aging housing stock.
Q: How confident are you in executing your $50 million CapEx plan with the current capital allocation and balance sheet strength? A: (Peter Ferrante, CFO) We are taking a prudent approach, focusing on selective initiatives like the new saw line at the holo location. Our balance sheet is strong, with excess liquidity of $51.4 million, allowing us to manage our capital projects effectively.
Q: What are the company's thoughts on the recently announced duty increase from 14.4% to 34.45% for Canadian shipments to the US? What will be the impact on the business? A: (Michel Lessard, President) The increased duty rate is concerning, but historically, costs have been passed to end customers, increasing US housing costs. We hope for a resolution before the new tariffs take effect.
Q: What is the company's position on the timing for resolution of the US Department of Commerce under Section 232 investigation? A: (Michel Lessard, President) The investigation is expected to be completed by November 2025. We are not paying additional tariffs beyond current duties and hope the report will show Canadian lumber is not a threat to US national security.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
