GreenFirst Forest Products Balances Progress and Pressure

Greenfirst Forest Products Inc. ((TSE:GFP)) has held its Q1 earnings call. Read on for the main highlights of the call.

GreenFirst Forest Products delivered a mixed first quarter, pairing clear operational gains with ongoing financial strain. Management highlighted safer, more efficient mills and fresh government financing that lifted liquidity, even as revenues fell, shipments dropped and tariffs bit deeper into margins, leaving the company still firmly in the red.

Safety Track Record Remains a Bright Spot

GreenFirst underscored that its safety performance stayed at record levels in the first quarter, reinforcing a strong safety culture across its operations. The company reported industry-leading safety metrics and no impairments related to safety, positioning this as a core strength amid broader headwinds.

Government Financing Bolsters Liquidity

The company shored up its balance sheet by securing a $30 million federal loan and roughly $2.4 million in provincial support during the quarter. These financings boosted cash to $6.5 million from $3.5 million and, alongside other activities, delivered $38.6 million of inflows, providing crucial liquidity in a tough market.

Chapleau Projects Drive Capacity and Quality Gains

Capital projects at Chapleau reached key milestones, with the new saw line completing testing and ramping production by 60 percent from January to March. Management said the line now runs at about 90 percent of target capacity, while the finished planer and cogeneration upgrades improved lumber quality and recovery, all delivered under budget.

Margins Improve Despite Ongoing Losses

Quarter-on-quarter profitability trends showed some relief, even if the company stayed loss-making. The EBITDA loss narrowed to $15.1 million from $21.7 million and the gross margin shortfall shrank sharply, helped by lower net realizable value charges and reduced freight expenses, signaling early cost discipline gains.

Lumber Prices and Housing Indicators Turn Up

Market data offered a tentative tailwind, with a key Western lumber benchmark climbing about 15 percent during the quarter. U.S. housing starts rose double digits year over year and repair and remodeling activity exceeded forecasts, hinting at improving demand for wood products after a challenging period.

Revenue Contracts on Softer Shipments

Top-line performance took a noticeable hit, with revenue slipping to $60.6 million from $71.8 million a year earlier and $77 million in the prior quarter. Management attributed the roughly 16 percent annual and 21 percent sequential declines mainly to lower shipment volumes rather than pricing.

Persistent Operating Losses Weigh on Results

Despite the sequential improvement, GreenFirst remained firmly in the red as operating income registered a $19 million loss. EBITDA also stayed negative at $15.1 million, underscoring that cost progress and operational gains have yet to fully offset weak volumes and heavy duties.

Volume Weakness and Inventory Build Pressure Cash

Shipment volumes dropped to 83 million board feet, down more than 23 percent from the prior quarter and almost 8 percent year over year. With production topping shipments at 90.6 million board feet, inventory built up, creating a timing mismatch that strained working capital and added to cash pressures.

Tariffs Intensify Cost Headwinds

Trade duties emerged as a major drag, with tariff costs jumping to $12.1 million from $5.7 million in the prior-year period. The company operates under a much higher countervailing and anti-dumping rate this year, plus an added tariff, turning trade policy into a structural cost burden despite potential relief later in the year.

Working Capital Drains and Liquidity Strain

Operating cash flow remained under pressure, with losses and interest costs totaling about $12.7 million and working capital outflows reaching $22.5 million. Revolver availability fell to $19.6 million from $39.4 million, and management acknowledged that the improved cash balance depended heavily on financing rather than internal cash generation.

Rising SG&A and One-Off Costs Add Drag

Overhead costs climbed as selling, general and administrative expenses increased to $4.4 million from $1.5 million in the prior quarter. Management linked the rise to timing of corporate projects, compensation changes and the effect of one-time items, temporarily pushing up operating expenses during a period of weaker revenues.

Operational Interruptions Hamper Shipments

Logistical and operational disruptions limited sales during the quarter, as three mills took downtime in January in response to market conditions. Weather-related railcar shortages further constrained shipments, compounding volume weakness and contributing to the inventory buildup that weighed on cash.

Macro Headwinds Temper Market Outlook

Management stressed that broader market conditions remain challenging, with U.S. mortgage rates above 6 percent keeping home affordability under pressure. While early demand indicators have improved, the company expects only modest price appreciation this year and maintains a cautious stance on the near-term outlook.

Guidance and Outlook Remain Cautious

Looking ahead, GreenFirst anticipates only a modest uptick in lumber prices in the second half of 2026, constrained by high borrowing costs and geopolitical uncertainty. The company aims to fully integrate the Chapleau line in the second quarter, continue selective capital spending under its phased program and maintain tight cash management, with possible duty relief later in the year offering incremental support.

GreenFirst’s latest earnings call painted a picture of a company tightening operations and securing funding while still wrestling with weak demand, heavy tariffs and cash outflows. For investors, the story is one of operational progress set against a difficult macro and trade backdrop, where any recovery is likely to be gradual and highly dependent on market and policy shifts.