GreenFirst Forest Products Q1 2025 Earnings Call Highlights

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

GreenFirst Forest Products Inc. recently held its earnings call, revealing a mixed sentiment. The company demonstrated a notable financial recovery with positive EBITDA and net income, primarily driven by increased lumber prices and operational improvements. However, challenges such as production and shipment issues due to tariff uncertainties and weather disruptions, alongside concerns about potential duty increases, balanced the overall sentiment. Despite these hurdles, strong performance in the repair and remodeling market provided a positive counterbalance.

Positive Financial Turnaround

GreenFirst reported a significant financial turnaround in Q1 2025, achieving a positive EBITDA of $5.1 million and a net income of $920,000. This marks a substantial improvement from Q4 2024, where the company faced a negative EBITDA of $913,000 and a net loss of $26.6 million. This turnaround highlights the company’s resilience and ability to adapt to market conditions.

Lumber Price Increase

The average realized lumber selling price saw an increase from $680 in Q4 2024 to $729 in Q1 2025. This rise in prices contributed to stronger market pricing conditions during the quarter, supporting GreenFirst’s financial recovery.

Operational Improvements

GreenFirst implemented operational changes that enhanced the overall grade of wood produced. These improvements resulted in the mill netting approximately $30 per thousand higher overall, showcasing the company’s commitment to optimizing its operations.

Continued Strong Performance in Repair and Remodeling Market

The repair and remodeling market segment remained robust, driven by factors such as increased home equity and an aging housing stock. This segment continues to be a strong performer for GreenFirst, providing a stable revenue stream amidst other challenges.

SG&A Reduction

GreenFirst successfully reduced its Selling, General, and Administrative expenses to $2.6 million in Q1 2025, down from $2.8 million in Q4 2024. This reduction reflects the company’s focus on cost management and operational efficiency.

Production and Shipment Challenges

Production and shipment volumes were lower than expected due to uncertainty around tariffs and weather-related disruptions. Q1 production was at 101 million FBM, slightly down from 103 million in Q4 2024, highlighting the operational challenges faced by the company.

Tariff Uncertainty Impact

The uncertainty surrounding a potential 25% tariff on Canadian lumber by the U.S. negatively impacted sales volume and created negative buyer sentiment. This uncertainty posed a significant challenge for GreenFirst during the quarter.

Inventory Increase

Due to economic uncertainty and tariff impacts, GreenFirst ended the quarter with higher-than-expected inventory levels. The increase in finished goods inventory reflects the company’s cautious approach in navigating market uncertainties.

Potential Duty Increase

GreenFirst is facing a potential increase in the combined duty rate from 14.4% to 34.45% starting late Q3. This anticipated increase may impact end consumers and the company’s cost structure, posing a potential challenge moving forward.

Softening Lumber Demand

Despite an initial surge, lumber demand began to soften, and prices started to decline towards the end of Q1 2025. This trend indicates a potential challenge for GreenFirst in maintaining its recent financial momentum.

Forward-Looking Guidance

In its forward-looking guidance, GreenFirst highlighted its positive EBITDA of $5.1 million and net income of $920,000 in Q1 2025 as a significant improvement from the previous quarter. The company attributed this success to higher lumber prices, despite facing shipment and production challenges due to tariff uncertainties and weather disruptions. GreenFirst’s strategic focus includes maintaining SG&A expenses below target levels and implementing a $20 million capital investment in strategic projects. The company also aims to navigate potential duty increases and economic uncertainties while continuing to improve its average realized lumber selling price.

In conclusion, GreenFirst Forest Products Inc.’s earnings call reflected a balanced sentiment, with notable financial recovery and operational improvements countered by significant challenges such as tariff uncertainties and production disruptions. The company’s strategic focus on operational efficiency and market adaptation positions it well to navigate future challenges and capitalize on opportunities in the lumber market.