GreenFirst Reports Financial Results for Fiscal 2023
Highlights
-
Fourth quarter 2023 net loss from continuing operations was
$21.6 million or$0.12 per share (diluted), compared to net earnings of$2.7 million or earnings of$0.01 per share (diluted) in the third quarter of 2023. For fiscal 2023, net loss from continuing operations was$48.8 million or$0.27 per share (diluted), compared to a net loss of$4.1 million or$0.02 per share (diluted) in 2022 on the same basis.
-
Average lumber prices for Q4 2023 were lower than Q3 2023, with an average selling price of
$611 /mfbm compared to$642 /mfbm in Q3 2023. There was strong pricing momentum in the first half of Q3 2023 due to supply related concerns, which benefited results at the beginning of the third quarter. Despite lower prices, volumes in Q4 2023 were higher than Q3 2023 due to increased demand in the latter half of Q4 driven by positive trends in US housing starts and the central banks indicating a pause of further interest rate hikes.
-
The valuation provision for lumber and log inventory was decreased to
$4.3 million from$8.7 million at the end of Q4 2022, generating a$4.4 million credit to cost of sales in fiscal 2023.
-
US Department of Commerce’s ("US DOC") Final Determination of its Fourth Administrative Review resulted in a final duty rate of 8.05%. The Company stands to benefit from an approximateUS$6.9 million (CAD$9.2 million ) recovery on duties paid in 2021, as recorded in 2023. Additionally, the ongoing lower duty rate has positively impacted the Company's earnings and free cash flow sinceAugust 1, 2023 .
- There continues to be downward pressure on newsprint and paper products prices.
-
On
November 6, 2023 , the company appointedJoel Fournier as its new Chief Executive Officer.Mr. Fournier is a seasoned executive with over two decades of hands-on experience in lumber mills across both Eastern andWestern Canada .
-
A corporate reorganization was concluded to separate the assets from the lumber mills and the paper mill. This reorganization aims to provide for increased alignment of incentives, cost control measures and focus on the unique aspects of each business. On
January 16, 2024 ,Terry Skiffington was engaged as Chief Executive Officer of the paper mill division.Mr. Skiffington is a skilled executive with a broad range of experience in the pulp and paper sector inCanada and globally.
"Despite ongoing pricing pressures in the fourth quarter, we are starting to see some positive momentum in lumber markets at the beginning of 2024," said
Financial Highlights
The following selected financial information is from the Company’s financial statements and MD&A:
|
(In thousands of CAD, except per share amounts) |
|
|
|
|||||
|
For the quarter ended |
|
2023 |
|
|
2023 |
|
2022(2 |
) |
|
Net sales from continuing operations |
|
|
|
|||||
|
Forest products(3) |
$ |
70,112 |
|
$ |
63,579 |
$ |
69,628 |
|
|
Paper products |
|
33,060 |
|
|
32,121 |
|
30,564 |
|
|
Total net sales from continuing operations |
|
103,172 |
|
|
95,700 |
|
100,192 |
|
|
Operating (loss) earnings from continuing operations |
|
(22,496 |
) |
|
3,864 |
|
(33,747 |
) |
|
Net (loss) earnings |
|
(21,588 |
) |
|
2,657 |
|
(43,615 |
) |
|
Net (loss) earning from continuing operations |
|
(21,588 |
) |
|
2,657 |
|
(25,876 |
) |
|
Basic (loss) earnings per share |
|
(0.12 |
) |
|
0.01 |
|
(0.25 |
) |
|
Basic (loss) earnings per share from continuing operations |
|
(0.12 |
) |
|
0.01 |
|
(0.15 |
) |
|
Diluted (loss) earnings per share |
|
(0.12 |
) |
|
0.01 |
|
(0.25 |
) |
|
Diluted (loss) earnings per share from continuing operations |
|
(0.12 |
) |
|
0.01 |
|
(0.15 |
) |
|
Adjusted EBITDA from continuing operations(2) |
$ |
(17,999 |
) |
$ |
7,996 |
$ |
(27,385 |
) |
|
(In thousands of CAD, except per share amounts) |
|
|
||||
|
For the year ended |
|
2023 |
|
|
2022(1 |
) |
|
Net sales from continuing operations |
|
|
||||
|
Forest products(3) |
$ |
268,438 |
|
$ |
398,098 |
|
|
Paper products |
|
141,179 |
|
|
94,011 |
|
|
Total net sales from continuing operations |
|
409,617 |
|
|
492,109 |
|
|
Operating (loss) earnings from continuing operations |
|
(47,595 |
) |
|
23,778 |
|
|
Net loss |
|
(47,019 |
) |
|
(910 |
) |
|
Net loss from continuing operations |
|
(48,802 |
) |
|
(4,132 |
) |
|
Basic loss per share |
|
(0.26 |
) |
|
— |
|
|
Basic loss per share from continuing operations |
|
(0.27 |
) |
|
(0.02 |
) |
|
Diluted loss per share |
|
(0.26 |
) |
|
— |
|
|
Diluted loss per share from continuing operations |
|
(0.27 |
) |
|
(0.02 |
) |
|
Adjusted EBITDA from continuing operations(2) |
|
(30,181 |
) |
|
39,384 |
|
|
(In thousands of CAD) |
|
|
|||
|
As at |
|
2023 |
|
2022(1 |
) |
|
Total assets |
$ |
277,944 |
$ |
371,504 |
|
|
Total liabilities |
|
92,706 |
|
147,042 |
|
|
Total shareholders' equity |
$ |
185,238 |
$ |
224,462 |
|
1Certain prior period amounts have been restated as a result of a change in presentation of the Company's Financial Statements for continuing and discontinued operations under IFRS. Please refer to Note 4 - Discontinued Operations, in the Company's Financial Statements for the year ended
2Adjusted EBITDA is a Non‐GAAP measure and does not have standardized meaning under GAAP or IFRS. As a result, it may not be comparable to information presented by other companies. For an explanation and reconciliation of Adjusted EBITDA to related comparable financial information presented in the Financial Statements prepared in accordance with IFRS, refer to the Non-GAAP Measures section in the MD&A for the year ended
3Includes net sales to external parties only.
The Company reported net sales from continuing operations of
The Company reported cost of sales of
The initial duty deposit rate, totaling 20.23%, had remained in effect since the Company's acquisition of its sawmill and paper mill assets and has resulted in a higher payment in relation to our Canadian peers as at
The Company reported selling, general and administration expenses for continuing operations of
Cost Improvement at the
The paper mill improved its cost profile with two operational paper machines and increased efficiencies in 2023. The paper mill continues to face many headwinds, primarily price pressures related to the secular decline of its paper products.
GreenFirst’s paper mill operation has key operational and performance metrics that are very different from the lumber mill operations. As such, in 2023 the Board of Directors determined to separate the lumber mill assets from the paper mill assets. It is believed that this separation of businesses and decentralization of management will provide for more expedient decision-making, better alignment of incentives and more entrepreneurialism. This corporate decentralization was completed, with the appointment of a new paper mill CEO in
Liquidity and Borrowings
At
New Board of Directors Slate
The Board of Directors has unanimously agreed to reduce its size to five directors at the next Annual General Meeting of our Shareholders on
“On behalf of the Board of Directors and the entire staff of GreenFirst, we want to thank Barbara, Sean and Candice for their dedication and service to the company,” said
Outlook
High interest rates, macroeconomic concerns and tensions in
In the longer-term, lack of available housing inventory, record levels of immigration in
Despite continued curtailment of lumber production in
Reconciliation of Adjusted EBITDA
References to EBITDA in this document are measures of earnings (loss) before interest and finance costs, income taxes, depreciation and amortization, while references to Adjusted EBITDA reflect EBITDA plus other non-operating costs such as impact of valuation changes on the Company's investments, the impact of foreign exchange on the Company’s long-term debt, loss on extinguishment of debt, loss on sale of assets and other non-operating losses. Management believes that certain lenders, investors, and analysts use EBITDA and Adjusted EBITDA as a common valuation measurement and to measure the Company’s ability to service debt and meet other payment obligations. EBITDA and Adjusted EBITDA are not intended to replace net earnings (loss), or other measures of financial performance and liquidity reported in accordance with GAAP. For more information on non-GAAP measures, please see the Company's MD&A.
|
(In thousands of CAD) |
|
|
|
|||||
|
For the quarter ended |
|
|
|
|||||
|
Net loss from continuing operations |
$ |
(21,588 |
) |
$ |
2,657 |
$ |
(25,876 |
) |
|
Adjustments: |
|
|
|
|||||
|
Finance costs, net |
|
609 |
|
|
125 |
|
1,162 |
|
|
Income taxes |
|
(2,488 |
) |
|
1,082 |
|
(1,030 |
) |
|
Depreciation and amortization |
|
4,497 |
|
|
4,132 |
|
6,362 |
|
|
EBITDA |
|
(18,970 |
) |
|
7,996 |
|
(19,382 |
) |
|
Gain on sale of assets |
|
971 |
|
|
— |
|
(8,003 |
) |
|
Adjusted EBITDA from continuing operations(2) |
$ |
(17,999 |
) |
$ |
7,996 |
$ |
(27,385 |
) |
|
(In thousands of CAD, except per share amounts) |
|
|
||||
|
For the year ended |
|
2023 |
|
|
2022(1 |
) |
|
Net loss from continuing operations |
$ |
(48,802 |
) |
$ |
(4,132 |
) |
|
Adjustments: |
|
|
||||
|
Finance costs, net |
|
2,108 |
|
|
12,796 |
|
|
Income taxes |
|
(1,586 |
) |
|
(643 |
) |
|
Depreciation and amortization |
|
17,414 |
|
|
15,606 |
|
|
EBITDA |
|
(30,866 |
) |
|
23,627 |
|
|
Foreign exchange on long-term debt |
|
— |
|
|
7,896 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
11,187 |
|
|
Gain on investment |
|
(286 |
) |
|
(643 |
) |
|
Other non-operating losses |
|
— |
|
|
5,320 |
|
|
Loss (gain) on sale of assets |
|
971 |
|
|
(8,003 |
) |
|
Adjusted EBITDA from continuing operations(2) |
$ |
(30,181 |
) |
$ |
39,384 |
|
1Certain prior period amounts have been restated as a result of a change in presentation of the Company's Financial Statements for continuing and discontinued operations under IFRS. Please refer to Note 4 - Discontinued Operations, in the Company's Financial Statements for the year ended
2Adjusted EBITDA is a Non‐GAAP measure and does not have standardized meaning under GAAP or IFRS. As a result, it may not be comparable to information presented by other companies. For an explanation and reconciliation of Adjusted EBITDA to related comparable financial information presented in the Financial Statements prepared in accordance with IFRS, refer to the Non-GAAP Measures section in the MD&A for the year ended
During the third quarter of the year ended
Earnings Conference Call
GreenFirst will host a conference call to review the fiscal 2023 financial results on
About GreenFirst
Forward Looking Information
Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact are forward-looking statements. Forward looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend”, “estimate” or the negative of these terms and similar expressions. Forward-looking statements are based on certain assumptions and, while GreenFirst considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. In addition, forward-looking statements necessarily involve known and unknown risks, including those set out in GreenFirst’s public disclosure record filed under its profile on www.sedarplus.ca. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. GreenFirst disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For more information, please visit: www.greenfirst.ca or contact Investor Relations (416) 775 2821
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Investor Relations (416) 775 2821
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