Conifex Timber (CFF) Q2 2024 earnings summary

Executive summary

• Secured a CAD 25 million term loan, ending Q2 with over CAD 10 million in unrestricted cash and available liquidity of $13.4 million.

• Reported a net loss of $9.7 million ($0.24/share) in Q2 2024, widening from Q1 2024, with negative EBITDA of $7.1 million.

• Resumed two-shift sawmill operations, increasing log and lumber inventories, and transitioned to a green log diet at Mackenzie Mill.

• Addressed significant valuation discount to peers and outlined board initiatives to mitigate this.

• Revenue totaled $31.8 million, a 22% decrease from Q1 2024 but a 17% increase year-over-year.

Financial highlights

• Negative EBITDA of CAD 7.6 million for H1 2024, with a Q2 loss of CAD 7.1 million, impacted by lower lumber prices, power plant downtime, and weather-related log shortages.

• Lumber revenue was $25.0 million, down 15% sequentially but up 33% year-over-year.

• Expensed CAD 2.5 million in countervailing and antidumping duties in H1 2024 at a combined rate of 8.05%.

• Cumulative refundable duty deposits now total $36.2 million, equivalent to over CAD 1.20 per share.

• SG&A costs decreased to $1.9 million from $2.6 million in Q1 2024 and $3.3 million in Q2 2023.

Outlook and guidance

• Lumber prices expected to gradually increase through year-end and into 2025 due to supply contraction and moderate demand growth.

• Q3 EBITDA loss anticipated to be slightly lower than Q2, with Q4 loss expected to be much lower.

• Transition to a green log diet at Mackenzie Mill expected to enhance sawmill performance and selling prices.

• Assumes no nationwide rail strike.