Greenfirst Forest Products (GFP) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income was $0.9 million and EBITDA $5.1 million, reversing prior losses, driven by higher lumber prices despite lower shipment and production volumes due to tariff uncertainty and weather disruptions.

• Average realized lumber price was $729/mfbm, with cost of sales at $688/mfbm.

• Tariff volatility, including a proposed 25% U.S. tariff and ongoing trade investigations, created negative buyer sentiment and temporarily depressed sales volumes.

• Maintained a cautious cash management strategy, pausing major capital projects and focusing on select investments to preserve balance sheet strength.

• Higher inventory levels resulted from seasonal harvesting and cautious buyer sentiment amid economic uncertainty.

Financial highlights

• Q1 2025 revenue was $72 million, with net sales of $71.8 million, down 3% quarter-over-quarter, driven by higher realized pricing despite lower shipments.

• Cost of sales decreased 9% to $62.1 million, reflecting lower shipment volumes and improved cost per unit.

• SG&A expenses reduced to $2.6 million, continuing a trend of cost savings and aligning with targets.

• Duties expensed were $5.7 million, down from $6.2 million in Q4 2024, with a duty rate of 14.4%.

• Cash flow from operations was negative $29.7 million, with a total cash decrease of $25.3 million in Q1 2025.

Outlook and guidance

• Anticipates a temporary increase in inventory to decrease in Q2 as seasonal factors normalize.

• Expects production costs to decline in summer months and sales volume to normalize after downtime for Chapleau line installation.

• U.S. housing starts are projected to average 1.53 million units, above the historical average, supporting lumber demand.

• Management prioritizes continuous improvement, strategic capital investment, and M&A to become a top quartile North American lumber producer.

• Efficiency improvements and capital investment are expected to enhance competitiveness amid labour and inflationary pressures.