Conifex Timber (CFF) Q3 2024 earnings summary

Executive summary

• Q3 2024 EBITDA was negative CAD 3.9 million, improving from negative CAD 7.1 million in Q2 2024 and negative CAD 6.7 million in Q3 2023.

• Net loss for Q3 2024 was CAD 3.8 million (CAD 0.09/share), compared to CAD 9.7 million (CAD 0.24/share) in Q2 2024 and CAD 8.0 million (CAD 0.20/share) in Q3 2023.

• Sawmill operations in Mackenzie TSA benefit from surplus sawlog supply and improved cost structure.

• Legal appeal ongoing regarding halted power business expansion due to provincial moratorium.

Financial highlights

• Q3 2024 negative EBITDA of CAD 3.9 million, improved from CAD 7.1 million loss in Q2 and CAD 6.7 million loss in Q3 2023.

• Revenue declined to CAD 25.2 million in Q3 2024 from CAD 31.8 million in Q2 2024 and CAD 38.7 million in Q3 2023.

• Average Q3 lumber selling price was CAD 436 per 1,000 board feet; early Q4 price realization up to CAD 512, a 17.5% increase.

• Duty deposits total CAD 150 million, exceeding three times current market capitalization.

• Lumber revenues were CAD 19.1 million, down 24% sequentially and 28% year-over-year due to lower shipment volumes and prices.

Outlook and guidance

• Expectation of dramatically reduced EBITDA loss or potential positive EBITDA in Q4 2024.

• Average mill net selling price in early Q4 2024 was 17.5% higher than Q3 2024, expected to significantly boost Q4 EBITDA if sustained.

• Plan to move to two-shift sawmill operation in 2025, contingent on securing additional borrowing capacity.

• Anticipate firm lumber prices through year-end due to supply contraction and moderating interest rates.

• Management anticipates improved market conditions due to industry-wide production curtailments.