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GreenFirst Reports Financial Results for Third Quarter 2022

General News
Green First Logo lumber mill

GreenFirst Forest Products Inc. (TSX: GFP) (“GreenFirst” or the “Company”) today announced results for the third quarter of 2022. The Company’s condensed consolidated interim financial statements (“Financial Statements”) and related Management Discussion and Analysis (“MD&A”) for the third quarter and three quarters endedSeptember 24, 2022 are available on GreenFirst’s website at and on SEDAR at All amounts are in thousands of Canadian dollars unless indicated otherwise.

Third Quarter of 2022 Highlights

  • Third quarter 2022 (“Q3 2022”) net loss was $23.3 million or a $0.13 loss per share (diluted), compared to net earnings of $30.7 million or $0.16 per share in the second quarter of 2022 (“Q2 2022”). This quarter marked the one-year point for the Company operating its acquired forest- products assets.
  • Q3 2022 Adjusted EBITDA was a loss of $7.9 millioncompared to Adjusted EBITDA in Q2 2022 of $54.3 million. Adjusted EBITDA before duties expensed for Q3 2022 was $5.1 million, compared to $76.6 million in Q2 2022.
  • Lumber continued to experience price volatility in Q3 2022, with an average selling price of $780/ mfbm compared to $1,255/mfbm in Q2 2022. Steeply rising interest rates and inflation reduced demand for lumber products from the second quarter onward, and remain a concern impacting US housing starts and homebuilders’ confidence.
  • On September 23, 2022, the Company entered into a credit agreement with a tier-1 Canadian bank for up to $140.0 million consisting of a term loan of $15.0 million and an asset-backed revolving credit facility of up to $125.0 million (collectively, the “Credit Facility”). This refinancing replaced a high yield secured term loan (US$87.3 million outstanding at extinguishment)and a $65.0 million asset-backed loan facility (undrawn at time of extinguishment).
  • On November 7, 2022, the Company announced the sale of its 203,000 acres of private forest land south of Kapuskasing, Ontario, to a third party for cash proceeds of $49.2 million.

“In the third quarter, we saw the global lumber markets softening, which along with higher softwood lumber duties is reflected in our results.” said Rick Doman, CEO of GreenFirst. “We will continue to monitor the external challenges we currently face, and work towards cost reduction and operational improvement.”

Acquisition of Sawmills and Paper Mill 

On August 28, 2021, the Company acquired six sawmills and one paper mill from Rayonier Advanced Materials (the “Rayonier AssetAcquisition”) for aggregate consideration of $296.1 million. The Company has measured and recorded the identifiable assets acquired and the liabilities assumed at management’s estimates of their acquisition-date fair values. For further information on the purchase price accounting, please refer to the Company’s third quarter interim financial statements.

Financial Highlights

During Q3 2022 the Company recorded a net loss of $23.3 million ($0.13 loss per share, diluted) and Adjusted EBITDA loss of $7.9 million. These were declines compared to Q2 2022 where net earnings were $30.7 million ($0.16 per share, diluted) and Adjusted EBITDA was $54.3 million.

The Company reported net sales of $153.4 million during Q3 2022, a decline of $61.1 million or 28%, compared to Q2 2022. This decrease was primarily due to declining lumber prices as the average selling price decreased to $780/mfbm compared to $1,255/mfbm in Q2 2022.

The Company reported cost of sales of $150.9 million during Q3 2022, higher by $13.4 million or 10%, compared to Q2 2022. This increase correlates with higher volume of lumber and paper sales, in addition to price inflation in Q3 2022, compared to Q2 2022.

The Company’s softwood lumber sales to US customers are subject to countervailing and anti-dumping duties as determined by the US Department of Commerce. Duties expensed in Q3 2022 were $13.0 million, a decrease of $9.3 million or 42%, quarter-over-quarter, which was driven by a lower average sales price on volumes shipped and exported compared to Q2 2022. Excluding the impact of duties expensed, Adjusted EBITDA for the third quarter and three quarters ended September 24, 2022 was $5.1 million and $142.9 million, respectively.

The Company reported selling, general and administration expenses of $5.9 million during Q3 2022 which was a decrease of $1.0 million compared to Q2 2022, primarily due to lower spend on information technology set-up related activities and lower costs related to transitional services that the Company incurred in the first half of 2022.

Finance costs, which include interest and accretion on the Company’s borrowings under the now extinguished term loan, was $4.0 million in Q3 2022.

In connection with the extinguishment of the term loan and the asset-backed loan facility, the Company recognized a loss of $11.2 million, which primarily reflects the write-offs of $7.7 million and $1.0 million of remaining capitalized fees related to the term loan and the asset-backed loan facility, respectively. In addition, there was a $2.5 million prepayment premium related to the early extinguishment of the term loan.

As part of the purchase price consideration for the Rayonier Asset Acquisition, the Company had recorded a $5.3 million receivable related to estimated final inventory adjustments at closing (See Note 4

– Acquisition of Sawmills and Paper Mill in the Company’s Financial Statements), which reflected the estimate of the amount subject to the arbitration process as at September 24, 2022. On November 4, 2022, the arbitrator provided a final and binding written determination which resulted in the Company revising the carrying value of this receivable to $nil. The Company has accounted for this transaction as an adjusting subsequent event by recording a loss of $5.3 million for the third quarter and three quarters ended September 24, 2022, presented as “Other non-operating loss” in the Financial Statements.

Liquidity and Borrowings

At September 24, 2022, the Company had total liquidity of $52.5 million comprising $29.9 million in cash on hand and $35.3 million, net of $12.7 million for standby letters of credit, available under its new Credit Facility. The Company has drawn down $84.0 million under the Credit Facility at September 24, 2022.

At September 24, 2022, the Company had $83.4 million of borrowings under its Credit Facility, net of deferred financing costs. The Company’s Credit Facility contains restrictive covenants that limit the Company’s ability to undertake certain actions without the lender’s consent, and it also includes the following financial covenant tests performed quarterly: a minimum fixed-charge coverage ratio and a maximum annual capital expenditure amount relative to budget, all as defined in the Credit Agreement. The Company monitors its performance monthly as well as its future performance expectations, adjusting as required, so it remains in compliance with these covenants. The Company was in compliance with its covenants under the Credit Agreement as at September 24, 2022.


During the third quarter of 2022, further interest rate rises in response to ongoing inflation continued to soften lumber demand. Thiswas evidenced by a decline in lumber market prices throughout Q3 2022 and leading into Q4 2022. Despite this, throughout Q3 2022 there were short windows of price support and tightening lumber supply, spurred on by the curtailment of lumber production announced by mills in the province of British Columbia.

COVID-19 remains a concern during Q4 2022 and as we approach 2023, although disruptions to trucking and rail logistics, seen during the first half of 2022, are not expected to recur to the same degree in the remaining two months of the year.

The combination of macro supply tightening and the risk of disruptions to lumber supply within North America underlies our expectation of continued volatility in lumber prices. However, with recent interest rate increases announced in Q4 2022, we expect that lumber prices will continue to be under pressure.

Lumber prices have a material impact on the operating earnings of the Company. In the third quarter of 2022, a US $10/mfbm difference in lumber prices would have impacted the Company’s operating earnings by approximately $1.4 million, assuming everything else remained constantThe Company currently does not have any hedges in place for lumber prices.

Inflationary pressures in North America have increased the cost of many inputs required for our operations. Furthermore, shortages of people, materials and equipment could negatively impact the Company, as well as the industry. Many of these pressures have been linked to the COVID-19 pandemic, which may still be a significant factor in the near term.

For the complete press release, click here.

About GreenFirst Forest Products

GreenFirst Forest Products is a forest-first business, focused on sustainable forest management and lumber production. The Company owns 7 sawmills and 1 paper mill across Ontario and Quebec. GreenFirst is a significant lumber producer in Canada having an annual lumber production capacity of 905MMfbm, with a goal to increase. GreenFirst’s mills are located in rich wood baskets proudly operating over 9.2 million hectares of FSC® certified public and private Canadian forestlands (FSC®-C167905). The Company believes that responsible forest practices, coupled with the long-term green advantage of lumber, provide GreenFirst with significant cyclical and secular advantages in building products. GreenFirst’s long-term vision is to be a leader in the global forestry industry.

Source: GreenFirst Forest Products Inc.