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GreenFirst Forest Products Inc. (TSX: GFP) (“GreenFirst” or the “Company”) today announced results for the second quarter of 2022. The Company’s condensed consolidated interim financial statements and related Management Discussion and Analysis (“MD&A”) are available on GreenFirst’s website at www.greenfirst.ca and on SEDAR at www.sedar.com. All amounts are in thousands of Canadian dollars unless indicated otherwise.
Second Quarter of 2022 Highlights
*Second quarter 2022 (“Q2 2022”) net earnings were $29.5 million or $0.15 per share (diluted), compared to $34.0 million or $ 0.18 per share in the first quarter of 2022 (“Q1 2022”). This was the Company’s third full quarter operating its acquired forest-products assets.
*Q2 2022 Adjusted EBITDA was $54.3 million, a 21% increase compared to Adjusted EBITDA in Q1 2022. Adjusted EBITDA before duties expensed for Q2 2022 was $76.6 million, compared to $61.3 million in Q1 2022.
*Lumber pricing remained strong in Q2 2022, with an average selling price of $1,255/mfbm compared to $1,325/mfbm in Q1 2022. Rising interest rates and inflation headwinds, coupled with macro supply tightening and the risk of disruptions to lumber supply underlies our expectation of continued volatility in lumber prices.
*The Company made a voluntary repayment of US$8.9 million on its outstanding term debt during the second quarter of 2022.
*Asset-backed revolving loan facility of $65.0 million was undrawn at quarter end and has remained undrawn at August 10, 2022. Strong operating cash flow continues to fund working capital needs. Cash and equivalents ended Q2 2022 with a balance of $74.2 million.
“We were pleased to see positive lumber markets in Q2 which contributed to strong earnings” said Rick Doman, CEO of GreenFirst. “Our earnings reflect the favourable pricing in lumber and improved transportation logistics, as we expect sales volumes to remain strong and inventory levels to continue to drop in the coming quarter. We continue to focus on investing in our operations to improve productivity and recovery.”
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 Asset Acquisition”) for aggregate consideration of $293.7 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. As the acquisition is within the measurement period, the Company and its external valuation experts are still assessing acquisition date fair value adjustments, including fair values of property, plant and equipment and related depreciation charges, leases and estimated final purchase price adjustments related to inventory and other items. For further information on the purchase price accounting, please refer to the Company’s second quarter interim financial statements.