VANCOUVER, British Columbia, Aug. 14, 2025 (GLOBE NEWSWIRE) -- Conifex Timber Inc. ("Conifex", "we" or "us") (TSX: CFF) today reported results for the first quarter ended March 31, 2025. EBITDA* was negative $3.2 million for the quarter compared to EBITDA of $4.9 million in the first quarter of 2025 and negative $7.1 million in the second quarter of 2024. Net loss was $8.3 million or ($0.20) per share for the quarter versus net income of $0.6 million or $0.02 per share in the previous quarter and net loss of $9.7 million or ($0.24) per share in the second quarter of 2024.
Selected Financial Highlights
The following table summarizes our selected financial information for the comparative periods. The financial information reflects results of operations from our Mackenzie sawmill and power plant.
| Selected Financial Information | |||||||||||||||||||
| (unaudited, in millions of dollars, except share and exchange rate information) | Q2 2025 | Q1 2025 | YTD 2025 | Q2 2024 | YTD 2024 | ||||||||||||||
| Sales | |||||||||||||||||||
| Lumber - Conifex produced | 27.4 | 31.3 | 58.7 | 25.0 | 54.5 | ||||||||||||||
| By-products and other | 2.9 | 6.3 | 9.2 | 2.3 | 5.3 | ||||||||||||||
| Bioenergy | 3.6 | 7.0 | 10.6 | 4.5 | 12.7 | ||||||||||||||
| 33.9 | 44.6 | 78.5 | 31.8 | 72.5 | |||||||||||||||
| Operating income (loss) | (4.5 | ) | 2.3 | (2.2 | ) | (9.6 | ) | (16.7 | ) | ||||||||||
| EBITDA(1) | (3.2 | ) | 4.9 | 1.7 | (7.1 | ) | (7.6 | ) | |||||||||||
| Net income (loss) | (8.3 | ) | 0.6 | (7.7 | ) | (9.7 | ) | (14.2 | ) | ||||||||||
| Basic earnings (loss) per share | (0.20 | ) | 0.02 | (0.19 | ) | (0.24 | ) | (0.35 | ) | ||||||||||
| Diluted earnings (loss) per share | (0.18 | ) | 0.01 | (0.17 | ) | (0.22 | ) | (0.33 | ) | ||||||||||
| Shares outstanding - weighted average (millions) | 40.7 | 40.7 | 40.7 | 40.4 | 40.4 | ||||||||||||||
| Diluted Shares (millions) | 45.1 | 45.0 | 45.1 | 44.0 | 44.0 | ||||||||||||||
| Reconciliation of EBITDA to net income (loss) | |||||||||||||||||||
| Net income (loss) | (8.3 | ) | 0.6 | (7.7 | ) | (9.7 | ) | (14.2 | ) | ||||||||||
| Add: | Finance costs | 2.4 | 2.3 | 4.7 | 2.8 | 4.1 | |||||||||||||
| Amortization | 1.9 | 2.8 | 4.7 | 2.5 | 5.7 | ||||||||||||||
| Deferred income tax expense (recovery) | 0.8 | (0.7 | ) | 0.1 | (2.7 | ) | (3.2 | ) | |||||||||||
| EBITDA(1) | (3.2 | ) | 4.9 | 1.7 | (7.1 | ) | (7.6 | ) | |||||||||||
| * | In this release, reference is made to "EBITDA". EBITDA represents earnings before finance costs, taxes, depreciation and amortization. We disclose EBITDA as it is a measure used by analysts and by our management to evaluate our performance. As EBITDA is not a generally accepted earnings measure under IFRS and does not have a standardized meaning prescribed by IFRS, it may not be comparable to EBITDA calculated by other companies. In addition, EBITDA is not a substitute for net earnings or cash flow, as determined in accordance with IFRS, and therefore readers should consider those measures in evaluating our performance. | ||||||||||||||||||
Selected Operating Information
| Q2 2025 | Q1 2025 | YTD 2025 | Q2 2024 | YTD 2024 | |||||||
| Production - WSPF lumber (MMfbm)(2) | 35.3 | 46.3 | 81.6 | 34.0 | 78.5 | ||||||
| Shipments - WSPF lumber (MMfbm)(2) | 38.9 | 38.0 | 76.9 | 38.5 | 83.0 | ||||||
| Electricity production (GWh) | 29.6 | 47.6 | 77.2 | 38.0 | 94.0 | ||||||
| Average exchange rate - $/US$(3) | 0.723 | 0.697 | 0.709 | 0.731 | 0.736 | ||||||
| Average WSPF 2x4 #2 & Btr lumber price (US$)(4) | $471 | $492 | $482 | $386 | $416 | ||||||
| Average WSPF 2x4 #2 & Btr lumber price (CDN$)(5) | $651 | $706 | $680 | $528 | $565 | ||||||
| (1) | Conifex's EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization. | ||||||||||
| (2) | MMfbm represents million board feet. | ||||||||||
| (3) | Bank of Canada, www.bankofcanada.ca. | ||||||||||
| (4) | Random Lengths Publications Inc. | ||||||||||
| (5) | Average SPF 2x4 #2 & Btr lumber prices (US$) divided by average exchange rate. | ||||||||||
Summary of Second Quarter 2025 Results
Consolidated Net Earnings
During the second quarter of 2025, we generated a net loss of $8.3 million or $0.20 per share compared to net income of $0.6 million or $0.02 per share in the previous quarter, and net loss of $9.7 million or $0.24 per share in the second quarter of 2024.
Lumber Operations
Our lumber production in the second quarter of 2025 totalled approximately 35.3 million board feet, representing operating rates of approximately 59% of annualized capacity. Second quarter production was negatively impacted by operating the sawmill on a four-day configuration, necessitated by reduced log availability. We also operated the sawmill on a single-line operating configuration at various times in the back half of the quarter as lower than anticipated deliveries impacted our log inventory. We were able to maintain the planer on a five-day, two-shift operating configuration through the entirety of the quarter due to robust lumber inventory. Production of 35.3 million board feet represented a decrease of 24% from the 46.3 million board feet produced in the previous quarter due to reduced availability of logs and an increase of 4% from the 34 million board feet produced in the second quarter of 2024.
Shipments of Conifex-produced lumber totaled 38.9 million board feet in the second quarter of 2025, representing an increase of 2% from the 38.0 million board feet shipped in the previous quarter, primarily due to improved transportation reliability and a draw down of our inventory build from the previous quarter. This also represents an increase of 1% from the 38.5 million board feet of lumber shipped in the second quarter of 2024. The results in the second quarter of 2024 were similar to the results in the second quarter of 2025 due to a similar draw down of our inventory build in the previous quarter of 2024.
Revenues from lumber products were $27.4 million in the second quarter of 2025, representing a decrease of 12% from the previous quarter and an increase of 10% from the second quarter of 2024. Compared to the previous quarter, lower mill net realizations on lower lumber market prices, particularly on wider dimension products, combined with a lower exchange rate on US dollar denominated lumber sales contributed to decreased revenue. The revenue increase in the current quarter over the same period in the prior year was due to higher mill net realizations as a result of higher print prices.
Cost of goods sold in the second quarter of 2025 decreased by 7% from the previous quarter and decreased by 10% from the second quarter of 2024. The decrease in cost of goods sold from the prior quarter was primarily driven by lower production volume and lower inventoried unit costs. Log costs were materially lower in the second quarter of 2025 than in the equivalent quarter of 2024. Unit manufacturing costs in the second quarter of 2025 increased in comparison to the first quarter of 2025 and decreased relative to the second quarter of 2024. The increase from the previous quarter primarily relates to higher cash conversion and unit log costs and the decrease from the second quarter of 2024 is due to materially lower unit log costs and modestly lower cash conversion costs. We recorded inventory valuation reserves of nil in the second quarter of 2025, nil in the first quarter of 2025, and $0.7 million in the second quarter of 2024. The change in inventory reserves year over year can be attributed to lower inventoried unit costs and more favourable sales prices.
We expensed countervailing ("CV") and anti-dumping ("AD") duty deposits of $2.0 million in the second quarter of 2025, $2.8 million in the previous quarter and $1.1 million in the second quarter of 2024. In September of 2024, the duty rate increased from a combined rate of 8.05% to a combined rate of 14.4%. Export taxes during the second quarter of 2025 were lower than the previous quarter due to lower selling prices and an 11% decline in overall shipped volume into the US, and higher than the second quarter of 2024 due to the change in duty rate of 8.05% to 14.4%, combined with higher selling prices. In total we have deposited US$41.7 million net of duty sales.
Bioenergy Operations
Our Power Plant sold 29.6 GWh of electricity under our EPA with BC Hydro in the second quarter of 2025 representing approximately 55% of targeted operating rates. Our Power Plant sold 47.6 GWh in the first quarter of 2025 and 38.0 GWh of electricity in the second quarter of 2024. Production at our Power Plant in the second quarter of 2025 was reduced relative to the previous quarter due to our annual maintenance shutdown, which was completed over a six-week period, with operations successfully resuming in early July. The 2025 annual maintenance shutdown was scheduled for a greater number of days than our annual maintenance shutdown in the second quarter of 2024, resulting in fewer operating days in the second quarter of 2025 relative to the comparative quarter of 2024.
Electricity production contributed revenues of $3.6 million in the second quarter of 2025, $7.0 million in the previous quarter and $4.5 million in the second quarter of 2024. The reduced operating days were the primary reason for the lower revenues in the current quarter.
Selling, General and Administrative Costs
Selling, general and administrative ("SG&A") costs decreased between both the second quarter of 2025 and first quarter of 2025 and the second quarter of 2024. SG&A costs were $1.5 million in the first quarter of 2025, $1.8 million in the previous quarter and $1.9 million in the second quarter of 2024. The decrease in SG&A costs relative to the previous quarter and second quarter of 2024 were largely due to decreases in corporate expenses and share compensation.
Finance Costs and Accretion
Finance costs and accretion totaled $2.4 million in the second quarter of 2025, $2.3 million in the previous quarter and $2.8 million in the second quarter of 2024. The modest increase in finance costs quarter over quarter was primarily related to the additional draw on the secured term loan supporting our lumber operations (the "Pender Term Loan") taken at the end of the first quarter, partially offset by a decline in the Power Term Debt from principal repayments. The reduction of finance costs in the second quarter of 2025 relative to the second quarter of 2024 was primarily due to the costs associated with retiring the WF Facility in the second quarter of 2024.
Gain or Loss on Derivative Financial Instruments
From time to time, we may enter lumber future contracts at times to manage our commodity lumber price or foreign exchange exposures. Gains or losses on derivative instruments are recognized as they are settled or as they are marked to market for each reporting period.
There were no outstanding futures contracts in place as at June 30, 2025.
Other Income
We recognized minimal other income in each of the second quarter of 2025, the previous quarter, and the second quarter of 2024.
Foreign Exchange Translation Gain or Loss
The foreign exchange translation gain or loss recorded for each period on our statement of net income results from the revaluation of US dollar-denominated cash and working capital balances to reflect the change in the value of the Canadian dollar relative to the value of the US dollar. US dollar-denominated monetary assets and liabilities are translated using the period end rate.
The US dollar averaged US$0.723 for each Canadian dollar during the second quarter of 2025, a level which represented a strengthening of the Canadian dollar over the previous quarter1.
The foreign exchange translation impacts arising from the variability in exchange rates at each measurement period on cash and working capital balances resulted in a foreign exchange translation loss of $0.8 million in the second quarter of 2025, compared to a foreign exchange translation loss in the previous quarter of $0.3 million and nominal variation relative to the second quarter of 2024.
Income Tax
We recorded income tax expense of $0.8 million in the second quarter of 2025, a $0.7 million recovery in the previous quarter and $2.7 million recovery in the second quarter of 2024. The tax expense in the current quarter relative to the tax recovery in the prior quarter relates to the impact of prior period tax allocations amongst corporate entities. The tax expense in the current quarter relative to the tax recovery in the second quarter of 2024 relates to the prior period tax adjustment, combined with a decline in operating loss.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities on our balance sheet and the amounts used for income tax purposes. As at June 30, 2025, we have recognized deferred income tax assets of $5.9 million, compared to $6.7 million in the previous quarter and $6.7 million in the second quarter of 2024
Financial Position and Liquidity
Overall debt was $81.6 million at June 30, 2025, compared to $84.2 million at March 31, 2025, and $73.8 million at June 30, 2024. The decrease in overall debt between the second quarter of 2025 and the previous quarter was driven by principal repayments against the Pender Term Loan, combined with payments against operating leases and repayments made against our loan supporting our bioenergy operations (the "Power Term Loan"). At June 30, 2025, we had $47.2 million outstanding on our Power Term Loan, $31.5 million outstanding on the Pender Term Loan, and $2.9 million in leases. The Power Term Loan is largely non-recourse to our lumber operations.
At June 30 2025, we had available liquidity of $3.0 million, comprised of unrestricted cash. This is a decrease from our available liquidity of $4.2 million as at March 31, 2025 and a decrease from our available liquidity of $10.9 million as at June 30, 2024. The change in liquidity in the second quarter of 2025 compared to the first quarter of 2025 is primarily due to a decline in cash generated by the Power Plant in the current quarter as the result of six weeks of downtime for the annual maintenance shutdown, combined with a decline in lumber prices. The change in liquidity in the second quarter of 2025 compared to the second quarter of 2024 is due to the initial advance of $22.5 million under the Pender Term Loan near the end of the second quarter of 2024.
Like other Canadian lumber producers, we were required to begin depositing cash on account of softwood lumber duties imposed by the US government in April 2017. Cumulative duties of US$41.7 million paid by us, net of certain prior sales of such deposits, since the inception of the current softwood lumber trade dispute remain held in trust by the US pending administrative reviews and the conclusion of all appeals of US decisions. We expect future cash flows could be adversely impacted by the CV and AD duty deposits to the extent additional costs on US destined shipments are not mitigated by higher lumber prices.
While there are signs that the macro-environment for the lumber industry is starting to improve, Conifex continues to review its options to improve liquidity. In the event of a sustained market downturn, Conifex maintains flexibility to significantly reduce expenditures and working capital levels and to proactively adjust its lumber production to match demand. At present, we are working collaboratively with our existing lenders to fund our operational working capital investments. We are also evaluating additional financing opportunities to help ensure that we retain sufficient liquidity to fund log and lumber inventories and receivables from the sale of lumber and residual chips, including obtaining additional debt facilities or the sale of assets, including duty deposits.
The Company endeavors to ensure that it has sufficient cash on demand to meet its obligations as they become due by preparing annual capital and administrative expenditure budgets, which are regularly monitored and updated as considered necessary. The Company monitors its risk of shortage of funds by monitoring the maturity dates of existing trade and other accounts payable as well as its credit facilities. The Company's trade and other accounts payable are subject to normal trade terms.
We monitor our expected liquidity levels and compliance with debt covenants under our Power Term Loan and Pender Term Loan by regularly preparing rolling cash flow forecasts to help ensure sufficient resources are available to meet operational requirements, debt service commitments, and to sustain future business development. Our Power Term Loan also contains certain restrictions on the ability of our power subsidiaries to transfer funds outside of the power entities. We did not have any material commitments for capital expenditures at June 30, 2025 as the majority of our anticipated capital spend for the fiscal year had been completed during the annual maintenance shutdown. As at June 30, 2025, we had cash of $3.0 million and had drawn $31.5 million from the Pender Term Loan. After adjustments for working capital items, cash flow generated from operations totalled $6.8 million for the quarter ended June 30, 2025. Working capital as at June 30, 2025, was $12.1 million, compared to $22.4 million as at March 31, 2025, and $24.3 million at June 30, 2024. The Company expects to be able to meet its obligations as they become due in the normal course of business for at least twelve months from June 30, 2025, however, there is a heightened uncertainty due to, among other things, fluctuating market conditions including tariffs and rising softwood lumber duty rates.
Subsequent to the end of the second quarter, we entered into a letter of undertaking with our Term Loan lender pursuant to which we agreed to repay $500,000 of a $3.5 million advance taken in the first quarter in early July, and $150,000 each month thereafter until the advance is repaid in full.
Outlook
North American lumber markets are anticipated to experience continued volatility and uncertainty throughout the remainder of 2025. Duty deposit rate increases and potential tariffs represent significant challenges. With a robust fibre basket and a steady power generation cash flow stream supporting our lumber manufacturing operations, Conifex currently expects to sustain two-shift operations through the balance of 2025.
Conference Call
We have scheduled a conference call on Thursday, August 14, 2025, at 8:00 AM Pacific time / 11:00 AM Eastern time to discuss the second quarter 2025 financial and operating results. To participate in the call, please dial toll free 1-800-806-5484 and enter the participant passcode 6042635#.
Our management's discussion and analysis and financial statements for the quarter ended June 30, 2025, are available under our profile on SEDAR+.
For further information, please contact:
Trevor Pruden
Chief Financial Officer
(604) 216-2949
About Conifex Timber Inc.
Conifex and its subsidiaries' primary business currently includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value added lumber finishing and distribution. Conifex's lumber products are sold in the United States, Canadian and Japanese markets. Conifex also produces bioenergy at its power generation facility at Mackenzie, B.C.
Forward-Looking Statements
Certain statements in this news release may constitute "forward-looking statements." Forward-looking statements are statements that address or discuss activities, events or developments that Conifex expects or anticipates may occur in the future. When used in this news release, words such as "estimates," "expects," "plans," "anticipates," "projects," "will," "believes," "intends," "should," "could," "may," and other similar terminology are intended to identify such forward-looking statements. Forward-looking statements reflect the current expectations and beliefs of Conifex's management. Because forward-looking statements involve known and unknown risks, uncertainties and other factors, actual results, performance or achievements of Conifex or the industry may be materially different from those implied by such forward-looking statements. Examples of such forward-looking information that may be contained in this news release include statements regarding: the availability and use of credit facilities or proceeds therefrom; our level of liquidity and our ability to service our debt; the realization of expected benefits of completed, current and any contemplated capital projects and the expected timing and budgets for such projects, including the build-out of any high-performance computing or data center operations; the growth and future prospects of our business; our expectations regarding our results of operations and performance; our planned operating format and expected operating rates; our perception of the industries or markets in which we operate and anticipated trends in such markets and in the countries in which we do business; our ability to supply our manufacturing operations with wood fibre and our expected cost of wood fibre; our expectation for market volatility associated with, among other things, the softwood lumber dispute with the U.S.; potential negative impacts of duties or other protective measures on our products, such as antidumping duties or countervailing duties on softwood lumber, or tariffs, duties or other protective measures on the Canadian economy in general; the expected rates of such antidumping duties, countervailing duties, tariffs, and other duties imposed by the U.S. government, and any accounting entries required in respect thereof; the outcome and/or effects of the U.S. government's investigation into the national security implications of importing timber, lumber, and related products; continued positive relations with Indigenous groups; the development of a longer-term capital plan and the expected benefits therefrom; demand and prices for our products; our ability to develop new revenue streams; the outcome of any actual or potential litigation; future capital expenditures; changes in stumpage fees and the uncertainty regarding future timber availability and costs resulting therefrom; and our expectations regarding interest rates and U.S. dollar benchmark prices. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements may include, but are not limited to, our future debt levels; that we will complete our projects in the expected timeframes and as budgeted; that we will effectively market our products; that capital expenditure levels will be consistent with those estimated by our management; our ability to obtain and maintain required governmental and community approvals; the impact of changing government regulations and shifting political climates; that current demand for lumber will continue to be in balance with supply; that transportation services by third party providers will continue uninterrupted; our ability to ship our products in a timely manner; that there will be no unforeseen disruptions affecting the operation of our Mackenzie power plant and that we will be able to continue to deliver power therefrom; our ability to obtain financing on acceptable terms, or at all; that interest and foreign exchange rates will not vary materially from current levels; the general health of the capital markets and the lumber industry; and the general stability of the economic environments within the countries in which we operate or do business. Forward-looking statements involve significant uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, without limitation: those relating to potential disruptions to production and delivery, including as a result of equipment failures, labour issues, the complex integration of processes and equipment and other similar factors; labour relations; failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; fluctuations in the price and supply of required materials, including log costs; fluctuations in the market price for products sold; foreign exchange fluctuations; trade restrictions or import duties, tariffs or other protective measures imposed by foreign governments; availability of financing (as necessary); and other risk factors detailed in our 2024 annual information form dated March 12, 2025 and our 2024 annual MD&A dated March 12, 2025 available under Conifex's profile on SEDAR+ at www.sedarplus.ca and other filings with the Canadian securities regulatory authorities. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should exercise caution in relying upon forward-looking statements and Conifex does not undertake any obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.
1 Source: Bank of Canada, www.bankofcanada.ca
