Thank you, operator. And good morning, everyone.

Welcome to Acadian Timber's first quarter conference call. With me on the call today is Erika Reilly, Acadian Timber's President and Chief Executive Officer.

Before discussing Acadian's results, I will first remind everyone that in discussing our first quarter financial and operating performance, the outlook for the remainder of 2020, and responding to questions we may make forward looking statements. These statements are subject to known and unknown risks in future results may differ materially.

For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com. I will begin with some comments on our financial results for the quarter ended March 28, 2020, then Erika will add some further remarks on the business, market conditions, and our outlook for the remainder of the year.

Before I begin, I would like to briefly discuss COVID-19. In conjunction with the emergency measures enacted by the Province of New Brunswick and the State of Maine, both governments have declared the forestry industry as an essential service.

As a result of this, we continued our operations through March 28, which coincided with a regular seasonal shutdown in the end of the company's first quarter and as such COVID-19 had no material impact on our results. Erika will cover our response to COVID-19 and the impact on our business.

Sales for the quarter were $31.4 million, almost unchanged from $30.9 million in the prior year period. The increase in sales is a result of the weighted average selling price, excluding biomass, increasing 1% year-over-year, which reflects the mix more heavily weighted towards hardwood, which attracts a higher average sales price.

And during the quarter, Acadian also experienced an increase in timber services activity. These gains were offset by 2% decrease in sales volume during the quarter.

Operating costs of $23.1 million in 2020 were up 4% from $22.2 million in the same -- in the prior year period. Operating costs were higher as a result of higher variable costs per cubic meter offset by lower harvest volumes.

The year-over-year increase in variable costs per cubic meter was mainly due to longer haul distances to market. Adjusted EBITDA totaled $8.3 million during the quarter, down from $8.9 million in the prior year period and the adjusted EBITDA margin for the quarter was 27% compared to 29% in the first quarter of 2019.

The decrease in EBITDA and EBITDA margin was mostly due to lower margins from the operations in Maine. Net loss for the first quarter was $3.7 million compared to net income of $6.2 million in the prior year period.

The variance from the same quarter in the prior year is primarily due to an $8.2 million unrealized foreign exchange loss on the reevaluation of our U.S. dollar-denominated long-term debt compared to an unrealized gain in the prior year period of $2 million.

During the first quarter, we declared a dividend of $0.29 per share and our payout ratio for the quarter was 74%, which is in line with expectations given the seasonality of our operations. I will now move into the results for each of our New Brunswick and Maine operations.

During the quarter, sales for our New Brunswick timberlands were $21.7 million, almost unchanged from $21.4 million in the same period of 2019. The weighted average selling price excluding biomass, during the quarter, was $68.75 per cubic meter or 3% higher than the price in the same period last year reflecting a sales mix more heavily weighted to hardwood, which attracts higher average prices than softwood.

Softwood sales volumes were down due to a greater focus on timber services activity than in the same period of 2019. Revenues from timber services and other sales during the quarter increased 15% year-over-year.

Operating costs in the first quarter totaled $15.9 million in line with the prior year period with the positive effect of lower harvest volumes offset by increased per cubic meter variable log harvest costs as a result of longer haul distances and by increased timber services activity as noted previously. New Brunswick's adjusted EBITDA in the quarter was $5.9 million, almost unchanged from $5.8 million in the same period last year and the adjusted EBITDA margin was consistent with the prior year period at 27% Switching to our Maine timberlands.

Sales during the first quarter totaled $9.7 million compared to $9.5 million in the same period last year. The sales volume, excluding biomass, increased 7% year-over-year reflecting improved contractor capacity and good operating conditions.

However, the weighted average selling price, excluding biomass, fell 3% compared to the prior year. In U.S.

dollar terms the weighted average selling price, excluding biomass, decreased 4% year-over-year to $59.38 per cubic meter. The operation has benefited from continued solid demand for softwood and hardwood pulpwood with U.S.

dollar prices for these products increasing by 9% and 7% respectively year-over-year. This benefit was, however, more than offset by 10% decrease in U.S.

dollar softwood sawlog prices due to pricing pressure resulting from the weakness in North American lumber prices. Operating costs totaled $6.7 million in the quarter compared to $6.2 million during the same period of 2019 with higher per cubic meter harvest costs partially offset by a decrease in administrative costs.

Variable harvest cost per cubic meter increased 5% compared to the prior year period as a result of transportation costs associated with longer haul distances combined with slightly higher harvesting costs. Adjusted EBITDA for the quarter was $3 million compared to $3.3 million during the same period last year and the adjusted EBITDA margin fell to 31% from 35% in the prior year period due to lower cubic meter operating margins.

And lastly, a few comments on our financial position and debt facilities. Acadian ended the quarter with a liquidity position of $22.4 million.

Our cash balance remained strong at $12 million and was up from $7.6 million at the end of 2019, reflecting strong operating cash flow for the quarter. During the first quarter, we refinanced our long-term credit facilities.

We were successful in extending the maturity dates of the facilities for periods ranging from five to 10 years. The amount under the facilities was increased from US$72.5 million to US$80 million and we were successful in negotiating a 20 basis point weighted average decrease in interest costs on an annual basis, which will become fully effective after we have drawn the new facility in October when the current facility matures.

The company's current US$10 million revolving facility remains in place and we added an additional $2 million Canadian revolving facility with a major Canadian bank subsequent to the end of the quarter in order to increase cash management flexibility. With that, I will now turn the call over to Erika.

Thank you, Adam. Acadian experienced one recordable safety incident among employees and four among contractors during the quarter.

These individuals are expected to make a full recovery and we remain committed to maintaining a culture across the organization that emphasizes the importance of strong safety performance. We support this commitment by regular training and monitoring.

Acadian's operations benefited from favorable winter operating conditions during the quarter and good demand and pricing for most of our products. Acadian's New Brunswick operations focused more heavily on timber services activity catching up from the second half of last year.

Given this focus, Acadian sale volume, excluding biomass, of 330,000 cubic meters was down 2% year-over-year. Sales from timber services and other was up 15%.

Acadian's weighted average selling price, excluding biomass, increased 1% over the same quarter of the prior year with continued strong demand and pricing for hardwood pulpwood offsetting weaker softwood sawlog prices and a lower quality hardwood sawlog mix. Softwood sawlog prices decreased 2% year-over-year with prices in New Brunswick remaining relatively consistent, but Maine prices decreasing 9% in Canadian and 10% in U.S.

dollar terms reflecting pricing pressure due to the weakness of North American lumber market. Hardwood pulpwood prices were 2% higher on continued strong demand and this product represents a larger proportion of the mix compared to the same period last year.

Hardwood sawlog prices decreased 6% due to a higher proportion of lower quality hardwood sawlogs in the mix that was sold from our Maine timberlands. Softwood pulpwood average selling prices decreased 2%, while biomass margins improved relative to the same period in 2019 due to a more favorable product mix.

At this point, in my prepared remarks, I normally present Acadian's outlook for the remainder of the year, however, we are not operating under normal conditions. Instead, I will briefly comment on Acadian's response to COVID-19, our focus through this period, and why Acadian is relatively well-positioned to weather the storm.

In response to COVID-19, our top priority has been the well-being of our people. We have been updating health and safety protocols on a regular basis based on guidance from regional health authority.

Our employees have adapted well to performing office work from home and there has been limited disruption to fieldwork as this work is conducted outdoors and in a manner that, for the most part, naturally allows for social distancing. We're pleased to report that none of our people, as of today, have contracted the virus.

The initial market disruption caused by COVID-19 took place as we entered our seasonally slow period. Harvest operations for the winter season wrapped up at the end of March.

And as Adam mentioned, the first quarter results were not impacted. Since then we have been assessing market conditions while planning and preparing for when operations start back up, which typically occurs late May through early June depending on operability and market conditions.

Our largest customers continue to operate and are experiencing steady demand for most of their products such as specialty paper and tissue products. This demand supports upstream activities such as whole log chipping and improved the value of sawmill residuals.

Having said, that's the outlook for the North American lumber consumption in 2020, which is the end use market for softwood sawtimber has been negatively impacted by the pandemic. As the market environment is fluid, we are focused on staying close to our customers and ready to adjust operations as markets evolve through the remainder of the year.

While no company is immune to issues in this type of market environment, we believe Acadian is relatively well-positioned. Our balance sheet is strong with this year's refinancing behind us and a solid liquidity position in place.

We have a large and well-diversified customer base with our largest customers continuing to operate in many serving end use markets that are in demand. And our team is experienced and resilient having not missed a beat through the changes resulting from COVID-19 protocols.

That concludes our formal remarks. We are available to take any questions from participants on the line.

Operator?

Hey, good morning. This is actually Marcus on for Paul.

Hey, Marcus.

Hi. Just with the uncertainty surrounding the COVID situation here.

Do you see any reason to change the dividend policy or even to temporarily suspend the dividend until there's some more clarity?

There's no change to our dividend at this time as was noted in our release. We will be paying a regular dividend.

We believe our balance sheet is incredibly strong. We've shored up our liquidity position.

We removed the refinancing risk, and nearly all of our customers today are operating. And so with that, the board made the decision to pay the dividend and no change at this time.

Okay. Thanks.

And maybe on the sawtimber side, the demand for lumber has clearly declined since the beginning of the year. Can you walk us through a bit of what you're seeing from your sawmill customers and what sort of operating rate you kind of expect in your mill markets?

Sure. So our -- clearly, that's a weaker spot in our markets.

We are benefiting from a number of customers being integrated in terms of owning sawmills as well as pulp mills and paper mills. And so while there is some weakness on the sawtimber side, many of those sawmills, also fiber, regional pulp mills and support that industry, which is experiencing some demand, so that's providing some support for that market.

Yes, I think very consistent with all the major forecasters the outlook has eroded since earlier this year for North American lumber consumptions, which is the end use market for our softwood sawtimber. A number of our regional customers were experiencing, yes, softness, but some support and demand from home centers, which saw some demand through the last several weeks.

But we expect our customers to continue to operate, but likely at some market weakness for that product.

Okay. And then just with Pixelle pulp line that went down in April, do you expect that it will have any impact on pulpwood pricing in Maine over the next few months?

We do, we do. So we were selling a small portion of softwood pulpwood into that customer, and so that will be ultimately re-diverted.

So we expect a slight increase in supply in the market or less demand as a result of that incident. My understanding is that they will continue to operate their paper machine and so that makes them more support demand to the extent they source pulpwood from other areas within the market.

But that's, yes, softwood pulpwood market for us will be a bit weaker, but it's not a main product line for us and not a main contributor to our bottom line.

Okay. That makes sense.

Maybe swing over to M&A. It seems like the pace of larger transactions has picked up a bit recently across the U.S.

Can you remind us what your strategy is around M&A and whether you've seen a pickup in transaction activity in the northeast specifically?

At the end of last year we saw a couple of bilateral transactions take place in our region specifically. You're right, across North America we also saw a couple of larger transactions and we've been monitoring them.

With respect to our M&A strategy, I would say our primary -- we are interested in growing, so on a value basis we continue to look at opportunities. Even through this COVID situation, we continue to look for growth opportunities, value add opportunities and do work on those.

We're particularly focused in growth opportunities more regionally as opposed to globally. I think that's where I'll leave it for now.

Okay. Thanks.

And then maybe I'll squeeze in one last one. What was the outlook for cash taxes for the year?

I'll have to let Adam take that one.

Yes. I'll have to take it.

I'll get back to you on that one, Marcus.

All right. Thanks, Adam.

Thanks.

Okay. Well that's great.

Thank you, operator. And on behalf of the board and the management team of Acadian, I'd like to thank you for your continued support.

Please stay safe.