GreenFirst Forest Products Inc.

Thank you very much, Joanne, and good morning, everyone, and welcome to our first quarter 2026 earnings call. I'm Joel Fournier, the Chief Executive Officer of GreenFirst.

Today, I'm joined by Peter Ferrante, our CFO, and Michel Lessard, our President. I would like to start this call by highlighting that we have maintained our excellent safety performance for Q1.

Last year, we achieved record safety results at GreenFirst, and these results continue to position us among the best in the industry. That reflects a strong and ongoing commitment to our safety culture.

We finished the quarter with a negative EBITDA of $15.1 million. This loss is primarily due to weaker market conditions, along with lower sales volume and production during the quarter.

The market began the year at a low point in January but improved steadily through the quarter, with prices increasing from $422 to $487 by quarter-end using the Western benchmark prices. Three of our mills took downtime in January due to market conditions.

The shipments were also negatively impacted by weather-related issues that limited railcar availability. In addition, we continue ramping up the new saw line at Chapleau, which affected production levels during the quarter.

During Q2 2026, it was also announced that the preliminary potential countervailing duty and antidumping rate on cable starting in October are expected to be around 25%, down from the 35% we are currently paying. In previous earnings calls, we mentioned that we're working with the federal government to secure a $30 million loan to support the industry.

Today, I'm pleased to announce that we received these funds in Q1, along with approximately $2.4 million in additional support from the provincial government for the CHIP program. Both will help strengthen our current and future liquidity position.

We will continue to work closely with both the federal and provincial governments to benefit from the recently announced program. I will now talk a little bit about the Q1 lumber market.

On the demand side, we did receive some positive news in March 2026 regarding both housing starts and repair and remodeling activity. Housing starts were 12% above last year and 11% higher than the previous month.

In addition, repair and remodeling activity came in 6% above forecast for the last 6 months. During Q1, lumber prices started at the low point in January, but increased steadily through February and March.

Our big box retail customer pulled strong volume during the quarter. However, shipment volume was impacted by logistic constraints, as already mentioned.

Home affordability remains a challenge, and mortgage interest rates will need to continue declining to support a stronger demand going forward. On the supply side, the recent announcement of mill closure in Ontario provides some near-term support.

Looking ahead to the remainder of 2026, despite these encouraging signs, we remain cautious in our outlook and continue to anticipate only a modest price increase in the second half of the year. I will pass it to Peter for the financial section.

Thank you. Good morning, everyone, and thank you for joining our call.

Today, I will review GreenFirst's first quarter 2026 financial results and provide an update on our operational performance, cost structure, and liquidity position. For the first quarter of 2026, total revenue was $60.6 million compared to $77 million in Q4 2025 and $71.8 million in Q1 2025.

Revenue was primarily driven by lumber sales of $55.4 million and byproduct revenue of $5.2 million. The quarter-over-quarter decline reflects lower shipment volumes of 83 million board feet compared to 108 million board feet in Q4 2025, driven primarily by seasonal demand patterns and timing differences between production and sales.

Overall, the quarter reflects a volume-driven decline in revenue, while pricing conditions remained relatively stable versus Q4 2026. Total cost of sales for the quarter was $62.6 million compared to $86 million in Q4 2025 and $60.8 million in Q1 2025.

The quarter-over-quarter reduction of approximately $23.4 million reflects 3 main drivers. First, the cost of inventory sold declined to $52.8 million compared to $61.8 million in Q4, mainly a reflection of lower shipment volumes.

Second, NRV expense decreased to $1.8 million compared to $10.2 million in Q4 2025. While NRV adjustments were still recorded in the quarter, they were lower than the prior period.

The $1.8 million reflects inventory build associated with seasonal harvesting activity, combined with slight cost increases derived from the continued ramp-up of our Chapel large log line, offset by improved pricing. Third, freight costs decreased to $8 million from $9.8 million in Q4, consistent with lower shipment volumes.

Depreciation remained stable at $3.9 million. Overall, the reduction in cost of sales was primarily driven by lower shipment volumes and reduced NRV expense.

Gross margin for the quarter was a loss of $2 million compared to a loss of $9 million in Q4 2025 and a gain of $11 million in Q1 2025. The improvement versus Q4 2025 reflects reduced NRV pressure and lower shipment volumes.

Duties and tariffs totaled $12.1 million in Q1 2026 compared to $15.1 million in Q4 2025 and $5.7 million in Q1 2025. The decrease reflects lower shipments compared to the prior quarter.

In comparison to Q1 2025, duties this year are at a 35% rate versus 14% last year. In addition, this year, we are subject to a 10% Section 232 tariff.

While still elevated, duties remain an external industry-wide headwind and continue to represent a significant cost burden on the business. SG&A expenses were $4.4 million in Q1 of 2026 compared to $1.5 million in Q4 2025 and $3.8 million in Q1 2025.

The increase versus Q4 reflects the timing of corporate initiatives and selected adjustments to compensation-related costs and one-time adjustments relating to operating expenses during Q4 2025, amounting to approximately $2.5 million. It does not represent a structural change in the underlying cost base.

Foreign exchange losses were $0.5 million for the quarter, and there were no impairment charges in Q1 2026 either. Finance costs were $1.7 million, broadly consistent with the prior period.

Operating income for the quarter was a loss of $19 million compared to a loss of $25.8 million in Q4 2025 and an income of $1.4 million in Q1 2025. EBITDA from continued operations for Q1 2026 was negative $15.1 million compared to negative $21.7 million in Q4 2025 and positive $5.1 million in Q1 2025.

The improvement versus Q4 2025 reflects the lower shipment volumes, reduced NRV expense, partially offset by higher SG&A. On a normalized basis, the quarter reflects improving cost efficiency despite continued price and volume pressure from market conditions.

Sales volumes were $83 million compared to $108 million in Q4 and $90 million in Q1 2025. Production volumes were $90.6 million, which is broadly consistent with prior levels, resulting in a temporary mismatch between production and sales timing.

This contributed to inventory buildup during the quarter, but does not reflect the change in the underlying production capability. As of March 31, 2026, the company ended the quarter with cash of $6.5 million compared to $3.5 million at year-end.

The increase in cash was primarily driven by external financing activities rather than operating performance. The operating cash flow for the quarter, it was impacted by a loss adjusted for noncash items and interest paid of approximately $12.7 million.

This was further affected by working capital outflows of $22.5 million, primarily driven by seasonal harvesting requirements. Investing activities were minimal at $0.9 million, reflecting a continued focus on liquidity preservation.

Financing activities provided $38.6 million of cash flows, primarily consisting of a $30 million draw on the software lumber program term loan and $10 million on our credit facility. As a result, our total availability remains supportive.

However, our revolver availability declined to $19.6 million from $39.4 million at the prior quarter end. The company continues to maintain a disciplined approach to liquidity management with a focus on reversing the working capital build and stabilizing operating cash flows in the upcoming months.

This concludes my remarks, and I will now pass it over to Joel.

Thank you, Peter. Looking ahead, GreenFirst will continue to pursue its objective of becoming a top-quartile operator and the largest producer in Ontario by maximizing the use of its available wood supply.

This continued to position the company uniquely from a log supply perspective compared to its competitors. In fact, there are many regions in Canada and elsewhere in North America with a constrained log supply situation.

As mentioned in the previous quarter, we have only partially advanced the previously announced $50 million Phase 1 of the capital expenditure program, proceeding with selected projects only. As communicated in Q3 2025, our primary focus has been on the installation of the new saw line, planer mill, and cogeneration refurbishment at Chapleau.

I'm pleased to announce that both the planar mill project and the cogeneration project are now complete, and ramp-up has been successfully finalized. This project has been delivered as expected and will increase our capacity to process the additional production coming from the new line at Chapleau.

We completed all performance testing for the new saw line, with production increasing by 60% from January to March, and are currently operating at approximately 90% of our target capacity with the new saw line. During Q2, the focus will be on finalizing optimization and integration with other equipment along the production process, including logging feed and sawmill stacker output.

We expect this integration to be completed in Q2. Finally, we continue to work with Texana to explore a potential partnership to build a Torrefied pellet plant mill in Chapleau.

This project will support the province of New Brunswick's effort to replace coal with green energy for power generation. There is currently a surplus of sawmills in Ontario, and this initiative would help strengthen demand if the project proceeds.

In addition, the federal government has announced measures to support the housing industry in Canada. One of our major chip customers, Cap Paper, is currently working with the federal government to explore the opportunity to build a new facility to produce building materials in Canada.

This project would help secure long-term demand for sawmill residue in northern Ontario. Finally, GreenFirst remains committed to continuous improvement as a core strategy to enhance business performance.

At the same time, we'll maintain a prudent and disciplined approach to cash management to ensure the company is well-positioned to navigate potential economic headwinds and emerging market challenges. I want to thank everyone for joining the call, and we'll take a few questions.

We do have one first question here. What's your expectation for the remainder of the year with respect to lumber demand?

I will answer this one. So, for the outlook, as mentioned, we're only forecasting a modest price increase for the remainder of the year, and this is in line with third-party forecasters such as FEA or Rising.

However, things could shift quickly with all the current geopolitical uncertainty. Since the start of the conflict, long-term mortgage rates have moved above 6%, and gas prices have risen, reflecting current economic conditions that continue to shape consumer sentiment.

However, housing activity saw an increase in March, and we believe the long-term fundamentals supporting wood product demand remain positive. We do have another question here on the shop line.

With the completion of the Chapleau large log line, have you seen any meaningful increase in production volume or quality of output? When can we expect to see this reflected in the financial results?

I will answer this question. In Q1, we hit our target on lumber recovery, and we're still in ramp-up mode for production with the new saw line.

All performance testing was passed at the end of the quarter for the line. Production, as I mentioned earlier, is currently in the range of 90% plus of the expected target.

We are currently finalizing optimization and integration with other equipment along the production process, including the log and feed, and the sawmill stacker output. We expect this integration to be completed in Q2.

We're also seeing better quality lumber going through the planner in terms of trim loss production and grade improvement coming from the wood produced from the new line. We're pleased to report that we expect the project to be under cost overall.

We do have another question here. Is there an opportunity to sell more product in Canada material?

Or should investors expect the majority of sales to remain in the United States? Ability to pass on tariff costs to U.S.

customers improved relative to Q4 2025. I will answer that question.

So some time ago, before the tariff ramp-up to 35% plus, we started to shift some of our contract sales from the United States to Canada. So our intention is to continue to accelerate that change going forward because there are savings for the company if we focus on the right grade, the right program in Canada versus the United States.

In addition, with the recent mill closure from our competitor in Ontario that was just announced a couple of days ago, it creates another opportunity for us to even foster faster or accelerate our strategy to sell more in Canada. And we're working right now with some of those customers to increase the volume.

We do have another question. Can you speak to your expectations for input cost increases related to the inflationary pressure that we're seeing with energy prices?

I will let Michel, our President, answer the question.

Thank you, Joel. Yes.

So, as you know, energy-related inflation is certainly having an impact on our cost structure. Fortunately, in our forestry operation, the fuel is a significant input from these operations.

But as you are also aware, Q1 is our significant harvesting season, where we bring in our logs to our mills. So as such, we should be minimally impacted by freight cost increases for the remaining 2026.

But this could translate into higher delivered wood cost over time if things don't change in the near future. I spoke about forestry, but just a word on the lumber side.

So while some of these cost pressures can be reflected in market pricing and are ultimately absorbed across the value chain, the extent of that recovery depends on the overall market condition and also the demand.

We do have another question here on liquidity. We've seen significant strain on the company's liquidity position over the past few quarters.

Can you speak to your ability to manage cash during this down cycle market if the down cycle market continues? I will let Peter, our CFO, answer the question.

Good question. So we go through a couple of items that we've been exposed to that have resulted in this liquidity issue.

So yes, we have had liquidity pressure both from market conditions and our seasonal working capital requirements, particularly in Q1, which is typical year-over-year in terms of inventory build. In addition, yes, we do see lumber inventories that are also higher year-over-year, which have weighed on our near-term liquidity, but this is expected to support stronger cash generation as these volumes are sold in the coming quarters.

In addition, both Joel and I talked about in this call, we worked with the federal government. So we did secure a $30 million loan with BDC through our banking partners.

In addition to this, we're working on various programs with various levels of the government, primarily provincial, for an additional $10 million. And as we discussed, we have, and we continue to look at all of our capital expenditures, and we try to remain disciplined from a cash management perspective.

When we put this all together, we believe we're well positioned to manage through this down cycle.

We do have another question. As 80% of the company's business is with the U.S., can you speak to any new U.S.-Canada relationship development in the near term?

I will let Michel, our President, answer the question.

Thanks, Joel. I would say what is encouraging is that we can hear the Prime Minister of Canada talking about the lumber industry as a priority for his government.

And we can also see that there are always efforts, ongoing efforts, to engage with the U.S. But that said, there's limited traction at this stage, and the timing will likely depend on the U.S.

There is also a possibility that softwood lumber becomes part of a broader discussion around the CUSMA review, although that process itself may extend over time rather than being resolved on July 1, 2026, the date that's been advanced. But from the industry perspective, there is a clear view that any agreement needs to be the right one.

So what we mentioned to the government many times is that no deal is better than a bad deal. And that key element, such as the overall tariff burden, including the Section 232 that we talked about before, will need to be addressed.

It's going to be an important element of the negotiation. So again, while the discussions are ongoing and efforts are being made on multiple fronts, we would remain cautious in terms of near-term expectations for a resolution.

We do have one more question. There is some indication that U.S.

duty could decrease from around 35% to 25% by October 2026. How would such a change impact the forest industry in your view?

I will let Michel, our President, answer the question.

Sure, a reduction in U.S. duties from 35% to 25%, it will help.

It will certainly be a step in the right direction and will help ease some of the pressure on Canadian producers. That said, even at 25%, duties would remain elevated if we compare to historical standards.

And that will continue to weigh on margins and also our competitiveness. I would add again that the 10% Section 32 tariffs further increase the overall burden, which continues to impact the industry.

Ultimately, the impact will also depend on broader market conditions, including U.S. housing demand and lumber pricing.

So we also have a question that I see if the tariffs could be passed to the customers. But with what we see, if we don't see any improvement in the U.S.

housing demand, and considering also the high interest rate, as Joel mentioned earlier. So we don't see how these duties could be absorbed by the customers.

So again, from our perspective, while a reduction is positive, it does not change the need for more stable and predictable long-term trade.

We don't have any more questions. So that concludes our call for today.

I would like to thank everyone for your participation in our Q1 call. Thank you very much.

Have a good day.