Conifex Timber Q1 2026 Earnings Report

Conifex Timber EPS Results

• Actual EPS: -C$0.23
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Conifex Timber Revenue Results

• Actual Revenue: $21.77 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Conifex Timber Announcement Details

• Quarter: Q1 2026
• Date: 5/15/2026
• Time: Before Market Opens
• Conference Call Date: Friday, May 15, 2026
• Conference Call Time: 12:00PM ET

Conifex Timber (TSE:CFF) Inc is a Canada based forestry company. It operates through two segments: Lumber and Bioenergy. The main activities of the lumbar segment include timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value-added lumber finishing. The firm's primary activities of the bioenergy segment are the generation of electrical power and the development of other opportunities in bioenergy and bioproducts which are complementary to the company's harvesting and manufacturing operations. The firm's main activities areas are the United States, Chinese, Canadian and Japanese markets. Most of the revenues are generated from the lumber in the United States of America.

Conifex Timber Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Conifex posted a Q1 2026 net loss of CAD 9.4 million and an EBITDA loss of CAD 7.7 million, though both were better than the prior quarter. Management said the first half of 2026 is expected to remain pressured by curtailments and single-shift operations.
• Neutral Sentiment: Lumber production was only 21.7 million board feet, or about 36% of capacity. The company expects to rebuild log inventories when summer logging resumes and move toward consistent two-shift operations in the closing months of 2026.
• Positive Sentiment: Management said a return to two shifts, combined with lower unit costs and potentially more modest duty deposit rates later in the year, should allow the business to become EBITDA positive in late 2026. They also highlighted strong long-term SPF demand fundamentals and reduced Canadian supply.
• Negative Sentiment: Conifex warned of a likely non-cash export duty expense of about CAD 7.8 million plus interest of roughly CAD 1.0 million later this year, tied to the U.S. Commerce Department’s preliminary 2024 softwood lumber duty review. The preliminary rates were set at 10.66% anti-dumping and 14.17% countervailing duty.
• Positive Sentiment: The company said it is pursuing government funding and working with existing lenders to secure additional liquidity, fund higher log inventories, and finance quick-payback capital projects. Management believes its Mackenzie mill could move toward the bottom half of the SPF cost curve over time due to low stumpage and favorable log supply.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the Conifex Timber Inc First Quarter 2026 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star, then zero. I would now like to turn the conference over to Ken Shields, CEO. Please go ahead.

[Ken Shields, CEO at Conifex Timber Inc]

Well, thank you, and good morning, everyone, and welcome to this call covering the Conifex results for Q1 of 2026. As mentioned, I'm the Chairman and CEO of Conifex, and I'm pleased to be joined today by our CFO, Trevor Pruden, and our President, Andrew McLellan. Let's deal quickly with the housekeeping item. We will be making forward-looking statements and references to non-IFRS measures and therefore call your attention to the warning statement set out on the first two pages of the MD&A materials that we released this morning. On our most recent call with you in late March, we made the point that we viewed 2026 as a transition year for Conifex. We expected curtailments and single shift operations would produce EBITDA losses for us in the first half of 2026.

[Ken Shields, CEO at Conifex Timber Inc]

We also disclosed our intention to do everything in our power to achieve steady state two-shift operations and to generate positive EBITDA prior to the end of 2026. As a result of curtailments in our lumber and power business, we incurred a net loss of CAD 9.4 million or CAD 0.23 per share in Q1. That compares to a higher net loss of CAD 11.4 million in the preceding quarter. However, it trails the year earlier net income of CAD 0.02 a share that we managed to report. Our EBITDA loss in Q1 was CAD 7.7 million, an improvement over the Q4 loss of CAD 12.6 million, but nowhere near the positive EBITDA of CAD 4.9 million we reported in Q1 of 2025.

[Ken Shields, CEO at Conifex Timber Inc]

Lumber production for the most recent quarter of 21.7 million board feet was equivalent to 36% of capacity. When summer logging resumes, we expect to rebuild log inventories to a level that enables us to achieve a consistent two-shift operation at our Mackenzie sawmill complex and power plant. We expect this to occur during the closing months of 2026. Based on analyst consensus estimates for SPF prices in 2026, we do not expect to be EBITDA positive while we're operating on a single shift. However, with the lower unit cost associated with spreading our fixed harvesting and manufacturing costs over a larger production base, coupled with the expectation that duty deposit rates will be more modest later this year, we expect our two-shift operation will be EBITDA positive in the closing months of the year.

[Ken Shields, CEO at Conifex Timber Inc]

I want to talk about a one-time earning charge that'll be showing up later this year, and it relates to the fact that on April 9th, the U.S. Department of Commerce released its preliminary determination under its seventh annual review, which covers 2024 lumber export to the U.S. from Canada. Our preliminary rates are set at 10.66% for anti-dumping and 14.17% for countervailing duty versus the prevailing rates that are higher than that today. During 2024, our export shipments were assessed at a much lower rate of just slightly more than 10% on a combined basis.

[Ken Shields, CEO at Conifex Timber Inc]

Because of the earlier underpayments, if the interim rates remain in effect towards the end of this year, we will record a likely non-cash export expense of around $5.7 million or CAD 7.8 million, together with accrued interest of approximately $0.8 million or just over CAD 1 million. Expect that to show up at the time the final duty deposit rates are set. All of us at Conifex greatly appreciate the support our two lumber business lenders, PenderFund and the Business Development Bank of Canada, as well as the support our power plant lender, Fierra, have provided us. Their combined with support has enabled us to overcome liquidity challenges flowing from the punishing duty and tariff impositions on lumber exports to the U.S.

[Ken Shields, CEO at Conifex Timber Inc]

Over the past several months, we've learned more about the details on eligibility and funding timelines for other government programs, some of which appear to have been specifically designed to help tariff-impacted export-dependent companies like Conifex. The intention of these programs is to fund operational cash flow deficits as well as facility upgrades to reduce costs and support the production of value-added lumber products. Part of the study and analysis of financial professionals that the government funding agencies undertake includes an assessment of the competitive position and economic sustainability of various Canadian sawmill complexes. It is well known that log costs generally represent 2/3 of the total costs of producing lumber, and therefore log costs are the single most important determinant of mid- and long-term competitiveness.

[Ken Shields, CEO at Conifex Timber Inc]

Since we operate in a timber supply area where the annual sawlog harvest greatly exceeds local sawlog consumption, we have access to plentiful supplies of quality sawlogs, and they're available at affordable costs. With respect to our conversion costs, over the next few years, we intend to complete several high-return, rapid-payback capital projects designed to improve sawmill reliability and boost our lumber finishing capacity. We're satisfied that our cost structures, coupled with the revenue generation enhancements we intend to put in place at our Mackenzie site, position our mill to be in the bottom half of the SPF cost curve compared to all other Canadian producers.

[Ken Shields, CEO at Conifex Timber Inc]

Our immediate priority is to secure additional capital to ensure we maintain robust sawlog inventories sufficient to sustain two-shift operations as well as to fund quick payback capital projects, both of which move us to a lower and more enviable position on the North American lumber industry cost curve. We continue to believe that the mid- and long-term demand fundamentals for SPF remain strong and will contribute to an improved pricing environment, and our beliefs are reinforced by the contractions in Canadian supply that have occurred over the past three years. We're presently involved in negotiations determining how the new credit facilities we expect to receive will be integrated with the credit facilities presently in place with our lumber power plant lender. Summing up, first a cautionary note.

[Ken Shields, CEO at Conifex Timber Inc]

Although we are encouraged by the positive discussions and progress we've had to date with the financial specialists representing government funding organizations, there is no guarantee that we will be successful obtaining funding. For this reason, we plan to continue working collaboratively with our existing lenders to obtain additional flexibility under our existing credit facilities, including potentially amending certain repayment terms and amortization periods. My final point, and the more important point, is that I sense that some of the options we have to create value are underappreciated by many of you on the line. We believe that we have numerous drivers that will assist us in generating incremental cash flow over the next few years, and for this reason, we believe the economic sustainability of a two-shift operation at our Mackenzie site is sufficiently compelling for Conifex to receive favorable consideration from government funding agencies.

[Ken Shields, CEO at Conifex Timber Inc]

Thank you for your interest in our company. Andrew, Trevor, and I look forward to responding to any questions analysts and shareholders may have. We'll turn it back to the operator.

[Operator]

Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Christian Reiter with Raymond James. Please go ahead.

[Christian Reiter, Associate Analyst at Raymond James]

Hey, Ken. It's Christian here. I was just wondering where you see the BC cost curve right now and what sort of relief do you expect when AR-7 takes effect in the back half of the year?

[Ken Shields, CEO at Conifex Timber Inc]

Okay. Good questions, Christian. I think a little-known fact is that stumpage rates in the interior region of BC have fallen a great deal. In Q1 of 2026, the interior BC stumpage rate was CAD 2.68 per cubic meter. I believe the Alberta stumpage rate was about twice that, and I believe that stumpage rates in Ontario and Quebec were 3x to 4x the BC level in Q1. What we found in our area is that we are paying very low stumpage rates. It looks like about 55% of the harvests in BC that are CAD 0.25 stumpage under present conditions.

[Ken Shields, CEO at Conifex Timber Inc]

The other thing that's happened in our operating area is that we believe the sustainable log supply in the northern Prince George, southern Mackenzie region is about 10 million cubic meters, and the demand is only 8 million cubic meters. We think that the supply-demand balance in sawlogs has enabled BC companies to migrate to a much lower position on the industry cost curve. Your analysis of Canfor's consolidated North American lumber results, which includes their remaining mills in BC, but some of the mills that have closed by Canfor and West Fraser lately were clearly high-cost mills that are no longer upping the average costs incurred by BC mills. We think that our analysis indicates that we have a competitive advantage over Quebec and Ontario mills.

[Ken Shields, CEO at Conifex Timber Inc]

As you're probably aware, an Ontario company recently reported that its EBITDA loss per thousand board feet in Q1 was something like CAD 186 per thousand board feet. BC mills that operated on a two-shift basis in Q1 would not have incurred operating losses at that level. That's probably more information than you wanted, Christian, but that's our view of it.

[Christian Reiter, Associate Analyst at Raymond James]

I appreciate it. That's great color. Second question I have here is, what specific financial and market conditions would you need to see before considering ramping to two shifts and increasing your mill utilization?

[Ken Shields, CEO at Conifex Timber Inc]

Okay. The big variable there, Christian, is the availability of funding to support the log inventory build-up. You know, we've got over time, people in BC, I think, Christian, will be aware that they have some close-in stands that have a low delivered log cost, and then they've got some remote stands in more difficult terrain that would have higher log costs. We think that lumber production in BC is gonna be quite sensitive to price changes because if there is some weakness in prices, some of the operators that have high-cost stands, those stands will not be economic. We could see the downtime adjust if there's any material further price weakness in SPF.

[Christian Reiter, Associate Analyst at Raymond James]

Perfect. That's all I had. Thank you so much.

[Operator]

Once again, if you have a question, please press star then one. Since there are no further questions, this concludes the question-and-answer session. I would like to turn the conference back over to Ken Shields for any closing remarks. Please go ahead.

[Ken Shields, CEO at Conifex Timber Inc]

Okay. Well, for those of you on the line, thank you for your interest in Conifex. All of us are working hard to get rid of the red ink around here and be on a profitable trajectory. Thank you.

[Operator]

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Participants

Executives

• Ken Shields, CEO

Analysts

• Christian Reiter, Associate Analyst at Raymond James