GreenFirst Announces 2021 Third Quarter Results

Canada NewsWire

TORONTO, Nov. 24, 2021

TORONTO, Nov. 24, 2021 /CNW/ - GreenFirst Forest Products Inc. (TSXV: GFP) ("GreenFirst" or the "Company") filed its unaudited interim financial statements for the quarter and the nine month period ended September 25, 2021 and the related management discussion and analysis, both of which are available under GreenFirst's profile on SEDAR at www.sedar.com. All amounts are in thousands of Canadian dollars unless indicated otherwise.

Third Quarter Highlights

   -- On August 28, 2021, completed the acquisition of sawmill and newsprint 
      assets from certain Canadian subsidiaries of Rayonier Advanced Materials 
      Inc. in Ontario and Quebec. 
   -- The mills continue to operate as 'business as usual' as Management 
      focuses on setting up its back-office functions in North Bay and Toronto. 
   -- Q3 results includes only 4 weeks of operating results for the newly 
      acquired operations. 
   -- Q3 2021 reported a negative Adjusted EBITDA of $4,736 after adjusting for 
      acquisition related expenses. 
   -- Q3 2021 net loss of $13,486 ($0.16 loss per share) includes the expensing 
      of transaction costs. 
   -- Lumber markets have rebounded in September and October from the low 
      prices in August. 

"After closing our purchase transaction on August 28(th) , we immediately turned our attention to improving operational efficiency and yields. We have been very pleased with the efforts of our team," said Rick Doman, CEO of GreenFirst. "We look forward to continuing our efforts in improving operations and reducing manufacturing costs. Our goal is to build a global forest company with a focus on sustainable forestry operations."

Q3 2021 Financial Highlights

   -- For the period ended September 25, 2021, the Company operated its newly 
      acquired assets for only four weeks. Inventory and some other 
      identifiable assets were recognized at their fair values upon 
      acquisition. The short period of operations, together with the opening 
      inventory recognized at fair value, means results for this period are of 
      limited value in extrapolating future quarterly and annual results. 

Select Financial Information

                    Three months ended            Nine months ended 
                    September 25,  September 30,  September 25,  September 30, 
                    2021           2020           2021           2020 
                    $              $              $              $ 
Net sales                 $28,928             $-        $28,928             $- 
Expenses 
 Manufacturing and 
  production             (31,082)              -       (31,082) 
 Selling, general 
  and 
  administrative          (1,772)          (776)        (3,476)        (1,168) 
 Duties                   (1,790)              -        (1,790) 
 Other operating 
  expenses, net             (694)           (28)          (715)             20 
 Operating loss 
  (1)                     (6,410)          (804)        (8,135)        (1,148) 
Transaction costs         (5,606)              -        (7,668)              - 
Interest expenses         (1,480)              -        (1,658)              - 
Other income 
 (expense)                     10            450          (111)            426 
Net loss for the 
 period                  (13,486)          (354)       (17,572)          (722) 
Other 
 comprehensive 
 (loss) income              (784)          (287)          (899)            305 
Total 
 comprehensive 
 loss for the 
 period                 ($14,270)         ($641)      ($18,471)         ($417) 
Basic and diluted 
 loss per share           ($0.16)        ($0.02)        ($0.41)        ($0.03) 
Adjusted EBITDA(1) 
Net loss for the 
 period                 ($13,486) 
Add back 
Interest expenses           1,480 
Depreciation and 
 amortization               1,666 
EBITDA(1)                (10,340) 
Transaction costs           5,606 
Adjusted EBITDA(1)       ($4,736) 
1 These Non-GAAP Measures do not have any standardized 
 meaning prescribed by IFRS and is therefore unlikely 
 to be comparable to similar measures presented by 
 other issuers. (See section on Non-GAAP Measures) 
   -- Net sales for four weeks ended September 25, 2021 were $28,928 on lumber 
      shipments of 30 MMfbm, with an additional 14 MMfbm in-transit to 
      customers and not recognized in revenue. 
   -- Manufacturing and production costs for the four weeks were $31,082 
      reflecting inventory shipped at fair value. 
   -- Selling, general and administration includes both pre and post 
      acquisition expenses for the quarter. 
   -- Transaction costs of $5,606 for the quarter ended September 25, 2021, 
      relate to professional fees associated with the acquisition and 
      non-capitalized financing related expenses. 
   -- The Company's softwood lumber sales to US customer are subject to 
      countervailing and anti-dumping duties as determined by the US Department 
      of Commerce. Duties expensed for the first 4 weeks of operations were 
      $1,790. The Company is initially subject to 14.19% countervailing duties 
      and 6.04% anti-dumping duties which it is challenging via a Change in 
      Circumstances Review. At the end of November, it's expected that 
      countervailing rates will be 6.27% and anti-dumping rates will be 12.05%. 
      This is consistent with the US Commerce Department's preliminary 
      determination announced in May 2021. 
   -- At September 25, 2021, the Company had total liquidity of $64,810 
      comprised of $33,778 cash on hand and $31,032, net of $8,491 open letters 
      of credit, available under its $65 million revolving ABL facility. The 
      facility was undrawn at quarter end except for the open letters of credit 
      which reduced availability. The amount available to the Company under the 
      ABL at quarter end was lower than what is expected in future periods 
      because the Company had no accounts receivable transferred upon closing 
      the acquisition. Accounts receivable balances will contribute 
      significantly to the amount available under the ABL in the future. 
   -- Subsequent to September 25, 2021, GreenFirst made a commitment to invest 
      in Boreal Carbon Corporation ("Boreal"), a company that seeks to invest 
      in and manage a portfolio of carbon credit projects through sustainable 
      forest management. GreenFirst will acquire shares of Boreal representing 
      approximately 6.1% of the outstanding securities of Boreal for cash 
      consideration of $500 thousand. Two directors of GreenFirst are also 
      directors and shareholders of Boreal. GreenFirst has applied to the TSX 
      Venture Exchange for approval of the transaction. 

"The Rayonier asset acquisition positions GreenFirst as one of the leading Canadian lumber producers in Eastern Canada. Rarely, do you get an opportunity to build a world class organization with its foundation based upon the ESG principles", said Paul Rivett, Chairman of GreenFirst. "We intend to invest capital in the operations of GreenFirst as we build sustainably for scale and look for accretive acquisition partnerships and opportunities in the future."

GreenFirst will provide a presentation on its Q3 2021 results at its Annual and Special Meeting for shareholders to be held December 2, 2021 (the "Meeting").

GreenFirst wishes to advise shareholders that it is amending the proposed by-law that will be adopted if shareholders approve the proposed continuance of the Company into Ontario at the Meeting. The last sentence of Section 3.05(b) will be deleted in its entirety to remove the prohibition in the Advance Notice provisions of a new notice period in the event of a postponed or adjourned meeting.

About GreenFirst

GreenFirst is a forest-first business, focused on sustainable forest management and lumber production. We believe that responsible forest practices, coupled with the long-term green advantage of lumber, provide GreenFirst with significant cyclical and secular advantages in building products. GreenFirst has seven Sawmills in Ontario and Quebec and one Paper Mill in Ontario. GreenFirst's long-term vision is to be an environmental leader in the global forestry industry.

For more information, please visit: www.greenfirst.ca.

Forward Looking Information

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact are forward-looking statements. Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend", "estimate" or the negative of these terms and similar expressions. Forward-looking statements are based on certain assumptions and, while GreenFirst considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. In addition, forward-looking statements necessarily involve known and unknown risks, including those set out in GreenFirst's public disclosure record filed under its profile on www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. GreenFirst disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.