Conifex Timber (TSE:CFF) reported a narrower sequential loss for the first quarter of 2026, but management said the company remains in a transition year marked by curtailed operations, weak near-term profitability and ongoing efforts to secure additional capital.
Chairman and CEO Ken Shields said the company incurred a net loss of CAD 9.4 million, or CAD 0.23 per share, in the quarter. That compared with a net loss of CAD 11.4 million in the preceding quarter and net income of CAD 0.02 per share in the year-earlier period.
Shields said lumber production totaled 21.7 million board feet in the quarter, equal to 36% of capacity, as curtailments affected both the company’s lumber and power businesses.
Management Targets Two-Shift Operations by Year-End
Shields reiterated that Conifex views 2026 as a transition year. He said the company previously expected curtailments and single-shift operations to result in EBITDA losses in the first half of the year, while aiming to return to steady-state two-shift operations and positive EBITDA before the end of 2026.
“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,” Shields said, adding that the company expects this to occur during the closing months of 2026.
Based on analyst consensus estimates for SPF lumber prices in 2026, Shields said Conifex does not expect to be EBITDA-positive while operating on a single shift. However, he said a two-shift setup should lower unit costs by spreading fixed harvesting and manufacturing expenses over greater production, while more modest duty deposit rates later in the year could also support profitability.
U.S. Lumber Duties Expected to Drive One-Time Charge
Shields also discussed a potential one-time earnings charge tied to the U.S. Department of Commerce’s preliminary determination under its seventh annual review, covering 2024 Canadian lumber exports to the United States.
He said Conifex’s preliminary rates were set at 10.66% for anti-dumping duties and 14.17% for countervailing duties. During 2024, the company’s export shipments were assessed at a combined rate of just over 10%, leading to expected underpayments if the preliminary rates remain in effect.
As a result, Shields said Conifex expects to record a likely non-cash export expense of about $5.7 million, or CAD 7.8 million, plus accrued interest of approximately $0.8 million, or just over CAD 1 million, when final duty deposit rates are set.
Company Seeks Additional Funding
Conifex is working to secure additional capital to rebuild sawlog inventories, sustain two-shift operations and fund quick-payback capital projects, Shields said. He said the company appreciates support from its lumber business lenders, PenderFund and the Business Development Bank of Canada, as well as its power plant lender, Fierra.
Shields said Conifex has learned more in recent months about eligibility and funding timelines for government programs that appear designed to assist tariff-impacted, export-dependent companies. He said those programs are intended to fund operational cash flow deficits and facility upgrades aimed at reducing costs and supporting value-added lumber production.
However, Shields cautioned that there is “no guarantee” Conifex will obtain funding. He said the company will continue working with existing lenders to seek additional flexibility under current credit facilities, including potential amendments to repayment terms and amortization periods.
Log Costs and Competitiveness in British Columbia
During the question-and-answer portion of the call, Raymond James analyst Christian Reiter asked about the British Columbia cost curve and potential relief from the annual review of U.S. duties.
Shields said stumpage rates in the interior region of British Columbia have fallen sharply, citing a first-quarter rate of CAD 2.68 per cubic meter. He said he believed Alberta’s stumpage rate was about twice that level, while rates in Ontario and Quebec were three to four times the British Columbia level during the quarter.
Shields said Conifex operates in a timber supply area where the annual sawlog harvest exceeds local consumption, giving it access to plentiful and affordable sawlogs. He estimated the sustainable log supply in the northern Prince George and southern Mackenzie region at about 10 million cubic meters, compared with demand of approximately 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,” Shields said.
Asked what financial and market conditions would be required before increasing mill utilization, Shields said the key variable is funding for log inventory buildup. He also said lumber production in British Columbia could be sensitive to SPF price changes, because higher-cost stands may become uneconomic if prices weaken further.
Shields closed the call by saying management is focused on returning the company to profitability. “All of us are working hard to get rid of the red ink around here and be on a profitable trajectory,” he said.
About Conifex Timber (TSE:CFF)
Conifex Timber 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.
