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Introduction & Market Context
GreenFirst Forest Products (TSX:GFP) presented its Q1 2025 results on May 14, 2025, highlighting a return to profitability despite ongoing challenges in the lumber industry. The company, currently trading at CAD $4.12 per share (up 3% on presentation day), operates in a market characterized by cautious buyer sentiment and trade uncertainties.
The North American lumber market continues to be influenced by housing construction trends, with GreenFirst’s presentation featuring forecasts showing U.S. housing starts projected to average 1.53 million units through 2028, above the historical average of 1.31 million.
As shown in the following chart of U.S. housing starts forecast:
Quarterly Performance Highlights
GreenFirst reported a net income of $0.9 million for Q1 2025, a significant improvement from the $26.6 million loss in Q4 2024. The company achieved an EBITDA of $5.1 million, compared to a negative $913,000 in the previous quarter.
The average realized lumber selling price increased to $729 per thousand board feet (mfbm) in Q1 2025, with cost of sales at $688/mfbm. This pricing improvement helped offset some challenges, including reduced sales volume of 90,034 mfbm, down from 93,489 mfbm in Q4 2024 and 107,217 mfbm in Q1 2024.
The following slide summarizes GreenFirst’s key financial metrics for the quarter:
CEO Joel Fournier emphasized the company’s cautious approach to cash management during the presentation, noting the completion of harvesting activities while maintaining a strong balance sheet. The company also highlighted that SG&A expenses continue to align with targets announced in April 2024.
Detailed Financial Analysis
GreenFirst’s financial comparison reveals the trajectory of key metrics across recent quarters. While net sales remained relatively stable at $71.8 million (compared to $69.9 million in Q4 2024), the company achieved significant cost reductions in its cost of sales, which decreased to $62.1 million from $68.5 million in the previous quarter.
The comprehensive financial comparison is illustrated in this table:
The company’s net income improvement from Q4 2024 to Q1 2025 can be attributed to several factors, as shown in the following waterfall chart:
Cash flow remains a concern, with the company reporting a total cash decrease of $25.3 million for the quarter. This was primarily driven by a $33.1 million increase in inventory, partially offset by positive changes in accounts payable and other items. The cash flow breakdown reveals:
Forward-Looking Statements & Challenges
GreenFirst faces significant challenges in the coming quarters, particularly related to U.S.-Canada trade relations. The presentation highlighted the Section 232 investigation by the U.S. Department of Commerce, with findings expected in November 2025. More immediately concerning is the preliminary result of the U.S. DoC’s sixth administrative review, which announced an increase in the combined duties rate from 14.4% to 34.45% starting in late Q3 2025.
During the earnings call, management expressed hope for a resolution to the U.S.-Canada lumber trade conflict. Michel Lesar, President, noted that "the forest industry in Canada has already paid around more than $7 billion US in duties since 2017."
Inventory management represents another challenge, with higher levels reported due to cautious buyer sentiment amid economic uncertainty. This inventory buildup contributed significantly to negative cash flow from operations during the quarter.
Despite these challenges, GreenFirst maintains its strategic vision to become one of the largest wood producers in Ontario and one of the top quartile lumber producers in North America. The company plans to achieve this through continuous improvement, strategic capital investment, and pursuing mergers and acquisitions.
Looking ahead, GreenFirst anticipates production costs to decrease during the summer months, which could positively impact future financial results. The company also plans to install a new production line, which may temporarily reduce sales volume but aims to improve long-term efficiency.
The stock currently trades at CAD $4.12, well above its 52-week low of CAD $2.58 but significantly below its 52-week high of CAD $8.79. According to the earnings call transcript, InvestingPro analysis suggests the stock appears undervalued based on its Fair Value estimate, though it has experienced a -42.86% return over the past year.
Full presentation:
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