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Conifex Reports Third Quarter 2023 Results

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Conifex Timber Reports Third Quarter 2023 Results

Conifex Timber Inc. has released its financial results for the third quarter ended September 30, 2023. The company reported a negative EBITDA of $6.7 million for the quarter, compared to positive EBITDA of $4.2 million in the same period last year. The results were impacted by recoveries of duty deposit overpayments, offset by inventory write-downs and the loss of a logging camp in a wildfire. Net loss for the quarter was $8.0 million, compared to net income of $0.9 million in the previous year. The decrease in net income reflects reduced operating earnings due to lower lumber prices.

Selected Financial Highlights

Revenue from lumber products was $27.4 million, representing a 38% increase from the previous quarter but a 30% decrease from the third quarter of 2022. Lumber production and shipments increased in the third quarter compared to the previous quarter, but decreased compared to the same period last year. The company's Power Plant sold 56.0 GWh of electricity, contributing revenues of $7.1 million. Selling, general, and administrative costs decreased compared to the previous quarter.

Outlook and Future Prospects

Conifex expects lumber prices to remain consistent for the remainder of 2023. The company anticipates higher lumber production and shipments in the closing quarter of the year. Looking ahead to 2024, Conifex agrees with analysts' estimates of improved benchmark lumber prices and expects an improved supply/demand balance for lumber producers. The company also expects benefits from transitioning to a greener log diet and lower stumpage charges. The Power Plant is forecasted to generate steady cash flow, and Conifex continues to prioritize funding sawmill upgrades and exploring high-performance computing business opportunities. In conclusion, Conifex Timber's third-quarter results reflect the challenges faced by the lumber industry due to lower prices. However, the company remains optimistic about future prospects and is focused on optimizing operations and exploring new opportunities.

Implications of Conifex Timber's Q3 2023 Results for New Businesses

Conifex Timber's third quarter 2023 results provide a stark snapshot of the challenges and opportunities new businesses in the lumber industry might face. The company's negative EBITDA and net loss underscore the risks of unpredictable factors like wildfires and fluctuating lumber prices. For new businesses, this volatility could be daunting, potentially leading to significant losses.

Revenue and Cost Considerations

However, Conifex's financial highlights offer some optimism. Despite a 30% year-on-year decrease, lumber product revenue increased by 38% from the previous quarter. This suggests that while the industry may be susceptible to downturns, there are also opportunities for recovery and growth. Moreover, the decrease in selling, general, and administrative costs could indicate potential areas for new businesses to streamline operations and cut costs.
Future Outlook and Opportunities
Conifex's outlook also offers valuable insights. The company's expectation of consistent lumber prices and higher production could signal stability for new entrants. Additionally, the company's transition to a greener log diet and exploration of high-performance computing business opportunities highlight the importance of innovation and sustainability in the industry's future. Thus, new businesses that can adapt to these trends may find themselves well-positioned to thrive in this challenging yet potentially rewarding industry.
Story First Published at: https://financialpost.com/globe-newswire/conifex-announces-third-quarter-2023-results
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