Conifex Timber Inc. reported results for the 1Q ended March 31, 2022. EBITDA from continuing operations was $20.1 million for the quarter compared to EBITDA of $9.7 million in the 1Q 2021. Net income was $11.4 million or $0.28 per share for the year versus $4.5 million or $0.10 per share in the year-earlier quarter. The results reflect higher lumber prices, partially offset by reduced shipments reflecting ongoing transportation challenges. 1Q 2022 sales were $52.6 million compared to $ 39.9 million in the 1Q 2021.
Lumber Operations
North American lumber market prices rose steadily in the 1Q 2022. Canadian dollar denominated benchmark Western Spruce/Pine/Fir (“WSPF”) prices, which averaged $1,631 in the 1Q 2022, increased by 75% or $700 from the previous quarter and by 31% or $387 from the 1Q 20211. The market price increase was fueled by steady demand from repair and remodelling activities, strong new home construction activity in the US and continuing industry supply chain challenges driven by rail and truck service disruptions. US housing starts on a seasonally adjusted annual basis remained steady, averaging 1,683,000 in the 1Q 2022, up 2% from the previous quarter and up 5% from the first quarter of 20212.
Revenues from lumber products were $61.0 million in the 1Q 2022 representing an increase of 24% from the previous quarter and 51% from the 1Q 2021. Compared to the previous quarter, higher mill net realizations on stronger lumber market prices offset the lower shipment volumes. The revenue increase in the current quarter over the same period in the prior year was largely the result of both higher benchmark lumber prices and increased lumber shipments.
Outlook
“We expect lumber prices to remain elevated through 2022, despite recent lumber market price volatility in the past month, supported by steady demand from US housing starts as home demand continues to outpace supply despite recent mortgage rate hikes. At our Mackenzie sawmill, we expect to see an increase in lumber production over the 1Q 2022, with the expectation of achieving annualized operating rates in excess of 90% for the remainder of the year. Our Mackenzie power plant is forecasted to operate at full capacity and continue to generate a steady and diversified source of cash flow, subject to the “turn down” notice received from BC Hydro for the latter half of the 2Q 2022,” the Company says in the press release.
Conifex and its subsidiaries' primary business currently includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value added lumber finishing and distribution.
