Conifex Timber Inc. (CFF) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the 2023 Annual General Meeting Call. I would now like to turn the meeting over to Mr. Ken Shields. Please go ahead.

Well, thank you very much, Chris, and good afternoon, everyone. I'm Ken Shields, I'm the Chairman and CEO of Conifex. I thought that we would cover off our meeting materials and then following the completion of the meeting that I would provide you an update on our operations and prospects. So I will now call the shareholders meeting to order. Most of our shareholders joining us today are doing so by teleconference rather than attending in person. And I'd like to thank all of you who have called in today. I appoint Trevor Pruden, our Chief Financial Officer as Secretary; Gary Gill of Sangra Moller as Recording Secretary; and Loretta Pataki of Computershare Investor Services as scrutineer. If anyone hasn't registered with the scrutineer, please do so now. The next item is the notice of meeting. I have a copy of the notice calling this meeting and an affidavit of mailing from Computershare Trust Company. The notice of the meeting has been circulated, so I will, therefore, dispense with reading of the notice calling this meeting. In accordance with the Canada Business Corporations Act, the Notice of Meeting and record date was also published in the Globe Mail on May 1 of this year. Turning to the quorum. I'm very pleased to report that the scrutineer advises me that there are 31 shareholders present in person or by proxy, holding 18,98,028 shares, which represents approximately 45.5% of our 39.75 million outstanding shares as of the record date. In accordance with the bylaws, I declare that a quorum of shareholders is represented and this meeting is regularly and duly called and constituted and ready for the transaction of business. Turning to the business. I now propose to deal with 3 main items. The first one is the financial statements. The first item, and as I said earlier, is the presentation of the financial statements for the financial year ended December 31, 2022, and the accompanying auditor's report. Copies of these statements have been mailed to all shareholders entitled to receive them. The next item is the election of directors. Ken Shields, Dave Roberts, Michael Costello, Janine North and Charlie Miller, are prepared to stand for election as directors and are being nominated for election. Each director will serve until the next Annual General Meeting of Shareholders, unless a director resigns or until the director ceases to hold office. Pursuant to the advanced notice provisions of our bylaws, there can be no further nominations put forward at this time. Accordingly, I declare the nominations closed. I now make a motion for the election of the 5 nominees as directors on the following terms. Resolve that each of the nominees be and are hereby elected directors of Conifex to hold office until the next AGM unless the director's office is earlier vacated in accordance with the articles or bylaws or the CBCA Act or unless he or she becomes disqualified to act as a director. All in favor signify by raising your hand. I declare this motion carried. The third item of business is the appointment and compensation of the auditor. The Board wishes to reappoint PricewaterhouseCoopers for the ensuing year, and such firm has consented to its reappointment. I now make a motion that PricewaterhouseCoopers be appointed the auditor of Conifex for the ensuing year and that the Board be granted their authorization to fix the remuneration. All in favor, signify by raising your hand. I declare the motion carried. This brings us to the termination of the meeting. Since there is nothing else on the agenda for today's meeting. I'll now make a motion for the meeting to be terminated. All present and in favor signify by raising your hand. I declare the motion carried. The meeting is terminated. Thank you for your attendance, and I will now please provide a brief update on our operations and outlook. As you all know, we are in the June 30 quarter, which is the second quarter of our year. And based on everything we see, the current quarter is going to represent the low point in the current lumber market downturn. Our results that we will be reporting at the end of the quarter were held back by 4 weeks of downtime at our sawmill complex and a 3-week maintenance shutdown at our power plant. Our power plant maintenance shutdown standard by up to 1 week to complete additional work necessary to ensure safe and reliable operations at the facility through the balance of the current and following year. Maintaining a conservative debt-to-equity ratio and robust liquidity during this period of negative cash flow generation has presented challenges to our operating and finance teams. Our Board of Directors and I would like to thank our operating and finance teams for how well they overcame these challenges and positioning us in a viable ongoing financial position. Turning to the second half of the current year, we expect much improved results as we progress through 2023. Lumber shipments and production will both be higher in the second half of the year, power deliveries to BC Hydro will also be higher compared to what we achieved in the first half of 2023. SPF lumber prices should also be higher based on much tighter availability from BC and certain other Canadian mills. Our mill net selling price realizations will improve further in August when slightly lower duty rates are intended to kick in and take effect. Looking forward, our log quality should improve as we transition to a greener log diet, while we expect log costs will be more affordable as a result of recent changes to stumpage charge impositions in BC. So we've got a much brighter outlook for the remainder of the year. And on behalf of our Board and leadership team, I look forward to updating all shareholders on our progress. As we host our next analyst call, which is scheduled for August 9, 2023. So that concludes the operational and financial review that I wanted to update you on. And we are now open for questions from shareholders who are present here at the meeting in Vancouver. There are no questions from those present here in Vancouver. So once again, thank you for your attendance at the meeting. And Chris, our operator, our call is terminated. Thank you.

Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.