TSE:CFX Canfor Pulp Products Q3 2023 Earnings Report C$0.70 -0.01 (-1.41%) As of 04/25/2025 11:39 AM Eastern Earnings HistoryForecast Canfor Pulp Products EPS ResultsActual EPS-C$0.55Consensus EPS -C$0.58Beat/MissBeat by +C$0.03One Year Ago EPSN/ACanfor Pulp Products Revenue ResultsActual Revenue$188.80 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ACanfor Pulp Products Announcement DetailsQuarterQ3 2023Date11/2/2023TimeN/AConference Call DateFriday, November 3, 2023Conference Call Time11:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckInterim ReportEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Canfor Pulp Products Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 3, 2023 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good morning. My name is Jenny, and I will be your conference operator today. Welcome to Canfor and Canfor Pulp's 3rd Quarter Analyst Call. All lines have been placed on mute to prevent any background noise. During this call, Canfor and Canfor Pulp's Chief Financial Officer will be referring to a slide presentation that is available in the Investor Relations section of the company's website. Operator00:00:26Also, the companies would like to point out that this call will include forward looking statements, so please refer to the press releases for the associated risks of such statements. I would now like to turn the meeting over to Mr. Don Cain, Canfor Corporation's President and Chief Executive Officer. Please go ahead, Mr. Kain. Speaker 100:00:47Thank you, operator, and good morning, everyone. Thank you for joining the Canfor and the Canfor Pulp Q3 2023 results conference call. I'm going to make a few comments before I turn things over to Kevin Edson, Canfor Pulp's President and CEO and Pat Elliott, Chief Financial Officer of Canfor Corporation and Canfor Pulp and our Senior Vice President of Sustainability. In addition, we are joined by Kevin Pankratz, Senior Vice President of Sales and Marketing. I'd like to begin by acknowledging the devastating wild Fire season in BC, Alberta and across Canada this summer. Speaker 100:01:22I want to thank the firefighters, the first responders, The military personnel and forestry contractors who worked tirelessly over the summer responding to record breaking wildfires. We are working with the provincial governments to assess the impact of the fires on the fiber supply, ensuring timely access to burnt fiber and discuss Any lessons learned. We appreciate the government's willingness to have these open and honest discussions. While we saw an improvement in our cost structure in British Columbia in the 3rd quarter, it remains a challenging jurisdiction as the fiber supply in the interior of British Columbia continues to be constrained Due to the impacts of the wildfires, pest infestations, government policy and land use decisions, these factors in combination with a lack of reliable access Economic fiber and weak market conditions are resulting in a very challenging near term outlook in British Columbia. While recognizing the significant current challenges, we remain committed to our strategy of having a smaller but stronger operating footprint in British Columbia. Speaker 100:02:26In September, we announced that we will build a new low cost highly efficient facility in Houston that will be globally competitive. This investment decision came after careful review of the economically available fiber supply in the region and after Stents of discussions with government and indigenous nations in the region. I had the opportunity to meet with many of our employees in Houston a few weeks ago. We certainly appreciate their patience and perseverance while we made the decision and they share our excitement to have a modern state of the art facility in their community. We are now working on a detailed project engineering and permitting requirements. Speaker 100:03:05While lumber prices are anticipated to remain under pressure in the short Due to affordability constraints and high interest rates, we do remain optimistic about the medium to longer term prospects of our industry. We continue to see the benefits of our diversification strategy through the Q3 with strong earnings generated in the U. S. South And solid earnings in Europe despite seasonal downtime. We are pleased with the ramp up of our DeRidder facility, which added a second shift in August And the progress of our other organic growth initiatives, including a rebuild of our Arkansas sawmill, 2nd greenfield in Alabama And organic growth in Sweden. Speaker 100:03:45We remain committed to our organic growth program with the investments further improving our global Our balance sheet strength will support continued reinvestment in our operations. And while we are prepared to remain patient until the right opportunities present themselves, we continue to assess various external growth initiatives as we look to further grow our lumber business globally. I will now turn it over to Kevin to provide an overview of Canfor Pulp. Speaker 200:04:17Thank you, Don, and good morning, everyone. Canfor Pulp had a challenging Q3 with continued weakness in global pulp Significant operational downtime weighing on our financial results. The Northwood pulp mill experienced the brunt of lost production due to a combination of The downtime related with the labor dispute at BC's ports, a planned maintenance shutdown late in the quarter and then the struggles to restart after both of these curtailments. In total, 3rd quarter production was reduced by approximately 65,000 tonnes with a further 30,000 tonnes will be lost in the 4th quarter. With regards to Northwood's planned maintenance shutdown, the key activity was a comprehensive inspection of recovery boiler number 1. Speaker 200:05:02We are pleased that the results confirmed our expectation that RV1 remains in stable condition, thus removing any concerns about the need to advance the rebuild any earlier than 2025. We are also pleased with recent market developments with the resumption of demand supporting price increases in Asia and announcements recently in North America and Europe. We would note that our reduced output in Q3 and expected impact in Q4, The anticipated lag between market mill net realizations will extend such that we do not expect to see the impact of these increases until early in the New Year. Previously, we announced the recapitalization program covering all three of our facilities, Northwood, Intercon and Specialty Paper. We remain committed to this program supported by cash generated from operations and existing liquidity. Speaker 200:05:55Though the market is improving, we are Still cautious about the outlook, so our early guidance on capital will be for another modest year in 2024. I'd like to take this moment to acknowledge and extend our appreciation to the employees at Northwood and InterCon and Specialty Paper for their continued efforts, Perseverance and commitment to safety as we navigate the current challenges facing our business. And with that, I will turn it over to Pat to provide an overview of our financial results. Speaker 300:06:25Thanks, Kevin, and good morning, everyone. The Canfor and Canfor Pulp 3rd quarter results were released yesterday afternoon. In my comments this morning, I'll speak to quarterly financial highlights, a summary of which is included in our overview slide presentation in the Investor Relations section of Canfor's website. Our lumber business generated an operating loss of $1,000,000 in the 3rd quarter, which included a $19,000,000 recovery of a previously recorded write down of inventory in And a net duty recovery of $43,000,000 While our construction in British Columbia improved slightly in the 3rd These results continue to reflect losses associated with our BC operations as a result of weak lumber pricing and a high cost operating environment. Notwithstanding these challenges, we continue to see the benefit of our diversification strategy with our U. Speaker 300:07:11S. Operations generating strong results in the 3rd quarter It's supported by stable unit margin and increased volume. Our European operations contributed cash earnings of approximately $31,000,000 in the quarter With slightly improved sales realization offset by seasonal summer down, our European operations have generated cash earnings of $135,000,000 to date 2023. Canfor Pulp generated an operating loss of $49,000,000 in the quarter, which included a $2,000,000 recovery of a previously recorded inventory write These results reflected weak global pulp markets and extensive downtime at Northland due to splint chain interruptions, Scheduled maintenance downtime and reliability issues upon restart, which weighed heavily on production and unit cost structure in the quarter. With production at Northwood stabilizing, we anticipate improved results in the 4th quarter, although our results will reflect the impact of unplanned downtime in October And an unfavorable timing lag in shipments versus orders. Speaker 300:08:13At the end of the Q3, Canfor Pulp had net debt of $81,000,000 $146,000,000 of available liquidity, of which $80,000,000 is restricted for use towards future reinvestment in Northwood's Not withstanding the current challenges facing our pulp business, we believe the longer term market fundamentals remain strong. In the short term, we have undertaken a series of measures to mitigate the financial impact of weak global market and persistent reliability issues. In 2023, we anticipate a capital spend of approximately $500,000,000 in the lumber segment and $70,000,000 for Canfor Pulp, including capitalized maintenance. We anticipate capital spend of $450,000,000 to $500,000,000 in the lumber segment in 2024, including remaining spend at Urbana and our Alabama Greenfield and various organic growth initiatives in the U. Speaker 400:09:04S. South and Fleet. Speaker 300:09:06For Canfor Pulp, we expect capital spending to be at or lower than 2023. In addition, we anticipate Canfor will continue to allocate a modest amount of capital to repurchase its share. And with that, Don, I'll turn it back to you. Speaker 100:09:19Thanks, Pat. So operator, we're okay now to go ahead with questions from analysts. Operator00:09:27Thank you. We will now take questions from financial analysts. Our first question comes from Hamir Patel from CIBC. Please ask your question. Speaker 500:10:03Hi, good morning. Don, your outlook you were pointing to European lumber prices coming under Some pressure in Q4. Has there been any change this year in the sort of share of your European lumber output that's exported to the U. S? Can you comment on how the returns for VIDA might compare between selling to the U. Speaker 500:10:27S. Versus selling within Europe? Speaker 100:10:31Yes, for sure. Maybe I'll let the first part, Kevin, maybe you can talk a little bit with Hamir in terms of the volumes coming into U. S. Compared to last First of all, yes. Speaker 600:10:41Hamir, like obviously, I would say it's a little bit off from last But overall, it's pretty consistent year over year in the markets that we serve. And because we do have a core programs that we support and there's Maybe a pivot of about 20% that we could allocate to markets that are maybe have better demand signals or stronger economics. But I'd say that in Q3 off a little bit into the U. S. And then the pickup on that volume was into other markets Such as the Middle East, North Africa markets and of course into the UK and then more into Japan. Speaker 600:11:19So just really leveraging the global Speaker 100:11:24Maybe just Hamir add to that. I mean, I think Kevin, I mean, just one thing For sure that we have in Sweden is we first of all, we're very specific on the products that we manufacture there for North America and there is very specific and customized products. But at the same time, we've got a lot of flexibility and a lot of options in other markets that in a lot of cases are more favorable from a return standpoint. So I think the key takeaway really in Europe or in North America is we've got lots of flexibility and we utilize it as we need to for customized use Yes, for the Speaker 300:11:55most part. Speaker 500:11:58Great. Thanks Don. That's helpful. And then just turning to the U. S. Speaker 500:12:02Market, Given some of the affordability headwinds facing consumers, what would be your view for 2024 for the R and R market in terms of Speaker 300:12:14volumes. Go ahead, Kobi. Speaker 600:12:15Yes. Hamir, like as we've said on previous calls, the R and R market has actually been quite resilient. And while we're not at the pace that we were at the first half of the year, we're still at more normalized growth kind of expectations in that Sort of like 2% to 3%. So for 2023, we'll be ahead of 2022. And 2024, we're guiding to So just a modest increases, not to some of the surges that we've seen in the past few years to your point because of some of the affordability and interest rate challenges. Speaker 600:12:48But The key drivers that are driving R and R are still there. The age of homes is a big driver that they look at. And of course, People staying in their homes, not selling as much and investing in their homes. So we do still think that that segment is going to be resilient through 2024. Speaker 500:13:07Fair enough. That's all I had. I'll turn it over. Thanks. Speaker 300:13:11Thanks, Operator00:13:16Thank you. Your next question is from Chetan Mamura from BMO Capital Markets. Please Speaker 400:13:25Thank you. Hey, just coming back on the pulp Capital expenditure, can you just remind me again how you guys are thinking about the multiyear program that you have? It sounds like It sounds like you guys seem to have pushed it back a little bit. Correct me if I'm wrong on that. And just sort of how you think about sequencing over the next few years. Speaker 200:13:50Ketan, are you referring to the pulp recapitalization? Speaker 400:13:55That is correct. Speaker 200:13:57So Ketan, when we made the announcement, what we were doing is indicating the level of reinvestment that we felt was needed in these facilities. We also indicated at that time that it would have to come from existing liquidity and the ability of our operations to generate cash. What we were concerned about was how our recovery boiler at Northwood was faring. And the feedback from the latest turnaround is it's actually in very solid condition. We did not see any material deterioration and therefore at this Point don't have a timeline on that, which allows us to have some more flexibility around the priorities on capitalization And matching that to our ability to generate cash. Speaker 200:14:40So it's a long winded way of getting back to I do believe that we're stretching out that capital Over a longer period of time to ensure that we protect the balance sheet as it is. Speaker 400:14:53Got it. Okay. No, that's very helpful. I'll jump back in the queue. Speaker 300:14:58Thanks, Keith. Operator00:15:02Thank you. Your next question is from Sean Steuart from TD Securities. Please ask your question. Speaker 700:15:09Thank you. Good morning, everyone. Good morning, Sean. Speaker 100:15:10Kevin, I Speaker 700:15:13Just want to follow-up on that last question with respect to the pulp CapEx plan. So beyond RB1 at Northwood, The rest of these initiatives that you had planned over a 4 to 5 year timeframe, This is all modular discrete spending initiatives across the portfolio that you can Toggle on timing, there's flexibility beyond RV1. Is that the right way to think about it? Speaker 200:15:44Absolutely, Sean, and the way I would look at it is, it's a general commitment to maintenance capital, is low on Strategic ROI and really should be viewed at recapitalizing the mills to get them back into the best condition they can be. And so the trade off on when you do that is what are the maintenance costs and what are the impacts on productivity between now and then. And so there are a multitude of smaller discrete projects that will be prioritized based on the risk and impact that they have And they'll be slotted based on available liquidity or cash to advance on them. Speaker 700:16:24Okay. That helps frame it for me. Second question for Pat. You had $48,000,000 of investments that you acquired this quarter. Can you give us any context on what that was? Speaker 300:16:41$48,000,000 of investments like in our On any cash flow. Speaker 600:16:45Sorry, Sean. Speaker 300:16:47Yes. Sean, I'm going to have to get back to you. Apologies for that. I'll get back to you. Okay. Speaker 300:16:52All Speaker 500:16:53right. That's all I had. Thanks, guys. Speaker 100:16:55Thanks, Operator00:16:59Sean. Thank you. Your next It's from Matthew McPherler from RBC Capital Markets. Please ask your question. Speaker 800:17:08Hi, good morning. Thanks for taking my questions. 1st, when you look across the markets, and this is kind of following Hamir's question, but do you see any risk of increased imports European lumber into North America given some of the softness in European demand, or does the combination of relatively low lumber prices in the U. S. And reduced supply into Europe from Russia and Belarus just not support that scenario. Speaker 300:17:33Go ahead, Kevin. Speaker 100:17:34Yes, sure. Speaker 600:17:34Yes, hi, Matthew. Yes, I think that the European producers are going to look at other markets and for sure U. S. Will be one of them. How much upside? Speaker 600:17:45It's going to be hard to really estimate, but there's going to be other markets that are going to support growth that are going to have comparable or if not better returns Via China, via Japan, via the Middle East. And so I do think we'll see some modest things there, but they're also Facing some cost challenges as well. And so if we don't see a material pickup in prices in North America, it could keep those volumes at bay, but That's our outlook as today. Speaker 800:18:13Okay. Thanks for that. Maybe Sticking to lumber business here, be about a 50,000,000 board foot mill in Sweden in the quarter. Sounds like there's potential to expand that mill. Can you talk It all around what that mill looks like today and then as you think about a potential expansion, how we should think about maybe a timeline there or required investment dollars, Return on investment targets, things of that nature. Speaker 100:18:39For sure, Matthew, it's Don. I'll just real Quickly on at least the first part of it, it's really a facility that's a unique opportunity that came up for us, for our Swedish folks that we really thought could add some Certainly some more specific added value to our customer base. It was really driven by our customers and the opportunity. It's a treated lumber facility basically And we've got opportunities there to increase production there as we move into next year in terms of how much dollars it's going to get And a cost to get that incremental production, we're not early days on that. We just closed recently here, but it's a real good opportunity here to get closer to our customer base in As you know, our Swedish company, one of the things that they do that we think is a huge advantage and one of the reasons we have had such an interest in it As they're focused on value added products and distinguish themselves outside of the commodity arena. Speaker 100:19:31And this is just another example of that, that we really think we can capitalize on. Speaker 800:19:37Great. That's helpful. Thank you. And then just maybe to close at pulp, Can you elaborate at all on exactly what the operational issues were at Northwood around the restarts? Thanks. Speaker 200:19:50Matthew, a very fair question and I wish I could point out one thing being a problem, but it was very sadly a Combination of different things, just failing to operate or restart the way we wanted. And then the struggles that we had to get those mills up and stable. And of course, they're very complex facilities as everybody knows, but we really Stumbled out of the gate and none of the issues that we ran into were related to work that was done on the turnaround. It was all various pumps and different cleaners and screens and the like that just tripped us up all the way along. And so I don't have a singular thing to point at other than the general condition of the facility. Speaker 800:20:39Okay, thanks. That's all for me. I'll turn it back. Operator00:20:46Thank you. We have another question from Keita Memora from BMO Capital Markets. Please ask your question. Speaker 400:20:54Thank you. Hey, can you just on the lumber side, can you talk about what you guys are seeing on the log costs In the South and in BC and in Europe? Speaker 100:21:08Yes. Log costs, if you just if I understand the question, Ketan, 100%. Yes. Log costs in BC are relatively flat, stumpage is down a bit. So it will be down small amount I would say overall and we expect that to kind of continue. Speaker 100:21:22In terms of Europe, it's up log costs in Europe are up a bit for sure, but not significantly, but they are up definitely. And but we're certainly we're not concerned about that. Speaker 400:21:37Got it. Okay, perfect. That's helpful. Good luck. Speaker 300:21:41All right. Thanks, Keith. Operator00:21:48Thank you. There are no further questions. I'll now turn the call over back to Mr. Don Cain for the closing remarks. Please go ahead, sir. Speaker 100:21:56All right. Thanks, operator, and Thanks, operator, and thanks to everyone that participated in the call and we look forward to talking to you at the end of the year. Thanks very much. Operator00:22:08Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for participating. You may all disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCanfor Pulp Products Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckInterim report Canfor Pulp Products Earnings HeadlinesCIBC Issues Pessimistic Forecast for Canfor Pulp Products (TSE:CFX) Stock PriceApril 23, 2025 | americanbankingnews.comCanfor Pulp Products Revises AGM and Q1 2025 Results Call ScheduleApril 11, 2025 | tipranks.comReal Americans Don’t Wait on Wall Street’s Next MoveWhat's happening in the markets right now should concern every freedom-loving American who's worked hard and saved smart. Your 401(k) doesn't deserve to be dragged through the mud by tariffs, trade wars, reckless spending, and political standoffs. And you don't have to stand by while Wall Street plays roulette with your future.April 27, 2025 | Premier Gold Co (Ad)Canfor Pulp Products Schedules AGM and Q1 2025 Results CallApril 10, 2025 | tipranks.comCanfor and Canfor Pulp demonstrate ESG performance in 2024 Sustainability ReportApril 2, 2025 | finance.yahoo.comCanfor Pulp Navigates Challenges with Strategic GainsMarch 10, 2025 | tipranks.comSee More Canfor Pulp Products Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Canfor Pulp Products? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Canfor Pulp Products and other key companies, straight to your email. Email Address About Canfor Pulp ProductsCanfor Pulp Products (TSE:CFX) Inc produces and sells northern bleached softwood kraft pulp, or NBSK pulp and paper. The company also generates and sells electricity from biomass out of its pulp plants in Western Canada. The firm organizes itself into two segments based on product: pulp and paper. The pulp segment generates most of the revenue. Canfor Pulp's NBSK pulp customers are typically manufacturers of tissue paper, specialty paper, and printing and writing paper. Most of Canfor Pulp's revenue comes from Asia. 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There are 9 speakers on the call. Operator00:00:00Good morning. My name is Jenny, and I will be your conference operator today. Welcome to Canfor and Canfor Pulp's 3rd Quarter Analyst Call. All lines have been placed on mute to prevent any background noise. During this call, Canfor and Canfor Pulp's Chief Financial Officer will be referring to a slide presentation that is available in the Investor Relations section of the company's website. Operator00:00:26Also, the companies would like to point out that this call will include forward looking statements, so please refer to the press releases for the associated risks of such statements. I would now like to turn the meeting over to Mr. Don Cain, Canfor Corporation's President and Chief Executive Officer. Please go ahead, Mr. Kain. Speaker 100:00:47Thank you, operator, and good morning, everyone. Thank you for joining the Canfor and the Canfor Pulp Q3 2023 results conference call. I'm going to make a few comments before I turn things over to Kevin Edson, Canfor Pulp's President and CEO and Pat Elliott, Chief Financial Officer of Canfor Corporation and Canfor Pulp and our Senior Vice President of Sustainability. In addition, we are joined by Kevin Pankratz, Senior Vice President of Sales and Marketing. I'd like to begin by acknowledging the devastating wild Fire season in BC, Alberta and across Canada this summer. Speaker 100:01:22I want to thank the firefighters, the first responders, The military personnel and forestry contractors who worked tirelessly over the summer responding to record breaking wildfires. We are working with the provincial governments to assess the impact of the fires on the fiber supply, ensuring timely access to burnt fiber and discuss Any lessons learned. We appreciate the government's willingness to have these open and honest discussions. While we saw an improvement in our cost structure in British Columbia in the 3rd quarter, it remains a challenging jurisdiction as the fiber supply in the interior of British Columbia continues to be constrained Due to the impacts of the wildfires, pest infestations, government policy and land use decisions, these factors in combination with a lack of reliable access Economic fiber and weak market conditions are resulting in a very challenging near term outlook in British Columbia. While recognizing the significant current challenges, we remain committed to our strategy of having a smaller but stronger operating footprint in British Columbia. Speaker 100:02:26In September, we announced that we will build a new low cost highly efficient facility in Houston that will be globally competitive. This investment decision came after careful review of the economically available fiber supply in the region and after Stents of discussions with government and indigenous nations in the region. I had the opportunity to meet with many of our employees in Houston a few weeks ago. We certainly appreciate their patience and perseverance while we made the decision and they share our excitement to have a modern state of the art facility in their community. We are now working on a detailed project engineering and permitting requirements. Speaker 100:03:05While lumber prices are anticipated to remain under pressure in the short Due to affordability constraints and high interest rates, we do remain optimistic about the medium to longer term prospects of our industry. We continue to see the benefits of our diversification strategy through the Q3 with strong earnings generated in the U. S. South And solid earnings in Europe despite seasonal downtime. We are pleased with the ramp up of our DeRidder facility, which added a second shift in August And the progress of our other organic growth initiatives, including a rebuild of our Arkansas sawmill, 2nd greenfield in Alabama And organic growth in Sweden. Speaker 100:03:45We remain committed to our organic growth program with the investments further improving our global Our balance sheet strength will support continued reinvestment in our operations. And while we are prepared to remain patient until the right opportunities present themselves, we continue to assess various external growth initiatives as we look to further grow our lumber business globally. I will now turn it over to Kevin to provide an overview of Canfor Pulp. Speaker 200:04:17Thank you, Don, and good morning, everyone. Canfor Pulp had a challenging Q3 with continued weakness in global pulp Significant operational downtime weighing on our financial results. The Northwood pulp mill experienced the brunt of lost production due to a combination of The downtime related with the labor dispute at BC's ports, a planned maintenance shutdown late in the quarter and then the struggles to restart after both of these curtailments. In total, 3rd quarter production was reduced by approximately 65,000 tonnes with a further 30,000 tonnes will be lost in the 4th quarter. With regards to Northwood's planned maintenance shutdown, the key activity was a comprehensive inspection of recovery boiler number 1. Speaker 200:05:02We are pleased that the results confirmed our expectation that RV1 remains in stable condition, thus removing any concerns about the need to advance the rebuild any earlier than 2025. We are also pleased with recent market developments with the resumption of demand supporting price increases in Asia and announcements recently in North America and Europe. We would note that our reduced output in Q3 and expected impact in Q4, The anticipated lag between market mill net realizations will extend such that we do not expect to see the impact of these increases until early in the New Year. Previously, we announced the recapitalization program covering all three of our facilities, Northwood, Intercon and Specialty Paper. We remain committed to this program supported by cash generated from operations and existing liquidity. Speaker 200:05:55Though the market is improving, we are Still cautious about the outlook, so our early guidance on capital will be for another modest year in 2024. I'd like to take this moment to acknowledge and extend our appreciation to the employees at Northwood and InterCon and Specialty Paper for their continued efforts, Perseverance and commitment to safety as we navigate the current challenges facing our business. And with that, I will turn it over to Pat to provide an overview of our financial results. Speaker 300:06:25Thanks, Kevin, and good morning, everyone. The Canfor and Canfor Pulp 3rd quarter results were released yesterday afternoon. In my comments this morning, I'll speak to quarterly financial highlights, a summary of which is included in our overview slide presentation in the Investor Relations section of Canfor's website. Our lumber business generated an operating loss of $1,000,000 in the 3rd quarter, which included a $19,000,000 recovery of a previously recorded write down of inventory in And a net duty recovery of $43,000,000 While our construction in British Columbia improved slightly in the 3rd These results continue to reflect losses associated with our BC operations as a result of weak lumber pricing and a high cost operating environment. Notwithstanding these challenges, we continue to see the benefit of our diversification strategy with our U. Speaker 300:07:11S. Operations generating strong results in the 3rd quarter It's supported by stable unit margin and increased volume. Our European operations contributed cash earnings of approximately $31,000,000 in the quarter With slightly improved sales realization offset by seasonal summer down, our European operations have generated cash earnings of $135,000,000 to date 2023. Canfor Pulp generated an operating loss of $49,000,000 in the quarter, which included a $2,000,000 recovery of a previously recorded inventory write These results reflected weak global pulp markets and extensive downtime at Northland due to splint chain interruptions, Scheduled maintenance downtime and reliability issues upon restart, which weighed heavily on production and unit cost structure in the quarter. With production at Northwood stabilizing, we anticipate improved results in the 4th quarter, although our results will reflect the impact of unplanned downtime in October And an unfavorable timing lag in shipments versus orders. Speaker 300:08:13At the end of the Q3, Canfor Pulp had net debt of $81,000,000 $146,000,000 of available liquidity, of which $80,000,000 is restricted for use towards future reinvestment in Northwood's Not withstanding the current challenges facing our pulp business, we believe the longer term market fundamentals remain strong. In the short term, we have undertaken a series of measures to mitigate the financial impact of weak global market and persistent reliability issues. In 2023, we anticipate a capital spend of approximately $500,000,000 in the lumber segment and $70,000,000 for Canfor Pulp, including capitalized maintenance. We anticipate capital spend of $450,000,000 to $500,000,000 in the lumber segment in 2024, including remaining spend at Urbana and our Alabama Greenfield and various organic growth initiatives in the U. Speaker 400:09:04S. South and Fleet. Speaker 300:09:06For Canfor Pulp, we expect capital spending to be at or lower than 2023. In addition, we anticipate Canfor will continue to allocate a modest amount of capital to repurchase its share. And with that, Don, I'll turn it back to you. Speaker 100:09:19Thanks, Pat. So operator, we're okay now to go ahead with questions from analysts. Operator00:09:27Thank you. We will now take questions from financial analysts. Our first question comes from Hamir Patel from CIBC. Please ask your question. Speaker 500:10:03Hi, good morning. Don, your outlook you were pointing to European lumber prices coming under Some pressure in Q4. Has there been any change this year in the sort of share of your European lumber output that's exported to the U. S? Can you comment on how the returns for VIDA might compare between selling to the U. Speaker 500:10:27S. Versus selling within Europe? Speaker 100:10:31Yes, for sure. Maybe I'll let the first part, Kevin, maybe you can talk a little bit with Hamir in terms of the volumes coming into U. S. Compared to last First of all, yes. Speaker 600:10:41Hamir, like obviously, I would say it's a little bit off from last But overall, it's pretty consistent year over year in the markets that we serve. And because we do have a core programs that we support and there's Maybe a pivot of about 20% that we could allocate to markets that are maybe have better demand signals or stronger economics. But I'd say that in Q3 off a little bit into the U. S. And then the pickup on that volume was into other markets Such as the Middle East, North Africa markets and of course into the UK and then more into Japan. Speaker 600:11:19So just really leveraging the global Speaker 100:11:24Maybe just Hamir add to that. I mean, I think Kevin, I mean, just one thing For sure that we have in Sweden is we first of all, we're very specific on the products that we manufacture there for North America and there is very specific and customized products. But at the same time, we've got a lot of flexibility and a lot of options in other markets that in a lot of cases are more favorable from a return standpoint. So I think the key takeaway really in Europe or in North America is we've got lots of flexibility and we utilize it as we need to for customized use Yes, for the Speaker 300:11:55most part. Speaker 500:11:58Great. Thanks Don. That's helpful. And then just turning to the U. S. Speaker 500:12:02Market, Given some of the affordability headwinds facing consumers, what would be your view for 2024 for the R and R market in terms of Speaker 300:12:14volumes. Go ahead, Kobi. Speaker 600:12:15Yes. Hamir, like as we've said on previous calls, the R and R market has actually been quite resilient. And while we're not at the pace that we were at the first half of the year, we're still at more normalized growth kind of expectations in that Sort of like 2% to 3%. So for 2023, we'll be ahead of 2022. And 2024, we're guiding to So just a modest increases, not to some of the surges that we've seen in the past few years to your point because of some of the affordability and interest rate challenges. Speaker 600:12:48But The key drivers that are driving R and R are still there. The age of homes is a big driver that they look at. And of course, People staying in their homes, not selling as much and investing in their homes. So we do still think that that segment is going to be resilient through 2024. Speaker 500:13:07Fair enough. That's all I had. I'll turn it over. Thanks. Speaker 300:13:11Thanks, Operator00:13:16Thank you. Your next question is from Chetan Mamura from BMO Capital Markets. Please Speaker 400:13:25Thank you. Hey, just coming back on the pulp Capital expenditure, can you just remind me again how you guys are thinking about the multiyear program that you have? It sounds like It sounds like you guys seem to have pushed it back a little bit. Correct me if I'm wrong on that. And just sort of how you think about sequencing over the next few years. Speaker 200:13:50Ketan, are you referring to the pulp recapitalization? Speaker 400:13:55That is correct. Speaker 200:13:57So Ketan, when we made the announcement, what we were doing is indicating the level of reinvestment that we felt was needed in these facilities. We also indicated at that time that it would have to come from existing liquidity and the ability of our operations to generate cash. What we were concerned about was how our recovery boiler at Northwood was faring. And the feedback from the latest turnaround is it's actually in very solid condition. We did not see any material deterioration and therefore at this Point don't have a timeline on that, which allows us to have some more flexibility around the priorities on capitalization And matching that to our ability to generate cash. Speaker 200:14:40So it's a long winded way of getting back to I do believe that we're stretching out that capital Over a longer period of time to ensure that we protect the balance sheet as it is. Speaker 400:14:53Got it. Okay. No, that's very helpful. I'll jump back in the queue. Speaker 300:14:58Thanks, Keith. Operator00:15:02Thank you. Your next question is from Sean Steuart from TD Securities. Please ask your question. Speaker 700:15:09Thank you. Good morning, everyone. Good morning, Sean. Speaker 100:15:10Kevin, I Speaker 700:15:13Just want to follow-up on that last question with respect to the pulp CapEx plan. So beyond RB1 at Northwood, The rest of these initiatives that you had planned over a 4 to 5 year timeframe, This is all modular discrete spending initiatives across the portfolio that you can Toggle on timing, there's flexibility beyond RV1. Is that the right way to think about it? Speaker 200:15:44Absolutely, Sean, and the way I would look at it is, it's a general commitment to maintenance capital, is low on Strategic ROI and really should be viewed at recapitalizing the mills to get them back into the best condition they can be. And so the trade off on when you do that is what are the maintenance costs and what are the impacts on productivity between now and then. And so there are a multitude of smaller discrete projects that will be prioritized based on the risk and impact that they have And they'll be slotted based on available liquidity or cash to advance on them. Speaker 700:16:24Okay. That helps frame it for me. Second question for Pat. You had $48,000,000 of investments that you acquired this quarter. Can you give us any context on what that was? Speaker 300:16:41$48,000,000 of investments like in our On any cash flow. Speaker 600:16:45Sorry, Sean. Speaker 300:16:47Yes. Sean, I'm going to have to get back to you. Apologies for that. I'll get back to you. Okay. Speaker 300:16:52All Speaker 500:16:53right. That's all I had. Thanks, guys. Speaker 100:16:55Thanks, Operator00:16:59Sean. Thank you. Your next It's from Matthew McPherler from RBC Capital Markets. Please ask your question. Speaker 800:17:08Hi, good morning. Thanks for taking my questions. 1st, when you look across the markets, and this is kind of following Hamir's question, but do you see any risk of increased imports European lumber into North America given some of the softness in European demand, or does the combination of relatively low lumber prices in the U. S. And reduced supply into Europe from Russia and Belarus just not support that scenario. Speaker 300:17:33Go ahead, Kevin. Speaker 100:17:34Yes, sure. Speaker 600:17:34Yes, hi, Matthew. Yes, I think that the European producers are going to look at other markets and for sure U. S. Will be one of them. How much upside? Speaker 600:17:45It's going to be hard to really estimate, but there's going to be other markets that are going to support growth that are going to have comparable or if not better returns Via China, via Japan, via the Middle East. And so I do think we'll see some modest things there, but they're also Facing some cost challenges as well. And so if we don't see a material pickup in prices in North America, it could keep those volumes at bay, but That's our outlook as today. Speaker 800:18:13Okay. Thanks for that. Maybe Sticking to lumber business here, be about a 50,000,000 board foot mill in Sweden in the quarter. Sounds like there's potential to expand that mill. Can you talk It all around what that mill looks like today and then as you think about a potential expansion, how we should think about maybe a timeline there or required investment dollars, Return on investment targets, things of that nature. Speaker 100:18:39For sure, Matthew, it's Don. I'll just real Quickly on at least the first part of it, it's really a facility that's a unique opportunity that came up for us, for our Swedish folks that we really thought could add some Certainly some more specific added value to our customer base. It was really driven by our customers and the opportunity. It's a treated lumber facility basically And we've got opportunities there to increase production there as we move into next year in terms of how much dollars it's going to get And a cost to get that incremental production, we're not early days on that. We just closed recently here, but it's a real good opportunity here to get closer to our customer base in As you know, our Swedish company, one of the things that they do that we think is a huge advantage and one of the reasons we have had such an interest in it As they're focused on value added products and distinguish themselves outside of the commodity arena. Speaker 100:19:31And this is just another example of that, that we really think we can capitalize on. Speaker 800:19:37Great. That's helpful. Thank you. And then just maybe to close at pulp, Can you elaborate at all on exactly what the operational issues were at Northwood around the restarts? Thanks. Speaker 200:19:50Matthew, a very fair question and I wish I could point out one thing being a problem, but it was very sadly a Combination of different things, just failing to operate or restart the way we wanted. And then the struggles that we had to get those mills up and stable. And of course, they're very complex facilities as everybody knows, but we really Stumbled out of the gate and none of the issues that we ran into were related to work that was done on the turnaround. It was all various pumps and different cleaners and screens and the like that just tripped us up all the way along. And so I don't have a singular thing to point at other than the general condition of the facility. Speaker 800:20:39Okay, thanks. That's all for me. I'll turn it back. Operator00:20:46Thank you. We have another question from Keita Memora from BMO Capital Markets. Please ask your question. Speaker 400:20:54Thank you. Hey, can you just on the lumber side, can you talk about what you guys are seeing on the log costs In the South and in BC and in Europe? Speaker 100:21:08Yes. Log costs, if you just if I understand the question, Ketan, 100%. Yes. Log costs in BC are relatively flat, stumpage is down a bit. So it will be down small amount I would say overall and we expect that to kind of continue. Speaker 100:21:22In terms of Europe, it's up log costs in Europe are up a bit for sure, but not significantly, but they are up definitely. And but we're certainly we're not concerned about that. Speaker 400:21:37Got it. Okay, perfect. That's helpful. Good luck. Speaker 300:21:41All right. Thanks, Keith. Operator00:21:48Thank you. There are no further questions. I'll now turn the call over back to Mr. Don Cain for the closing remarks. Please go ahead, sir. Speaker 100:21:56All right. Thanks, operator, and Thanks, operator, and thanks to everyone that participated in the call and we look forward to talking to you at the end of the year. Thanks very much. Operator00:22:08Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for participating. You may all disconnect.Read morePowered by