Mr. Trevor Pruden reports

CONIFEX ANNOUNCES THIRD QUARTER 2023 RESULTS

Conifex Timber Inc. has released results for the third quarter ended Sept. 30, 2023. EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $6.7-million for the quarter compared with EBITDA of $4.2-million in the third quarter of 2022. The third quarter results were favourably impacted by $1.7-million in recoveries of duty deposit overpayments, which were more than offset by $2.4-million in further inventory writedowns that were taken in response to lower lumber prices and after disposing of a logging camp that was lost in a wildfire this summer for $600,000. Net loss was $8.0-million or 20 cents per share for the quarter versus net income of $900,000 or two cents per share in the year-earlier quarter. The results reflect reduced operating earnings on lower lumber prices.

Selected financial highlights

The attached financial information table summarizes its selected financial information for the comparative periods. The financial information reflects results of operations from the company's Mackenzie sawmill and power plant.

Outlook

Through the rest of 2023, it expects lumber prices to remain consistent with year-to-date levels. It expects its lumber production and shipments in the closing quarter of 2023 to be modestly higher than in the third quarter. Seasonally higher power prices are expected to be recorded in its power business.

Looking ahead to 2024, it agrees with analyst estimates calling for benchmark lumber prices to improve by low-double-digit percentages in 2024. It expects an improved supply-demand balance for lumber producers in 2024. The demand side is anticipated to benefit from some moderation in interest rates, a key driver of residential construction activity and lumber prices. The supply side will continue to reflect supply contractions in the interior region of British Columbia. In the northern interior region of B.C., where it operates, trailing-12-month lumber production has retreated by one-third, from 4.5 billion board feet early in 2021 to 3.0 billion board feet currently.

At its Mackenzie site, it anticipates capturing benefits from its transition to a green log diet. In May, 2023, the chief forester ruled that the remaining dead pine stands in the Mackenzie timber supply area have lost their commercial value as sawlogs. Transitioning to a greener log diet leads to improved sawmill performance, higher-grade outturns and stronger selling price realizations. It also expects to benefit from lower stumpage charges through the rest of 2023 and the following year. Besides moving its Mackenzie site to a lower ranking on the lumber industry cost curve, these fibre-supply-related factors position it to improve EBITDA in 2024 even if lumber prices, exchange rates and duty impositions average out at 2023 levels.

Its power plant is forecasted to generate a steady and diversified source of cash flow through 2024 and continue to reach or exceed 90-per-cent uptime.

It continues to prioritize financing quick-payback sawmill upgrades and continue exploring the potential development of its high performance computing business.

Conference call

It has scheduled a conference call on Tuesday, Nov. 7, 2023, at 2 p.m. Pacific Time/5 p.m. Eastern Time, to discuss the third quarter 2023 financial and operating results. To participate in the call, please dial toll-free 1-800-806-5484 and enter the participant passcode 6592667 followed by the number sign. The call will also be available on instant replay access until Dec. 7, 2023, by calling 1-800-408-3053 and entering the participant passcode 8736529 followed by the number sign.

Its management's discussion and analysis and financial statements for the quarter ended Sept. 30, 2023, are available under its profile on SEDAR+.

About Conifex Timber Inc.

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. Conifex's lumber products are sold in the U.S., Canadian and Japanese markets. Conifex also produces bioenergy at its power generation facility at Mackenzie, B.C.

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