Conifex Timber (TSE:CFF) executives used the company’s fourth-quarter and full-year 2025 earnings call to outline the impact of sharply higher U.S. softwood lumber duties and tariffs, recap recent financing activity that eased near-term liquidity pressure, and describe an operational plan that management characterized as a “transition year” in 2026.
2025 results shaped by duties, tariffs, and weaker pricing
CEO Ken Shields said the year began with expectations that moderating interest rates would support residential construction and improve lumber prices. He noted Conifex generated positive EBITDA in the first half of 2025, but conditions deteriorated in the second half as trade costs rose and lumber prices softened.
For the full year, Shields said the company reported a net loss of CAD 35.7 million after expensing duty pre-deposits and tariff charges of CAD 26.1 million. He added that the net loss included a one-time, non-cash charge of CAD 15.3 million related to duty underpayments for the 2023 calendar year.
Financing recap and temporary debt reclassification under IFRS
Management also addressed financing steps taken to navigate liquidity challenges following what Shields described as “punishing duty and tariff impositions” on lumber exports to the U.S. He reviewed a sequence of funding support from PenderFund and the Business Development Bank of Canada (BDC).
Shields said Conifex entered into a CAD 25 million secured term loan with PenderFund in June 2024 for the lumber business. He added that PenderFund provided an additional CAD 8.5 million in the first quarter of 2025, plus a further CAD 5 million in September and October 2025. Later in 2025, PenderFund and BDC reached an understanding regarding joint support, and PenderFund advanced another CAD 8 million to bridge operations until BDC funding was in place.
Earlier in 2026, Shields said the company announced its wholly owned lumber subsidiary entered into a CAD 19 million secured term loan with BDC under the Softwood Lumber Guarantee Program. The loan matures in 2033, bears interest at BDC’s floating base rate minus 60 basis points, and calls for principal repayments to begin in August 2028. Shields said CAD 8 million of the proceeds were used to retire the short-term PenderFund advances.
Shields also highlighted an accounting-driven issue that affected the company’s reported balance sheet at year-end. He said that because the BDC funding was not formalized until early 2026, IFRS required Conifex’s long-term debt to be temporarily reclassified as current as of December 31, 2025. He said management expects the reclassification to be reversed when Conifex releases its first-quarter results. Shields added that under U.S. GAAP, the temporary reclassification would not have been required.
2026 operating plan: from curtailment to two shifts
Shields said Conifex views 2026 as a transition year, with plans to move from curtailment and single-shift operations in the first half toward steady two-shift operations in the second half. He cited typical seasonal limitations in the region, noting that weather and road conditions usually prevent harvesting and log deliveries between mid-March and mid-June.
Shields said the timing of the BDC loan closing shortened the logging season, leaving current and foreseeable log inventories “not quite adequate” to maintain the equivalent of a full single shift in the first half of 2026. He said Conifex expects to rebuild log inventories when summer logging resumes, with the goal of supporting consistent two-shift operations at the Mackenzie sawmill complex and the power plant in the second half.
Based on analysts’ consensus estimates for SPF prices in 2026, Shields said the company does not expect to be EBITDA positive while operating on a single shift. However, he said two shifts should lower unit costs by spreading fixed costs over a larger production base, and management also expects duty deposit rates to decrease late in the year. With those factors, Shields said Conifex expects two-shift operations to be capable of generating positive EBITDA in the closing months of 2026.
Cost curve discussion and planned capital projects
During the Q&A, Raymond James analyst Christian Dreher asked about Conifex’s position on the SPF lumber cost curve and the benefit of shifting from one to two shifts. Shields emphasized log costs as a key determinant of competitiveness, stating that log costs typically represent about two-thirds of total lumber production costs.
He said Conifex operates in a timber supply area where annual sawlog harvest “greatly exceeds” local sawlog consumption, and characterized the region as having surplus supply that reduces tension in auction bidding and supports more affordable stumpage rates. Shields said Conifex believes it has “very affordable log costs compared to other mills in BC,” and also argued that BC mills have superior revenue generation compared to Eastern Canadian mills due to product mix differences. He referenced materials he said indicated BC mills may have approximately $50 of pricing not available to Eastern Canadian mills because of differences between random length pricing and stud exposure.
President Andrew McLellan said Conifex restarted two-shift operations in February after a year-end curtailment and said he was encouraged by early results. He said the company has been running above targets on many shifts in both the sawmill and planer, and reiterated that the plan is to target two shifts in the second half of 2026, subject to fiber supply.
McLellan estimated that moving to two shifts would materially improve per-unit manufacturing costs compared with the fourth quarter, when the company was operating at about 46% of capacity. He estimated the fixed-cost benefit at roughly $50 to $70 per thousand in conversion costs relative to the fourth quarter experience.
On capital allocation, Shields said Conifex has identified quick-payback projects totaling just over CAD 11 million of expenditure, with EBITDA potential of “something like over CAD 4 million annually,” implying a payback period of less than three years. He said the company has not yet been able to fund many of these opportunities due to a tight cash position.
When asked about additional funding needs, Shields said one organization Conifex is dealing with has a minimum loan amount of CAD 30 million, and said the company is “in that range and possibly a bit more,” adding that it would like surplus cash to manage through the cycle and address unanticipated challenges. He cautioned that while discussions with government funding organizations have been positive, there is no guarantee Conifex will secure additional program funding, and said the company plans to continue working with existing lenders on potential flexibility, including repayment terms and amortization periods.
BC Hydro dispute tied to planned HPC data centers
Shields also provided an update on Conifex’s legal challenge with BC Hydro, which relates to a diversification initiative announced in 2022 to develop two high-performance computing (HPC) data centers in British Columbia’s interior. Shields said the projects were designed to leverage Conifex’s experience in designing, constructing, and operating large-scale electric power infrastructure in northern BC, and were intended to target national and international HPC customers with long-duration cash flows and long-term leases.
He said that in June 2022, after encouragement and collaboration with BC Hydro, Conifex entered into two system impact study agreements at locations BC Hydro identified. Shields described the system impact study as the first step in the interconnection process to determine needed infrastructure.
Shields said BC Hydro later informed the company on January 23, 2023 that interconnection activities at the two sites would not be advanced and Conifex would be removed from the interconnection queue, which he said surprised the company. He cited an August 2024 statement from the Ministry of Energy, Mines and Low Carbon Innovation asserting that BC Hydro, as a regulated utility, cannot refuse to provide electricity to any customer and that the interconnection queue is “first come, first served” for large industrial customers.
Shields said BC Hydro cited an order in council pausing cryptocurrency projects, but he argued Conifex’s agreements referenced HPC data centers and that the order did not instruct BC Hydro to remove such projects from the queue. Shields said Conifex views BC Hydro’s actions as a breach of contract and believes the company has suffered damages, including lost opportunity to obtain power for HPC centers and associated revenue and profit potential.
The call concluded without additional analyst questions. Shields said Conifex expects to provide its next update around the middle of May.
About Conifex Timber (TSE:CFF)
Conifex Timber Inc is a Canada based forestry company. It operates through two segments: Lumber and Bioenergy. The main activities of the lumbar segment include timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value-added lumber finishing. The firm’s primary activities of the bioenergy segment are the generation of electrical power and the development of other opportunities in bioenergy and bioproducts which are complementary to the company’s harvesting and manufacturing operations.
