Conifex Timber Reports Mixed 2024 Results Amid Market Challenges

Conifex Timber Inc. (TSX: CFF) released its fourth quarter and year-end results for 2024, revealing a mixed performance marked by operational adjustments and market challenges. The company reported an EBITDA of negative $2.1 million for the fourth quarter and negative $13.6 million for the full year, showing some improvement from the previous year's negative $3.5 million and negative $25.8 million, respectively. The net loss for 2024 was $29.8 million or $0.73 per share, slightly better than the $30.6 million or $0.77 per share loss in 2023.

The lumber industry faced significant headwinds in 2024, with over-supply issues persisting from the previous year. Inflationary pressures and a decline in new home construction due to higher interest rates and economic uncertainty led to a 4% decrease in US housing starts, averaging 1.36 million starts in 2024. This market downturn directly impacted Conifex's operations, leading to a reduction in lumber production and shipments.



Conifex's lumber production in 2024 was 134.8 million board feet, reflecting an annualized operating rate of 56%, down from 155.8 million board feet and a 65% operating rate in 2023. The company implemented a one-shift basis for an eighteen-week period beginning in late August to address unsustainable inventory levels and logistical issues. Additionally, a month-long curtailment of the Mackenzie Mill between mid-June and mid-July was necessitated by weak lumber prices and softer market demand.

Despite these challenges, Conifex managed to partially offset the impact on revenues. Lumber revenues were $93.5 million in 2024, a decrease of only 4% from 2023. This was achieved through higher mill net realizations resulting from modestly higher overall benchmark lumber prices. The average Canadian dollar-denominated WSPF lumber price increased by 6% to $559 in 2024, up from $528 in 2023.

The company also focused on cost management, with the cost of goods sold in 2024 being 14% lower than in 2023. This helped to mitigate some of the financial losses, but the net loss for the year remained significant at $29.8 million.

Looking ahead, Conifex will need to continue adapting its operational strategy to navigate the challenging market conditions. The company's focus on cost management and higher mill net realizations will be crucial in mitigating the impact of lower production and shipments. Additionally, Conifex will need to monitor market trends and adjust its production schedule accordingly to ensure long-term sustainability.

In conclusion, Conifex Timber Inc.'s 2024 results reflect the challenges faced by the lumber industry, with market conditions and operational adjustments playing a significant role in the company's financial performance. While the company has taken steps to mitigate these challenges, the road to recovery will require continued strategic adjustments and a focus on cost management. Investors will be watching closely to see how Conifex navigates the evolving market landscape in the coming years.