GreenFirst: A Turnaround Quarter Under the Shadow of Tariffs

Production and shipments surge, EBITDA flips positive, but the trade war and CEO transition loom.

GFP.TO · Earnings Call · 2026-08-11

From Red to Black: The Operational Turnaround

GreenFirst Forest Products delivered a striking operational rebound in Q2 2026. Production rose 22% sequentially to 111 million board feet, while shipments jumped 43% to 119 million board feet — the strongest shipment quarter in two years. This volume surge, paired with a $60 per thousand board feet improvement in average realized selling price, pushed net sales to roughly $96 million, a ~60% year-over-year increase. The result: “We delivered positive operating income and EBITDA during the quarter” — Joel Fournier, Chief Executive Officer · 2026-08-11, after a deeply negative Q1. Central to this swing was a sharp reduction in unit costs. As management explained, “the benefits of higher production volumes, improved manufacturing efficiency, and better first cost absorption” — Peter Ferrante, Chief Financial Officer · 2026-08-11 drove cost of sales down by about $70 per thousand board feet despite energy and fuel headwinds. Two mills achieved their lowest processing costs in recent years, and the Hearst mill set a Q2 production record. This is a classic manufacturing cost improvement story. The company leveraged fixed costs over a larger base, and the inventory valuation reserves reversal added ~$3 million to the quarter. CFO Peter Ferrante noted that “stronger lumber prices were the single largest driver” — Peter Ferrante, Chief Financial Officer · 2026-08-11 of that reversal, alongside lower per-unit costs and a higher-value inventory mix. The operational momentum is real, but it comes with an asterisk: ~$21 million in duties and tariffs ate into results, and the company's liquidity position remains thin at $2.8 million cash.

Chapleau: The Long-Awaited Ramp

The Chapleau large log line — the company's key strategic investment — continued to ramp through Q2. While still short of pro forma expectations, production at that mill grew over 35% sequentially, and management says the line will reach full financial contribution by year-end. “We expect the line to continue ramping up through the remainder of the year and to realize its full financial contribution by year-end” — Joel Fournier, Chief Executive Officer · 2026-08-11, said CEO Joel Fournier. The investment is central to GreenFirst's Chapleau line cost-reduction strategy and to its ambition of becoming the largest lumber producer in Ontario. Beyond Chapleau, management is evaluating smaller, quick-payback capital projects like speed control systems to further cut manufacturing costs.

We're going to reintroduce small strategic capital expenditure that will help to push throughput in our mill to further reduce our cost.
Joel Fournier, Chief Executive Officer · 2026-08-11

Tariffs, Trade, and Government Support

Duties and tariffs remain the single largest overhang. Q2 alone saw $21.1 million in duties and tariffs, up from $12.1 million in Q1. Year-to-date, GreenFirst has paid $33 million ($26 million duties, $7 million tariffs). The company is closely watching U.S.–Canada negotiations, and its President, Michel Lessard, noted that “it's still early in the process, and we don't want to speculate on the outcome, but we believe that the constructive dialogue is a positive development” — Michel Lessard, President · 2026-08-11. He also pointed out that if duties are reduced, “there's an opportunity for producers to capture at least part of the benefits to improve margins” — Michel Lessard, President · 2026-08-11, though pricing will ultimately follow market fundamentals. In the meantime, the company is drawing on government programs. During Q2 it received ~$3.2 million from Ontario's sawmill chip supply program, and it is pursuing federal support for larger projects. “We will also continue to actively manage the impact of duties and tariffs” — Peter Ferrante, Chief Financial Officer · 2026-08-11, said CFO Ferrante, underscoring that liquidity management remains a top priority.

Strategic Optionality: Pellets, MDF, and a CEO Transition

GreenFirst is building strategic optionality beyond commodity lumber. The torrefied pellets partnership with Texana is moving through feasibility, with construction potentially starting in late 2027. Meanwhile, the development of an MDF facility in Kapuskasing by its major chip customer Kap Paper could create a Kap Paper-driven new market for sawmill residuals, supporting long-term demand in Northern Ontario. These moves align with federal support for the forest products industry. Yet the most significant governance news came from CEO Joel Fournier, who announced he will resign effective October 31, 2026. “I'm proud of what we accomplished together during my time at GreenFirst” — Joel Fournier, Chief Executive Officer · 2026-08-11, he said, while committing to a smooth transition. This leadership change compounds the uncertainty from tariffs and market volatility.

Prior Calls: The Same Themes, Recurring

The Q&A history shows these themes are not new. In the May 2026 call, management discussed Chapleau's ramp directly: “we're still in ramp-up mode for production with the new saw line” — Joel Fournier, Chief Executive Officer · 2026-05-11. Liquidity was already a concern: “We've seen significant strain on the company's liquidity position over the past few quarters” — Joel Fournier, Chief Executive Officer · 2026-05-11. And the duty burden was front and center in the November 2025 call, when Michel Lessard noted “it's not a good news to have a 10% tariffs in addition to the 35.6% duties that we're already paying” — Michel Lessard, President · 2025-11-12. What has changed now is the operational execution: the company is finally converting production gains into positive EBITDA.

The Bottom Line

GreenFirst's Q2 demonstrates meaningful progress on costs, volume, and price realization — the core levers it controls. But with Lumber market dynamics still volatile, energy costs rising, and a CEO transition underway, the sustainability of this turnaround is far from assured. The reversal of inventory provisions provided a tailwind that won't repeat every quarter, and the heavy tariff load persists. The stock remains a high-risk, high-reward micro-cap dependent on both operational execution and the whims of trade policy.