Conifex Timber Burns $6.3M EBITDA, Warns on Going Concern

Conifex Timber Inc. (TSX: CFF) posted negative EBITDA of $6.3 million in the second quarter, barely improved from the $7.7 million loss in Q1 but worse than the $3.2 million loss a year ago. Net loss was $9.5 million, or $0.23 per share, versus $9.4 million in the prior quarter and $8.3 million in Q2 2025.

The Vancouver-based lumber and bioenergy producer cut sawmill output to 14.1 million board feet, running at 23% of annualized capacity, after a seven-week curtailment that started May 19. The company blamed a shortage of sawlogs during the seasonal spring breakup. That shutdown has now stretched past the original seven-week window, and Conifex said it will not restart until it secures financing – funding it admitted "cannot be assured."

The power plant at Mackenzie, B.C. idled for the last two months of the quarter during its annual maintenance shutdown, selling just 19.8 gigawatt-hours of electricity versus 36.7 GWh in Q1. Power revenue fell to $2.8 million from $5.2 million.

Lumber revenue was $19 million, up 27% from Q1 on higher shipments and better benchmark pricing, but down 31% from a year ago. Shipments of 23.6 million board feet exceeded production as Conifex drew down finished inventory. Cost of goods sold fell 10% from the prior quarter, partly offset by $3 million in inventory valuation recoveries.

Conifex expensed $3.7 million in anti-dumping and countervailing duty deposits in the quarter, up from $3 million in Q1 and $2 million a year earlier. The combined cash deposit rate was 35.16%, with an additional 10% Section 232 tariff on lumber. On June 30, the U.S. Department of Commerce set preliminary combined rates for the seventh administrative review at 25.18%, below the current 35.16%, but because the new rates exceed what Conifex deposited on 2024 shipments, the company estimates it will record a non-cash duty expense of roughly US$6.7 million plus US$0.9 million in interest when the final determination lands in Q4.

Total debt stood at $101.8 million at quarter-end, down slightly from $102.6 million in March. Available liquidity was $1.3 million in cash, down from $3.6 million. Conifex received $6.4 million in bridge advances from Pender Corporate Bond Fund in July to cover budgeted expenses and debt payments while it pursues government financing, but those advances are due August 15 – or earlier if the government money comes through first.

Net working capital turned negative, at negative $6.1 million versus positive $4.8 million in March. The company acknowledged "material uncertainty" about its ability to continue as a going concern but said it plans to prepare financial statements on that basis anyway, pending financing, lender accommodations, and a recovery in lumber prices and demand.

Cumulative softwood lumber duties held in trust by the U.S. since 2017 total US$49.4 million, net of prior sales.

Conifex said the 50% tariff the U.S. announced July 20 under Section 338, effective August 19, does not cover softwood lumber. The company said it is watching for indirect effects on demand and supply chains.