GreenFirst Forest Prods (TSX: GFP) reported a 60% year-on-year increase in net sales to $96.1 million for the second quarter of FY26, driven by a 40% rise in shipment volume and higher lumber prices.

The company returned to positive operating income and EBITDA, reversing the losses recorded in the first quarter. This turnaround occurred despite significant pressure from export duties and tariffs, which totaled $21.1 million during the period.

Financial Performance

Revenue for Q2FY26 stood at $96.1 million, compared to $60.6 million in Q1FY26 and $84.5 million in Q2FY25. Lumber sales contributed $91 million, while byproduct revenue added $5.1 million. The sequential improvement was primarily fueled by stronger realized lumber prices and increased shipment volumes.

Average gross selling prices rose to $765 per thousand board feet, while average net selling prices reached $486 per thousand board feet after accounting for duties and tariffs. Cost of sales remained essentially unchanged at $62.1 million compared to Q1FY26, despite the surge in shipments. This stability reflects improved manufacturing efficiency and better absorption of fixed costs over a larger production base.

Operating income improved to $7.9 million, a significant shift from the $19 million operating loss in Q1FY26. EBITDA from continuing operations turned positive to $11.8 million, compared to a negative $15.1 million in the prior quarter. These results benefited from the reversal of previously recognized inventory valuation reserves, reflecting stronger lumber prices and lower manufacturing costs.

Operational Highlights

Production increased 22% sequentially to approximately 111 million board feet, while shipments jumped 43% to 119 million board feet. Shipments exceeded production during the quarter, leading to a reduction in inventory levels. This dynamic helped reverse the seasonal inventory build experienced in Q1FY26 and provided a positive contribution to working capital.

The company incurred $21.1 million in export duties and tariffs in Q2FY26, an increase from $12.1 million in Q1FY26. Year-to-date, GreenFirst has paid $33 million in duties and tariffs, comprising $26 million in duties and $7 million in tariffs. The company received approximately $3.2 million from the provincial government through the Ontario Sawmill Chip Supply program during the quarter.

What the Numbers Show

The divergence between flat cost of sales ($62.1 million) and a 40% increase in shipment volume highlights significant operational leverage. By maintaining constant total costs while drastically increasing output, the company effectively reduced its per-unit manufacturing cost by approximately $70 per thousand Mfbm. This efficiency gain was critical in offsetting the impact of rising energy and fuel costs, allowing the firm to return to profitability despite elevated duty burdens.

Liquidity and Outlook

Cash position ended the quarter at $2.8 million, down from $6.5 million at the end of Q1FY26. Operating activities generated $2.4 million in cash, partially offset by working capital movements, including the settlement of trade payables accumulated in the previous quarter. Capital expenditures were disciplined at approximately $900,000.

CEO Joel Fournier announced his resignation effective October 31, 2026. The company is progressing with the commissioning of a new large log line at the Chapleau mill, expecting full financial contribution by year-end. Additionally, GreenFirst is exploring a partnership for a torrefied pellet facility to utilize sawmill residuals, with feasibility studies ongoing.

GreenFirst Forest Products Inc. (TSX: GFP) has secured more than $7.5 million in government support from Ontario to upgrade its Chapleau facility and explore biomass markets.

The funding comprises two distinct initiatives aimed at enhancing operational efficiency and diversifying revenue streams through sustainable forest management.

Infrastructure and Efficiency Upgrade

The Government of Ontario is providing more than $5.9 million via the Forest Sector Investment and Innovation Program (FSIIP). This capital supports the installation of a new sawline and a high-speed planer at the Chapleau site.

The funding structure includes a performance-based loan, with up to 50% forgivable upon meeting specific criteria. Both pieces of equipment are installed and currently ramping up operations. The project targets increased productivity, improved lumber recovery, and higher value extraction from raw logs.

Biomass Innovation Initiative

A separate grant of more than $1.6 million under the Forest Biomass Program will fund engineering and feasibility studies for a potential torrefied pellet facility.

This initiative explores new commercial applications for forest biomass residues. If developed, the facility holds long-term potential to create 30 direct and 70 indirect jobs in the region. GreenFirst is advancing this project in partnership with First Nations and other business partners, evaluating technical, commercial, and financial requirements.

What the Numbers Show

The total support of over $7.5 million represents a significant external validation of GreenFirst’s capital allocation strategy. Since commencing operations in 2021, the company has invested more than $70 million across its Ontario facilities. The current government backing effectively reduces the net capital outlay required for the Chapleau modernization, improving the return profile on these specific asset upgrades by offsetting costs through forgivable loans and grants.

Strategic Context

Joel Fournier, CEO of GreenFirst, highlighted that the new equipment enables the team to capture more recovery and value from every log. He noted that the torrefied pellet project could open new markets for residual biomass, leveraging Northern Ontario’s abundant wood fibre resources.

GreenFirst operates four sawmills across 6 million hectares of FSC-certified public forestlands in Ontario. The company positions itself as a forest-first business focused on sustainable management and lumber production.