Q4 2025 Acadian Timber Corp Earnings Call

February 12, 2026

Operator: Good day, and thank you for standing by. Welcome to the Acadian Timber Fourth Quarter 2025 Analyst Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Wood, Chief Financial Officer. Ma'am, please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1-1 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speaker today, Susan Wood, Chief Financial Officer. Ma'am, please go ahead.

Speaker #2: Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's fourth quarter conference call. With me on the call today is Adam Szeparski, Acadian's President and Chief Executive Officer.

Susan Wood: Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's fourth quarter conference call. With me on the call today is Adam Sheparski, Acadian's President and Chief Executive Officer. Before discussing Acadian's results, I will first remind everyone that in discussing our fourth quarter and full year financial and operating performance, the outlook for 2026, and in responding to your questions, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com. I'll begin by outlining the financial and operational highlights for our fourth quarter ended 31 December 2025.

Speaker #2: For discussing Acadian's results, I will first remind everyone that in discussing our Fourth Quarter and full-year financial and operating performance, the outlook for 2026 and in responding to your questions, we may make forward-looking statements.

Speaker #2: These statements are subject to known and unknown risks, and future results may differ materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com.

Speaker #2: I'll begin by outlining the financial and operational highlights for our fourth quarter, ended December 31, 2025. Adam will then comment on our operational activities and financial results for the full year, as well as our outlook for the remainder of 2026.

Susan Wood: Adam will then comment on our operational activities and financial results for the full year, as well as our outlook for the remainder of 2026. Acadian delivered solid Q4 results, with overall freehold timber sales volumes, excluding biomass, 21% higher than Q4 of 2024. Increased freehold sales volumes were partially offset by a decrease in our weighted average selling price, in large part due to changes in product mix, hauling distances, and fuel adjustment surcharges, and lower timber services activity. Sales for Q4 were CAD 22 million, an increase from CAD 20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions.

Speaker #2: Acadian delivered solid fourth quarter results, with overall freehold timber sales volumes, excluding biomass, 21% higher than the fourth quarter of 2024. Increased freehold sales volumes were partially offset by a decrease in our weighted average selling price, in large part due to changes in product mix, hauling distances, and fuel adjustment surcharges, and lower timber services activity.

Speaker #2: Sales for the fourth quarter were $22 million and increased from $20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions.

Speaker #2: In New Brunswick, a favorable shift in customer mix resulted in more harvesting on our freehold timberlands and less on Crown licensed timberlands, which increased freehold sales and reduced timber services revenue.

Susan Wood: In New Brunswick, a favorable shift in customer mix resulted in more harvesting on our freehold timberlands and less on Crown licensed timberlands, which increased freehold sales and reduced timber services revenue. Contractor availability improved in New Brunswick. However, limited trucking capacity continued to be a significant challenge in Maine. Softwood sawlog pricing decreased 2% year-over-year, with a higher value product mix offset by shorter hauling distances. Hardwood sawlog pricing declined 10%, reflecting a lower value product mix and ongoing weakness in lumber markets. Softwood pulpwood pricing was consistent with the prior year period, while hardwood pulpwood pricing decreased 12% due to shorter hauling distances and lower fuel adjustment surcharges. Biomass sales volumes were 12% higher than Q4 2024, while pricing decreased 12% as a greater proportion of sales were made roadside rather than delivered.

Speaker #2: Contractor availability improved in New Brunswick. However, limited trucking capacity continued to be a significant challenge in Maine. Softwood solid pricing decreased 2% year over year, with a higher value product mix offset by shorter hauling distances.

Speaker #2: Hardwood solid pricing declined 10%, reflecting a lower value product mix and ongoing weakness in lumber markets. Softwood pulpwood pricing was consistent with the prior-year period, while hardwood pulpwood pricing decreased 12% due to shorter hauling distances and lower fuel adjustment surcharges.

Speaker #2: Biomass sales volumes were 12% higher than Q4 2024, while pricing decreased 12% as a greater proportion of sales were made roadside rather than delivered.

Speaker #2: Overall, our weighted average selling price excluding biomass decreased 6% year over year. Operating costs and expenses were $17.7 million during the fourth quarter, compared to $17 million during the fourth quarter of 2024.

Susan Wood: Overall, our weighted average selling price, excluding biomass, decreased 6% year-over-year. Operating costs and expenses were $17.7 million during the fourth quarter, compared to $17 million during the fourth quarter of 2024. The increase was primarily due to higher sales volumes and higher land management costs, partially offset by lower timber services activity. In New Brunswick, weighted average variable costs decreased due to a higher proportion of softwood versus hardwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and reduced fuel adjustment costs. In Maine, cost of sales per cubic meter increased as compared to the prior year period due to lower production levels.

Speaker #2: The increase was primarily due to higher sales volumes and higher land management costs, partially offset by lower timber services activity. In New Brunswick, weighted average variable costs decreased due to a higher proportion of softwood versus hardwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and reduced fuel adjustment costs.

Speaker #2: In Maine, cost of sales per cubic meter increased as compared to the prior year period due to lower production levels. Adjusted EBITDA for the fourth quarter was $5.2 million, up from $3.7 million in the prior year period, and adjusted EBITDA margin improved to 23% compared to 18% in Q4 2024.

Susan Wood: Adjusted EBITDA for the fourth quarter was $5.2 million, up from $3.7 million in the prior year period, and Adjusted EBITDA margin improved to 23%, compared to 18% in Q4 2024. Our net income for the fourth quarter was $39.7 million, or $2.18 per share, compared to $5.6 million, or $0.32 per share in the same period of 2024. The increase in net income was largely due to the impact of higher gains on non-cash fair value adjustments in 2025 compared to 2024, partially offset by lower operating income and higher income tax expense. Acadian generated $1.9 million of Free Cash Flow and declared dividends of $5.3 million to our shareholders during the fourth quarter, or $0.29 per share.

Speaker #2: Our net income for the fourth quarter was $39.7 million, or $2.18 per share, compared to $5.6 million, or $0.32 per share, in the same period of 2024.

Speaker #2: The increase in net income was largely due to the impact of higher gains on non-cash fair value adjustments in 2025 compared to 2024, partially offset by lower operating income and higher income tax expense.

Speaker #2: Acadian generated 1.9 million dollars of free cash flow and declared dividends of 5.3 million dollars to our shareholders during the Fourth Quarter, or 29 cents per share.

Speaker #2: I'll now move into the Fourth Quarter results for our New Brunswick operations. Sales for our New Brunswick timberlands were 19 million dollars, up from 17.2 million dollars in the prior year period.

Susan Wood: I'll now move into the fourth quarter results for our New Brunswick operations. Sales for our New Brunswick Timberlands were CAD 19 million, up from CAD 17.2 million in the prior year period. Sales volume, excluding biomass, increased 23%, driven by increased contractor availability and a favorable shift in customer mix, which shifted harvesting volumes from Crown licensed timberlands to our freehold timberlands. Favorable weather conditions further supported higher sales volumes. With regard to softwood sawlogs, demand was strong and volumes increased 54% compared to Q4 2024, largely due to the favorable shift in customer mix noted earlier. Pricing was consistent with the prior year period, supported by modest improvement in softwood lumber markets and a higher value product mix, partially offset by shorter hauling distances. Hardwood sawlogs demand and pricing were negatively affected by weakness in end-use markets.

Speaker #2: Sales volume excluding biomass increased 23%, driven by increased contractor availability and a favorable shift in customer mix, which shifted harvesting volumes from crown licensed timber licensed timberlands to our freehold timberlands.

Speaker #2: Favorable weather conditions further supported higher sales volumes. With regard to softwood solids, demand was strong and volumes increased 54% compared to Q4 2024, largely due to the favorable shift in customer mix noted earlier.

Speaker #2: Pricing was consistent with the prior-year period, supported by modest improvement in softwood lumber markets and a higher-value product mix, partially offset by shorter hauling distances.

Speaker #2: Hardwood solid demand and pricing were negatively affected by weakness in end-use markets. Sales volumes declined 23% and pricing decreased 12% year over year, reflecting both market conditions and a lower-value product mix.

Susan Wood: Sales volumes declined 23% and pricing decreased 12% year-over-year, reflecting both market conditions and a lower value product mix. Softwood pulpwood demand was also steady. Volumes increased 21% in New Brunswick, and pricing was consistent year-over-year. Hardwood pulpwood volumes decreased 18% as compared to Q4 2024, with demand impacted by tariff uncertainty. Pricing decreased 13% due to shorting haul- shorter hauling distances and lower fuel adjustment surcharges. Overall, New Brunswick's weighted average selling price, excluding biomass, decreased 6% as compared to Q4 2024. Operating costs and expenses were CAD 13.6 million during the fourth quarter, compared to CAD 13.4 million in the prior year period. Higher costs associated with increased freehold sales volumes were offset by lower timber services activity and reduced weighted average variable costs.

Speaker #2: Softwood Pulpwood demand was also steady. Volumes increased 21% in New Brunswick and pricing was consistent year over year. Hardwood Pulpwood volumes decreased 18% as compared to Q4 2024 with demand impacted by tariff uncertainty.

Speaker #2: Pricing decreased 13% due to shorting shorter hauling distances and lower fuel adjustment surcharges. Overall, New Brunswick's weighted average selling price excluding biomass decreased 6% as compared to Q4 2024.

Speaker #2: Operating costs and expenses were $13.6 million during the fourth quarter, compared to $13.4 million in the prior year period. Higher costs associated with increased freehold sales volumes were offset by lower timber services activity and reduced weighted average variable costs.

Speaker #2: Weighted average variable costs, excluding biomass, decreased 15% compared with the fourth quarter of 2024 due to a higher proportion of softwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and lower fuel adjustment costs.

Susan Wood: Weighted average variable costs, excluding biomass, decreased 15% compared to the fourth quarter of 2024, due to a higher proportion of softwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and lower fuel adjustment costs. New Brunswick generated CAD 5.5 million of Adjusted EBITDA for the fourth quarter, up from CAD 4.2 million dollars in the prior period. Adjusted EBITDA margin improved to 29% compared to 24% last year. Switching over to Maine. Sales during the fourth quarter totaled $3 million, consistent with Q4 of last year. Sales volume, excluding biomass, increased 5% compared to the same volume, same period of 2024, supported by more favorable weather conditions. However, deliveries were hindered by limited trucking capacity. Softwood sawlog volumes increased 12%, although pricing decreased 12% in US and Canadian dollar terms.

Speaker #2: New Brunswick generated $5.5 million of adjusted EBITDA for the fourth quarter, up from $4.2 million in the prior-year period. Adjusted EBITDA margin improved to 29% compared to 24% last year.

Speaker #2: Switching over to Maine. Sales during the Fourth Quarter totaled 3 million dollars, consistent with Q4 of last year. Sales volume excluding biomass increased 5% compared to the same volume same period of 2024, supported by more favorable weather conditions.

Speaker #2: However, deliveries were hindered by limited trucking capacity. Softwood solid volumes increased 12%, although pricing decreased 12% in US and Canadian dollar terms. Pricing was impacted by the incurrence of stumpage sales, which did not occur in the fourth quarter of 2024, and increased roadside sales, partially offset by a higher value product mix.

Susan Wood: Pricing was impacted by the incurrence of frontage sales, which did not occur in Q4 2024, and increased roadside sales, partially offset by a higher value product mix. Excluding frontage sales, softwood sawlogs pricing increased 6%. Hardwood sawlogs volumes were negligible during Q4 2024. Softwood pulpwood volumes were also negligible in Maine due to the extended shutdown of a major softwood pulpwood customer. Hardwood pulpwood volumes were consistent with the prior period, though pricing decreased 6% due to lower demand. Overall, the weighted average selling price in Maine, excluding biomass, decreased 8% compared to Q4 2024, primarily due to frontage sales. Excluding frontage sales, the weighted average selling price, excluding biomass, increased 3%.

Speaker #2: Excluding stumpage sales, softwood solid pricing increased 6%. Hardwood solid volumes were negligible during the Fourth Quarter of the year. Softwood Pulpwood volumes were also negligible in Maine due to the extended shutdown of a major softwood pulpwood customer.

Speaker #2: Hardwood pulpwood volumes were consistent with the prior-year period, though pricing decreased 6% due to lower demand. Overall, the weighted average selling price in Maine, excluding biomass, decreased 8% compared to the fourth quarter of 2024, primarily due to stumpage sales.

Speaker #2: Excluding stumpage sales, the weighted average selling price excluding biomass increased 3%. Operating costs and expenses for the Fourth Quarter were 3.8 million dollars, compared to 3.3 million dollars during the same period in 2024 as a result of higher average operating costs and expenses per cubic meter produced, adjusted EBITDA for the quarter was negative 53,000 dollars, compared to negative 223,000 dollars, and adjusted EBITDA margin was negative 2% compared to negative 7% in the prior year period.

Susan Wood: Operating costs and expenses for the Q4 were $3.8 million, compared to $3.3 million during the same period in 2024, as a result of higher average operating costs and expenses per cubic meter produced. Adjusted EBITDA for the quarter was -$53,000, compared to -$223,000, and adjusted EBITDA margin was -2%, compared to -7% in the prior period. Lower operating income was offset by higher gains on sale of timberlands and other fixed assets. With respect to Acadian's financial position at the end of the quarter, it remained strong, ending with a net liquidity position of $17.4 million, including a cash balance of $4.8 million and our revolving credit facilities, which remain undrawn. With that, I'll turn the call over to Adam.

Speaker #2: Lower operating income was offset by higher gains on sale of timberlands and other fixed assets. With respect to Acadian's financial position at the end of the quarter, it remained strong ending with a net liquidity position of 17.4 million dollars including a cash balance of 4.8 million dollars and a revolving credit facilities which remain undrawn.

Speaker #2: With that, I'll turn the call over to Adam.

Speaker #1: Thank you, Susan. And good afternoon, everyone. As always, health and safety remain Acadian's top priority. I'm pleased to report that we had no recordable safety incidents during the Fourth Quarter.

Adam Sheparski: Thank you, Susan, and good afternoon, everyone. As always, health and safety remain Acadian's top priority. I'm pleased to report that we had no recordable safety incidents during Q4. As we have said many times, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business, and incident reduction continues to be a primary focus. 2025 was another busy year for Acadian. As part of our year-end review, I want to again highlight the meaningful steps we took to address the ongoing challenge of limited contractor availability in Maine by establishing our own internal logging operations. In January, we purchased several pieces of harvesting equipment and hired equipment operators. Then in February, we acquired additional logging and related assets, including harvesting, trucking, and road-building equipment, and related real estate.

Speaker #1: As we have said many times, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business and incident reduction continues to be a primary focus.

Speaker #1: 2025 was another busy year for Acadian. As part of our year-end review, I want to again highlight the meaningful steps we took to address the ongoing challenge of limited contractor availability in Maine by establishing our own internal logging operations.

Speaker #1: In January, we purchased several pieces of harvesting equipment and hired equipment operators. Then, in February, we acquired additional logging and related assets, including harvesting, trucking, and roadworking equipment, as well as related real estate.

Speaker #1: These assets, combined with an established workforce, constituted an operational logging business which has operated on the Acadian land base for many years. As part of the transition, some operations are, and will continue to be, performed by external contractors in Maine.

Adam Sheparski: These assets, combined with an established workforce, constituted an operational logging business, which has operated on the Acadian land base for many years. As part of the transition, some operations are, and will continue to be, performed by external contractors in Maine, including a significant portion of our trucking. During 2025, we experienced a shortfall in external trucking capacity, which impacted our ability to meet delivery demands. To address this, we are actively expanding our contractor network, working with our customers to align on solutions, and exploring options within our internal operations to ensure greater reliability moving forward. Our strategic transition in Maine from contractor-based logging to internal logging operations has temporarily reduced production volumes. During 2025, production volumes were below anticipated long-term levels, and operating costs per cubic meter of timberland produced remained elevated relative to long-term targets by approximately 30% as of Q4.

Speaker #1: Including a significant portion of our trucking. During 2025, we experienced a shortfall in external trucking capacity, which impacted our ability to meet delivery demands.

Speaker #1: To address this, we are actively expanding our contractor network, working with our customers to align on solutions, and exploring options within our internal operations to ensure greater reliability moving forward.

Speaker #1: Our strategic transition in Maine from contractor-based logging to internal logging operations has temporarily reduced production volumes. During 2025, production volumes were below anticipated long-term levels, and operating costs per cubic meter of timberland produced remained elevated relative to long-term targets by approximately 30% as of the fourth quarter.

Speaker #1: The shift to a more fixed cost structure has also changed our historical cost patterns, making costs less directly tied to revenue, which is more noticeable during periods of lower sales volumes.

Adam Sheparski: The shift to a more fixed cost structure has also changed our historical cost patterns, making costs less directly tied to revenue, which is more noticeable during periods of lower sales volumes. To support long-term improvement, we are investing in operator training and optimizing equipment utilization to enhance efficiency, build long-term capabilities, and ensure sustained cost improvements. We expanded the operational workforce in Q3, and production levels notably improved in Q4 and have continued to improve since. Turning to our operating and financial results for the year, Acadian's 2025 revenues for timber sales and services were CAD 87 million, compared to CAD 91.6 million in 2024. In 2024, carbon credit sales contributed an additional CAD 24.6 million to total sales, while no carbon credit sales occurred in 2025.

Speaker #1: To support long-term improvement, we are investing in operator training and optimizing equipment utilization to enhance efficiency. We aim to build long-term capabilities and ensure sustained cost improvements.

Speaker #1: We expanded the operational workforce in the Third Quarter and production levels notably improved in the Fourth Quarter and have continued to improve since. Turning to our operating and financial results for the year, Acadian's 2025 revenues for timber sales and services were 87 million dollars compared to 91.6 million dollars in 2024.

Speaker #1: In 2024, carbon credit sales contributed an additional 24.6 million dollars to total sales while no carbon credit sales occurred in 2025. Adjusted EBITDA totaled 15.8 million dollars compared to 38.9 million dollars during 2024.

Adam Sheparski: Adjusted EBITDA totaled CAD 15.8 million, compared to CAD 38.9 million during 2024, and adjusted EBITDA margin was 18%, compared to 33% in the prior year. Overall, we achieved solid results from our timber operations in 2025, despite a multitude of challenges and amid a high level of economic uncertainty. We are very pleased with the performance of our New Brunswick operations, which delivered increased sales and sales volumes, lower variable costs, and higher adjusted EBITDA as compared to 2024. New Brunswick's steady operations helped to offset the operational challenges in Maine. Overall, demand for our timber products was mixed but generally stable, despite the heightened economic uncertainty underscoring the resilience of Northeast regional log markets. Timber pricing softened modestly but remained relatively stable over the year.

Speaker #1: And adjusted EBITDA margin was 18% compared to 33% in the prior year. Overall, we achieved solid results from our timber operations in 2025 despite a multitude of challenges and amid a high level of economic uncertainty.

Speaker #1: We are very pleased with the performance of our New Brunswick operations which delivered increased sales and sales volumes, lower variable costs, and higher adjusted EBITDA as compared to 2024.

Speaker #1: New Brunswick's steady operations helped to offset the operational challenges in Maine. Overall, demand of our demand for our timber products was mixed but generally stable.

Speaker #1: Despite this heightened economic uncertainty, it underscores the resilience of Northeast Regional Log Markets. Timber pricing softened modestly but remained relatively stable over the year. Timber sales volume, excluding biomass, was consistent year over year but was offset by a decrease in our weighted average selling price and lower timber services activity.

Adam Sheparski: Timber sales volume, excluding biomass, was consistent year-over-year, but was offset by a decrease in our weighted average selling price and lower timber services activity. New Brunswick benefited from increased contractor capacity and delivered a 10% increase in sales volumes, excluding biomass. In contrast, Maine sales volumes declined 40%, reflecting unfavorable weather in the first half of the year, limited trucking capacity, and the short-term productivity impacts of our operational transition. Our weighted average selling price for 2025 was 4% lower than 2024. Softwood sawlog pricing was consistent year-over-year, supported by modest improvements in end-use markets. Softwood pulpwood demand started low early in the year, which contributed to a 5% decrease in pricing year-over-year, but improved in the second half of the year.

Speaker #1: New Brunswick benefited from increased contractor capacity and delivered a 10% increase in sales volumes, excluding biomass. In contrast, Maine's sales volumes declined 40%, reflecting unfavorable weather in the first half of the year, limited trucking capacity, and the short-term productivity impacts of our operational transition.

Speaker #1: Our weighted average selling price for 2025 was 4% lower than 2024. Softwood sawlog pricing was consistent year over year, supported by modest improvements in end-use markets.

Speaker #1: Softwood Pulpwood demand started low early in the year which contributed to a 5% decrease in pricing year over year but improved in the second half of the year.

Speaker #1: Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices, and combined with a lower value product mix, resulted in a 7% decrease in pricing from 2024.

Adam Sheparski: Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices, and combined with a lower value product mix, resulted in a 7% decrease in pricing from 2024. However, demand for Acadian's hardwood sawlogs remained stable. Hardwood pulpwood demand softened due to tariff-related uncertainty, and shorter hauling distances contributed to a pricing decrease of 3%. Operating costs and expenses related to timber sales and services were relatively consistent, with lower average costs in New Brunswick, offset by higher average costs in Maine. Now, turning to our outlook for the remainder of 2026. Near-term pressures on end-use markets have continued, with trade policy developments adding further complexity for forest products companies on both sides of the border. The escalation of US duties on Canadian softwood lumber, along with tariffs on select wood-based products, poses a potential risk to Canadian exporters and may dampen cross-border demand.

Speaker #1: However, demand for Acadian's hardwood sawlogs remained stable. Hardwood pulpwood demand softened due to tariff-related uncertainty, and shorter hauling distances contributed to a pricing decrease of 3%.

Speaker #1: Operating costs and expenses related to timber sales and services were relatively consistent, with lower average costs in New Brunswick offset by higher average costs in Maine.

Speaker #1: Now turning to our outlook for the remainder of 2026, near-term pressures on end-use markets have continued with trade policy developments adding further complexity for forest products companies on both sides of the border.

Speaker #1: The escalation of U.S. duties on Canadian softwood lumber, along with tariffs on select wood-based products, poses a potential risk to Canadian exporters and may dampen cross-border demand.

Speaker #1: That said, macroeconomic indicators remain supportive. North American interest rates are easing, and the outlook for U.S. housing starts is steady at approximately 1.38 million starts in 2026, compared to 1.35 million in 2025.

Adam Sheparski: That said, macroeconomic indicators remain supportive. North American interest rates are easing, and the outlook for US housing starts is steady at approximately 1.38 million starts in 2026, compared to 1.35 million in 2025. We remain confident that the stability of the Northeastern forestry sector, combined with long-term demand for new homes, and repair and remodel activity, will support the long-term demand for our products. On the operations side, we maintained sufficient contractor availability in New Brunswick through 2025, and we expect this to continue into 2026. As I mentioned earlier, production from our internal harvesting operations in Maine improved during Q4 2025, and we expect this momentum to continue through the winter, supporting further progress towards our targeted cost structure.

Speaker #1: We remain confident that the stability of the Northeastern forestry sector, combined with long-term demand for new homes and repair and remodel activity, will support the long-term demand for our products.

Speaker #1: On the operations side, we maintain sufficient contractor availability in New Brunswick through 2025, and we expect this to continue into 2026. As I mentioned earlier, production from our internal harvesting operations in Maine improved during the fourth quarter of 2025.

Speaker #1: And we expect this momentum to continue through the winter, supporting further progress towards our targeted cost structure. We do expect production levels to ease somewhat in the second and third quarters of 2026.

Adam Sheparski: We do expect production levels to ease somewhat in Q2 and Q3 of 2026, reflecting the usual spring slowdown and lower productivity of the harvest stands planned for the warmer months. Demand for Acadian sawlogs continues to be driven by regional supply and demand, and is expected to remain stable in the near term, while pricing may remain challenged until end-use markets improve. Demand and pricing for softwood pulpwood, and hardwood pulpwood is expected to remain at reduced levels in the near term. With respect to voluntary carbon credits, demand and pricing are expected to remain stable. Registration of the next batch of credits from our ongoing project in Maine was delayed in 2025 as a result of transitioning our project to version 2.1 of the ACR's Improved Forest Management Protocol.

Speaker #1: Reflecting the usual spring slowdown and lower productivity of the harvest stands planned for the warmer months, demand for Acadian saw logs continues to be driven by regional supply and demand and is expected to remain stable in the near term, while pricing may remain challenged until end-use markets improve.

Speaker #1: Demand and pricing for softwood pulpwood and hardwood pulpwood are expected to remain at reduced levels in the near term. With respect to voluntary carbon credits, demand and pricing are expected to remain stable.

Speaker #1: Registration of the next batch of credits for our ongoing project in Maine was delayed in 2025 as a result of transitioning our project to version 2.1 of the ACR's Improved Forest Management Protocol.

Speaker #1: However, we are expecting registration in the near term which is expected to be approximately 400,000 credits. While the updated protocol may result in slightly fewer total credits than originally expected all credits generated will be carbon removal credits.

Adam Sheparski: However, we are expecting registration in the near term, which is expected to be approximately 400,000 credits. While the updated protocol may result in slightly fewer total credits than originally expected, all credits generated will be carbon removal credits, which are generally more attractive to customers and expected to command higher pricing. Beyond our current project, we are also evaluating future opportunities to develop additional projects for the remaining 900,000 acres under either the Canadian Compliance Protocol that was finalized in 2024, or voluntary programs similar to our current project. We also expect to remain active in our real estate business in 2026, as we begin selling residential lots and continue pursuing investments and partnerships in renewable energy in both Maine and New Brunswick.

Speaker #1: Which are generally more attractive to customers and expected to demand higher pricing. Beyond our current project, we are also evaluating future opportunities to develop additional projects for the remaining 900,000 acres under either the Canadian compliance protocol that was finalized in 2024 or voluntary programs similar to our current project.

Speaker #1: We also expect to remain active in our real estate business in 2026, as we begin selling residential lots and continue pursuing investments and partnerships in renewable energy in both Maine and New Brunswick.

Speaker #1: In closing, our priorities for 2026 remain clear. We will lead with the highest standards of safety and environmental stewardship. We will stay focused on achieving the best possible margins across our product lines.

Adam Sheparski: In closing, our priorities for 2026 remain clear: We will lead with the highest standards of safety and environmental stewardship. We will stay focused on achieving the best possible margins across our product lines, and we will keep pushing targeted improvements throughout the business to strengthen cash flow and support long-term value. A key focus for 2026 will be improving productivity in our internal harvesting operations in Maine, while keeping a close eye on costs. We will also continue working closely with our contractors in both New Brunswick and Maine to meet our harvesting goals and ensure we are meeting the delivery demands of our customers. As always, our work is grounded in sustainable forestry practices. That commitment will continue to guide us as we strengthen the business and deliver long-term value for our shareholders. With that, we are now available to take your questions. Operator?

Speaker #1: And we will keep pushing targeted improvements throughout the business to strengthen cash flow and support long-term value. A key focus for 2026 will be improving productivity in our internal harvesting operations in Maine.

Speaker #1: While keeping a close eye on costs. We will also continue working closely with our contractors in both New Brunswick and Maine to meet our harvesting goals and ensure we are meeting the delivery demands of our customers.

Speaker #1: As always, our work is grounded in sustainable forestry practices. That commitment will continue to guide us as we strengthen the business and deliver long-term value for our shareholders.

Speaker #1: With that, we are now available to take your questions. Operator?

Speaker #2: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question will come from the line of Matthew McKellar with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #2: One moment while we compile our Q&A roster. Our first question will come from the line of Matthew McKeller with RBC Capital Markets. Your line is open.

Speaker #2: Please go ahead.

Speaker #3: Thanks. Good afternoon. First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production's continued to improve in the Q1.

Matthew McKellar: Thanks, and good afternoon. First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production's continued to improve into Q1. Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then second, you noted that operating costs per meter, cubic meter, are about 30% above the long-term target. Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs?

Matt McKellar: Thanks, and good afternoon. First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production's continued to improve into Q1. Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then second, you noted that operating costs per meter, cubic meter, are about 30% above the long-term target. Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs?

Speaker #3: Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then, second, you noted that operating costs per cubic meter are about 30% above the long-term target.

Speaker #3: Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs?

Speaker #3: Thanks.

Adam Sheparski: Thanks, Matthew. Starting with your first question regarding volumes, how we see it, I think the easiest way to address that is to look at our allowable volumes on an annual basis, as we disclose in our AIFs. Call that 240,000 cubic meters. Probably about 10% less than that, just as we have some marketability issues with, you know, softwood pulpwood is really what it comes down to. So I would take approximately 10% off of that to give you a volume for the rest of the year, for 2026. That's our target. We believe we can achieve that. Regarding the second question on the 30% cost levers, most of our levers are internally generated through the internal logging operations.

Speaker #4: Thanks, Matthew. Starting with your first question regarding volumes—how we see it—I think the easiest way to address that is to look at our allowable volumes on an annual basis, as we disclose in our AIFs, called at 240,000 cubic meters, probably about 10% less than that, just as we have some marketability issues with softwood pulpwood; is really what it comes down to.

Speaker #4: So I would take approximately 10% off of that to give you a volume for the rest of the year, for 2026. That's our target.

Speaker #4: We believe we can achieve that. Regarding the second question on the 30% cost levers, most of our levers are internally generated through the internal logging operations.

Adam Sheparski: You know, it's a very fixed cost structure that we are operating in right now. You know, even some of the things that you would think would be quite variable, like fuel, were, you know, over the last 12 months, we've realized it's actually quite fixed in a lot of the equipment, believe it or not. And productivity is just going to be so crucial to achieving that 30%. But most of, if not all of that 30%, is under our control, as far as productivity is concerned.

Speaker #4: It's a very fixed cost structure that we are operating in right now. Even some of the things that you would think would be quite variable, like fuel, over the last 12 months we've realized are actually quite fixed in a lot of the equipment, believe it or not.

Speaker #4: And productivity is just going to be so crucial to achieving that 30%. But most of, if not all, of that 30% is under our control.

Speaker #4: As far as productivity is concerned.

Speaker #3: Okay, that's helpful. Thank you. Next for me, could you maybe just talk a little bit about how US tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side?

Matthew McKellar: Okay, that's helpful. Thank you. Next for me, could you maybe just talk a little bit about how US tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side? And with that, how are you thinking about risk to, maybe, volumes and pricing, if those tariffs end up stepping higher into 2027? Thank you.

Matt McKellar: Okay, that's helpful. Thank you. Next for me, could you maybe just talk a little bit about how US tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side? And with that, how are you thinking about risk to, maybe, volumes and pricing, if those tariffs end up stepping higher into 2027? Thank you.

Speaker #3: And with that, how are you thinking about risk to maybe volumes and pricing if those tariffs end up stepping higher into 2027? Thank you.

Speaker #4: Yeah. Great question. It is a tariff duties have really been causing a lot of noise in the news in particular. Hardwood is an interesting one for Acadian.

Adam Sheparski: Yeah. Great question. It is a tariff duties have really been causing a lot of noise in the news in particular. Hardwood is an interesting one for Acadian. Hardwood timber, in particular, is probably more important of a conversation than hardwood lumber, especially in our region. Hardwood timber volumes across the region, or the supply of hardwood timber logs in particular, is expected to continue to decrease. So more or less supporting our volumes moving forward. I think where we find ourselves right now is these end-use markets, which are probably being driven by cabinets, as you say, the number of things crossing the border, home starts, for instance, you know, less hardwood floors, less cabinets. That's keeping the price of end use markets or hardwood lumber, the pricing down.

Speaker #4: Hardwood timber, in particular, is probably more important of a conversation than hardwood lumber, especially in our region. Hardwood timber volumes across the region, or the supply of hardwood timber logs in particular, is expected to continue to decrease.

Speaker #4: So more or less supporting our volumes moving forward. I think where we find ourselves right now is these end-use markets which are probably being driven by cabinets, as you say, any number of things crossing the border.

Speaker #4: Homestarts, for instance, less hardwood floors, less cabinets. That's keeping the price of end-use markets or hardwood lumber, the pricing down. So it's hard for us to push through pricing.

Adam Sheparski: So it's hard for us to push through pricing. Volume isn't a problem for Acadian, for hardwood sawlogs. It's being able to push that pricing through to our customers and keep them running, to be frank. And so, that's what we're remaining focused on is those hardwood lumber markets and pushing through as many price increases as we possibly can, as those hopefully will improve over the next near to midterm.

Speaker #4: Volume is an issue for Acadian for hardwood saw logs. It's being able to push that pricing through to our customers and keep them running, to be frank.

Speaker #4: And so that's what we're remaining focused on is those hardwood lumber markets and pushing through as many price increases as we possibly can as those hopefully will improve over the next year to midterm.

Speaker #3: Great, that's helpful. If I could, just one last one. You've brought up trucking constraints, and certainly this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December.

Matthew McKellar: Great, that's helpful. If I could just sneak one last one in.

Matt McKellar: Great, that's helpful. If I could just sneak one last one in.

Adam Sheparski: Sure.

Matthew McKellar: You brought up, you know, trucking constraints, and certainly this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December.

Matt McKellar: You brought up, you know, trucking constraints, and certainly this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December.

Speaker #3: Is that something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one?

Adam Sheparski: Mm-hmm.

Matthew McKellar: Is that something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one? Thanks.

Matt McKellar: Is that something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one? Thanks.

Speaker #3: Thanks.

Speaker #4: Yeah. It's a great question. We've been talking about it internally and literally that's all we've been doing is talking about it. We've been talking a lot about AI and data especially as it relates to inventory which is really neat.

Adam Sheparski: Yeah, it's a great question. We've been talking about it internally, and literally that's all we've been doing is talking about it. We've been talking a lot about AI and data, especially as it relates to inventory, which is really, really neat. And some of the information that's coming out and some of the data that we're receiving has been really interesting to consume. Nothing obviously to report. On the trucking side, there probably is some availability for us in the future when those systems get refined, because we do have a significant amount of off-road hauling that happens on our roads that are restricted. So there is potentially something there. We are keeping an eye on it, but certainly haven't done anything in that regard as of yet.

Speaker #4: And some of the information that's coming out, and some of the data that we're receiving, has been really interesting to consume. Nothing, obviously, to report.

Speaker #4: On the trucking side, there probably is some availability for us in the future when those systems get refined, because we do have a significant amount of off-road hauling that happens on our roads that are restricted.

Speaker #4: So there is potentially something there. We are keeping an eye on it, but certainly haven't done anything in that regard as of yet. But I would say the off-road availability to Acadian, which you locally you probably don't realize, but locally is a very big benefit to us to allow us to do hauling a lot longer than a lot of our friends here in New Brunswick.

Adam Sheparski: But, I would say the off-road availability to Acadian, which you know, locally, you probably don't realize, but locally is a very big benefit to us to allow us to do hauling a lot longer than a lot of our friends here in New Brunswick. And would lend itself to an autonomous driving vehicle as well.

Speaker #4: And would lend itself to an autonomous driving vehicle as well.

Speaker #3: Thanks very much for all the color. I'll turn it back.

Matthew McKellar: Thanks very much for all the color. I'll turn it back.

Matt McKellar: Thanks very much for all the color. I'll turn it back.

Speaker #4: Thanks, Matthew.

Adam Sheparski: Thanks, Matthew.

Speaker #5: Thank you. And I would like to hand the conference back over to Adam Shiparski for closing remarks.

Operator: Thank you, and I would like to hand the conference back over to Adam Sheparski for closing remarks.

Speaker #4: Thank you, operator. On behalf of the board and management of Acadian, I would like to thank all of our shareholders for their ongoing support. Thank you.

Adam Sheparski: Thanks, operator. On behalf of the board and management of Acadian, I would like to thank all of our shareholders for their ongoing support. Thank you, stay safe, and we look forward to you joining us for our virtual AGM in Q1 of 2026 conference call, both of which are on 7 May. Goodbye.

Speaker #4: Stay safe. And we look forward to you joining us for our virtual AGM and first quarter of 2026 conference call, both of which are on May 7th.

Speaker #4: Goodbye.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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