RE:RE:RE:Call next week with JNHere are a few questions that have been on our minds:
Why are detailed bioenergy results no longer broken out as a separate reportable segment? You will probably get some BS answer about “single complex” or Cash Generating Unit” so the follow up is how does combining the two very different earnings streams help the investor correctly value the firm.
The bulk of the lumber sales appear to be to customers outside of Canada. Is this because of a pricing premium or some other reason? Would a greater volume of Canadian sales reduce the $100/mbf - $115/mbf freight cost from the Canadian mills? I’m wondering if Conifex simply doesn’t have the marketing clout in Canada vs other local competitors.
What derivatives are used and how? Specifically, is it futures and/or options, what tenors and cash or physical settled. Also, many companies in other industries break out details about their hedging programs. Why doesn’t Conifex disclose details of its hedging program?
Can it be confirmed there is a prepayment penalty on the bioenergy loan? The latest loan agreement highlights this but specifics are redacted. My guess is no lender would like their 6.15% loan paid out early without compensation for the lost income, but it would be nice to get that confirmed.
Can a range be provided for cost of goods sold per mbf for Mackenzie at near capacity levels of operation? We’ve gone through the Canadian only results for fiscal 2019, Q1/19, Q2/19, Q1/20 and Q2/20 and can’t get below $500/mbf for any period, recognizing that (1) all of the 2019 numbers include Fort St. James and (2) some assumptions have to be made about the 2020 bioenergy cost of goods sold to be stripped from the lumber ops. The five data points we are using have volumes ranging from 14% to 89% of capacity and $500/mbf to $584mbf. And five data points is not enough to come up with a statistically relevant fixed vs variable number, so some guidance there might help.
Compared to other firms we’ve talked to over the years, Conifex seems pretty good about providing information. And keep in mind selective disclosure rules.
Good luck and thanks.