Acadian Timber Stock

Good day, and thank you for standing by. Welcome to the Acadian Timber Q2 2026 Analyst Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like to hand the conference over to your first speaker today, Susan Wood, Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's Second Quarter Conference Call. With me on the call today is Malcolm Cockwell, Acadian's Chair and Interim President and Chief Executive Officer.

Before discussing Acadian's results, I'll first remind everyone that in discussing our second quarter financial and operating performance, the outlook for the remainder of 2026 and 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 second quarter ended June 27, 2026, then Malcolm will discuss the progress we've made on our operations in Maine and conclude with our outlook for the remainder of 2026.

The second quarter is traditionally our lowest period of production of the year due to seasonal operational conditions. However, volumes during Q2 2026 were further impacted by elevated customer inventories following a highly productive winter in the region, particularly in New Brunswick. Our performance in Maine improved as compared to Q2 2025. We adjusted the scale of our internal harvesting operations to focus on improving efficiency and reducing operating costs and we noted positive progress towards these goals.

For Q2 2026, Acadian generated $1.3 million of adjusted EBITDA and $1.3 million of net income, compared to $2.4 million of adjusted EBITDA and $2.7 million of net income in the same period last year. On a per share basis, net income was $0.07, compared to $0.15 in the same quarter last year. Revenue in Q2 2026 was $14.6 million, compared to $17.1 million in Q2 2025, reflecting lower volumes, partially offset by a 19% increase in the weighted average selling price driven by stronger softwood lumber markets, higher fuel surcharges and longer hauling distances.

Operating costs and expenses decreased $1.7 million from Q2 2025 due to lower sales volumes, operational efficiencies in Maine that began taking effect during Q2 2026, and lower selling and administrative costs, partially offset by higher fuel adjustment costs and longer hauling distances.

Net income for the quarter reflected lower operating income, higher interest expense and higher income tax expense relative to Q2 2025. These impacts were partially offset by higher noncash fair value adjustments.

From a segment perspective, New Brunswick freehold sales volumes decreased 38% as compared to Q2 2025, but were partially offset by an increase in the weighted average selling price, excluding biomass, of 19%. The increase in the weighted average selling price was driven by stronger softwood lumber markets, higher fuel surcharges and longer hauling distances. Variable costs were similarly impacted by higher fuel costs and longer hauling distances.

Total sales were $12 million, compared to $14.4 million in Q2 2025, and adjusted EBITDA was $2.1 million, compared to $4 million.

In Maine, freehold sales volumes decreased 31% due to reduced harvesting activity as internal harvesting operations were scaled down to focus on improving efficiency and reducing operating costs. This was offset by a 16% increase in the weighted average selling price driven by a higher value product mix, increased fuel surcharges and longer hauling distances as compared to Q2 2025.

Cost of sales per cubic meter produced decreased 7% with the impacts of operational efficiencies, partially offset by higher fuel costs and longer hauling distances. Total sales were $2.6 million, compared to $2.7 million in Q2 of 2025 and adjusted EBITDA was negative $400,000 compared to negative $900,000 last year.

Turning to liquidity. The company ended the quarter with net liquidity of $15 million, including cash and available credit capacity, net of required minimum balances related to long-term debt. A portion of our long-term debt totaling $45 million is scheduled to mature in March of 2027. It is our intention to refinance the debt prior to the maturity date.

With that, I'll turn the call over to Malcolm.

Thank you, Susan, and good afternoon, everyone. As Susan mentioned, I will first address how we have improved our internal harvesting operations in Maine, which we continue to view as a major challenge and a major opportunity. And then I will conclude with our outlook for the remainder of 2026.

With respect to Maine, I'll start with some history. In early 2025, we established internal harvesting operations in order to overcome reduced regional harvesting and trucking capacity, escalating harvesting and trucking costs and a changing forest profile that generally requires modern cut-to-length equipment. The concept was good, but the results were poor throughout 2025.

Over the course of the second quarter of this year, we made significant changes to the scale and structure of these operations. Rather than striving to produce cubic meters of wood, we worked towards reducing the cost per cubic meter of wood being produced. I will share a few anecdotes to illustrate our approach over the last few months.

First, we scaled down the operations to the most productive group of operators and equipment, and then improved the data flow from our equipment in order to address production bottlenecks. We increased the use of optimization software in those machines, adjusted our different machines work together in a harvest block and dialed in our approach to block selection to ensure that our crews were working in conditions that maximize their productivity within the constraints of our sustainable forest management plan.

In addition to these operational challenges, we reduced our fixed costs to ensure that they are appropriate for the scale of our operations in Maine, and we repositioned the business to rely on our internal harvesting capacity where it makes sense to do so, while utilizing third-party contractors where their equipments or capabilities can provide the greatest operational advantage.

These steps that were taken over the course of the second quarter are showing positive boots on the ground results. And these steps are also beginning to show in our overall financial results. While Maine did not achieve profitability during the quarter, the year-over-year improvement in adjusted EBITDA demonstrates that these operational changes are progressing in the right direction. We are laser-focused on further improving these operations and expect to delivering stronger results through the balance of the year as compared to 2025.

Turning to our outlook. Our overall outlook is positive for the rest of 2026. With respect to volumes and regional performance in New Brunswick, we expect sufficient contractor availability to continue through the year. In Maine, we expect the progress that I just discussed to continue through the remainder of the year as well.

On the demand side, regional supply dynamics continue to be the primary driver of our markets. In New Brunswick, the elevated customer roundwood inventories that constrained deliveries during Q2 have now returned to more normal levels, and we therefore expect sales to match harvesting capacity.

Looking ahead, we expect sawlog demand to remain relatively stable in the near term. However, pricing could continue to face pressure until end use markets improve. For pulpwood, both demand and pricing in New Brunswick and Maine are expected to remain soft until existing customers increase production and/or new pulpwood and biomass consuming facilities come online.

From a broader market perspective, we're encouraged by the underlying market fundamentals. Most macroeconomic indicators are positive and the consensus forecast for U.S. housing starts remain steady. In addition, temporary and permanent curtailments at forest products facilities in other parts of North America are expected to support demand and pricing conditions for our customers in both New Brunswick and Maine. Overall, these trends reinforce our confidence in the long-term stability of the Northeastern forestry sector. That said, there are still challenges. Tariffs and duties continue to impact many of our customers and higher fuel costs are also putting pressure on their operations.

While we have not seen significant customer curtailments so far this year in New Brunswick or Maine, these factors are likely to continue impacting their production levels and therefore, their demand for the primary forest products that Acadian produces.

Turning to carbon credits. Demand and pricing remain stable. The issuance of the next tranche of carbon credits from our current project has been delayed due to the transition to ACR's updated improved forest management protocol. We now expect the registration of those additional credits in the second half of 2026. And importantly, we believe that the updated protocol will enhance the marketability of those credits going forward. Over the coming months, we will also continue developing real estate into a business capable of delivering steady incremental EBITDA to complement our core operations.

In closing, on behalf of the Board of Directors, thank you for your continued support. And Susan and I are now available to take your questions. Operator?

[Operator Instructions] Our first question comes from Matthew McKellar from RBC Capital Markets.

First, a couple of questions on renewables. It sounds like you executed a new renewable energy lease in the quarter. Can you tell us a little bit about that? And then a couple of years ago, the team had highlighted the installation of a meteorological tower to collect wind data on your land in New Brunswick. Are you able to share whether that data has unlocked any potential opportunities? And I guess, more broadly, are there any updates across your portfolio as it relates to renewable energy opportunities elsewhere?

Yes. Thanks, Matt. With respect to the information that was included in this round with a new option and lease being signed, I think the guidance we provide is similar to what we've said in the past about these and that in the short term or the near term, income generation is modest, but it's still accretive with these option payments. So you could think of it as a doubling up of the expected timber income that one would generate for the next couple of years over a couple of thousand acres.

Where it gets exciting is a couple of years down the road, and I'd handicap that at say 4 to 5 years from now, where the economics get very favorable and into the 10x plus equivalent of the timber income that we would derive from those properties and then lasting for decades if the projects are developed.

So in summary, with respect to that announcement, it's small and modest to start, but we're excited about what it could become if it is successful over the next couple of years, and you can expect to get updates from us on that.

With respect to the second part of your question about meteorological data in New Brunswick and what opportunities are coming up there, it's a little early. What I can say is that the data is useful and we're actively engaged with some project components that we'd like to work with. And I would hope that we've got a more specific update to share with you in a couple of months on potential projects in New Brunswick.

Great. And then just pivoting over, can you talk a bit about the residential development project you're planning in Maine? It sounds like you're seeing some progress there.

Yes, happy to speak to that, too. So with respect to that project, it's progressing on the internal time line we set for ourselves, which was aiming to be more or less shovel ready by the end of this year, and therefore, in a revenue-generating position in 2027. That is occurring as we hoped it would, and we're seeing good support in the local community and with regulators. There's still some work to do, but it's going to achieve our objectives.

In terms of the scale of that project, over the course of a number of years, it would be material for the Maine business. But more importantly, I'd say that it's a good example of what's possible with the timberland portfolio that we have, a substantial portion of which is in proximity to the urban settlements and appropriate to that kind of development.

I'm showing no further questions at this time. I would now like to turn it back to Malcolm for closing remarks.

Okay. Thanks, Shannon. On behalf of the Board of Directors and the management team of Acadian, I'd like to thank all of our shareholders and other stakeholders for their ongoing support, and we will look forward to you joining us for our third quarter 2026 conference call on October 29. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Acadian Timber Q1 2026 Analyst Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Susan Wood, Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's First Quarter Conference Call. With me on the call today is Malcolm Cockwell, Acadian's Chair and Interim President and Chief Executive Officer.

Before discussing Acadian's results, I will first remind everyone that in discussing our first quarter financial and operating performance, the outlook for the remainder of 2026 and 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 first quarter ended March 28, 2026. Malcolm will then provide additional comments on our leadership team, our outlook for the remainder of 2026, the dividend and a special milestone achieved by Acadian this year. From an operational standpoint, Q1 2026 was a quarter of steady execution and continued progress. Our operations in New Brunswick performed consistently, while results in Maine improved as the efficiency of our internal harvesting operations continued to advance. Our markets remained resilient despite ongoing challenges, including tariffs and weak demand in certain end-use markets. For Q1 2026, Acadian generated $4.8 million of adjusted EBITDA and $3.5 million of net income compared to $4.7 million of adjusted EBITDA and $3.7 million of net income in the same period last year.

On a per share basis, net income was $0.19 compared to $0.21 in the same quarter last year. Revenue in the quarter reflected consistent overall freehold sales volumes year-over-year. Within our product mix, demand for softwood pulpwood was lower than Q1 2025 as a result of increased availability of sawmill residuals in the region. This was largely offset by a higher proportion of softwood sawlogs. Our weighted average selling price was broadly consistent with the prior year quarter. Timber services activity decreased $2.3 million. However, this had a minimal impact on our adjusted EBITDA.

Total operating costs and expenses decreased by $1.3 million year-over-year. This decline was primarily attributable to lower timber services activity in New Brunswick, partially offset by higher operating cost per cubic meter in Maine, where we continue to transition toward internal harvesting operations. Selling and administration costs were modestly higher compared to last year. Net income for the quarter reflected lower operating income and higher interest expense relative to Q1 2025. These impacts were partially offset by higher noncash fair value adjustments and a lower income tax expense. From a segment perspective, New Brunswick Timberlands delivered stable results.

Freehold sales totaled $17.8 million with similar volumes and pricing to last year, excluding biomass. Adjusted EBITDA was $5.8 million, in line with Q1 2025. In Maine, freehold sales increased to $3.2 million from $2.4 million in the prior year period. This increase was driven by a 57% increase in sales volumes, excluding biomass, reflecting improved productivity from internal harvesting operations. Prices declined by approximately 10%, primarily due to stumpage sales and an increased proportion of roadside sales. Revenue from timber services and other sales increased by $900,000 as compared to Q1 2025, adding a total of $1.2 million to sales. Adjusted EBITDA improved to $400,000 compared to negative $700,000 last year.

Turning to liquidity. The company ended the quarter with net liquidity of $15 million, including cash and available credit capacity, net of required minimum balances related to long-term debt.

With that, I'll now turn the call over to Malcolm.

Thank you, Susan, and good afternoon, everyone. With Susan having provided an overview of our financial and operational results in Q1, I will speak to 4 topics addressed in our news release and MD&A, which are available on SEDAR. First, the recent CEO transition, then our expectations for the rest of the year; third, the dividend; and finally, an important milestone for the company.

I'd like to start by addressing the recent changes to our leadership team. As we announced in February, I have assumed the role of Interim President and Chief Executive Officer of Acadian while continuing as Chairman. Given the strength of our team, the transition was smooth, and we quickly resumed steady state. This transition has not affected Acadian's overall strategy. While we continue to focus on maximizing cash flows from our existing assets, we are also pursuing attractive acquisition opportunities where we can. However, this transition has provided an opportunity to make practical, tactical adjustments that we believe will strengthen the business.

For example, a major and ongoing focus is improving the performance of our business in Maine by rightsizing the operations and through hands-on performance management. We are also examining cost savings opportunities across the company, developing attractive real estate opportunities and embracing more technology, including AI. These are practical, tactical adjustments that will reduce our costs, increase our revenue and/or improve our efficiency. In terms of leadership succession with the Board's support, I will continue serving in this role and being based in New Brunswick for as long as it is appropriate to do so. While a formal process has not been launched by the Board of Directors yet, I anticipate that we will provide a further update on this subject later in the year.

Looking ahead and building on Susan's explanation of the results for Q1, I will speak to our expectations for the rest of the year. With respect to our core business, harvest volumes in New Brunswick are expected to remain stable through 2026. In Maine, we expect to deliver stronger results in 2026 compared to last year due to changes that we have made and continue making to the structure and scale of the operations. Our longer-term objective for Maine will continue being to achieve EBITDA margins at a level that is comparable to New Brunswick. We expect markets for our products to remain stable relative to Q1 and most of 2025 in both New Brunswick and Maine.

End-use markets remain challenging for many of our customers, but broader indicators are encouraging. North American interest rates have eased. U.S. housing starts are forecast at approximately 1.3 million units in 2026 and capacity curtailments in other regions of North America are expected to improve demand for our customers. These trends reinforce our confidence in the long-term stability of the Northeastern forestry sector. Higher fuel prices that took effect early in the second quarter represent a new challenge for our operations and those of our customers. We're working to mitigate the impact by ensuring that contracts with both contractors and customers contain fuel adjustment mechanisms. At this point, we expect to achieve pass-through rates that are similar to previous periods of elevated fuel prices such as early 2022 when we had similar mechanisms in place with most customers and contractors.

Regarding voluntary carbon credits, demand and pricing are expected to remain stable. We expect to register the next tranche of carbon credits in the second half of 2026 following the transition to updated protocols, which we expect will improve their marketability. Over the coming months, we will also continue developing real estate, the newest segment of our business, with the objective of establishing a business that delivers steady incremental EBITDA to our core business. With respect to the dividend, the Board of Directors has declared a dividend of $0.29 per share, consistent with prior quarters. At the same time, our largest shareholder, Macer Forest Holdings, with which I am affiliated, has reiterated its intention to participate in the DRIP for 100% of dividends payable to it.

The Board believes that the current dividend level appropriately aligns with our objectives of delivering consistent returns to all shareholders. The Board also believes that this dividend level and structure reflects the long-term cash-generating capacity of Acadian's assets as well as the steady appreciation of high-quality freehold timberlands in attractive jurisdictions such as New Brunswick and Maine. With that said, the Board will, of course, continually review the dividend level based on future performance and capital priorities. I would like to end by noting a special milestone for Acadian. 2026 marks the company's 20th anniversary as a pure-play timberland company.

Over that period of time, Acadian has had a good run on several fronts. We have practiced sustainable science-based forest management in a manner that protects the ecological integrity of our land while improving its long-term asset value. We have also consistently shared our land with the public for hunting, camping and other recreational activities and contributed meaningfully to important causes in our communities. At the same time that we have delivered on these environmental and social priorities, we have run a strong business and returned approximately $325 million of capital to shareholders.

As we look ahead to the next 20 years, we plan to continue demonstrating that Acadian can achieve environmental, social and economic sustainability in a manner that is rewarding for our shareholders as well as the many stakeholders affiliated with our business and our assets.

In closing, on behalf of the Board of Directors, thank you for your continued support. And Susan and I are now available to take your questions. Operator?

[Operator Instructions]

At this time, I am showing no questions. I would now like to turn it back over to Malcolm Cockwell, Chairman and Interim President and Chief Executive Officer, for closing remarks.

Thank you, operator. On behalf of the Board of Directors and the management team of Acadian, I would like to thank all our shareholders for their ongoing support. We look forward to joining you for our second quarter of 2026 conference call on August 6. Goodbye.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Welcome to the Acadian Timber Corp. 2026 Annual General Meeting. Please note the meeting is being recorded. I would like to introduce Malcolm Cockwell, Interim President and Chief Executive Officer and Chairman of Acadian. Mr. Cockwell, please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. It is my pleasure to welcome everyone to the Acadian Timber Corp. Annual General Meeting. It's now 11:00 a.m. Eastern Time and time to start the 2026 Annual Meeting. My name is Malcolm Cockwell, and as Chairman of the corporation, I will chair this meeting. With me today are the Directors of Acadian, Heather Fitzpatrick, Karen Oldfield, Erika Reilly, and Bruce Robertson. Also in attendance is Susan Wood, Chief Financial Officer of Acadian. We are committed to open communication and are prepared to host this meeting through TSX Trust Company's Virtual Meeting Platform, accessible to all of our shareholders regardless of physical location, to participate and view the meeting. I officially call the meeting to order and appoint Susan Wood to act as Secretary of the meeting and Jennifer Villareal of TSX Trust Company to act as scrutineer of the meeting. Only registered shareholders who held shares in their name as of March 27, 2026, the record date of this meeting, or their validly appointed proxy holders are entitled to vote and ask questions at this meeting.

Before we turn to the business before us, I would like to deal with a few procedural matters. The business of the meeting is described in the management information circular dated March 27, 2026, which accompanied the notice of meeting. I will take the notice of meeting as read. We will conduct the votes on the matters before us by a poll. On a poll, each registered shareholder or their duly appointed proxy holder who is entitled to vote on the matter and has joined the meeting using their control number, has 1 vote in respect of each share entitled to be voted on the matter and held by that shareholder. The poll will be open for all resolutions at the same time. Click the voting button on the left menu on your screen when the poll is announced. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote.

There will be an opportunity to ask questions on each resolution in turn. To submit a question, click the Ask a Question button on the left menu of your screen and type your question in the text box. Once discussion on each item of business has concluded, I will give you a moment to enter your votes if you have not done so already. Once discussion on all items of business has concluded, I will provide a final opportunity to vote and then declare voting closed on all resolutions. I now declare the polls open on all resolutions. Registered shareholders and duly appointed proxy holders who have joined the meeting using their control number, you may now click on the voting button in order to cast your votes or vote once discussion on each item has concluded. If you have not already submitted your votes in advance and do not wish to change your vote, you do not need to take further action.

To expedite matters today, Ms. Wood and I will move and second all motions with respect to the business of the meeting. This is designed to facilitate the progression of the meeting and not intended to discourage comments. A copy of the materials, together with an affidavit of TSX Trust Company confirming such materials were properly mailed to shareholders will be kept by the Secretary with the records of the meeting. The minutes of last year's annual meeting held on May 8, 2025, are available should any shareholder wish to review them. The transfer agent has provided a preliminary report on attendance. And based on this report, the Secretary has confirmed that there is a quorum present. I therefore declare the meeting properly constituted for the transaction of business for which it has been called.

I will now table the corporation's 2025 annual report to shareholders, which includes the 2025 financial statements together with the auditor's report. Copies of our annual report were mailed to registered shareholders and are accessible on the corporation's website and profile on SEDAR+. We will now proceed to the appointment of auditors. As stated in the notice of meeting, it is the intention of the persons named in the form of proxy to vote in favor of a resolution appointing PricewaterhouseCoopers LLP as auditors of the corporation to hold office until the next annual meeting and authorizing the Board to fix their remuneration, subject to contrary instructions given in the form of proxy.

Mr. Chairman, I will move that PricewaterhouseCoopers LLP be appointed auditors of the corporation until the next annual meeting and that the Directors be authorized to fix their remuneration.

Thank you, Ms. Wood. I second the motion. To submit a question, click the Ask a Question button on the left menu of your screen and type your question in the text box. Seeing no questions, if you have not already, please cast your votes using the voting button before we move on to the next item. We will now proceed with the election of 5 Directors, each of whom is to be elected at this meeting to hold office until the next annual meeting. Particulars of the 5 Director nominees are set out in the management information circular, which accompanied the notice of meeting sent to shareholders. As stated in the notice of meeting, it is the intention of the persons named in the form of proxy to vote in favor of the election of each of the 6 (sic) [ 5 ] Director nominees, subject to contrary instructions given in the form of proxy. I will now call for nominations for the election of Directors of the corporation.

Mr. Chairman, I nominate the following persons: Malcolm Cockwell, Heather Fitzpatrick, Karen Oldfield, Erika Reilly, and Bruce Robertson, and move that they be elected Directors of the corporation to hold office until the next annual meeting.

Thank you, Ms. Wood. Are there any further nominations? There being no further nominations, I declare the nominations closed.

Mr. Chairman, I will move that those nominees whose names have been read be elected to serve as Directors of the corporation until the next Annual Meeting of Shareholders or until their successors are elected or appointed.

Thank you, Ms. Wood. I second the motion. To submit a question, click the Ask a Question button on the left menu of your screen and type your question in the text box. Seeing no questions, if you have not already, please cast your votes using the voting button. This being our final resolution, for those of you who have not voted on either of the resolutions, please do so now as I will shortly close the poll. The polls are now closed, and I will read the results. Management has received proxies representing over 99% of the votes cast in favor of this resolution appointing PricewaterhouseCoopers LLP as auditors of the corporation to hold office until the next annual meeting and authorizing the Board to fix their remuneration.

Since the votes withheld for this resolution are minimal, I will take the voting results from the proxy tabulation report and declare the motion carried. Management has received proxies representing over 97% of the votes cast in favor of each of the Directors nominated. Since the votes against each nominee are minimal, I will take the voting results from the proxy tabulation report and declare the motion carried. As there are 5 persons nominated for the same number of positions, I will now declare that those nominated have been duly elected Directors of the corporation. Thank you, ladies and gentlemen. This concludes the formal part of today's meeting. Now we will turn to our management presentation.

Before we begin, I would like to remind listeners that during the course of our presentation and in responding to questions about our financial and operating performance, 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 risk factors, I encourage you to review Acadian's annual report and annual information form, which are posted on our website at acadiantimber.com. Today, we will start by providing you with an overview of our business and why Acadian is an attractive investment. We will then discuss the company's achievements and performance during 2025. We will also provide an update on our performance so far in 2026 and comment on the outlook for the remainder of the year, after which we would be happy to take any questions. With that, Malcolm will get us started.

Thanks, Susan. Before we get into the main presentation, we want to first pause to acknowledge an important milestone for Acadian. This year marks 20 years of sustainability at Acadian, and that commitment shows up in 3 important ways. We have consistently shared our land with the public for hunting, camping, and other recreational activities, and received tens of thousands of visits each year on an annual basis, a number that is growing each year. Second, we have practiced sustainable science-based forest management in a manner that protects the ecological integrity of our land while improving its long-term asset value.

Since 2006, our merchantable forest inventory has actually grown from 28 million cubic meters to 34 million cubic meters, demonstrating disciplined long-term stewardship. Our lands are SFI certified and support extensive water protection and wildlife habitat areas with a formal conservation program that protects over 190,000 acres in Maine. At the same time that we have delivered on these social and environmental priorities, we have run a strong business and returned approximately $325 million of capital to shareholders.

As we look ahead to the next 20 years, we plan to continue demonstrating that Acadian can achieve environmental, social, and economic sustainability in a manner that is rewarding for our shareholders as well as the many stakeholders affiliated with our business and our assets. Acadian is a leading sustainable forest management company in Eastern North America. We own and manage approximately 1.1 million acres of private timberland located in New Brunswick and Maine and manage an additional 1.3 million acres of Crown Land in New Brunswick with all of our operations being SFI certified. Acadian's timberlands have been under active management for over 120 years.

We have a complete and comprehensive infrastructure network in place and long-standing relationships with a large and diversified base of customers. Our primary business is forest management and the production of sawlogs, pulpwood, and biomass on our freehold timberlands as well as providing forest management services on Crown Land. We also have flexibility to generate significant revenues through other land use activities, including real estate and environmental solutions.

Why choose Acadian as an investment? First, we offer unique public equity access to Canadian timberlands. Our business provides focused exposure to high-quality timberland assets, giving investors access to a scarce asset class with long-term supportive fundamentals. Second, resilient cash generation is central to our model. A diversified customer base combined with sustainable scientific and disciplined forest management practices supports cash flow across market cycles. Third, we deliver strong shareholder returns. We prioritize dividends and maintaining a conservative approach to capital allocation, ensuring returns are sustainable and aligned with long-term value creation. And finally, we see growing sources of optionality. Beyond our core business of growing and harvesting timber, which has upside as global demand for forest products increases, we are developing new ways to generate value through opportunities such as carbon credits and real estate.

On that note, I'll spend some time today talking about one of these potential sources of value, real estate. We are progressing with 3 distinct areas of real estate activity. The first is recreational use, including day passes, leases, and broader land use arrangements. These initiatives allow us to share our land while obtaining additional value from our assets. The second is commercial leasing, where we lease sites for a number of uses. We currently see high potential related to renewable energy leasing though those projects take some time to develop. And the third is the sale of developed and undeveloped lots where selective dispositions allow us to extract value from land that is not core to our long-term timber strategy and has a better alternate use. Importantly, real estate represents a highly complementary line of business. It enhances returns without compromising the productivity, expense, or integrity of our forests. We will now move into a financial overview of 2025 and a review of operational performance, for which I will turn over the presentation to Susan.

Thank you, Malcolm. We achieved positive 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 last year, 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 our operational challenges in Maine. Overall, demand for our timber products was mixed but generally stable despite this heightened economic uncertainty, underscoring the resilience of Northeast regional log market.

Timber pricing softened modestly but remained relatively stable over the year. Our revenue from timber sales and services was $87 million compared to $91.6 million in 2024. In 2024, carbon credit sales contributed an additional $24.6 million to total sales, while no carbon credit sales occurred in 2025. Adjusted EBITDA totaled $15.8 million compared to $38.9 million during 2024 and net income totaled $49 million compared to $21.7 million in 2024. Turning to our performance during the first quarter of 2026. As reported yesterday, revenue in the first quarter reflected consistent overall freehold sales volumes year-over-year. Within our product mix, demand for softwood pulpwood was lower than Q1 2025 as a result of increased availability of sawmill residuals in the region. This was largely offset by a higher proportion of softwood sawlogs.

Our weighted average selling price was broadly consistent with the prior year quarter. Timber services activity decreased $2.3 million. However, this had a minimal impact on our adjusted EBITDA. Total operating costs and expenses decreased by $1.3 million year-over-year. This decline was primarily attributable to lower timber services activity in New Brunswick, partially offset by higher operating cost per cubic meter in Maine, where we continue to transition towards internal harvesting operations. Selling and administration costs were modestly higher compared to last year. Acadian generated $23.4 million in sales compared to $24.8 million in Q1 2025. Adjusted EBITDA was $4.8 million and net income was $3.5 million compared to $4.7 million of adjusted EBITDA and $3.7 million of net income in the same period last year. Malcolm?

We'll finish up today by looking at the outlook for 2026. We expect markets for our products to remain stable relative to Q1 and most of 2025 in both New Brunswick and Maine. End-use markets remain challenging for many of our customers, but broader indicators are encouraging. North American interest rates have eased. U.S. housing starts are forecast at approximately 1.3 million units in 2026 and capacity curtailments in other regions of North America are expected to support supply-demand dynamics for our customers. These trends reinforce our confidence in the long-term sustainability and stability of the Northeastern forestry sector. We will remain focused on executing our improvement plan for Maine by continuing to progress our internal harvesting operations towards targeted production levels as well as cost structure. We expect to deliver stronger results in Maine in 2026 compared to last year due to changes that we have made and continue making to the structure and scale of the operation. Our longer-term objective for Maine will continue to be achieving EBITDA margins at a level that is comparable to New Brunswick.

Looking beyond our core operations, we expect to register the next tranche of carbon credits in the second half of 2026, following the transition to updated protocols, which we expect will improve their marketability. Over the coming months, we will also continue developing real estate, the newest segment of our business, with the objective of establishing a business that delivers steady incremental EBITDA to our core business. We are grounded by our vision, which is our commitment to long-term sustainable land management for the benefit of our stakeholders. We recognize the importance of making positive contributions to the communities in which we live and work, and we continue to innovate in order to provide dependable cash flows to our shareholders.

Before I conclude, on behalf of the management team, I would like to thank our employees and our contractors for their hard work, contributions, and commitment to working with Acadian. This concludes our presentation, and we would now welcome any questions. There being no questions, ladies and gentlemen, I would like to thank you for your participation and attendance in today's meeting. This brings us to the end of today's meeting. And as there is no other business, I declare the meeting terminated. Thank you.

Thank you for attending today's meeting. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Acadian Timber Fourth Quarter 2025 Analyst Conference Call and Webcast. [Operator Instructions] 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.

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 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.

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. Sales for the fourth quarter were $22 million, an increase from $20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions.

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. 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 cost 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.

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 noncash 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.

I'll now move into the fourth quarter results for our New Brunswick operations. Sales for New Brunswick Timberlands were $19 million, up from $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 sawlog 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. 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 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 $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. 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 cost. 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.

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 U.S. 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. Excluding stumpage sales, softwood sawlog pricing increased 6%. Hardwood sawlog 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. 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. Excluding stumpage sales, the weighted average selling price, excluding biomass, increased 3%.

Operating costs and expenses for the fourth quarter 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 negative $53,000 compared to negative $223,000 and adjusted EBITDA margin was negative 2% compared to negative 7% in the prior year 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, they remain 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 will turn the call over to Adam.

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. 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 working equipment and related real estate. 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 cost per cubic meter of timberland produced remained elevated relative to long-term targets by approximately 30% as of the fourth quarter. 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 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 compared to $91.6 million in 2024. In 2024, carbon credit sales contributed an additional $24.6 million to total sales, while no carbon credit sales occurred in 2025. Adjusted EBITDA totaled $15.8 million compared to $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. 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 a 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. Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices and combined with the 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 cost 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 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. 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. 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 the fourth quarter of 2025, 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, 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 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. 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.

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 and 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?

First question will come from the line of Matthew McKellar with RBC Capital Markets.

First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production has continued to improve in 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 cubic meter 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?

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 disclosed in our AIF, call that 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. 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. 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 where 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.

Okay. That's helpful. Next for me, could you maybe just talk a little bit about how U.S. 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 '27?

Yes. 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, a number of things crossing the border, home starts, for instance, less hardwood floors, less cabinets. That's keeping the price of end-use markets for hardwood lumber, the pricing down. So it's hard for us to push through pricing. Volume isn't the 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.

Great. That's helpful. If I could just sneak one last one in. You've got 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. 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?

Yes, 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. 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 and would lend itself to an autonomous driving vehicle as well.

And I would like to hand the conference back over to Adam Sheparski for closing remarks.

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 and first quarter of 2026 conference call, both of which are on May 7. Goodbye.

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

Ladies and gentlemen, thank you for standing by. Welcome to the third quarter 2025 analyst conference call and webcast.

[Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Susan Wood chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's Third 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'll first remind everyone that in discussing our third quarter financial and operating performance, the outlook for the remainder of 2025 and 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 third quarter ended September 27, 2025. Adam will then provide some additional comments and will discuss our outlook for the remainder of 2025.

Acadian's operations and financial results for the third quarter of 2025 reflected a mix of stable market demand and operational challenges. While overall product demand remained relatively stable amid ongoing economic uncertainty, performance varied across our operating regions. In New Brunswick, consistent contractor availability supported strong timber sales volumes. However, our main operations faced challenges stemming from limited contractor capacity and reduced productivity, which impacted deliveries to our customers.

Acadian generated timber sales and services revenue of $23 million compared to $26 million in the prior year period. Timber sales volume, excluding biomass, decreased 8% compared to the third quarter of 2024. In New Brunswick, timber sales volumes, excluding biomass, were consistent with the same period of 2024 despite harvesting operations being temporarily disrupted by elevated fire risk resulting from dry conditions. Sales volumes in Maine remain challenged.

Softwood sawlog pricing increased 10%, primarily driven by modest improvements in end-user markets, a higher value product mix and longer hauling distances. Hardwood sawlog prices decreased 11% as compared to the prior year period due to a lower value product mix and continued weakness in lumber markets. Pulpwood pricing remained relatively consistent with the prior year period. Lower fuel adjustment surcharges resulting from lower fuel prices, particularly in New Brunswick, also impacted pricing.

Overall, the weighted average selling price, excluding biomass, remained consistent year-over-year. Biomass sales volumes were lower compared to the prior year period due to timing differences across quarters and pricing was consistent. Operating costs and expenses decreased $2 million compared to the prior year period. The impact of decreased timber sales volumes and timber services activity was partially offset by higher average operating costs and expenses per cubic meter produced in Maine as a result of the transition to internal logging operations and a more fixed cost structure.

Adjusted EBITDA and adjusted EBITDA margin were $3.5 million and 15% during the third quarter compared to $4 million and 16%, respectively, in the prior year period. Our net income for the third quarter totaled $2.9 million or $0.16 per share compared to $2.2 million or $0.13 per share in the same period of 2024. Higher noncash fair value adjustments and lower income tax expense were partially offset by lower operating income and higher interest expense. Acadian generated $1 million of free cash flow and declared dividends of $5.3 million to our shareholders during the third quarter or $0.29 per share.

I will now move into the third quarter results for our New Brunswick operations. Sales for our New Brunswick Timberlands were $20.5 million compared to $21.8 million during the prior year period. Harvesting operations were temporarily disrupted by dry conditions and elevated fire risk. However, targeted total freehold volumes were achieved. The year-over-year decrease in total sales primarily reflects reduced timber services activity.

Softwood sawlog volumes decreased 13%, but were offset by an increase in softwood pulpwood volumes of 168% compared to Q3 2024. Pricing for softwood sawlogs increased 12% due to modest improvements in end user markets, a higher value product mix and longer hauling distances. Pricing for softwood pulpwood increased 5% due to solid demand. With regards to hardwood, demand for sawlogs remained strong. However, volumes decreased 21% due to the temporary shutdown of operations caused by dry conditions and elevated fire risk. Hardwood pulpwood volumes decreased 8% for the same reason. Pricing for hardwood sawlogs decreased 9% due to a lower value product mix and weakness in lumber markets, while hardwood pulpwood pricing remained consistent as compared to the prior year period. Lower fuel adjustment surcharges resulting from lower fuel prices also impacted pricing.

Overall, for New Brunswick, the weighted average selling price, excluding biomass, was 3% higher as compared to Q3 2024. Operating costs and expenses were $16.2 million during the third quarter compared to $17.1 million in the prior year period. Additional costs related to increased freehold harvesting activity were offset by lower timber services activity and decreased weighted average variable costs as compared to the third quarter of 2024. Weighted average variable costs, excluding biomass, decreased 2% as a result of a higher proportion of softwood products, which carry lower variable costs and lower fuel adjustment costs, partially offset by increased contractor rates and longer hauling distances. New Brunswick's adjusted EBITDA for the quarter was $4.4 million compared to $4.8 million in the prior year period. Adjusted EBITDA margin was 21% compared to 22%.

Switching over to Maine. Sales during the third quarter totaled $2.5 million compared to $4.2 million in the same period last year. Timber sales volume, excluding biomass, decreased 42%, primarily due to limited trucking capacity, which impacted our ability to deliver to our customers, combined with short-term harvesting productivity constraints. Softwood sawlog volumes decreased 41%. However, pricing increased 4% in U.S. dollar terms due to a favorable change in product mix. Hardwood sawlog volumes were minimal during the third quarter of the year. Hardwood pulpwood volumes decreased 38% due to lower demand and pricing decreased 7% in U.S. dollar terms as compared to Q3 2024. Softwood pulpwood volumes were negligible in Maine due to the extended shutdown of a major softwood pulpwood customer.

Overall, the weighted average selling price, excluding biomass, in U.S. dollar terms was consistent with the same quarter in the prior year. Operating costs and expenses for the third quarter were $3.4 million compared to $4.4 million during the same period in 2024. Decreased costs resulting from lower timber sales volumes were partially offset by higher average operating costs and expenses per cubic meter produced. This increase is attributable to the lower production during the ramp-up of internal logging operations as well as the transition to a more fixed cost structure. Adjusted EBITDA for the quarter was negative $500,000 compared to negative $200,000 during the prior year period. With respect to Acadian's financial position at the end of the quarter, it remains strong, ending with a net liquidity position of $15.1 million, including cash balances and our revolving credit facilities, which remain undrawn.

With that, I'll turn the call over to Adam.

Thank you, Susan, and good afternoon, everyone. As always, Acadian remains committed to health and safety as our #1 priority. And as we've said before, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business. Acadian's operations experienced 2 recordable safety incidents during the quarter among employees, which were minor in nature and none among our contractors. Incident reduction will always be a primary focus for Acadian, and we have been very pleased with our new logging operations and their commitment to safety.

As Susan mentioned, we experienced mixed results across our operations. While New Brunswick had a very solid quarter, operational performance in Maine continued to be challenged. A significant portion of our trucking operations in Maine continues to rely on contractors as we had planned. During the third quarter, we experienced a shortfall in contractor capacity, which impacted our ability to meet delivery demands. To address this challenge, we are actively expanding our contractor network 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 also temporarily reduced production volumes. During the first 9 months of 2025, production volumes were below anticipated long-term levels and operating costs per cubic meter of timber produced were elevated relative to long-term targets. Additionally, the transition to a more fixed cost structure has resulted in changes from historical cost patterns with costs less directly tied to revenue generated. This impact is amplified during periods of lower sales volumes.

Acadian is actively investing in operator training programs and optimizing equipment utilization to enhance efficiency, build long-term capabilities and ensure sustained cost improvements. During the third quarter, we expanded the operational workforce, and as we exited the quarter, production levels continue to improve with just last week being our highest production week this year.

Turning to our outlook. Near-term pressures on end-use markets have continued with trade policy developments adding further complexity for forest products companies in both the U.S. and Canada. The recent escalation of U.S. duties on Canadian softwood lumber, along with new tariffs on select wood-based products, poses a potential risk to Canadian exporters and may dampen cross-border demand. Despite these headwinds, macroeconomic indicators remain positive. North American interest rates are easing and the consensus forecast for U.S. housing starts is steady at approximately 1.35 million starts in 2025, consistent with 2024.

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. We maintained sufficient contractor availability in New Brunswick through the third quarter, which is expected to continue for the remainder of the year. As I mentioned, we expanded the workforce within our internal harvesting operations in Maine and have already noted improvements in production levels. As internal operations continue to scale, Acadian expects to see meaningful gains in production levels, while advancing toward our targeted cost structure.

Demand for Acadian sawlogs is mainly driven by regional supply and demand. Near-term sawlog demand is expected to remain stable, 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. Issuance of the next tranches of carbon credits from Acadian's current project has been delayed due to the transition to ACR's updated improved Forest Management Protocol, which is fundamentally the same approach as the previous protocol, but introduces dynamic baselines. The transition to the new protocol may result in slightly fewer total carbon credits being issued than was expected under the initial protocol. However, all credits generated will be higher value carbon removal credits and no conservation credits will be generated.

Carbon credits assessed using the new protocol are expected to be more appealing to customers, thereby commanding higher pricing. Registration is expected in the last quarter of 2025 or early in 2026, and we continue to evaluate the opportunities to develop carbon projects under both the compliance protocol in Canada and the current ACR Voluntary Protocol.

With respect to real estate, we will remain busy through the rest of 2025. We have initiated development projects in New Brunswick and Maine, including the listing of a modest number of residential lots. These efforts are just the beginning of a broader strategy, and we will continue advancing these and other developments with a long-term view. Looking ahead, we anticipate expanding our real estate footprint with additional listings, new site planning and strategic investments that align with our growth objectives.

In closing, backed by a strong balance sheet, access to diverse and resilient markets and the dedication of a highly skilled team, Acadian is well positioned to navigate the evolving operational and economic landscape. Our high-quality, sustainably managed timberlands, together with our disciplined approach to capital allocation, provide a stable foundation for long-term value creation. As we look ahead to the remainder of 2025 and into 2026, we see meaningful opportunities to advance both our operational efficiency and financial performance.

With that, we are now available to take your questions. Operator?

[Operator Instructions] I'm showing no questions in the queue at this time. So I will turn it back to Adam Sheparski, President and CEO, for closing remarks.

Thank you, operator. It makes it easy. 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 fourth quarter of 2025 conference call on February 12. Goodbye.

This concludes today's conference call. Thank you for participating, and you may now disconnect.