Operating‑margin outlook:
Conif fex’s Q1 2025 results show a sharp swing from a modest positive EBITDA of $4.9 m in the prior quarter to a negative $3.2 m this period – a swing of roughly $8.1 m (≈ 165 % of the previous quarter’s profit). The negative EBITDA, combined with an $8.3 m net loss, signals that the company’s operating margin has moved from a thin profit to a loss‑making position. Assuming the cost base (logistics, labor, equipment depreciation) remains unchanged, the margin will stay negative unless either (1) timber‑price fundamentals improve, (2) the company curtails operating expenses, or (3) it secures higher‑margin contracts in the next two quarters.
Market dynamics & technical view:
The timber sector is currently facing a modest oversupply in North‑American soft‑wood markets, keeping log‑price growth flat to slightly negative. Conif ex’s exposure to lower‑grade wood and limited downstream processing further compresses gross margins. On the chart, CFF has broken below its 20‑day SMA and is testing the $1.00‑$1.10 support zone, a level that has held since the early‑2024 downtrend. Volume on the recent decline has been above its 30‑day average, indicating a firm‑handed move rather than a short‑term pull‑back.
Actionable insight:
Given the negative swing in operating performance and a weak commodity backdrop, the operating margin outlook for the next two quarters remains bearish. Until the company demonstrates a concrete cost‑reduction plan or a lift in timber prices, the stock is likely to stay under pressure. Traders should consider a short‑position or, at a minimum, a defensive stance (tight stop‑loss around the $1.10 level) and monitor upcoming earnings for any sign of margin‑recovery initiatives. A turnaround in Q3‑Q4 would be the catalyst needed to shift the margin trajectory back to positive.