Interfor Reports Record Q1’21 Results

Thursday, 06. May 2021 23:32

EBITDA1 of $392 million on Sales of $849 million
Net Cash Position and Available Liquidity of $944 million

BURNABY, British Columbia, May 06, 2021 (GLOBE NEWSWIRE) -- INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded Net earnings in Q1’21 of $264.5 million, or $4.01 per share, compared to $149.1 million, or $2.24 per share in Q4’20 and $6.3 million, or $0.09 per share in Q1’20. Adjusted net earnings in Q1’21 was $270.6 million compared to $164.7 million in Q4’20 and $0.7 million in Q1’20.

Adjusted EBITDA was a record $392.1 million on sales of $849.3 million in Q1’21 versus $248.6 million on sales of $662.3 million in Q4’20.

Notable items in the quarter:

  • Strong Free Cash Flow Generation
    • Interfor generated $377.7 million of cash flow from operations before changes in working capital, or $5.73 per share. Working capital investment increased by $92.6 million, primarily related to higher trade receivables driven by lumber prices and seasonally higher log inventories in B.C.
    • Net debt ended the quarter at $(236.0) million, or (21.7)% of invested capital, resulting in available liquidity of $943.6 million.
  • Strategic Capital Investments
    • Capital spending was $29.2 million, including $18.7 million on high-return discretionary projects. The majority of this discretionary spending was focused on a new kiln at the Adams Lake, BC sawmill and the ongoing multi-year rebuild of the Eatonton, Georgia sawmill.
    • The new kiln installed at our Adams Lake sawmill was fully operational by mid-February and allows for increased site-wide production and a significantly improved grade mix. This project was complementary to Interfor’s Q1’20 acquisition of 349,000 cubic metres of annual cutting rights from Canfor Corporation which solidified Adams Lake’s long-term log supply and operational platform.
    • The major rebuild of our Eatonton, Georgia sawmill is on-track for completion in Q4 of 2021, with full ramp-up expected to take approximately nine months thereafter. This project will add approximately 110 million board feet of annual production capacity and result in lower cash conversion costs and improved grade mix. Inclusive of this project, US$108 million has been spent on the Company’s Phase II strategic capital plan through March 31, 2021.
    • The Company has received Board approval to proceed with strategic capital investments at its sawmills in Castlegar, BC, and Perry, Georgia of approximately $35 million and US$30 million, respectively. These investments will provide a combination of benefits in the form of higher production, improved lumber recovery and grade mix, and lower conversion costs. Completion of both projects is expected in Q3 of 2022.
    • Interfor’s total capital expenditures are expected to be approximately $150 million in 2021 and in the range of $150 - $180 million in 2022, as the Company continues to execute on its strategic capital plans with attractive returns at conservative lumber prices.
  • Acquisition of Summerville sawmill
    • On March 12, 2021, Interfor concluded the acquisition of sawmill operations in Summerville, South Carolina from WestRock Company for total consideration of US$58,618,000 ($73,630,000).
  • Normal Course Issuer Bid (“NCIB”)
    • During Q1’21, Interfor purchased 774,420 common shares under the Company’s NCIB for total consideration of $20.3 million.
  • Record Lumber Market
    • Interfor’s average selling price was $1,143 per mfbm, up $301 per mfbm versus Q4’20. The key benchmark prices rose significantly quarter-over-quarter with the SYP Composite, Western SPF Composite and KD H-F Stud 2x4 9’ benchmarks increasing by US$312, US$283 and US$355 per mfbm to US$915, US$935 and US$1,162 per mfbm, respectively.
  • Continued Strong Production
    • Total lumber production in Q1’21 was 687 million board feet, which was consistent with Q4’20 and only 1 million board feet below Interfor’s production record for a quarter. The U.S. South and U.S. Northwest regions accounted for 338 million board feet and 141 million board feet, respectively, compared to 361 million board feet and 136 million board feet in Q4’20. Production in the B.C. region increased to 208 million board feet from 190 million board feet in the preceding quarter.
    • Total lumber shipments were 666 million board feet, including agency and wholesale volumes, or 17 million board feet lower than Q4’20.
  • Softwood Lumber Duties
    • Interfor expensed $12.4 million of duties in the quarter, representing the full amount of countervailing and anti-dumping duties incurred on its Canadian shipments of softwood lumber into the U.S. at a combined rate of 8.99%.
    • Cumulative duties of US$143.1 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by the U.S. Except for US$32.9 million in respect of overpayments arising from duty rate adjustments, Interfor has recorded the duty deposits as an expense.

1 Refer to Adjusted EBITDA in the Non-GAAP Measures section


North American lumber markets over the near term are expected to remain robust and above historical trends, albeit volatile, as relatively low levels of lumber inventories industry-wide combined with growing demand from new housing starts and repair and remodel activity put pressure on available lumber supply from manufacturers.

Interfor expects lumber demand to continue to grow over the mid-term, as repair and renovation activities and U.S. housing starts benefit from favourable underlying economic fundamentals and trends.

Interfor’s strategy of maintaining a diversified portfolio of operations allows the Company to both reduce risk and maximize returns on invested capital over the business cycle.

While uncertainty remains as to the duration and extent of the economic impact from the COVID-19 pandemic, Interfor is well positioned with its strong balance sheet and significant available liquidity.

Financial and Operating Highlights1

   For the three months ended
   Mar. 31,  Mar. 31,  Dec. 31,  
 Unit 2021  2020  2020  
Financial Highlights2     
Total sales$MM 849.3  479.6  662.3  
Lumber$MM 762.4  379.3  575.0  
Logs, residual products and other$MM 86.9  100.3  87.3  
Operating earnings$MM 355.6  14.6  203.2  
Net earnings$MM 264.5  6.3  149.1  
Net earnings per share, basic$/share 4.01  0.09  2.24  
Adjusted net earnings3$MM 270.6  0.7  164.7  
Adjusted net earnings per share, basic3$/share 4.11  0.01  2.47  
Operating cash flow per share (before working capital changes)3$/share 5.73  0.57  3.05  
Adjusted EBITDA3$MM 392.1  36.6  248.6  
Adjusted EBITDA margin3% 46.2% 7.6% 37.5% 
Total assets$MM 2,159.7  1,569.5  1,843.2  
Total debt$MM 377.3  425.6  382.0  
Net debt3$MM (236.0) 322.0  (75.4) 
Net debt to invested capital3% (21.7)% 26.7% (7.5)% 
Annualized return on capital employed3% 79.2% 4.0% 48.4% 
Operating Highlights     
Lumber productionmillion fbm 687  627  687  
Total lumber salesmillion fbm 666  641  683  
Lumber sales - Interfor producedmillion fbm 662  632  675  
Lumber sales - wholesale and commissionmillion fbm 4  9  8  
Lumber - average selling price4$/thousand fbm 1,143  592  842  
Average USD/CAD exchange rate51 USD in CAD 1.2660  1.3449  1.3030  
Closing USD/CAD exchange rate51 USD in CAD 1.2575  1.4187  1.2732  


  1. Figures in this table may not equal or sum to figures presented elsewhere due to rounding.
  2. Financial information presented for interim periods in this release is prepared in accordance with IFRS and is unaudited.
  3. Refer to the Non-GAAP Measures section of this release for definitions and reconciliations of these measures to figures reported in the Company’s consolidated financial statements.
  4. Gross sales before duties.
  5. Based on Bank of Canada foreign exchange rates.


Balance Sheet

Interfor’s Net debt at March 31, 2021 was $(236.0) million, or (21.7)% of invested capital, representing a decrease of $160.5 million from the level of Net debt at December 31, 2020.

As at March 31, 2021 the Company had net working capital of $744.5 million and available liquidity of $943.6 million, based on the full borrowing capacity under its $350 million Revolving Term Line.

The Revolving Term Line and Senior Secured Notes are subject to financial covenants, including net debt to total capitalization ratios, and an EBITDA interest coverage ratio.

Management believes, based on circumstances known today, that Interfor has sufficient working capital and liquidity to fund operating and capital requirements for the foreseeable future.

  For the three months ended
  Mar. 31,
 Dec. 31,
 Mar. 31,
Thousands of Dollars 2021  2020  2020 
Net debt    
Net debt, period opening $(75,432)$88,705 $224,860 
Issuance of Senior Secured Notes  -  -  140,770 
Revolving Term Line net repayments  -  -  (59)
Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD  (4,710) (18,210) 25,139 
Increase in cash and cash equivalents  (162,167) (165,294) (68,984)
Impact on U.S. Dollar denominated cash and cash equivalents from strengthening CAD  6,343  19,367  310 
Net debt, period ending $(235,966)$(75,432)$322,036 

On March 26, 2020, the Company issued US$50,000,000 of Series F Senior Secured Notes, bearing interest at 3.34%, and US$50,000,000 of Series G Senior Secured Notes, bearing interest at 3.25%. Each series of these Senior Secured Notes have equal payments of US$16,667,000 due on each of March 26, 2028, 2029 and on maturity in 2030.

Capital Resources

The following table summarizes Interfor’s credit facilities and availability as of March 31, 2021:

Thousands of Canadian Dollars Line
Available line of credit and maximum borrowing available $350,000 $377,250 $727,250 
Drawings  -  377,250  377,250 
Outstanding letters of credit included in line utilization  19,613  -  19,613 
Unused portion of facility $330,387 $-  330,387 
Cash and cash equivalents        613,216 
Available liquidity at March 31, 2021       $943,603 

Interfor’s Revolving Term Line matures in March 2024 and its Senior Secured Notes have maturities principally in the years 2024-2030.

As of March 31, 2021, the Company had commitments for capital expenditures totaling $75.7 million for both maintenance and discretionary capital projects.

Non-GAAP Measures

This release makes reference to the following non-GAAP measures: Adjusted net earnings, Adjusted net earnings per share, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Net debt to invested capital, Operating cash flow per share (before working capital changes), and Annualized return on capital employed which are used by the Company and certain investors to evaluate operating performance and financial position. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.

The following table provides a reconciliation of these non-GAAP measures to figures as reported in the Company’s audited consolidated financial statements (unaudited for interim periods) prepared in accordance with IFRS:

  For the three months ended
  Mar. 31,
 Mar. 31,
 Dec. 31,
Thousands of Canadian Dollars except number of shares and per share amounts  2021  2020  2020 
Adjusted Net Earnings    
Net earnings $264,487 $6,309 $149,148 
Asset write-downs and restructuring costs  142  371  1,793 
Other foreign exchange loss  2,346  849  8,162 
Long term incentive compensation expense (recovery)  7,670  (8,946) 10,254 
Other (income) expense  (1,996) 115  92 
Post closure wind-down costs  224  -  949 
Income tax effect of above adjustments  (2,229) 2,043  (5,652)
Adjusted net earnings $270,644 $741 $164,746 
Weighted average number of shares - basic ('000)  65,927   67,260   66,687  
Adjusted net earnings per share $4.11 $0.01 $2.47 
Adjusted EBITDA    
Net earnings $264,487 $6,309 $149,148 
Depreciation of plant and equipment  21,474  20,061  21,947 
Depletion and amortization of timber, roads and other  6,968  10,530  10,511 
Finance costs  4,524  4,096  1,891 
Income tax expense  86,256  3,205  43,889 
EBITDA  383,709  44,201  227,386 
Long term incentive compensation expense (recovery)  7,670  (8,946) 10,254 
Other foreign exchange loss  2,346  849  8,162 
Other (income) expense  (1,996) 115  92 
Asset write-downs and restructuring costs  142  371  1,793 
Post closure wind-down costs  224  -  947 
Adjusted EBITDA $392,095 $36,590 $248,634 
Sales $849,307 $479,646 $662,301 
Adjusted EBITDA margin  46.2% 7.6% 37.5%
Net debt to invested capital    
Net debt    
Total debt $377,250 $425,610 $381,960 
Cash and cash equivalents  (613,216) (103,574) (457,392)
Total net debt $(235,966)$322,036 $(75,432)
Invested capital    
Net debt $(235,966)$322,036 $(75,432)
Shareholders' equity  1,322,222  882,917  1,080,312 
Total invested capital $1,086,256 $1,204,953 $1,004,880 
Net debt to invested capital1  (21.7)% 26.7% (7.5)%
Operating cash flow per share (before working capital changes)    
Cash provided by operating activities $285,080 $19,319 $229,947 
Cash used in (generated from) operating working capital  92,604  19,109  (26,514)
Operating cash flow (before working capital changes) $377,684 $38,428 $203,433 
Weighted average number of shares - basic ('000)  65,927   67,260   66,687  
Operating cash flow per share (before working capital changes) $5.73 $0.57 $3.05 
Annualized return on capital employed    
Net earnings $264,487 $6,309 $149,148 
Finance costs  4,524  4,096  1,891 
Income tax expense  86,256  3,205  43,889 
Earnings before income taxes and finance costs $355,267 $13,610 $194,928 
Capital employed    
Total assets $2,159,692 $1,569,508 $1,843,187 
Current liabilities  (263,526) (149,748) (189,726)
Current portion of long term debt  6,811  -  6,897 
Current portion of lease liabilities  12,169  11,819  11,745 
Capital employed, end of period $1,915,146 $1,431,579 $1,672,103 
Capital employed, beginning of period  1,672,103  1,214,375  1,555,212 
Average capital employed $1,793,624 $1,322,977 $1,613,657 
Earnings before income taxes and finance costs divided by average capital employed  19.8% 1.0% 12.1%
Annualization factor  4.0  4.0  4.0 
Annualized return on capital employed  79.2% 4.0% 48.4%

Note: 1 Net debt to invested capital as of the period end.

For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars except earnings per share)Three Months
 Three Months
  Mar. 31, 2021
 Mar. 31, 2020
Sales$849,307 $479,646 
Costs and expenses:  
 Production 432,167  423,228 
 Selling and administration 12,879  9,228 
 Long term incentive compensation expense (recovery) 7,670  (8,946)
 U.S. countervailing and anti-dumping duty deposits 12,390  10,600 
 Depreciation of plant and equipment 21,474  20,061 
 Depletion and amortization of timber, roads and other 6,968  10,530 
   493,548  464,701 
Operating earnings before restructuring costs 355,759  14,945 
Restructuring costs (142) (371)
Operating earnings 355,617  14,574 
Finance costs (4,524)  (4,096 )
Other foreign exchange loss (2,346) (849)
Other (income) expense 1,996  (115 )
  (4,874) (5,060)
Earnings before income taxes 350,743  9,514 
Income tax expense  
 Current 83,173  329 
 Deferred 3,083  2,876 
  86,256  3,205 
Net earnings$264,487 $6,309 
Net earnings per share  
Basic$4.01  $0.09
Diluted$4.00 $0.09

For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars)Three Months
 Three Months
  Mar. 31, 2021
 Mar. 31, 2020
Net earnings
$264,487 $6,309 
Other comprehensive income:  
Items that will not be recycled to Net earnings:  
 Defined benefit plan actuarial gain (loss), net of tax 4,472  (713)
Items that are or may be recycled to Net earnings:  
 Foreign currency translation differences for foreign operations, net of tax (8,887) 46,083 
Total other comprehensive income (loss), net of tax (4,415) 45,370 
Comprehensive income $260,072 $51,679 

For the three months ended March 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars)Three Months
 Three Months
  Mar. 31, 2021
 Mar. 31, 2020
Cash provided by (used in):  
Operating activities:  
 Net earnings $264,487 $6,309 
 Items not involving cash:  
  Depreciation of plant and equipment 21,474  20,061 
  Depletion and amortization of timber, roads and other 6,968  10,530 
  Deferred income tax expense 3,083  2,876 
  Current income tax expense 83,173  329 
  Finance costs 4,524  4,096 
  Other assets (431) 936 
  Reforestation liability 496  2,766 
  Provisions and other liabilities 495  (10,293)
  Stock options 196  256 
  Unrealized foreign exchange loss 3,011  441 
  Other (income) expense (1,996) 115 
 Income taxes (paid) refunded(7,796) 6 
   377,684  38,428 
 Cash generated from (used in) operating working capital:  
  Trade accounts receivable and other (67,859) (23,413)
  Inventories (24,352) 1,355 
  Prepayments (3,348) (2,113)
  Trade accounts payable and provisions 2,955  5,062 
  285,080  19,319  
Investing activities:  
 Additions to property, plant and equipment (26,331) (24,872)
 Additions to roads and bridges (2,885) (2,704)
 Acquisitions (73,630) (56,606)
 Proceeds on disposal of plant and equipment 5,693  162 
 Net proceeds from (additions to) deposits and other assets 157  (198)
   (96,996) (84,218)
Financing activities:  
 Issuance of share capital, net of expenses 1,945  - 
 Share repurchases (20,303) - 
 Interest payments (4,258) (3,758)
 Lease liability payments (3,301) (2,934)
 Debt refinancing costs -  (136)
 Operating line net repayments -  (59)
 Additions to long term debt -  140,770 
  (25,917) 133,883  
Foreign exchange loss on cash and cash equivalents held in a foreign currency (6,343) (310 )
Increase in cash  155,824  68,674  
Cash and cash equivalents, beginning of period 457,392  34,900 
Cash and cash equivalents, end of period$613,216 $103,574 

March 31, 2021 and December 31, 2020 (unaudited)
(thousands of Canadian Dollars)  
 Mar. 31, 2021
 Dec. 31, 2020
Current assets:  
 Cash and cash equivalents$613,216 $457,392 
 Trade accounts receivable and other 182,436  117,371 
 Income taxes receivable 179  169 
 Inventories 191,169  160,188 
 Prepayments 21,027  17,970 
   1,008,027  753,090 
Employee future benefits 4,880  106 
Deposits and other assets 48,770  48,957 
Right of use assets 36,673  35,471 
Property, plant and equipment 778,831  729,163 
Roads and bridges 22,640  22,379 
Timber licences 114,059  114,953 
Goodwill and other intangible assets 145,128  138,838 
Deferred income taxes 684  230 
 $2,159,692 $1,843,187 
Liabilities and Shareholders’ Equity  
Current liabilities:  
 Trade accounts payable and provisions$148,880 $150,509 
 Current portion of long term debt 6,811  6,897 
 Reforestation liability 16,551  16,181 
 Lease liabilities 12,169  11,745 
 Income taxes payable 79,115  4,394 
  263,526  189,726 
Reforestation liability 30,281  29,735 
Lease liabilities 29,129  28,541 
Long term debt 370,439  375,063 
Employee future benefits 9,734  11,137 
Provisions and other liabilities 27,320  26,637 
Deferred income taxes 107,041  102,036 
 Share capital 520,151  523,605 
 Contributed surplus 4,500  5,157 
 Translation reserve 40,959  49,846 
 Retained earnings 756,612  501,704 
   1,322,222  1,080,312 
 $2,159,692 $1,843,187 

Approved on behalf of the Board:

L. Sauder
T.V. Milroy


This release contains forward-looking information about the Company’s business outlook, objectives, plans, strategic priorities and other information that is not historical fact. A statement contains forward-looking information when the Company uses what it knows and expects today, to make a statement about the future. Statements containing forward-looking information may include words such as: will, could, should, believe, expect, anticipate, intend, forecast, projection, target, outlook, opportunity, risk or strategy. Readers are cautioned that actual results may vary from the forward-looking information in this release, and undue reliance should not be placed on such forward-looking information. Risk factors that could cause actual results to differ materially from the forward-looking information in this release are described in Interfor’s first quarter and annual Management’s Discussion and Analysis under the heading “Risks and Uncertainties”, which are available on and under Interfor’s profile on Material factors and assumptions used to develop the forward-looking information in this release include volatility in the selling prices for lumber, logs and wood chips; the Company’s ability to compete on a global basis; the availability and cost of log supply; natural or man-made disasters; currency exchange rates; changes in government regulations; the availability of the Company’s allowable annual cut (“AAC”); claims by and treaty settlements with Indigenous peoples; the Company’s ability to export its products; the softwood lumber trade dispute between Canada and the U.S.; stumpage fees payable to the Province of British Columbia (“B.C.”); environmental impacts of the Company’s operations; labour disruptions; information systems security; and the existence of a public health crisis (such as the current COVID-19 pandemic). Unless otherwise indicated, the forward-looking statements in this release are based on the Company’s expectations at the date of this release. Interfor undertakes no obligation to update such forward-looking information, except as required by law.


Interfor is a growth-oriented forest products company with operations in Canada and the United States. The Company has annual production capacity of approximately 3.2 billion board feet and offers a diverse line of lumber products to customers around the world. For more information about Interfor, visit our website at

The Company’s unaudited condensed consolidated interim financial statements and Management’s Discussion and Analysis for Q1’21 are available at and

There will be a conference call on Friday, May 7, 2021 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its first quarter 2021 financial results.

The dial-in number is 1-833-297-9919. The conference call will also be recorded for those unable to join in for the live discussion and will be available until June 7, 2021. The number to call is 1-855-859-2056, Passcode 4759584.

For further information:
Richard Pozzebon, Senior Vice President and Chief Financial Officer
(604) 422-3400


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