Interfor Reports Record Q3’20 Results and Announces Share Buyback Program

EBITDA1 of $222 million on Sales of $645 million
Net Debt to Invested Capital1 of 8%; Liquidity of $637 million

BURNABY, British Columbia, Nov. 05, 2020 (GLOBE NEWSWIRE) — INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded net earnings in Q3’20 of $121.6 million, or $1.81 per share, compared to $3.2 million, or $0.05 per share in Q2’20 and a net loss of $35.6 million, or $0.53 per share in Q3’19. Adjusted net earnings in Q3’20 were $140.0 million compared to $10.6 million in Q2’20 and an Adjusted net loss of $11.8 million in Q3’19.

Adjusted EBITDA was a record $221.7 million on sales of $644.9 million in Q3’20 versus $42.8 million on sales of $396.8 million in Q2’20.

Notable items in the quarter:

• Higher Lumber Prices

  • Interfor’s average lumber selling price increased $264 per mfbm from Q2’20 to $910 per mfbm. The key benchmark prices rose significantly quarter-over-quarter with the SYP Composite, Western SPF Composite and KD H-F Stud 2×4 9’ benchmarks increasing by US$320, US$361 and US$349 per mfbm to US$748, US$711 and US$764 per mfbm, respectively.   Interfor’s average selling price lags the key benchmark price changes due to timing differences between orders and shipments.  

  • While lumber prices fell sharply in the initial stages of COVID-19, industry-wide production curtailments in Q2’20 and growing demand from repair and renovation activities and U.S. housing starts contributed to the robust price environment during Q3’20.

• Strengthened Financial Position

  • Net debt ended the quarter at $88.7 million, or 8.3% of invested capital, resulting in available liquidity of $636.7 million.

  • Interfor generated $214.8 million of cash flow from operations before changes in working capital, or $3.19 per share.

  • Capital spending was $23.4 million, including $16.2 million on high-return discretionary projects, primarily in the U.S. South. US$84.6 million has been spent on the Company’s Phase II strategic capital plan through September 30, 2020.  

  • Reflecting its strengthened financial position and available internal investment opportunities with attractive returns, Interfor has revised its planned capital expenditures for 2020 and 2021 to now total approximately $115.0 million and $150.0 million, respectively.

• Production Increased to Meet Demand

  • Total lumber production in Q3’20 was 642 million board feet, representing an increase of 221 million board feet quarter-over-quarter. Production in the B.C. region increased to 193 million board feet from 115 million board feet in the preceding quarter. The U.S. South and U.S. Northwest regions accounted for 331 million board feet and 118 million board feet, respectively, compared to 230 million board feet and 76 million board feet in Q2’20.

  • Total lumber shipments were 618 million board feet, including agency and wholesale volumes, or 120 million board feet higher than Q2’20.

• Asset Write-downs and Restructuring Costs

  • Asset write-downs and restructuring costs in Q3’20 are $9.8 million (after-tax), or $13.0 million on a pre-tax basis. This includes $10.8 million of non-cash impairments for asset write-downs on buildings, equipment and parts inventory related to the sale of the sawmill in Gilchrist, Oregon.   The sale was completed on October 29, 2020.

• Softwood Lumber Duties

  • Interfor expensed $19.7 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 20.23%. Cumulative duties of US$121.1 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by U.S. Customs and Border Protection.

  • On February 3, 2020 the U.S. Department of Commerce issued preliminary revised combined rates of 8.37% for 2017 and 8.21% for 2018. These rates remain preliminary, with final rate determinations not expected until November 2020. At such time, the final rates will be applied to new lumber shipments. No adjustments have been recorded in the financial statements as of September 30, 2020 to reflect the preliminary revised duty rates.

1 Refer to Adjusted EBITDA and Net debt to invested capital in the Non-GAAP Measures section

Normal Course Issuer Bid (“NCIB”)

The Toronto Stock Exchange (“TSX”) has approved the launch by the Company of a NCIB.

The NCIB will allow for the purchase during the twelve-month period commencing on November 11, 2020 and ending on November 10, 2021 of up to 5,981,751 common shares, which represents 10% of the Company’s public float as at November 5, 2020. The Company purchased no common shares under the prior NCIB that expired on March 6, 2020. The Company was authorized to purchase up to 6,652,006 common shares under the prior NCIB.

Under TSX rules, Interfor will be allowed to purchase daily a maximum of 88,590 common shares, representing 25% of the average daily trading volume of 354,363 common shares over the six-month period ending October 31, 2020, subject to certain exemptions for block purchases. As of November 5, 2020, the Company has 67,274,878 common shares issued and outstanding. All purchases will be made through open market transactions through the facilities of the TSX or other Canadian alternative trading systems and will conform to their rules and regulations. The price to be paid by Interfor for any common shares will be the market price at the time of acquisition. All common shares purchased pursuant to the NCIB will be cancelled.

Interfor has also entered into an automatic securities purchase plan agreement with a securities broker under which the broker will act as the Company’s agent to acquire Interfor common shares under the NCIB during the Company’s scheduled blackout periods in the course of the NCIB. Purchases by the broker under the NCIB during these periods will be made at the broker’s discretion, subject to certain parameters established by Interfor prior to each period with respect to price and number of common shares.

The Company believes that, from time to time, the market price of its common shares may be attractive and their purchase would represent a prudent allocation of capital.

Outlook

Near term lumber demand is expected to be impacted by uncertainties related to COVID-19 within the North American economy as well as a traditional fall/winter seasonal slowdown that can be weather dependent.  

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 3 months ended

 

For the 9 months ended

 

 

Sept. 30

 

Sept. 30

 

Jun. 30

 

 

Sept. 30

 

Sept. 30

 

 

Unit

2020

 

2019

 

2020

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Financial Highlights2

 

 

 

 

 

 

 

Total sales

$MM

644.9

 

486.5

 

396.8

 

 

1,521.3

 

1,419.0

 

Lumber

$MM

562.4

 

403.5

 

322.1

 

 

1,263.8

 

1,190.9

 

Logs, residual products and other

$MM

82.5

 

83.0

 

74.7

 

 

257.5

 

228.1

 

Operating earnings (loss)

$MM

171.4

 

(44.8

)

13.3

 

 

199.3

 

(79.8

)

Net earnings (loss)

$MM

121.6

 

(35.6

)

3.2

 

 

131.1

 

(62.1

)

Net earnings (loss) per share, basic

$/share

1.81

 

(0.53

)

0.05

 

 

1.95

 

(0.92

)

Adjusted net earnings (loss)3

$MM

140.0

 

(11.8

)

10.6

 

 

151.4

 

(40.7

)

Adjusted net earnings (loss) per share, basic3

$/share

2.08

 

(0.17

)

0.16

 

 

2.25

 

(0.60

)

Operating cash flow per share (before working capital changes) 3

$/share

3.19

 

0.03

 

0.56

 

 

4.32

 

0.43

 

Adjusted EBITDA3

$MM

221.7

 

16.8

 

42.8

 

 

301.1

 

45.8

 

Adjusted EBITDA margin3

%

34.4%

 

3.5%

 

10.8%

 

 

19.8%

 

3.2%

 

 

 

 

 

 

 

 

 

Total assets

$MM

1,731.9

 

1,421.0

 

1,538.8

 

 

1,731.9

 

1,421.0

 

Total debt

$MM

400.2

 

264.9

 

408.8

 

 

400.2

 

264.9

 

Net debt3

$MM

88.7

 

212.7

 

239.1

 

 

88.7

 

212.7

 

Net debt to invested capital3

%

8.3%

 

19.4%

 

21.6%

 

 

8.3%

 

19.4%

 

Annualized return on invested capital3

%

81.3%

 

6.1%

 

14.8%

 

 

37.7%

 

5.7%

 

 

 

 

 

 

 

 

 

Operating Highlights

 

 

 

 

 

 

 

Lumber production

million fbm

642

 

685

 

421

 

 

1,690

 

1,978

 

Total lumber sales

million fbm

618

 

692

 

499

 

 

1,758

 

1,987

 

Lumber sales – Interfor produced

million fbm

609

 

681

 

488

 

 

1,729

 

1,955

 

Lumber sales – wholesale and commission

million fbm

9

 

11

 

11

 

 

29

 

32

 

Lumber – average selling price4

$/thousand fbm

910

 

583

 

646

 

 

719

 

599

 

 

 

 

 

 

 

 

 

Average USD/CAD exchange rate5

1 USD in CAD

1.3321

 

1.3204

 

1.3862

 

 

1.3541

 

1.3292

 

Closing USD/CAD exchange rate5

1 USD in CAD

1.3339

 

1.3243

 

1.3628

 

 

1.3339

 

1.3243

 

 

 

 

 

 

 

 

 

Notes:

  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 unaudited condensed consolidated interim financial statements.

  4. Gross sales before duties.

  5. Based on Bank of Canada foreign exchange rates.

Liquidity

Balance Sheet

Interfor’s net debt at September 30, 2020 was $88.7 million, or 8.3% of invested capital, representing a decrease of $136.2 million since December 31, 2019.  

As at September 30, 2020 the Company had net working capital of $452.8 million and available liquidity of $636.7 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 3 months ended
Sept. 30,

 

For the 9 months ended
Sept. 30,

Thousands of Dollars

 

2020

 

 

2019 

 

 

2020

 

 

2019 

 

 

 

 

 

 

Net debt

 

 

 

 

 

Net debt, period opening

$

239,114

 

$

198,209

 

 

$

224,860

 

$

63,825

 

Issuance of Senior Secure Notes

 

 

 

 

 

 

140,770

 

 

 

Term Line net drawings (repayments)

 

(23

)

 

 

 

 

(82

)

 

755

 

Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD

 

(8,647

)

 

3,120

 

 

 

(278

)

 

(8,735

)

Decrease (increase) in cash and cash equivalents

 

(144,849

)

 

11,747

 

 

 

(285,473

)

 

110,665

 

Decrease in marketable securities

 

 

 

 

 

 

 

 

41,766

 

Impact on U.S. Dollar denominated cash and cash equivalents and marketable securities from strengthening (weakening) CAD

 

3,110

 

 

(402

)

 

 

8,908

 

 

4,398

 

Net debt, period ending

$

88,705

 

$

212,674

 

 

$

88,705

 

$

212,674

 

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 September 30, 2020:

 

Revolving

Senior

 

 

Term

Secured

 

Thousands of Canadian Dollars

Line

Notes

Total

Available line of credit and maximum borrowing available

$

350,000

$

400,170

$

750,170

Less:

 

 

 

     Drawings

 

 

400,170

 

400,170

     Outstanding letters of credit included in line utilization

 

24,773

 

 

24,773

Unused portion of facility

$

325,227

$

 

325,227

 

 

 

 

Add:

 

 

 

     Cash and cash equivalents

 

 

 

311,465

Available liquidity at September 30, 2020

 

 

$

636,692

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

As of September 30, 2020, the Company had commitments for capital expenditures totaling $37.8 million for both maintenance and discretionary capital projects.

Non-GAAP Measures

This MD&A makes reference to the following non-GAAP measures: Adjusted net earnings (loss), Adjusted net earnings (loss) per share, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Net debt to invested capital, Operating cash flow per share (before working capital changes), and Return on invested capital 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 unaudited condensed consolidated interim financial statements prepared in accordance with IFRS:

 

For the 3 months ended

 

For the 9 months ended

 

Sept. 30

Sept. 30

Jun. 30

 

Sept. 30

Sept. 30

Thousands of Canadian Dollars except number of shares and per share amounts

 

2020 

 

2019 

 

2020 

 

 

2020 

 

2019 

 

 

 

 

 

 

 

Adjusted Net Earnings (Loss)

 

 

 

 

 

 

Net earnings (loss)

$

121,604

 

$

(35,648

)

$

3,235

 

 

$

131,148

 

$

(62,109

)

Add:

 

 

 

 

 

 

   Asset write-downs and restructuring costs

 

12,985

 

 

31,814

 

 

115

 

 

 

13,471

 

 

33,566

 

Other foreign exchange loss (gain)

 

2,907

 

 

(216

)

 

4,963

 

 

 

8,719

 

 

(235

)

Long term incentive compensation expense

 

5,576

 

 

1,049

 

 

5,629

 

 

 

2,259

 

 

2,181

 

Other (income) expense

 

43

 

 

100

 

 

(586

)

 

 

(428

)

 

(6,223

)

Post closure wind-down costs

 

3,085

 

 

 

 

 

 

 

3,085

 

 

 

Income tax effect of above adjustments

 

(6,206

)

 

(8,867

)

 

(2,712

)

 

 

(6,875

)

 

(7,876

)

Adjusted net earnings (loss)

$

139,994

 

$

(11,768

)

$

10,644

 

 

$

151,379

 

$

(40,696

)

Weighted average number of shares – basic (‘000)

 

67,270

 

 

67,253

 

 

67,260

 

 

 

67,263

 

 

67,284

 

Adjusted net earnings (loss) per share

$

2.08

 

$

(0.17

)

$

0.16

 

 

$

2.25

 

$

(0.60

)

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

Net earnings (loss)

$

121,604

 

$

(35,648

)

$

3,235

 

 

$

131,148

 

$

(62,109

)

Add:

 

 

 

 

 

 

Depreciation of plant and equipment

 

20,850

 

 

20,595

 

 

15,601

 

 

 

56,512

 

 

59,727

 

Depletion and amortization of timber, roads and other

 

7,922

 

 

8,142

 

 

8,108

 

 

 

26,560

 

 

30,080

 

Asset write-downs and restructuring costs

 

12,985

 

 

31,814

 

 

115

 

 

 

13,471

 

 

33,566

 

Finance costs

 

4,907

 

 

3,784

 

 

5,185

 

 

 

14,188

 

 

11,284

 

Other foreign exchange loss (gain)

 

2,907

 

 

(216

)

 

4,963

 

 

 

8,719

 

 

(235

)

Income tax expense (recovery)

 

41,916

 

 

(12,804

)

 

563

 

 

 

45,684

 

 

(22,508

)

EBITDA

 

213,091

 

 

15,667

 

 

37,770

 

 

 

296,282

 

 

49,805

 

Add:

 

 

 

 

 

 

Long term incentive compensation expense

 

5,576

 

 

1,049

 

 

5,629

 

 

 

2,259

 

 

2,181

 

Other (income) expense

 

43

 

 

100

 

 

(586

)

 

 

(428

)

 

(6,223

)

Post closure wind-down costs

 

2,967

 

 

 

 

 

 

 

2,967

 

 

 

Adjusted EBITDA

$

221,677

 

$

16,816

 

$

42,813

 

 

$

301,080

 

$

45,763

 

Sales

$

644,884

 

$

486,494

 

$

396,778

 

 

$

1,521,308

 

$

1,419,002

 

Adjusted EBITDA margin

 

34.4%

 

 

3.5%

 

 

10.8%

 

 

 

19.8%

 

 

3.2%

 

 

 

 

 

 

 

 

Net debt to invested capital

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

Total debt

$

400,170

 

$

264,860

 

$

408,840

 

 

$

400,170

 

$

264,860

 

Cash and cash equivalents

 

(311,465

)

 

(52,186

)

 

(169,726

)

 

 

(311,465

)

 

(52,186

)

Total net debt

$

88,705

 

$

212,674

 

$

239,114

 

 

$

88,705

 

$

212,674

 

Invested capital

 

 

 

 

 

 

Net debt

$

88,705

 

$

212,674

 

$

239,114

 

 

$

88,705

 

$

212,674

 

Shareholders’ equity

 

983,225

 

 

880,854

 

 

869,443

 

 

 

983,225

 

 

880,854

 

Total invested capital

$

1,071,930

 

$

1,093,528

 

$

1,108,557

 

 

$

1,071,930

 

$

1,093,528

 

Net debt to invested capital1

 

8.3%

 

 

19.4%

 

 

21.6%

 

 

 

8.3%

 

 

19.4%

 

 

 

 

 

 

 

 

Operating cash flow per share (before working capital changes)

 

 

 

 

 

 

Cash provided by operating activities

$

175,492

 

$

29,658

 

$

103,003

 

 

$

296,837

 

$

3,610

 

Cash used in (generated from) operating working capital

 

39,346

 

 

(27,336

)

 

(65,439

)

 

 

(6,013

)

 

25,656

 

Operating cash flow (before working capital changes)

$

214,838

 

$

2,322

 

$

37,564

 

 

$

290,824

 

$

29,266

 

Weighted average number of shares – basic (‘000)

 

67,270

 

 

67,253

 

 

67,260

 

 

 

67,263

 

 

67,284

 

Operating cash flow per share (before working capital changes)

$

3.19

 

$

0.03

 

$

0.56

 

 

$

4.32

 

$

0.43

 

 

 

 

 

 

 

 

Annualized return on invested capital

 

 

 

 

 

 

Adjusted EBITDA

$

221,677

 

$

16,816

 

$

42,813

 

 

$

301,080

 

$

45,763

 

Invested capital, beginning of period

$

1,108,557

 

$

1,109,618

 

$

1,204,953

 

 

$

1,055,842

 

$

1,032,591

 

Invested capital, end of period

 

1,071,930

 

 

1,093,528

 

 

1,108,557

 

 

 

1,071,930

 

 

1,093,528

 

Average invested capital

$

1,090,244

 

$

1,101,573

 

$

1,156,755

 

 

$

1,063,886

 

$

1,063,060

 

Adjusted EBITDA divided by average invested capital

 

20.3%

 

 

1.5%

 

 

3.7%

 

 

 

28.3%

 

 

4.3%

 

Annualization factor

 

4.0

 

 

4.0

 

 

4.0

 

 

 

1.3

 

 

1.3

 

Annualized return on invested capital

 

81.3%

 

 

6.1%

 

 

14.8%

 

 

 

37.7%

 

 

5.7%

 

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the three and nine months ended September 30, 2020 and 2019 (unaudited)

(thousands of Canadian Dollars except earnings per share)

Three Months

Three Months

Nine Months

Nine Months

 

 

Sept. 30, 2020

Sept. 30, 2019

Sept. 30, 2020

Sept. 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Sales

$

644,884

 

$

486,494

 

$

1,521,308

 

$

1,419,002

 

Costs and expenses:

 

 

 

 

 

Production

 

394,463

 

 

448,214

 

 

1,154,825

 

 

1,309,440

 

 

Selling and administration

 

11,992

 

 

9,383

 

 

30,664

 

 

29,756

 

 

Long term incentive compensation expense

 

5,576

 

 

1,049

 

 

2,259

 

 

2,181

 

 

U.S. countervailing and anti-dumping duty deposits

 

19,719

 

 

12,081

 

 

37,706

 

 

34,043

 

 

Depreciation of plant and equipment

 

20,850

 

 

20,595

 

 

56,512

 

 

59,727

 

 

Depletion and amortization of timber, roads and other

 

7,922

 

 

8,142

 

 

26,560

 

 

30,080

 

 

 

 

460,522

 

 

499,464

 

 

1,308,526

 

 

1,465,227

 

 

 

 

 

 

Operating earnings (loss) before write-downs and restructuring cost

 

184,362

 

 

(12,970

)

 

212,782

 

 

(46,225

)

 

 

 

 

 

Asset write-downs and restructuring costs

 

12,985

 

 

31,814

 

 

13,471

 

 

33,566

 

Operating earnings (loss)

 

171,377

 

 

(44,784

)

 

199,311

 

 

(79,791

)

 

 

 

 

 

Finance costs

 

(4,907

)

 

(3,784

)

 

(14,188

)

 

(11,284

)

Other foreign exchange gain (loss)

 

(2,907

)

 

216

 

 

(8,719

)

 

235

 

Other income (expense)

 

(43

)

 

(100

)

 

428

 

 

6,223

 

  

 

(7,857

)

 

(3,668

)

 

(22,479

)

 

(4,826

)

 

  

 

 

 

 

Earnings (loss) before income taxes

 

163,520

 

 

(48,452

)

 

176,832

 

 

(84,617

)

 

 

 

 

 

 

Income tax expense (recovery):

 

 

 

 

 

Current

 

1,515

 

 

416

 

 

1,651

 

 

809

 

 

Deferred

 

40,401

 

 

(13,220

)

 

44,033

 

 

(23,317

)

 

 

41,916

 

 

(12,804

)

 

45,684

 

 

(22,508

)

 

 

 

 

 

 

Net earnings (loss)

$

121,604

 

$

(35,648

)

$

131,148

 

$

(62,109

)

 

 

 

 

 

Net earnings (loss) per share, basic and diluted

$

1.81

 

$

(0.53

)

$

1.95

 

$

(0.92

)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the three and nine months ended September 30, 2020 and 2019 (unaudited)

(thousands of Canadian Dollars)

Three Months

Three Months

Nine Months

Nine Months

 

 

Sept. 30, 2020

Sept. 30, 2019

Sept. 30, 2020

Sept. 30, 2019

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

$

121,604

 

$

(35,648

)

$

131,148

 

$

(62,109

)

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

Items that will not be recycled to Net earnings (loss):

 

 

 

 

 

Defined benefit plan actuarial loss, net of tax

 

(109

)

 

(1,151

)

 

(1,365

)

 

(1,018

)

 

 

 

 

 

 

Items that are or may be recycled to Net earnings (loss):

 

 

 

 

 

Foreign currency translation differences for foreign operations, net of tax

 

(8,027

)

 

6,020

 

 

21,656

 

 

(17,581

)

Total other comprehensive income (loss), net of tax

 

(8,136

)

 

4,869

 

 

20,291

 

 

(18,599

)

 

 

 

 

 

Comprehensive income (loss)

$

113,468

 

$

(30,779

)

$

151,439

 

$

(80,708

)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three and nine months ended September 30, 2020 and 2019 (unaudited)

(thousands of Canadian Dollars)

Three Months

 

Three Months

Nine Months

Nine Months

 

 

Sept. 30, 2020

 

Sept. 30, 2019

Sept. 30, 2020

Sept. 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in):

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

Net earnings (loss)

$

121,604

 

$

(35,648

)

$

131,148

 

$

(62,109

)

 

Items not involving cash:

 

 

 

 

 

 

 

 

Depreciation of plant and equipment

 

20,850

 

 

20,595

 

 

56,512

 

 

59,727

 

 

 

Depletion and amortization of timber, roads and other

 

7,922

 

 

8,142

 

 

26,560

 

 

30,080

 

 

 

Deferred income tax expense (recovery)

 

40,401

 

 

(13,220

)

 

44,033

 

 

(23,317

)

 

 

Current income tax expense

 

1,515

 

 

416

 

 

1,651

 

 

809

 

 

 

Finance costs

 

4,907

 

 

3,784

 

 

14,188

 

 

11,284

 

 

 

Other assets

 

355

 

 

202

 

 

841

 

 

523

 

 

 

Reforestation liability

 

(139

)

 

(1,834

)

 

(1,989

)

 

(2,577

)

 

 

Provisions and other liabilities

 

4,638

 

 

6,210

 

 

(662

)

 

5,206

 

 

 

Stock options

 

123

 

 

224

 

 

613

 

 

541

 

 

 

Write-down of plant, equipment and other

 

9,807

 

 

14,583

 

 

9,754

 

 

16,394

 

 

 

Unrealized foreign exchange loss (gain)

 

2,812

 

 

(150

)

 

8,603

 

 

10

 

 

 

Other expense (income)

 

43

 

 

(982

)

 

(428

)

 

(7,305

)

 

 

214,838

 

 

2,322

 

 

290,824

 

 

29,266

 

 

Cash generated from (used in) operating working capital:

 

 

 

 

 

 

 

 

Trade accounts receivable and other

 

(69,994

)

 

(4,741

)

 

(100,548

)

 

(25,189

)

 

 

 

Inventories

 

(9,919

)

 

37,647

 

 

57,404

 

 

28,082

 

 

 

 

Prepayments

 

(209

)

 

(1,340

)

 

1,698

 

 

(7,082

)

 

 

 

Trade accounts payable and provisions

 

40,035

 

 

(3,933

)

 

46,706

 

 

(20,595

)

 

 

 

Income tax refund (payment)

 

741

 

 

(297

)

 

753

 

 

(872

)

 

175,492

 

 

29,658

 

 

296,837

 

 

3,610

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Additions to property, plant and equipment

(19,736

)

 

(31,951

)

 

(65,724

)

 

(126,781

)

 

Additions to roads and bridges

(3,686

)

 

(3,767

)

 

(8,829

)

 

(17,272

)

 

Additions to intangible assets

 

 

(5

)

 

 

 

(77

)

 

Acquisition of timber license, roads and other assets net of assumed liabilities

 

 

 

 

(56,606

)

 

 

 

Proceeds on disposal of property, plant and equipment and other

229

 

 

309

 

 

1,096

 

 

8,449

 

 

Net proceeds from marketable securities,

 

 

 

 

 

deposits and other assets

25

 

 

370

 

 

123

 

 

47,130

 

 

(23,168

)

 

(35,044

)

 

(129,940

)

 

(88,551

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Issuance of share capital, net of expenses

191

 

 

 

 

191

 

 

80

 

 

Share repurchases

 

 

 

 

 

 

(7,825

)

 

Interest payments

(4,583

)

 

(3,431

)

 

(13,092

)

 

(8,848

)

 

Lease liability payments

(3,052

)

 

(2,927

)

 

(9,060

)

 

(8,692

)

 

Debt refinancing costs

(8

)

 

(3

)

 

(151

)

 

(1,194

)

 

Operating line net drawings (repayments)

(23

)

 

 

 

(82

)

 

5

 

 

Additions to long term debt

 

 

 

 

140,770

 

 

197,925

 

 

Repayments of long term debt

 

 

 

 

 

 

(197,175

)

 

(7,475

)

 

(6,361

)

 

118,576

 

 

(25,724

)

 

 

 

 

 

 

Foreign exchange gain (loss) on cash and cash equivalents held in a foreign currency

(3,110

)

 

402

 

 

(8,908

)

 

(3,301

)

Increase (decrease) in cash

141,739

 

 

(11,345

)

 

276,565

 

 

(113,966

)

 

 

 

 

 

Cash and cash equivalents, beginning of period

169,726

 

 

63,531

 

 

34,900

 

 

166,152

 

 

 

 

 

 

Cash and cash equivalents, end of period

$

311,465

 

$

52,186

 

$

311,465

 

$

52,186

 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

September 30, 2020 and December 31, 2019 (unaudited)

(thousands of Canadian Dollars)

 

 

 

 

 

Sept. 30, 2020

Dec. 31, 2019

 

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

311,465

$

34,900

 

Trade accounts receivable and other

 

 

189,357

 

86,608

 

Income taxes receivable

 

 

76

 

1,995

 

Inventories

 

 

128,987

 

181,577

 

Prepayments

 

 

19,421

 

20,449

 

 

 

 

649,306

 

325,529

 

 

 

 

Employee future benefits

 

 

110

 

673

Deposits and other assets

 

 

8,632

 

9,296

Right of use assets

 

 

38,788

 

32,780

Property, plant and equipment

 

 

752,173

 

739,515

Roads and bridges

 

 

20,615

 

24,353

Timber licences

 

 

115,888

 

60,596

Goodwill and other intangible assets

 

 

145,238

 

142,214

Deferred income taxes

 

 

1,131

 

6,961

 

 

 

 

 

 

$

1,731,881

$

1,341,917

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable and provisions

 

$

159,370

$

114,358

 

Current portion of long term debt

 

 

7,225

 

 

Reforestation liability

 

 

16,673

 

13,021

 

Lease liabilities

 

 

12,579

 

10,105

 

Income taxes payable

 

 

626

 

163

 

 

 

196,473

 

137,647

 

 

 

 

 

Reforestation liability

 

 

29,753

 

27,401

Lease liabilities

 

 

31,251

 

27,718

Long term debt

 

 

392,945

 

259,760

Employee future benefits

 

 

12,842

 

11,843

Provisions and other liabilities

 

 

19,390

 

18,957

Deferred income taxes

 

 

66,002

 

27,609

 

 

 

 

Equity:

 

 

 

 

Share capital

 

 

533,958

 

533,685

 

Contributed surplus

 

 

5,002

 

4,471

 

Translation reserve

 

 

78,415

 

56,759

 

Retained earnings

 

 

365,850

 

236,067

 

 

 

 

 

 

 

 

983,225

 

830,982

 

 

 

 

 

 

 

$

1,731,881

$

1,341,917

Approved on behalf of the Board:

 

L. Sauder
Director

 

Thomas V. Milroy
Director        

 

FORWARD-LOOKING STATEMENTS

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 third quarter and annual Management’s Discussion & Analysis under the heading “Risks and Uncertainties”, which is available on www.interfor.com and under Interfor’s profile on www.sedar.com. 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; 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 information in this release is 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.

ABOUT INTERFOR

Interfor is a growth-oriented lumber company with operations in Canada and the United States. The Company has annual production capacity of approximately 3.0 billion board feet and offers one of the most diverse lines of lumber products to customers around the world. For more information about Interfor, visit our website at www.interfor.com.

The Company’s unaudited condensed consolidated interim financial statements and Management’s Discussion and Analysis for Q3’20 are available at www.sedar.com and www.interfor.com.

There will be a conference call on Friday, November 6, 2020 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its third quarter 2020 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 December 6, 2020. The number to call is 1-855-859-2056, Passcode 8550308.

For further information:
Richard Pozzebon, Senior Vice President and Chief Financial Officer
(604) 689-6800

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