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Interfor Reports Q2’22 Results

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Interfor Corporation
Interfor Corporation

Adjusted EBITDA of $429 million and Net Earnings of $270 million With Record Production, Shipments and Sales

BURNABY, British Columbia, Aug. 04, 2022 (GLOBE NEWSWIRE) -- INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded Net earnings in Q2’22 of $269.9 million, or $4.92 per share, compared to $397.0 million, or $6.69 per share in Q1’22 and $419.2 million, or $6.45 per share in Q2’21. Adjusted net earnings in Q2’22 were $280.2 million compared to $392.5 million in Q1’22 and $433.5 million in Q2’21.

Adjusted EBITDA was $428.6 million on record sales of $1.4 billion in Q2’22 versus $570.1 million on sales of $1.3 billion in Q1’22.

Notable items in the quarter:

  • Record Lumber Production and Shipments

    • Lumber production totaled a record 1.0 billion board feet, representing an increase of 99 million board feet quarter-over-quarter and the fifth consecutive quarter of record production. This growth was mostly driven by the first full quarter of contribution from the Eastern Canada Operations; these operations produced 211 million board feet versus 96 million board feet in the preceding quarter. The U.S. South and U.S. Northwest regions accounted for 467 million board feet and 163 million board feet, respectively, compared to 452 million board feet and 173 million board feet in Q1’22. Production in the B.C. region decreased to 174 million board feet from 196 million board feet in Q1’22, in part due to the sale of the Acorn sawmill during the quarter.

    • Lumber shipments were a record 1.1 billion board feet, or 239 million higher than Q1’22.

    • Ongoing improvement in the availability of logistics contributed to a reduction of lumber inventories by 46 million board feet during the quarter. Further reductions following quarter-end have now positioned total lumber inventory volume within the Company’s targeted range.

  • Moderating Lumber Prices

    • Interfor’s average selling price was $1,104 per mfbm, down $306 per mfbm versus Q1’22. The SYP Composite, Western SPF Composite, KD H-F Stud 2x4 9’ and ESPF Composite price benchmarks decreased quarter-over-quarter by US$437, US$322, US$402 and US$313 per mfbm to US$682, US$837, US$891, and US$938 per mfbm, respectively, with the majority of these decreases occurring in the second half of the quarter.

  • Strong Free Cash Flow Generation

    • Interfor generated $218.2 million of cash flow from operations before changes in working capital, or $3.98 per share. A reduction in working capital investment added $175.6 million of cash flow, primarily related to the collection of trade receivables recorded at higher lumber prices and a reduction in log and lumber inventories.

    • Net debt ended the quarter at $102.0 million, or 4.6% of invested capital, resulting in ample available liquidity of $726.5 million.

  • Strong results from Eastern Canada Operations

    • The Eastern Canada Operations contributed $115.7 million of Adjusted EBITDA to Interfor’s second quarter results, which is net of $17.3 million recorded in production costs related to fair value adjustments recognized at the acquisition date.

    • Since being acquired on February 22, 2022, the Eastern Canada Operations have generated $120.8 million of Adjusted EBITDA, which is net of $85.3 million recorded in production costs related to fair value adjustments recognized at the acquisition date.

  • Ramp-up of DeQuincy, LA Sawmill

    • The DeQuincy, LA sawmill, with an annual two-shift capacity of 200 million board feet, has continued to ramp up ahead of schedule following its July 2021 acquisition in an idled state. Its operating schedule increased from one shift to two shifts during the quarter and the mill is expected to reach its full production run-rate in Q3 2022.

  • Strategic Capital Investments

    • Capital spending was $65.1 million, including $40.6 million on discretionary projects. The majority of this discretionary spending was focused on the multi-year rebuild of the Eatonton, GA sawmill, a new planer at the Castlegar, B.C. sawmill and upgrades to the Perry, GA sawmill.

  • Minority Interest in GreenFirst Forest Products Inc. (“GreenFirst”)

    • On May 2, 2022, a wholly-owned subsidiary of Interfor acquired a total of 28,684,433 common shares in the capital of GreenFirst from Rayonier A.M. Canada G.P., which represents approximately 16.2% of GreenFirst’s issued and outstanding common shares. The Company paid total cash consideration of $55.6 million.

  • Ongoing Monetization of Coastal B.C. Operations

    • On May 13, 2022, the Company completed the sale of its Acorn specialty sawmill located near Vancouver, British Columbia and related working capital to an affiliate of San Industries Ltd. for cash consideration of $25.2 million, and recorded a gain of $6.2 million. With this sawmill sale completed, Interfor no longer has any lumber manufacturing assets within the Coastal B.C. region.

    • Interfor is currently undertaking a strategic review of its remaining Coastal B.C. operations, which consist solely of timber harvesting and sales related to its 1.67 million cubic meters of annual harvesting rights. Any alternatives, including disposition of harvesting rights, would be subject to consultation with First Nations and consent from the Government of B.C.

  • Share Repurchases

    • During Q2’22, Interfor purchased 1,015,396 common shares under the Company’s Normal Course Issuer Bid (“NCIB”) for total consideration of $32.9 million. This completed the purchase of all 6,041,701 common shares allowable under the NCIB for total consideration of $227.2 million, representing an average price of $37.60 per share or 0.98 times book value per share at June 30, 2022.

    • On July 26, 2022, the Company announced its intention to commence a substantial issuer bid (“SIB”) pursuant to which the Company will offer to purchase up to $100,000,000 in value of its outstanding common shares for cancellation from holders of common shares for cash. The SIB will proceed by way of a “modified Dutch auction” procedure with a tender price range from $29.00 to $34.00 per common share.

  • Softwood Lumber Duties

    • Interfor expensed $46.3 million of duties in the quarter, representing the full amount of countervailing (“CV”) and anti-dumping (“AD”) duties incurred on shipments of softwood lumber from its Canadian operations to the U.S. at a combined rate of 17.91%.

    • Interfor has cumulative duties of US$401.0 million held in trust by U.S. Customs and Border Protection as at June 30, 2022. Except for US$105.0 million recorded as a receivable in respect of overpayments arising from duty rate adjustments and the fair value of rights to duties acquired, Interfor has recorded the duty deposits as an expense.

Interfor Appoints New Director

At its meeting today, the Interfor Board appointed Tom Temple of Kingston, Washington as a director of the Company. Mr. Temple, who is 65, is the former VP, Wood Products and Southern Resources of PotlatchDeltic, a diversified forest products company. Mr. Temple’s appointment increased the number of directors from ten to eleven, while deepening the Board’s operations and sales expertise in the U.S. in line with the Company’s Board succession plan.

Sustainability Performance

On April 22, 2022, Interfor released its fifth annual Sustainability Report, which provides detailed information on the Company’s commitments and actions, including a number of new targets and enhanced metrics. Sustainability is at the core of Interfor’s culture and integrated within its strategy, and the targets set represent an ongoing commitment to take strong action to enhance performance. Interfor’s Sustainability Report can be found at www.interfor.com.

Outlook

North American lumber markets over the near term are expected to be volatile as the economy continues to adjust to inflationary pressures, higher interest rates, supply chain constraints and labour shortages.

Interfor expects that over the mid-term, lumber markets will continue to benefit from favourable underlying supply and demand fundamentals. Positive demand factors include the advanced age of the U.S. housing stock, a shortage of available housing and various demographic factors, while growth in lumber supply is expected to be limited by extended capital project completion and ramp-up timelines and constrained overall fibre availability.

Interfor’s strategy of maintaining a diversified portfolio of operations in multiple regions allows the Company to both reduce risk and maximize returns on capital over the business cycle. Interfor is well positioned with its strong balance sheet and significant available liquidity to continue pursuing its strategic plans despite ongoing economic and geo-political uncertainty globally.

Financial and Operating Highlights1

 

 

For the 3 months ended

 

For the 6 months ended

 

 

Jun. 30

Jun. 30

Mar. 31

 

Jun. 30

Jun. 30

 

Unit

2022

2021

2022

 

2022

2021

 

 

 

 

 

 

 

 

Financial Highlights2

 

 

 

 

 

 

 

Total sales

$MM

1,389.1

1,099.7

1,349.0

 

2,738.1

1,949.0

Lumber

$MM

1,190.8

1,012.9

1,212.5

 

2,403.3

1,775.3

Logs, residual products and other

$MM

198.3

86.8

136.5

 

334.8

173.7

Operating earnings

$MM

385.9

568.3

512.7

 

898.5

923.9

Net earnings

$MM

269.9

419.2

397.0

 

666.9

683.7

Net earnings per share, basic

$/share

4.92

6.45

6.69

 

11.68

10.45

Adjusted net earnings3

$MM

280.2

433.5

392.5

 

672.6

704.2

Adjusted net earnings per share, basic3

$/share

5.11

6.67

6.61

 

11.78

10.76

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

$/share

3.98

7.46

6.38

 

10.45

13.17

Adjusted EBITDA3

$MM

428.6

611.3

570.1

 

998.7

1,003.4

Adjusted EBITDA margin3

%

30.9%

55.6%

42.3%

 

36.5%

51.5%

 

 

 

 

 

 

 

 

Total assets

$MM

3,269.5

2,409.4

3,081.4

 

3,269.5

2,409.4

Total debt

$MM

372.6

365.1

403.1

 

372.6

365.1

Net debt3

$MM

102.0

(490.7)

340.2

 

102.0

(490.7)

Net debt to invested capital3

%

4.6%

(46.1%)

15.8%

 

4.6%

(46.1%)

Annualized return on capital employed3

%

52.9%

110.8%

86.6%

 

69.4%

96.2%

 

 

 

 

 

 

 

 

Operating Highlights

 

 

 

 

 

 

 

Lumber production

million fbm

1,016

716

917

 

1,933

1,402

Lumber sales

million fbm

1,082

714

843

 

1,925

1,380

Lumber - average selling price4

$/thousand fbm

1,104

1,419

1,410

 

1,240

1,286

 

 

 

 

 

 

 

 

Average USD/CAD exchange rate5

1 USD in CAD

1.2768

1.2282

1.2662

 

1.2715

1.2470

Closing USD/CAD exchange rate5

1 USD in CAD

1.2886

1.2394

1.2496

 

1.2886

1.2394

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 including duties.

  5. Based on Bank of Canada foreign exchange rates.

Liquidity

Balance Sheet

Interfor’s Net debt at June 30, 2022 was $102.0 million, or 4.6% of invested capital, representing an increase of $264.9 million from the level of Net debt at December 31, 2021.

As at June 30, 2022 the Company had net working capital of $607.1 million and available liquidity of $726.5 million, based on the full borrowing capacity under its $500 million Revolving Term Line.

The Revolving Term Line and Senior Secured Notes are subject to financial covenants, including a net debt to total capitalization ratio 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
Jun. 30,

 

For the 6 months ended
Jun. 30,

Thousands of Dollars

2022

2021

 

2022

2021

 

 

 

 

 

 

Net debt

 

 

 

 

 

Net debt, period opening

$340,180

$(235,966)

 

$(162,886)

$(75,432)

Repayment of Senior Secured Notes

(7,005)

(6,671)

 

(7,005)

(6,671)

Revolving Term Line net drawings

(35,000)

-

 

(3,850)

-

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

11,513

(5,473)

 

7,800

(10,183)

(Increase) decrease in cash and cash equivalents

(201,899)

(251,402)

 

276,304

(413,569)

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

(5,798)

8,830

 

(8,372)

15,173

Net debt, period ending

$101,991

$(490,682)

 

$101,991

$(490,682)

On December 17, 2021, the Company completed an early renewal and expansion of its Revolving Term Line. The commitment under the facility was increased by $150 million to a total of $500 million, and the term was extended from March 2024 to December 2026.

Capital Resources

The following table summarizes Interfor’s credit facilities and availability as of June 30, 2022:

 

Revolving

Senior

 

 

Term

Secured

 

Thousands of Canadian Dollars

Line

Notes

Total

Available line of credit and maximum borrowing available

$500,000

$372,620

$872,620

Less:

 

 

 

Drawings

-

372,620

372,620

Outstanding letters of credit included in line utilization

44,083

-

44,083

Unused portion of facility

$455,917

$         -

455,917

Add:

 

 

 

Cash and cash equivalents

 

 

270,629

Available liquidity at June 30, 2022

 

 

$726,546

Interfor’s Revolving Term Line matures in December 2026 and its Senior Secured Notes have maturities principally in the years 2024-2030.

As of June 30, 2022, the Company had commitments for capital expenditures totaling $196.2 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 3 months ended

 

For the 6 months ended

 

Jun. 30

Jun. 30

Mar. 31

 

Jun. 30

Jun. 30

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

2022

2021

2022

 

2022

2021

 

 

 

 

 

 

 

Adjusted Net Earnings

 

 

 

 

 

 

Net earnings

$269,881

$419,241

$397,031

 

$666,913

$683,728

Add:

 

 

 

 

 

 

Asset write-downs and restructuring costs

1,088

2,213

3,198

 

4,286

2,355

Other foreign exchange loss (gain)

20,299

4,645

(12,823)

 

7,476

6,991

Long-term incentive compensation expense (recovery)

(10,403)

11,145

3,671

 

(6,732)

18,815

Other expense (income) excluding business interruption insurance

3,085

1,045

(395)

 

2,690

(951)

Post closure wind-down costs

-

251

-

 

-

475

Income tax effect of above adjustments

(3,787)

(4,991)

1,794

 

(1,993)

(7,220)

Adjusted net earnings

$280,163

$433,549

$392,476

 

$672,640

$704,193

Weighted average number of shares - basic ('000)

54,874

64,984

59,357

 

57,103

65,453

Adjusted net earnings per share

$5.11

$6.67

$6.61

 

$11.78

$10.76

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

Net earnings

$269,881

$419,241

$397,031

 

$666,913

$683,728

Add:

 

 

 

 

 

 

Depreciation of plant and equipment

41,647

22,717

33,113

 

74,760

44,191

Depletion and amortization of timber, roads and other

9,154

6,669

9,124

 

18,279

13,637

Finance costs

4,357

4,437

5,169

 

9,524

8,961

Income tax expense

89,474

138,922

132,026

 

221,500

225,178

EBITDA

414,513

591,986

576,463

 

990,976

975,695

Add:

 

 

 

 

 

 

Long-term incentive compensation expense (recovery)

(10,403)

11,145

3,671

 

(6,732)

18,815

Other foreign exchange loss (gain)

20,299

4,645

(12,823)

 

7,476

6,991

Other expense (income) excluding business interruption insurance

3,085

1,045

(395)

 

2,690

(951)

Asset write-downs and restructuring costs

1,088

2,213

3,198

 

4,286

2,355

Post closure wind-down costs

-

251

-

 

-

475

Adjusted EBITDA

$428,582

$611,285

$570,114

 

$998,696

$1,003,380

Sales

$1,389,050

$1,099,670

$1,349,038

 

$2,738,087

$1,948,977

Adjusted EBITDA margin

30.9%

55.6%

42.3%

 

36.5%

51.5%

 

 

 

 

 

 

 

Net debt to invested capital

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

Total debt

$372,620

$365,106

$403,112

 

$372,620

$365,106

Cash and cash equivalents

(270,629)

(855,788)

(62,932)

 

(270,629)

(855,788)

Total net debt

$101,991

$(490,682)

$340,180

 

$101,991

$(490,682)

Invested capital

 

 

 

 

 

 

Net debt

$101,991

$(490,682)

$340,180

 

$101,991

$(490,682)

Shareholders' equity

2,106,097

1,554,205

1,817,371

 

2,106,097

1,554,205

Total invested capital

$2,208,088

$1,063,523

$2,157,551

 

$2,208,088

$1,063,523

Net debt to invested capital1

4.6%

(46.1%)

15.8%

 

4.6%

(46.1%)

 

 

 

 

 

 

 

Operating cash flow per share (before working capital changes)

 

 

 

 

 

 

Cash provided by operating activities

$393,806

$484,723

$281,214

 

$675,020

$769,803

Cash (generated from) used in operating working capital

(175,586)

(249)

97,567

 

(78,019)

92,355

Operating cash flow (before working capital changes)

$218,220

$484,474

$378,781

 

$597,001

$862,158

Weighted average number of shares - basic ('000)

54,874

64,984

59,357

 

57,103

65,453

Operating cash flow per share (before working capital changes)

$3.98

$7.46

$6.38

 

$10.45

$13.17

 

 

 

 

 

 

 

Annualized return on capital employed

 

 

 

 

 

 

Net earnings

$269,881

$419,241

$397,031

 

$666,913

$683,728

Add:

 

 

 

 

 

 

Finance costs

4,357

4,437

5,169

 

9,524

8,961

Income tax expense

89,474

138,922

132,026

 

221,500

225,178

Earnings before income taxes and finance costs

$363,712

$562,600

$534,226

 

$897,937

$917,867

Capital Employed

 

 

 

 

 

 

Total assets

$3,269,508

$2,409,388

$3,081,351

 

$3,269,508

$2,409,388

Current liabilities

(421,383)

(285,081)

(472,686)

 

(421,383)

(285,081)

Less:

 

 

 

 

 

 

Current portion of long-term debt

6,980

6,713

6,769

 

6,980

6,713

Current portion of lease liabilities

14,776

11,758

15,014

 

14,776

11,758

Capital employed, end of period

$2,869,881

$2,142,778

$2,630,448

 

$2,869,881

$2,142,778

Capital employed, beginning of period

2,630,448

1,915,146

2,303,177

 

2,303,177

1,672,103

Average capital employed

$2,750,164

$2,028,962

$2,466,812

 

$2,586,529

$1,907,441

Earnings before income taxes and finance costs divided by average
   capital employed

13.2%

27.7%

21.7%

 

34.7%

48.1%

Annualization factor

4.0

4.0

4.0

 

2.0

2.0

Annualized return on capital employed

52.9%

110.8%

86.6%

 

69.4%

96.2%

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

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the three and six months ended June 30, 2022 and 2021 (unaudited)

(thousands of Canadian Dollars except earnings per share)

Three Months

Three Months

Six Months

Six Months

 

Jun. 30, 2022

Jun. 30, 2021

Jun. 30, 2022

Jun. 30, 2021

 

 

 

 

 

Sales

$1,389,050

$1,099,670

$2,738,087

$1,948,977

Costs and expenses:

 

 

 

 

Production

899,289

457,329

1,633,118

889,496

Selling and administration

16,102

12,136

33,730

25,015

Long-term incentive compensation expense (recovery)

(10,403)

11,145

(6,732)

18,815

U.S. countervailing and anti-dumping duty deposits

46,311

19,171

82,128

31,561

Depreciation of plant and equipment

41,647

22,717

74,760

44,191

Depletion and amortization of timber, roads and other

9,154

6,669

18,279

13,637

 

1,002,100

529,167

1,835,283

1,022,715

 

 

 

 

 

Operating earnings before write-downs and
   restructuring costs

386,950

570,503

902,804

926,262

 

 

 

 

 

Asset write-downs and restructuring costs

1,088

2,213

4,286

2,355

Operating earnings

385,862

568,290

898,518

923,907

 

 

 

 

 

Finance costs

(4,357)

(4,437)

(9,524)

(8,961)

Other foreign exchange loss

(20,299)

(4,645)

(7,476)

(6,991)

Other income (expense)

(1,851)

(1,045)

6,895

951

 

(26,507)

(10,127)

(10,105)

(15,001)

 

 

 

 

 

Earnings before income taxes

359,355

558,163

888,413

908,906

 

 

 

 

 

Income tax expense (recovery):

 

 

 

 

Current

92,828

135,140

215,408

218,313

Deferred

(3,354)

3,782

6,092

6,865

 

89,474

138,922

221,500

225,178

 

 

 

 

 

Net earnings

$269,881

$419,241

$666,913

$683,728

 

 

 

 

 

Net earnings per share

 

 

 

 

Basic

$4.92

$6.45

$11.68

$10.45

Diluted

$4.90

$6.43

$11.64

$10.42


 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended June 30, 2022 and 2021 (unaudited)

(thousands of Canadian Dollars)

Three Months

Three Months

Six Months

Six Months

 

Jun. 30, 2022

Jun. 30, 2021

Jun. 30, 2022

Jun. 30, 2021

 

 

 

 

 

Net earnings

$269,881

$419,241

$666,913

$683,728

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

Items that will not be recycled to Net earnings:

 

 

 

 

Defined benefit plan actuarial gain (loss), net of tax

(1,064)

1,110

1,722

5,582

 

 

 

 

 

Items that are or may be recycled to Net earnings:

 

 

 

 

Foreign currency translation differences for
   foreign operations, net of tax

52,624

(8,876)

27,895

(17,763)

Total other comprehensive income (loss), net of tax

51,560

(7,766)

29,617

(12,181)

 

 

 

 

 

Comprehensive income

$321,441

$411,475

$696,530

$671,547


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three and six months ended June 30, 2022 and 2021 (unaudited)

(thousands of Canadian Dollars)

Three Months

Three Months

Six Months

Six Months

 

Jun. 30, 2022

Jun. 30, 2021

Jun. 30, 2022

Jun. 30, 2021

 

 

 

 

 

Cash provided by (used in):

 

 

 

 

Operating activities:

 

 

 

 

Net earnings

$269,881

$419,241

$666,913

$683,728

Items not involving cash:

 

 

 

 

Depreciation of plant and equipment

41,647

22,717

74,760

44,191

Depletion and amortization of timber, roads and other

9,154

6,669

18,279

13,637

Deferred income tax expense (recovery)

(3,354)

3,782

6,092

6,865

Current income tax expense

92,828

135,140

215,408

218,313

Finance costs

4,357

4,437

9,524

8,961

Other assets

(2,447)

655

(2,487)

224

Reforestation liability

(1,665)

(1,187)

71

(691)

Provisions and other liabilities

(12,798)

6,392

(25,708)

6,887

Stock options

213

167

454

363

Write-down of plant and equipment

1,117

2,035

2,340

2,035

Unrealized foreign exchange gain (loss)

(6,338)

5,406

(4,530)

8,417

Other income (expense)

1,851

1,045

(6,895)

(951)

Income taxes paid

(176,226)

(122,025)

(357,220)

(129,821)

 

218,220

484,474

597,001

862,158

Cash generated from (used in) operating working capital:

 

 

 

 

Trade accounts receivable and other

83,534

(4,741)

18,883

(72,600)

Inventories

60,506

(8,873)

36,072

(33,225)

Prepayments

(3,260)

(1,428)

(3,422)

(4,776)

Trade accounts payable and provisions

34,806

15,291

26,486

18,246

 

393,806

484,723

675,020

769,803

 

 

 

 

 

Investing activities:

 

 

 

 

Additions to property, plant and equipment

(60,939)

(36,263)

(111,962)

(62,594)

Additions to roads and bridges

(4,214)

(4,312)

(4,059)

(7,197)

Acquisitions

1,592

-

(536,087)

(73,630)

Proceeds on disposal of property, plant and equipment

10,181

283

11,371

5,976

Investment in GreenFirst Forest Products Inc.

(55,648)

-

(55,648)

-

Net proceeds from (additions to) deposits and other assets

(224)

725

168

882

 

(109,252)

(39,567)

(696,217)

(136,563)

 

 

 

 

 

Financing activities:

 

 

 

 

Issuance of share capital, net of expenses

-

401

377

2,346

Share repurchases

(32,929)

(49,435)

(227,237)

(69,738)

Dividend paid

-

(130,625)

-

(130,625)

Interest payments

(4,314)

(4,161)

(9,326)

(8,419)

Lease liability payments

(3,333)

(3,263)

(7,803)

(6,564)

Debt refinancing costs

(74)

-

(263)

-

Term line net repayments

-

-

(2,209)

-

Additions to long-term debt

-

-

328,720

-

Repayments of long-term debt

(42,005)

(6,671)

(337,366)

(6,671)

 

(82,655)

(193,754)

(255,107)

(219,671)

 

 

 

 

 

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

5,798

(8,830)

8,372

(15,173)

Increase (decrease) in cash

207,697

242,572

(267,932)

398,396

 

 

 

 

 

Cash and cash equivalents, beginning of period

62,932

613,216

538,561

457,392

 

 

 

 

 

Cash and cash equivalents, end of period

$270,629

$855,788

$270,629

$855,788


 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

June 30, 2022 and December 31, 2021 (unaudited)

(thousands of Canadian Dollars)

Jun. 30, 2022

Dec. 31, 2021

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$270,629

$538,561

Trade accounts receivable and other

265,220

147,764

Income tax receivable

19

12,776

Inventories

461,864

250,481

Prepayments

30,728

16,125

 

1,028,460

965,707

 

 

 

Employee future benefits

20,392

8,338

Deposits and other assets

192,952

52,221

Right of use assets

33,195

33,547

Property, plant and equipment

1,472,014

1,067,754

Roads and bridges

34,250

27,101

Timber licences

104,189

106,136

Goodwill and other intangible assets

383,367

342,291

Deferred income taxes

689

415

 

 

 

 

$3,269,508

$2,603,510

 

 

 

Liabilities and Shareholders’ Equity

 

 

Current liabilities:

 

 

Bank indebtedness

$         -

$2,202

Trade accounts payable and provisions

340,049

218,825

Current portion of long-term debt

6,980

6,868

Reforestation liability

15,920

16,670

Lease liabilities

14,776

12,239

Income taxes payable

43,658

64,838

 

421,383

321,642

 

 

 

Reforestation liability

29,612

29,250

Lease liabilities

20,388

26,850

Long-term debt

365,640

366,605

Employee future benefits

9,579

9,069

Provisions and other liabilities

23,474

43,686

Deferred income taxes

293,335

170,435

 

 

 

Equity:

 

 

Share capital

436,352

484,721

Contributed surplus

4,986

4,694

Translation reserve

86,315

58,420

Retained earnings

1,578,444

1,088,138

 

 

 

 

2,106,097

1,635,973

 

 

 

 

$3,269,508

$2,603,510

Approved on behalf of the Board:

 

L. Sauder

 

T.V. Milroy

 

Director

 

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 second quarter and annual Management’s Discussion and Analysis under the heading “Risks and Uncertainties”, which are 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; Indigenous reconciliation; the Company’s ability to export its products; the softwood lumber trade dispute between Canada and the U.S.; environmental impacts of the Company’s operations; labour disruptions; information systems security; and the existence of a public health crisis. 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 or statements, except as required by law.

ABOUT INTERFOR

Interfor is a growth-oriented forest products company with operations in Canada and the United States. The Company has annual lumber production capacity of approximately 4.7 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 www.interfor.com.

The Company’s unaudited condensed consolidated interim financial statements and Management’s Discussion and Analysis for Q2’22 are available at www.sedar.com and www.interfor.com.

There will be a conference call on Friday, August 5, 2022 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its second quarter 2022 financial results.

The dial-in number is 1-888-396-8049. The conference call will also be recorded for those unable to join in for the live discussion and will be available until September 5, 2022. The number to call is 1-877-674-7070, Passcode 637113#.

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