Interfor Reports Q4’24 Results

Adjusted EBITDA of $80 million and Net Loss of $50 million

INTERFOR CORPORATION (“Interfor” or the “Company”) recorded a Net loss in Q4’24 of $49.9 million, or $0.97 per share, compared to a Net loss of $105.7 million, or $2.05 per share in Q3’24 and a Net loss of $169.0 million, or $3.29 per share in Q4’23.

Adjusted EBITDA was $80.4 million on sales of $746.5 million in Q4’24 versus an Adjusted EBITDA loss of $22.0 million on sales of $692.7 million in Q3’24 and an Adjusted EBITDA loss of $51.4 million on sales of $785.9 million in Q4’23.

Notable items:

• Improved Lumber Prices
  • Lumber prices increased during Q4’24 as reflected in Interfor’s average selling price of $659 per mfbm, up $89 per mfbm versus Q3’24. Lumber prices strengthened from the effects of market-driven industry production curtailments combined with increased new home construction starts.
  • In Q4’24, lumber production totalled 948 million board feet, representing a 44 million board foot increase over the prior quarter. Q3’24 production was impacted by temporary production curtailments in response to weak market conditions.  
• Stable Financial Position
  • Net debt at quarter-end was $861.3 million, or 36.0% of invested capital compared to net debt at Q3’24 of $849.9 million, or 36.1% of invested capital.
  • The Company’s financial position benefited in the fourth quarter from $74.8 million of positive operating cash flow, primarily resulting from higher average lumber prices and the collection of $13.9 million of income tax refunds.  
  • The Company’s available liquidity improved $30.2 million quarter-over-quarter to $383.0 million at December 31, 2024.
• Monetization of Coastal B.C. Operations
  • The Company sold Coastal B.C. forest tenures totalling approximately 111,000 cubic metres of allowable annual cut (“AAC”) and related assets and liabilities for proceeds of $11.6 million and a gain of $9.0 million.
  • Interfor held approximately 901,000 cubic metres of AAC for disposition at December 31, 2024, subject to approvals from the Ministry of Forests.
• Capital Investments
  • Capital spending was $14.5 million, including $4.4 million of discretionary investment primarily focused on the multi-year rebuild of the Thomaston, GA sawmill.
  • Capital expenditures planned for 2025 are estimated to be approximately $85.0 million.
• Softwood Lumber Duties
  • Interfor recorded $3.1 million of duties expense in the quarter. This represents 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 14.40%, net of a $17.0 million foreign exchange gain from revaluation of U.S. Dollar denominated duty deposits.
  • Interfor has paid cumulative duties of US$593.6 million, or approximately $12.12 per share on an after-tax basis, as at December 31, 2024. Except for a US$165.0 million net receivable recorded 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.
• Sale of Quebec Operations
  • On October 16, 2024, the Company announced that it entered into a definitive agreement to sell its sawmills in Val-d’Or and Matagami, QC, as well as its Sullivan remanufacturing plant in Val-d’Or.
  • This divestiture was completed on January 10, 2025, for net cash consideration of $16.3 million. In addition, the Company drew down $9.0 million of log, lumber and other inventories during Q4’24 prior to the completion of the divestiture. The Company expects to record a loss on disposal of $28.9 million in the first quarter of 2025, primarily related to goodwill.

Outlook

North American lumber markets over the near term are expected to be volatile as the economy continues to adjust to changing monetary policies, labour shortages and geo-political uncertainty, and as industry-wide lumber production continues to adjust to match demand.  

Near-term volatility could be further impacted by a potential tariff on Canadian lumber exports to the U.S. Overall, the Company is well positioned with a diversified product mix in Canada and the U.S., with approximately 60% of its total lumber produced and sold within the U.S. Ultimately, only about 26% of the Company’s total lumber production is exported from Canada to the U.S. and exposed to a potential tariff. Over the mid-term, Canadian lumber is expected to remain a key source of supply to meet U.S. needs, as growth in U.S. lumber manufacturing capacity will likely be limited by labour constraints, lengthy equipment lead-times and extended project ramp-up schedules.   

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, labour availability and constrained global 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. In the event of a sustained lumber market downturn, Interfor maintains flexibility to significantly reduce capital expenditures and working capital levels, and to proactively adjust its lumber production to match demand.

Liquidity

Balance Sheet

Interfor’s Net debt at December 31, 2024 was $861.3 million, or 36.0% of invested capital, representing an increase of $18.6 million from the level of Net debt at December 31, 2023.

As at December 31, 2024 the Company had net working capital of $174.5 million and available liquidity of $383.0 million, based on the available borrowing capacity under its $600.0 million Revolving Term Line (“Term Line”).

The Term Line and Senior Secured Notes are subject to financial covenants, including a maximum net debt to total capitalization ratio of 50.0% and a minimum EBITDA interest coverage ratio of two times, which becomes effective if the net debt to total capitalization ratio exceeds 42.5%. As at December 31, 2024, Interfor was fully in compliance with all covenants relating to the Term Line and Senior Secured Notes.

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.

On March 26, 2024, the Company issued US$33.3 million of Series I Senior Secured Notes, bearing interest at 6.37% with principal repayment due at final maturity on March 26, 2030. The proceeds were used to settle US$33.3 million of principal under the Company’s existing Series C Senior Secured Notes due on March 26, 2024.

Capital Resources

Interfor’s Term Line matures in December 2026 and its Senior Secured Notes have maturities in the years 2025-2033.

As of December 31, 2024, the Company had commitments for capital expenditures totaling $30.6 million for both maintenance and discretionary capital projects.

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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 5.0 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.

Contact:

Richard Pozzebon – Executive Vice President and Chief Financial Officer – (604) 422-3400

Source: Interfor Corporation