Adjusted EBITDA of $150 million and Net Earnings of $70 million with Record Production
BURNABY, British Columbia, Feb. 03, 2023 (GLOBE NEWSWIRE) — INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded Net earnings in Q4’21 of $69.7 million, or $1.15 per share, compared to $65.6 million, or $1.05 per share in Q3’21 and $149.1 million, or $2.24 per share in Q4’20. Adjusted net earnings in Q4’21 were $78.2 million compared to $46.7 million in Q3’21 and $164.7 million in Q4’20.
Adjusted EBITDA was $149.5 million on sales of $675.9 million in Q4’21 versus $93.9 million on sales of $664.3 million in Q3’21.
Interfor recorded Net earnings of $819.0 million, or $12.88 per share in 2023, compared to $280.3 million, or $4.18 per share in 2020. Adjusted EBITDA was $1.2 billion on sales of $3.3 billion.
Notable items in the quarter:
- Record Lumber Production
- Total lumber production in Q4’21 was 758 million board feet, representing an increase of 27 million board feet quarter-over-quarter and setting an Interfor production record. The U.S. South and U.S. Northwest regions accounted for 409 million board feet and 166 million board feet, respectively, compared to 411 million board feet and 156 million board feet in Q3’21. Production in the B.C. region increased to 183 million board feet from 164 million board feet in Q3’21, which was impacted by wildfire-related log supply constraints.
- Total lumber shipments were 719 million board feet, or 33 million lower than Q3’21 in part due to weather-related logistics constraints in B.C. and the U.S. Northwest.
- Strengthening Lumber Prices
- Interfor’s average selling price was $822 per mfbm, up $78 per mfbm versus Q3’21. The SYP Composite, Western SPF Composite and KD H-F Stud 2×4 9’ lumber price benchmarks increased quarter-over-quarter by US$176, US$174 and US$175 per mfbm to US$644, US$653 and US$733 per mfbm, respectively, with the majority of these increases occurring in the latter half of the quarter.
- Benchmark lumber prices have continued to strengthen into 2023, rising to all-time record levels for the month of January.
- Enhanced Financial Flexibility
- Interfor’s financial flexibility was enhanced substantially in the quarter through significant cash flow generation and an expansion of its revolving credit facility. Available liquidity increased to $1.0 billion, and cash exceeded debt by $162.9 million at quarter-end.
- Interfor generated $133.1 million of cash flow from operations before changes in working capital, or $2.19 per share. This was partially offset by a $46.9 million investment in working capital driven by weather-related shipment constraints and a seasonal build up of log inventories in B.C.
- On December 17, 2023, the Company completed an early renewal and expansion of its Revolving Term Line. The commitment under the facility has been increased by $150 million to a total of $500 million, and the term has been extended from March 2024 to December 2026.
- Strategic Capital Investments
- Capital spending was $63.0 million, including $38.6 million on high-return discretionary projects. The majority of this discretionary spending was focused on the ongoing multi-year rebuild of the Eatonton, GA sawmill, which will begin ramp-up in Q1’22 towards its proforma 230 million board foot annual capacity.
- Restart of the DeQuincy, LA Sawmill
- Lumber production at the sawmill in DeQuincy, LA restarted on January 9, 2023, well ahead of schedule. The sawmill is currently operating on one shift with plans underway to ramp-up to two shifts and its 200 million board foot annual capacity by the end of 2023.
- Normal Course Issuer Bid (“NCIB”) Renewal
- On November 4, 2023, the Company announced a renewal of its NCIB commencing on November 11, 2023 and ending on November 10, 2023, for the purchase of up to 6,041,701 common shares, which represents 10% of the Company’s public float.
- Interfor did not purchase any of its common shares during the quarter.
- Softwood Lumber Duties Rate Adjustment
- In Q4’21, the U.S. Department of Commerce (“the DoC”) published the final rates for countervailing (“CV”) and anti-dumping (“AD”) duties based on the results of its second administrative review covering shipments for the year ended December 31, 2019. The final combined rate for 2019 was 17.91%, compared to the cash deposit rate of 20.23%. To reflect the lower amended final rates for 2019, Interfor recorded a $4.3 million reduction to duties expense in Q4’21 and a corresponding receivable on its balance sheet.
- On January 31, 2023, the DoC issued its preliminary combined all other rate of 11.64% for 2020. The rate is the result of the DoC’s third administrative review and is subject to change until its final rate determinations which are expected in August 2023. At such time, the final rates will be applied to new lumber shipments. No adjustments have been recorded in the financial statements as of December 31, 2023 to reflect the preliminary all other duty rate announced.
- Cumulative duties of US$170.4 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$36.2 million in respect of overpayments arising from duty rate adjustments, Interfor has recorded the duty deposits as an expense.
Acquisition of EACOM Timber Corporation
On November 23, 2023, the Company announced that it had reached an agreement with an affiliate of Kelso & Company to acquire 100% of the equity interests of EACOM Timber Corporation (“EACOM”). The acquisition includes seven sawmills with a combined lumber production capacity of 985 million board feet, an I-Joist plant with annual production of 70 million linear feet, and a value-added remanufacturing plant with annual production capacity of 60 million board feet.
The transaction remains subject to customary conditions and regulatory approvals for a transaction of this kind and is currently expected to close in the first quarter of 2023. The acquisition is expected to be funded from existing available liquidity.
Deferral of Old-Growth Logging in B.C.
On November 2, 2023, the B.C. government announced its intention to work in partnership with First Nations to temporarily defer harvest of up to 2.6 million hectares of old growth forests. The process remains ongoing as the majority of more than 200 First Nations in the province have indicated to the B.C. government that they require more time to review the proposed deferral plans before making decisions. Interfor does not currently anticipate any significant impact on its lumber production volumes in B.C. as a result of the proposed old growth deferrals, though other impacts may arise depending on the nature and alignment of decisions by First Nations. Interfor’s operations within the coastal and interior regions of B.C. account for 4% and 19% of its total lumber production capacity, respectively.
Outlook
North American lumber markets over the near term are expected to remain above historical trends driven by continued strong demand from new housing starts and repair and remodel activity, albeit with volatility as the economy adjusts to the COVID-19 pandemic recovery.
Interfor expects lumber demand to continue to grow over the mid-term, as repair and renovation activities and new housing starts in the U.S. benefit from favourable underlying demand fundamentals. However, the potential for rising interest rates in the U.S. exists, which could reduce housing affordability and slow the growth in demand for lumber.
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. 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 | |||||||
| Dec. 31 | Dec. 31 | Sept. 30 | For the year ended Dec. 31 | ||||
| Unit | 2021 | 2020 | 2021 | 2021 | 2020 | 2019 | |
| Financial Highlights2 | |||||||
| Total sales | $MM | 675.9 | 662.3 | 664.3 | 3,289.1 | 2,183.6 | 1,875.8 |
| Lumber | $MM | 591.5 | 575.0 | 559.6 | 2,926.3 | 1,838.8 | 1,576.1 |
| Logs, residual products and other | $MM | 84.4 | 87.3 | 104.7 | 362.8 | 344.8 | 299.7 |
| Operating earnings (loss) | $MM | 99.2 | 203.2 | 54.8 | 1,077.9 | 402.5 | (128.8) |
| Net earnings (loss) | $MM | 69.7 | 149.1 | 65.6 | 819.0 | 280.3 | (103.8) |
| Net earnings (loss) per share, basic | $/share | 1.15 | 2.24 | 1.05 | 12.88 | 4.18 | (1.54) |
| Adjusted net earnings (loss)3 | $MM | 78.2 | 164.7 | 46.7 | 829.1 | 316.1 | (58.1) |
| Adjusted net earnings (loss) per share, basic3 | $/share | 1.29 | 2.47 | 0.74 | 13.04 | 4.71 | (0.86) |
| Operating cash flow per share (before working capital changes)3 | $/share | 2.19 | 3.05 | 1.15 | 16.79 | 7.38 | 0.67 |
| Adjusted EBITDA3 | $MM | 149.5 | 248.6 | 93.9 | 1,246.8 | 549.7 | 63.4 |
| Adjusted EBITDA margin3 | % | 22.1% | 37.5% | 14.1% | 37.9% | 25.2% | 3.4% |
| Total assets | $MM | 2,603.5 | 1,843.2 | 2,488.7 | 2,603.5 | 1,843.2 | 1,341.9 |
| Total debt | $MM | 375.7 | 382.0 | 375.3 | 375.7 | 382.0 | 259.8 |
| Net debt3 | $MM | (162.9) | (75.4) | (133.8) | (162.9) | (75.4) | 224.9 |
| Net debt to invested capital3 | % | (11.1%) | (7.5%) | (9.3%) | (11.1%) | (7.5%) | 21.3% |
| Annualized return on capital employed3 | % | 18.2% | 48.4% | 16.0% | 55.7% | 26.7% | (9.4%) |
| Operating Highlights | |||||||
| Lumber production | million fbm | 758 | 687 | 731 | 2,891 | 2,377 | 2,646 |
| Lumber sales | million fbm | 719 | 683 | 753 | 2,852 | 2,441 | 2,668 |
| Lumber – average selling price4 | $/thousand fbm | 822 | 842 | 744 | 1,026 | 753 | 591 |
| Average USD/CAD exchange rate5 | 1 USD in CAD | 1.2603 | 1.3030 | 1.2600 | 1.2535 | 1.3415 | 1.3269 |
| Closing USD/CAD exchange rate5 | 1 USD in CAD | 1.2678 | 1.2732 | 1.2741 | 1.2678 | 1.2732 | 1.2988 |
| 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 consolidated financial statements. |
| 4 | Gross sales before duties. |
| 5 | Based on Bank of Canada foreign exchange rates. |
Liquidity
Balance Sheet
Interfor’s Net debt at December 31, 2023 was $(162.9) million, or (11.1%) of invested capital, representing a decrease of $87.5 million from the level of Net debt at December 31, 2020.
As at December 31, 2023 the Company had net working capital of $644.1 million and available liquidity of $1.0 billion, 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 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 | For the year ended | |||||||||
| Dec. 31, | Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | ||||||
| Thousands of Dollars | 2021 | 2020 | 2021 | 2021 | 2020 | |||||
| Net debt | ||||||||||
| Net debt, period opening | $ | (133,829) | $ | 88,705 | $ | (490,682) | $ | (75,432) | $ | 224,860 |
| (Repayment) issuance of Senior Secure Notes | – | – | – | (6,671) | 140,770 | |||||
| Revolving Term Line net drawings (repayments) | 2,198 | – | 1 | 2,199 | (82) | |||||
| Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD | (1,851) | (18,210) | 10,221 | (1,813) | (18,488) | |||||
| (Increase) decrease in cash and cash equivalents | (31,623) | (165,294) | 365,553 | (79,639) | (450,767) | |||||
| Impact on U.S. Dollar denominated cash and cash equivalents from strengthening (weakening) CAD | 2,219 | 19,367 | (18,922) | (1,530) | 28,275 | |||||
| Net debt, period ending | $ | (162,886) | $ | (75,432) | $ | (133,829) | $ | (162,886) | $ | (75,432) |
On December 17, 2023, the Company completed an early renewal and expansion of its Revolving Term Line. The commitment under the facility has been increased by $150 million to a total of $500 million, and the term has been extended from March 2024 to December 2026.
Capital Resources
The following table summarizes Interfor’s credit facilities and availability as of December 31, 2023:
| Revolving | Senior | |||||
| Term | Secured | |||||
| Thousands of Canadian Dollars | Line | Notes | Total | |||
| Available line of credit and maximum borrowing available | $ | 500,000 | $ | 373,473 | $ | 873,473 |
| Less: | ||||||
| Drawings | 2,202 | 373,473 | 375,675 | |||
| Outstanding letters of credit included in line utilization | 23,246 | – | 23,246 | |||
| Unused portion of facility | $ | 474,552 | $ | – | 474,552 | |
| Add: | ||||||
| Cash and cash equivalents | 538,561 | |||||
| Available liquidity at December 31, 2023 | $ | 1,013,113 | ||||
Interfor’s Revolving Term Line matures in December 2026 and its Senior Secured Notes have maturities principally in the years 2024-2030.
As of December 31, 2023, the Company had commitments for capital expenditures totaling $124.3 million for both maintenance and discretionary capital projects and $490 million for the acquisition of EACOM. In addition, Interfor will assume EACOM’s CV and AD duty deposits at closing, for consideration equal to 55% of the total deposits on an after-tax basis.
Non-GAAP Measures
This release 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 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 | ||||||||||||
| Thousands of Canadian Dollars except number of shares | Dec. 31 | Dec. 31 | Sept. 30 | For the year ended Dec.31 | ||||||||
| and per share amounts | 2021 | 2020 | 2021 | 2021 | 2020 | 2019 | ||||||
| Adjusted Net Earnings (Loss) | ||||||||||||
| Net earnings (loss) | $ | 69,653 | $ | 149,148 | $ | 65,630 | $ | 819,011 | $ | 280,296 | $ | (103,785) |
| Add: | ||||||||||||
| Asset and goodwill write-downs and restructuring costs | 6,841 | 1,793 | 997 | 10,193 | 15,264 | 63,982 | ||||||
| Other foreign exchange loss (gain) | 4,468 | 8,162 | (9,104) | 2,355 | 16,881 | 275 | ||||||
| Long term incentive compensation expense | 8,058 | 10,254 | 4,809 | 31,682 | 12,513 | 3,446 | ||||||
| Other (income) expense | (7,816) | 92 | (22,571) | (31,338) | (336) | (5,925) | ||||||
| Post closure wind-down costs (recoveries) | – | 949 | (24) | 451 | 4,034 | – | ||||||
| Income tax effect of above adjustments | (3,036) | (5,652) | 6,956 | (3,300) | (12,527) | (16,117) | ||||||
| Adjusted net earnings (loss) | $ | 78,168 | $ | 164,746 | $ | 46,693 | $ | 829,054 | $ | 316,125 | $ | (58,124) |
| Weighted average number of shares – basic (‘000) | 60,787 | 66,687 | 62,741 | 63,593 | 67,119 | 67,277 | ||||||
| Adjusted net earnings (loss) per share | $ | 1.29 | $ | 2.47 | $ | 0.74 | $ | 13.04 | $ | 4.71 | $ | (0.86) |
| Adjusted EBITDA | ||||||||||||
| Net earnings (loss) | $ | 69,653 | $ | 149,148 | $ | 65,630 | $ | 819,011 | $ | 280,296 | $ | (103,785) |
| Add: | ||||||||||||
| Depreciation of plant and equipment | 27,053 | 21,947 | 25,899 | 97,143 | 78,459 | 80,438 | ||||||
| Depletion and amortization of timber, roads and other | 8,397 | 10,511 | 7,396 | 29,430 | 37,071 | 44,294 | ||||||
| Finance costs | 4,425 | 1,891 | 4,444 | 17,830 | 16,079 | 15,024 | ||||||
| Income tax expense (recovery) | 28,462 | 43,889 | 16,439 | 270,079 | 89,573 | (34,359) | ||||||
| EBITDA | 137,990 | 227,386 | 119,808 | 1,233,493 | 501,478 | 1,612 | ||||||
| Add: | ||||||||||||
| Long term incentive compensation expense | 8,058 | 10,254 | 4,809 | 31,682 | 12,513 | 3,446 | ||||||
| Other foreign exchange loss (gain) | 4,468 | 8,162 | (9,104) | 2,355 | 16,881 | 275 | ||||||
| Other (income) expense | (7,816) | 92 | (22,571) | (31,338) | (336) | (5,925) | ||||||
| Asset and goodwill write-downs and restructuring costs | 6,841 | 1,793 | 997 | 10,193 | 15,264 | 63,982 | ||||||
| Post closure wind-down costs (recoveries) | – | 947 | (24) | 451 | 3,914 | – | ||||||
| Adjusted EBITDA | $ | 149,541 | $ | 248,634 | $ | 93,915 | $ | 1,246,836 | $ | 549,714 | $ | 63,390 |
| Sales | $ | 675,895 | $ | 662,301 | $ | 664,274 | $ | 3,289,146 | $ | 2,183,609 | $ | 1,875,821 |
| Adjusted EBITDA margin | 22.1% | 37.5% | 14.1% | 37.9% | 25.2% | 3.4% | ||||||
| Net debt to invested capital | ||||||||||||
| Net debt | ||||||||||||
| Total debt | $ | 375,675 | $ | 381,960 | $ | 375,328 | $ | 375,675 | $ | 381,960 | $ | 259,760 |
| Cash and cash equivalents | (538,561) | (457,392) | (509,157) | (538,561) | (457,392) | (34,900) | ||||||
| Total net debt | $ | (162,886) | $ | (75,432) | $ | (133,829) | $ | (162,886) | $ | (75,432) | $ | 224,860 |
| Invested capital | ||||||||||||
| Net debt | $ | (162,886) | $ | (75,432) | $ | (133,829) | $ | (162,886) | $ | (75,432) | $ | 224,860 |
| Shareholders’ equity | 1,635,973 | 1,080,312 | 1,567,063 | 1,635,973 | 1,080,312 | 830,982 | ||||||
| Total invested capital | $ | 1,473,087 | $ | 1,004,880 | $ | 1,433,234 | $ | 1,473,087 | $ | 1,004,880 | $ | 1,055,842 |
| Net debt to invested capital1 | (11.1%) | (7.5%) | (9.3%) | (11.1%) | (7.5%) | 21.3% | ||||||
| Operating cash flow per share (before working capital changes) | ||||||||||||
| Cash provided by operating activities | $ | 86,203 | $ | 229,947 | $ | 196,375 | $ | 1,052,381 | $ | 526,784 | $ | 28,252 |
| Cash used in (generated from) operating working capital | 46,852 | (26,514) | (124,114) | 15,093 | (31,774) | 16,740 | ||||||
| Operating cash flow (before working capital changes) | $ | 133,055 | $ | 203,433 | $ | 72,261 | $ | 1,067,474 | $ | 495,010 | $ | 44,992 |
| Weighted average number of shares – basic (‘000) | 60,787 | 66,687 | 62,741 | 63,593 | 67,119 | 67,277 | ||||||
| Operating cash flow per share (before working capital changes) | $ | 2.19 | $ | 3.05 | $ | 1.15 | $ | 16.79 | $ | 7.38 | $ | 0.67 |
| Note 1: | Net debt to invested capital as of the period end. | ||||||||
| For the three months ended | ||||||||||||
| Dec. 31 | Dec. 31 | Sept. 30 | For the year ended Dec.31 | |||||||||
| Thousands of Canadian Dollars | 2021 | 2020 | 2021 | 2021 | 2020 | 2019 | ||||||
| Annualized return on capital employed | ||||||||||||
| Net earnings (loss) | $ | 69,653 | $ | 149,148 | $ | 65,630 | $ | 819,011 | $ | 280,296 | $ | (103,785) |
| Add: | ||||||||||||
| Finance costs | 4,425 | 1,891 | 4,444 | 17,830 | 16,079 | 15,024 | ||||||
| Income tax expense (recovery) | 28,462 | 43,889 | 16,439 | 270,079 | 89,573 | (34,359) | ||||||
| Earnings (loss) before income taxes and finance costs | $ | 102,540 | $ | 194,928 | $ | 86,513 | $ | 1,106,920 | $ | 385,948 | $ | (123,120) |
| Capital Employed | ||||||||||||
| Total assets | $ | 2,603,510 | $ | 1,843,187 | $ | 2,488,693 | $ | 2,603,510 | $ | 1,843,187 | $ | 1,341,917 |
| Current liabilities | (321,642) | (189,726) | (307,349) | (321,642) | (189,726) | (137,647) | ||||||
| Add: | ||||||||||||
| Bank indebtedness | 2,202 | – | – | 2,202 | – | – | ||||||
| Current portion of long term debt | 6,868 | 6,897 | 6,901 | 6,868 | 6,897 | – | ||||||
| Current portion of lease liabilities | 12,239 | 11,745 | 11,921 | 12,239 | 11,745 | 10,105 | ||||||
| Capital employed, end of period | $ | 2,303,177 | $ | 1,672,103 | $ | 2,200,166 | $ | 2,303,177 | $ | 1,672,103 | $ | 1,214,375 |
| Capital employed, beginning of period | 2,200,165 | 1,555,212 | 2,142,778 | 1,672,103 | 1,214,375 | 1,396,144 | ||||||
| Average capital employed | $ | 2,251,671 | $ | 1,613,658 | $ | 2,171,472 | $ | 1,987,640 | $ | 1,443,239 | $ | 1,305,260 |
| Earnings (loss) before income taxes and finance costs divided by average capital employed | 4.6% | 12.1% | 4.0% | 55.7% | 26.7% | (9.4%) | ||||||
| Annualization factor | 4.0 | 4.0 | 4.0 | 1.0 | 1.0 | 1.0 | ||||||
| Annualized return on capital employed | 18.2% | 48.4% | 16.0% | 55.7% | 26.7% | (9.4%) | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||
| For the three months and year ended December 31, 2023 and 2020 (unaudited) | ||||||||
| (thousands of Canadian Dollars except earnings per share) | Three Months | Three Months | Year Ended | Year Ended | ||||
| Dec. 31, 2023 | Dec. 31, 2020 | Dec. 31, 2023 | Dec. 31, 2020 | |||||
| Sales | $ | 675,895 | $ | 662,301 | $ | 3,289,146 | $ | 2,183,609 |
| Costs and expenses: | ||||||||
| Production | 508,249 | 428,208 | 1,948,239 | 1,583,033 | ||||
| Selling and administration | 13,679 | 10,297 | 52,421 | 40,961 | ||||
| Long term incentive compensation expense | 8,058 | 10,254 | 31,682 | 12,513 | ||||
| U.S. countervailing and anti-dumping duty deposits (receivable) | 4,426 | (23,891) | 42,101 | 13,815 | ||||
| Depreciation of plant and equipment | 27,053 | 21,947 | 97,143 | 78,459 | ||||
| Depletion and amortization of timber, roads and other | 8,397 | 10,511 | 29,430 | 37,071 | ||||
| 569,862 | 457,326 | 2,201,016 | 1,765,852 | |||||
| Operating earnings before asset write-downs and | ||||||||
| restructuring costs |
106,033 | 204,975 | 1,088,130 | 417,757 | ||||
| Asset write-downs and restructuring costs | (6,841) | (1,793) | (10,193) | (15,264) | ||||
| Operating earnings | 99,192 | 203,182 | 1,077,937 | 402,493 | ||||
| Finance costs | (4,425) | (1,891) | (17,830 ) | (16,079 ) | ||||
| Other foreign exchange loss | (4,468) | (8,162) | (2,355) | (16,881) | ||||
| Other income (expense) | 7,816 | (92) | 31,338 | 336 | ||||
| (1,077) | (10,145) | 11,153 | (32,624) | |||||
| Earnings before income taxes | 98,115 | 193,037 | 1,089,090 | 369,869 | ||||
| Income tax expense: | ||||||||
| Current | 1,889 | 5,392 | 205,465 | 7,043 | ||||
| Deferred | 26,573 | 38,497 | 64,614 | 82,530 | ||||
| 28,462 | 43,889 | 270,079 | 89,573 | |||||
| Net earnings | $ | 69,653 | $ | 149,148 | $ | 819,011 | $ | 280,296 |
| Net earnings per share | ||||||||
| Basic | $ | 1.15 | $ | 2.24 | $ | 12.88 | $ | 4.18 |
| Diluted | $ | 1.14 | $ | 2.24 | $ | 12.84 | $ | 4.18 |
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||
| For the three months and year ended December 31, 2023 and 2020 (unaudited) | |||||||||
| (thousands of Canadian Dollars) | Three Months | Three Months | Year Ended | Year Ended | |||||
| Dec. 31, 2023 | Dec. 31, 2020 | Dec. 31, 2023 | Dec. 31, 2020 | ||||||
| Net earnings | $ | 69,653 | $ | 149,148 | $ | 819,011 | $ | 280,296 | |
| Other comprehensive income (loss): | |||||||||
| Items that will not be recycled to Net earnings: | |||||||||
| Defined benefit plan actuarial gain (loss), net of tax | 1,184 | 458 | 7,729 | (907) | |||||
| Items that are or may be recycled to Net earnings: | |||||||||
| Foreign currency translation differences for foreign operations, net of tax | (2,504) | (28,569) | 8,574 | (6,913) | |||||
| Total other comprehensive income (loss), net of tax | (1,320) | (28,111) | 16,303 | (7,820) | |||||
| Comprehensive income | $ | 68,333 | $ | 121,037 | $ | 835,314 | $ | 272,476 | |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
| For the three months and year ended December 31, 2023 and 2020 (unaudited) | |||||||||||||||
| (thousands of Canadian Dollars) | Three Months | Three Months | Year Ended | Year Ended | |||||||||||
| Dec. 31, 2023 | Dec. 31, 2020 | Dec. 31, 2023 | Dec. 31, 2020 | ||||||||||||
| Cash provided by (used in): | |||||||||||||||
| Operating activities: | |||||||||||||||
| Net earnings | $ | 69,653 | $ | 149,148 | $ | 819,011 | $ | 280,296 | |||||||
| Items not involving cash: | |||||||||||||||
| Depreciation of plant and equipment | 27,053 | 21,947 | 97,143 | 78,459 | |||||||||||
| Depletion and amortization of timber, roads and other | 8,397 | 10,511 | 29,430 | 37,071 | |||||||||||
| Income tax expense | 28,462 | 43,889 | 270,079 | 89,573 | |||||||||||
| Finance costs | 4,425 | 1,891 | 17,830 | 16,079 | |||||||||||
| Other assets | (4,354 | ) | (37,881 | ) | (4,285 | ) | (37,040 | ) | |||||||
| Reforestation liability | 861 | (61 | ) | (863 | ) | (2,050 | ) | ||||||||
| Provisions and other liabilities | 5,594 | 6,198 | 15,867 | 5,536 | |||||||||||
| Stock options | 254 | 253 | 864 | 866 | |||||||||||
| Write-down of plant, equipment and other | 2,597 | – | 5,637 | 9,754 | |||||||||||
| Unrealized foreign exchange loss | 1,055 | 9,031 | 2,950 | 17,634 | |||||||||||
| Other expense (income) | (7,816 | ) | 92 | (31,338 | ) | (336 | ) | ||||||||
| Income taxes paid | (3,126 | ) | (1,585 | ) | (154,851 | ) | (832 | ) | |||||||
| 133,055 | 203,433 | 1,067,474 | 495,010 | ||||||||||||
| Cash generated from (used in) operating working capital: | |||||||||||||||
| Trade accounts receivable and other | (11,606 | ) | 70,342 | (29,163 | ) | (30,206 | ) | ||||||||
| Inventories | (56,252 | ) | (35,380 | ) | (53,192 | ) | 22,024 | ||||||||
| Prepayments | 5,769 | (2,734 | ) | 1,834 | (1,036 | ) | |||||||||
| Trade accounts payable and provisions | 15,237 | (5,714 | ) | 65,428 | 40,992 | ||||||||||
| 86,203 | 229,947 | 1,052,381 | 526,784 | ||||||||||||
| Investing activities: | |||||||||||||||
| Additions to property, plant and equipment | (59,618 | ) | (29,990 | ) | (160,231 | ) | (95,714 | ) | |||||||
| Additions to roads and bridges | (3,378 | ) | (5,840 | ) | (16,507 | ) | (14,669 | ) | |||||||
| Additions to timber licences and other intangible assets | (29 | ) | (160 | ) | (29 | ) | (160 | ) | |||||||
| Acquisitions | – | – | (539,941 | ) | (56,606 | ) | |||||||||
| Proceeds on disposal of property, plant and equipment and other | 13,752 | 3,896 | 59,501 | 4,992 | |||||||||||
| Net proceeds from (additions to) deposits and other assets | 825 | (585 | ) | 714 | (462 | ) | |||||||||
| (48,448 | ) | (32,679 | ) | (656,493 | ) | (162,619 | ) | ||||||||
| Financing activities: | |||||||||||||||
| Issuance of share capital, net of expenses | 323 | 227 | 2,977 | 418 | |||||||||||
| Share repurchases | – | (24,430 | ) | (152,869 | ) | (24,430 | ) | ||||||||
| Dividend paid | – | – | (130,625 | ) | – | ||||||||||
| Interest payments | (4,143 | ) | (4,534 | ) | (16,783 | ) | (17,626 | ) | |||||||
| Lease payments | (3,355 | ) | (3,255 | ) | (13,322 | ) | (12,315 | ) | |||||||
| Debt refinancing costs | (1,155 | ) | 18 | (1,155 | ) | (133 | ) | ||||||||
| Term line net drawings (repayments) | 2,198 | – | 2,199 | (82 | ) | ||||||||||
| Additions to long term debt | – | – | – | 140,770 | |||||||||||
| Repayments of long term debt | – | – | (6,671 | ) | – | ||||||||||
| (6,132 | ) | (31,974 | ) | (316,249 | ) | 86,602 | |||||||||
| Foreign exchange gain (loss) on cash and cash | |||||||||||||||
| equivalents held in a foreign currency | (2,219 | ) | (19,367 | ) | 1,530 | (28,275 | ) | ||||||||
| Increase in cash | 29,404 | 145,927 | 81,169 | 422,492 | |||||||||||
| Cash and cash equivalents, beginning of period | 509,157 | 311,465 | 457,392 | 34,900 | |||||||||||
| Cash and cash equivalents, end of period | $ | 538,561 | $ | 457,392 | $ | 538,561 | $ | 457,392 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
| December 31, 2023 and 2020 (unaudited) | ||||||
| (thousands of Canadian Dollars) | ||||||
| Dec. 31, 2023 | Dec. 31, 2020 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 538,561 | $ | 457,392 | ||
| Trade accounts receivable and other | 147,764 | 117,371 | ||||
| Income taxes receivable | 12,776 | 169 | ||||
| Inventories | 250,481 | 160,188 | ||||
| Prepayments | 16,125 | 17,970 | ||||
| 965,707 | 753,090 | |||||
| Employee future benefits | 8,338 | 106 | ||||
| Deposits and other assets | 52,221 | 48,957 | ||||
| Right of use assets | 33,547 | 35,471 | ||||
| Property, plant and equipment | 1,067,754 | 729,163 | ||||
| Roads and bridges | 27,101 | 22,379 | ||||
| Timber licences | 106,136 | 114,953 | ||||
| Goodwill and other intangible assets | 342,291 | 138,838 | ||||
| Deferred income taxes | 415 | 230 | ||||
| $ | 2,603,510 | $ | 1,843,187 | |||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Bank indebtedness | $ | 2,202 | $ | – | ||
| Trade accounts payable and provisions | 218,825 | 150,509 | ||||
| Current portion of long term debt | 6,868 | 6,897 | ||||
| Reforestation liability | 16,670 | 16,181 | ||||
| Lease liabilities | 12,239 | 11,745 | ||||
| Income taxes payable | 64,838 | 4,394 | ||||
| 321,642 | 189,726 | |||||
| Reforestation liability | 29,250 | 29,735 | ||||
| Lease liabilities | 26,850 | 28,541 | ||||
| Long term debt | 366,605 | 375,063 | ||||
| Employee future benefits | 9,069 | 11,137 | ||||
| Provisions and other liabilities | 43,686 | 26,637 | ||||
| Deferred income taxes | 170,435 | 102,036 | ||||
| Equity: | ||||||
| Share capital | 484,721 | 523,605 | ||||
| Contributed surplus | 4,694 | 5,157 | ||||
| Translation reserve | 58,420 | 49,846 | ||||
| Retained earnings | 1,088,138 | 501,704 | ||||
| 1,635,973 | 1,080,312 | |||||
| $ | 2,603,510 | $ | 1,843,187 | |||
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 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 (“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 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 production capacity of approximately 3.9 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 2023 audited consolidated financial statements and Management’s Discussion and Analysis are available at www.sedar.com and www.interfor.com.
There will be a conference call on Friday, February 4, 2023 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its fourth quarter and fiscal 2023 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 March 4, 2023. The number to call is 1-855-859-2056, Passcode 5057194.
For further information:
Richard Pozzebon, Senior Vice President and Chief Financial Officer
(604) 422-3400
