Interfor (IFP) Q2 2024 earnings summary

Executive summary

• Q2 net loss was CAD 76 million ($75.8 million), with adjusted EBITDA loss of CAD 17 million ($16.7 million), reflecting ongoing weak pricing and challenging market conditions.

• Interfor is a top three North American softwood lumber producer with 31 facilities and a diversified geographic footprint, focusing on the US South, Eastern, and Atlantic Canada.

• Log and conversion costs declined in most regions, and shipments exceeded production.

• Working capital improvements were achieved through reductions in receivables and inventories.

• ESG and sustainability are core to the company’s strategy, with a focus on climate-friendly products and responsible forest management.

Financial highlights

• Revenue for Q2 was CAD 771 million ($771.2 million), down 5% quarter-over-quarter, with sales declining from $871.8 million in Q2'23.

• Adjusted EBITDA margin was -2.2% versus 4.8% in Q2'23.

• Net debt to invested capital leverage ratio stood at 35% at quarter-end.

• Available liquidity was CAD 331 million ($330.5 million), supported by CAD 48 million in operating cash flow and CAD 21 million from asset sales.

• Production costs per unit sold were 2% lower quarter-over-quarter.

Outlook and guidance

• Additional industry supply reductions are expected, with 5%-7% of capacity already removed year-to-date.

• Updated production guidance includes curtailment of 280-350 million board feet, about 15%-18% of production, from August to December.

• Two-thirds of curtailments will occur in the US, one-third in Canada.

• More positive outlook anticipated for 2025, but planning for continued weakness until further supply is removed.

• Sale of remaining coastal BC forest tenures expected to complete by end of 2025, with $70 million in net proceeds.