Interfor (IFP) Q3 2024 earnings summary

Executive summary

• Reported a net loss of $106 million in Q3'24, with an adjusted EBITDA loss of $22 million, reflecting weak lumber pricing, production curtailments, and significant impairment charges.

• Production was reduced, including indefinite closures at two US South mills and the announced exit from Quebec, selling three facilities and closing the Montreal office.

• Interfor is a top three North American softwood lumber producer, operating 31 facilities with a focus on the US South, Eastern, and Atlantic Canada, and a 10-year production CAGR of 6%.

• The company maintains a balanced capital allocation strategy, disciplined growth, and a well-capitalized, high-margin sawmill portfolio.

• Emphasizes sustainability, with a strong ESG focus and climate-friendly wood products.

Financial highlights

• Q3 adjusted EBITDA loss of $22 million on total revenue of $693 million, with sales down from $771.2 million in Q2'24 and $828.1 million in Q3'23.

• Net loss of $106 million, including $91 million in non-cash impairments related to Quebec asset sales and mill curtailments.

• Adjusted EBITDA margin was -3.2% in Q3'24, down from 3.9% in Q3'23.

• Operating cash flow was $38 million, supported by $55 million in tax refunds and $7 million working capital release.

• Available liquidity improved to $353 million at September 30, 2024.

Outlook and guidance

• Lumber prices have improved over 20% since early July, with further gains expected as supply reductions take effect.

• Near-term North American lumber markets expected to remain volatile due to economic uncertainty, high interest rates, and supply-demand imbalances.

• Q4 is expected to see improved operating cash flows due to higher prices and additional tax refunds.

• Capital expenditures for 2024 and 2025 are planned at $70 million and $75 million, respectively.

• Targeting around 4 billion board feet of lumber production in 2025, adjustable based on market strength.