Record Quarterly Sales of $533 million and EBITDA¹ of $90 million
Record Annual Sales of $2 billion and EBITDA¹ of $288 million
Quarterly Free Cash Flow from Operations of $83 Million (or $1.19 per Share)
Net Debt to Invested Capital Ratio of 12%

VANCOUVER, British Columbia, Feb. 08, 2018 (GLOBE NEWSWIRE) -- INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX:IFP) recorded net earnings in Q4’17 of $36.2 million, or $0.52 per share, compared to $16.8 million, or $0.24 per share in Q3’17 and $26.6 million, or $0.38 per share in Q4’16.  Adjusted net earnings¹ in Q4’17 were $45.1 million or $0.64 per share, compared to $20.0 million, or $0.29 per share in Q3’17 and $17.7 million, or $0.25 per share in Q4’16.

Adjusted EBITDA¹ was a record $89.5 million on sales of $532.8 million in Q4’17 versus $60.5 million on sales of $489.2 million in Q3’17.

For the year, net earnings were $97.2 million, or $1.39 per share, compared to $65.6 million or $0.94 per share in 2016.  Adjusted EBITDA and sales were both records at $287.8 million and $2.0 billion, respectively.

Notable items in the quarter included:

• Strong Lumber Prices

• The key benchmark prices improved quarter-over-quarter with the SYP Composite, Western SPF Composite and KD H-F Stud 2x4 9’ increasing by US$30, US$35 and US$4 per mfbm, respectively.  Interfor’s average lumber selling price increased $39 from Q3’17 to a record $650 per mfbm on 686 million board feet of lumber sales.    

• Increased Production

• Total lumber production was 655 million board feet or 10 million board feet more than the prior quarter.  Production in the U.S. South region increased to 296 million board feet from 281 million board feet in the preceding quarter.  The B.C. and U.S. Northwest regions accounted for 219 million board feet and 140 million board feet, respectively, compared to 225 million board feet and 139 million board feet in Q3’17, respectively. 

• Significant Cash Flow

• Interfor generated $83.4 million of cash from operations before changes in working capital, or $1.19 per share, plus a $3.3 million reduction in working capital, for total cash generated from operations of $86.7 million.
  
  
• Capital spending was $25.0 million on a mix of high-return discretionary, maintenance and woodlands projects.
  
  
• Net debt ended the quarter at $119.3 million, or 12.3% of invested capital.

• Tax Reform Impact

• The U.S. tax reform enacted in December 2017 reduced the effective tax rate on Interfor’s U.S. operations from approximately 37% to 24%.  As a result, Q4’17 deferred tax expense includes a $2.9 million recovery related to the preceding three quarters of 2017.  The Company continues to have significant tax loss carry-forwards, with US$132.4 million and $66.7 million available as at December 31, 2017 in the U.S. and Canada, respectively.

^{1 _{Refer to Adjusted EBITDA and Adjusted net earnings in the Non-GAAP Measures section}}

Strategic Capital Plan

• Interfor continues to make progress on its multi-year strategic capital plan that involves a number of discretionary projects designed to capture the opportunities within its current operating platform and to pursue opportunities for further growth.
  
  
• The previously announced large scale projects at the Company’s Meldrim and Monticello sawmills, which represent a total investment of approximately US$65 million, are on track for completion in Q1’19.  These two projects are designed to add annual lumber production capacity of approximately 150 million board feet and enhance operating margins at these operations.  Positive progress on a series of smaller debottlenecking and optimization projects is also being made.
  
  
• Other large capital projects to enhance existing operations are continuing to be advanced from an engineering and feasibility standpoint and will be sequenced after the Meldrim and Monticello projects.  These projects will be subject to Board approval in the normal course.
  
  
• Assessment of the greenfield sawmill opportunity in the Central Region of the U.S. South continues with a decision on the project expected by mid-2018. This sawmill would produce in excess of 200 million board feet of lumber per year for an estimated total cost, including working capital and start-up costs, of approximately US$115 million.

Softwood Lumber Duties

• In Q4’17, the U.S. Department of Commerce announced amended final rates for countervailing and anti-dumping duties of 14.19% and 6.04% on softwood lumber shipments from Canada, down from the preliminary rates set in Q2’17 of 19.88% and 6.87%, respectively.  In addition, negative findings were made in respect of critical circumstances for both countervailing and anti-dumping duties.  To reflect lower amended final rates set for U.S. countervailing and anti-dumping duties, Interfor recorded a $3.7 million reduction to duties expense in Q4’17 relating to shipments in Q2’17 and Q3’17.
  
  
• In Q4’17, Interfor shipped approximately 109 million board feet from its Canadian operations to the U.S. market, which represented approximately 16% of the Company’s total lumber sales.
  
  
• Interfor is of the view that these duties imposed by the U.S. are without merit and are politically driven. Interfor will continue to work with the B.C. and Canadian governments to vigorously defend Canada’s position through various appeal processes.

Executive Appointments Announced

At its meeting earlier today, the Company’s Board of Directors confirmed the appointments of Ian Fillinger as Senior Vice-President & Chief Operating Officer, and Marty Juravsky as Senior Vice-President & Chief Financial Officer, effective February 9, 2018.  Fillinger, who is 49, joined Interfor in 2005 as General Manager of the Company’s Adams Lake Division and has served in a series of increasingly responsible positions since that time.  He was appointed Senior Vice-President & Head of Operations with responsibility for all of the Company’s operations and capital project activities in December 2015.  Juravsky, who is 54, and a CPA, CA, joined Interfor in 2012 in a consulting capacity and took formal responsibility for the Company’s corporate development activities in 2013.  He has more than twenty years of experience working with some of North America’s largest investment banks including Salomon Brothers/Citigroup and National Bank Financial.  Immediately prior to his appointment, Juravsky served as the Company’s Senior Vice-President, Corporate Development & Strategy.

Summary of Quarterly Results⁽¹⁾

Liquidity

Balance Sheet

Interfor strengthened its financial position throughout 2017, with strong cash flow generated from operations used to repay debt and fund capital projects.  Net debt at December 31, 2017 was $119.3 million, or 12.3% of invested capital, representing a decrease of $170.3 million from the level of net debt at December 31, 2016. 

A strengthening of the Canadian Dollar against the U.S. Dollar by 6.6%, contributed $17.7 million to the net debt reduction in 2017 over 2016 as all debt held was denominated in U.S. Dollars.

Capital Resources

The following table summarizes Interfor’s credit facilities and availability as of December 31, 2017:

As of December 31, 2017, the Company had commitments for capital expenditures totaling $27.3 million for both maintenance and discretionary capital projects. 

Interfor continues to maintain its disciplined focus on monitoring discretionary capital expenditures, optimizing inventory levels and matching production with offshore and domestic demand. 

As at December 31, 2017, the Company had net working capital of $257.1 million and available liquidity of $443.8 million, including cash and borrowing capacity on operating and term line facilities.  These resources, in addition to cash generated from operations, will be used to support working capital requirements, debt servicing commitments and capital expenditures.  We believe that Interfor will have sufficient liquidity to fund operating and capital requirements for the foreseeable future.

Non-GAAP Measures

This release makes reference to the following non-GAAP measures: Adjusted net earnings, Adjusted net earnings per share, EBITDA, Adjusted EBITDA, Net debt to invested capital and Operating cash flow per share (before working capital changes) 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:

Notes:
(1)  Net debt to invested capital as of the period end.

FORWARD-LOOKING STATEMENTS

This release contains information and statements that are forward-looking in nature, including, but not limited to, statements containing the words “believes”, “will”, “should”, “expects”, “annualized” and similar expressions.  Such statements involve known and unknown risks and uncertainties that may cause Interfor’s actual results to be materially different from those expressed or implied by those forward-looking statements.  Such risks and uncertainties include, among other things: price volatility, competition, availability and cost of log supply, natural or man-made disasters, currency exchange sensitivity, regulatory changes, allowable annual cut reductions, Aboriginal title and rights claims, potential countervailing and anti-dumping duties, stumpage fee variables and changes, environmental impact and performance, labour disruptions, cyber-security measures, and other factors referenced herein and in Interfor’s Annual Report available on www.sedar.com and www.interfor.com.  The forward-looking information and statements contained in this release are based on Interfor’s current expectations and beliefs.  Readers are cautioned not to place undue reliance on forward-looking information or statements.  Interfor undertakes no obligation to update such forward-looking information or statements, except where required by law.

ABOUT INTERFOR

Interfor is a growth-oriented lumber company with operations in Canada and the United States.  The Company has annual production capacity of approximately 3.1 billion board feet and offers one of the most diverse lines of lumber products to customers around the world.  For more information about Interfor, visit our website at www.interfor.com.

The Company’s 2017 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 9, 2018 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 2017 financial results.

The dial-in number is 1-866-378-9082.  The conference call will also be recorded for those unable to join in for the live discussion, and will be available until March 9, 2018.  The number to call is 1-855-859-2056, Passcode 7086487.

For further information:
John A. Horning, Executive Vice President and Chief Financial Officer
(604) 689-6829

Martin L. Juravsky, Senior Vice President, Corporate Development and Strategy
(604) 689-6873