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Interfor Reports Record Q3’20 Results and Announces Share Buyback Program

General News

Interfor Corporation (“Interfor” or the “Company”) recorded net earnings in Q3’20 of $121.6 million, or $1.81 per share, compared to $3.2 million, or $0.05 per share in Q2’20 and a net loss of $35.6 million, or $0.53 per share in Q3’19. Adjusted net earnings in Q3’20 were $140.0 million compared to $10.6 million in Q2’20 and an Adjusted net loss of $11.8 million in Q3’19.

Adjusted EBITDA was a record $221.7 million on sales of $644.9 million in Q3’20 versus $42.8 million on sales of $396.8 million in Q2’20.

Notable Items in the Quarter

Higher Lumber Prices

Interfor’s average lumber selling price increased $264 per mfbm from Q2’20 to $910 per mfbm. The key benchmark prices rose significantly quarter-over-quarter with the SYP Composite, Western SPF Composite and KD H-F Stud 2×4 9’ benchmarks increasing by US$320, US$361 and US$349 per mfbm to US$748, US$711 and US$764 per mfbm, respectively. Interfor’s average selling price lags the key benchmark price changes due to timing differences between orders and shipments.

While lumber prices fell sharply in the initial stages of COVID-19, industry-wide production curtailments in Q2’20 and growing demand from repair and renovation activities and U.S. housing starts contributed to the robust price environment during Q3’20.

Strengthened Financial Position

Net debt ended the quarter at $88.7 million, or 8.3% of invested capital, resulting in available liquidity of $636.7 million.

Interfor generated $214.8 million of cash flow from operations before changes in working capital, or $3.19 per share.

Capital spending was $23.4 million, including $16.2 million on high-return discretionary projects, primarily in the U.S. South. US$84.6 million has been spent on the Company’s Phase II strategic capital plan through September 30, 2020.

Reflecting its strengthened financial position and available internal investment opportunities with attractive returns, Interfor has revised its planned capital expenditures for 2020 and 2021 to now total approximately $115.0 million and $150.0 million, respectively.

Production Increased to Meet Demand

Total lumber production in Q3’20 was 642 million board feet, representing an increase of 221 million board feet quarter-over-quarter. Production in the B.C. region increased to 193 million board feet from 115 million board feet in the preceding quarter. The U.S. South and U.S. Northwest regions accounted for 331 million board feet and 118 million board feet, respectively, compared to 230 million board feet and 76 million board feet in Q2’20.

Total lumber shipments were 618 million board feet, including agency and wholesale volumes, or 120 million board feet higher than Q2’20.

Asset Write-downs and Restructuring Costs

Asset write-downs and restructuring costs in Q3’20 are $9.8 million (after-tax), or $13.0 million on a pre-tax basis. This includes $10.8 million of non-cash impairments for asset write-downs on buildings, equipment and parts inventory related to the sale of the sawmill in Gilchrist, Oregon. The sale was completed on October 29, 2020.

Softwood Lumber Duties

Interfor expensed $19.7 million of duties in the quarter, representing the full amount of countervailing and anti-dumping duties incurred on its Canadian shipments of softwood lumber into the U.S. at a combined rate of 20.23%. Cumulative duties of US$121.1 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by U.S. Customs and Border Protection.

On February 3, 2020 the U.S. Department of Commerce issued preliminary revised combined rates of 8.37% for 2017 and 8.21% for 2018. These rates remain preliminary, with final rate determinations not expected until November 2020. At such time, the final rates will be applied to new lumber shipments. No adjustments have been recorded in the financial statements as of September 30, 2020 to reflect the preliminary revised duty rates.

1 Refer to Adjusted EBITDA and Net debt to invested capital in the Non-GAAP Measures section

Normal Course Issuer Bid (“NCIB”)

The Toronto Stock Exchange (“TSX”) has approved the launch by the Company of a NCIB.

The NCIB will allow for the purchase during the twelve-month period commencing on November 11, 2020 and ending on November 10, 2021 of up to 5,981,751 common shares, which represents 10% of the Company’s public float as at November 5, 2020. The Company purchased no common shares under the prior NCIB that expired on March 6, 2020. The Company was authorized to purchase up to 6,652,006 common shares under the prior NCIB.

Under TSX rules, Interfor will be allowed to purchase daily a maximum of 88,590 common shares, representing 25% of the average daily trading volume of 354,363 common shares over the six-month period ending October 31, 2020, subject to certain exemptions for block purchases. As of November 5, 2020, the Company has 67,274,878 common shares issued and outstanding. All purchases will be made through open market transactions through the facilities of the TSX or other Canadian alternative trading systems and will conform to their rules and regulations. The price to be paid by Interfor for any common shares will be the market price at the time of acquisition. All common shares purchased pursuant to the NCIB will be cancelled.

Interfor has also entered into an automatic securities purchase plan agreement with a securities broker under which the broker will act as the Company’s agent to acquire Interfor common shares under the NCIB during the Company’s scheduled blackout periods in the course of the NCIB. Purchases by the broker under the NCIB during these periods will be made at the broker’s discretion, subject to certain parameters established by Interfor prior to each period with respect to price and number of common shares.

The Company believes that, from time to time, the market price of its common shares may be attractive and their purchase would represent a prudent allocation of capital.


Near term lumber demand is expected to be impacted by uncertainties related to COVID-19 within the North American economy as well as a traditional fall/winter seasonal slowdown that can be weather dependent.

Interfor expects lumber demand to continue to grow over the mid-term, as repair and renovation activities and U.S. housing starts benefit from favourable underlying economic fundamentals and trends.

Interfor’s strategy of maintaining a diversified portfolio of operations allows the Company to both reduce risk and maximize returns on invested 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.

For the full third quarter results, click here.

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 3.0 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


Richard Pozzebon – Senior Vice President & CFO – (604) 689-6800

Source: Interfor Corporation