Interfor Reports Q1’25 Results

Adjusted EBITDA of $49 million and Net Loss of $35 million

Interfor Corporation (“Interfor” or the “Company”) recorded a Net loss in Q1’25 of $35.1 million, or $0.68 per share, compared to a Net loss of $49.9 million, or $0.97 per share in Q4’24 and a Net loss of $72.9 million, or $1.42 per share in Q1’24.  

Adjusted EBITDA was $48.6 million on sales of $735.5 million in Q1’25 versus Adjusted EBITDA of $80.4 million on sales of $746.5 million in Q4’24 and an Adjusted EBITDA loss of $22.3 million on sales of $813.2 million in Q1’24.

Notable items:

• Improved Lumber Prices
  • Lumber prices increased during Q1’25 as reflected in Interfor’s average selling price of $712 per mfbm, up $53 per mfbm versus Q4’24. This improvement primarily reflects the industry-wide market-driven production curtailments in 2024, seasonal demand and tariff-related uncertainty.
• Reduced Lumber Shipments
  • In Q1’25, lumber shipments totalled 863 million board feet, representing a 77 million board foot decrease over the prior quarter. The decrease primarily relates to the sale of the Quebec operations, weather-related curtailments and shipment delays resulting from tariff uncertainty.   
• Stable Financial Position
  • Net debt at quarter-end was $886.3 million, or 37.3% of invested capital, while available liquidity was ample at $306.0 million.
  • The Company generated $40.4 million of positive operating cash flow before working capital changes in Q1’25, primarily due to higher average lumber prices. $53.6 million was invested in working capital, driven by seasonally higher log inventories and lumber shipment delays resulting from tariff uncertainty.  
• Monetization of Coastal B.C. Operations
  • The Company sold Coastal B.C. forest tenures totalling approximately 84,000 cubic metres of allowable annual cut (“AAC”) and related assets and liabilities for gross proceeds of $7.4 million and a gain of $6.5 million.
  • Interfor held approximately 817,000 cubic metres of AAC for disposition at March 31, 2025, subject to approvals from the Ministry of Forests.
• Sale of Quebec Operations
  • On January 10, 2025, the Company completed the sale of its sawmills in Val-d’Or and Matagami, QC, as well as its Sullivan remanufacturing plant in Val-d’Or, for net cash consideration of $16.3 million and recorded a loss on disposal of $29.1 million, primarily related to goodwill.

• Capital Investments
  • Capital spending was $17.2 million, including $7.5 million of discretionary investment primarily focused on the multi-year rebuild of the Thomaston, GA sawmill.
• Softwood Lumber Duties
  • On March 3, 2025 and April 4, 2025, respectively, the U.S. Department of Commerce issued its preliminary anti-dumping (“AD”) and countervailing (“CV”) duty rates for a combined all others rate of 34.45% for its sixth administrative review covering shipments for the year ended December 31, 2023. The preliminary rate is subject to change until the final rate determinations, which are expected in the second half of 2025. At such time, the final combined rate will be applied to new lumber shipments and an accounting adjustment will be recorded to reflect the delta between the cash deposit rate on 2023 lumber shipments and the final combined all others duty rate. Based on the preliminary combined all others rate, an expected non-cash incremental duty expense, before interest, of US$84.2 million would be recorded.
  • Interfor recorded $22.3 million of duties expense in the quarter. This represents the full amount of CV and AD duties incurred on shipments of softwood lumber from its Canadian operations to the U.S. at a combined rate of 14.40%, inclusive of a $1.6 million foreign exchange loss from revaluation of U.S. Dollar denominated duty deposits.
  • Interfor has paid cumulative duties of US$607.0 million, or approximately $12.32 per share on an after-tax basis, as at March 31, 2025. Except for a US$165.0 million net receivable recorded in respect of overpayments arising from duty rate adjustments and the fair value of rights to duties acquired, Interfor has recorded the duty deposits as an expense.
• Tariffs
  • On February 1, 2025, the U.S. administration issued an executive order to impose tariffs on all imports from Canada to take effect on February 4, 2025. These tariffs were subsequently paused for a 30-day period. Between March 4, 2025 and March 6, 2025, a 25% tariff was imposed resulting in the Company paying $1.9 million in tariffs. On March 6, 2025, an executive order was issued temporarily pausing tariffs on Canadian goods compliant with the United States-Mexico-Canada Agreement (“USMCA”), including lumber. On April 2, 2025, another executive order imposed reciprocal tariffs on all countries, however those goods compliant with the USMCA were exempted. At present, there are no tariffs on the Company’s Canadian lumber exports to the U.S.
  • On March 1, 2025, the U.S. administration issued an executive order for a Section 232 investigation to assess the national security implications of importing timber, lumber and their derivative products. This investigation is expected to conclude within 270 days and aims to ensure that trade policies align with the strategic interests of the U.S., potentially resulting in adjustments to tariff regulations based on its findings. The investigation will include recommendations on actions to address any identified threats, such as potential tariffs, export controls including quotas, or incentives to increase domestic production. Currently, the results and impacts of the Section 232 investigation are unknown.

Outlook

North American lumber markets over the near term are expected to remain volatile as the economy continues to adjust to changing monetary policies, tariffs, labour shortages and geo-political uncertainty, and as industry-wide lumber production continues to adjust to match demand.  

Near-term volatility could be further impacted by potential tariffs on Canadian lumber exports to the U.S. Overall, the Company is well positioned with a diversified product mix in Canada and the U.S., with approximately 60% of its total lumber produced and sold within the U.S. Ultimately, only about 24% of the Company’s total lumber production is exported from Canada to the U.S. and exposed to a potential tariff. Over the mid-term, Canadian lumber is expected to remain a key source of supply to meet U.S. needs, as growth in U.S. lumber manufacturing capacity will likely be limited by labour constraints, lengthy equipment lead-times, residual offtake constraints and extended project ramp-up schedules.

Interfor expects that over the mid-term, lumber markets will continue to benefit from favourable underlying supply and demand fundamentals. Positive demand factors include the advanced age of the U.S. housing stock, a shortage of available housing and various demographic factors, while growth in lumber supply is expected to be limited by extended capital project completion and ramp-up timelines, labour availability and constrained global fibre availability.  

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. In the event of a sustained lumber market downturn, Interfor maintains flexibility to significantly reduce capital expenditures and working capital levels, and to proactively adjust its lumber production to match demand.

Liquidity

Balance Sheet

Interfor’s Net debt at March 31, 2025 was $886.3 million, or 37.3% of invested capital, representing an increase of $25.0 million from the level of Net debt at December 31, 2024.

As at March 31, 2025, the Company had net working capital of $195.0 million and available liquidity of $306.0 million, based on the available borrowing capacity under its $600.0 million Revolving Term Line (“Term Line”).

The Term Line and Senior Secured Notes are subject to financial covenants, including a maximum net debt to total capitalization ratio of 50.0% and a minimum EBITDA interest coverage ratio of two times, which becomes effective if the net debt to total capitalization ratio exceeds 42.5%. As at March 31, 2025, Interfor was fully in compliance with all covenants relating to the Term Line and Senior Secured Notes.

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.

On March 26, 2025, the Company paid US$33.3 million of principal that was due on the Company’s existing Series C Senior Secured Notes.

On March 26, 2024, the Company issued US$33.3 million of Series I Senior Secured Notes, bearing interest at 6.37% with principal repayment due at final maturity on March 26, 2030. The proceeds were used to settle US$33.3 million of principal under the Company’s existing Series C Senior Secured Notes due on March 26, 2024.

Capital Resources

Interfor’s Term Line matures in December 2026 and its Senior Secured Notes have maturities in the years 2026-2033.

As of March 31, 2025, the Company had commitments for capital expenditures totaling $63.1 million for both maintenance and discretionary capital projects.

For the full first quarter results, click here.

About Interfor

Interfor is a growth-oriented forest products company with operations in Canada and the United States. The Company has annual lumber production capacity of approximately 4.7 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.

Contact:

Richard Pozzebon – Executive Vice President and Chief Financial Officer – (604) 422-3400

Source: Interfor Corporaiton