Bullboard - Stock Discussion Forum Interfor Corp T.IFP

Alternate Symbol(s): IFSPF

Forest Products Lumber & Wood Production

Interfor Corporation is a Canada-based forest products company. The Company and its subsidiaries produce wood products in Canada and the United States for sale to markets around the world. The Company operates through solid wood products segment. The Company offers its products across two categories, which include Dimension Lumber and Specialty Lumber. The Company's products include Interfor... see more

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TSX:IFP - Post Discussion

Interfor Corp > TD

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Post by retiredcf on Aug 05, 2022 8:38am

TD

This is a flash report so there's potential for them to raise their current target of $43.00. GLTA

Interfor Corp.

(IFP-T) C$32.73

Q2 Results Well Above Estimates Led by Resilient Top Line Event

Interfor reported Q2/22 results yesterday after market close. Adjusted EBITDA of $428.6 million exceeded our estimate of $385.1 million and the consensus forecast of $387.0 million. Adjusted EBITDA included a $17.3 fair value adjustment related to the acquisition of EACOM Timber, which was consistent with our forecast. Adjusted EPS of $5.11 was above our estimate of $4.77 and the consensus forecast of $4.52.

Conference call at 11:00 a.m. ET this morning: 1-888-396-8049.

Impact: POSITIVE

Interfor's Q2/22 results reflected weakening lumber markets, but overall margins were still exceptional. Like its peers, Interfor benefited from order file- related price realization lags which tempered pressure (a timing issue). Excluding the EACOM fair value adjustment, recurring adjusted Q2 EBITDA was 89% of our estimate of the company's annual mid-cycle (trend) EBITDA.

Details

Like most peers, Interfor's Q2/22 lumber price realization decline was tempered by timing lags. Average realizations of $1,104/Mfbm declined 22% q/ q versus average declines of 33% for peers this earnings season. The decline was less significant than expected.
The EACOM portfolio contributed a substantial portion of overall earnings. Including the fair value adjustment, EACOM contributed adjusted EBITDA of $115.7 million in the first quarter of full ownership (27% of total Q2 adjusted EBITDA and 21% of total production).
Interfor was able to lower inventories during Q2. Shipments increased 28% q/ q (mostly reflecting a full quarter with EACOM, but still above our forecast) and aggregate inventories declined 66 million board feet during the quarter (most of the 100 million board feet of inventory built over the two preceding quarters).
The company is deploying capital at a rapid pace. Interfor generated Q2/22 FCF/share of $5.89 (an 18% yield for the quarter alone, after considering a large cash tax payment and augmented by seasonal working capital declines). The company completed its NCIB during the quarter and subsequently announced a $100-million SIB via a modified Dutch Auction (5.4%-6.3% of current shares to be repurchased at a price range of $29.00-$34.00/share). Interfor ended Q2 with minimal net debt and abundant available liquidity of $726.5 million.