Post by
Apaulson on Nov 04, 2022 9:07am
CIBC's take on earnings
CIBC has a price target of $32.00. Too pessimistic in my opinion.
INTERFOR CORPORATION Q3/22 Results Slightly Lower Than Expected - First Glance
Impact: Neutral.
IFP also renewed its NCIB, allowing the company to repurchase up to 5.1MM shares over the next 12 months (10% of the public float), commencing November 11.
Q3/22 Results Slightly Lower Than Expected: Interfor reported adjusted EBITDA of $103MM (after paying lumber duties of $14MM), below our forecast of $113MM but close to consensus of $107MM (range of $90MM to $126MM). On an EBITDA/shipment basis, IFP generated $97/mfbm, well ahead of the top three North American producers (which ranged from $54/mfbm-$74/mfbm).
Operating Metrics: The company's US$ gross price realizations decreased 29% Q/Q. By contrast, the SYP Composite was down 22% in the quarter, while the W. SPF 2x4 benchmark fell 35%. Interfor shipped 1.1 Bbf of lumber in Q3, a 2% decrease Q/Q (+41% Y/Y). Lumber production was down 3% Q/Q to 986 mmfbm, driven by a 9% reduction in British Columbia (partially due to the sale of the Acorn sawmill), 6% reduction in Eastern Canada and modestly lower volumes in the PNW (-2%), partially offset by a 1% improvement in the South. The DeQuincy, LA sawmill reached its full production run-rate during the quarter (annual capacity of 200 mmfbm). With production slowing more than shipments, IFP reduced lumber inventories by 36 mmfbm during Q3, ending the quarter within IFP’s targeted range.
Management Outlook: IFP still expects to close on its $325MM acquisition of Chaleur Forest Products in Q4. While Interfor continues to expect North American lumber markets will be volatile over the near term (given housing headwinds), management remains optimistic about the mid-term outlook, pointing to demand tailwinds from an aging U.S. housing stock and favourable demographics, while lumber supply growth is expected to be constrained by extended project completion and ramp-up timelines (as well as constrained fiber availability).
Conference call on Friday at 11:00 a.m. ET: Dial-in 888-396-8049.