Variance analysis. The adj. EBITDA variance vs. our forecast was mainly driven by higher-than-expected lumber prices (+$40M) and Log and Other sales (+$2M) and lower-than-expected export taxes & duties (+$2M), partially offset by lower-than-expected lumber shipments (-$2M) and higher-than-expected COGS (-$26M) and SG&A expenses (-$1M).
Excess capital. In 2021, IFP generated CFO of ~$1,050M. It returned $130M through cash dividends and $153M through share repurchases (no shares repurchased in Q4/21) while spending $541M on acquisitions. The company also incurred capital spending of $177M (+60% y/y), $108M of which were geared towards high-return discretionary projects.
At December 31, IFP's net debt to invested capital ratio stood at -11% . It had cash on hand of $539M, and a net cash position of $163M (~$2.78/share).
Our forecast suggests that despite spending $250M in capex in 2022 and ~$550M for the Eacom acquisition (assumed in Q1/22), the company’s cash balance should trough at the end of Q1 – but remain positive – and grow each quarter to end the year at over $400M. This should enable the company to repurchase shares under its 10% NCIB.
Conference call. Feb 4, 2022, at 11:00 a.m. (ET). Dial-in: 833-297-9919.