Interfor Corp T.IFP

Always a Good Sign

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Morning Report: Contrarian alert: Interfor insiders continue to build their holdings 

April 4, 2023

Today, we revisit forest products firm Interfor (IFP). The stock is down 13.1% since we last reported on it on June 24th, setting a 52-week low of $19.75 on December 22nd along the way. When Interfor reported Q4 results on February 9th, sales came in at $810.3 million, up from $675.9 million in Q4 2021. However, Interfor reported a net loss of $1.40 per basic share, down from earnings of $1.15 per share in the comparable period. A key factor was lower lumber demand and prices. Interfor's average selling price in Q4 was $699 per thousand board feet (mfbm), down $101/mfbm from Q3 2022. In Q4, Interfor recorded $58.6 million in log and lumber inventory valuation adjustments versus $20.5 million in Q3.

On January 11th, Interfor announced it would be reducing its lumber production in Q1 by at least 100 million board feet, or 8% of its quarterly capacity, due to reduced lumber demand as the result of rising interest rates. Interfor expects to resume normal operations in April but will be monitoring market conditions and adjusting its plans accordingly.

Going forward, Interfor expects continued volatility in the near term due to inflationary pressures, higher interest rates, labour shortages, and geopolitical uncertainty. However, it remains upbeat about the mid-term, citing favourable underlying supply and demand fundamentals including an aging US housing stock. Insiders appear to be betting on it. In March, they spent $881,144 picking up shares in the public market.