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 machine-stress rated (MSR) Lumber, Interfor Western HQ Lumber, Interfor Stud Lumber, Interfor Elite Decking, Interfor Elite Fascia & Boards, Interfor Elite V-Joint Paneling, Interfor Elite Fineline Paneling, Interfor Elite Channel and Lap sidings, Interfor Elite Bevel Siding and Interfor Elite Shadow Gap Siding. It produces quality joist products for both residential and commercial floor and roof projects. The Company has annual lumber production capacity of approximately 5.2 billion board feet and offers a diverse line of lumber products to customers around the globe.

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Interfor Corp

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Post by retiredcfon Nov 04, 2022 8:16am

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Post# 35072306

TD

Have a $39.00 target. GLTA

Interfor Corp.

(IFP-T) C$23.99

Core Q3 Operating Results Near Expectations; NCIB Renewed Event

Interfor reported Q3/22 results yesterday after market close. Adjusted EBITDA of $129.5 million exceeded our estimate of $107.6 million and the consensus forecast of $109.0 million. Adjusted EBITDA included a $26.1 million duty recovery, related to a positive administrative review, which was not in our estimate. Adjusted EPS of $0.58 (including the duty benefit) was below our estimate of $0.74 (we matched consensus). The effective tax rate was higher than expected.

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

Impact: NEUTRAL

Excluding the duty recovery, Interfor's Q3/22 operating results were near expectations. Interfor's aggregate adjusted EBITDA/Mfbm compared favourably to key peers, which we believe reflects the company's relative margin progress tied to discretionary capex and value-accretive M&A initiatives.

Details

Average Q3/22 lumber price realizations fell 28% q/q and were a little below our estimate. Interfor's sequential lumber price trends were consistent with peers (down 26% q/q on average). Q/Q pressure relative to benchmark prices was tempered by order file timing lags, the weaker CAD, and mix.
Q3/22 lumber shipments declined only 2% q/q and were above our estimate. Aggregate production declined 3% (down 6% q/q in Eastern Canada and 9% q/q in B.C.) and aggregate inventories declined 78 million board feet, which built on a 66 million board feet inventory reduction in Q2/22. The DeQuincy, Louisiana sawmill ramped up rapidly and reached its full production run-rate during the quarter.
Q3/22 adjusted EBITDA margins excluding the $26.1 million duty benefit were 10% (close to our estimate of 11%) down versus exceptional Q2 margins of 31%. Capitulating lumber prices and a $20.6 million inventory write- down were negative factors.
Interfor is deploying capital at a fast pace. The company completed a $100- million SIB in September and announced the renewal of its 10% NCIB yesterday. Interfor ended Q3 with net debt-to-cap of 10.5% and abundant available liquidity of $601.4 million. On October 3, Interfor announced an agreement to acquire Chaleur Forest Products for $325 million plus ~$46 million for 55% of Chaleur's after-tax softwood lumber duty deposits to-date (cumulative deposits of US$82 million).