VANCOUVER, BRITISH COLUMBIA–(Marketwired – Aug. 3, 2017) – INTERFOR CORPORATION (“Interfor” or “the Company”) (TSX:IFP) recorded net earnings in Q2’17 of $24.5 million, or $0.35 per share, compared to $19.7 million, or $0.28 per share in Q1’17 and $23.2 million, or $0.33 per share in Q2’16. Adjusted net earnings1 (which takes into account the effects of share-based compensation expense and non-recurring items) in Q2’17 were $28.7 million or $0.41 per share, compared to $22.7 million, or $0.32 per share in Q1’17 and $17.5 million, or $0.25 per share in Q2’16.
Adjusted EBITDA1 for the second quarter, 2017 was $77.4 million (or $84.7 million excluding the impact from $7.3 million of softwood lumber duties expense), on sales of $511.4 million versus $60.3 million on sales of $456.8 million in Q1’17.
Notable items in the quarter included:
| • | Strong Cash Flow and Substantially Lower Leverage | |
| • | Interfor generated $73.3 million of cash from operations before changes in working capital, or $1.05 per share, plus a $32.5 million reduction in working capital, for total cash generated from operations of $105.8 million. | |
| • | Capital spending was $20.4 million. | |
| • | Net debt ended the quarter at $218.3 million, or 21.1% of invested capital. | |
| • | Higher Lumber Prices For Western Species | |
| • | The key Western commodity benchmark prices improved quarter-over-quarter as a result of strong demand in both North American and international markets. The Western SPF Composite and KD H-F Stud 2×4 9′ benchmarks were up US$39 to US$378 per mfbm and US$38 to US$398 per mfbm, respectively. Prices in the U.S. South region were less robust, with the SYP Composite benchmark increasing US$1 quarter-over-quarter to US$417 per mfbm. | |
| • | Interfor’s average lumber selling price increased $38 from Q1’17 to $642 per mfbm, due to a combination of the higher benchmark prices, improved grade yields in the U.S. South region and a weaker Canadian Dollar. | |
| • | Increased Production | |
| • | Total production increased for the second successive quarter, driven by strong customer demand. 655 million board feet of lumber was produced in Q2’17, up 15 and 48 million board feet over Q1’17 and Q4’16, respectively. Sales of Interfor-produced lumber were 654 million board feet in Q2’17 versus 624 million board feet in Q1’17. | |
| • | Production in the U.S. South region increased to 294 million board feet from 285 million board feet in the preceding quarter. The B.C. and U.S. Northwest regions accounted for 215 million board feet and 146 million board feet, respectively, compared with 215 million board feet and 140 million board feet in Q1’17, respectively. | |
| • | Progress on Optimization Initiative and EBITDA Gains | |
| • | In early 2016, Interfor launched a Business Optimization Initiative to capture additional margin opportunities across the Company’s operating platform, with a particular focus on the U.S. South region, where $35 million in annualized EBITDA gains were targeted by year-end 2017. | |
| • | In Q2’17, the Company realized on 110% of the targeted EBITDA gains, due to a combination of increased operating hours, improvements in productivity, lumber recovery and grade yields, and lower manufacturing costs. | |
| • | The Company has identified a series of additional opportunities that include both non-capital operating improvements and targeted capital investments. The non-capital operating improvements are currently underway and are expected to be realized over the next 12-18 months. The capital investments, which are expected to generate very attractive returns, will be implemented over the next three years. The specifics of these investments will be released once detailed engineering has been completed and the sequencing of the projects has been finalized. | |
1 Refer to Adjusted EBITDA and Adjusted net earnings in the Non-GAAP Measures section
Softwood Lumber Duties
During the second quarter, the U.S. Department of Commerce (“DoC”) preliminarily ruled on its cases against Canadian softwood lumber producers for both countervailing and anti-dumping duties. As a result, the U.S. Customs and Border Protection Agency began collecting deposits from Interfor on its shipments of softwood lumber from Canada into the U.S. for countervailing duties on April 28, 2017 at a preliminary rate of 19.88% and for anti-dumping duties on June 30, 2017 at a preliminary rate of 6.87%.
In addition, the DoC has taken the unjustified position that most Canadian lumber producers, including Interfor, may be required to submit deposits for retroactive countervailing duties for the 90 days prior to April 28, 2017 and for retroactive anti-dumping duties for the 90 days prior to June 30, 2017. Interfor has not submitted any such deposits, which could total approximately US$8.4 million and US$3.0 million for countervailing and anti-dumping duties, respectively. Interfor does not believe the retroactive application of duties will stand up under final scrutiny which, in turn, should result in a full return of any related deposits to the Company.
In Q2’17, Interfor shipped approximately 100 million board feet from its Canadian operations to the U.S. market, which represented approximately 15% of the Company’s total lumber sales. Interfor is of the view that the DoC’s positions are without merit and are politically driven. Interfor intends to vigorously defend the Company’s and the Canadian industry’s positions through various appeal processes, in conjunction with the B.C. and Canadian Governments.
Summary of Quarterly Results(1)
| 2017 | 2016 | 2015 | |||||||||||||
| Unit | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||
| Financial Performance (Unaudited) | |||||||||||||||
| Total sales | $MM | 511.4 | 456.8 | 442.3 | 457.6 | 458.8 | 433.9 | 411.4 | 430.8 | ||||||
| Lumber | $MM | 433.7 | 389.6 | 363.5 | 374.8 | 371.1 | 348.9 | 325.0 | 343.3 | ||||||
| Logs, residual products and other | $MM | 77.7 | 67.2 | 78.8 | 82.8 | 87.7 | 85.0 | 86.4 | 87.5 | ||||||
| Operating earnings (loss) | $MM | 42.7 | 30.4 | 22.3 | 20.1 | 30.0 | 3.5 | (6.3 | ) | (11.6 | ) | ||||
| Net earnings (loss) | $MM | 24.5 | 19.7 | 26.6 | 15.1 | 23.2 | 0.8 | (3.5 | ) | (6.1 | ) | ||||
| Net earnings (loss) per share, basic | $/share | 0.35 | 0.28 | 0.38 | 0.22 | 0.33 | 0.01 | (0.05 | ) | (0.09 | ) | ||||
| Adjusted net earnings (loss)(2) | $MM | 28.7 | 22.7 | 17.7 | 20.7 | 17.5 | 2.7 | 4.5 | (16.6 | ) | |||||
| Adjusted net earnings (loss) per share, basic(2) | $/share | 0.41 | 0.32 | 0.25 | 0.30 | 0.25 | 0.04 | 0.06 | (0.24 | ) | |||||
| Adjusted EBITDA(2) | $MM | 77.4 | 60.3 | 51.3 | 58.1 | 56.9 | 33.4 | 35.8 | 11.5 | ||||||
| Shares outstanding – end of period | million | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | ||||||
| Shares outstanding – weighted average | million | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | 70.0 | ||||||
| Operating Performance | |||||||||||||||
| Lumber production | million fbm | 655 | 640 | 607 | 628 | 637 | 618 | 568 | 618 | ||||||
| Total lumber sales | million fbm | 675 | 645 | 619 | 647 | 658 | 637 | 615 | 686 | ||||||
| Lumber sales – Interfor produced | million fbm | 654 | 624 | 598 | 627 | 634 | 609 | 586 | 663 | ||||||
| Lumber sales – wholesale and commission | million fbm | 21 | 21 | 21 | 20 | 24 | 28 | 29 | 23 | ||||||
| Lumber – average selling price(3) | $/thousand fbm | 642 | 604 | 588 | 580 | 564 | 548 | 529 | 500 | ||||||
| Average USD/CAD exchange rate(4) | 1 USD in CAD | 1.3449 | 1.3238 | 1.3341 | 1.3050 | 1.2886 | 1.3732 | 1.3354 | 1.3089 | ||||||
| Closing USD/CAD exchange rate(4) | 1 USD in CAD | 1.2977 | 1.3322 | 1.3427 | 1.3117 | 1.3009 | 1.2971 | 1.3840 | 1.3394 | ||||||
Notes:
- Figures in this table may not add due to rounding.
- Refer to the Non-GAAP Measures section of this release for a definition and reconciliation of this measure to figures reported in the Company’s consolidated financial statements.
- Gross sales before export taxes and duties.
- Based on Bank of Canada foreign exchange rates.
Liquidity
Balance Sheet
Net debt at June 30, 2017 was $218.3 million, or 21.1% of invested capital, representing a decrease of $177.7 million from June 30, 2016 and a decrease of $71.3 million from December 31, 2016. A slight strengthening of the Canadian Dollar against the U.S. Dollar reduced net debt by $9.1 million over the first six months of 2017.
| For the 3 months ended | For the 6 months ended | |||||||||||
| June 30, | June 30, | |||||||||||
| Thousands of dollars | 2017 | 2016 | 2017 | 2016 | ||||||||
| Net debt | ||||||||||||
| Net debt, period opening, CAD | $ | 306,676 | $ | 428,062 | $ | 289,551 | $ | 452,303 | ||||
| Net repayment of credit facilities, CAD | (59,468 | ) | (33,619 | ) | (40,218 | ) | (33,566 | ) | ||||
| Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD | (6,359 | ) | 1,320 | (9,063 | ) | (28,175 | ) | |||||
| Decrease (increase) in cash and equivalents, CAD | (22,597 | ) | 196 | (22,018 | ) | 5,397 | ||||||
| Net debt, period ending, CAD | $ | 218,252 | $ | 395,959 | $ | 218,252 | $ | 395,959 | ||||
| Net debt components by currency | ||||||||||||
| U.S. Dollar debt, period opening, USD | $ | 235,979 | $ | 338,692 | $ | 230,000 | $ | 338,699 | ||||
| Net repayment on credit facilities, USD | (35,979 | ) | (41,192 | ) | (30,000 | ) | (41,199 | ) | ||||
| U.S. Dollar debt, period ending, USD | 200,000 | 297,500 | 200,000 | 297,500 | ||||||||
| Spot rate, period end | 1.2977 | 1.3009 | ||||||||||
| U.S. Dollar debt expressed in CAD | 259,540 | 387,018 | ||||||||||
| Canadian Dollar debt, including bank indebtedness, CAD | – | 20,000 | ||||||||||
| Total debt, CAD | 259,540 | 407,018 | ||||||||||
| Cash and cash equivalents, CAD | (41,288 | ) | (11,059 | ) | ||||||||
| Net debt, period ending, CAD | $ | 218,252 | $ | 395,959 | ||||||||
Capital Resources
The following table summarizes Interfor’s credit facilities and availability as of June 30, 2017:
| Revolving | Senior | U.S. | |||||||||
| Operating | Term | Secured | Operating | ||||||||
| Thousands of Canadian dollars | Line | Line | Notes | Line | Total | ||||||
| Available line of credit | $ | 65,000 | $ | 200,000 | $ | 259,540 | $ | 64,885 | $ | 589,425 | |
| Maximum borrowing available | $ | 65,000 | $ | 200,000 | $ | 259,540 | $ | 64,885 | $ | 589,425 | |
| Less: | |||||||||||
| Drawings | – | – | 259,540 | – | 259,540 | ||||||
| Outstanding letters of credit included in line utilization | 11,038 | – | – | 4,023 | 15,061 | ||||||
| Unused portion of facility | $ | 53,962 | $ | 200,000 | $ | – | $ | 60,862 | $ | 314,824 | |
| Add cash and cash equivalents | 41,288 | ||||||||||
| Available liquidity at Jun. 30, 2017 | $ | 356,112 | |||||||||
As of June 30, 2017, the Company had commitments for capital expenditures totaling $12.1 million, related to both maintenance and discretionary projects.
Interfor continues to maintain its disciplined focus on monitoring discretionary capital expenditures, optimizing inventory levels and matching production with offshore and domestic demand.
As at June 30, 2017, the Company had net working capital of $177.1 million and available capacity on operating and term facilities of $314.8 million. These resources, in addition to cash generated from operations, will be used to support working capital requirements, debt servicing commitments and capital expenditures. We believe that Interfor will have sufficient liquidity to fund operating and capital requirements for the foreseeable future.
Non-GAAP Measures
This release makes reference to the following non-GAAP measures: Adjusted net earnings (loss), Adjusted net earnings (loss) per share, EBITDA, Adjusted EBITDA, Pre-tax return on total assets, Net debt to invested capital and Operating cash flow per share (before working capital changes) which are used by the Company and certain investors to evaluate operating performance and financial position. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. The following table provides a reconciliation of these non-GAAP measures to figures as reported in the Company’s unaudited interim consolidated financial statements prepared in accordance with IFRS:
| Thousands of Canadian dollars except number of shares and per share amounts | For the 3 months ended | For the 6 months ended | ||||||||||||||
| Jun. 30, | Mar. 31, | Jun. 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||
| Adjusted Net Earnings(1) | ||||||||||||||||
| Net earnings | $ | 24,512 | $ | 23,205 | $ | 19,667 | $ | 44,179 | $ | 24,000 | ||||||
| Add: | ||||||||||||||||
| Restructuring costs and capital asset write-downs | 1,457 | 2,304 | 345 | 1,802 | 3,507 | |||||||||||
| Other foreign exchange loss (gain) | 913 | (503 | ) | 181 | 1,094 | 396 | ||||||||||
| Long term incentive compensation expense (recovery) | 3,270 | (4,147 | ) | 3,593 | 6,863 | (3,969 | ) | |||||||||
| Other expense | 456 | 458 | 189 | 645 | 365 | |||||||||||
| Beaver sawmill post-closure wind-down costs | 5 | 3 | 7 | 12 | 11 | |||||||||||
| Tacoma sawmill post-acquisition losses and closure costs | – | 311 | 1 | 1 | 683 | |||||||||||
| Income tax effect of above adjustments | (1,883 | ) | (725 | ) | (1,249 | ) | (3,132 | ) | (1,479 | ) | ||||||
| Recognition of previously unrecognized deferred tax assets | – | (3,384 | ) | – | – | (3,268 | ) | |||||||||
| Adjusted net earnings | $ | 28,730 | $ | 17,522 | $ | 22,734 | $ | 51,464 | $ | 20,246 | ||||||
| Weighted average number of shares – basic (‘000) | 70,030 | 70,030 | 70,030 | 70,030 | 70,030 | |||||||||||
| Adjusted net earnings per share | $ | 0.41 | $ | 0.25 | $ | 0.32 | $ | 0.73 | $ | 0.29 | ||||||
| Adjusted EBITDA | ||||||||||||||||
| Net earnings | $ | 24,512 | $ | 23,205 | $ | 19,667 | $ | 44,179 | $ | 24,000 | ||||||
| Add: | ||||||||||||||||
| Depreciation of plant and equipment | 19,967 | 18,765 | 19,603 | 39,570 | 38,934 | |||||||||||
| Depletion and amortization of timber, roads and other | 10,024 | 9,652 | 6,297 | 16,321 | 17,621 | |||||||||||
| Restructuring costs and capital asset write-downs | 1,457 | 2,304 | 345 | 1,802 | 3,507 | |||||||||||
| Finance costs | 3,535 | 4,965 | 4,062 | 7,597 | 10,149 | |||||||||||
| Other foreign exchange loss (gain) | 913 | (503 | ) | 181 | 1,094 | 396 | ||||||||||
| Income tax expense (recovery) | 13,289 | 1,852 | 6,320 | 19,609 | (1,474 | ) | ||||||||||
| EBITDA | 73,697 | 60,240 | 56,475 | 130,172 | 93,133 | |||||||||||
| Add: | ||||||||||||||||
| Long term incentive compensation expense (recovery) | 3,270 | (4,147 | ) | 3,593 | 6,863 | (3,969 | ) | |||||||||
| Other expense | 456 | 458 | 189 | 645 | 365 | |||||||||||
| Beaver sawmill post-closure wind-down costs | 5 | 3 | 7 | 12 | 11 | |||||||||||
| Tacoma sawmill post-acquisition losses and closure costs | – | 311 | 1 | 1 | 683 | |||||||||||
| Adjusted EBITDA(2) | $ | 77,428 | $ | 56,865 | $ | 60,265 | $ | 137,693 | $ | 90,223 | ||||||
| Pre-tax return on total assets | ||||||||||||||||
| Operating earnings before restructuring costs | $ | 44,162 | $ | 32,281 | $ | 30,764 | $ | 74,926 | $ | 36,943 | ||||||
| Total assets(3) | $ | 1,318,784 | $ | 1,323,788 | $ | 1,301,648 | $ | 1,298,832 | $ | 1,363,683 | ||||||
| Pre-tax return on total assets(4) | 13.4% | 9.8% | 9.5% | 11.5% | 5.4% | |||||||||||
| Net debt to invested capital | ||||||||||||||||
| Net debt | ||||||||||||||||
| Total debt | $ | 259,540 | $ | 407,018 | $ | 325,367 | $ | 259,540 | $ | 407,018 | ||||||
| Cash and cash equivalents | (41,288 | ) | (11,059 | ) | (18,691 | ) | (41,288 | ) | (11,059 | ) | ||||||
| Total net debt | $ | 218,252 | $ | 395,959 | $ | 306,676 | $ | 218,252 | $ | 395,959 | ||||||
| Invested capital | ||||||||||||||||
| Net debt | $ | 218,252 | $ | 395,959 | $ | 306,676 | $ | 218,252 | $ | 395,959 | ||||||
| Shareholders’ equity | 816,136 | 727,470 | 804,748 | 816,136 | 727,470 | |||||||||||
| Total invested capital | $ | 1,034,388 | $ | 1,123,429 | $ | 1,111,424 | $ | 1,034,388 | $ | 1,123,429 | ||||||
| Net debt to invested capital(5) | 21.1% | 35.2% | 27.6% | 21.1% | 35.2% | |||||||||||
| Operating cash flow per share (before working capital changes) | ||||||||||||||||
| Cash provided by operating activities | $ | 105,816 | $ | 62,559 | $ | 4,682 | $ | 110,498 | $ | 82,602 | ||||||
| Cash used in (generated from) operating work capital | (32,531 | ) | (6,259 | ) | 55,033 | 22,502 | 4,720 | |||||||||
| Operating cash flow (before working capital changes) | $ | 73,285 | $ | 56,300 | $ | 59,715 | $ | 133,000 | $ | 87,322 | ||||||
| Weighted average number of shares – basic (‘000) | 70,030 | 70,030 | 70,030 | 70,030 | 70,030 | |||||||||||
| Operating cash flow per share (before working capital changes) | $ | 1.05 | $ | 0.80 | $ | 0.85 | $ | 1.90 | $ | 1.25 | ||||||
Notes:
- Certain historical periods have been recast to exclude the recognition of previously unrecognized deferred tax assets from Adjusted net earnings.
- If countervailing and anti-dumping duties expense of $7.3 million were excluded, Adjusted EBITDA for Q2’17 would be $84.7 million. Other periods presented were not impacted by such duties.
- Total assets at period beginning for three month periods; average of opening and closing total assets for six month periods.
- Annualized rate.
- Net debt to invested capital as of the period end.
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||
| For the three and six months ended June 30, 2017 and 2016 (unaudited) | |||||||||||||||||
| (thousands of Canadian dollars except earnings per share) | 3 Months | 3 Months | 6 Months | 6 Months | |||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||
| Sales | $ | 511,376 | $ | 458,813 | $ | 968,156 | $ | 892,757 | |||||||||
| Costs and expenses: | |||||||||||||||||
| Production | 414,205 | 390,487 | 798,282 | 780,623 | |||||||||||||
| Selling and administration | 12,435 | 11,775 | 24,881 | 22,605 | |||||||||||||
| Long term incentive compensation expense (recovery) | 3,270 | (4,147 | ) | 6,863 | (3,969 | ) | |||||||||||
| U.S. countervailing and anti-dumping duty deposits | 7,313 | – | 7,313 | – | |||||||||||||
| Depreciation of plant and equipment | 19,967 | 18,765 | 39,570 | 38,934 | |||||||||||||
| Depletion and amortization of timber, roads and other | 10,024 | 9,652 | 16,321 | 17,621 | |||||||||||||
| 467,214 | 426,532 | 893,230 | 855,814 | ||||||||||||||
| Operating earnings before restructuring costs | 44,162 | 32,281 | 74,926 | 36,943 | |||||||||||||
| Restructuring costs | 1,457 | 2,304 | 1,802 | 3,507 | |||||||||||||
| Operating earnings | 42,705 | 29,977 | 73,124 | 33,436 | |||||||||||||
| Finance costs | (3,535 | ) | (4,965 | ) | (7,597 | ) | (10,149 | ) | |||||||||
| Other foreign exchange gain (loss) | (913 | ) | 503 | (1,094 | ) | (396 | ) | ||||||||||
| Other expense | (456 | ) | (458 | ) | (645 | ) | (365 | ) | |||||||||
| (4,904 | ) | (4,920 | ) | (9,336 | ) | (10,910 | ) | ||||||||||
| Earnings before income taxes | 37,801 | 25,057 | 63,788 | 22,526 | |||||||||||||
| Income tax expense (recovery) | |||||||||||||||||
| Current | 380 | 330 | 686 | 461 | |||||||||||||
| Deferred | 12,909 | 1,522 | 18,923 | (1,935 | ) | ||||||||||||
| 13,289 | 1,852 | 19,609 | (1,474 | ) | |||||||||||||
| Net earnings | $ | 24,512 | $ | 23,205 | $ | 44,179 | $ | 24,000 | |||||||||
| Net earnings per share, basic and diluted | $ | 0.35 | $ | 0.33 | $ | 0.63 | $ | 0.34 | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||
| For the three and six months ended June 30, 2017 and 2016 (unaudited) | |||||||||||||||||
| 3 Months | 3 Months | 6 Months | 6 Months | ||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||
| Net earnings | $ | 24,512 | $ | 23,205 | $ | 44,179 | $ | 24,000 | |||||||||
| Other comprehensive income (loss): | |||||||||||||||||
| Items that will not be recycled to Net earnings: | |||||||||||||||||
| Defined benefit plan actuarial loss, net of tax | (1,222 | ) | (3,580 | ) | (398 | ) | (2,946 | ) | |||||||||
| Items that are or may be recycled to Net earnings: | |||||||||||||||||
| Foreign currency translation differences for foreign operations, net of tax | (12,057 | ) | 2,607 | (14,562 | ) | (18,832 | ) | ||||||||||
| Loss in fair value of interest rate swaps | – | (32 | ) | (11 | ) | (139 | ) | ||||||||||
| Total items that are or may be recycled to Net earnings | (12,057 | ) | 2,575 | (14,573 | ) | (18,971 | ) | ||||||||||
| Total other comprehensive loss, net of tax | (13,279 | ) | (1,005 | ) | (14,971 | ) | (21,917 | ) | |||||||||
| Comprehensive income | $ | 11,233 | $ | 22,200 | $ | 29,208 | $ | 2,083 | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||
| For the three and six months ended June 30, 2017 and 2016 (unaudited) | ||||||||||||||||||
| (thousands of Canadian dollars) | 3 Months | 3 Months | 6 Months | 6 Months | ||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||
| Operating activities: | ||||||||||||||||||
| Net earnings | $ | 24,512 | $ | 23,205 | $ | 44,179 | $ | 24,000 | ||||||||||
| Items not involving cash: | ||||||||||||||||||
| Depreciation of plant and equipment | 19,967 | 18,765 | 39,570 | 38,934 | ||||||||||||||
| Depletion and amortization of timber, roads and other | 10,024 | 9,652 | 16,321 | 17,621 | ||||||||||||||
| Income tax expense (recovery) | 13,289 | 1,852 | 19,609 | (1,474 | ) | |||||||||||||
| Finance costs | 3,535 | 4,965 | 7,597 | 10,149 | ||||||||||||||
| Other assets | 231 | (83 | ) | 182 | (284 | ) | ||||||||||||
| Reforestation liability | (234 | ) | (2,157 | ) | 2,309 | (543 | ) | |||||||||||
| Provisions and other liabilities | 1,232 | (2,120 | ) | 2,047 | (3,295 | ) | ||||||||||||
| Stock options | 155 | 56 | 261 | 133 | ||||||||||||||
| Write-down of plant and equipment | – | 1,018 | – | 1,018 | ||||||||||||||
| Unrealized foreign exchange (gain) loss | (1 | ) | 689 | (9 | ) | 698 | ||||||||||||
| Other | 575 | 458 | 934 | 365 | ||||||||||||||
| 73,285 | 56,300 | 133,000 | 87,322 | |||||||||||||||
| Cash generated from (used in) operating working capital: | ||||||||||||||||||
| Trade accounts receivable and other | 3,312 | (11,134 | ) | (12,256 | ) | (12,053 | ) | |||||||||||
| Inventories | (432 | ) | (8,512 | ) | (15,672 | ) | (5,768 | ) | ||||||||||
| Prepayments and other | 2,365 | 2,410 | (419 | ) | 263 | |||||||||||||
| Trade accounts payable and provisions | 27,415 | 23,703 | 6,265 | 13,304 | ||||||||||||||
| Income taxes paid | (129 | ) | (208 | ) | (420 | ) | (466 | ) | ||||||||||
| 105,816 | 62,559 | 110,498 | 82,602 | |||||||||||||||
| Investing activities: | ||||||||||||||||||
| Additions to property, plant and equipment | (10,409 | ) | (9,446 | ) | (23,152 | ) | (21,997 | ) | ||||||||||
| Additions to logging roads and bridges | (9,429 | ) | (6,148 | ) | (16,531 | ) | (11,237 | ) | ||||||||||
| Additions to timber licences and other intangible assets | (531 | ) | (219 | ) | (1,365 | ) | (355 | ) | ||||||||||
| Proceeds on disposal of property, plant and equipment | 423 | 139 | 398 | 314 | ||||||||||||||
| Investments and other assets | (35 | ) | (8,764 | ) | (152 | ) | (9,553 | ) | ||||||||||
| (19,981 | ) | (24,438 | ) | (40,802 | ) | (42,828 | ) | |||||||||||
| Financing activities: | ||||||||||||||||||
| Interest payments | (3,211 | ) | (4,354 | ) | (6,753 | ) | (11,165 | ) | ||||||||||
| Debt refinancing costs | (42 | ) | (110 | ) | (170 | ) | (842 | ) | ||||||||||
| Change in operating line components of long term debt | (40,918 | ) | (18,467 | ) | (65 | ) | (11,733 | ) | ||||||||||
| Additions to long term debt | – | 28,000 | 76,107 | 28,000 | ||||||||||||||
| Repayments of long term debt | (18,550 | ) | (43,154 | ) | (116,260 | ) | (49,834 | ) | ||||||||||
| (62,721 | ) | (38,085 | ) | (47,141 | ) | (45,574 | ) | |||||||||||
| Foreign exchange gain (loss) on cash and cash equivalents held in a foreign currency | (517 | ) | (232 | ) | (537 | ) | 403 | |||||||||||
| Increase (decrease) in cash | 22,597 | (196 | ) | 22,018 | (5,397 | ) | ||||||||||||
| Cash and cash equivalents, beginning of period | 18,691 | 11,255 | 19,270 | 16,456 | ||||||||||||||
| Cash and cash equivalents, end of period | $ | 41,288 | $ | 11,059 | $ | 41,288 | $ | 11,059 | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||
| June 30, 2017 and December 31, 2016 (unaudited) | |||||
| (thousands of Canadian dollars) | Jun. 30, | Dec. 31, | |||
| 2017 | 2016 | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 41,288 | $ | 19,270 | |
| Trade accounts receivable and other | 105,307 | 95,059 | |||
| Income taxes receivable | 19 | 222 | |||
| Inventories | 167,283 | 154,535 | |||
| Prepayments and other | 15,055 | 14,016 | |||
| Investments and other assets | 3,097 | 2,911 | |||
| 332,049 | 286,013 | ||||
| Employee future benefits | 2,260 | 2,471 | |||
| Investments and other assets | 1,885 | 2,341 | |||
| Property, plant and equipment | 697,851 | 730,981 | |||
| Logging roads and bridges | 25,906 | 20,739 | |||
| Timber licences | 68,018 | 69,273 | |||
| Other intangible assets | 16,351 | 19,017 | |||
| Goodwill | 151,695 | 156,502 | |||
| Deferred income taxes | – | 14,311 | |||
| $ | 1,296,015 | $ | 1,301,648 | ||
| Liabilities and Shareholders’ Equity | |||||
| Current liabilities: | |||||
| Trade accounts payable and provisions | $ | 143,358 | $ | 138,029 | |
| Reforestation liability | 11,194 | 11,609 | |||
| Income taxes payable | 376 | 317 | |||
| 154,928 | 149,955 | ||||
| Reforestation liability | 28,468 | 25,931 | |||
| Long term debt | 259,540 | 308,821 | |||
| Employee future benefits | 8,541 | 8,136 | |||
| Provisions and other liabilities | 22,978 | 21,290 | |||
| Deferred income taxes | 5,424 | 848 | |||
| Equity: | |||||
| Share capital | 555,388 | 555,388 | |||
| Contributed surplus | 8,260 | 7,999 | |||
| Translation reserve | 55,012 | 69,574 | |||
| Hedge reserve | – | 11 | |||
| Retained earnings | 197,476 | 153,695 | |||
| 816,136 | 786,667 | ||||
| $ | 1,296,015 | $ | 1,301,648 | ||
| Approved on behalf of the Board: | ||
| “L. Sauder“ | “D.W.G. Whitehead“ | |
| Director | Director | |
FORWARD-LOOKING STATEMENTS
This release contains information and statements that are forward-looking in nature, including, but not limited to, statements containing the words “believes”, “will”, “should”, “expects”, “annualized” and similar expressions. Such statements involve known and unknown risks and uncertainties that may cause Interfor’s actual results to be materially different from those expressed or implied by those forward-looking statements. Such risks and uncertainties include, among other things: price volatility, competition, availability and cost of log supply, natural or man-made disasters, currency exchange sensitivity, regulatory changes, allowable annual cut reductions, Aboriginal title and rights claims, potential countervailing and anti-dumping duties, stumpage fee variables and changes, environmental impact and performance, labour disruptions, and other factors referenced herein and in Interfor’s Annual Report available on www.sedar.com and www.interfor.com. The forward-looking information and statements contained in this release are based on Interfor’s current expectations and beliefs. Readers are cautioned not to place undue reliance on forward-looking information or statements. Interfor undertakes no obligation to update such forward-looking information or statements, except where required by law.
ABOUT INTERFOR
Interfor is a growth-oriented lumber company with operations in Canada and the United States. The Company has annual production capacity of approximately 3 billion board feet and offers one of the most diverse lines of lumber products to customers around the world. For more information about Interfor, visit our website at www.interfor.com.
The Company’s unaudited consolidated financial statements and Management’s Discussion and Analysis for Q2’17 are available at www.sedar.com and www.interfor.com.
There will be a conference call on Friday, August 4, 2017 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its second quarter 2017 financial results.
The dial-in number is 1-866-233-4795. The conference call will also be recorded for those unable to join in for the live discussion, and will be available until September 3, 2017. The number to call is
1-888-203-1112, Passcode 1493113.
Executive Vice President and Chief Financial Officer
(604) 689-6829
Martin L. Juravsky
Senior Vice President, Corporate Development and Strategy
(604) 689-6873