EBITDA(1) of $69 million and Net Earnings of $28 million
Operating Cash Flow(1) of $1.00 per share
Net Debt to Invested Capital(1) of 0%
Greenfield Decision Postponed Indefinitely
VANCOUVER, British Columbia, Nov. 08, 2018 (GLOBE NEWSWIRE) — INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded net earnings in Q3’18 of $28.1 million, or $0.40 per share, compared to $63.8 million, or $0.91 per share in Q2’18 and $16.8 million, or $0.24 per share in Q3’17. Adjusted net earnings in Q3’18 were $28.2 million or $0.40 per share, compared to $68.9 million, or $0.98 per share in Q2’18 and $20.0 million, or $0.29 per share in Q3’17.
Adjusted EBITDA was $69.4 million on sales of $570.5 million in Q3’18 versus $123.8 million on sales of $619.9 million in Q2’18.
In comparison to the third quarter of 2017, Interfor posted improved results across most key metrics, including an $8.9 million or 15% improvement in Adjusted EBITDA, an $11.3 million or 67% increase in net earnings and a 29 million board foot rise in lumber production.
Notable items in the quarter included:
• Lower Lumber Prices
- Key benchmark prices decreased quarter-over-quarter, with the SYP Composite, Western SPF Composite and KD H-F Stud 2×4 9’ benchmark dropping by US$63, US$98 and US$94 per mfbm, respectively. Interfor’s average lumber selling price fell $52 from Q2’18 to $701 per mfbm.
- Lumber prices have experienced an unusual level of volatility in 2018. The logistics disruptions that occurred in Q1’18 led to a significant increase in lumber inventories being trapped at producer yards. This supply side constraint, combined with growing demand, contributed to an unprecedented rise in lumber prices during the early part of the year. As shipment levels increased, prices responded, falling in record amounts from late May through the end of September and dropping further in the early part of Q4’18. Notwithstanding the volatility experienced in 2018, Interfor believes that the underlying fundamental drivers of demand for its lumber products remain positive.
• Production Balanced With Shipments
- Total lumber production was 674 million board feet or 14 million board feet lower than the prior quarter. Production in the U.S. South region of 313 million board feet was negatively impacted by several factors including preventative downtime ahead of Hurricane Florence and maintenance/project related downtime, which contributed to a 12 million board feet decrease from the preceding quarter. The B.C. and U.S. Northwest regions accounted for 224 million board feet and 137 million board feet, respectively, compared to 215 million board feet and 148 million board feet in Q2’18, respectively.
- Total lumber shipments were 685 million board feet, of which 675 million board feet were Interfor produced volumes, with the balance of 10 million board feet being agency and wholesale volumes. Total lumber shipments were 15 million board feet lower than Q2’18, as Q3’18 shipments were negatively impacted by adverse weather in the U.S. South. The Company’s lumber inventory was reduced 2 million board feet quarter-over-quarter.
- Production in Q4’18 from Interfor’s B.C. Interior operations will be impacted by a previously announced temporary curtailment. The curtailment is in response to the combination of declining lumber prices and escalating log costs and is expected to reduce the Company’s production in the region by approximately 20% during the quarter.
• Higher Operating Costs
- Interfor’s production costs increased by $22 per mfbm of lumber sold in Q3’18 versus Q2’18, as a result of several factors, including: (i) higher stumpage and log hauling costs in the B.C. Interior; (ii) higher log and lumber inventory valuation adjustments due to the decline in lumber prices; (iii) higher maintenance spending in the U.S. South; and (iv) lower production due to the downtime from several maintenance projects and adverse weather in the U.S. South.
• Strong Cash Flows and Liquidity
- Interfor generated $69.7 million of cash from operations before changes in working capital, or $1.00 per share. Total cash generated from operations was $85.0 million.
- Net debt ended the quarter at $3.8 million, or 0.4% of invested capital, resulting in available liquidity of $567.2 million. The Company closed on its previously announced agreement to extend US$84 million of its 2021 to 2023 term debt maturities to 2027 to 2029, resulting in a weighted average fixed interest rate on its term debt of 4.47%.
- Capital spending was $38.5 million on a mix of high-return discretionary, maintenance and woodlands projects. In addition, Interfor has US$12.6 million of deposits placed with key suppliers for capital equipment related to Phases I and II of its strategic capital plan.
- Interfor purchased and cancelled 597,245 of its common shares at a total cost of $12.0 million. The Company’s existing normal course issuer bid (“NCIB”) permits the purchase of up to 3,500,000 common shares until its expiry on March 6, 2019.
• Softwood Lumber Duties
- Interfor expensed $15.9 million of duties in the quarter, representing the full amount of countervailing (“CV”) and anti-dumping (“AD”) duties incurred on its Canadian shipments of softwood lumber into the U.S. at a combined rate of 20.23%.
- Cumulative duties of US$52.9 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by the U.S. Of this total, US$3.2 million is recorded as a receivable in respect of overpayments arising from duty rate adjustments and US$49.7 million has been expensed and is not recorded on the balance sheet as a receivable.
__________________
(1) Refer to Adjusted EBITDA, Operating cash flow per share and Net debt to invested capital in the Non-GAAP Measures section
Strategic Capital Plan Update
- Interfor continues to make progress on previously announced Phases I and II strategic capital projects in the U.S. South. The Phase I projects total US$65 million at the Meldrim, Georgia and Monticello, Arkansas sawmills. Both of these projects remain on budget, with completion set for the Meldrim project in Q1’19 and the Monticello project by Q2’19. The Phase II projects total US$240 million at the Thomaston and Eatonton sawmills in Georgia and the Georgetown sawmill in South Carolina. These projects are on track for completion in various stages over the period of 2019 to 2021.
Greenfield Decision Postponed Indefinitely
- Over the past year, Interfor has been assessing the feasibility of greenfield sawmill opportunities in the U.S. South. In that regard, the Company has completed a detailed engineering study, secured the rights to a well-located site and negotiated a number of ancillary arrangements in support of the project. However, based on prevailing market conditions for greenfield projects, including equipment lead times, contractor availability and projected capital costs, Interfor has concluded the project does not currently meet its criteria for discretionary investments and has postponed its decision on the project for an indefinite period.
- In the meantime, the Company intends to focus on the previously announced Phase I and II internal capital projects and on other capital investment alternatives. Any future decision on the greenfield project would likely result in that project being scheduled for construction, if at all, subsequent to the Phase I and II capital projects achieving substantial completion.
Financial and Operating Highlights (1)
| For the 3 months ended | For the 9 months ended | |||||||
| Sept. 30 | Sept. 30 | Jun. 30 | Sept. 30 | Sept. 30 | ||||
| Unit | 2018 | 2017 | 2018 | 2018 | 2017 | |||
| Financial Highlights(2) | ||||||||
| Total sales | $MM | 570.5 | 489.2 | 619.9 | 1,718.0 | 1,457.3 | ||
| Lumber | $MM | 480.3 | 410.2 | 527.0 | 1,453.2 | 1,233.4 | ||
| Logs, residual products and other | $MM | 90.2 | 79.0 | 92.9 | 264.8 | 223.9 | ||
| Operating earnings | $MM | 41.3 | 28.3 | 85.9 | 173.6 | 101.5 | ||
| Net earnings | $MM | 28.1 | 16.8 | 63.8 | 124.8 | 61.0 | ||
| Net earnings per share, basic | $/share | 0.40 | 0.24 | 0.91 | 1.78 | 0.87 | ||
| Adjusted net earnings(3) | $MM | 28.2 | 20.0 | 68.9 | 133.9 | 71.4 | ||
| Adjusted net earnings per share, basic(3) | $/share | 0.40 | 0.29 | 0.98 | 1.91 | 1.02 | ||
| Operating cash flow per share (before working capital changes)(3) | $/share | 1.00 | 0.82 | 1.76 | 3.83 | 2.72 | ||
| Adjusted EBITDA(3) | $MM | 69.4 | 60.5 | 123.8 | 274.2 | 198.2 | ||
| Adjusted EBITDA margin(3) | % | 12.2% | 12.4% | 20.0% | 16.0% | 13.6% | ||
| Total assets | $MM | 1,539.5 | 1,296.3 | 1,536.0 | 1,539.5 | 1,296.3 | ||
| Total debt | $MM | 258.9 | 249.6 | 263.4 | 258.9 | 249.6 | ||
| Net debt | $MM | 3.8 | 176.9 | 34.4 | 3.8 | 176.9 | ||
| Net debt to invested capital(3) | % | 0.4% | 17.8% | 3.4% | 0.4% | 17.8% | ||
| Annualized return on invested capital(3) | % | 27.7% | 23.9% | 48.5% | 37.3% | 25.5% | ||
| Operating Highlights | ||||||||
| Lumber production | million fbm | 674 | 645 | 688 | 2,029 | 1,940 | ||
| Total lumber sales | million fbm | 685 | 671 | 700 | 2,033 | 1,991 | ||
| Lumber sales – Interfor produced | million fbm | 675 | 650 | 689 | 1,999 | 1,928 | ||
| Lumber sales – wholesale and commission | million fbm | 10 | 21 | 11 | 34 | 63 | ||
| Lumber – average selling price(4) | $/thousand fbm | 701 | 611 | 753 | 715 | 620 | ||
| Average USD/CAD exchange rate(5) | 1 USD in CAD | 1.3070 | 1.2528 | 1.2911 | 1.2876 | 1.3074 | ||
| Closing USD/CAD exchange rate(5) | 1 USD in CAD | 1.2945 | 1.2480 | 1.3168 | 1.2945 | 1.2480 | ||
| Notes: | |||||||||
| (1) | Figures in this table may not equal or sum to figures presented elsewhere due to rounding. | ||||||||
| (2) | Financial information presented for interim periods in this release is prepared in accordance with IFRS and is unaudited. | ||||||||
| (3) | Refer to the Non-GAAP Measures section of this release for definitions and reconciliations of these measures to figures reported in the Company’s consolidated financial statements. | ||||||||
| (4) | Gross sales before duties. | ||||||||
| (5) | Based on Bank of Canada foreign exchange rates. | ||||||||
Liquidity
Balance Sheet
Interfor maintained a strong financial position throughout Q3’18. Net debt at September 30, 2018 was $3.8 million, or 0.4% of invested capital, representing a decrease of $173.1 million from September 30, 2017, and a decrease of $115.5 million from December 31, 2017. The majority of the decrease in net debt in Q3’18 is attributed to strong cash flows generated from operations. Net debt was positively impacted by a strengthened Canadian Dollar against the U.S. Dollar as all debt held was denominated in U.S. Dollars; this was partially hedged by the Company’s U.S. Dollar cash and marketable securities balances.
| For the 3 months ended Sept. 30, | For the 9 months ended Sept. 30, | ||||
| Thousands of Dollars | 2018 | 2017 | 2018 | 2017 | |
| Net debt | |||||
| Net debt, period opening, CAD | $34,415 | $215,155 | $119,300 | $289,551 | |
| Net repayment on credit facilities, CAD | 112 | 2 | 111 | (40,216) | |
| Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD | (4,572) | (9,942) | 7,889 | (19,005) | |
| Decrease (increase) in cash and cash equivalents, CAD | 63,392 | (30,525) | (33,953) | (52,543) | |
| Decrease (increase) in marketable securities, CAD | (89,547) | 2,176 | (89,547) | (921) | |
| Net debt, period ending, CAD | $3,800 | $176,866 | $3,800 | $176,866 | |
| Net debt components by currency | |||||
| U.S. Dollar debt, period opening, USD | $200,000 | $200,000 | $200,000 | $230,000 | |
| Net repayment on credit facilities, USD | – | – | – | (30,000) | |
| U.S. Dollar debt, period ending, USD | $200,000 | $200,000 | 200,000 | 200,000 | |
| Spot rate, period end | 1.2945 | 1.2480 | |||
| U.S. Dollar debt expressed in CAD | 258,900 | 249,600 | |||
| Total debt, CAD | 258,900 | 249,600 | |||
| Cash and cash equivalents, CAD | (165,553) | (71,813) | |||
| Marketable securities, CAD | (89,547) | (921) | |||
| Net debt, period ending, CAD | $3,800 | $176,866 | |||
As at September 30, 2018, the Company had net working capital of $411.7 million and available liquidity of $567.2 million, including unrestricted cash, marketable securities and borrowing capacity on operating and term line facilities.
On June 15, 2018, the Company extended the maturity of its U.S. Operating line from May 1, 2019 to June 15, 2021, with no other significant changes. On August 14, 2018, Interfor completed an agreement to extend US$84 million of its 2021 to 2023 Senior Secured Note maturities to 2027 to 2029. As a result, Interfor’s weighted average fixed interest rate on its term debt is 4.47%.
These resources, in addition to cash generated from operations, will be used to support capital expenditures, working capital requirements and debt servicing commitments. We believe that Interfor will have sufficient liquidity to fund operating and capital requirements for the foreseeable future.
Capital Resources
The following table summarizes Interfor’s credit facilities and availability as of September 30, 2018:
| 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 | $258,900 | $64,725 | $588,625 |
| Maximum borrowing available | $65,000 | $200,000 | $258,900 | $64,725 | $588,625 |
| Less: | |||||
| Drawings | – | – | 258,900 | – | 258,900 |
| Outstanding letters of credit included in line utilization | 14,472 | – | – | 3,184 | 17,656 |
| Unused portion of facility | $50,528 | $200,000 | $ – | $61,541 | 312,069 |
| Add: | |||||
| Cash and cash equivalents | 165,553 | ||||
| Marketable securities | 89,547 | ||||
| Available liquidity at September 30, 2018 | $567,169 |
As of September 30, 2018, the Company had commitments for capital expenditures totaling $105.6 million.
Non-GAAP Measures
This release makes reference to the following non-GAAP measures: Adjusted net earnings, Adjusted net earnings per share, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Net debt to invested capital, Operating cash flow per share (before working capital changes) and Return on invested capital 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:
| For the 3 months ended | For the 9 months ended | |||||
| Sept. 30 | Sept. 30 | Jun.30 | Sept. 30 | Sept. 30 | ||
| Thousands of Canadian Dollars except number of shares and per share amounts | 2018 | 2017 | 2018 | 2018 | 2017 | |
| Adjusted Net Earnings | ||||||
| Net earnings | $28,092 | $16,778 | $63,775 | $124,843 | $60,957 | |
| Add: | ||||||
| Capital asset write-downs and restructuring costs (recovery) | 5,848 | (21) | 4,669 | 10,753 | 1,781 | |
| Other foreign exchange loss (gain) | 1,847 | 1,353 | (1,880) | (144) | 2,447 | |
| Long term incentive compensation expense (recovery) | (7,503) | 3,004 | 3,996 | 1,351 | 9,867 | |
| Other expense (income) | (192) | 347 | 80 | 66 | 992 | |
| Post closure wind-down costs and losses (recoveries) | – | (39) | – | 4 | (26) | |
| Income tax effect of above adjustments | 149 | (1,456) | (1,701) | (2,926) | (4,588) | |
| Adjusted net earnings | $28,241 | $19,966 | $68,939 | $133,947 | $71,430 | |
| Weighted average number of shares – basic (‘000) | 69,908 | 70,030 | 70,038 | 69,993 | 70,030 | |
| Adjusted net earnings per share | $0.40 | $0.29 | $0.98 | $1.91 | $1.02 | |
| Adjusted EBITDA | ||||||
| Net earnings | $28,092 | $16,778 | $63,775 | $124,843 | $60,957 | |
| Add: | ||||||
| Depreciation of plant and equipment | 20,071 | 18,836 | 20,851 | 60,990 | 58,406 | |
| Depletion and amortization of timber, roads and other | 9,715 | 10,435 | 8,350 | 27,482 | 26,756 | |
| Capital asset write-downs and restructuring costs (recovery) | 5,848 | (21) | 4,669 | 10,753 | 1,781 | |
| Finance costs | 2,465 | 3,294 | 2,786 | 8,156 | 10,891 | |
| Other foreign exchange loss (gain) | 1,847 | 1,353 | (1,880) | (144) | 2,447 | |
| Income tax expense | 9,044 | 6,559 | 21,132 | 40,709 | 26,168 | |
| EBITDA | 77,082 | 57,234 | 119,683 | 272,789 | 187,406 | |
| Add: | ||||||
| Long term incentive compensation expense (recovery) | (7,503) | 3,004 | 3,996 | 1,351 | 9,867 | |
| Other expense (income) | (192) | 347 | 80 | 66 | 992 | |
| Post closure wind-down costs and losses (recoveries) | – | (39) | – | 4 | (26) | |
| Adjusted EBITDA | $69,387 | $60,546 | $123,759 | $274,210 | $198,239 | |
| Sales | $570,486 | $489,169 | $619,893 | $1,718,023 | $1,457,325 | |
| Adjusted EBITDA margin | 12.2% | 12.4% | 20.0% | 16.0% | 13.6% | |
| Net debt to invested capital | ||||||
| Net debt | ||||||
| Total debt | $258,900 | $249,600 | $263,360 | $258,900 | $249,600 | |
| Cash and cash equivalents | (165,553) | (71,813) | (228,945) | (165,553) | (71,813) | |
| Marketable securities | (89,547) | (921) | – | (89,547) | (921) | |
| Total net debt | $3,800 | $176,866 | $34,415 | $3,800 | $176,866 | |
| Invested capital | ||||||
| Net debt | $3,800 | $176,866 | $34,415 | $3,800 | $176,866 | |
| Shareholders’ equity | 985,316 | 817,676 | 977,294 | 985,316 | 817,676 | |
| Total invested capital | $989,116 | $994,542 | $1,011,709 | $989,116 | $994,542 | |
| Net debt to invested capital(1) | 0.4% | 17.8% | 3.4% | 0.4% | 17.8% | |
| Operating cash flow per share (before working capital changes) | ||||||
| Cash provided by operating activities | $84,956 | $60,977 | $133,729 | $237,196 | $171,475 | |
| Cash used in (generated from) operating working capital | (15,223) | (3,474) | (10,579) | 31,171 | 19,028 | |
| Operating cash flow (before working capital changes) | $69,733 | $57,503 | $123,150 | $268,367 | $190,503 | |
| Weighted average number of shares – basic (‘000) | 69,908 | 70,030 | 70,038 | 69,993 | 70,030 | |
| Operating cash flow per share (before working capital changes) | $1.00 | $0.82 | $1.76 | $3.83 | $2.72 | |
| Annualized return on invested capital | ||||||
| Adjusted EBITDA | $69,387 | $60,546 | $123,759 | $274,210 | $198,239 | |
| Invested capital, beginning of period | $1,011,709 | $1,031,291 | $1,028,240 | $973,488 | $1,076,218 | |
| Invested capital, end of period | 989,116 | 994,542 | 1,011,709 | 989,116 | 994,542 | |
| Average invested capital | $1,000,413 | $1,012,917 | $1,019,975 | $981,302 | $1,035,380 | |
| Adjusted EBITDA divided by average invested capital | 6.9% | 6.0% | 12.1% | 27.9% | 19.1% | |
| Annualization factor | 4.0 | 4.0 | 4.0 | 1.33 | 1.33 | |
| Annualized return on invested capital | 27.7% | 23.9% | 48.5% | 37.3% | 25.5% | |
| Notes: | ||||||
| (1) Net debt to invested capital as of the period end. | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||
| For the three and nine months ended September 30, 2018 and 2017 (unaudited) | |||||||||||||||||
| (thousands of Canadian Dollars except earnings per share) | Three Months |
Three Months |
Nine Months |
Nine Months |
|||||||||||||
| Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||||||||||
| Sales Costs and expenses: |
$ | 570,486 | $ | 489,169 | $ | 1,718,023 | $ | 1,457,325 | |||||||||
| Production | 472,354 | 407,222 | 1,359,291 | 1,205,504 | |||||||||||||
| Selling and administration | 12,825 | 11,936 | 40,850 | 36,817 | |||||||||||||
| Long term incentive compensation expense (recovery) | (7,503 | ) | 3,004 | 1,351 | 9,867 | ||||||||||||
| U.S. countervailing and anti-dumping duty deposits | 15,920 | 9,426 | 43,676 | 16,739 | |||||||||||||
| Depreciation of plant and equipment | 20,071 | 18,836 | 60,990 | 58,406 | |||||||||||||
| Depletion and amortization of timber, roads and other | 9,715 | 10,435 | 27,482 | 26,756 | |||||||||||||
| 523,382 | 460,859 | 1,533,640 | 1,354,089 | ||||||||||||||
| Operating earnings before write-downs and restructuring | 47,104 | 28,310 | 184,383 | 103,236 | |||||||||||||
| Capital asset write-downs and restructuring costs (recovery) | 5,848 | (21 | ) | 10,753 | 1,781 | ||||||||||||
| Operating earnings | 41,256 | 28,331 | 173,630 | 101,455 | |||||||||||||
| Finance costs | (2,465 | ) | (3,294 | ) | (8,156 | ) | (10,891 | ) | |||||||||
| Other foreign exchange gain (loss) | (1,847 | ) | (1,353 | ) | 144 | (2,447 | ) | ||||||||||
| Other expense | 192 | (347 | ) | (66 | ) | (992 | ) | ||||||||||
| (4,120 | ) | (4,994 | ) | (8,078 | ) | (14,330 | ) | ||||||||||
| Earnings before income taxes | 37,136 | 23,337 | 165,552 | 87,125 | |||||||||||||
| Income tax expense: | |||||||||||||||||
| Current | 663 | 22 | 3,000 | 708 | |||||||||||||
| Deferred | 8,381 | 6,537 | 37,709 | 25,460 | |||||||||||||
| 9,044 | 6,559 | 40,709 | 26,168 | ||||||||||||||
| Net earnings | $ | 28,092 | $ | 16,778 | $ | 124,843 | $ | 60,957 | |||||||||
| Net earnings per share, basic and diluted | $ | 0.40 | $ | 0.24 | $ | 1.78 | $ | 0.87 | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||
| For the three and nine months ended September 30, 2018 and 2017 (unaudited) | |||||||||||||
| (thousands of Canadian Dollars) | Three Months |
Three Months |
Nine Months |
Nine Months |
|||||||||
| Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||||||
| Net earnings |
$ | 28,092 | $ | 16,778 | $ | 124,843 | $ | 60,957 | |||||
| Other comprehensive income (loss): |
|||||||||||||
| Items that will not be recycled to Net earnings: |
|||||||||||||
| Defined benefit plan actuarial gain, net of tax | 957 | 1,192 | 2,846 | 794 | |||||||||
| Items that are or may be recycled to Net earnings: |
|||||||||||||
| Foreign currency translation differences for | |||||||||||||
| foreign operations, net of tax | (9,289 | ) | (16,589 | ) | 14,688 | (31,151 | ) | ||||||
| Loss in fair value of interest rate swaps | – | – | – | (11 | ) | ||||||||
| Total items that are or may be recycled to Net earnings | (9,289 | ) | (16,589 | ) | 14,688 | (31,162 | ) | ||||||
| Total other comprehensive income (loss), net of tax |
(8,332 | ) | (15,397 | ) | 17,534 | (30,368 | ) | ||||||
| Comprehensive income |
$ | 19,760 | $ | 1,381 | $ | 142,377 | $ | 30,589 | |||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
| For the three and nine months ended September 30, 2018 and 2017 (unaudited) |
|||||||||||||||
| (thousands of Canadian Dollars) | Three Months |
Three Months |
Nine Months |
Nine Months |
|||||||||||
| Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||||||||
| Cash provided by (used in): Operating activities: |
|||||||||||||||
| Net earnings |
$ | 28,092 | $ | 16,778 | $ | 124,843 | $ | 60,957 | |||||||
| Items not involving cash: |
|||||||||||||||
| Depreciation of plant and equipment | 20,071 | 18,836 | 60,990 | 58,406 | |||||||||||
| Depletion and amortization of timber, roads and other | 9,715 | 10,435 | 27,482 | 26,756 | |||||||||||
| Income tax expense | 9,044 | 6,559 | 40,709 | 26,168 | |||||||||||
| Finance costs | 2,465 | 3,294 | 8,156 | 10,891 | |||||||||||
| Other assets | 241 | (252 | ) | (176 | ) | (70 | ) | ||||||||
| Reforestation liability | (2,111 | ) | (522 | ) | (684 | ) | 1,787 | ||||||||
| Provisions and other liabilities | (3,724 | ) | 2,178 | (4,180 | ) | 4,225 | |||||||||
| Stock options | 212 | 159 | 558 | 420 | |||||||||||
| Write-down of plant, equipment and intangibles | 5,823 | – | 10,687 | – | |||||||||||
| Unrealized foreign exchange loss (gain) | 97 | (2 | ) | (84 | ) | (11 | ) | ||||||||
| Other expense (income) | (192 | ) | 40 | 66 | 974 | ||||||||||
| 69,733 | 57,503 | 268,367 | 190,503 | ||||||||||||
| Cash generated from (used in) operating working capital: |
|||||||||||||||
| Trade accounts receivable and other | 20,738 | (8,785 | ) | (3,232 | ) | (21,041 | ) | ||||||||
| Inventories | 951 | 10,417 | (30,975 | ) | (5,255 | ) | |||||||||
| Prepayments | (560 | ) | (1,011 | ) | (3,344 | ) | (1,430 | ) | |||||||
| Trade accounts payable and provisions | (3,952 | ) | 3,576 | 9,656 | 9,841 | ||||||||||
| Income taxes paid | (1,954 | ) | (723 | ) | (3,276 | ) | (1,143 | ) | |||||||
| 84,956 | 60,977 | 237,196 | 171,475 | ||||||||||||
| Investing activities: |
|||||||||||||||
| Additions to property, plant and equipment | (28,968 | ) | (19,805 | ) | (56,133 | ) | (42,957 | ) | |||||||
| Additions to roads and bridges | (9,473 | ) | (8,608 | ) | (23,641 | ) | (25,139 | ) | |||||||
| Additions to timber licences and other intangible assets | (40 | ) | (461 | ) | (90 | ) | (1,826 | ) | |||||||
| Proceeds on disposal of property, plant and equipment | 324 | 63 | 509 | 461 | |||||||||||
| Net proceeds from (additions to) investments and other assets | (93,354 | ) | 2,805 | (106,919 | ) | 2,653 | |||||||||
| (131,511 | ) | (26,006 | ) | (186,274 | ) | (66,808 | ) | ||||||||
| Financing activities: |
|||||||||||||||
| Issuance of share capital, net of expenses | – | – | 143 | – | |||||||||||
| Repurchase of share capital | (11,950 | ) | – | (11,950 | ) | – | |||||||||
| Interest payments | (2,788 | ) | (2,832 | ) | (7,902 | ) | (9,585 | ) | |||||||
| Debt refinancing costs | (67 | ) | (615 | ) | (70 | ) | (785 | ) | |||||||
| Change in operating line components of long term debt | – | 2 | (1 | ) | (63 | ) | |||||||||
| Additions to long term debt | 155,909 | – | 155,909 | 76,107 | |||||||||||
| Repayments of long term debt | (155,797 | ) | – | (155,797 | ) | (116,260 | ) | ||||||||
| (14,693 | ) | (3,445 | ) | (19,668 | ) | (50,586 | ) | ||||||||
| Foreign exchange gain (loss) on cash and |
|||||||||||||||
| cash equivalents held in a foreign currency |
(2,144 | ) | (1,001 | ) | 2,699 | (1,538 | ) | ||||||||
| Increase (decrease) in cash |
(63,392 | ) | 30,525 | 33,953 | 52,543 | ||||||||||
| Cash and cash equivalents, beginning of period |
228,945 | 41,288 | 131,600 | 19,270 | |||||||||||
| Cash and cash equivalents, end of period |
$ | 165,553 | $ | 71,813 | $ | 165,553 | $ | 71,813 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||
| September 30, 2018 and December 31, 2017 (unaudited) | |||||||
| (thousands of Canadian Dollars) | |||||||
| Sep. 30, 2018 |
Dec. 31, 2017 |
||||||
| Assets |
|||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 165,553 | $ | 131,600 | |||
| Marketable securities | 89,547 | – | |||||
| Trade accounts receivable and other | 117,593 | 112,470 | |||||
| Income taxes receivable | 1,636 | 1,289 | |||||
| Inventories | 199,294 | 165,156 | |||||
| Prepayments | 16,363 | 12,562 | |||||
| 589,986 | 423,077 | ||||||
| Employee future benefits |
3,497 | 502 | |||||
| Deposits and other assets |
22,712 | 6,404 | |||||
| Property, plant and equipment |
670,173 | 670,830 | |||||
| Roads and bridges |
27,427 | 24,092 | |||||
| Timber licences |
64,794 | 66,589 | |||||
| Other intangible assets |
8,877 | 14,170 | |||||
| Goodwill |
151,354 | 147,081 | |||||
| Deferred income taxes |
653 | 251 | |||||
| $ | 1,539,473 | $ | 1,352,996 | ||||
| Liabilities and Shareholders’ Equity |
|||||||
| Current liabilities: |
|||||||
| Trade accounts payable and provisions | $ | 164,066 | $ | 152,854 | |||
| Reforestation liability | 13,975 | 12,873 | |||||
| Income taxes payable | 251 | 224 | |||||
| 178,292 | 165,951 | ||||||
| Reforestation liability |
27,306 | 27,535 | |||||
| Long term debt |
258,900 | 250,900 | |||||
| Employee future benefits |
8,170 | 8,249 | |||||
| Provisions and other liabilities |
22,724 | 26,976 | |||||
| Deferred income taxes |
58,765 | 19,197 | |||||
| Equity: |
|||||||
| Share capital | 550,864 | 555,388 | |||||
| Contributed surplus | 3,662 | 8,582 | |||||
| Translation reserve | 55,408 | 40,720 | |||||
| Retained earnings | 375,382 | 249,498 | |||||
| 985,316 | 854,188 | ||||||
| $ | 1,539,473 | $ | 1,352,996 | ||||
Approved on behalf of the Board of Directors:
| “L. Sauder” | “Thomas V. Milroy” | ||
| 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, cyber-security measures, 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 3.1 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 Q3’18 are available at www.sedar.com and www.interfor.com.
There will be a conference call on Friday, November 9, 2018 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its third quarter 2018 financial results.
The dial-in number is 1-866-559-8291. The conference call will also be recorded for those unable to join in for the live discussion, and will be available until December 9, 2018. The number to call is 1-855-859-2056, Passcode 7288847.
For further information:
Martin L. Juravsky, Senior Vice President and Chief Financial Officer
(604) 689-6873
