Interfor Reports Q1’16 Results

INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded Adjusted EBITDA1 of $33.4 million on sales of $433.9 million in Q1’16 versus Adjusted EBITDA1 of $35.8 million on sales of $411.4 million in Q4’15.
Adjusted net earnings1 in Q1’16 were $2.6 million, or $0.04 per share, compared to $5.5 million, or $0.08 per share, in Q4’15. Net earnings were $0.8 million, or $0.01 per share, compared with net losses of $3.5 million, or $0.05 per share, in Q4’15.
Highlights for the quarter include:
* Higher Lumber Prices – Product prices were higher in Q1’16 versus Q4’15, with the Western SPF Composite and the Southern Pine (“SP”) Composite up over the prior quarter by US$6 and US$20 per mfbm, respectively.
* Weaker Canadian Dollar – The Canadian Dollar was weaker on average against the U.S. Dollar as compared to the prior quarter, averaging 1.3732 in Q1’16 versus 1.3354 in Q4’15. However, the Canadian Dollar strengthened significantly against the U.S. Dollar in the latter half of Q1’16 to close the period up 6.3% over the rate at December 31, 2015.
* Higher Lumber Production – The Company produced an additional 50 million board feet in Q1’16 versus Q4’15. The production increase is a result of: (i) the return to a normal operating schedule at the Castlegar mill in Q1’16 versus the mill restart during Q4’15; (ii) the improvement in weather conditions near the Georgetown mill that negatively impacted operations in Q4’15; and (iii) incremental operating days in Q1’16 versus the holiday-impacted schedule in Q4’15.
* Free Cash Flow Generation – Adjusted EBITDA was impacted by: (i) reduced profitability in the B.C. Coastal business due to seasonally lower log production, an increase in the percentage of helicopter logging, and lumber product mix changes; and (ii) variances in quarter end log and lumber inventory reserve adjustments.
– Interfor generated $31.0 million of cash from operations before working capital changes. In the quarter, working capital increased by $11.0 million, primarily as a result of reductions in payables outstanding. Capital spending amounted to $17.8 million during the quarter.
– The Company’s net debt decreased by $24.2 million during the quarter to $428.1 million, or 37.8% of invested capital, providing the Company with $148.2 million of available liquidity as at March 31, 2016.
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