Interfor Reports Q2’15 Results Decision to Exit the Tacoma Sawmill Announced

INTERFOR CORPORATION (TSX: IFP) recorded a net loss of $20.6 million, or $0.29 per share, on sales of $429.7 million in Q2’15 compared with a net loss of $0.2 million in Q1’15 and net earnings of $7.4 million in Q2’14.

Included in the Company’s results for Q2’15 is a pre-tax loss of $7.7 million(1) associated with the operations of the Tacoma sawmill which was acquired from Simpson Lumber Company, LLC (“Simpson”) earlier this year as part of a larger transaction involving a total of four mills.

Excluding the Tacoma loss and certain other items, the Company reported an adjusted net loss(2) of $14.7 million, or $0.21 per share, in Q2’15 versus adjusted net earnings(2) of $4.5 million in Q1’15 and $21.1 million in Q2’14.

Adjusted EBITDA(2), which excludes the results associated with Tacoma and certain other items, was $12.7 million in Q2’15 versus $31.8 million in Q1’15 and $47.3 million in Q2’14.

The Company’s operations in all regions were impacted by the significant drop in product prices experienced in Q2’15.

Benchmark prices for Western SPF 2×4, SYP East 2×4 and HF Studs 2×4 9’ declined US$38, US$30 and US$46 per mfbm, respectively, compared to the prior quarter. Prices for SPF 2×4 and HF Studs 9’ began to strengthen in the final month of Q2’15 as increased takeaway levels and production curtailments helped to rebalance in-market inventories. SYP lagged SPF and HF prices on the decline and remained soft through quarter-end, with discounts from list prevalent on most items.

Beyond the benchmarks, prices for low-grade products were particularly weak in Q2’15, with SPF 2×4 #3 off US$55 and SYP 2×4 #3 off US$59 versus Q1’15.

The Canadian dollar strengthened by 0.9% against the US dollar during the quarter, averaging US$0.8132 in Q2’15 versus US$0.8057 in Q1’15.

In addition, the reintroduction of export duties on April 1, 2015 on lumber shipments from Canada into the US resulted in $2.5 million of duties paid in Q2’15 compared with $0 in Q1’15 and Q2’14.

The Company’s Q2’15 results were further impacted by an EBITDA loss of $1.5 million related to its Castlegar sawmill which was curtailed for 13 days during the quarter as part of a $50 million modernization project at that facility. The Castlegar Project is proceeding on-time and on-budget with construction expected to be completed in Q4’15 and full operating performance targeted for Q1’16.
http://www.interfor.com/sites/default/files/docs/reports/Interfor-Reports-Q2-15-Results-Decision-to-Exit-the-Tacoma-Sawmill-Announced.pdf

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