INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded Net earnings in Q4’21 of $69.7 million, or $1.15 per share, compared to $65.6 million, or $1.05 per share in Q3’21 and $149.1 million, or $2.24 per share in Q4’20. Adjusted net earnings in Q4’21 were $78.2 million compared to $46.7 million in Q3’21 and $164.7 million in Q4’20.

Adjusted EBITDA was $149.5 million on sales of $675.9 million in Q4’21 versus $93.9 million on sales of $664.3 million in Q3’21.

Interfor recorded Net earnings of $819.0 million, or $12.88 per share in 2021, compared to $280.3 million, or $4.18 per share in 2020. Adjusted EBITDA was $1.2 billion on sales of $3.3 billion.

Notable items in the quarter:

  • Record Lumber Production
    • Total lumber production in Q4’21 was 758 million board feet, representing an increase of 27 million board feet quarter-over-quarter and setting an Interfor production record. The U.S. South and U.S. Northwest regions accounted for 409 million board feet and 166 million board feet, respectively, compared to 411 million board feet and 156 million board feet in Q3’21. Production in the B.C. region increased to 183 million board feet from 164 million board feet in Q3’21, which was impacted by wildfire-related log supply constraints.
    • Total lumber shipments were 719 million board feet, or 33 million lower than Q3’21 in part due to weather-related logistics constraints in B.C. and the U.S. Northwest.
  • Strengthening Lumber Prices
    • Interfor’s average selling price was $822 per mfbm, up $78 per mfbm versus Q3’21. The SYP Composite, Western SPF Composite and KD H-F Stud 2x4 9’ lumber price benchmarks increased quarter-over-quarter by US$176, US$174 and US$175 per mfbm to US$644, US$653 and US$733 per mfbm, respectively, with the majority of these increases occurring in the latter half of the quarter.
    • Benchmark lumber prices have continued to strengthen into 2022, rising to all-time record levels for the month of January.
  • Enhanced Financial Flexibility
    • Interfor’s financial flexibility was enhanced substantially in the quarter through significant cash flow generation and an expansion of its revolving credit facility. Available liquidity increased to $1.0 billion, and cash exceeded debt by $162.9 million at quarter-end.
    • Interfor generated $133.1 million of cash flow from operations before changes in working capital, or $2.19 per share. This was partially offset by a $46.9 million investment in working capital driven by weather-related shipment constraints and a seasonal build up of log inventories in B.C.
    • On December 17, 2021, the Company completed an early renewal and expansion of its Revolving Term Line. The commitment under the facility has been increased by $150 million to a total of $500 million, and the term has been extended from March 2024 to December 2026.
  • Strategic Capital Investments
    • Capital spending was $63.0 million, including $38.6 million on high-return discretionary projects. The majority of this discretionary spending was focused on the ongoing multi-year rebuild of the Eatonton, GA sawmill, which will begin ramp-up in Q1’22 towards its proforma 230 million board foot annual capacity.
  • Restart of the DeQuincy, LA Sawmill
    • Lumber production at the sawmill in DeQuincy, LA restarted on January 9, 2022, well ahead of schedule. The sawmill is currently operating on one shift with plans underway to ramp-up to two shifts and its 200 million board foot annual capacity by the end of 2022.
  • Normal Course Issuer Bid (“NCIB”) Renewal
    • On November 4, 2021, the Company announced a renewal of its NCIB commencing on November 11, 2021 and ending on November 10, 2022, for the purchase of up to 6,041,701 common shares, which represents 10% of the Company’s public float.
    • Interfor did not purchase any of its common shares during the quarter.  
  • Softwood Lumber Duties Rate Adjustment
    • In Q4'21, the U.S. Department of Commerce (“the DoC”) published the final rates for countervailing (“CV”) and anti-dumping (“AD”) duties based on the results of its second administrative review covering shipments for the year ended December 31, 2019. The final combined rate for 2019 was 17.91%, compared to the cash deposit rate of 20.23%. To reflect the lower amended final rates for 2019, Interfor recorded a $4.3 million reduction to duties expense in Q4'21 and a corresponding receivable on its balance sheet.
    • On January 31, 2022, the DoC issued its preliminary combined all other rate of 11.64% for 2020. The rate is the result of the DoC’s third administrative review and is subject to change until its final rate determinations which are expected in August 2022. At such time, the final rates will be applied to new lumber shipments. No adjustments have been recorded in the financial statements as of December 31, 2021 to reflect the preliminary all other duty rate announced.
    • Cumulative duties of US$170.4 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by the U.S. Except for US$36.2 million in respect of overpayments arising from duty rate adjustments, Interfor has recorded the duty deposits as an expense.

Acquisition of EACOM Timber Corporation

On November 23, 2021, the Company announced that it had reached an agreement with an affiliate of Kelso & Company to acquire 100% of the equity interests of EACOM Timber Corporation (“EACOM”). The acquisition includes seven sawmills with a combined lumber production capacity of 985 million board feet, an I-Joist plant with annual production of 70 million linear feet, and a value-added remanufacturing plant with annual production capacity of 60 million board feet.

The transaction remains subject to customary conditions and regulatory approvals for a transaction of this kind and is currently expected to close in the first quarter of 2022. The acquisition is expected to be funded from existing available liquidity.

Deferral of Old-Growth Logging in B.C.

On November 2, 2021, the B.C. government announced its intention to work in partnership with First Nations to temporarily defer harvest of up to 2.6 million hectares of old growth forests. The process remains ongoing as the majority of more than 200 First Nations in the province have indicated to the B.C. government that they require more time to review the proposed deferral plans before making decisions. Interfor does not currently anticipate any significant impact on its lumber production volumes in B.C. as a result of the proposed old growth deferrals, though other impacts may arise depending on the nature and alignment of decisions by First Nations. Interfor’s operations within the coastal and interior regions of B.C. account for 4% and 19% of its total lumber production capacity, respectively.

Outlook

North American lumber markets over the near term are expected to remain above historical trends driven by continued strong demand from new housing starts and repair and remodel activity, albeit with volatility as the economy adjusts to the COVID-19 pandemic recovery.

Interfor expects lumber demand to continue to grow over the mid-term, as repair and renovation activities and new housing starts in the U.S. benefit from favourable underlying demand fundamentals. However, the potential for rising interest rates in the U.S. exists, which could reduce housing affordability and slow the growth in demand for lumber.

Interfor’s strategy of maintaining a diversified portfolio of operations in multiple regions allows the Company to both reduce risk and maximize returns on capital over the business cycle. While uncertainty remains as to the duration and extent of the economic impact from the COVID-19 pandemic, Interfor is well positioned with its strong balance sheet and significant available liquidity.

Financial and Operating Highlights1  

    For the three months ended      
    Dec. 31 Dec. 31 Sept. 30 For the year ended Dec. 31
  Unit 2021 2020 2021 2021 2020 2019
               
Financial Highlights2              
Total sales $MM 675.9 662.3 664.3 3,289.1 2,183.6 1,875.8
Lumber $MM 591.5 575.0 559.6 2,926.3 1,838.8 1,576.1
Logs, residual products and other $MM 84.4 87.3 104.7 362.8 344.8 299.7
Operating earnings (loss) $MM 99.2 203.2 54.8 1,077.9 402.5 (128.8)
Net earnings (loss) $MM 69.7 149.1 65.6 819.0 280.3 (103.8)
Net earnings (loss) per share, basic $/share 1.15 2.24 1.05 12.88 4.18 (1.54)
Adjusted net earnings (loss)3 $MM 78.2 164.7 46.7 829.1 316.1 (58.1)
Adjusted net earnings (loss) per share, basic3 $/share 1.29 2.47 0.74 13.04 4.71 (0.86)
Operating cash flow per share (before working capital changes)3 $/share 2.19 3.05 1.15 16.79 7.38 0.67
Adjusted EBITDA3 $MM 149.5 248.6 93.9 1,246.8 549.7 63.4
Adjusted EBITDA margin3 % 22.1% 37.5% 14.1% 37.9% 25.2% 3.4%
               
Total assets $MM 2,603.5 1,843.2 2,488.7 2,603.5 1,843.2 1,341.9
Total debt $MM 375.7 382.0 375.3 375.7 382.0 259.8
Net debt3 $MM (162.9) (75.4) (133.8) (162.9) (75.4) 224.9
Net debt to invested capital3 % (11.1%) (7.5%) (9.3%) (11.1%) (7.5%) 21.3%
Annualized return on capital employed3 % 18.2% 48.4% 16.0% 55.7% 26.7% (9.4%)
               
Operating Highlights              
Lumber production million fbm 758 687 731 2,891 2,377 2,646
Lumber sales million fbm 719 683 753 2,852 2,441 2,668
Lumber - average selling price4 $/thousand fbm 822 842 744 1,026 753 591
               
Average USD/CAD exchange rate5 1 USD in CAD 1.2603 1.3030 1.2600 1.2535 1.3415 1.3269
Closing USD/CAD exchange rate5 1 USD in CAD 1.2678 1.2732 1.2741 1.2678 1.2732 1.2988
               
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’s Net debt at December 31, 2021 was $(162.9) million, or (11.1%) of invested capital, representing a decrease of $87.5 million from the level of Net debt at December 31, 2020.

As at December 31, 2021 the Company had net working capital of $644.1 million and available liquidity of $1.0 billion, based on the full borrowing capacity under its $500 million Revolving Term Line.

The Revolving Term Line and Senior Secured Notes are subject to financial covenants, including net debt to total capitalization ratios, and an EBITDA interest coverage ratio.

Management believes, based on circumstances known today, that Interfor has sufficient working capital and liquidity to fund operating and capital requirements for the foreseeable future.

  For the three months ended For the year ended
  Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
Thousands of Dollars   2021   2020   2021   2021   2020
           
Net debt          
Net debt, period opening $ (133,829) $ 88,705 $ (490,682) $ (75,432) $ 224,860
(Repayment) issuance of Senior Secure Notes   -   -   -   (6,671)   140,770
Revolving Term Line net drawings (repayments)   2,198   -   1   2,199   (82)
Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD   (1,851)   (18,210)   10,221   (1,813)   (18,488)
(Increase) decrease in cash and cash equivalents   (31,623)   (165,294)   365,553   (79,639)   (450,767)
Impact on U.S. Dollar denominated cash and cash equivalents from strengthening (weakening) CAD   2,219   19,367   (18,922)   (1,530)   28,275
Net debt, period ending $ (162,886) $ (75,432) $ (133,829) $ (162,886) $ (75,432)

On December 17, 2021, the Company completed an early renewal and expansion of its Revolving Term Line. The commitment under the facility has been increased by $150 million to a total of $500 million, and the term has been extended from March 2024 to December 2026.

Capital Resources

The following table summarizes Interfor’s credit facilities and availability as of December 31, 2021:

  Revolving Senior  
  Term Secured  
Thousands of Canadian Dollars Line Notes Total
Available line of credit and maximum borrowing available $ 500,000 $ 373,473 $ 873,473
Less:      
Drawings   2,202   373,473   375,675
Outstanding letters of credit included in line utilization   23,246   -   23,246
Unused portion of facility $ 474,552 $ -   474,552
Add:      
Cash and cash equivalents       538,561
Available liquidity at December 31, 2021     $ 1,013,113

Interfor’s Revolving Term Line matures in December 2026 and its Senior Secured Notes have maturities principally in the years 2024-2030.

As of December 31, 2021, the Company had commitments for capital expenditures totaling $124.3 million for both maintenance and discretionary capital projects and $490 million for the acquisition of EACOM. In addition, Interfor will assume EACOM’s CV and AD duty deposits at closing, for consideration equal to 55% of the total deposits on an after-tax basis.

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, Adjusted EBITDA margin, Net debt to invested capital, Operating cash flow per share (before working capital changes), and Annualized return on capital employed 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 audited consolidated financial statements (unaudited for interim periods) prepared in accordance with IFRS:

  For the three months ended      
Thousands of Canadian Dollars except number of shares Dec. 31 Dec. 31 Sept. 30 For the year ended Dec.31
and per share amounts   2021   2020   2021   2021   2020   2019
             
Adjusted Net Earnings (Loss)            
Net earnings (loss) $ 69,653 $ 149,148 $ 65,630 $ 819,011 $ 280,296 $ (103,785)
Add:            
Asset and goodwill write-downs and restructuring costs   6,841   1,793   997   10,193   15,264   63,982
Other foreign exchange loss (gain)   4,468   8,162   (9,104)   2,355   16,881   275
Long term incentive compensation expense   8,058   10,254   4,809   31,682   12,513   3,446
Other (income) expense   (7,816)   92   (22,571)   (31,338)   (336)   (5,925)
Post closure wind-down costs (recoveries)   -   949   (24)   451   4,034   -
Income tax effect of above adjustments   (3,036)   (5,652)   6,956   (3,300)   (12,527)   (16,117)
Adjusted net earnings (loss) $ 78,168 $ 164,746 $ 46,693 $ 829,054 $ 316,125 $ (58,124)
Weighted average number of shares - basic ('000)   60,787   66,687   62,741   63,593   67,119   67,277
Adjusted net earnings (loss) per share $ 1.29 $ 2.47 $ 0.74 $ 13.04 $ 4.71 $ (0.86)
             
Adjusted EBITDA            
Net earnings (loss) $ 69,653 $ 149,148 $ 65,630 $ 819,011 $ 280,296 $ (103,785)
Add:            
Depreciation of plant and equipment   27,053   21,947   25,899   97,143   78,459   80,438
Depletion and amortization of timber, roads and other   8,397   10,511   7,396   29,430   37,071   44,294
Finance costs   4,425   1,891   4,444   17,830   16,079   15,024
Income tax expense (recovery)   28,462   43,889   16,439   270,079   89,573   (34,359)
EBITDA   137,990   227,386   119,808   1,233,493   501,478   1,612
Add:            
Long term incentive compensation expense   8,058   10,254   4,809   31,682   12,513   3,446
Other foreign exchange loss (gain)   4,468   8,162   (9,104)   2,355   16,881   275
Other (income) expense   (7,816)   92   (22,571)   (31,338)   (336)   (5,925)
Asset and goodwill write-downs and restructuring costs   6,841   1,793   997   10,193   15,264   63,982
Post closure wind-down costs (recoveries)   -   947   (24)   451   3,914   -
Adjusted EBITDA $ 149,541 $ 248,634 $ 93,915 $ 1,246,836 $ 549,714 $ 63,390
Sales $ 675,895 $ 662,301 $ 664,274 $ 3,289,146 $ 2,183,609 $ 1,875,821
Adjusted EBITDA margin   22.1%   37.5%   14.1%   37.9%   25.2%   3.4%
             
Net debt to invested capital            
Net debt            
Total debt $ 375,675 $ 381,960 $ 375,328 $ 375,675 $ 381,960 $ 259,760
Cash and cash equivalents   (538,561)   (457,392)   (509,157)   (538,561)   (457,392)   (34,900)
Total net debt $ (162,886) $ (75,432) $ (133,829) $ (162,886) $ (75,432) $ 224,860
Invested capital            
Net debt $ (162,886) $ (75,432) $ (133,829) $ (162,886) $ (75,432) $ 224,860
Shareholders' equity   1,635,973   1,080,312   1,567,063   1,635,973   1,080,312   830,982
Total invested capital $ 1,473,087 $ 1,004,880 $ 1,433,234 $ 1,473,087 $ 1,004,880 $ 1,055,842
Net debt to invested capital1   (11.1%)   (7.5%)   (9.3%)   (11.1%)   (7.5%)   21.3%
             
Operating cash flow per share (before working capital changes)            
Cash provided by operating activities $ 86,203 $ 229,947 $ 196,375 $ 1,052,381 $ 526,784 $ 28,252
Cash used in (generated from) operating working capital   46,852   (26,514)   (124,114)   15,093   (31,774)   16,740
Operating cash flow (before working capital changes) $ 133,055 $ 203,433 $ 72,261 $ 1,067,474 $ 495,010 $ 44,992
Weighted average number of shares - basic ('000)   60,787   66,687   62,741   63,593   67,119   67,277
Operating cash flow per share (before working capital changes) $ 2.19 $ 3.05 $ 1.15 $ 16.79 $ 7.38 $ 0.67
Note 1:   Net debt to invested capital as of the period end. 
  For the three months ended      
  Dec. 31 Dec. 31 Sept. 30 For the year ended Dec.31
Thousands of Canadian Dollars   2021   2020   2021   2021   2020   2019
Annualized return on capital employed            
Net earnings (loss) $ 69,653 $ 149,148 $ 65,630 $ 819,011 $ 280,296 $ (103,785)
Add:            
Finance costs   4,425   1,891   4,444   17,830   16,079   15,024
Income tax expense (recovery)   28,462   43,889   16,439   270,079   89,573   (34,359)
Earnings (loss) before income taxes and finance costs $ 102,540 $ 194,928 $ 86,513 $ 1,106,920 $ 385,948 $ (123,120)
Capital Employed            
Total assets $ 2,603,510 $ 1,843,187 $ 2,488,693 $ 2,603,510 $ 1,843,187 $ 1,341,917
Current liabilities   (321,642)   (189,726)   (307,349)   (321,642)   (189,726)   (137,647)
Add:            
Bank indebtedness   2,202   -   -   2,202   -   -
Current portion of long term debt   6,868   6,897   6,901   6,868   6,897   -
Current portion of lease liabilities   12,239   11,745   11,921   12,239   11,745   10,105
Capital employed, end of period $ 2,303,177 $ 1,672,103 $ 2,200,166 $ 2,303,177 $ 1,672,103 $ 1,214,375
Capital employed, beginning of period   2,200,165   1,555,212   2,142,778   1,672,103   1,214,375   1,396,144
Average capital employed $ 2,251,671 $ 1,613,658 $ 2,171,472 $ 1,987,640 $ 1,443,239 $ 1,305,260
Earnings (loss) before income taxes and finance costs divided by average capital employed   4.6%   12.1%   4.0%   55.7%   26.7%   (9.4%)
Annualization factor   4.0   4.0   4.0   1.0   1.0   1.0
Annualized return on capital employed   18.2%   48.4%   16.0%   55.7%   26.7%   (9.4%)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the three months and year ended December 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars except earnings per share) Three Months Three Months Year Ended Year Ended
  Dec. 31, 2021 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2020
         
Sales $ 675,895 $ 662,301 $ 3,289,146 $ 2,183,609
Costs and expenses:        
 Production   508,249   428,208   1,948,239   1,583,033
 Selling and administration   13,679   10,297   52,421   40,961
 Long term incentive compensation expense   8,058   10,254   31,682   12,513
 U.S. countervailing and anti-dumping duty deposits (receivable)   4,426   (23,891)   42,101   13,815
 Depreciation of plant and equipment   27,053   21,947   97,143   78,459
 Depletion and amortization of timber, roads and other   8,397   10,511   29,430   37,071
    569,862   457,326   2,201,016   1,765,852
         
Operating earnings before asset write-downs and        
 restructuring costs   106,033   204,975   1,088,130   417,757
         
Asset write-downs and restructuring costs   (6,841)   (1,793)   (10,193)   (15,264)
Operating earnings   99,192   203,182   1,077,937   402,493
         
Finance costs   (4,425)   (1,891)   (17,830 )   (16,079 )
Other foreign exchange loss   (4,468)   (8,162)   (2,355)   (16,881)
Other income (expense)   7,816   (92)   31,338   336
     (1,077)   (10,145)   11,153   (32,624)
         
Earnings before income taxes   98,115   193,037   1,089,090   369,869
         
Income tax expense:        
 Current   1,889   5,392   205,465   7,043
 Deferred   26,573   38,497   64,614   82,530
    28,462   43,889   270,079   89,573
         
Net earnings $ 69,653 $ 149,148 $ 819,011 $ 280,296
         
Net earnings per share                
Basic $ 1.15 $ 2.24 $ 12.88 $ 4.18
Diluted $ 1.14 $ 2.24 $ 12.84 $ 4.18
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months and year ended December 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars) Three Months Three Months Year Ended Year Ended
    Dec. 31, 2021 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2020
           
Net earnings $ 69,653 $ 149,148 $ 819,011 $ 280,296
               
Other comprehensive income (loss):          
Items that will not be recycled to Net earnings:          
  Defined benefit plan actuarial gain (loss), net of tax   1,184   458   7,729   (907)
             
Items that are or may be recycled to Net earnings:          
  Foreign currency translation differences for foreign operations, net of tax   (2,504)   (28,569)   8,574   (6,913)
Total other comprehensive income (loss), net of tax   (1,320)   (28,111)   16,303   (7,820)
           
Comprehensive income $ 68,333 $ 121,037 $ 835,314 $ 272,476

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months and year ended December 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars) Three Months Three Months Year Ended Year Ended
    Dec. 31, 2021 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2020
         
Cash provided by (used in):        
Operating activities:        
  Net earnings $ 69,653   $ 149,148   $ 819,011   $ 280,296  
  Items not involving cash:        
   Depreciation of plant and equipment 27,053     21,947     97,143     78,459  
   Depletion and amortization of timber, roads and other 8,397     10,511     29,430     37,071  
   Income tax expense 28,462     43,889     270,079     89,573  
   Finance costs 4,425     1,891     17,830     16,079  
   Other assets (4,354 )   (37,881 )   (4,285 )   (37,040 )
   Reforestation liability 861     (61 )   (863 )   (2,050 )
   Provisions and other liabilities 5,594     6,198     15,867     5,536  
   Stock options 254     253     864     866  
   Write-down of plant, equipment and other 2,597     -     5,637     9,754  
   Unrealized foreign exchange loss 1,055     9,031     2,950     17,634  
   Other expense (income) (7,816 )   92     (31,338 )   (336 )
  Income taxes paid (3,126 )   (1,585 )   (154,851 )   (832 )
      133,055     203,433     1,067,474     495,010  
  Cash generated from (used in) operating working capital:        
   Trade accounts receivable and other (11,606 )   70,342     (29,163 )   (30,206 )
   Inventories (56,252 )   (35,380 )   (53,192 )   22,024  
   Prepayments 5,769     (2,734 )   1,834     (1,036 )
   Trade accounts payable and provisions 15,237     (5,714 )   65,428     40,992  
    86,203     229,947     1,052,381     526,784  
         
Investing activities:        
  Additions to property, plant and equipment   (59,618 )   (29,990 )   (160,231 )   (95,714 )
  Additions to roads and bridges   (3,378 )   (5,840 )   (16,507 )   (14,669 )
  Additions to timber licences and other intangible assets   (29 )   (160 )   (29 )   (160 )
  Acquisitions   -     -     (539,941 )   (56,606 )
  Proceeds on disposal of property, plant and equipment and other   13,752     3,896     59,501     4,992  
  Net proceeds from (additions to) deposits and other assets   825     (585 )   714     (462 )
     (48,448 )   (32,679 )   (656,493 )   (162,619 )
            
Financing activities:        
  Issuance of share capital, net of expenses           323     227     2,977     418  
  Share repurchases   -     (24,430 )   (152,869 )   (24,430 )
  Dividend paid   -     -     (130,625 )   -  
  Interest payments   (4,143 )   (4,534 )   (16,783 )   (17,626 )
  Lease payments   (3,355 )   (3,255 )   (13,322 )   (12,315 )
  Debt refinancing costs   (1,155 )   18     (1,155 )   (133 )
  Term line net drawings (repayments)   2,198     -     2,199     (82 )
  Additions to long term debt   -     -     -     140,770  
  Repayments of long term debt   -     -     (6,671 )   -  
    (6,132 )   (31,974 )   (316,249 )   86,602  
           
Foreign exchange gain (loss) on cash and cash        
  equivalents held in a foreign currency   (2,219 )   (19,367 )   1,530     (28,275 )
Increase in cash   29,404     145,927     81,169     422,492  
         
Cash and cash equivalents, beginning of period   509,157     311,465     457,392     34,900  
         
Cash and cash equivalents, end of period $ 538,561   $ 457,392   $ 538,561   $ 457,392  

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, 2021 and 2020 (unaudited)
(thousands of Canadian Dollars)      
    Dec. 31, 2021 Dec. 31, 2020
         
Assets      
Current assets:      
  Cash and cash equivalents   $ 538,561 $ 457,392
  Trade accounts receivable and other     147,764   117,371
  Income taxes receivable     12,776   169
  Inventories     250,481   160,188
  Prepayments     16,125   17,970
        965,707   753,090
       
Employee future benefits     8,338   106
Deposits and other assets     52,221   48,957
Right of use assets     33,547   35,471
Property, plant and equipment     1,067,754   729,163
Roads and bridges     27,101   22,379
Timber licences     106,136   114,953
Goodwill and other intangible assets     342,291   138,838
Deferred income taxes     415   230
       
    $ 2,603,510 $ 1,843,187
       
Liabilities and Shareholders’ Equity      
Current liabilities:      
  Bank indebtedness   $ 2,202 $ -
  Trade accounts payable and provisions     218,825   150,509
  Current portion of long term debt     6,868   6,897
  Reforestation liability     16,670   16,181
  Lease liabilities     12,239   11,745
  Income taxes payable     64,838   4,394
      321,642   189,726
         
Reforestation liability     29,250   29,735
Lease liabilities     26,850   28,541
Long term debt     366,605   375,063
Employee future benefits     9,069   11,137
Provisions and other liabilities     43,686   26,637
Deferred income taxes     170,435   102,036
       
Equity:      
  Share capital     484,721   523,605
  Contributed surplus     4,694   5,157
  Translation reserve     58,420   49,846
  Retained earnings     1,088,138   501,704
       
        1,635,973   1,080,312
         
    $ 2,603,510 $ 1,843,187
 

Approved on behalf of the Board:                                                          

  “L. Sauder”   “T.V. Milroy”  
  Director   Director  

FORWARD-LOOKING STATEMENTSThis release contains forward-looking information about the Company’s business outlook, objectives, plans, strategic priorities and other information that is not historical fact. A statement contains forward-looking information when the Company uses what it knows and expects today, to make a statement about the future. Statements containing forward-looking information may include words such as: will, could, should, believe, expect, anticipate, intend, forecast, projection, target, outlook, opportunity, risk or strategy. Readers are cautioned that actual results may vary from the forward-looking information in this release, and undue reliance should not be placed on such forward-looking information. Risk factors that could cause actual results to differ materially from the forward-looking information in this release are described in Interfor’s annual Management’s Discussion & Analysis under the heading “Risks and Uncertainties”, which is available on www.interfor.com and under Interfor’s profile on www.sedar.com. Material factors and assumptions used to develop the forward-looking information in this release include volatility in the selling prices for lumber, logs and wood chips; the Company’s ability to compete on a global basis; the availability and cost of log supply; natural or man-made disasters; currency exchange rates; changes in government regulations; the availability of the Company’s allowable annual cut (“AAC”); claims by and treaty settlements with Indigenous peoples; the Company’s ability to export its products; the softwood lumber trade dispute between Canada and the U.S.; stumpage fees payable to the Province of British Columbia (“B.C.”); environmental impacts of the Company’s operations; labour disruptions; information systems security; and the existence of a public health crisis (such as the current COVID-19 pandemic). Unless otherwise indicated, the forward-looking statements in this release are based on the Company’s expectations at the date of this release. Interfor undertakes no obligation to update such forward-looking information or statements, except as required by law.

ABOUT INTERFORInterfor is a growth-oriented forest products company with operations in Canada and the United States. The Company has annual production capacity of approximately 3.9 billion board feet and offers a diverse line of lumber products to customers around the world. For more information about Interfor, visit our website at www.interfor.com.

The Company’s 2021 audited consolidated financial statements and Management’s Discussion and Analysis are available at www.sedar.com and www.interfor.com.

There will be a conference call on Friday, February 4, 2022 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its fourth quarter and fiscal 2021 financial results.

The dial-in number is 1-833-297-9919. The conference call will also be recorded for those unable to join in for the live discussion, and will be available until March 4, 2022. The number to call is 1-855-859-2056, Passcode 5057194.

For further information:Richard Pozzebon, Senior Vice President and Chief Financial Officer(604) 422-3400

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