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
Interfor (TSX:IFP)
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