Interfor reports strong Q4
Feb. 13, 2014, Vancouver – International Forest Products (Interfor) reported net earnings of $11.4 million or $0.18 per share in the fourth quarter of 2013, compared to net losses of $0.1 million or $0.00 per share in the third quarter and $3.8 million or $0.07 per share in the fourth quarter of 2012.
EBITDA, adjusted to exclude the effects of long-term incentive compensation and other items, was $36.2 million compared with $24.6 million in the third quarter of 2013 and $19.3 million in the fourth quarter of last year.
Lumber production in the fourth quarter was a record 470 million board feet, up 5% from the third quarter of 2013. Lumber sales, including wholesale and agency volumes, were a record 500 million board feet, up 12% versus the prior quarter.
The company's fourth quarter results also benefited from a rise in commodity lumber prices. SPF 2x4 in the US market averaged US$370, up US$42 versus the third quarter. Hem-Fir studs increased US$41 to average US$374 while SYP 2x4 East increased US$22 to average US$415.
Long-term incentive compensation amounted to $5.2 million or $0.08 per share in the fourth quarter.
Export taxes on shipments to the US averaged 2% in the fourth quarter of this year versus 5% in the third quarter and an average of 8% in the fourth quarter last year.
In the fourth quarter, Interfor generated $35.2 million in cash from operations before working capital changes and $33.5 million after working capital changes. Capital spending amounted to $16.8 million during the quarter.
Net debt closed the quarter at $140.8 million or 21.5% of invested capital.
Subsequent to the quarter end, Interfor announced that it had reached an agreement with Ilim Timber Continental, S.A. ("Ilim Timber") to acquire Tolleson Ilim Lumber Company ("Tolleson") of Perry, Georgia, USA.
Though the US economic recovery remains fragile, expectations are that US housing starts and lumber prices will continue to improve in 2014. Export tax rates for the first two months of 2014 have been set at 0% as lumber prices remain above the relevant benchmark price. Demand in Japan is expected to be stable through the first half of 2014. Following the implementation of a VAT increase in April 2014, there is potential for a moderate reduction in demand as consumers adjust to higher housing prices. Demand and pricing in China are expected to remain stable across all product lines. Long-term interest rates are expected to increase while continued volatility in the value of the Canadian dollar is anticipated.
Interfor will continue its disciplined approach to production, cost control, inventory management and capital spending to help position the company to deliver above average returns on invested capital as conditions improve. At the same time, Interfor will remain alert to opportunities to position the company for long-term success.
(1) Adjusted to exclude the effects of long-term incentive compensation, foreign exchange gains (losses), other income (expense) and restructuring costs (refer to our MD&A prepared as of February 13, 2014 for the full definition).