Interfor nets almost $18 million
By Contributor
International Forest Products Limited (Interfor) reported net income of $17.8 million or $0.32 per share before share-based compensation expense and other items in the first quarter of 2013.
These results compare with net earnings, reported on the same basis, of $3.5 million in the fourth quarter of 2012 and a loss of $4.1 million in the first quarter of last year.
Ebitda for the quarter, adjusted to exclude the effects of share-based compensation and other items, was $37.1 million compared with $19.3 million in the fourth quarter and $7.0 million in the first quarter last year.
Share-based compensation and other items amounted to $7.4 million in the first quarter.
The Company’s results in the current quarter were positively impacted by strong prices, the ramp-up of the rebuilt Grand Forks sawmill and the addition, on March 1st, of the Company’s newly-acquired operations in the US Southeast.
Lumber production in the first quarter was a record 390 million board feet, up 11% from the previous high achieved in the third quarter of 2012.
In the quarter, SPF 2×4 in the U.S. market averaged US$391, up US$56 versus the fourth quarter, building on momentum established in late 2012. Hem-Fir studs averaged US$426, up US$66 versus the prior quarter, while SYP 2×4 East averaged US$452, up US$66. The markets in China and Japan gained in the quarter following the trend in North America. Cedar was stronger on limited supply.
Export taxes on shipments to the U.S. were 0% in the first quarter compared with an average of 8% in the fourth quarter last year.
In the quarter, Interfor generated $32.9 million in cash from operations before working capital changes and $9.4 million after working capital changes were considered. Capital spending, excluding acquisitions, amounted to $8.0 million in the quarter including $3.8 million on the final stages of the Grand Forks and Castlegar projects.
Net debt closed the quarter at $202.8 million or 34% percent of invested capital.
On February 28th, Interfor announced it had reached agreement with the members of its banking syndicate to increase and extend its credit facilities, bringing the total facility to $315 million, up from $265 million previously. Maturity has been extended from July 2015 to February 2017. Pricing of the facility has been improved as well.
During the quarter, Interfor announced it had reached agreement to purchase two timber tenures in the Kootenay Region of British Columbia from Springer Creek Forest Products Limited Partnership.
(1) Other items include certain foreign exchange gains (losses), other income (expense), restructuring costs and deferred tax assets not recognized.
(2) Other items include certain foreign exchange gains (losses), other income (expense) and restructuring costs.
The tenures, which have a combined Allowable Annual Cut (AAC) of approximately 174,000 cubic meters, will support an increase in production at the company’s sawmill at Castlegar, to be phased in over the next six to twelve months.
The transaction with Springer Creek closed on May 1st.
The U.S. housing sector is projected to continue its recovery through 2013 while Canadian housing starts are projected to slow. In terms of offshore markets, building activity in Japan is expected to gain momentum in 2013 in anticipation of a planned increase in that country’s consumption tax in early 2014. Demand for lumber in China is expected to continue to grow in spite of a slowing in demand for other commodities.
Price levels for most commodity items have come off in recent weeks following traditional seasonal patterns. While some further weakening may occur, prices are expected to remain above the levels recorded at the same time in recent years. Interest rates are forecasted to remain low and the Canadian dollar is expected to continue to trade at close to par against the U.S. dollar.
As always, Interfor will maintain 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.
– submitted by press release
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