BURNABY, B.C. — Interfor Corp. recorded a net loss in the fourth quarter of 2024 of $49.9 million, or $0.97 per share, compared to a net loss of $105.7 million, or $2.05 per share in the third quarter of 2024 and a net loss of $169.0 million, or $3.29 per share in the fourth quarter of 2023. 

Overall, Interfor reports $304 million net loss in 2024 as lumber production dropped 5% to 4 billion board feet. The net loss was a 14% increase from the $267 million net loss in 2023. Total sales fell 9% to $3 billion, down from $3.3 billion in the previous year.

Interfor records ninth straight quarter of net losses. In November 2024, Interfor recorded a third quarter of 2024 net loss of $105.7 million. The forest products company last reported a net profit – $3.5 million – for the third quarter of 2022. 

Volatility expected
According to the results, North American lumber markets over the near term are expected to be volatile as the economy continues to adjust to changing monetary policies, labor shortages, and geo-political uncertainty, and as industry-wide lumber production continues to adjust to match demand.

Near-term volatility could be further impacted by a potential tariff on Canadian lumber exports to the U.S. Overall, the company is well positioned with a diversified product mix in Canada and the U.S., with approximately 60% of its total lumber produced and sold within the U.S. 

Ultimately, only about 26% of the company’s total lumber production is exported from Canada to the U.S. and exposed to a potential tariff. Over the mid-term, Canadian lumber is expected to remain a key source of supply to meet U.S. needs, as growth in U.S. lumber manufacturing capacity will likely be limited by labor constraints, lengthy equipment lead-times and extended project ramp-up schedules.

Interfor expects that over the mid-term, lumber markets will continue to benefit from favorable underlying supply and demand fundamentals. Positive demand factors include the advanced age of the U.S. housing stock, a shortage of available housing and various demographic factors, while growth in lumber supply is expected to be limited by extended capital project completion and ramp-up timelines, labor availability and constrained global fiber availability.

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. In the event of a sustained lumber market downturn, Interfor maintains flexibility to significantly reduce capital expenditures and working capital levels, and to proactively adjust its lumber production to match demand.

Notable factors, included: 
Improved lumber prices

• Lumber prices increased during Q4’24 as reflected in Interfor’s average selling price of $659 per mfbm, up $89 per mfbm versus Q3’24. Lumber prices strengthened from the effects of market-driven industry production curtailments combined with increased new home construction starts.
• In Q4’24, lumber production totalled 948 million board feet, representing a 44 million board foot increase over the prior quarter. Q3’24 production was impacted by temporary production curtailments in response to weak market conditions.

Stable financial position

• Net debt at quarter-end was $861.3 million, or 36.0% of invested capital compared to net debt at Q3’24 of $849.9 million, or 36.1% of invested capital.
• The Company’s financial position benefited in the fourth quarter from $74.8 million of positive operating cash flow, primarily resulting from higher average lumber prices and the collection of $13.9 million of income tax refunds.
• The Company’s available liquidity improved $30.2 million quarter-over-quarter to $383.0 million at December 31, 2024.

Monetization of Coastal B.C. operations

• The Company sold Coastal B.C. forest tenures totaling approximately 111,000 cubic meters of allowable annual cut (“AAC”) and related assets and liabilities for proceeds of $11.6 million and a gain of $9.0 million.
• Interfor held approximately 901,000 cubic meters of AAC for disposition on December 31, 2024, subject to approvals from the Ministry of Forests.

Capital investments

• Capital spending was $14.5 million, including $4.4 million of discretionary investment primarily focused on the multi-year rebuild of the Thomaston, Georgia, sawmill.
• Capital expenditures planned for 2025 are estimated to be approximately $85.0 million.

Softwood lumber duties

• Interfor recorded $3.1 million of duties expenses in the quarter. This represents the full amount of countervailing (“CV”) and anti-dumping (“AD”) duties incurred on shipments of softwood lumber from its Canadian operations to the U.S. at a combined rate of 14.40%, net of a $17.0 million foreign exchange gain from the revaluation of U.S. Dollar denominated duty deposits.
• Interfor has paid cumulative duties of US$593.6 million, or approximately $12.12 per share on an after-tax basis, as at December 31, 2024. Except for a $165.0 million net receivable recorded in respect of overpayments arising from duty rate adjustments and the fair value of rights to duties acquired, Interfor has recorded the duty deposits as an expense.

Sale of Quebec operations

• On October 16, 2024, the Company announced that it entered into a definitive agreement to sell its sawmills in Val-d’Or and Matagami, QC, as well as its Sullivan remanufacturing plant in Val-d’Or.
• This divestiture was completed on January 10, 2025, for net cash consideration of $16.3 million. In addition, the company drew down $9.0 million of log, lumber and other inventories during Q4’24 prior to the completion of the divestiture. The Company expects to record a loss on disposal of $28.9 million in the first quarter of 2025, primarily related to goodwill.