Interfor Q3 2026 Earnings Results & Report

Interfor EPS Results

• Actual EPS: -C$0.69
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 0 of last 7 quarters

Interfor Revenue Results

• Actual Revenue: C$832.10 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Interfor (TSE:IFP) Corp is a Canadian forest products company that operates in Canada and the United States. The company was founded in 1963 and is headquartered in Vancouver, British Columbia. It operates in British Columbia, Alberta, Quebec, Washington State and Oregon. The company produces and sells wood products to North America, Asia and Europe customers. Interfor Corp commits to sustainable forestry practices and is recognized for its leadership in responsible forest management. In 2021, the company was named one of Canada's Top 100 Employers for the fifth year.

The current CEO of Interfor Corp is Daniel Kraft, who assumed the role in 2023. Kraft grew up around the forest products industry and has been a full-time manager at IFP since 1997. Under his leadership, Kraft intends to push IFP aggressively down a path of growth and diversification. 

Interfor Corp has been experiencing solid financial performance in recent years. The company's profit margins have also been strong. Debt levels have increased. Interfor Corp's stock performance has been on the rise in recent years. The company's ownership structure has remained stable, with the founding family holding a significant stake.

Interfor Corp operates in the forest products industry, which has experienced consolidation in recent years. As a result, the industry is highly cyclical and is sensitive to changes in housing construction and consumer demand for wood products. The industry is also subject to regulatory and political issues, particularly concerning forest management practices and international trade.

Interfor Corp's primary competitors include Canfor Corporation, West Fraser Timber Co. Ltd. and Resolute Forest Products Inc. The company's strong reputation for sustainable forest management practices distinguishes it from competitors. However, the industry faces challenges from a changing climate, leading to an increased risk of wildfires and disease outbreaks in forests.

Interfor Corp identified several opportunities in the coming years. First, the company invests in new technologies to improve manufacturing processes and reduce costs. In 2022, the company acquired a sawmill in Georgia, increasing its production capacity.

Interfor Corp faces several potential risks and challenges in the coming years. One key risk is the potential impact of climate change on forest health and productivity. The company may also face challenges from changes in government regulations related to forest management practices and international trade. Additionally, the cyclical nature of the forest products industry means that Interfor Corp may be vulnerable to downturns in demand or price volatility. Finally, competition from other companies in the industry, particularly those with lower cost structures, is another potential challenge for Interfor Corp.

Despite these risks, Interfor Corp has several strategies to mitigate potential challenges. The company focuses on sustainable forest management practices, which positions it well to navigate changing regulations and consumer preferences. It's also focused on operational efficiency and cost management, which will help improve its industry competitiveness. Finally, the company's focus on growth opportunities, such as product diversification and expansion into new markets, will ensure its long-term success.

Interfor Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Interfor generated CAD 77 million of adjusted EBITDA in Q3. Realized selling prices rose 2%, production increased 3%, and year-to-date unit production costs were down 4%.
• Positive Sentiment: The company-wide cost-reduction program remains on track to deliver its CAD 80 million annualized target, while Thomaston reached full pro forma production ahead of schedule and is now among Interfor’s top-performing mills.
• Positive Sentiment: Interfor strengthened its balance sheet, lowering net debt and improving its net debt-to-invested-capital ratio to 35.5%; available liquidity was above CAD 460 million. It expects CAD 20–25 million from each of its BC Coast tenure and U.S. South real estate sales over the coming months.
• Negative Sentiment: Management expects a gradual recovery, not a near-term improvement: demand remains subdued, benchmark prices have moderated, and seasonal softness and economic uncertainty persist. Fuel and other cost inflation are expected to weigh on results in Q4 and could remain a headwind into 2027.

Presentation

[Operator]

Good morning. My name is Sylvie, and I will be your conference operator today. Welcome to Interfor Corporation's Third Quarter 2026 Results Conference Call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. Following prepared remarks, there will be an opportunity for analysts to ask questions. During this conference call, Interfor's representatives may make forward-looking statements within the meaning of applicable securities laws. Additional information regarding the risks, uncertainties, and assumptions of such statements can be found in Interfor's most recent press release and MD&A. I would now like to turn the call over to Mr. Ian Fillinger, Interfor's President and CEO. Mr. Fillinger, please go ahead.

[Ian Fillinger, President and CEO at Interfor]

Thank you, operator, and good morning, everyone. Joining me today is Mike Mackay, our Executive Vice President and Chief Financial Officer. The third quarter reflected strong execution across our business, supported by modestly improved lumber markets, continued cost focus, higher mill productivity, and disciplined inventory management. While uncertainty remains elevated, we are making solid progress strengthening our business and our balance sheet. Our two-year company-wide cost reduction program remains on track to achieve our CAD 80 million annualized target. Thomaston delivered another strong quarter, reaching full pro forma production ahead of schedule. The transformation at that mill is now complete, and Thomaston has become one of the top-performing assets in our portfolio. Looking ahead, we expect a gradual market recovery rather than a significant near-term improvement. Demand remains subdued, while ongoing curtailments and closures continue to rationalize supply.

[Ian Fillinger, President and CEO at Interfor]

Against this backdrop, our priorities are clear: operate safely and efficiently, align production with demand, relentlessly reduce costs, and preserve the balance sheet strength and flexibility. With that, I will turn the call over to Mike.

[Mike Mackay, EVP and CFO at Interfor]

Thanks, Ian, and good morning, everyone. From an earnings standpoint, Interfor generated CAD 77 million of Adjusted EBITDA in the third quarter, continuing the strong results delivered in the second quarter. From a sales perspective, realized selling prices were up 2%, with slight improvements across most regions. Production volumes increased by 25 million board feet, or 3%. The increase was driven primarily by higher production in the U.S. South, following the ramp-up of Thomaston, along with more normalized operating schedules in the BC Interior. This was partially offset by lower production in Ontario. Shipments were essentially in line with production. Production cost per unit remained below full-year 2025 levels, with year-to-date costs down 4%. These improvements were driven by higher operating rates, the ramp-up of Thomaston, ongoing productivity gains from our company-wide cost reduction program.

[Mike Mackay, EVP and CFO at Interfor]

With that being said, fuel and other cost inflation has been notable this year and is expected to be an ongoing headwind in the fourth quarter and potentially into 2027. Turning to the cash flow and balance sheet, improved earnings, along with non-core asset sales, contributed to a further strengthening of our financial position. Net debt declined, and our net debt to invested capital ratio improved to 35.5%. Excuse me. This represents a 120 basis point improvement from the second quarter and a 330 basis point improvement from the first quarter. We ended September with available liquidity of over CAD 460 million. We continue to anticipate proceeds from divestitures over the next several months, including the ongoing sale of our BC Coast forest tenures, as well as the sale of real estate in the U.S. South.

[Mike Mackay, EVP and CFO at Interfor]

Looking ahead to the fourth quarter, benchmark lumber prices have moderated in recent weeks, with demand continuing to be constrained by housing affordability, consumer and builder confidence, and broader economic uncertainty, all in addition to normal seasonal softness. At the same time, supply rationalization has continued through much of 2026, building on the actions taken across the industry in the prior years. We believe this has contributed to a more balanced market environment. This ongoing supply discipline, combined with the recent 10% reduction in duty rates on Canadian imports to the U.S., does provide some optimism heading into 2027. Lastly, turning to capital allocation, our priority remains on debt reduction, the pace of which will depend on lumber prices and market conditions. Preliminary 2027 capital expenditures are expected to range between CAD 75 million to CAD 100 million.

[Mike Mackay, EVP and CFO at Interfor]

Spending will be primarily maintenance-focused, but supplemented with a number of smaller-scale, high-return, quick-payback discretionary projects, which will be advanced and flexed based on market conditions as appropriate. With that, I'll now turn the call back over to you, Ian.

[Ian Fillinger, President and CEO at Interfor]

Thanks, Mike. Operator, we're ready to take questions from analysts at this point.

[Operator]

Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. Thank you. First question will be from Sean Steuart at TD Cowen. Please go ahead.

[Sean Steuart, Analyst at TD Cowen]

Thank you. Good morning, everyone. Mike, I will start with you. Can you give us a sense of, I guess, the cadence and the overall dollar amount you are anticipating from non-core asset sales, whether it is the real estate or the coastal tenures?

[Mike Mackay, EVP and CFO at Interfor]

Yeah. Hey, good morning, Sean. Absolutely. From a BC Coast tenure perspective, we are looking at the next several months, most likely into early 2027, in the range of CAD 20 million-CAD 25 million. Largely some of the timing delays around the BC election, so just letting the government settle in as that resets. Real estate, similar type of timing. We did close on one of the sales in Q3, and it is advancing well, looking at probably late Q4 or early Q1.

[Sean Steuart, Analyst at TD Cowen]

Dollar amount for the real estate piece of it?

[Mike Mackay, EVP and CFO at Interfor]

That's in the same range as the BC Coast tenures, so I'd say between 20 million to 25 million.

[Sean Steuart, Analyst at TD Cowen]

Okay. Thanks for that. Ian, it looks like from very low levels, you're opening up CapEx plans a little bit. With respect to any discretionary projects that are being thought about, can you give us some context on what you're looking at, specific mills that are being targeted? I guess more broadly speaking, does the federal budget yesterday and some of the support that's being talked about for forest products change your perspective on potential investment plans for your Canadian platform?

[Ian Fillinger, President and CEO at Interfor]

Hey, Sean. Thanks. Yes, so as Mike said, there are discretionary projects. There's several small, ultra-small projects with ultra-high paybacks that are scattered across the U.S. and Canada. We'll look at those, and again, can flex those to the bottom end of the CapEx range or the top end, depending upon how the business performs over the next several quarters. These are, again, several small CapEx projects with ultra-high paybacks and supported in many cases by incentives such as grants, straight cash influx from government programs, or tax incentives and benefits in both the U.S. and Canada. So, very small projects, number of them, really good paybacks, and in many cases, supported through different initiatives. We'll be able to flex those.

[Ian Fillinger, President and CEO at Interfor]

As far as the budget that was announced yesterday in Canada, our view is it's an important recognition, obviously, of the forest industry as a strategic industry for Canada. It appears to be putting some meaningful resources behind the sector's future, which is good, but the details we'll be looking for and have been told in the next several weeks will be more clear through the Forest Sector Transformation Strategy that the federal government launched a number of months ago. So, as far as clarity on the key industry priorities, we expect to find out more in the next several weeks when that transformation report and strategy is released.

[Sean Steuart, Analyst at TD Cowen]

Great. Thanks for that detail, Ian. That is all I have for now.

[Ian Fillinger, President and CEO at Interfor]

Thanks, Sean.

[Operator]

Ladies and gentlemen, a reminder to please press star one should you have any questions. At this time, Mr. Fillinger, we have no other questions registered. Please proceed.

[Ian Fillinger, President and CEO at Interfor]

Okay. Well, thank you, everyone, for joining us this morning. While market conditions remain uncertain, we continue to plan conservatively, focusing in on the areas we can control and strengthening the balance sheet. As always, Mike and I are available for follow-up, along with Bryan Fast, our Director of Investor Relations. Thanks, everyone. Have a great day and be safe.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Have a good weekend.

Participants

Executives

• Ian Fillinger, President and CEO
• Mike Mackay, EVP and CFO

Analysts

• Sean Steuart, Analyst at TD Cowen