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1. Company Snapshot

1.a. Company Description

Interfor Corporation, together with its subsidiaries, produces and sells wood products in Canada, the United States, Japan, China, Taiwan, and internationally.The company offers lumber products for decking, fascia and trims, framings, furniture, industrial packaging, Japan Zairai, millworks, paneling, sidings, trusses, and windows and doors.It also provides logs, wood chips, and other residuals.


The company was formerly known as International Forest Products Limited and changed its name to Interfor Corporation in May 2014.Interfor Corporation was incorporated in 1963 and is headquartered in Burnaby, Canada.

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1.b. Last Insights on IFP

Interfor Corporation's recent performance was negatively driven by a challenging Q3 2024, marked by a net loss of $106 million and adjusted EBITDA loss of $22 million. The company's revenue declined, and it reported a significant increase in net loss compared to Q2 2024 and Q3 2023. Additionally, Interfor's decision to exit its operations in Québec, Canada, including the sale of its manufacturing facilities and closure of its Montréal corporate office, may have contributed to the negative performance. Furthermore, the US lumber industry's potential to surpass Canada's dominance due to trade restrictions and tariffs may have also impacted Interfor's performance.

1.c. Company Highlights

2. Interfor's Q3 Earnings: Navigating the Downturn

Interfor reported a challenging Q3 with total revenue dropping 12% quarter-over-quarter to $689 million, driven by a 10% decrease in the average realized lumber price. The company's adjusted EBITDA loss was $36 million. The actual EPS came out at -$3.01338, missing estimates of -$1.28696. The revenue decline was partly offset by a 6% increase in the volume of lumber shipped, and lumber production was up 1% year-over-year due to fewer curtailments compared to the previous year.

Publication Date: Nov -23

📋 Highlights
  • Significant Production Reductions:: Interfor reduced lumber production by 250 million board feet (~26% of Q2 volumes) and curtailed two U.S. sawmills indefinitely.
  • Financial Strain Despite Liquidity:: Reported a $36M adjusted EBITDA loss, $689M revenue (down 12% QoQ), driven by a 20% QoQ drop in Southern Yellow Pine prices and 6% higher lumber volume shipped.
  • Enhanced Financial Flexibility:: Raised $144M via equity offering and secured credit facility renewal, leaving $386M in liquidity and net debt to invested capital at 35.2%.
  • Market Outlook and Strategic Positioning:: Anticipates lumber affordability to improve by 2026, leveraging low end-market inventories and diversified operations across Canada and the U.S.
  • Cost Efficiency and Resilience:: Maintains competitive costs in BC with modernized operations and secure fiber, while targeting top-quartile EBITDA margins through ongoing cost reductions.

Financial Flexibility and Liquidity

The company took proactive steps to enhance its financial flexibility, generating $144 million of gross proceeds from a bought deal equity offering and completing a credit facility renewal. As a result, Interfor's net debt to invested capital would have been 35.2% at the end of Q3, with available liquidity of $386 million. This move is expected to help the company navigate the current downturn.

Operational Adjustments and Cost Management

Interfor has taken several measures to adjust its operations, including reducing lumber production by approximately 250 million board feet, divesting its Quebec assets, and indefinitely curtailing two U.S. sawmills. The company is focused on driving out costs, with internal initiatives aimed at maintaining top-quartile EBITDA margins. According to Ian Fillinger, the company has built a diversified portfolio over the last 5 years, which is expected to help it capitalize when the market turns.

Market Outlook and Valuation

Interfor anticipates continued lumber market volatility, expecting that affordability will begin to improve in 2026, leading to better market conditions. The company's diversified species-producing regions and product mix allow for a targeted market approach. With a current P/S Ratio of 0.13 and EV/EBITDA of 19.41, the market appears to be pricing in a significant downturn. Analysts estimate next year's revenue growth at 10.7%, which could potentially lead to a revaluation of the stock.

Long-term Prospects

The company's long-term prospects appear to be supported by its competitive cost position in British Columbia, modernized operations, and high percentages of secure fiber. Interfor does not expect significant risks of further impairments on its $500 million goodwill, as long-term lumber prices used in testing have not changed year-over-year, and portfolio quality has improved.

3. NewsRoom

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CIBC Says "High-cost" Lumber Producers Thrown Lifeline

Nov -27

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TSX up 215 Points With Miners The Best Performer

Nov -26

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Interfor Corp (IFSPF) Q3 2025 Earnings Call Highlights: Navigating Market Challenges with ...

Nov -08

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Interfor Q3 Loss Widens on Weak Lumber Prices; Warns of Impact from New U.S. Tariffs

Nov -06

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Interfor Reports Q3’25 Results

Nov -06

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Lumber Firm Interfor Deepens Production Cuts

Oct -17

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Interfor Announces Incremental Lumber Production Curtailments for the Fourth Quarter of 2025

Oct -17

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TSX Closer: Up More Than 500 Pts As Gold and Silver Shine, and Desjardins Plays Down Impact of Latest Targeted U.S. Tariffs

Oct -14

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.03%)

6. Segments

Lumber and Other Wood

Expected Growth: 8%

Interfor Corporation's Lumber and Other Wood segment growth of 8% is driven by increasing demand from the US housing market, strong repair and remodeling activity, and rising prices due to supply chain constraints and tariffs on Canadian lumber. Additionally, the company's strategic capital investments in modernizing its mills and expanding production capacity have improved operational efficiency and productivity.

Wood Chips and Other By-Products

Expected Growth: 7%

Interfor Corporation's 7% growth in Wood Chips and Other By-Products is driven by increasing demand for sustainable packaging, rising pulp prices, and expanding bioenergy markets. Additionally, the company's strategic investments in modernizing its mills and optimizing production processes have improved operational efficiency, further contributing to growth.

Logs

Expected Growth: 10%

Interfor Corporation's 10% growth is driven by increasing lumber prices, strong demand from the US housing market, and strategic acquisitions. The company's focus on operational efficiency, cost reduction, and capital investments in its mills have also contributed to its growth. Additionally, Interfor's diversified product mix and geographic presence have helped mitigate risks and capitalize on market opportunities.

Other

Expected Growth: 9%

Interfor Corporation's 9% growth is driven by increasing lumber prices, strong demand from the repair and remodeling market, and the company's strategic capital investments in its mills, which have improved operational efficiency and increased production capacity.

7. Detailed Products

Lumber

Interfor Corporation produces a wide range of lumber products, including dimension lumber, timbers, and specialty products, used in construction, renovation, and industrial applications.

Specialty Products

Interfor offers a variety of specialty products, including western red cedar, cypress, and other specialty softwoods, used for outdoor and decorative applications.

Log Products

Interfor harvests and sells logs to domestic and international markets, used for pulp, paper, and other wood-based products.

Bioenergy Products

Interfor produces bioenergy products, including wood chips and hog fuel, used to generate electricity and heat.

8. Interfor Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Interfor Corporation's products are moderately substitutable, as customers have some alternatives, but they are not easily replaceable.

Bargaining Power Of Customers

Interfor Corporation's customers have limited bargaining power due to the company's strong market position and diversified customer base.

Bargaining Power Of Suppliers

Interfor Corporation's suppliers have moderate bargaining power, as the company relies on a few key suppliers, but has some flexibility in its supply chain.

Threat Of New Entrants

The threat of new entrants is low for Interfor Corporation, as the forestry industry has significant barriers to entry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the forestry industry is high, with several large players competing for market share, leading to pricing pressure and high marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.15%
Debt Cost 10.07%
Equity Weight 64.85%
Equity Cost 17.17%
WACC 14.67%
Leverage 54.21%

11. Quality Control: Interfor Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Jewett-Cameron Trading

A-Score: 4.3/10

Value: 9.8

Growth: 4.4

Quality: 4.5

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

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Clearwater Paper

A-Score: 4.1/10

Value: 9.3

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 1.0

Volatility: 3.7

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Canfor

A-Score: 4.0/10

Value: 9.8

Growth: 1.9

Quality: 3.2

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

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Mativ

A-Score: 3.9/10

Value: 9.0

Growth: 1.9

Quality: 1.8

Yield: 8.0

Momentum: 1.0

Volatility: 2.0

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Glatfelter

A-Score: 3.8/10

Value: 7.1

Growth: 4.8

Quality: 2.5

Yield: 1.0

Momentum: 4.0

Volatility: 3.7

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Interfor

A-Score: 3.5/10

Value: 8.3

Growth: 3.9

Quality: 1.9

Yield: 1.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.68$

Current Price

8.68$

Potential

0.00%

Expected Cash-Flows