Interfor Reports Q2’25 Results

Interfor Corporation (“Interfor” or the “Company”) (TSX: IFP) recorded net earnings in Q2’25 of $11.1 million, or $0.22 per share, compared to a net loss of $35.1 million, or $0.68 per share in Q1’25 and a net loss of $75.8 million, or $1.47 per share in Q2’24.

Adjusted EBITDA was $17.2 million on sales of $780.5 million in Q2’25 versus Adjusted EBITDA of $48.6 million on sales of $735.5 million in Q1’25 and an Adjusted EBITDA loss of $16.7 million on sales of $771.2 million in Q2’24.

Notable items:

Robust Lumber Shipments and Reduced Inventory
- Lumber shipments of 978 million board feet exceeded production by approximately 5%, resulting in a 37 million board foot reduction in inventory volume during the quarter.
Lumber Pricing Volatility
- Lumber prices were volatile on a species-by-species basis throughout the quarter. Interfor’s average selling price of $684 per mfbm was down $28 per mfbm versus Q1’25, primarily due to the 3.5% strengthening of the Canadian Dollar against the U.S. Dollar quarter-over-quarter.
Improved Financial Position
- Net debt at quarter-end was $798.0 million, or 35.6% of invested capital compared to net debt at Q1’25 of $886.3 million, or 37.3% of invested capital.
- The Company’s financial position benefited from $84.9 million of positive operating cash flow, including a $60.5 million reduction in working capital. This reduction was due in part to seasonal factors and a focused effort to reduce log and lumber inventories.
- On July 25, 2025, the Company completed an early renewal and extension of its Revolving Term Line (“Term Line”) with several provisions that enhance its financial flexibility. The commitment under the Term Line totals $562.5 million and the maturity was extended from December 17, 2026 to July 25, 2029. At June 30, 2025, Interfor had just over $330.0 million of available liquidity on a pro forma basis.
Monetization of Coastal B.C. Operations
- The Company sold Coastal B.C. forest tenures totalling approximately 81,000 cubic metres of allowable annual cut (“AAC”) and related assets and liabilities for gross proceeds of $8.2 million and a gain of $8.4 million.
- Interfor held approximately 736,000 cubic metres of AAC for disposition at June 30, 2025, subject to approvals from the Ministry of Forests.
Capital Investments
- Capital spending was $23.6 million, including $12.3 million of discretionary investment primarily focused on the multi-year rebuild of the Thomaston, GA sawmill.
- Total capital expenditures for 2025 are expected to be in the range of $85.0 million to $95.0 million.
Softwood Lumber Duties
- On July 29, 2025, the U.S. Department of Commerce (“DoC”) published the “All Others” final anti-dumping (“AD”) duty rate of 20.56%, based on the results of its sixth administrative review (“AR6”) covering shipments for the year ended December 31, 2023. The final “All Others” countervailing (“CV”) duty rate for AR6 is expected to be published by mid-August 2025, unless the DoC extends this deadline. Based on the final AD duty rate and preliminary CV duty rate for AR6, an incremental expense of approximately US$100.0 million is expected to be recorded in the third quarter of 2025.
- Interfor recorded $36.2 million of duties expense in the quarter. This represents the full amount of CV and AD duties incurred on shipments of softwood lumber from its Canadian operations to the U.S. at a combined rate of 14.40%, inclusive of a $12.2 million foreign exchange loss from revaluation of U.S. Dollar denominated duty deposits.
- Interfor has paid cumulative duties of US$621.5 million, or approximately $12.06 per share on an after-tax basis, as at June 30, 2025. Except for a US$165.0 million net receivable recorded in respect of net overpayments arising from duty rate adjustments and the fair value of rights to duties acquired, Interfor has recorded the duty deposits as an expense.
Tariffs
- On April 2, 2025, the U.S. administration issued an executive order to impose reciprocal tariffs on all countries, however goods compliant with the United States-Mexico-Canada Agreement (“USMCA”) including lumber were exempted. Effective August 1, 2025, the reciprocal tariff on Canadian goods of 25% was increased to 35%, however goods compliant with the USMCA remain exempted. At present, there are no tariffs on the Company’s Canadian lumber exports to the U.S.
- On March 1, 2025, the U.S. President issued an executive order requiring the U.S. Secretary of Commerce to conduct a Section 232 investigation to determine the effects on national security of imports of timber, lumber and their derivative products from all countries, including Canada. This investigation is expected to conclude within 270 days and aims to determine whether additional measures are necessary to protect national security, including potential tariffs, export controls such as quotas, or incentives to increase domestic production. Currently, the results and potential impacts of the Section 232 investigation are unknown.

Outlook
North American lumber markets over the near term are expected to remain volatile as the economy continues to adjust to changing monetary policies, tariffs, labour shortages and geo-political uncertainty, and as industry-wide lumber production continues to adjust to match demand.

Near-term volatility is likely to be amplified by the significantly higher duty rates on Canadian lumber exports to the U.S., and by any tariffs or other trade restrictions if imposed. Overall, the Company is well positioned to navigate this volatility 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 25% of the Company’s total lumber production is exported from Canada to the U.S. and exposed to duties and any 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 labour constraints, lengthy equipment lead-times, residual offtake constraints and extended project ramp-up schedules. Over the same period, the North American lumber market will continue to benefit from favourable underlying demand fundamentals, including the advanced age of the U.S. housing stock, a shortage of available housing and various demographic factors.

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.