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Interfor Corporation (TSE:IFP)
TSX:IFP
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Interfor
(TSX:IFP)
50Neutral
Positive Factors
Financial Strategy
Income tax refunds, ongoing monetization of BC forest tenures, and lower capex should help lower financial leverage.
Market Potential
Interfor has significant torque to upswing in lumber prices.
Valuation
Valuation appears attractive at current levels — trading at 4.1x our mid-cycle EBITDA and 0.6x book value.
Negative Factors
Financial Performance
Adjusted 2Q EBITDA loss of C$16.7mm indicates financial struggles.
Industry Challenges
2024 is proving to be a challenging year for lumber producers with slowing housing demand and abundant supply as key issues.
Market Conditions
Lumber prices are depressed and most producers are below cash costs, though supply curtailments are expected to help improve the balance.
Interfor (IFP) vs. S&P 500 (SPY)
Market Cap
$716.75M
Dividend YieldN/A
Average Volume (3M)275.21K
Price to Earnings (P/E)―
Beta (1Y)1.41
Revenue Growth-8.81%
EPS Growth-13.99%
CountryCA
Employees4,419
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-5.91
Shares Outstanding51,453,735
10 Day Avg. Volume256,138
30 Day Avg. Volume275,208
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.26
Price to Cash Flow (P/CF)2.60
P/FCF Ratio2.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$23.74Price Target Upside70.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Interfor Business Overview & Revenue Model
Company DescriptionInterfor (IFP) is one of the largest lumber producers in the world, operating in the forestry sector. The company is headquartered in Canada and is involved in the production and sale of wood products, including lumber, engineered wood, and other related products. Interfor manages a network of sawmills across North America, focusing on sustainable forestry practices and catering to various markets, including residential, commercial, and industrial construction.
How the Company Makes MoneyInterfor makes money primarily through the production and sale of lumber and wood products. The company's key revenue streams include selling lumber to wholesalers, retailers, and distributors in North America and international markets. Interfor benefits from strategic partnerships with major home improvement retailers and distribution networks, which help distribute its products more widely. Additionally, the company focuses on operational efficiencies and sustainable forestry practices, which can provide cost savings and improve profitability. Fluctuations in lumber prices, demand from construction and housing markets, and international trade policies are significant factors that influence Interfor's earnings.
Interfor Financial Statement Overview
Summary
Interfor faces significant financial challenges, with declining revenues and profitability pressures impacting its income statement. The balance sheet remains relatively stable with moderate leverage, though rising debt levels require careful management. Cash flow performance has been inconsistent, with recent improvements not fully offsetting past volatility. Strategic adjustments may be needed to navigate industry conditions and restore financial health.Income Statement
Interfor's income statement shows a significant decrease in revenue over the past two years, dropping from a peak of $4.58 billion in 2022 to $3.02 billion in 2024. The company has experienced negative EBIT and net income in the latest periods, with net profit margins deteriorating from 13.05% in 2022 to -10.06% in 2024. This decline highlights profitability challenges, potentially impacted by industry cycles or operational inefficiencies.45
Neutral
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio, increasing from 0.41 in 2020 to 0.62 in 2024, indicating a cautious increase in leverage. Stockholders' equity has decreased, but with an equity ratio of around 49.8% in 2024, the company maintains a stable capital structure. This setup provides some resilience against financial volatility, although the rising debt level warrants attention.65
Positive
Cash Flow
Interfor's cash flow statement shows fluctuating cash flow with a notable improvement in operating cash flow in 2024 compared to 2023. The free cash flow in 2024 was positive at $70.2 million, recovering from a negative position in 2023. However, the free cash flow to net income ratio is not meaningful due to negative net income, indicating potential cash flow sustainability issues in the context of ongoing losses.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.02B | 3.32B | 4.58B | 3.29B | 2.18B | Gross Profit |
| 112.20M | 156.80M | 1.20B | 1.34B | 600.58M | EBIT |
| -198.10M | -252.40M | 859.62M | 1.08B | 402.49M | EBITDA |
| -62.00M | -71.40M | 1.03B | 1.23B | 504.94M | Net Income Common Stockholders |
| -304.30M | -266.80M | 598.20M | 819.01M | 280.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 43.40M | 55.00M | 77.61M | 538.56M | 457.39M | Total Assets |
| 3.08B | 3.40B | 3.62B | 2.60B | 1.84B | Total Debt |
| 950.80M | 938.00M | 833.22M | 414.76M | 422.25M | Net Debt |
| 907.40M | 883.00M | 755.61M | -123.80M | -35.15M | Total Liabilities |
| 1.55B | 1.67B | 1.59B | 967.54M | 762.88M | Stockholders Equity |
| 1.53B | 1.73B | 2.03B | 1.64B | 1.08B |
| Cash Flow | Free Cash Flow | |||
| 70.20M | -79.60M | 426.91M | 875.61M | 359.63M | Operating Cash Flow |
| 144.30M | 119.80M | 732.36M | 1.05B | 526.78M | Investing Cash Flow |
| -9.90M | -189.80M | -1.24B | -656.49M | -162.62M | Financing Cash Flow |
| -149.50M | 49.70M | 31.06M | -316.25M | 86.60M |
Interfor Technical Analysis
Negative
13.93
Price Trends
15.66
Negative
16.90
Negative
17.53
Negative
Market Momentum
-0.29
Negative
42.12
Neutral
34.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:IFP, the sentiment is Negative. The current price of 13.93 is below the 20-day moving average (MA) of 14.89, below the 50-day MA of 15.66, and below the 200-day MA of 17.53, indicating a bearish trend. The MACD of -0.29 indicates Negative momentum. The RSI at 42.12 is Neutral, neither overbought nor oversold. The STOCH value of 34.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:IFP.
Interfor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $3.66B | 11.63 | 17.93% | 1.73% | 4.52% | 0.51% | |
68 Neutral | C$296.57M | 13.45 | 6.61% | 6.97% | 24.29% | -27.59% | |
58 Neutral | C$1.59B | ― | -18.83% | ― | -3.20% | -107.88% | |
50 Neutral | $716.75M | ― | -18.73% | ― | -8.81% | -13.99% | |
47 Neutral | $2.49B | -2.97 | -22.82% | 3.51% | 4.13% | -28.53% | |
43 Neutral | C$52.19M | ― | -63.11% | ― | -8.78% | -68.46% |
* Basic Materials Sector Average
Performance Comparison
TSE:IFP
Interfor
13.93
-4.06
-22.57%
TSE:SJ
Stella-Jones
65.75
-13.06
-16.57%
TSE:CFP
Canfor
13.41
-1.45
-9.76%
TSE:CFX
Canfor Pulp Products
0.80
-0.68
-45.95%
TSE:ADN
Acadian Timber
16.64
0.36
2.21%
Interfor Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -10.59% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
Despite achieving positive operating cash flow, synergy achievements, and improved EBITDA, the company faces significant challenges, including a net loss, ongoing market uncertainties, potential tariff impacts, and declining demand. These challenges are notable and could affect future performance.Highlights
Positive Operating Cash Flow
Interfor achieved a positive operating cash flow of $144 million despite a challenging market environment with low lumber prices.
Synergy Achievements
Significant synergy achievements were made with log and lumber inventory targets, achieving year-over-year reductions of 25% and 16%, respectively.
Planer Project Completion
Successfully completed a new planer project at the Thomaston, Georgia mill, meeting all KPI targets within 30 operating days.
Improved EBITDA
All operating regions in Canada and the U.S. were EBITDA positive, resulting in an adjusted EBITDA of $80 million for Q4.
Reduction in Financial Leverage
Financial leverage remained flat at 36% quarter-over-quarter, with available liquidity growing to over $380 million.
Completion of Divestitures
Continued divestiture of B.C. coast tenures, executing eight tenure sales for gross proceeds of $67 million.
Lowlights
Net Loss Recorded
A net loss of $50 million was recorded in the quarter, including a $42 million foreign exchange loss mostly unrealized in relation to cross-border intercompany funding.
Market Uncertainties
Ongoing volatility in the lumber industry with uncertain economic and political environments raising potential impacts on both lumber supply and demand.
Potential Tariff Impact
Canadian lumber facing headwinds for shipments to the U.S., with the potential for increased tariffs leading to significant cost increases.
Demand Concerns
Near-term lumber markets in North America remain uncertain, with demand showing signs of decline due to economic uncertainties.
Company Guidance
During the Interfor Analyst Conference Call, the company provided a detailed overview of its fiscal year 2024 performance, highlighting several key metrics. Interfor reported positive operating cash flow of $144 million despite a challenging market environment with low lumber prices. They achieved significant reductions in log and lumber inventory by 25% and 16% year-over-year, respectively. The completion of a new planer project at the Thomaston, Georgia mill met all KPI targets within 30 operating days. The company also reported adjusted EBITDA of $80 million for Q4, driven by an 8% increase in total revenue to $747 million and a 16% rise in the average realized price of lumber. Financial leverage remained stable at 36%, while liquidity increased to over $380 million. Interfor plans to maintain a conservative capital spending plan of approximately $85 million for 2025 and continues to focus on reducing financial leverage. They also discussed the impact of potential tariffs, with only 25% of their lumber subject to duties, and emphasized their strategy of maintaining strong foundations and diversified operations to navigate the uncertain economic and political environments.Interfor Corporate Events
Financial Disclosures
Interfor to Release Q1 Financial Results on May 8, 2025
Neutral
Apr 8, 2025
Interfor Corporation is set to release its first quarter financial results on May 8, 2025, with an analyst conference call scheduled for May 9, 2025. This announcement is significant as it provides stakeholders with insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and investor relations.
Spark’s Take on TSE:IFP Stock
According to Spark, TipRanks’ AI Analyst, TSE:IFP is a Neutral.
Interfor’s overall stock score reflects significant financial and operational challenges. Declining revenues and profitability pressures weigh heavily on the score, despite some positive cash flow developments and strategic management efforts. Technical indicators and valuation metrics are unfavorable, with market uncertainties and potential tariff impacts posing additional risks. While there are efforts to stabilize and improve performance, the current landscape remains challenging.
To see Spark’s full report on TSE:IFP stock, click here.
Business Operations and StrategyFinancial Disclosures
Interfor Reports Improved Q4 2024 Results Amid Rising Lumber Prices
Positive
Feb 13, 2025
Interfor reported a net loss of $49.9 million for Q4 2024, an improvement from previous quarters, with adjusted EBITDA reaching $80.4 million on sales of $746.5 million. The company’s performance benefited from increased lumber prices and production, as well as strategic financial management, including the sale of Coastal B.C. operations and positive cash flow from higher lumber prices and tax refunds. Looking forward, Interfor plans significant capital investments in 2025, reflecting its ongoing commitment to growth and operational efficiency.
Interfor to Release Q4 and Fiscal 2024 Results
Jan 13, 2025
Interfor Corporation announced that it will release its fourth quarter and fiscal 2024 financial results on February 13, 2025, followed by an analyst conference call on February 14, 2025. This announcement provides an opportunity for stakeholders to gain insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and investor relations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.