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Interfor Reports Q2'16 Results

Record EBITDA(1) of $56.9 million

Strong Lumber Prices

Progress on Operational Initiatives


/EINPresswire.com/ -- VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/28/16 -- INTERFOR CORPORATION ("Interfor" or the "Company") (TSX: IFP) recorded net earnings in Q2'16 of $23.2 million, or $0.33 per share, compared to $0.8 million, or $0.01 per share in Q1'16. Adjusted net earnings1 in Q2'16 were $20.9 million, or $0.30 per share, compared to $2.6 million, or $0.04 per share, in Q1'16.

Adjusted EBITDA1 was $56.9 million on sales of $458.8 million in Q2'16, versus Adjusted EBITDA1 of $33.4 million on sales of $433.9 million in Q1'16.

Highlights for the quarter include:


--  Higher Lumber Prices
    --  Product prices were higher in Q2'16 versus Q1'16, with the Western
        SPF Composite and the Southern Pine ("SP") Composite up over the
        prior quarter by US$38 and US$27 per mfbm, respectively. As somewhat
        of an offsetting factor, the Canadian Dollar was stronger quarter-
        over-quarter, averaging 1.2886 in Q2'16 versus 1.3732 in Q1'16.
--  Higher Lumber Production
    --  The Company produced an additional 19 million board feet in Q2'16
        versus Q1'16, mostly reflective of productivity gains at several
        operations as ongoing improvement initiatives take effect.
--  Business Optimization Initiative
    --  The Company is focused on capturing margin expansion opportunities
        across its operations and has taken a number of steps to advance
        this initiative.
    --  In particular, the Company has achieved strong productivity, cost
        and product mix gains at its Gilchrist, Oregon operation, which
        resulted in a significant margin improvement over Q1'16. In
        addition, a number of margin improvement projects are underway
        across the U.S. South platform, with early stage results being
        realized.
--  Tacoma Sawmill Monetization
    --  The monetization process for the Tacoma sawmill property is
        proceeding on track, with the sale expected to close in the second
        half of 2016.
--  Free Cash Flow Generation
    --  Interfor generated $62.6 million of cash from operations, with a
        reduction in working capital contributing $6.3 million. Capital
        spending amounted to $15.8 million during the quarter.
    --  The Company's net debt decreased by $32.1 million during the quarter
        to $396.0 million, or 35.2% of invested capital, providing the
        Company with $181.2 million of available liquidity as at June 30,
        2016.

1 Refer to Non-GAAP Measures section

Production

Lumber production in Q2'16 was 637 million board feet versus 618 million board feet in Q1'16.

Production from Canadian operations totaled 218 million board feet in Q2'16, up 8 million board feet compared to Q1'16. Production increased most significantly at Castlegar, which produced an additional 4 million board feet as productivity gains have continued following the resumption of operations at that mill in Q4'15.

Production from the Company's nine U.S. South sawmills totaled 270 million board feet, up 5 million board feet compared to Q1'16 as a result of a modest increase in total productivity.

Production from U.S. Northwest operations totaled 149 million board feet in Q2'16, an increase of 6 million board feet over the preceding quarter. The Company's three stud mills in the region contributed an additional 3 million board feet while its specialty board mill at Gilchrist also added 3 million board feet, both as a result of productivity improvements.

Lumber Markets and Pricing

Lumber markets were relatively strong in the second quarter on increased demand, as reflected by improvements in all three of Interfor's key price benchmarks over the first quarter. The Western SPF Composite improved by US$38 to US$300 per mfbm, the SP Composite increased by US$27 to US$390 per mfbm and the KD HF Stud 2x4 9' benchmark rose by US$23 to US$355 per mfbm.


Summary of Quarterly Results(1)
                                            2016                2015
                                    ------------------- --------------------
                        Unit                Q2       Q1        Q4        Q3
----------------------------------------------------------------------------

Financial Performance
 (Unaudited)
Total sales             $MM              458.8    433.9     411.4     430.8
  Lumber                $MM              371.1    348.9     325.0     343.3
  Logs, residual
   products and other   $MM               87.7     85.0      86.4      87.5
Operating earnings
 (loss)                 $MM               30.0      3.5      (6.3)    (11.6)
Net earnings (loss)     $MM               23.2      0.8      (3.5)     (6.1)
Net earnings (loss) per
 share, basic and
 diluted                $/share           0.33     0.01     (0.05)    (0.09)
Adjusted net earnings
 (loss)(2)              $MM               20.9      2.6       5.5     (15.4)
Adjusted net earnings
 (loss) per share,
 basic and diluted (2)  $/share           0.30     0.04      0.08     (0.22)
Adjusted EBITDA(2)      $MM               56.9     33.4      35.8      11.5
Shares outstanding -
 end of period          million           70.0     70.0      70.0      70.0
Shares outstanding -
 weighted average       million           70.0     70.0      70.0      70.0

Operating Performance
Lumber production       million fbm        637      618       568       618
Total lumber sales      million fbm        658      637       615       686
  Lumber sales -
   Interfor produced    million fbm        634      609       586       663
  Lumber sales -
   wholesale and
   commission           million fbm         24       28        29        23
Lumber - average        $/thousand
 selling price (3)       fbm               564      548       529       500

Average USD/CAD
 exchange rate (4)      1 USD in CAD    1.2886   1.3732    1.3354    1.3089
Closing USD/CAD
 exchange rate (4)      1 USD in CAD    1.3009   1.2971    1.3840    1.3394
----------------------------------------------------------------------------

Summary of Quarterly Results(1)
                                            2015                 2014
                                    -------------------- -------------------
                        Unit               Q2        Q1         Q4        Q3
----------------------------------------------------------------------------

Financial Performance
 (Unaudited)
Total sales             $MM             429.7     415.4      389.0     373.1
  Lumber                $MM             352.2     340.7      318.6     303.0
  Logs, residual
   products and other   $MM              77.5      74.7       70.4      70.1
Operating earnings
 (loss)                 $MM             (25.8)      7.8       (1.1)     20.1
Net earnings (loss)     $MM             (20.6)     (0.2)      (5.2)     11.0
Net earnings (loss) per
 share, basic and
 diluted                $/share         (0.29)    (0.00)     (0.08)     0.16
Adjusted net earnings
 (loss)(2)              $MM             (14.7)      4.5       10.2      16.1
Adjusted net earnings
 (loss) per share,
 basic and diluted (2)  $/share         (0.21)     0.07       0.15      0.24
Adjusted EBITDA(2)      $MM              12.7      31.8       37.4      45.4
Shares outstanding -
 end of period          million          70.0      70.0       66.7      66.7
Shares outstanding -
 weighted average       million          70.0      67.8       66.7      66.7

Operating Performance
Lumber production       million fbm       672       639        578       567
Total lumber sales      million fbm       719       632        620       595
  Lumber sales -
   Interfor produced    million fbm       688       607        605       581
  Lumber sales -
   wholesale and
   commission           million fbm        31        25         15        14
Lumber - average        $/thousand
 selling price (3)       fbm              490       539        514       509

Average USD/CAD
 exchange rate (4)      1 USD in CAD   1.2297    1.2412     1.1350    1.0890
Closing USD/CAD
 exchange rate (4)      1 USD in CAD   1.2474    1.2683     1.1601    1.1208
----------------------------------------------------------------------------

Notes:
(1) Figures in this table may not equal or sum to figures presented
elsewhere due to rounding.
(2) Refer to the Non-GAAP Measures section of this press release for
definitions.
(3) Gross sales before export taxes.
(4) Based on Bank of Canada foreign exchange rates.

Balance Sheet

Net debt at June 30, 2016 was $396.0 million, or 35.2% of invested capital, representing a decrease of $34.9 million from June 30, 2015 and a decrease of $56.3 million from December 31, 2015. A 6.0% strengthening of the Canadian Dollar against the U.S. Dollar contributed $28.2 million to the net debt reduction in YTD'16 as the majority of debt is denominated in U.S. Dollars.


                                 For the 3 months
                                            ended    For the 6 months ended
                                         June 30,                  June 30,
                          ------------------------ -------------------------
Thousands of dollars             2016        2015         2016         2015
----------------------------------------------------------------------------

Net debt
Net debt, period opening,
 CAD                       $  428,062  $  369,683   $  452,303  $   202,553
Net drawing (repayment)
 on credit facilities,
 CAD                          (33,619)     60,061      (33,566)     205,812
Impact on U.S. Dollar
 denominated debt from
 (strengthening)
 weakening CAD                  1,320      (4,897)     (28,175)      18,720
Decrease in cash and cash
 equivalents, CAD                 196       6,023        5,397        3,785
                          ------------------------ -------------------------
Net debt, period ending,
 CAD                       $  395,959  $  430,870   $  395,959  $   430,870
                          ------------------------ -------------------------

Net debt components by
 currency
U.S. Dollar debt, period
 opening, USD              $  338,692  $  305,099   $  338,699  $   190,000
Net drawing (repayment)
 on credit facilities,
 USD                          (41,192)     50,024      (41,199)     165,123
                          ------------------------ -------------------------
U.S. Dollar debt, period
 ending, USD                  297,500     355,123      297,500      355,123

Spot rate, period end                                   1.3009       1.2474

U.S. Dollar debt
 expressed in CAD                                      387,018      442,980
Canadian Dollar debt,
 including bank
 indebtedness, CAD                                      20,000            -
Canadian Dollar operating
 line, CAD                                                   -        1,971
                                                   -------------------------
Total debt, CAD                                        407,018      444,951
Cash and cash
 equivalents, CAD                                      (11,059)     (14,081)
                                                   -------------------------
Net debt, period ending,
 CAD                                                $  395,959  $   430,870
----------------------------------------------------------------------------

Capital Resources

The following table summarizes Interfor's credit facilities and availability as of June 30, 2016:



                                  Revolving     Senior        U.S.
Thousands of          Operating        Term    Secured   Operating
 Canadian dollars          Line        Line      Notes        Line     Total
----------------------------------------------------------------------------
Available line of
 credit             $    65,000 $   200,000 $  260,180 $    65,045 $ 590,225
Maximum borrowing
 available          $    65,000 $   200,000 $  260,180 $    65,045 $ 590,225
Less:
  Drawings               13,009     133,829    260,180           -   407,018
  Outstanding
   letters of
   credit included
   in line
   utilization            9,891           -          -       3,194    13,085
----------------------------------------------------------------------------
Unused portion of
 facility           $    42,100 $    66,171 $        - $    61,851 $ 170,122
----------------------------------------------------------------------------

Add cash and cash
 equivalents                                                          11,059
----------------------------------------------------------------------------
Available
 liquidity at June
 30, 2016                                                          $ 181,181
----------------------------------------------------------------------------

As of June 30, 2016, the Company had commitments for capital expenditures totaling $17.5 million, related to both maintenance and discretionary capital projects.

Interfor continues to maintain its disciplined focus on monitoring discretionary capital expenditures, optimizing inventory levels and matching production with offshore and domestic demand.

As at June 30, 2016, the Company had net working capital of $161.2 million and available capacity on operating and term facilities of $170.1 million. These resources, in addition to cash generated from operations, will be used to support working capital requirements, debt servicing commitments and capital expenditures. We believe that Interfor will have sufficient liquidity to fund operating and capital requirements for the foreseeable future.

Non-GAAP Measures

This release makes reference to the following non-GAAP measures: Adjusted net earnings (loss), Adjusted net earnings (loss) per share, EBITDA, Adjusted EBITDA, Pre-tax return on total assets and Net debt to invested capital, which are used by the Company and certain investors to evaluate operating performance and financial position. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. The following table provides a reconciliation of these non-GAAP measures to figures as reported in the Company's unaudited interim consolidated financial statements prepared in accordance with IFRS:


                           For the 3 months ended   For the 6 months ended
                                         June 30,                 June 30,
                           ------------------------ ------------------------
Thousands of Canadian
 dollars                          2016       2015          2016       2015
----------------------------------------------------------------------------

Adjusted Net Earnings
 (Loss)
Net earnings (loss)             23,205    (20,583)       24,000    (20,746)
Add:
  Restructuring (recovery)
   costs and capital asset
   write-downs                   2,304        (12)        3,507       (134)
  Other foreign exchange
   loss (gain)                    (503)    (2,303)          396      3,110
  Long term incentive
   compensation expense
   (recovery)                   (4,147)     3,908        (3,969)     2,199
  Other expense                    458        162           365         29
  Beaver sawmill post-
   closure wind-down costs           3         11            11        352
  Tacoma sawmill post-
   acquisition losses and
   closure costs                   311      7,651           683      8,659
  Income tax effect of
   above adjustments              (725)    (3,505)       (1,479)    (3,647)
----------------------------------------------------------------------------
Adjusted net earnings (1)       20,906    (14,671)       23,514    (10,178)
Weighted average number of
 shares - basic and
 diluted ('000)                 70,030     70,030        70,030     68,937
Adjusted net earnings per
 share (1)                        0.30      (0.21)         0.34      (0.15)
----------------------------------------------------------------------------

Adjusted EBITDA
Net earnings (loss)             23,205    (20,583)       24,000    (20,746)
Add:
  Depreciation of plant
   and equipment                18,765     18,130        38,934     34,645
  Depletion and
   amortization of timber,
   roads and other               9,652      8,909        17,621     16,853
  Restructuring (recovery)
   costs and capital asset
   write-downs                   2,304        (12)        3,507       (134)
  Finance costs                  4,965      4,088        10,149      7,162
  Other foreign exchange
   loss (gain)                    (503)    (2,303)          396      3,110
  Income tax expense
   (recovery)                    1,852     (7,199)       (1,474)    (7,582)
----------------------------------------------------------------------------
EBITDA                          60,240      1,030        93,133     33,308
Add:
  Long term incentive
   compensation expense
   (recovery)                   (4,147)     3,908        (3,969)     2,199
  Other expense                    458        162           365         29
  Beaver sawmill post-
   closure wind-down costs           3         10            11        350
  Tacoma sawmill post-
   acquisition losses and
   closure costs                   311      7,604           683      8,585
----------------------------------------------------------------------------
Adjusted EBITDA(1)              56,865     12,714        90,223     44,471
----------------------------------------------------------------------------

Pre-tax return on total
 assets
Operating earnings (loss)
 before restructuring
 costs                          32,281    (25,847)       36,943    (18,161)
Total assets(2)              1,323,788  1,343,211     1,363,683  1,216,542
----------------------------------------------------------------------------
Pre-tax return on total
 assets(3)                         9.8%      (7.7%)         5.4%      (3.0%)
----------------------------------------------------------------------------

Net debt to invested
 capital
Net debt
  Total debt                   407,018    444,951       407,018    444,951
  Cash and cash
   equivalents                 (11,059)   (14,081)      (11,059)   (14,081)
----------------------------------------------------------------------------
Total net debt                 395,959    430,870       395,959    430,870
----------------------------------------------------------------------------
Invested capital
  Net debt                     395,959    430,870       395,959    430,870
  Shareholders' equity         727,470    703,695       727,470    703,695
----------------------------------------------------------------------------
Total invested capital       1,123,429  1,134,565     1,123,429  1,134,565
----------------------------------------------------------------------------
Net debt to invested
 capital(4)                       35.2%      38.0%         35.2%      38.0%
----------------------------------------------------------------------------

Notes:
(1) Q1'15 adjusted net earnings, adjusted net earnings per share and
adjusted EBITDA have been revised for inclusion of Tacoma sawmill post-
acquisition losses arising during that period.
(2) Total assets at period beginning for three month periods; average of
opening and closing total assets for six month periods.
(3) Annualized rate.
(4) Net debt to invested capital as of the period end.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the three and six months ended June 30, 2016 and 2015 (unaudited)


----------------------------------------------------------------------------
(thousands of Canadian
 dollars except earnings
 per share)                     3 Months   3 Months    6 Months    6 Months
                                June 30,   June 30,    June 30,    June 30,
                                  2016       2015        2016        2015
----------------------------------------------------------------------------

Sales                        $  458,813  $  429,683  $  892,757  $  845,129
Costs and expenses:
  Production                    390,487     409,949     780,623     783,045
  Selling and
   administration                11,775      12,155      22,605      24,069
  Long term incentive
   compensation (recovery)
   expense                       (4,147)      3,908      (3,969)      2,199
  Export taxes                        -       2,479           -       2,479
  Depreciation of plant and
   equipment                     18,765      18,130      38,934      34,645
  Depletion and
   amortization of timber,
   roads and other                9,652       8,909      17,621      16,853
  --------------------------------------------------------------------------
                                426,532     455,530     855,814     863,290

----------------------------------------------------------------------------
Operating earnings (loss)
 before restructuring costs      32,281     (25,847)     36,943     (18,161)

Restructuring costs
 (recovery)                       2,304         (12)      3,507        (134)
----------------------------------------------------------------------------
Operating earnings (loss)        29,977     (25,835)     33,436     (18,027)

Finance costs                    (4,965)     (4,088)    (10,149)     (7,162)
Other foreign exchange gain
 (loss)                             503       2,303        (396)     (3,110)
Other expense                      (458)       (162)       (365)        (29)
----------------------------------------------------------------------------
                                 (4,920)     (1,947)    (10,910)    (10,301)

----------------------------------------------------------------------------
Earnings (loss) before
 income taxes                    25,057     (27,782)     22,526     (28,328)

Income tax expense
 (recovery)
  Current                           330         308         461         472
  Deferred                        1,522      (7,507)     (1,935)     (8,054)
  --------------------------------------------------------------------------
                                  1,852      (7,199)     (1,474)     (7,582)

----------------------------------------------------------------------------
Net earnings (loss)          $   23,205  $  (20,583) $   24,000  $  (20,746)
----------------------------------------------------------------------------

Net earnings (loss) per
 share, basic and diluted    $     0.33  $    (0.29) $     0.34  $    (0.30)
----------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the three and six months ended June 30, 2016 and 2015 (unaudited)


----------------------------------------------------------------------------
                                3 Months    3 Months    6 Months   6 Months
                                June 30,    June 30,    June 30,   June 30,
                                  2016        2015        2016       2015
----------------------------------------------------------------------------

Net earnings (loss)           $   23,205  $  (20,583) $   24,000  $ (20,746)

Other comprehensive income
 (loss):
Items that will not be
 recycled to Net earnings
 (loss):
  Defined benefit plan
   actuarial gain (loss)          (3,580)      1,158      (2,946)     1,440
  Income tax recovery                  -         376           -        376
  --------------------------------------------------------------------------
  Total items that will not
   be recycled to Net
   earnings (loss)                (3,580)      1,534      (2,946)     1,816
----------------------------------------------------------------------------

Items that are or may be
 recycled to Net earnings
 (loss):
  Foreign currency
   translation differences
   for foreign operations,
   net of tax                      2,607      (7,184)    (18,832)    23,138
  Loss in fair value of
   interest rate swaps               (32)        (10)       (139)      (288)
  --------------------------------------------------------------------------
  Total items that are or
   may be recycled to Net
   earnings (loss)                 2,575      (7,194)    (18,971)    22,850
----------------------------------------------------------------------------
Total other comprehensive
 income (loss), net of tax        (1,005)     (5,660)    (21,917)    24,666
----------------------------------------------------------------------------

Comprehensive income (loss)   $   22,200  $  (26,243) $    2,083  $   3,920
----------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three and six months ended June 30, 2016 and 2015 (unaudited)


-----------------------------------------------------------------------------
(thousands of Canadian
 dollars)                    3 Months    3 Months    6 Months      6 Months
                             June 30,    June 30,    June 30,      June 30,
                               2016        2015        2016          2015
-----------------------------------------------------------------------------

Cash provided by (used
 in):
Operating activities:
  Net earnings (loss)       $   23,205  $  (20,583) $   24,000  $    (20,746)
  Items not involving
   cash:
    Depreciation of plant
     and equipment              18,765      18,130      38,934        34,645
    Depletion and
     amortization of
     timber, roads and
     other                       9,652       8,909      17,621        16,853
    Income tax expense
     (recovery)                  1,852      (7,199)     (1,474)       (7,582)
    Finance costs                4,965       4,088      10,149         7,162
    Other assets                   (83)         26        (284)          372
    Reforestation
     liability                  (2,157)     (1,931)       (543)         (692)
    Other liabilities and
     provisions                 (2,120)      2,951      (3,295)       (3,470)
    Stock options                   56          99         133            99
    Reversal of write-down
     of plant and
     equipment                       -           -           -        (1,195)
    Write-down of plant
     and equipment               1,018           -       1,018             -
    Unrealized foreign
     exchange loss (gain)          689      (2,355)        698          (328)
    Other                          458         162         365            29
  ---------------------------------------------------------------------------
                                56,300       2,297      87,322        25,147
  Cash generated from
   (used in) operating
   working capital:
    Trade accounts
     receivable and other      (11,134)      6,170     (12,053)       (9,421)
    Inventories                 (8,512)     13,348      (5,768)        9,572
    Prepayments                  2,410       1,312         263        (2,848)
    Trade accounts payable
     and provisions             23,703      (2,666)     13,304        (2,483)
    Income taxes paid             (208)       (319)       (466)         (455)
  ---------------------------------------------------------------------------
                                62,559      20,142      82,602        19,512

Investing activities:
  Additions to property,
   plant and equipment          (9,446)    (30,543)    (21,997)      (52,118)
  Additions to logging
   roads                        (6,148)     (7,765)    (11,237)      (12,903)
  Additions to timber and
   other intangible assets        (219)       (297)       (355)       (1,137)
  Proceeds on disposal of
   property, plant and
   equipment                       139         587         314         3,790
  Acquisitions                       -     (46,568)          -      (223,361)
  Investments and other
   assets                       (8,764)         74      (9,553)          180
  ---------------------------------------------------------------------------
                               (24,438)    (84,512)    (42,828)     (285,549)

Financing activities:
  Issuance of capital
   stock, net of share
   issue expenses                    -           -           -        63,196
  Interest payments             (4,354)     (3,679)    (11,165)       (6,630)
  Debt refinancing costs          (110)        (95)       (842)         (254)
  Change in operating line
   components of long-term
   debt                        (18,467)     17,694     (11,733)       32,921
  Additions to long term
   debt                         28,000      42,367      28,000       362,582
  Repayments of long term
   debt                        (43,154)          -     (49,834)     (189,691)
  ---------------------------------------------------------------------------
                               (38,085)     56,287     (45,574)      262,124

Foreign exchange gain
 (loss) on cash and cash
 equivalents held in a
 foreign currency                 (232)      2,060         403           128
-----------------------------------------------------------------------------
Decrease in cash                  (196)     (6,023)     (5,397)       (3,785)

Cash and cash equivalents,
 beginning of period            11,255      20,104      16,456        17,866
-----------------------------------------------------------------------------

Cash and cash equivalents,
 end of period              $   11,059  $   14,081  $   11,059   $    14,081
-----------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

June 30, 2016 and December 31, 2015 (unaudited)


----------------------------------------------------------------------------
(thousands of Canadian dollars)                June 30,          Dec. 31,
                                                 2016              2015
----------------------------------------------------------------------------

Assets
Current assets:
  Cash and cash equivalents               $         11,059  $         16,456
  Trade accounts receivable and other              104,158            95,218
  Income taxes receivable                              454               459
  Inventories                                      157,471           155,740
  Prepayments and other                             14,415            15,512
  Assets held for sale                              25,016            27,836
  --------------------------------------------------------------------------
                                                   312,573           311,221

Employee future benefits                               247             1,570
Other investments and assets                        14,153             3,191
Property, plant and equipment                      729,420           777,590
Logging roads and bridges                           19,405            20,611
Timber licences                                     70,889            72,429
Other intangible assets                             19,489            23,601
Goodwill                                           152,037           160,914
Deferred income taxes                               19,356            18,669
----------------------------------------------------------------------------

                                          $      1,337,569  $      1,389,796
----------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
  Trade accounts payable and provisions   $        137,862  $        130,840
  Reforestation liability                           13,064            11,052
  Income taxes payable                                 433               398
  --------------------------------------------------------------------------
                                                   151,359           142,290
Reforestation liability                             24,700            25,074
Long term debt                                     407,018           468,759
Employee future benefits                            10,313             8,391
Provisions and other liabilities                    16,709            20,028
Equity:
  Share capital                                    553,559           553,559
  Contributed surplus                                7,798             7,665
  Translation reserve                               58,593            77,425
  Hedge reserve                                        (77)               62
  Retained earnings                                107,597            86,543
  --------------------------------------------------------------------------

                                                   727,470           725,254
----------------------------------------------------------------------------

                                          $      1,337,569  $      1,389,796
----------------------------------------------------------------------------

Approved on behalf of the Board:

L. Sauder, Director

D.W.G. Whitehead, Director

FORWARD-LOOKING STATEMENTS

This release contains information and statements that are forward-looking in nature, including, but not limited to, statements containing the words "will", "should", "expects", "annualized" and similar expressions. Such statements involve known and unknown risks and uncertainties that may cause Interfor's actual results to be materially different from those expressed or implied by those forward- looking statements. Such risks and uncertainties include, among other things: price volatility, competition, availability and cost of log supply, natural or man-made disasters, currency exchange sensitivity, regulatory changes, allowable annual cut reductions, Aboriginal title and rights claims, potential countervailing and anti-dumping duties, stumpage fee variables and changes, environmental impact and performance, labour disruptions, and other factors referenced herein and in Interfor's Annual Report available on www.sedar.com and www.interfor.com. The forward-looking information and statements contained in this release are based on Interfor's current expectations and beliefs. Readers are cautioned not to place undue reliance on forward-looking information or statements. Interfor undertakes no obligation to update such forward-looking information or statements, except where required by law.

ABOUT INTERFOR

Interfor is a growth-oriented lumber company with operations in Canada and the United States. The Company has annual production capacity of approximately 3 billion board feet and offers one of the most diverse lines of lumber products to customers around the world. For more information about Interfor, visit our website at www.interfor.com.

The Company's unaudited interim condensed consolidated financial statements and Management's Discussion and Analysis for the three and six months ended June 30, 2016 are available at www.sedar.com and www.interfor.com.

There will be a conference call on Friday, July 29, 2016 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company's release of its second quarter 2016 financial results.

The dial-in number is 1-866-233-4795. The conference call will also be recorded for those unable to join in for the live discussion, and will be available until August 12, 2016. The number to call is 1-888-203-1112, Passcode 6364992.

Contacts:
Interfor Corporation
John A. Horning
Executive Vice President and Chief Financial Officer
(604) 689-6829