EBITDA¹ of $16 million on Sales of $451 million
Net Debt to Invested Capital¹ of 16%; Liquidity of $425 million

VANCOUVER, British Columbia, May 02, 2019 (GLOBE NEWSWIRE) -- INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) recorded a net loss in Q1’19 of $15.3 million, or $0.23 per share, compared to $13.5 million, or $0.20 per share in Q4’18 and net earnings of $32.7 million, or $0.47 per share in Q1’18.  Adjusted net loss in Q1’19 was $12.7 million compared to $20.2 million in Q4’18 and Adjusted net earnings of $36.5 million in Q1’18.

Adjusted EBITDA was $16.3 million on sales of $451.2 million in Q1’19 versus $8.9 million on sales of $468.5 million in Q4’18.  The Q1’19 Adjusted EBITDA included approximately $1.2 million of expenses that were refinements of prior estimates.

Other notable items in the quarter included:

• Marginally Higher Lumber Prices
  
  • The key benchmark prices improved marginally quarter-over-quarter with the SYP Composite, Western SPF Composite and KD H-F Stud 2x4 9’ increasing by US$10, US$41 and US$21 per mfbm, respectively.  Interfor’s average lumber selling price increased $14 from Q4’18 to $613 per mfbm.   
  
  
• Increased Production/Reduced Shipments
  
  • Total lumber production was 646 million board feet, or 39 million board feet more than the prior quarter with a return to normal operating schedules after the holidays and the easing of temporary production curtailments in the B.C. Interior.  Production in the U.S. South increased to 316 million board feet from 303 million board feet in the preceding quarter.  The B.C. and U.S. Northwest regions accounted for 195 million board feet and 135 million board feet, respectively, compared to 174 million board feet and 130 million board feet in Q4’18. 
  
  • Total lumber shipments were 621 million board feet, including agency and wholesale volumes, or 26 million board feet lower than Q4’18.
  
  • On April 25, 2019, the Company announced temporary reductions in operating hours at its sawmills in the B.C. Interior for the month of May 2019 due to a combination of weak lumber prices and continuing high log costs.
  
  
• Continued Strong Financial Position
  
  • Net debt ended the quarter at $172.7 million, or 15.6% of invested capital, resulting in available liquidity of $425.3 million. 
  
  • On March 28, 2019, the Company completed a modernization of its credit facilities.  The new facility replaces the U.S. Operating Line, Canadian Operating Line, and Revolving Term Line with one consolidated facility.  The new facility increased credit availability to $350 million, which is in addition to the Company’s US$200 million of Senior Secured Notes, and matures in March 2024. 
  
  • The Company generated $17.1 million of cash flow from operations before changes in working capital, or $0.25 per share.  During the quarter, working capital increased by $75.4 million as a result of the payment of 2018 incentive compensation as well as typical seasonal factors including a build up of lumber and log inventories in the B.C. Interior.
  
  • Capital investments of $43.8 million in Q1’19 included $32.1 million primarily on U.S. South focused high-return discretionary projects, with the remainder related to maintenance capital and woodlands projects.
  
  • Interfor purchased and cancelled 515,100 of its Common Shares (“Shares”) at a cost of $7.8 million in Q1’19.  The Company’s normal course issuer bid (“NCIB”) was renewed on March 4, 2019 and permits the purchase of up to 6,652,006 Shares until its expiry on March 6, 2020. 

• Softwood Lumber Duties
  
  • Interfor expensed $11.1 million of duties in the quarter, representing the full amount of countervailing (“CV”) and anti-dumping (“AD”) duties incurred on its Canadian shipments of softwood lumber into the U.S. at a combined rate of 20.23%.
  
  • Cumulative duties of US$68.7 million have been paid by Interfor since the inception of the current trade dispute and are held in trust by the U.S.  Except for US$3.3 million recorded as a long-term receivable in respect of overpayments arising from duty rate adjustments, Interfor has recorded the duty deposits as an expense.

¹ _{Refer to Adjusted EBITDA and Net debt to invested capital in the Non-GAAP Measures section}

Strategic Capital Plan Update

• Interfor continues to make progress on previously announced Phase I and II strategic capital projects in the U.S. South. 
  
  
• The Phase I projects at the Meldrim, Georgia and Monticello, Arkansas sawmills are scheduled for completion in May 2019.  Total project costs are expected to be within a 10% variance of the original US$62.5 million budget.  As of March 31, 2019, US$48.7 million has been capitalized.
  
  
• The Phase II projects at the Thomaston and Eatonton sawmills in Georgia and the Georgetown sawmill in South Carolina are on track for completion in various stages over the period of 2019 to 2021.  As of March 31, 2019, US$21.7 million has been capitalized and the projects remain on budget.

Financial and Operating Highlights ¹ 

				For the three months ended
				Mar.  31		Mar.  31		Dec.  31
		Unit		2019		2018		2018
						(restated)2		(restated)2
Financial Highlights3
Total sales		$MM		451.2		527.6		468.5
Lumber		$MM		380.5		445.9		387.7
Logs, residual products and other		$MM		70.7		81.7		80.8
Operating earnings (loss)		$MM		(16.8	)	46.8		(16.9	)
Net earnings (loss)		$MM		(15.3	)	32.7		(13.5	)
Net earnings (loss) per share, basic		$/share		(0.23	)	0.47		(0.20	)
Adjusted net earnings (loss)3		$MM		(12.7	)	36.5		(20.2	)
Adjusted net earnings (loss) per share, basic4		$/share		(0.19	)	0.52		(0.29	)
Operating cash flow per share (before working capital changes)4		$/share		0.25		1.12		0.14
Adjusted EBITDA4		$MM		16.3		83.5		8.9
Adjusted EBITDA margin4		%		3.6%		15.8%		1.9%
Total assets		$MM		1,491.5		1,448.2		1,565.3
Total debt		$MM		267.3		257.9		272.8
Net debt4		$MM		172.7		127.1		63.8
Net debt to invested capital4		%		15.6%		12.4%		6.2%
Annualized return on invested capital4		%		6.1%		33.5%		3.6%
Operating Highlights
Lumber production		million fbm		646		666		607
Total lumber sales		million fbm		621		648		647
Lumber sales - Interfor produced		million fbm		610		635		639
Lumber sales - wholesale and commission		million fbm		11		13		8
Lumber - average selling price5		$/thousand fbm		613		688		599
Average USD/CAD exchange rate6		1 USD in CAD		1.3295		1.2647		1.3204
Closing USD/CAD exchange rate6		1 USD in CAD		1.3363		1.2894		1.3642

Notes:

1. Figures in this table may not equal or sum to figures presented elsewhere due to rounding.
2. Financial information has been restated for implementation of IFRS 16, Leases.
3. Financial information presented for interim periods in this release is prepared in accordance with IFRS and is unaudited.
4. Refer to the Non-GAAP Measures section of this release for definitions and reconciliations of these measures to figures reported in the Company’s consolidated financial statements. 
5. Gross sales before duties.
6. Based on Bank of Canada foreign exchange rates.

Liquidity

Balance Sheet

Interfor’s net debt at March 31, 2019 was $172.7 million, or 15.6% of invested capital, representing an increase of $108.9 million from the level at December 31, 2018.  This increase includes funding of capital projects, short term incentive compensation payments, inventory builds, share capital repurchases, and finance and leasing costs. 

Net debt was negatively impacted by a weaker Canadian Dollar against the U.S. Dollar as all debt held was denominated in U.S. Dollars; this was partially hedged by the Company’s U.S. Dollar cash balances.  

		For the three months ended
		Mar.  31,		Dec.  31,		Mar.  31,
Thousands of Dollars		2019		2018		2018
Net debt
Net debt, period opening		$63,825		$3,800		$119,300
Net drawing (repayment) on credit facilities		750		(1)		(1)
Impact on U.S. Dollar denominated debt from (strengthening) weakening CAD		(6,330)		13,941		6,981
Decrease in cash and cash equivalents		68,890		7,286		2,509
Decrease in marketable securities		41,766		49,871		-
Impact on U.S. Dollar denominated cash and cash equivalents and marketable securities from strengthening (weakening) CAD		3,845		(11,072)		(1,725)
Net debt, period ending, CAD		$172,746		$63,825		$127,064

On March 28, 2019, the Company completed a modernization of its credit facilities.  The new facility replaces the U.S. Operating Line, Canadian Operating Line, and Revolving Term Line with one consolidated facility.  The new facility increased credit availability to $350 million and matures in March 2024. 

As at March 31, 2019, the Company had net working capital of $306.8 million and available liquidity of $425.3 million, including cash and borrowing capacity on its term line facility. 

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 enough liquidity to fund operating and capital requirements for the foreseeable future.

Capital Resources

The following table summarizes Interfor’s credit facilities and availability as of March 31, 2019:

		Revolving	Senior
		Term	Secured
Thousands of Canadian Dollars		Line	Notes		Total
Available line of credit		$350,000	$ 267,260		$617,260
Maximum borrowing available		$350,000	$ 267,260		$617,260
Less:
Drawings		-		267,260		267,260
Outstanding letters of credit included in line utilization		19,249		-		19,249
Unused portion of facility		$330,751		$           -		330,751
Add:
Cash and cash equivalents						94,514
Available liquidity at March 31, 2019					$425,265

As of March 31, 2019, the Company had commitments for capital expenditures totaling $154.4 million for both maintenance and discretionary capital projects. 

Non-GAAP Measures

This release makes reference to the following non-GAAP measures: Adjusted net earnings, Adjusted net earnings per share, EBITDA, Adjusted EBITDA, Net debt to invested capital and Operating cash flow per share (before working capital changes) 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 audited consolidated financial statements (unaudited for interim periods) prepared in accordance with IFRS:

			For the three months ended
			Mar.  31,			Mar.  31,			Dec.  31,
Thousands of Canadian Dollars except number of shares and per share amounts		2019				2018			2018
						(restated)¹			(restated)¹
Adjusted Net Earnings (Loss)
Net earnings (loss)		$(15,302)			$32,665			$(13,512)
Add:
Restructuring costs and capital asset write-downs		1,665				236			4,551
Other foreign exchange gain		(340)				(111)			(3,330)
Long term incentive compensation expense (recovery)		1,983				4,858			(9,180)
Other income (expense)		164				178			(1,254)
Post closure wind-down costs and losses		-				4			-
Income tax effect of above adjustments		(875)				(1,374)			2,530
Adjusted net earnings (loss)		$(12,705)			$36,456			$(20,195)
Weighted average number of shares - basic ('000)		67,348				70,033			68,884
Adjusted net earnings (loss) per share		$(0.19)			$0.52			$(0.29)
Adjusted EBITDA
Net earnings (loss)		$(15,302)			$32,665			$(13,512)
Add:
Depreciation of plant and equipment		19,722				20,021			19,241
Depletion and amortization of timber, roads and other		9,737				11,764			11,229
Restructuring costs and capital asset write-downs		1,665				236			4,551
Finance costs		4,176				3,411			2,758
Other foreign exchange gain		(340)				(111)			(3,330)
Income tax expense (recovery)		(5,508)				10,467			(1,553)
EBITDA		14,150				78,453			19,384
Add:
Long term incentive compensation expense (recovery)		1,983				4,858			(9,180)
Other income (expense)		164				178			(1,254)
Post closure wind-down costs and losses		-				4			-
Adjusted EBITDA		$16,297			$83,493			$8,950
Sales		451,163				527,644			468,544
Adjusted EBITDA margin		3.6%				15.8%			1.9%
Net debt to invested capital
Net debt
Total debt		$267,260			$257,880			$272,840
Cash and cash equivalents		(94,514)				(130,816)			(166,152)
Marketable securities		-				-			(42,863)
Total net debt		$172,746			$127,064			$63,825
Invested capital
Net debt		$172,746			$127,064			$63,825
Shareholders' equity		933,509				896,215			968,766
Total invested capital		$1,106,255			$1,023,279			$1,032,591
Net debt to invested capital2		15.6%				12.4%			6.2%
Operating cash flow per share (before working capital changes)
Cash (used in) provided by operating activities		$(58,350)			$21,073			$21,096
Cash used in (generated from) operating working capital		75,435				57,050			(11,253)
Operating cash flow (before working capital changes)		$17,085			$78,123			$9,843
Weighted average number of shares - basic ('000)		67,348				70,033			68,884
Operating cash flow per share (before working capital changes)		$0.25			$1.12			$0.14
Return on invested capital
Adjusted EBITDA		$16,297			$83,493			$8,950
Invested capital, beginning of period		$1,032,591			$968,853			$984,189
Invested capital, end of period		1,106,255				1,023,279			1,032,591
Average invested capital		$1,069,423			$996,066			$1,008,390
Adjusted EBITDA divided by average invested capital		1.5%				8.4%			0.9%
Annualization factor		4.0				4.0			4.0
Return on invested capital		6.1%				33.5%			3.6%

Notes:

1. Financial information has been restated for implementation of IFRS 16, Leases.
2. Net debt to invested capital as of the period end.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
For the three months ended March 31, 2019 and 2018 (unaudited)
(thousands of Canadian Dollars except earnings per share)				Three Months			Three Months
				Mar. 31, 2019			Mar. 31, 2018
							(restated)¹
Sales				$451,163			$527,644
Costs and expenses:
	Production			413,183			417,397
	Selling and administration			10,565			13,829
	Long term incentive compensation expense			1,983			4,858
	U.S. countervailing and anti-dumping duty deposits			11,118			12,929
	Depreciation of plant and equipment			19,722			20,021
	Depletion and amortization of timber, roads and other			9,737			11,764
				466,308			480,798
Operating earnings (loss) before write-downs and restructuring				(15,145)			46,846
Capital asset write-downs and restructuring costs				1,665			236
Operating earnings (loss)				(16,810)			46,610
Finance costs				(4,176)			(3,411)
Other foreign exchange gain				340			111
Other expense				(164)			(178)
				(4,000)			(3,478)
Earnings (loss) before income taxes				(20,810)			43,132
Income tax expense (recovery):
	Current			160			770
	Deferred			(5,668)			9,697
				(5,508)			10,467
Net earnings (loss)				$(15,302)			$32,665
Net earnings (loss) per share, basic and diluted				$(0.23)			$0.47

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the three months ended March 31, 2019 and 2018 (unaudited)
(thousands of Canadian Dollars)			Three Months		Three Months
			Mar. 31, 2019		Mar. 31, 2018
					(restated)¹
Net earnings (loss)			$(15,302)		$32,665
Other comprehensive income (loss):
Items that will not be recycled to Net earnings (loss):
	Defined benefit plan actuarial gain, net of tax		572			885
Items that are or may be recycled to Net earnings (loss):
	Foreign currency translation differences for foreign operations, net of tax		(12,873)			12,833
Total other comprehensive income (loss), net of tax			(12,301)			13,718
Comprehensive income (loss)			$(27,603)		$46,383

Notes:

1. Financial information has been restated for implementation of IFRS 16, Leases.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2019 and 2018 (unaudited)
(thousands of Canadian Dollars)							Three Months			Three Months
							Mar. 31, 2019			Mar. 31, 2018
										(restated)¹
Cash provided by (used in): Operating activities:
	Net earnings (loss)						$(15,302)		$32,665
	Items not involving cash:
			Depreciation of plant and equipment				19,722			20,021
			Depletion and amortization of timber, roads and other				9,737			11,764
			Income tax expense (recovery)				(5,508)			10,467
			Finance costs				4,176			3,411
			Other assets				17			(295)
			Reforestation liability				2,507			2,289
			Provisions and other liabilities				(203)			(2,816)
			Stock options				108			137
			Write-down of plant, equipment and intangibles				1,723			219
			Unrealized foreign exchange loss (gain)				(56)			83
			Other expense				164			178
							17,085			78,123
	Cash generated from (used in) operating working capital:
			Trade accounts receivable and other				(14,575)			(10,748)
			Inventories				(27,170)			(34,037)
			Prepayments				(2,869)			(4,255)
			Trade accounts payable and provisions				(30,524)			(7,839)
			Income taxes paid				(297)			(171)
							(58,350)			21,073
Investing activities:
		Additions to property, plant and equipment					(35,926)			(12,039)
		Additions to roads and bridges					(7,844)			(6,082)
		Additions to timber licences and other intangible assets					(52)			13
		Proceeds on disposal of property, plant and equipment					108			109
		Net proceeds from (additions to) investments and other assets					46,771			(502)
							3,057			(18,501)
Financing activities:
		Share issuance, net of expenses					63			143
		Share repurchase					(7,825)			-
		Interest payments					(2,580)			(3,033)
		Lease liability payments					(2,986)			(2,189)
		Debt refinancing costs					(1,019)			(1)
		Change in operating line components of long term debt					-			(1)
		Additions to long term debt					197,925			-
		Repayments of long term debt					(197,175)			-
							(13,597)			(5,081)
Foreign exchange gain (loss) on cash and cash equivalents
	held in a foreign currency						(2,748)			1,725
Decrease in cash and cash equivalents							(71,638)			(784)
Cash and cash equivalents, beginning of period							166,152			131,600
Cash and cash equivalents, end of period							$94,514		$130,816

Notes:

1. Financial information has been restated for implementation of IFRS 16, Leases.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, 2019, December 31, 2018 and January 1, 2018 (unaudited)
(thousands of Canadian Dollars)
				Mar. 31, 2019		Dec. 31, 2018		Jan. 1, 2018
							(restated)¹	(restated)¹
Assets Current assets:
	Cash and cash equivalents			$94,514		$166,152		$131,600
	Marketable securities			-			42,863		-
	Trade accounts receivable and other			104,528			90,384		112,470
	Income taxes receivable			2,938			3,008		1,289
	Inventories			235,231			209,178		165,156
	Prepayments			19,513			16,833		12,186
				456,724			528,418		422,701
Employee future benefits				1,058			303		502
Deposits and other assets				11,362			16,842		6,404
Right of use assets				38,220			37,778		38,600
Property, plant and equipment				726,778			723,773		669,165
Roads and bridges				32,776			29,829		24,092
Timber licences				63,549			64,153		66,589
Other intangible assets				4,358			5,288		14,170
Goodwill				155,819			158,799		147,081
Deferred income taxes				872			133		253
				$1,491,516		$1,565,316		$1,389,557
Liabilities and Shareholders’ Equity
Current liabilities:
	Trade accounts payable and provisions			$124,945		$154,869		$152,355
	Reforestation liability			14,212			13,947		12,873
	Lease liability			10,577			10,158		8,019
	Income taxes payable			202			356		224
				149,936			179,330		173,471
Reforestation liability				30,879			28,235		27,535
Lease liability				33,660			33,954		36,165
Long term debt				267,260			272,840		250,900
Employee future benefits				8,880			8,687		8,249
Provisions and other liabilities				16,252			16,421		25,808
Deferred income taxes				51,140			57,083		17,877
Equity:
	Share capital			533,539			537,534		555,388
	Contributed surplus			3,931			3,851		8,582
	Translation reserve			71,520			84,393		40,733
	Retained earnings			324,519			342,988		244,849
				933,509			968,766		849,552
				$1,491,516		$1,565,316		$1,389,557

Notes:

1. Financial information has been restated for implementation of IFRS 16, Leases.

Approved on behalf of the Board:

	“L. Sauder”	“Thomas V. Milroy”
	Director	Director

FORWARD-LOOKING STATEMENTS

This release contains forward-looking information about the Company’s business outlook, objectives, plans, strategic priorities and other information that is not historical fact.  A statement contains forward-looking information when the Company uses what it knows and expects today, to make a statement about the future.  Generally, statements containing forward-looking information can be identified by the use of words such as: believe, expect, intend, forecast, plan, target, budget, outlook, opportunity, risk, strategy or variations or comparable language, or statements that certain actions, events or results may, could, would, should, might, or will occur or not occur.  Readers are cautioned that actual results may vary from the forward-looking information in this release, and undue reliance should not be placed on such forward-looking information.  Risk factors that could cause actual results to differ materially from the forward-looking information in this release are described in Interfor’s annual Management’s Discussion & Analysis under the heading “Risks and Uncertainties”, which is available on www.interfor.com and under Interfor’s profile on www.sedar.com.  Material factors and assumptions used to develop the forward-looking information in this release include assumptions regarding selling prices for lumber, logs and wood chips; the Company’s ability to compete on a global basis; the availability and cost of log supply; the effects of natural or man-made disasters; currency exchange rates; changes in government regulations; the availability of the Company’s allowable annual cut (“AAC”); claims by and treaty settlements with Indigenous peoples; the Company’s ability to export its products; the softwood lumber dispute between Canada and the U.S.; stumpage fees payable to the Province of British Columbia; environmental impacts of the Company’s operations; labour disruptions; and the efficacy of information systems security.  Unless otherwise indicated, the forward-looking information in this release is based on the Company’s expectations at the date of this release.  Interfor undertakes no obligation to update such forward-looking information, except as 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 3.1 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 consolidated financial statements and Management’s Discussion and Analysis for Q1’19 are available at www.sedar.com and www.interfor.com. 

There will be a conference call on Friday, May 3, 2019 at 8:00 a.m. (Pacific Time) hosted by INTERFOR CORPORATION for the purpose of reviewing the Company’s release of its first quarter 2019 financial results.

The dial-in number is 1-833-297-9919.  The conference call will also be recorded for those unable to join in for the live discussion and will be available until June 2, 2019.  The number to call is 1-855-859-2056, Passcode 8868218.

For further information:
Martin L. Juravsky, Senior Vice President and Chief Financial Officer
(604) 689-6873