Interfor Reports $47.3 million of EBITDA(1) on Record Sales in Q2’14

Vancouver, BC

July 31, 2014

INTERFOR CORPORATION (“Interfor” or the “Company”) (TSX: IFP) reported second quarter net earnings of $21.6 million or $0.32 per share and EBITDA(1) of $47.3 million, excluding the impact of one-time items including the restructuring and impairment charges related to the permanent closure of its Beaver-Forks operation announced today. Inclusive of these charges, net earnings in the quarter were $7.4 million or $0.11 per share.

Lumber production in the second quarter was a record 582 million board feet, up 18% from the prior quarter. This growth reflects the addition of the Perry and Preston sawmills in March 2014, and higher operating rates at the Company’s BC Interior and US Southeast operations.

Record lumber sales of 628 million board feet, including wholesale and agency volumes, were driven primarily by the increase in sales from the Company’s US Southeast operations and by the draw-down of lumber inventories from the first quarter.

On June 27, 2014, the Company announced a curtailment of its Beaver-Forks operation on the Olympic Peninsula in Washington State. Following a comprehensive strategic review, the Company has decided to consolidate production at its Port Angeles facility and to close the Beaver-Forks operation. By consolidating operations on the Peninsula, the Company believes it can enhance operations in the area and improve its overall financial results. Interfor recorded asset impairment and restructuring charges in the second quarter totalling $14.2 million relating to the Beaver-Forks operation, net of an $8.5 million deferred tax recovery. For the quarter, Beaver-Forks contributed $9.7 million of sales and negative EBITDA(1) of $0.4 million on production and sales of 21 million and 20 million board feet, respectively.

Average commodity lumber prices were mixed in the second quarter. Western SPF 2×4 and HF Stud 2×4 prices dropped to US$335 and US$409, down US$32 and US$23, respectively, in part due to the impact of lumber inventories from the first quarter working their way through the distribution channel. The SYP Eastside 2×4 #2Btr benchmark price strengthened US$2 quarter-over-quarter to US$405 as transportation issues impacted the ability to move product to market. Demand for lumber in China was relatively stable with some tightening of credit apparent. Activity in Japan continued to reflect post-VAT impacts.

A long-term incentive compensation recovery of $0.4 million, or less than $0.01 per share, was recorded in the quarter.

In the second quarter, Interfor generated $45.7 million in cash from operations before working capital changes and $41.7 million after working capital changes. Capital spending amounted to $15.9 million during the quarter.

Read more: http://www.interfor.com/sites/default/files/docs/reports/Interfor-Reports-%2447.3-million-of-EBITDA-on-Record-Sales-in-Q2-14.pdf

NT3