Interfor has recently published their financial results for Q2/2016. The Canadian company registered net earnings of CAD $23.2 million in the mentioned period, as compared to the CAD $0.8 million in Q1/2016.
Adjusted net earnings in Q2/2016 were CAD $20.9 million, compared to CAD $2.6 million in the Q1/2016. The company's adjusted EBITDA1 was $56.9 million on sales of $458.8 million in Q2/2016, compared to the adjusted EBITDA1 of $33.4 million on sales of $433.9 million in Q1/2016.
For the quarter, the product prices were higher in Q2/2016 versus Q1/2016, 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.
Interfor produced an additional 19 million board feet in Q2/2016 versus Q1/2016, mostly reflective of productivity gains at several operations as ongoing improvement initiatives take effect.
In particular, Interfor has achieved strong productivity, cost and product mix gains at its Gilchrist, Oregon operation, which resulted in a significant margin improvement over Q1/2016. In addition, a number of margin improvement projects are underway across the U.S. South platform, with early stage results being realized.
Also, the monetization process for Interfor's Tacoma sawmill property is proceeding on track, with the sale expected to close in the second half of 2016.
Interfor generated CAD $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.
Production
Interfor's lumber production in Q2/2016 was 637 million board feet versus 618 million board feet in Q1/2016.
Production from Interfor's Canadian operations totaled 218 million board feet in the mentioned period, up 8 million board feet compared to Q1/2016. Production increased most significantly at Castlegar mill, which produced an additional 4 million board feet as productivity gains have continued following the resumption of operations at that mill in Q4/2015.
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 Q2/2016, an increase of 6 million board feet over the preceding quarter.
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.
