This man may not seem to have any connection to Interfor (IFP) but because of the pandemic he now works at home. And so he is able to spend more time fixing up his house and grounds.And it is apparent that the "repair and renovation" trade has improved sales of lumber and lumber products.This has helped IFP increase sales and earningsOnly slightly in Q2 but substantially in Q3.In fact,sales in Q3 2020 were 60% higher than in Q3 2019.
A Modest second Quarter
Interfor saw lumber prices and demand pick up slightly in the second quarter.But it was only able to earn $43 million of adjustable EBITDA and net earnings of $3 million or $.09 per share.This resulted in the share price dropping to $5 in April,2020.At the same time IFP was still able to reduce it's debt to $239 million while having a capital expenditure of $120 million.This was necessary as Interfor produces 3 billion board feet of lumber every year.Over the last 3 years this was an average quarter but IFP was ready as the cycle turned up and prices increased in Q3.
Q3 is Better
Lumber prices remained buoyant in Q3 and sales were $645 million compared to $397 million in Q2.Adjusted EBITDA was $222 million while net earnings were$181 million or $1.81 per share.The price in April was $264 per million board feet and now was $910 per million board feet.This allowed IFP to reduce a significant amount of debt so that debt was now only 8% of the capital structure.In addition, Interfor bought back 6 million shares or 10% of their float.This was pretty close to a clean balance sheet. 
Lumber prices in Q4
Lumber prices move in cycles and Interfor may have expected prices to drift downwards.But in fact lumber prices remained at $900 level in December and are expected to be there in January also.RBC Capital expects lumber prices to be above $800 for the first half of the rear.In fact,Interfor is expecting a good spring.Q4 results should be out in early February and this blog expects IFP to clear out any remaining debt and buy back more of it's shares.It will also modernize most of it's mills.On average analysts predict annual results of $2.85 and reduce it's P/E ratio to less than 8.However most investors are aware of the wild swings in net earnings and e.p.s. so risk adjusted P/E might be 11-12.This should still enable IFP share prices to hit $25 by March.And investors can look for a small tuck-in acquisition as has a very clean balance sheet. https://woodbridgegrp.ca/
