Interfor (TSE:IFP) delivered one of its most robust quarterly performances in nearly four years during the second quarter of 2026, posting C$92 million in adjusted EBITDA driven by surging lumber prices, heightened production volumes, and optimized manufacturing costs.
Operational Excellence and Cost Efficiency
President and CEO Ian Fillinger attributed the strong results to disciplined execution across the company’s portfolio. Key drivers included improved market conditions, rigorous cost-reduction initiatives, and enhanced mill productivity. Despite these gains, Fillinger noted that the company maintains a cautious outlook due to ongoing uncertainties surrounding the softwood lumber trade dispute.
CFO Mike Mackay highlighted an 11% sequential increase in realized selling prices across all five operating regions. Production saw a significant boost, rising by 70 million board feet—an 8% increase—largely fueled by the ramp-up of the Thomaston, Georgia mill and normalized operations in the U.S. Northwest. This increase was partially mitigated by the indefinite curtailment of two Ontario facilities, though overall shipments outpaced production, allowing for a successful reduction in inventory levels.
Margin Gains and Strategic Initiatives
Manufacturing costs per unit saw a 1% decline from the first quarter and a 6% drop compared to 2025 levels, translating to savings of approximately C$41 per thousand board feet. The Thomaston mill remains a centerpiece of this efficiency, currently operating at roughly 97% of its pro forma production target.
Management confirmed that the company’s two-year cost-reduction program is tracking toward its C$80 million annualized target. Fillinger noted that while the program is structured over two years, current performance metrics suggest the company is operating at a run rate consistent with achieving full-year targets ahead of schedule, with savings expected to be split relatively evenly between 2026 and 2027.
Financial Position and Capital Allocation
Interfor’s balance sheet strengthened significantly during the quarter, with net debt decreasing and the net debt-to-invested-capital ratio improving to 36.7% from 38.3%. Liquidity currently stands at over C$440 million.
The company has set its 2026 capital expenditure target at approximately C$90 million. Moving forward, spending will focus primarily on maintenance, with an estimated quarterly run rate of C$15 million to C$16 million. Additionally, Interfor is prioritizing leverage reduction through planned asset sales, including British Columbia coastal forest tenures and real estate associated with two former U.S. South facilities, with proceeds expected within the next 12 months.
Market Outlook and Regional Strategy
While benchmark lumber prices maintained positive momentum into the third quarter, management is planning for potential seasonal volatility during the latter half of the year. Fillinger stated that while order files remain solid, the company is prepared to adjust production if market conditions shift.
Interfor also announced a strategic shift to transition certain corporate support roles to its Peachtree City, Georgia office. This move is designed to better align support functions with operational hubs in the U.S. The company emphasized that this transition will be gradual and does not constitute a re-domiciling, as Burnaby will remain the official corporate headquarters.
Interfor continues to operate as a major forest products entity with an annual production capacity of 4.4 billion board feet, maintaining a global reach in lumber distribution.