Interfor's Strong Q2: Supply Discipline and a Quiet Shift South
Beneath the surface, a transformation of the cost base and a cautious but confident market outlook
IFP.TO · Earnings Call · 2026-08-07
Quarterly Results: A Clear Inflection
Interfor's second quarter was a standout. Adjusted EBITDA reached $92 million, a significant sequential improvement and one of the best quarters in nearly four years. Realized prices rose ~11% quarter-over-quarter, production volumes increased 8%, and manufacturing costs per unit fell 6% versus 2025 levels. Management attributes this to a combination of stronger Thomaston mill performance, broader productivity gains, and industry supply rationalization that has finally created a more balanced market. "The second quarter reflected strong execution across our business, supported by stronger lumber markets," noted CEO Ian Fillinger.
We believe this has contributed to a much more balanced and disciplined market environment despite the ongoing macro trade and geopolitical uncertainty.
Cost Program and Balance Sheet
The previously announced two-year cost reduction initiative continues to track toward its $80 million annualized target, with management suggesting the first-half run rate could achieve the full-year run rate, though they are cautioning that the two-year timeline remains. "We are encouraged by the progress our teams are making and remain focused on further strengthening our balance sheet," added Fillinger.
The financial position strengthened: net debt to invested capital improved to 36.7% from 38.3% sequentially, available liquidity ended at over $440 million, and capital expenditures for 2026 are guided to ~$90 million, effectively all maintenance in the back half. This stands in contrast to prior quarters when management highlighted temporary leverage. On the August 2025 call, CFO Rick Pozzebon noted: "we do view the 37% leverage at the end of Q1 as temporary." Now, that leverage is ticking down.
A Quiet Organizational Shift
One notable new element is the announcement that certain corporate support roles will transition to the Peachtree City office in Georgia. CEO Ian Fillinger was explicit: "This is not a re-domiciling of the company, nor does it alter our long-standing commitment within our Canadian operations." The move is gradual, primarily via attrition and future hiring. When asked about potential tax benefits from redomiciling, Fillinger responded, "We haven't looked at it in that much detail." This suggests an operational, cost-oriented decision rather than a strategic pivot, but it does signal a deepening organizational footprint in the U.S. South—a region that already hosts the majority of its operations.
Market Outlook and Inventory Dynamics
Management described a "hand-to-mouth" inventory situation across channels, contrasting with last year's inventory build ahead of tariffs. This is seen as a more resilient setup. "We continue to plan cautiously for the back half of the year," said Mike Mackay, even as order files remain solid and pricing strong despite recent futures pullback. The industry supply rationalization that began in prior years appears to be taking hold, and Interfor's diversified geographic footprint—from the Pacific Northwest to Eastern Canada and the U.S. South—provides a buffer against regional swings.
Prior commentary shows the company has been emphasizing cost competitiveness for several quarters. On the November 2025 call, Fillinger reflected: "Our B.C. operations ... have been modernized over the last number of years and are very competitive on a cost basis." This quarter's results underscore that. The Thomaston mill ramp is largely complete, with production at ~97% of pro forma, and it has become one of the top-performing assets in the portfolio.
While the softwood lumber trade dispute remains a major overhang, Interfor's second-quarter performance demonstrates that disciplined execution and a reshaped asset base can deliver results even amid macro uncertainty.