West Fraser reports Q1 earnings of C$67M, up from loss of C$19M a year earlier, on sales up 26.7% to C$863M; CEO cites recovering US housing market, says outlook for all building products 'cautiously optimistic'
VANCOUVER, Canada
,
April 25, 2013
(press release)
–
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 25, 2013) - West Fraser Timber Co. Ltd. ("WFT") (TSX:WFT) today reported earnings of $67 million or $1.57 per share on sales of $863 million in the first quarter of 2013. These results compare with previous periods as follows:
($ millions except earnings per share ("EPS")) |
Q1-13 |
Q4-12 |
Q1-12 |
Sales |
863 |
773 |
681 |
EBITDA1 |
141 |
75 |
17 |
Operating earnings |
101 |
36 |
(23) |
Earnings (loss) |
67 |
20 |
(19) |
Basic EPS ($) |
1.57 |
0.46 |
(0.45) |
Adjusted earnings (loss)2 |
103 |
51 |
(13) |
Adjusted basic EPS ($)2 |
2.42 |
1.19 |
(0.32) |
1 In this News Release, reference is made to EBITDA (defined as operating earnings plus amortization). Our management believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures and income taxes. Reference is also made to Adjusted earnings (loss) (calculated as set out in the tables described in footnote 2) and Adjusted basic EPS (collectively, with EBITDA, "these measures"). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none have a standardized meaning prescribed by IFRS. Investors are cautioned that these measures should not be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities.
2 Refer to the table titled "Earnings Adjustments for Certain Non-Operational Items" in Management's Discussion and Analysis of our first quarter 2013 results for details of these adjustments.
Operational Results
In the quarter our lumber operations generated operating earnings of $122 million and EBITDA of $146 million. The improvement over the prior quarter reflects improved prices for SPF and SYP lumber.
The panel segment, which includes plywood, LVL and MDF, generated $14 million of operating earnings and EBITDA of $18 million in the quarter, reflecting higher plywood prices.
Pulp and paper operations generated an operating loss of $4 million in the quarter and EBITDA of $8 million. The decline from the prior quarter occurred despite the increase in pulp prices as the results were adversely affected by production issues at our NBSK mills.
Outlook
Both SPF and SYP lumber prices steadily improved throughout the quarter as we headed into the spring building season. B.C. and Alberta stumpage costs are set to increase in the next quarter but lumber productivity and cost improvements are expected to continue to improve over the next few quarters as we complete various major capital projects.
"We've been encouraged by the recovery of the U.S. housing market over the last few quarters," West Fraser's President and CEO Ted Seraphim said. "Our outlook remains cautiously optimistic for all our building products."
Management's Discussion & Analysis ("MD&A")
The Company's MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.
The Company
West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.
Forward-Looking Statements
This news release contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2012 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.
Conference Call
Investors are invited to listen to the quarterly conference call on Friday, April 26, 2013 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-952-6845 (toll- free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.
West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".
West Fraser Timber Co. Ltd. |
Condensed Consolidated Balance Sheets |
(in millions of Canadian dollars, except where indicated - unaudited) |
|
|
March 31 |
December 31 |
|
|
2013 |
|
2012 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and short-term investments |
$ |
61 |
$ |
102 |
Receivables |
|
329 |
|
251 |
Inventories (note 4) |
|
572 |
|
459 |
Prepaid expenses |
|
16 |
|
11 |
|
|
978 |
|
823 |
Property, plant and equipment |
|
974 |
|
959 |
Timber licences |
|
492 |
|
496 |
Goodwill and other intangibles |
|
327 |
|
330 |
Other assets |
|
9 |
|
10 |
|
$ |
2,780 |
$ |
2,618 |
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Cheques issued in excess of funds on deposit |
$ |
11 |
$ |
- |
Payables and accrued liabilities |
|
371 |
|
322 |
Income taxes payable |
|
31 |
|
20 |
Reforestation and decommissioning obligations |
|
42 |
|
43 |
|
|
455 |
|
385 |
Long-term debt (note 5) |
|
306 |
|
300 |
Other liabilities (note 6) |
|
407 |
|
313 |
Deferred income taxes |
|
106 |
|
128 |
|
|
1,274 |
|
1,126 |
|
Shareholders' Equity |
|
|
|
|
Share capital |
|
602 |
|
602 |
Accumulated other comprehensive earnings |
|
(4) |
|
(9) |
Retained earnings |
|
908 |
|
899 |
|
|
1,506 |
|
1,492 |
|
$ |
2,780 |
$ |
2,618 |
Number of Common shares and Class B Common shares outstanding at April 25, 2013 was 42,864,668.
West Fraser Timber Co. Ltd. |
Condensed Consolidated Statements of Changes in Shareholders' Equity |
(in millions of Canadian dollars, except where indicated - unaudited) |
|
|
January 1 to March 31 |
|
2013 |
2012 |
Share capital |
|
|
|
|
Balance - beginning and end of period |
$ |
602 |
$ |
601 |
|
Accumulated other comprehensive earnings |
|
|
|
|
Balance - beginning of period |
$ |
(9) |
$ |
(6) |
Translation gain (loss) on foreign operations |
|
5 |
|
(4) |
Balance - end of period |
$ |
(4) |
$ |
(10) |
|
Retained earnings |
|
|
|
|
Balance - beginning of period |
$ |
899 |
$ |
888 |
Actuarial loss on employee future benefits (net of tax) |
|
(52) |
|
(12) |
Earnings for the period |
|
67 |
|
(19) |
Dividends |
|
(6) |
|
(6) |
Balance - end of period |
$ |
908 |
$ |
851 |
|
Shareholders' equity |
$ |
1,506 |
$ |
1,442 |
|
|
|
|
|
West Fraser Timber Co. Ltd. |
Condensed Consolidated Statements of Earnings and Comprehensive Earnings |
(in millions of Canadian dollars, except where indicated - unaudited) |
|
|
January 1 to March 31 |
|
2013 |
2012 |
|
|
|
|
|
Sales |
$ |
863 |
$ |
681 |
|
|
|
|
|
Costs and expenses |
|
|
|
|
Cost of products sold |
|
541 |
|
496 |
Freight and other distribution costs |
|
117 |
|
117 |
Export taxes |
|
- |
|
13 |
Amortization |
|
40 |
|
40 |
Selling, general and administration |
|
32 |
|
26 |
Equity-based compensation |
|
32 |
|
12 |
|
|
762 |
|
704 |
Operating earnings |
|
101 |
|
(23) |
Finance expense (note 8) |
|
(7) |
|
(7) |
Exchange gain (loss) on long-term debt |
|
(6) |
|
6 |
Other expense (note 9) |
|
(3) |
|
- |
Earnings before tax provision |
|
85 |
|
(24) |
Tax recovery (provision) (note 10) |
|
(18) |
|
5 |
Earnings |
$ |
67 |
$ |
(19) |
|
|
|
|
|
Earnings per share (dollars) (note 11) |
|
|
|
|
Basic |
$ |
1.57 |
$ |
(0.45) |
Diluted |
$ |
1.57 |
$ |
(0.45) |
|
|
|
|
|
Comprehensive earnings |
|
|
|
|
Earnings |
$ |
67 |
$ |
(19) |
Other comprehensive earnings |
|
|
|
|
Translation gain (loss) on foreign operations1 |
|
5 |
|
(4) |
Actuarial loss on employee future benefits2 |
|
(52) |
|
(12) |
Comprehensive earnings |
$ |
20 |
$ |
(35) |
1 Reclassified through earnings in the event of a reduction in net investment in foreign operations.
2 Not reclassified through earnings. Net of income tax of $17 million (three months ended March 31, 2012 - $4 million).
West Fraser Timber Co. Ltd. |
Condensed Consolidated Statements of Cash Flows |
(in millions of Canadian dollars, except where indicated - unaudited) |
|
|
January 1 to March 31 |
|
2013 |
2012 |
Operating activities |
|
|
|
|
Earnings |
$ |
67 |
$ |
(19) |
Adjustments |
|
|
|
|
|
Amortization |
|
40 |
|
40 |
|
Finance expense |
|
7 |
|
7 |
|
Exchange loss (gain) on long-term debt |
|
6 |
|
(6) |
|
Tax provision (recovery) |
|
18 |
|
(5) |
|
Income taxes received (paid) |
|
(12) |
|
4 |
|
Reforestation and decommissioning obligations |
|
18 |
|
12 |
|
Employee future benefits expense |
|
12 |
|
10 |
|
Contributions to employee future benefit plans |
|
(6) |
|
(4) |
|
Other |
|
- |
|
(1) |
Changes in non-cash working capital |
|
|
|
|
|
Receivables |
|
(77) |
|
(50) |
|
Inventories |
|
(112) |
|
(80) |
|
Prepaid expenses |
|
(5) |
|
(3) |
|
Payables and accrued liabilities |
|
46 |
|
26 |
Cash flows from operating activities |
|
2 |
|
(69) |
|
Financing activities |
|
|
|
|
Proceeds from operating loans |
|
- |
|
56 |
Finance charges paid |
|
(1) |
|
(1) |
Dividends |
|
(6) |
|
(6) |
Other |
|
- |
|
1 |
Cash flows from financing activities |
|
(7) |
|
50 |
|
Investing activities |
|
|
|
|
Additions to capital assets |
|
(49) |
|
(51) |
Proceeds from Green Transformation Program |
|
1 |
|
16 |
Proceeds from disposal of capital assets |
|
1 |
|
2 |
Cash flows from investing activities |
|
(47) |
|
(33) |
|
Change in cash |
|
(52) |
|
(52) |
Cash - beginning of period |
|
102 |
|
68 |
Cash - end of period |
$ |
50 |
$ |
16 |
|
Cash consists of |
|
|
|
|
Cash and short-term investments |
$ |
61 |
$ |
30 |
Cheques issued in excess of funds on deposit |
|
(11) |
|
(14) |
|
$ |
50 |
$ |
16 |
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