Acadian Timber reports Q3 net loss of C$341,000, compared with net income of C$3M a year earlier on lower land management, hardwood harvest contributions; sales down 2% to C$17.5M
VANCOUVER, British Columbia
October 27, 2011
– All figures in Canadian dollars unless otherwise noted
Investors, analysts and other interested parties can access Acadian Timber Corp.'s 2011 Third Quarter Results conference call via webcast on Friday, October 28, 2011 at 12:00 p.m. ET at http://www.acadiantimber.com/ or via teleconference at 1-800-319-4610, toll free in North America. For overseas calls please dial +1-604-638-5340, at approximately 11:50 a.m. ET. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 or +1-604-638-9010 and enter passcode 2826.
Acadian Timber Corp. ("Acadian" or the "Company") (TSX:ADN) today reported financial and operating results(1) for the three months ended September 24, 2011 (the "third quarter").
For the third quarter of 2011, Acadian generated net sales of $17.5 million on sales volume of 341 thousand m3, which represents a $0.3 million, or 2%, decrease in net sales compared to the same period in 2010.
EBITDA of $3.8 million for the third quarter of 2011 was $0.9 million lower than in the third quarter of 2010, and EBITDA margin decreased to 22% from 26% in the same period of last year. The decrease in margin is attributed to a lower contribution from the land management services agreement and a higher percentage of hardwood harvested during the quarter which typically generates lower contributions to Acadian than softwoods.
"Acadian performed well in the third quarter despite very wet weather conditions and challenges with labour supply in Maine" said Reid Carter, Chief Executive Officer of Acadian. Mr. Carter further noted that "Operating levels at Acadian's primary sawmill and at pulp and paper customers are positive and in-yard log inventories are low suggesting demand and pricing will remain firm."
For the nine months ended September 24, 2011, Acadian generated net sales of $51.0 million on sales volume of 1,010 thousand m3 as compared to net sales of $50.4 million on sales volume of 1,017 thousand m3 in the comparable period of 2010. EBITDA of $11.7 million during the nine months ended September 24, 2011 is $0.3 million higher than the comparable period of 2010 reflecting the strong first quarter 2011 results.
(1)This news release makes reference to earnings before interest, taxes, depreciation and amortization, and fair value adjustments ("EBITDA") and free cash flow. Management believes that EBITDA and free cash flow are key performance measures in evaluating Acadian's operations and are important in enhancing investors' understanding of the Company's operating performance. As EBITDA and free cash flow do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS"), they may not be comparable to similar measures presented by other companies. As a result, we have provided in this news release reconciliations of net income and cash flow from operations, as determined in accordance with IFRS, to EBITDA and free cash flow.
Review of Operations
International Financial Reporting Standards
Effective fiscal 2011, Acadian's financial results are reported in accordance with International Financial Reporting Standards ("IFRS"). Comparative figures in this press release, previously presented in GAAP, have been adjusted to conform to IFRS.
New Brunswick Timberlands
Softwood, hardwood and biomass shipments were 99 thousand m3, 120 thousand m3 and 60 thousand m3, respectively, for the third quarter of 2011. Approximately 34% was sold as sawlogs, 44% as pulpwood and 22% as biomass. This compares to 35% sold as sawlogs, 39% as pulpwood and 26% as biomass in the third quarter of 2010.
Net sales for the third quarter of 2011 were $14.3 million (2010 - $13.3 million) with an average selling price across all products of $46.10 per m3 which compares to an average selling price of $43.47 per m3 during the third quarter of 2010. The year-over-year increase in the average selling price resulted from lower biomass sales during the third quarter of 2011. Pricing across the primary products was relatively flat compared to the third quarter of 2010. Net sales for the first nine months ended September 24, 2011 were $42.8 million, an increase of $3.4 million over the comparable period of 2010.
Costs for the third quarter were $10.9 million (2010 - $9.7 million). Variable costs per m3 were 6% higher than the third quarter of 2010 as a result of a 17% increase in hardwood sales over the prior year. The delivered cost of hardwood logs is typically higher than softwood because of longer transportation distances.
EBITDA for the third quarter was $3.4 million, compared to $3.6 million in the comparable period of 2010. For the nine months ended September 24, 2011, EBITDA was $10.9 million as compared to $9.6 million for the comparable period of 2010. EBITDA margin decreased to 24%, as compared to 27% for the third quarter of 2010, primarily reflecting the impact of an increased proportion of hardwood logs in the sales mix.
During the third quarter of 2011, NB Timberlands experienced four recordable safety incidents among employees and one recordable incident among contractors.
Softwood, hardwood and biomass shipments were 44 thousand m3, 14 thousand m3 and 4 thousand m3, respectively, for the third quarter of 2011. Approximately 60% was sold as sawlogs, 34% as pulpwood and 6% as biomass. This compares to 54% sold as sawlogs, 42% as pulpwood and 4% as biomass in the third quarter of 2010.
Net sales for the third quarter of 2011 were $3.3 million (2010 - $4.6 million) with an average selling price across all products of $50.12 per m3 which compares to an average selling price of $53.38 per m3 during the third quarter of 2010. This variance in sales price was primarily attributable to foreign exchange as average pricing across all products was relatively stable in US dollar terms. Sales volume was limited due to very difficult operating conditions owing to exceptionally wet weather and challenging contractor availability due to the Maine government's efforts to limit Canadian labourer's access to work in the state. Net sales for the first nine months ended September 24, 2011 were $8.2 million, a decrease of $2.8 million over the comparable period of 2010 reflecting a 27% reduction in year-over-year harvest volume.
Costs for the third quarter were $2.7 million (2010 - $3.3 million). Variable costs per m3 decreased 4% in Canadian dollar terms as changes to contract rates made late in the second quarter and increases in fuel costs were offset by foreign exchange. Variable costs per m3 increased 2% in U.S. dollar terms.
EBITDA for the third quarter was $0.5 million, compared to $1.2 million in the comparable period of 2010. For the nine months ended September 24, 2011, EBITDA was $1.6 million as compared to $2.7 million for the first nine months of 2010. EBITDA margin averaged 17% in the third quarter of 2011 as compared to 27% during the third quarter of 2010. The reduction in margin reflects higher costs and lower sales volume resulting in reduced contribution towards fixed costs.
We are pleased to report that during the third quarter of 2011, Maine Timberlands experienced no recordable safety incidents among employees or contractors.
The following Market Outlook contains forward-looking statements about Acadian Timber Corp.'s market outlook for the remainder of fiscal 2011 and 2012. Reference should be made to the "Forward-looking Statements" section of this news release. For a description of material factors that could cause actual results to differ materially from the forward-looking statements in the following, please see the Risk Factors section of our management's discussion and analysis of Acadian's most recent Annual Report and Annual Information Form available on our website at www.acadiantimber.com or filed with SEDAR at www.sedar.com.
Signals for recovery of the U.S. housing market continue to be very weak with most industry watchers suggesting 2012 will look much like 2011 before a gradual recovery to historic trends during the 2013 - 2015 period. This outlook suggests that any robust recovery of Acadian's softwood sawlog market remains somewhat distant. However, Acadian continues to benefit from most of its softwood sawmilling customers maintaining active operations and, as a result, demand for spruce-fir sawlogs continues to be reasonably strong causing our outlook to be cautiously optimistic for the remainder of 2011 and into 2012.
Markets for hardwood sawlogs remain stable and appear to have a similar outlook for the foreseeable future.
Markets for both softwood and hardwood pulp logs remain strong despite softening global pulp markets. Acadian's major pulpwood customers are currently operating and actively competing for deliveries suggesting prices will remain stable through year end. The expected start-up of a groundwood paper mill in Maine is expected to add to strong market demand for softwood pulpwood.
Biomass markets continue to face significant market challenges. Cogeneration plants associated with manufacturing facilities are generally in good shape, while stand-alone wood-to-energy plants continue to suffer from depressed prices for electricity and Renewable Energy Credits. Despite this challenging market environment, Acadian continues to be able to sell all of its biomass with a stable price outlook.
Acadian is pleased to announce a dividend of $0.20625 per share, payable on January 13, 2012 to shareholders of record on December 30, 2011.
Acadian Timber Corp. is a leading supplier of primary forest products in Eastern Canada and the Northeastern U.S. With a total of 2.4 million acres of land under management, Acadian is the second largest timberland operator in New Brunswick and Maine.
Acadian owns and manages approximately 1.1 million acres of freehold timberlands in New Brunswick and Maine, and provides management services relating to approximately 1.3 million acres of Crown licensed timberlands. Acadian also owns and operates a forest nursery in Second Falls, New Brunswick. Acadian's products include softwood and hardwood sawlogs, pulpwood and biomass by-products, sold to over 100 regional customers.
Acadian's shares are listed for trading on the Toronto Stock Exchange under the symbol ADN.
For further information, please visit our website at www.acadiantimber.com.
Editor's Note: In an unpublished table, Acadian reported Forestweb Editor’s Note: In an omitted table, Acadian reported Q3 net sales of C$17.53 million and a net loss of C$341,000. For the same period a year ago, the company reported net sales of C$17.82 million and net earnings of C$3.039 million.
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