Ainsworth reports net loss of C$59.2M in Q3, compared with income of C$10.4M a year ago; results affected by drop in Western Canadian OSB prices, increased foreign exchange loss on long-term debt

VANCOUVER, British Columbia , November 9, 2011 (press release) – Highlights

  • Recorded positive adjusted EBITDA in third quarter
  • Maintained strong cash position during the quarter
  • Company recorded the best quarter in terms of safety
  • Appointed Jim Lake President & COO upon the retirement of CEO Rick Huff
Ainsworth Lumber Co. Ltd. today reported its financial results for the third quarter of 2011.

Adjusted EBITDA for the third quarter of 2011 was $0.7 million compared to $9.8 million in the same quarter of 2010. EBITDA margin on sales was 1.0% compared to 12.1% in the third quarter of 2010. The decrease was primarily the result of a $9.5 million decrease in gross profit (sales less cost of products sold (exclusive of amortization)) due to a decrease in the Western Canadian pricing for OSB compared with the same quarter in 2010. The Canadian dollar was an average of six cents stronger than the U.S. dollar in the third quarter of 2011 compared to the same period in 2010, which had a negative impact on gross profit. If foreign exchange rates had been consistent with the third quarter of 2010, adjusted EBITDA would have been $2.8 million higher.

Ainsworth President and Chief Operating Officer Jim Lake said, "In the third quarter of 2011 Ainsworth recorded positive EBITDA from continuing operations despite facing considerable market challenges, including an unfavourable foreign exchange position, historically low North American oriented strand board ("OSB") prices, and an expected decline in overseas sales. We achieved this on the strength of ongoing market share gains with our value added product segments and several operational successes."

"Despite the difficult conditions we continue to face, I believe Ainsworth is well positioned to emerge from this period well positioned for growth and continued value creation. The Company recorded the best quarter in its history in terms of safety. I have always held true the belief that people that are conscientious about safety tend to pay close attention to detail in everything they do, and that is now translating into improved operational and financial performance across our organization," added Mr. Lake.

In the third quarter of 2011, the published benchmark price indicator for North Central delivered 7/16" OSB averaged U.S. $184 per msf, a marginal increase from an average quarterly price of U.S. $180 per msf in the third quarter of 2010. The average Western Canadian published price for 7/16" OSB was U.S. $137 per msf in the third quarter of 2011, down from an average price of U.S. $164 msf in the same period of 2010.

Ainsworth recorded a net loss from continuing operations of $58.9 million in the third quarter of 2011 compared to net income of $10.5 million in the third quarter of 2010. This decrease is primarily due to a $60.5 million increase in the unrealized foreign exchange loss on long-term debt and a $9.5 million decrease in gross profit, partially offset by a $5.7 million increase in income tax recovery.

Selected Financial Information
In millions of Canadian dollars, except per share data

  Three months ended Nine months ended
  September 30 September 30
  2011 2010 2011 2010
Sales $ 71.8 $ 81.1 $ 223.8 $ 274.5
Cost of products sold 67.1 66.9 201.9 199.7
Net income from continuing operations (58.9) 10.5 5.9 10.0
Net income (loss) (59.2) 10.4 5.5 9.0
Adjusted EBITDA 0.7 9.8 9.8 61.0
Adjusted EBITDA margin 1.0% 12.1% 4.4% 22.2%
Basic and diluted earnings (loss) per share:        
  Net income from continuing operations (0.59) 0.10 0.05 0.10
  Net income (loss) (0.59) 0.10 0.05 0.08
  Weighted average common shares outstanding 100.6 100.3 100.6 100.1

Conference Call Information

Ainsworth will hold a conference call on Wednesday, November 9, 2011 at 10:00 a.m. PST (1:00 p.m. EST) to discuss the 2011 third quarter results. The dial-in phone number is 1-800-319-4610 from inside the U.S. or Canada and 1-604-638-5340 from outside the U.S. or Canada. To access the post-view line, dial 1-800-319-6413, or 1-604-638-9010, Reservation 4176#. This recording will be available until the end of the day on November 16, 2011.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.