Acadian Timber's Q3 net income rose to C$5M, up from net loss of C$341,000 a year earlier, with sales holding steady at C$17.5M; CEO cites stability of softwood and hardwood sawlogs, hardwood pulp markets
Allison Oesterle
VANCOUVER, British Columbia
,
October 30, 2012
(press release)
–
Investors, analysts and other interested parties can access Acadian Timber Corp.'s 2012 Third Quarter Results conference call via webcast on Wednesday, October 31, 2012 at 1:00 p.m. ET atwww.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 12:50 p.m. ET. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 or +1-604-638-9010 and enter passcode 2826.
All figures in Canadian dollars unless otherwise noted
Acadian Timber Corp. ("Acadian" or the "Company") (TSX:ADN) today reported financial and operating results(1) for the three months ended September 29, 2012 (the "third quarter").
"The markets for softwood and hardwood sawlogs and hardwood pulpwood were relatively stable during the third quarter", said Reid Carter, Chief Executive Officer of Acadian. "Acadian's major softwood sawmill and structural panel customers operated continuously throughout the quarter and most regional pulp and paper mills continued to run at full capacity."
Acadian generated net sales of $17.5 million during the third quarter of 2012. While the sales volume during the quarter fell to 319 thousand m3 from 341 thousand m3 in the same quarter of 2011, a 3% year-over-year increase in the weighted average selling price across all log products kept net sales consistent with the third quarter of 2011.
Adjusted EBITDA of $4.4 million for the third quarter of 2012 was $0.6 million higher than in the third quarter of 2011, while Adjusted EBITDA margin increased to 25% from 22% in the same period of last year.
For the nine months ended September 29, 2012, Acadian generated net sales of $50.4 million on sales volume of 976 thousand m3 as compared to net sales of $51.0 million on sales volume of 1,010 thousand m3 in the comparable period of 2011. Adjusted EBITDA of $11.3 million during the nine months ended September 29, 2012 is $0.3 million lower than the comparable period of 2011.
(1) This news release makes reference to Adjusted EBITDA and free cash flow which are key performance measures in evaluating Acadian's operations and are important in enhancing investors' understanding of Acadian's operating performance. Acadian's management defines Adjusted EBITDA as earnings before interest, taxes, fair value adjustments, unrealized exchange gain/loss on debt, depreciation and amortization. As these performance measures do not have standardized meanings 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, as determined in accordance with IFRS, to Adjusted EBITDA and free cash flow.
Review of Operations
Financial and Operating Highlights
Three Months Ended Nine Months Ended
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(CAD thousands, except per Sept 29 Sept 24 Sept 29 Sept 24
share information) 2012 2011 2012 2011
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Sales volume (000s m3) 318.9 340.7 976.4 1,009.8
Net sales $ 17,523 $ 17,535 $ 50,428 $ 51,014
Adjusted EBITDA 4,377 3,811 11,343 11,684
Free cash flow 3,532 3,183 9,654 10,198
Net income (loss) 4,995 (341) 9,938 2,332
Dividends declared 3,451 3,451 10,353 10,353
Per share - basic and diluted
Free cash flow 0.21 0.19 0.58 0.61
Net income (loss) 0.30 (0.02) 0.59 0.14
Dividends declared 0.21 0.21 0.62 0.62
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Acadian benefited from strong demand from local customers and higher realized selling prices for its two main products, softwood sawlogs and hardwood pulpwood. The majority of the softwood sawlog price increase was attributable to increased prices in Maine where customer inventories remain low.
New Brunswick Timberlands
The table below summarizes operating and financial results for New Brunswick Timberlands:
Three Months Ended September Three Months Ended September
29, 2012 24, 2011
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Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
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Softwood 92.3 94.7 $ 5,091 98.0 99.0 $ 5,174
Hardwood 113.9 106.0 6,222 121.1 119.5 6,886
Biomass 53.6 53.6 877 60.3 60.3 795
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259.8 254.3 12,190 279.4 278.8 12,855
Other sales 1,545 1,418
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Net sales $ 13,735 $ 14,273
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Adjusted
EBITDA $ 3,626 $ 3,410
Adjusted
EBITDA
margin 26% 24%
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Nine Months Ended September 29, Nine Months Ended September 24,
2012 2011
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Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
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Softwood 302.0 307.3 $ 15,413 352.8 351.6 $ 17,888
Hardwood 299.0 314.7 18,874 346.3 337.7 19,807
Biomass 159.7 159.7 2,745 164.2 164.2 2,430
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760.7 781.7 37,032 863.3 853.5 40,125
Other sales 2,250 2,696
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Net sales $ 39,282 $ 42,821
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Adjusted
EBITDA $ 9,227 $ 10,904
Adjusted
EBITDA
margin 23% 25%
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Softwood, hardwood and biomass shipments were 95 thousand m3, 106 thousand m3 and 54 thousand m3, respectively, for the third quarter of 2012. Approximately 41% was sold as sawlogs, 38% as pulpwood and 21% as biomass. This compares to 34% sold as sawlogs, 44% as pulpwood and 22% as biomass in the third quarter of 2011.
Net sales for the third quarter of 2012 were $13.7 million (2011 - $14.3 million) with an average selling price across all log products of $56.39 per m3, which compares to an average log selling price of $55.18 per m3 during the third quarter of 2011. This year-over-year increase in the average selling price reflects the higher percentage of sawtimber in the sales mix, higher prices for hardwood pulpwood due to strong demand and a greater proportion of sales made to more distant markets. Net sales for the nine months ended September 29, 2012 were $39.3 million, a decrease of $3.5 million over the comparable period of 2011 primarily as a result of decreased sales volume.
Costs for the third quarter were $10.1 million (2011 - $10.9 million). Variable costs per m3 were 7% higher than the third quarter of 2011 due to increased hauling costs as a greater proportion of sales were made to more distant markets. Total costs per m3 were 3% higher than in the third quarter of 2011.
Adjusted EBITDA for the third quarter was $3.6 million, compared to $3.4 million in the comparable period of 2011 as a result of an increase in other sales and an increased proportion of higher margin softwood sawtimber in the sales mix. Adjusted EBITDA margin increased to 26%, compared to 24% for the third quarter of 2011.
NB Timberlands experienced one recordable safety incident among contractors and one recordable incident involving an employee during the third quarter of 2012. Both individuals are expected to return to work before the end of the year.
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