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 at
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 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
--------------------------------------------
(CAD thousands, except per Sept 29 Sept 24 Sept 29 Sept 24
share information) 2012 2011 2012 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
259.8 254.3 12,190 279.4 278.8 12,855
Other sales 1,545 1,418
----------------------------------------------------------------------------
Net sales $ 13,735 $ 14,273
----------------------------------------------------------------------------
Adjusted
EBITDA $ 3,626 $ 3,410
Adjusted
EBITDA
margin 26% 24%
----------------------------------------------------------------------------
Nine Months Ended September 29, Nine Months Ended September 24,
2012 2011
----------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
760.7 781.7 37,032 863.3 853.5 40,125
Other sales 2,250 2,696
----------------------------------------------------------------------------
Net sales $ 39,282 $ 42,821
----------------------------------------------------------------------------
Adjusted
EBITDA $ 9,227 $ 10,904
Adjusted
EBITDA
margin 23% 25%
----------------------------------------------------------------------------
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.
Maine Timberlands
The table below summarizes operating and financial results for
Maine Timberlands:
Three Months Ended September Three Months Ended September
29, 2012 24, 2011
----------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 45.3 45.3 $ 2,563 43.8 44.1 $ 2,283
Hardwood 18.1 15.8 989 14.0 13.8 781
Biomass 3.5 3.5 22 4.0 4.0 41
----------------------------------------------------------------------------
66.9 64.6 3,574 61.8 61.9 3,105
Other sales 214 157
----------------------------------------------------------------------------
Net sales $ 3,788 $ 3,262
----------------------------------------------------------------------------
Adjusted
EBITDA $ 849 $ 549
Adjusted
EBITDA
margin 22% 17%
----------------------------------------------------------------------------
Nine Months Ended September 29, Nine Months Ended September 24,
2012 2011
----------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 141.7 141.5 $ 7,947 113.8 114.1 $ 5,968
Hardwood 46.3 44.7 2,762 30.4 31.6 1,826
Biomass 8.5 8.5 75 10.6 10.6 98
----------------------------------------------------------------------------
196.5 194.7 10,784 154.8 156.3 7,892
Other sales 362 301
----------------------------------------------------------------------------
Net sales $ 11,146 $ 8,193
----------------------------------------------------------------------------
Adjusted
EBITDA $ 2,650 $ 1,630
Adjusted
EBITDA
margin 24% 20%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 45 thousand m3, 16
thousand m3 and 3 thousand m3, respectively, for the third quarter
of 2012. Approximately 59% was sold as sawlogs, 36% as pulpwood and
5% as biomass. This compares to 60% sold as sawlogs, 34% as
pulpwood and 6% as biomass in the third quarter of 2011.
Net sales for the third quarter of 2012 were $3.8 million (2011
- $3.3 million) with an average selling price across all log
products of $57.80 per m3, compared to the average log selling
price of $52.90 per m3 during the third quarter of 2011. The
year-over-year selling price increase reflects a higher value mix
of products sold and improved demand which has resulted in
increased prices for most primary products. Net sales for the first
nine months ended September 29, 2012 were $11.1 million, an
increase of $2.9 million over the comparable period of 2011.
Costs for the third quarter were $2.9 million (2011 - $2.7
million). Variable costs per m3 increased 4% in Canadian dollar
terms as a result of a 2% increase in U.S. dollar-based contractor
rates and the year-over-year weakening of the Canadian dollar
compared to the U.S. dollar.
Adjusted EBITDA for the third quarter was $0.8 million, compared
to $0.5 million in the comparable period of 2011 primarily as a
result of increased selling prices. Adjusted EBITDA margin was 22%
in the third quarter of 2012 as compared to 17% during the third
quarter of 2011.
Maine Timberlands experienced one recordable safety incident
without lost time among contractors and no recordable incidents
among employees during the third quarter of 2012.
Market Outlook
The following Market Outlook contains forward-looking statements
about Acadian Timber Corp.'s market outlook for the remainder of
fiscal 2012 and 2013. 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.
The U.S. housing market continues to gain momentum. U.S. private
residential construction has increased 18% over the past year with
single family construction rising 21% and the multifamily
increasing 45%. In September, housing starts reached a seasonally
adjusted annual rate of 872 thousand, the highest since July 2008.
Inventories of new homes available for sale are at 50-year lows and
U.S. home pricing appears to have bottomed with the FHFA and
CoreLogic home price indices up nearly 4% year-over-year and the
Case-Schiller 20-City Home Price Index up 1.2% year-over-year.
Mortgage rates remain at record lows, housing affordability is at
near-record highs and mortgage underwriting standards are becoming
more accommodative. As stated in the past, for the U.S. housing
market to fully recover the economy must continue to improve,
inventories of unsold homes and homes in foreclosure must decline
to more normal levels and appraisers and lenders must become
convinced that home price declines are coming to an end. The past
six months has offered consistent good news in all of these
areas.
Acadian's outlook for the remainder of 2012 and into 2013
remains cautiously optimistic as demand for spruce-fir sawlogs
continues to be reasonably strong with most of Acadian's softwood
sawmilling customers maintaining active operations. Markets for
hardwood sawlogs remain stable and appear to have a similar outlook
for the foreseeable future.
Markets for hardwood pulpwood are reasonably strong with
Acadian's major hardwood pulp customers all operating and actively
competing for deliveries suggesting prices will remain relatively
stable through the remainder of 2012. After several quarters of
excess supply, softwood pulpwood markets improved slightly in the
third quarter, but we expect demand for softwood pulpwood to remain
soft as a result of recent capacity closures. As pointed out in the
past, this is not expected to significantly affect Acadian's
financial performance as softwood pulpwood typically accounts for
less than 6% of total sales and an even smaller proportion of free
cash flow.
Biomass demand and pricing is expected to continue to face
challenges owing to depressed prices for electricity and decade-low
prices for natural gas. Despite this challenging market
environment, Acadian continues to be able to sell all of its
biomass with a stable outlook for gross margins generated from
sales of this product.
Quarterly Dividend
Acadian is pleased to announce a dividend of $0.20625 per share,
payable on January 15, 2013 to shareholders of record on December
31, 2012.
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 approximately 90 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.
Forward-Looking Statements
This News Release contains forward-looking information within
the meaning of applicable Canadian securities laws that involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of Acadian
Timber Corp. and its subsidiaries (collectively, "Acadian"), or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. When used in this News Release, such
statements may contain such words as "may," "will," "intend,"
"should," "expect," "believe," "outlook," "predict," "remain,"
"anticipate," "estimate," "potential," "continue," "plan," "could,"
"might," "project," "targeting" or the negative of these terms or
other similar terminology. Forward-looking information in this News
Release includes, without limitation, statements made in sections
entitled "Free Cash Flow," Liquidity and Capital Resources" and
"Market Outlook," and other statements regarding management's
beliefs, intentions, results, performance, goals, achievements,
future events, plans and objectives, business strategy, access to
capital, liquidity and trading volumes, dividends, taxes, capital
expenditures, costs, market trends and similar statements
concerning anticipated future events, results, achievements,
circumstances, performance or expectations that are not historical
facts. These statements which reflect management's current
expectations regarding future events and operating performance are
based on information currently available to management and speak
only as of the date of this News Release. All forward-looking
statements in this News Release are qualified by these cautionary
statements. Forward-looking statements involve significant risks
and uncertainties, should not be read as guarantees of future
performance or results, should not be unduly relied upon, and will
not necessarily be accurate indications of whether or not such
results will be achieved.
Factors that could cause actual results to differ materially
from the results discussed in the forward-looking statements
include, but are not limited to: general economic and market
conditions; product demand; concentration of customers; commodity
pricing; interest rate and foreign currency fluctuations;
seasonality; weather and natural conditions; regulatory, trade or
environmental policy changes; changes in Canadian income tax law;
economic situation of key customers; and other factors discussed
under the heading "Risk Factors" in each of the Annual Information
Form of Acadian dated March 28, 2012 and the Management Information
Circular of Acadian dated March 28, 2012, and other filings of
Acadian made with securities regulatory authorities, which are
available on SEDAR at www.sedar.com. Forward-looking information is
based on various material factors or assumptions, which are based
on information currently available to Acadian. Material factors or
assumptions that were applied in drawing a conclusion or making an
estimate set out in the forward-looking information contained
herein may include, but are not limited to: anticipated financial
performance; business prospects; strategies; regulatory
developments; exchange rates; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the availability
and cost of labour and services and the ability to obtain financing
on acceptable terms, which are subject to change based on commodity
prices, market conditions for timber and wood products, and the
economic situation of key customers. Readers are cautioned that the
preceding list of material factors or assumptions is not
exhaustive. Although the forward-looking statements contained in
this News Release are based upon what management believes are
reasonable assumptions, Acadian cannot assure readers that actual
results will be consistent with these forward-looking statements.
The forward-looking statements in this News Release are made as of
the date of this News Release, and should not be relied upon as
representing Acadian's views as of any date subsequent to the date
of this News Release. Acadian Corp. assumes no obligation to update
or revise these forward-looking statements to reflect new
information, events, circumstances or otherwise, except as may be
required by applicable law.
Acadian Timber Corp.
Interim Consolidated Statements of Net Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
----------------------------------------------------------------------------
Sept 29 Sept 24 Sept 29 Sept 24
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net sales $ 17,523 $ 17,535 $ 50,428 $ 51,014
----------------------------------------------------------------------------
Operating costs and expenses
Cost of sales 11,628 12,061 34,453 34,285
Selling, administration and
other 1,405 1,498 4,376 4,685
Reforestation 157 174 319 467
Depreciation and amortization 138 137 411 409
----------------------------------------------------------------------------
13,328 13,870 39,559 39,846
----------------------------------------------------------------------------
Operating earnings 4,195 3,665 10,869 11,168
Interest expense, net (711) (745) (2,169) (2,422)
Other items
Fair value adjustments 42 (177) 449 (575)
Unrealized exchange gain
(loss) on long-term debt 2,399 (2,941) 2,769 (3,928)
Gain on sale of timberlands 44 9 63 107
----------------------------------------------------------------------------
Earnings (loss) before income
taxes 5,969 (189) 11,981 4,350
Deferred tax expense (974) (152) (2,043) (2,018)
----------------------------------------------------------------------------
Net income (loss) for the period $ 4,995 $ (341) $ 9,938 $ 2,332
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per share -
basic and diluted $ 0.30 $ (0.02) $ 0.59 $ 0.14
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statements of Comprehensive Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
----------------------------------------------------------------------------
Sept 29 Sept 24 Sept 29 Sept 24
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net income (loss) $ 4,995 $ (341) $ 9,938 $ 2,332
----------------------------------------------------------------------------
Other comprehensive income
(loss)
Unrealized foreign currency
translation income (loss) (2,820) 3,366 (3,237) 3,134
Amortization of derivative
designated as hedge (48) (48) (146) (270)
----------------------------------------------------------------------------
Comprehensive income $ 2,127 $ 2,977 $ 6,555 $ 5,196
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Balance Sheets
(unaudited)
----------------------------------------------------------------------------
As at September 29 December 31
(CAD thousands) 2012 2011
----------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 6,381 $ 4,019
Accounts receivable and other assets 8,737 8,726
Inventory 1,343 2,263
----------------------------------------------------------------------------
16,461 15,008
Timber 228,498 231,370
Land, roads and other fixed assets 32,613 33,438
Investment property 39 -
Intangible asset 6,140 6,140
Deferred income tax asset 1,501 3,038
----------------------------------------------------------------------------
$ 285,252 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 7,775 $ 4,534
Dividends payable to shareholders 3,452 3,451
----------------------------------------------------------------------------
11,227 7,985
Long-term debt 70,494 73,079
Deferred income tax liability 20,971 21,572
Shareholders' equity 182,560 186,358
----------------------------------------------------------------------------
$ 285,252 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statements of Cash Flows
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
----------------------------------------------------------------------------
Sept 29 Sept 24 Sept 29 Sept 24
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Cash provided by (used for):
----------------------------------------------------------------------------
Operating activities
Net income (loss) $ 4,995 $ (341) $ 9,938 $ 2,332
Adjustments to net income (loss)
Deferred tax expense 974 152 2,043 2,018
Depreciation and amortization 138 137 411 409
Fair value adjustments (42) 177 (449) 575
Unrealized exchange (gain)
loss on long-term debt (2,399) 2,941 (2,769) 3,928
Interest expense, net 711 745 2,169 2,422
Interest paid, net (740) (619) (1,476) (1,463)
Gain on sale of timberlands (44) (9) (63) (107)
----------------------------------------------------------------------------
3,593 3,183 9,804 10,114
Net change in non-cash working
capital and other 172 1,457 3,061 2,179
----------------------------------------------------------------------------
3,765 4,640 12,865 12,293
----------------------------------------------------------------------------
Financing activities
Borrowing on term facility - - - 70,608
Repayment of bank term credit
facility and term loan - - - (73,639)
Deferred financing costs - - - (1,205)
Dividends paid to shareholders (3,451) (3,451) (10,353) (7,739)
----------------------------------------------------------------------------
(3,451) (3,451) (10,353) (11,975)
----------------------------------------------------------------------------
Investing activities
Additions to timber, property,
plant and other fixed assets (105) (9) (215) (25)
Proceeds from sale of
timberlands 44 9 65 109
----------------------------------------------------------------------------
(61) - (150) 84
----------------------------------------------------------------------------
Increase in cash and cash
equivalents during the period 253 1,189 2,362 402
Cash and cash equivalents,
beginning of period 6,128 6,546 4,019 7,333
----------------------------------------------------------------------------
Cash and cash equivalents, end
of period $ 6,381 $ 7,735 $ 6,381 $ 7,735
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliations to Adjusted EBITDA and Free Cash Flow
----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
----------------------------------------------------------------------------
Sept 29 Sept 24 Sept 29 Sept 24
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net income (loss) $ 4,995 $ (341) $ 9,938 $ 2,332
Add (deduct):
Interest expense, net 711 745 2,169 2,422
Deferred tax expense 974 152 2,043 2,018
Depreciation and amortization 138 137 411 409
Fair value adjustments (42) 177 (449) 575
Unrealized exchange (gain)
loss on long-term debt (2,399) 2,941 (2,769) 3,928
----------------------------------------------------------------------------
Adjusted EBITDA 4,377 3,811 11,343 11,684
Add (deduct):
Interest paid on debt, net (740) (619) (1,476) (1,463)
Additions to timber, land,
roads and other fixed assets (105) (9) (215) (25)
Gain on sale of timberlands (44) (9) (63) (107)
Proceeds on sale of
timberlands 44 9 65 109
----------------------------------------------------------------------------
Free cash flow $ 3,532 $ 3,183 $ 9,654 $ 10,198
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dividends declared $ 3,451 $ 3,451 $ 10,353 $ 10,353
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Payout ratio 98% 108% 107% 102%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607rlee@acadiantimber.com
www.acadiantimber.com
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