Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the three months
ended June 29, 2019 (the “second quarter”).
“A combination of favorable spring operating
conditions and continued stability in key markets supported the
anticipated drawdown in log inventories accumulated during the
unseasonably cold first quarter”, said Mark Bishop, Chief Executive
Officer of Acadian. “Acadian expects to continue to benefit from
well-balanced regional softwood sawtimber and hardwood pulpwood
markets for the remainder of the
year”.
Acadian generated Adjusted EBITDA1 of $3.0
million during the second quarter, up from $2.6 million in the
prior year period. Acadian benefited from strong demand, reflecting
favourable Northeast regional log markets dynamics and operating
conditions during the second quarter. As a result, year-over-year
log sales volumes increased 5% while ancillary revenues improved
73%, primarily related to timing of timber services. In addition,
Acadian benefited from stronger higher and better use land
sales.
For the six-month period ended June 29, 2019,
the Board of Directors declared dividends of $0.58 per share or
$9.7 million, compared to $0.5575 per share or $9.3 million during
the same period of 2018, reflecting the dividend increases
announced in May 2018 and February 2019 amounting to a combined 5%
increase in our quarterly dividend per share. This represents a
Payout Ratio1 of 105%, which is above our long-term annual target
of 95% but in line with expectations given the seasonality of our
operations and the aforementioned dividend increases. We anticipate
that over the long-term we will revert to a Payout Ratio consistent
with our target level and, in the near-term, Acadian’s strong cash
position supports a Payout Ratio in excess of our
target.
Review of Operations
Financial and Operating
Highlights
|
Three Months Ended |
Six Months Ended |
(CAD thousands, except per share information) |
June 29, 2019 |
|
June 30,2018 |
|
June 29,2019 |
|
June 30,2018 |
|
Sales volume (000s m3) |
|
214.0 |
|
|
231.6 |
|
|
598.2 |
|
|
651.3 |
|
Sales |
$ |
17,918 |
|
$ |
16,099 |
|
$ |
48,856 |
|
$ |
49,047 |
|
Net income |
|
5,784 |
|
|
1,888 |
|
|
11,966 |
|
|
3,874 |
|
Adjusted EBITDA |
|
3,038 |
|
|
2,582 |
|
|
11,895 |
|
|
11,452 |
|
Adjusted EBITDA margin |
|
17% |
|
|
16% |
|
|
24% |
|
|
23% |
|
Free Cash Flow |
|
2,750 |
|
|
1,997 |
|
|
9,240 |
|
|
9,255 |
|
Dividends declared |
|
4,839 |
|
|
4,727 |
|
|
9,679 |
|
|
9,328 |
|
Payout ratio |
|
176% |
|
|
237% |
|
|
105% |
|
|
101% |
|
Per share – basic and diluted |
|
|
|
|
Net income |
$ |
0.35 |
|
$ |
0.11 |
|
$ |
0.72 |
|
$ |
0.23 |
|
Free Cash Flow |
|
0.16 |
|
|
0.12 |
|
|
0.55 |
|
|
0.55 |
|
Dividends declared |
|
0.29 |
|
|
0.2825 |
|
|
0.58 |
|
|
0.5575 |
|
During the second quarter, Acadian generated
sales of $17.9 million, compared to $16.1 million in the prior year
period. Acadian benefited from strong seasonal demand and
favourable operating conditions resulting in a 5% increase in log
sales volumes and a 73% increase in ancillary revenues
year-over-year, primarily related to timing of timber services. The
weighted average log selling price was in line with the prior year
period as our products continued to benefit from favourable market
dynamics.
Costs were $15.3 million during the second
quarter, compared to $13.7 million during the prior year period,
reflecting higher log sales volumes and timing of timber services.
Variable log harvest costs per m3 increased 4% compared to the
prior year period as a result of higher log processing costs.
Adjusted EBITDA was $3.0 million during the
second quarter compared to $2.6 million in the prior year period
while the Adjusted EBITDA margin for the quarter was 17%, compared
to 16% in the prior year period. These improvements reflect higher
log sales volumes and ancillary revenues as well as stronger higher
and better use land sales which were partially offset by the impact
of higher relative operating costs.
Acadian typically experiences low levels of
operating, marketing and selling activity during the second quarter
of each year owing to the spring thaw period that causes much of
the infrastructure to be temporarily inoperable. As a result, year
to year variations in sales volumes and operating costs are less
meaningful.
Second quarter net income of $5.8 million, or
$0.35 per share, was $3.9 million higher than the prior year period
total of $1.9 million, or $0.11 per share. The variance from the
prior year period is primarily due to an unrealized foreign
exchange revaluation gain on U.S. dollar denominated long-term debt
during the second quarter, compared to an unrealized loss in the
prior year period.
During the first half of 2019, Acadian’s sales
of $48.9 million were largely in line with the prior year
period. Acadian benefited from strong seasonal demand
resulting in a 2% increase in the weighted average log selling
price, however operations were impacted by adverse weather
conditions during the winter harvest season resulting in a 3%
decrease in log sales volumes. Costs of $37.4 million were $0.4
million lower than the prior year period primarily due to lower log
sales volumes. As a result, Adjusted EBITDA improved to $11.9
million from $11.5 million during the first half of 2018 while the
Adjusted EBITDA margin improved to 24% from 23%. For the six months
ended June 29, 2019, net income was $12.0 million, or $0.72 per
share, which represents an increase of $8.1 million over the same
period of 2018 primarily due to the impact of foreign exchange
revaluation of U.S. dollar denominated long-term debt.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands.
|
Three Months Ended June 29, 2019 |
|
Three Months Ended June 30, 2018 |
|
|
Harvest |
|
Sales |
|
Sales |
Results |
|
Harvest |
|
Sales |
|
Sales |
Results |
|
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
Softwood |
47.0 |
|
61.7 |
|
36% |
$ |
3,621 |
|
47.2 |
|
53.3 |
|
29% |
$ |
2,930 |
|
Hardwood |
51.5 |
|
77.6 |
|
46% |
|
6,071 |
|
68.2 |
|
81.9 |
|
44% |
|
6,467 |
|
Biomass |
30.7 |
|
30.7 |
|
18% |
|
1,237 |
|
51.1 |
|
51.1 |
|
27% |
|
1,503 |
|
|
129.2 |
|
170.0 |
|
100% |
|
10,929 |
|
166.5 |
|
186.3 |
|
100% |
|
10,900 |
|
Timber services and
other sales |
|
|
|
|
|
|
3,520 |
|
|
|
|
|
|
|
2,017 |
|
Sales |
|
|
|
|
|
$ |
14,449 |
|
|
|
|
|
|
$ |
12,917 |
|
Adjusted EBITDA |
|
|
|
|
|
$ |
2,837 |
|
|
|
|
|
|
$ |
2,160 |
|
Adjusted
EBITDA margin |
|
|
|
|
20% |
|
|
|
|
|
|
|
17% |
|
|
Six Months Ended June 29, 2019 |
|
Six Months Ended June 30, 2018 |
|
|
Harvest |
|
Sales |
|
Sales |
Results |
|
Harvest |
|
Sales |
|
Sales |
Results |
|
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
Softwood |
187.7 |
|
200.6 |
|
46% |
$ |
11,953 |
|
205.8 |
|
210.7 |
|
44% |
$ |
11,815 |
|
Hardwood |
155.2 |
|
162.9 |
|
37% |
|
12,661 |
|
161.2 |
|
164.9 |
|
34% |
|
13,033 |
|
Biomass |
74.1 |
|
74.1 |
|
17% |
|
2,736 |
|
104.0 |
|
104.0 |
|
22% |
|
2,954 |
|
|
417.0 |
|
437.6 |
|
100% |
|
27,350 |
|
471.0 |
|
479.6 |
|
100% |
|
27,802 |
|
Timber services and
other sales |
|
|
|
|
|
|
8,548 |
|
|
|
|
|
|
|
8,235 |
|
Sales |
|
|
|
|
|
$ |
35,898 |
|
|
|
|
|
|
$ |
36,037 |
|
Adjusted EBITDA |
|
|
|
|
|
$ |
8,599 |
|
|
|
|
|
|
$ |
8,017 |
|
Adjusted
EBITDA margin |
|
|
|
|
24% |
|
|
|
|
|
|
|
22% |
|
Sales for our New Brunswick Timberlands were
$14.4 million compared to $12.9 million during the prior year
period. Seasonal demand remained strong and operating conditions
were favourable resulting in a 3% increase in log sales volumes and
a 75% increase in ancillary revenues, primarily related to timing
of timber services which were impacted by adverse weather
conditions during the first quarter. The weighted average log
selling price during the quarter was $69.54 per m3, largely in line
with the prior year period as market dynamics remained
favourable.
Adjusted EBITDA was $2.8 million during the
second quarter of 2019, compared to $2.2 million in the prior year
period, due to higher log sales volumes and ancillary revenues as
well as the benefit of stronger higher and better use land sales.
These benefits were partially offset by a 6% increase in variable
log harvest costs per m3 as log processing costs were impacted by
weather conditions. As a result, the Adjusted EBITDA margin for the
quarter increased to 20% from 17% in the prior year period.
During the first half of 2019, New Brunswick’s
sales of $35.9 million were largely in line with the prior year
period. New Brunswick benefited from strong seasonal demand
resulting in a 2% increase in the weighted average log selling
price, however operations were impacted by adverse weather
conditions during the winter harvest season resulting in a 3%
decrease in log sales volumes. In addition, New Brunswick benefited
from higher and better use land sales. As a result, Adjusted EBITDA
improved to $8.6 million from $8.0 million during the first half of
2018 while the Adjusted EBITDA margin of 24% improved from 22%.
There were no recordable safety incidents
amongst employees or contractors during the second quarter of
2019.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands.
|
Three Months Ended June 29, 2019 |
|
Three Months Ended June 30, 2018 |
|
|
Harvest |
|
Sales |
|
Sales |
Results |
|
Harvest |
|
Sales |
|
Sales |
Results |
|
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
Softwood |
26.9 |
|
28.0 |
|
64% |
$ |
1,884 |
|
25.4 |
|
25.3 |
|
56% |
$ |
1,914 |
|
Hardwood |
12.6 |
|
15.9 |
|
36% |
|
1,449 |
|
9.5 |
|
13.2 |
|
29% |
|
1,156 |
|
Biomass |
0.1 |
|
0.1 |
|
—% |
|
3 |
|
6.8 |
|
6.8 |
|
15% |
|
11 |
|
|
39.6 |
|
44.0 |
|
100% |
|
3,336 |
|
41.7 |
|
45.3 |
|
100% |
|
3,081 |
|
Other sales |
|
|
|
|
|
|
133 |
|
|
|
|
|
|
|
101 |
|
Sales |
|
|
|
|
|
$ |
3,469 |
|
|
|
|
|
|
$ |
3,182 |
|
Adjusted EBITDA |
|
|
|
|
|
$ |
540 |
|
|
|
|
|
|
$ |
569 |
|
Adjusted
EBITDA margin |
|
|
|
|
16% |
|
|
|
|
|
|
|
18% |
|
|
Six Months Ended June 29, 2019 |
|
Six Months Ended June 30, 2018 |
|
|
Harvest |
|
Sales |
|
Sales |
Results |
|
Harvest |
|
Sales |
|
Sales |
Results |
|
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
(000s m3) |
|
(000s m3) |
|
Mix |
($000s) |
|
Softwood |
114.1 |
|
114.3 |
|
71% |
$ |
8,920 |
|
117.0 |
|
116.5 |
|
67% |
$ |
9,235 |
|
Hardwood |
42.6 |
|
42.8 |
|
27% |
|
3,730 |
|
43.4 |
|
43.9 |
|
26% |
|
3,410 |
|
Biomass |
3.5 |
|
3.5 |
|
2% |
|
8 |
|
11.3 |
|
11.3 |
|
7% |
|
18 |
|
|
160.2 |
|
160.6 |
|
100% |
|
12,658 |
|
171.7 |
|
171.7 |
|
100% |
|
12,663 |
|
Other sales |
|
|
|
|
|
|
300 |
|
|
|
|
|
|
|
347 |
|
Sales |
|
|
|
|
|
$ |
12,958 |
|
|
|
|
|
|
$ |
13,010 |
|
Adjusted EBITDA |
|
|
|
|
|
$ |
3,883 |
|
|
|
|
|
|
$ |
4,033 |
|
Adjusted
EBITDA margin |
|
|
|
|
30% |
|
|
|
|
|
|
|
31% |
|
Sales totaled $3.5 million for Maine Timberlands
compared to $3.2 million for the same period last year. Seasonal
demand remained strong and operating conditions were favourable as
log sales volumes increased 14%, the benefits of which were
partially offset by a 5% decrease in the weighted average log
selling price. The weighted average log selling price reflects
favourable market dynamics for most products, offset by lower
softwood sawlog pricing and changes in the sales mix.
Adjusted EBITDA for the quarter was $0.5 million
compared to $0.6 million during the prior year period due to lower
weighted average log sales prices. The Adjusted EBITDA margin was
16% during the quarter compared to 18% in the prior year
period.
During the first half of 2019, Maine
Timberland’s sales of $13.0 million were largely in line with the
prior year period. Maine Timberland’s benefited from strong
seasonal demand resulting in a 2% increase in the weighted average
log selling price largely due to the benefit of foreign exchange,
however operations were impacted by adverse weather conditions
during the winter harvest season resulting in a 2% decrease in log
sales volumes. As a result, Adjusted EBITDA was $3.9 million
compared to $4.0 million during the first half of 2018 while the
Adjusted EBITDA margin of 30% declined marginally.
There were no recordable safety incidents
amongst employees and one lost time incident amongst contractors
during the second quarter of 2019. The individual returned to work
during the quarter.
Market Outlook
The following contains forward-looking
information about Acadian Timber Corp.’s market outlook for the
remainder of fiscal 2019. Reference should be made to the section
entitled “Cautionary Statement Regarding Forward-Looking
Information and 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.
Acadian’s key markets include softwood
sawtimber, hardwood sawtimber and hardwood pulpwood. Northeast
North American softwood dimension sawmills represent over one third
of Acadian’s end-use market and are the primary market for our
softwood sawtimber. Well-balanced regional supply demand
fundamentals for both Acadian’s softwood and hardwood resource
segments, combined with deep and diversified end use markets
continue to provide support for stable log pricing across our key
markets.
A combination of supply-side constraints
including tight construction labour markets and restrictive
building regulations, an unseasonably cold and wet first half
construction season, and affordability challenges have all weighed
on housing start activity during the first half of 2019. However,
recent solid wage growth performance and the prospect for a near
term rate reduction coupled with favorable underlying demographics
supporting household formation growth continue to suggest that
modest positive momentum should return in housing construction over
the medium term. Recent consensus forecasts now anticipate a modest
year-over-year contraction of U.S. housing starts for 2019 of about
1%, followed by a 2-3% increase for 2020. After a slight
anticipated decline for 2019, North American lumber consumption is
expected to post modest year-over-year growth, supporting a 3-5%
increase in sawtimber demand through 2020.
Average Q2 2019 quarterly benchmark Eastern
Spruce-Pine-Fir and Southern Yellow Pine lumber prices declined 5%
and 7%, respectively, from the prior quarter as lower than expected
demand resulted in an inventory build during the quarter. With a
return to more normal summer weather patterns, forecasters expect
improved demand growth combined with capacity curtailments in
Western Canada and the U.S. Pacific Northwest to support a modest
recovery in lumber pricing through the fall building season. There
was no notable progress in bi-lateral U.S. Canadian lumber trade
discussions during the quarter and we continue to expect current
duty levels will apply through 2020. We anticipate uncertainty
surrounding the trade file will continue to drive higher than
normal volatility in lumber prices. As Acadian’s regional Northeast
sawmill customers continue to run at normal operating rates, we
foresee stable sawtimber demand during the second half of 2019 and
into 2020.
Acadian’s hardwood sawtimber and pulpwood
markets remain well balanced with a continued stable outlook for
the remainder of the year. Softwood pulpwood markets, Acadian’s
smallest product segment by volume and margin, continue to
gradually improve supported, in part, by the expected restart of a
pulp mill during H2 2019 in Maine. While the biomass market in
Maine remains weak, the New Brunswick biomass market continues to
be supported by steady export demand at attractive prices.
Quarterly Dividend
Acadian is pleased to announce a dividend of
$0.29 per share, payable on October 15, 2019 to shareholders of
record on September 30, 2019.
* * * * * * * * *
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 one of the largest timberland
operators in New Brunswick and Maine.
Acadian owns and manages approximately 1.1
million acres of freehold timberlands in New Brunswick and Maine,
and provides timber services relating to approximately 1.3 million
acres of Crown licensed timberlands in New Brunswick. Acadian's
products include softwood and hardwood sawlogs, pulpwood and
biomass by-products, sold to approximately 85 regional
customers.
Acadian’s business strategy is to maximize cash
flows from its existing timberland assets while growing our
business by acquiring assets on a value basis and utilizing our
operations-oriented approach to drive improved performance.
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 or
contact:Kate WhiteInvestor Relations and CommunicationsTel:
416-956-5183Email: kwhite@acadiantimber.com
* * * * * * * * *
Cautionary Statement Regarding
Forward-Looking Information and Statements
This News Release contains forward-looking
information and statements 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 forward-looking
statements may contain such words as “may,” “will,” “intend,”
“should,” “suggest,” “expect,” “believe,” “outlook,” “forecast,”
“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 the section entitled “Market
Outlook” and other statements regarding management’s beliefs,
intentions, results, performance, goals, achievements, future
events, plans and objectives, business strategy, growth strategy
and prospects, access to capital, liquidity and trading volumes,
dividends, taxes, capital expenditures, projected 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; changes in U.S.
housing starts; 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; Brookfield’s ability to source
and secure potential investment opportunities; the availability of
potential acquisitions that suit Acadian’s growth profile; and
other risks and factors discussed under the heading “Risk Factors”
in each of the Annual Information Form dated March 28, 2019 and the
Management Information Circular dated March 28, 2019, 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 may include, but are not limited to: forecasts in the
housing market; anticipated financial performance; anticipated
market conditions; business prospects; the economic situation of
key customers; 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.
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 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 Condensed Consolidated Statements of
Net Income(unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands, except per share data) |
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
|
|
|
|
|
|
Sales |
$ |
17,918 |
|
$ |
16,099 |
|
$ |
48,856 |
|
$ |
49,047 |
|
Operating costs and expenses |
|
|
|
|
Cost of sales |
|
12,575 |
|
|
11,174 |
|
|
32,496 |
|
|
32,668 |
|
Selling, administration and other |
|
2,424 |
|
|
2,214 |
|
|
4,623 |
|
|
4,720 |
|
Reforestation |
|
374 |
|
|
415 |
|
|
374 |
|
|
422 |
|
Depreciation and amortization |
|
72 |
|
|
77 |
|
|
144 |
|
|
161 |
|
|
|
15,445 |
|
|
13,880 |
|
|
37,637 |
|
|
37,971 |
|
Operating earnings |
|
2,473 |
|
|
2,219 |
|
|
11,219 |
|
|
11,076 |
|
Interest expense, net |
|
(970 |
) |
|
(1,003 |
) |
|
(1,979 |
) |
|
(1,961 |
) |
Other items |
|
|
|
|
Fair value adjustments and other |
|
3,112 |
|
|
3,391 |
|
|
1,270 |
|
|
1,266 |
|
Unrealized exchange gain / (loss) on long-term debt |
|
1,903 |
|
|
(1,651 |
) |
|
3,937 |
|
|
(3,939 |
) |
Gain on sale of timberlands |
|
492 |
|
|
286 |
|
|
531 |
|
|
463 |
|
Gain / (loss) on disposal of other fixed assets |
|
1 |
|
|
— |
|
|
1 |
|
|
(248 |
) |
Earnings before income taxes |
|
7,011 |
|
|
3,242 |
|
|
14,979 |
|
|
6,657 |
|
Current income tax recovery / (expense) |
|
368 |
|
|
96 |
|
|
(1,332 |
) |
|
(1,269 |
) |
Deferred income tax expense |
|
(1,595 |
) |
|
(1,450 |
) |
|
(1,681 |
) |
|
(1,514 |
) |
Net income |
$ |
5,784 |
|
$ |
1,888 |
|
$ |
11,966 |
|
$ |
3,874 |
|
Net income per share – basic and diluted |
$ |
0.35 |
|
$ |
0.11 |
|
$ |
0.72 |
|
$ |
0.23 |
|
Acadian Timber
Corp.Interim Condensed Consolidated Statements of
Comprehensive Income(unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands) |
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
|
|
|
|
|
|
Net income |
$ |
5,784 |
|
$ |
1,888 |
|
$ |
11,966 |
|
$ |
3,874 |
|
Other comprehensive income / (loss) |
|
|
|
|
Items that may be reclassified subsequently to net income: |
|
|
|
|
Unrealized foreign currency translation (loss) / gain |
|
(2,845 |
) |
|
2,088 |
|
|
(5,947 |
) |
|
5,454 |
|
Loss on revaluation of land |
|
(14 |
) |
|
— |
|
|
(14 |
) |
|
— |
|
Deferred income tax recovery |
|
4 |
|
|
246 |
|
|
4 |
|
|
— |
|
Comprehensive income |
$ |
2,929 |
|
$ |
4,222 |
|
$ |
6,009 |
|
$ |
9,328 |
|
Acadian Timber
Corp.Interim Condensed Consolidated Balance
Sheets(unaudited)
As at(CAD thousands) |
June 29, 2019 |
December 31, 2018 |
|
Assets |
|
|
Current
assets |
|
|
Cash
and cash equivalents |
$ |
20,881 |
$ |
22,320 |
|
Accounts receivable and other assets |
|
7,025 |
|
7,230 |
|
Inventory |
|
1,119 |
|
2,756 |
|
|
|
29,025 |
|
32,306 |
|
Timber |
|
364,608 |
|
367,901 |
|
Land, roads
and other fixed assets |
|
84,400 |
|
86,103 |
|
Intangible
asset |
|
6,140 |
|
6,140 |
|
Total assets |
$ |
484,173 |
$ |
492,450 |
|
Liabilities and shareholders’ equity |
|
|
Current
liabilities |
|
|
Accounts payable and accrued liabilities |
$ |
5,088 |
$ |
7,963 |
|
Current tax liabilities |
|
1,637 |
|
647 |
|
Dividends payable to shareholders |
|
4,839 |
|
4,714 |
|
|
|
11,564 |
|
13,324 |
|
Long-term
debt |
|
93,421 |
|
96,595 |
|
Deferred
income tax liability |
|
92,483 |
|
92,119 |
|
Shareholders’ equity |
|
286,705 |
|
290,412 |
|
Total liabilities and shareholders’ equity |
$ |
484,173 |
$ |
492,450 |
|
Acadian Timber
Corp.Interim Condensed Consolidated Statements of
Cash Flows(unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
|
(CAD thousands) |
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
|
|
Cash and cash equivalents provided by / (used for): |
|
|
|
|
|
Operating activities |
|
|
|
|
|
Net income |
$ |
5,784 |
|
$ |
1,888 |
|
$ |
11,966 |
|
$ |
3,874 |
|
|
Adjustments to net income: |
|
|
|
|
|
Deferred income tax expense |
|
1,595 |
|
|
1,450 |
|
|
1,681 |
|
|
1,514 |
|
|
Depreciation and amortization |
|
72 |
|
|
77 |
|
|
144 |
|
|
161 |
|
|
Fair value adjustments and other |
|
(3,112 |
) |
|
(3,391 |
) |
|
(1,270 |
) |
|
(1,266 |
) |
|
Unrealized exchange loss / (gain) on long term debt |
|
(1,903 |
) |
|
1,651 |
|
|
(3,937 |
) |
|
3,939 |
|
|
Gain on sale of timberlands |
|
(492 |
) |
|
(286 |
) |
|
(531 |
) |
|
(463 |
) |
|
(Gain) / loss on disposal of other fixed assets |
|
(1 |
) |
|
— |
|
|
(1 |
) |
|
248 |
|
|
Accretion of long-term debt |
|
269 |
|
|
259 |
|
|
585 |
|
|
507 |
|
|
Net change in non-cash working capital balances and
other |
|
355 |
|
|
3,268 |
|
|
(1,035 |
) |
|
(1,050 |
) |
|
|
|
2,567 |
|
|
4,916 |
|
|
7,602 |
|
|
7,464 |
|
|
Financing activities |
|
|
|
|
|
Dividends paid to shareholders |
|
(4,840 |
) |
|
(4,601 |
) |
|
(9,554 |
) |
|
(9,202 |
) |
|
Common shares repurchased under NCIB |
|
— |
|
|
— |
|
|
(37 |
) |
|
— |
|
|
|
|
(4,840 |
) |
|
(4,601 |
) |
|
(9,591 |
) |
|
(9,202 |
) |
|
Investing activities |
|
|
|
|
|
Additions to timber, land, roads and other fixed assets |
|
(18 |
) |
|
(26 |
) |
|
(18 |
) |
|
(31 |
) |
Proceeds from sale of timberlands |
|
527 |
|
|
305 |
|
|
567 |
|
|
497 |
|
|
Proceeds from sale of other fixed assets |
|
1 |
|
|
8 |
|
|
1 |
|
|
187 |
|
|
|
|
510 |
|
|
287 |
|
|
550 |
|
|
653 |
|
|
Increase / (decrease) in cash and cash equivalents
during the period |
|
(1,763 |
) |
|
602 |
|
|
(1,439 |
) |
|
(1,085 |
) |
|
Cash and cash equivalents, beginning of period |
|
22,644 |
|
|
22,264 |
|
|
22,320 |
|
|
23,951 |
|
|
Cash and cash equivalents, end of period |
$ |
20,881 |
|
$ |
22,866 |
|
$ |
20,881 |
|
$ |
22,866 |
|
|
Reconciliations to Adjusted EBITDA and
Free Cash Flow
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands) |
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
|
|
|
|
|
|
Net income |
$ |
5,784 |
|
$ |
1,888 |
|
$ |
11,966 |
|
$ |
3,874 |
|
Add / (deduct): |
|
|
|
|
Interest expense, net |
|
970 |
|
|
1,003 |
|
|
1,979 |
|
|
1,961 |
|
Current income tax (recovery) / expense |
|
(368 |
) |
|
(96 |
) |
|
1,332 |
|
|
1,269 |
|
Deferred income tax expense |
|
1,595 |
|
|
1,450 |
|
|
1,681 |
|
|
1,514 |
|
Depreciation and amortization |
|
72 |
|
|
77 |
|
|
144 |
|
|
161 |
|
Fair value adjustments and other |
|
(3,112 |
) |
|
(3,391 |
) |
|
(1,270 |
) |
|
(1,266 |
) |
Unrealized exchange (gain) / loss on long-term debt |
|
(1,903 |
) |
|
1,651 |
|
|
(3,937 |
) |
|
3,939 |
|
Adjusted EBITDA |
$ |
3,038 |
|
$ |
2,582 |
|
$ |
11,895 |
|
$ |
11,452 |
|
Add / (deduct): |
|
|
|
|
Interest paid on debt, net |
|
(673 |
) |
|
(682 |
) |
|
(1,341 |
) |
|
(1,366 |
) |
Additions to timber, land, roads and other fixed assets |
|
(18 |
) |
|
(26 |
) |
|
(18 |
) |
|
(31 |
) |
Gain on sale of timberlands |
|
(492 |
) |
|
(286 |
) |
|
(531 |
) |
|
(463 |
) |
(Gain) / loss on disposal of other fixed assets |
|
(1 |
) |
|
— |
|
|
(1 |
) |
|
248 |
|
Proceeds on sale of timberlands |
|
527 |
|
|
305 |
|
|
567 |
|
|
497 |
|
Proceeds on sale of other fixed assets |
|
1 |
|
|
8 |
|
|
1 |
|
|
187 |
|
Current income tax recovery / (expense) |
|
368 |
|
|
96 |
|
|
(1,332 |
) |
|
(1,269 |
) |
Free Cash Flow |
$ |
2,750 |
|
$ |
1,997 |
|
$ |
9,240 |
|
$ |
9,255 |
|
Dividends declared |
$ |
4,839 |
|
$ |
4,727 |
|
$ |
9,679 |
|
$ |
9,328 |
|
Payout ratio |
|
176% |
|
|
237% |
|
|
105% |
|
|
101% |
|
1 |
|
This news release makes reference to Adjusted EBITDA, Adjusted
EBITDA margin, Free Cash Flow and Payout Ratio which are key
performance measures in evaluating Acadian’s operations and are
important in enhancing investors’ understanding of Acadian’s
operating performance. Adjusted EBITDA and Adjusted EBITDA margin
are used to evaluate operational performance. Free Cash Flow is
used to evaluate Acadian’s ability to generate sustainable cash
flows from our operations while the Payout Ratio is used to
evaluate Acadian’s ability to fund its distribution using Free Cash
Flow. Acadian’s management defines Adjusted EBITDA as earnings
before interest, taxes, fair value adjustments, recovery of or
impairment of land and roads, realized gain/loss on sale of roads
and other fixed assets, unrealized exchange gain/loss on debt,
depreciation and amortization and Adjusted EBITDA margin as
Adjusted EBITDA as a percentage of its total revenue. Free Cash
Flow is defined as Adjusted EBITDA less interest paid, current
income tax expense, and capital expenditures plus net proceeds from
the sale of fixed assets (selling price less gains or losses
included in Adjusted EBITDA). Payout Ratio is defined as dividends
declared divided by Free Cash Flow. 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, Adjusted
EBITDA margin and Free Cash Flow. |
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