Acadian Timber Corp. (TSX: ADN) -
Investors, analysts and other interested parties can access
Acadian Timber Corp.'s 2010 First Quarter Results conference call
via webcast on Thursday, April 29, 2010 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 recorded
teleconference will be rebroadcast and 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-month period ended March 27, 2010 (the "first quarter").
"We are pleased to report our operating and financial results
for the first quarter," said Reid Carter, President and Chief
Executive Officer of Acadian. "These results were in line with our
expectations and demonstrate the continuing recovery of the North
American wood products industry."
"Increases in our operating activity are very apparent among
Acadian's customers with most anticipating improved operating rates
throughout the summer. Demand for spruce-fir sawlogs has been very
strong with the majority of regional mills adding shifts and
rebuilding log inventories," added Mr. Carter.
Acadian generated net sales of $20.4 million on consolidated
volumes of 401 thousand m3 during the first quarter as compared to
net sales of $26.2 million on consolidated volumes of 427 thousand
m3 during the same period last year(2).
EBITDA for the first quarter was $5.8 million or 28% of net
sales, compared with EBITDA of $10.8 million or 41% of net sales
for the comparable period in 2009.
(1) This news release makes reference to earnings before
interest, taxes, depletion, depreciation and amortization
("EBITDA") and free cash flow. Management believes that EBITDA and
free cash flow are key performance measures in evaluating Acadian's
operations and are important in enhancing investors' understanding
of the Company's operating performance. As EBITDA and free cash
flow do not have a standardized meaning prescribed by Canadian
GAAP, they may not be comparable to similar measures presented by
other companies. As a result, we have provided in this news release
reconciliations of net income and cash flow from operations, as
determined in accordance with Canadian GAAP, to EBITDA and free
cash flow.
(2) On January 1, 2010, Acadian Timber Income Fund completed a
plan of arrangement which allowed for it's conversion from an
income trust to a corporation. Subsequent to the conversion,
Acadian began operating as Acadian Timber Corp. Comparative results
for the three-month period ended March 28th, 2009 reflect the
results of Acadian Timber Income Fund and results for the first
quarter of 2010 reflect the results of Acadian Timber Corp.
References to "dividends", "free cash flow" and "shareholders"
reflect distributions, distributable cash from operations and
unitholders, respectively, of Acadian Timber Income Fund for the
comparative period in 2009.
Review of Operations
First Quarter 2010 Financial and Operating Highlights
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For the Three Months Ended
($ millions except per share information) March 27, 2010 March 28, 2009
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Net sales $ 20.4 $ 26.2
EBITDA 5.8 10.8
Free cash flow 5.0 9.5
Dividends declared 1.1 3.4
Net income(1) 3.4 11.1
Per share - fully diluted
Net Income(1) 0.20 0.40
Free cash flow 0.30 0.57
Dividends declared 0.07 0.21
Sales volume (000s m3) 401.0 427.4
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(1) Net income includes the impact of future income tax recovery, and
depreciation and depletion expense, which are non-cash items recorded in
each respective period. Net income for the three months ended March 28, 2009
only, included a $4.4 million gain, net of related interest expense,
resulting from the Class B Interest Liability of a subsidiary.
First quarter 2010 results reflect weaker market conditions for
softwood, compared to the especially strong softwood market in the
comparable period of 2009. However, this was partially offset by
improving demand for hardwood pulp allowing Acadian to increase its
harvesting activity in hardwood stands. Harvest activity was also
stronger than anticipated on Acadian's Crown licensed lands
favourably impacting cash flows. The low number of winter storms
and unseasonably warm weather resulted in considerable road
maintenance savings although this warm winter weather in Maine
adversely impacted road access causing decreased harvest
volume.
One of Acadian's principal customers, Fraser Papers Inc.
("Fraser") emerged from creditor protection during the first
quarter with its two Canadian sawmills, Edmundston pulpmill and
Madawaskwa paper mill constituting a new company, to be named Twin
Rivers Papers. With the return to normal operating conditions,
Fraser was once again an active buyer of spruce-fir sawlogs
throughout the quarter and was also very active on its Crown
licenses managed by Acadian. Like Fraser, most other regional
sawmills operated on two shifts resulting in high operating rates
on both Acadian's freehold and Crown license operations. These
results are encouraging as they demonstrate the continuing recovery
of the North American wood products industry. However, we would
note that as Acadian's softwood sawlog fibre supply agreement with
Fraser operates on a trailing six month basis, Acadian will not
realize the full benefit from these improved market conditions
until future quarters.
Included in the net income for the three month period ended
March 27, 2010 is a non-cash future income tax recovery of $0.5
million (2009 - $0.8 million). The future income tax asset of
Acadian is based on differences between the financial reporting and
tax basis of assets and liabilities of its subsidiaries, which have
been measured using the substantially enacted tax rates and laws
that are expected to be in effect at the time the differences are
anticipated to reverse. The reduction in the future income tax
asset, and related expense, recorded during the period is largely a
result of changes in the timing of when the differences are
anticipated to reverse.
The first quarter of 2009 included a non-cash gain related to
the Class B Interest Liability of a subsidiary. On February 3,
2009, an affiliate of Brookfield Asset Management Inc. converted
all units representing the Class B Interest Liability into Class A
Units of the Fund on a one-for-one basis. For the period ended
March 28, 2009, the revaluation of this interest resulted in a gain
of $4.7 million. The gain was comprised of a $4.1 million
mark-to-market gain plus an additional $0.6 million foreign
exchange gain due to the weakening of the Canadian currency in the
quarter.
New Brunswick Timberlands
The table below summarizes operating and financial results for
New Brunswick Timberlands ("NB Timberlands").
Three Months Ended March 27, Three Months Ended March 28,
2010 2009
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Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) (millions) (000s m3) (000s m3) (millions)
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Softwood 134.2 122.2 $ 6.3 174.2 151.9 $ 9.1
Hardwood 140.9 141.7 7.7 123.8 93.2 5.1
Biomass 58.0 58.0 1.2 63.4 63.4 1.5
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333.1 321.9 15.2 361.4 308.5 15.7
Other sales 1.2 2.5
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Net sales $ 16.4 $ 18.2
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EBITDA $ 5.1 $ 7.8
EBITDA margin 31% 43%
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Softwood, hardwood and biomass shipments were 122 thousand m3,
142 thousand m3 and 58 thousand m3 for the first quarter,
respectively. The total sales volume was comprised of approximately
39% sawlogs, 43% pulpwood and 18% biomass, respectively in the
first quarter. This compares to total sales volume in the first
quarter of 2009 of 39% sawlogs, 40% pulpwood and 21% biomass,
respectively. Increased demand and greater activity from hardwood
pulp mills allowed Acadian to increase sales of hardwood volumes
during the quarter relative to the same period last year.
Net sales for the first quarter totaled $16.4 million (2009 -
$18.2 million) with an average selling price across all products of
$47.26 per m3,which compares to an average selling price of $50.88
per m3 during the first quarter of 2009. The decrease in average
selling price was attributable to a lower value species mix in
addition to lower realized softwood prices, compared to the strong
first quarter of 2009. Other sales decreased $1.3 million,
primarily as a result of decreased harvesting activity on the Crown
licensed timberlands during the first quarter of 2010, compared to
the same period in 2009.
Costs for the first quarter were $11.3 million (2009 - $10.4
million). Variable costs per m3 were 11% higher than the first
quarter of 2009 as a result of a greater portion of hardwood pulp
logs in the mix and longer hauling distances to more distant
markets for those logs. This increase was partially offset by lower
road maintenance as a result of favorable weather conditions.
EBITDA for the first quarter was $5.1 million, compared to $7.8
million during the first quarter of 2009. EBITDA margin declined to
31% from 43% for the first quarter of 2009, primarily as a result
of the impact of increased activity in lower margin hardwood
stands, longer hauling distances and the decreased contribution of
the Crown operations.
During the first quarter, NB Timberlands experienced one
recordable incident among employees from which the individual has
fully recovered and no recordable incidents among contractors.
Acadian is pleased to report that there were no reportable
environmental incidents during the first quarter.
Maine Timberlands
The table below summarizes operating and financial results for
Maine Timberlands.
Three Months Ended March 27, Three Months Ended March 28,
2010 2009
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Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) (millions) (000s m3) (000s m3) (millions)
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Softwood 61.0 60.6 $ 3.1 108.8 104.9 $ 7.4
Hardwood 17.3 16.2 0.7 9.8 8.6 0.4
Biomass 2.3 2.3 0.1 5.4 5.4 0.1
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80.6 79.1 3.9 124.0 118.9 7.9
Other sales 0.1 0.1
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Net sales $ 4.0 $ 8.0
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EBITDA $ 1.2 $ 3.3
EBITDA margin 30% 41%
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Softwood, hardwood and biomass shipments were 61 thousand m3, 16
thousand m3 and 2 thousand m3 for the first quarter, respectively.
Total sales volume was comprised of approximately 57% sawlogs, 40%
pulpwood and 3% biomass, respectively in the first quarter. This
compares to total sales volume in the same quarter of 2009, of 63%
sawlogs, 32% pulpwood and 5% biomass. Continued challenging market
conditions kept operations on the Maine Timberlands at modest
levels, consistent with Acadian's value preservation strategy. Warm
winter weather resulted in challenging road conditions during the
first quarter, thereby contributing to lower harvesting activity.
Similar to the experience of the NB Timberlands' operation, Maine
Timberlands benefited from improving hardwood pulp demand.
Net sales for the first quarter totaled $4.0 million (2009 -
$8.0 million) with an average selling price across all products of
$50.04 per m3, which compares to an average selling price of $66.76
per m3 during the first quarter of 2009. The 16% depreciation
year-over-year of the U.S. dollar compared to the Canadian, the
lower value species mix, and softer pricing for softwood sawlogs
all contributed to the decrease in average price. Weighted average
selling price decreased 13% in U.S. dollar terms during the first
quarter year-over-year.
Costs for the first quarter were $2.8 million (2009 - $4.7
million). Lower harvest volumes, in addition to the depreciation of
the U.S. dollar, contributed to this decrease in costs. Variable
costs per m3 were relatively flat in U.S. dollar terms compared to
the first quarter of 2009.
EBITDA for the first quarter was $1.2 million, compared to $3.3
million during the first quarter of 2009, and EBITDA margin
declined to 30% in the first quarter from 41% during the first
quarter of 2009.
During the first quarter, Maine Timberlands experienced no
recordable incidents among employees and one recordable incident
among contractors from which the individual has fully recovered.
Acadian is also pleased to report that there were no reportable
environmental incidents during the first quarter in its Maine
Timberlands.
Market Outlook
The following Market Outlook contains forward-looking statements
about Acadian Timber Corp.'s market outlook for fiscal 2010.
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
(MD&A) in Acadian Timber Income Fund's 2009 Annual Report and
Acadian Timber Corp.'s Annual Information Form dated March 26, 2010
available on the website at www.acadiantimber.com or filed with
SEDAR at www.sedar.com.
Market signals during Acadian's first quarter have been
positive. Unlike 2009, where most regional mills carried
significant log inventories into the second quarter, most mills
appear to be short two to four weeks of log supply making for a
very tight market and offering a positive outlook for log sales as
operations resume following spring break-up. However, this
optimistic outlook is tempered by Acadian's expectation that
current strong lumber markets reflect inventory rebuilding and that
sustained recovery of underlying demand from new home construction
is not expected for another 12 to 24 months.
Acadian is currently benefiting from a very strong market for
pulpwood with shortages of pulp logs placing upward pressure on
prices. This strong pulp market is expected to last throughout 2010
as pulp producers in the U.S. South have had difficulty gaining an
adequate log supply due to wet weather. In addition, global pulp
markets are currently experiencing strong demand with low
inventories and supply constraints resulting from disrupted
operations in Chile caused by the recent devastating earthquake and
related tsunami.
Markets for hardwood sawlogs and veneer logs have also recovered
nicely and improved prices are expected to follow. Biomass demand
and pricing remains stable with the now suspended U.S. Biomass Crop
Assistance Program having little impact on Acadian.
"We are encouraged by this increasingly widespread evidence of
improving market conditions. As demand continues to improve we will
focus on harvesting and merchandizing to meet market opportunities
while actively seeking to improve prices", concluded Mr.
Carter.
Quarterly Dividend
Acadian is pleased to announce a dividend of $0.05 per share,
payable on July 15, 2010 to shareholders of record on June 30,
2010.
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 110 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 and other
forward-looking 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 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 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, projected costs, and
similar statements concerning anticipated future events, results,
achievements, circumstances, performance or expectations that are
not historical facts. These statements 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 risks and factors discussed under the heading "Risk Factors"
in each of the Annual Information Form dated March 26, 2010 and the
Management Information Circular dated March 26, 2010 , and other
filings of Acadian 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:
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. Certain statements in this New Release
may also be considered "financial outlook" for the purposes of
applicable Canadian securities laws, and such financial outlook may
not be appropriate for purposes other than this News Release. 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 Consolidated Balance Sheets
(unaudited)
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As at
(CAD millions) March 27, 2010 December 31, 2009
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ASSETS
Current Assets:
Cash and cash equivalents $ 6.1 $ 2.1
Accounts receivable and other assets 6.3 6.2
Note receivable - 4.0
Inventory 2.1 1.8
Future income tax asset 1.6 -
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16.1 14.1
Intangible Assets 6.1 6.1
Timberlands, logging roads and fixed
assets 186.4 190.0
Future income tax asset 14.9 -
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$ 223.5 $ 210.2
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 6.4 $ 4.3
Dividends payable to shareholders 0.8 -
Debt 77.7 -
Deferred credit 1.3 -
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86.2 4.3
Deferred credit 19.2 -
Future income tax liability 4.3 13.9
Long-term debt - 80.7
Shareholders' equity 113.8 111.3
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$ 223.5 $ 210.2
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Acadian Timber Corp.
Interim Consolidated Statements of Operations and Deficit
(unaudited)
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For the Three Months Ended
(CAD millions) March 27, 2010 March 28, 2009
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Net sales $ 20.4 $ 26.2
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Operating costs and expenses
Cost of sales 12.8 13.7
Selling, administration and other 1.8 1.7
Depreciation and depletion 2.1 3.6
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16.7 19.0
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Operating earnings 3.7 7.2
Gain on Class B Interest Liability of a
subsidiary - (4.7)
Interest:
Interest expense on debt 0.8 0.9
Class B Interest Liability of a subsidiary - 0.3
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Earnings before income taxes 2.9 10.7
Income tax recovery (expense)
Current - (0.4)
Future 0.5 0.8
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Net income for the period 3.4 11.1
Deficit, beginning of period (23.0) (20.9)
Shareholders' dividends (1.1) (3.1)
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Deficit, end of period $ (20.7) $ (12.9)
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Net income per share - basic $ 0.20 $ 0.75
Net income per share - diluted $ 0.20 $ 0.40
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Acadian Timber Corp.
Interim Consolidated Statements of Comprehensive Income
(unaudited)
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For the Three Months Ended
(CAD millions) March 27, 2010 March 28, 2009
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Net income $ 3.4 $ 11.1
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Other comprehensive income (loss)
Unrealized foreign currency translation
gains (losses) (0.8) 0.2
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Comprehensive income $ 2.6 $ 11.3
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Acadian Timber Corp.
Interim Consolidated Statements of Cash Flows
(unaudited)
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For the Three Months Ended
(CAD millions) March 27, 2010 March 28, 2009
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Cash provided by (used for):
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Operating activities
Net income $ 3.4 $ 11.1
Items not affecting cash:
Future income tax recovery (0.5) (0.8)
Depreciation and depletion 2.1 3.6
Gain on Class B Interest Liability of a
subsidiary - (4.7)
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5.0 9.2
Net change in non-cash working capital
balances and other 1.6 (2.0)
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6.6 7.2
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Investing activities
Additions to timberlands, logging roads and
fixed assets - -
Silviculture expenditures - -
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- -
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Financing activities
Repayment of credit facility (2.3) -
Dividends paid to shareholders (0.3) (3.1)
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(2.6) (3.1)
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Increase in cash and cash equivalents during
the period 4.0 4.1
Cash and cash equivalents, beginning of
period 2.1 9.0
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Cash and cash equivalents, end of period $ 6.1 $ 13.1
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Reconciliation of Net Income to EBITDA and Free Cash Flow
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For the Three Months Ended
(CAD millions) March 27, 2010 March 28, 2009
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Net income(1) $ 3.4 $ 11.1
Add (deduct):
Interest expense on debt 0.8 0.9
Distribution on Class B Interest Liability
of a subsidiary - 0.3
Income tax recovery (0.5) (0.4)
Depreciation and depletion 2.1 3.6
Non-cash gain on Class B Interest
Liability of a subsidiary - (4.7)
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EBITDA 5.8 10.8
Deduct:
Interest expense on debt (0.8) (0.9)
Current income tax expense - (0.4)
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Free cash flow $ 5.0 $ 9.5
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(1) Net income includes the impact of future income tax recovery, and
depreciation and depletion expense, which are non-cash items recorded in
each respective period. Net income for the three months ended March 28, 2009
only, included the impact of the revaluation of the Class B Interest
Liability of a subsidiary.
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607 rlee@acadiantimber.com
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