Acadian Timber Corp. ("Acadian" or the "Corporation") (TSX: ADN)
Investors, analysts and other interested parties can access
Acadian Timber Corp.'s 2010 Fourth Quarter and Year-End Results
conference call via webcast on Wednesday, February 9, 2011 at 10:00
a.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 9:50 a.m. ET. The
teleconference recorded rebroadcast can be accessed at
1-800-319-6413 or +1-604-638-9010 and enter passcode 2826 followed
by the # sign.
All figures in Canadian dollars unless otherwise noted
Acadian Timber Corp.(1) ("Acadian" or the "Corporation") (TSX:
ADN), today reported financial and operating results(2) for the
three month period and year ended December 31, 2010.
For the three months ended December 31, 2010 (the "fourth
quarter"), Acadian generated net sales of $20.5 million on
consolidated volumes of 382 thousand m3, compared with net sales of
$16.7 million on consolidated volumes of 343 thousand m3 during the
same period last year.
EBITDA for the fourth quarter was $6.4 million, or 31% of net
sales, as compared to EBITDA of $2.0 million, or 12% of net sales,
during the comparable period in 2009. Results in the quarter
reflect a higher contribution from the management of the Crown
licensed timberlands, improved demand for softwood sawlogs and
reduced costs.
For the year ended December 31, 2010, Acadian generated net
sales of $71.0 million as compared to net sales of $63.4 million in
2009. EBITDA was $18.0 million or 25% of net sales as compared to
EBITDA of $12.1 million or 19% of net sales in the prior year.
"Despite challenging market conditions, Acadian performed very
well in 2010 generating its highest level of EBITDA since 2007,"
commented Reid Carter, Chief Executive Officer of Acadian.
"Management was able to merchandise effectively and Acadian
benefited from a combination of increasing demand for most of our
products and higher hardwood pulplog prices," added Mr. Carter.
Increase of Acadian's Target Annual Dividend
We are pleased to announce that Acadian's Board of Directors,
has reached a decision to increase Acadian's target annual dividend
to $0.825 per share, equivalent to levels prior to last year's
dividend cut and consistent with that established at the time of
initial public offering.
Acadian generated free cash flow of $13.6 million with declared
dividends of $3.6 million during the year ended December 31, 2010.
A portion of the incremental free cash flow was used to repay $5.5
million on Acadian's revolving credit facility, drawn primarily to
fund last year's corporate conversion, leaving Acadian with a cash
balance of $7.3 million. This strong cash position and improved
cash flow, in addition to the anticipated reduction in interest
expense related to the terms of our refinanced debt, fully supports
the decision to increase the dividend.
The new target dividend will be effective in the first quarter
of 2011.
Review of Operations
2010 Financial and Operating Highlights
Three Months Ended Year Ended
December 31 December 31
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($millions except per share
information) 2010 2009 2010 2009
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Net sales $ 20.5 $ 16.7 $ 71.0 $ 63.4
EBITDA 6.4 2.0 18.0 12.1
Free cash flow 5.3 1.3 13.6 8.1
Dividends declared 0.8 1.4 3.6 11.7
Net income(1) 5.4 - 8.8 9.3
Per share - fully diluted
Net Income(1) 0.32 - 0.53 0.30
Free cash flow 0.32 0.08 0.81 0.49
Dividends declared 0.05 0.08 0.22 0.70
Sales volume (000s m3) 381.9 343.0 1,398.7 1,258.3
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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 year ended December 31, 2009
only, included the impact of the revaluation of the Class B Interest
Liability of a subsidiary.
Included in the net income for the three month period and year
ended December 31, 2010 is a non-cash future income tax recovery of
$1.7 million and $1.2 million, respectively (2009 - $0.3 million
and $3.0 million, respectively). The future income tax liability of
Acadian is based on differences between the financial reporting and
tax bases 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 year ended December 31, 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 Acadian Timber Income Fund on a one-for-one
basis. For the year ended December 31, 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.
New Brunswick Timberlands
The table below summarizes operating and financial results for
New Brunswick Timberlands.
Three Months Ended December Three Months Ended December
31, 2010 31, 2009
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Harvest Sales Results Harvest Sales Results
(000s (000s (millions) (000s (000s (millions)
m3) m3) m3) m3)
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Softwood 95.5 109.5 $ 5.6 57.4 68.0 $ 3.8
Hardwood 131.8 136.3 8.3 148.7 143.9 7.6
Biomass 55.2 55.1 0.6 58.8 58.8 1.1
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282.5 300.9 14.5 264.9 270.7 12.5
Other sales 1.9 0.8
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Net sales $ 16.4 $ 13.3
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EBITDA $ 5.6 $ 2.5
EBITDA margin 34% 19%
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Year Ended December 31, 2010 Year Ended December 31, 2009
------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s (000s (millions) (000s (000s (millions)
m3) m3) m3) m3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 395.4 402.6 $ 21.0 336.5 328.9 $ 18.9
Hardwood 447.7 473.6 27.2 444.0 432.7 22.1
Biomass 231.5 231.4 2.9 235.4 235.4 4.5
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1,074.6 1,107.6 51.1 1,015.9 997.0 45.5
Other sales 4.8 3.3
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Net sales $ 55.9 $ 48.8
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EBITDA $ 15.4 $ 10.8
EBITDA margin 28% 22%
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Softwood, hardwood and biomass shipments were 110 thousand m3,
136 thousand m3 and 55 thousand m3, respectively, during the fourth
quarter, representing an 11% increase in sales volume over the same
period in 2009. This increase reflects improved demand for softwood
sawlogs relative to the fourth quarter of 2009. Approximately 36%
of sales volume was sold as sawlogs, 46% as pulpwood and 18% as
biomass in the fourth quarter. This compares to 30% of sales volume
sold as sawlogs, 48% as pulpwood and 22% as biomass in the fourth
quarter of 2009.
Net sales for the fourth quarter totaled $16.4 million compared
to $13.3 million for the same period last year. This was primarily
the result of the increase in sales volume, a higher value species
mix and improved hardwood pulpwood pricing. The increase in other
sales was primarily attributed to an increased contribution from
our management of Crown licensed timberlands as a result of higher
harvesting activity. The weighted average selling price was $48.10
in the fourth quarter of 2010, compared to $46.05 in the same
period of 2009.
Costs for the fourth quarter were $10.8 million, comparable to
the same period of 2009. Higher sales volumes were offset by lower
variable costs per m3 due to shorter haul distances and deliveries
from Acadian's woodyard.
EBITDA for the fourth quarter was $5.6 million, compared to $2.5
million in the same period in 2009, while EBITDA margin increased
from 19% to 34%.
NB Timberlands experienced one reportable incident among
employees and one minor reportable incident among contractors
during the fourth quarter. We are pleased to report that there were
no reportable environmental incidents during the fourth
quarter.
Maine Timberlands
The table below summarizes operating and financial results for
Maine Timberlands.
Three Months Ended December Three Months Ended December
31, 2010 31, 2009
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Harvest Sales Results Harvest Sales Results
(000s (000s (millions) (000s (000s (millions)
m3) m3) m3) m3)
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---------------------------------------------------------------------------
Softwood 55.7 55.6 $ 2.9 43.7 43.6 $ 2.1
Hardwood 17.2 19.1 1.1 21.2 21.2 1.1
Biomass 6.1 6.3 - 7.5 7.5 0.1
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79.0 81.0 4.0 72.4 72.3 3.3
Other sales 0.1 0.1
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Net sales $ 4.1 $ 3.4
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EBITDA $ 1.2 $ 0.7
EBITDA margin 29% 21%
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Year Ended December 31, 2010 Year Ended December 31, 2009
----------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s (000s (millions) (000s (000s (millions)
m3) m3) m3) m3)
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---------------------------------------------------------------------------
Softwood 208.0 207.6 $ 10.7 196.0 195.6 $ 11.7
Hardwood 68.5 68.3 3.8 45.3 44.6 2.2
Biomass 15.1 15.2 0.2 21.1 21.1 0.3
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291.6 291.1 14.7 262.4 261.3 14.2
Other sales 0.4 0.4
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Net sales $ 15.1 $ 14.6
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EBITDA $ 3.9 $ 4.2
EBITDA margin 26% 29%
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Softwood, hardwood and biomass shipments were 56 thousand m3, 19
thousand m3, and 6 thousand m3, respectively, with total sales
volume increasing by 12% over the fourth quarter of 2009. The
increase in sales volume reflects improved contractor productivity,
despite poor weather conditions in the fourth quarter of 2010.
Approximately 57% of sales volume was sold as sawlogs, 35% as
pulpwood and 8% as biomass during the fourth quarter. This compares
to 43% of sales volume sold as sawlogs, 47% as pulpwood and 10% as
biomass in the fourth quarter of 2009.
Net sales for the fourth quarter totaled $4.1 million, compared
to $3.4 million for the same period last year. The year-over-year
increase in net sales is a result of higher shipment volumes and a
higher value species mix. The weighted average price across all
products was $50.44 in the fourth quarter, compared to $45.27 in
the same period of 2009, reflecting an 11% increase in Canadian
dollar terms. Weighted average selling prices increased 15% in U.S.
dollar terms during the fourth quarter.
Costs for the fourth quarter were $2.9 million, compared to $2.7
million for the same period in 2009. This increase reflects higher
sales volumes, offset partially by lower variable costs per m3
primarily due to the depreciation of the U.S. dollar compared to
the Canadian dollar.
EBITDA for the fourth quarter was $1.2 million, compared to $0.7
million for the same period in 2009, while EBITDA margin increased
from 21% to 29%.
Maine Timberlands had no recordable safety incidents among
employees and two minor reportable incidents among contractors
during the fourth quarter. We are pleased to report that there were
no reportable environmental incidents during the fourth
quarter.
Market and Company Outlook
The following Market Outlook contains forward-looking statements
about Acadian Timber Corp.'s market outlook for fiscal 2011.
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 our 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 economic outlook for the United States improved
substantially in the second half of 2010 as a result of gains in
international trade, a strong holiday shopping season and the tax
compromise reached between the Obama administration and the
Republican leadership which will extend lower tax rates on
dividends and capital gains and include a temporary reduction in
payroll taxes. Despite this improved outlook, the U.S. housing
sector is expected to continue to lag as approximately 2.5 million
vacant homes continue to remain an overhang on the market.
Consensus forecasts for U.S. housing predict an increase in housing
starts to 680,000 units in 2011 up from 590,000 in 2010. The
recovery is expected to continue in 2012 with a consensus forecast
calling for 900,000 starts.
Acadian continues to benefit from smaller, non-industrial
timberland owners withholding timber from the market. However, an
ample supply of low cost Crown timber in New Brunswick is expected
to continue to put pressure on selling prices for softwood sawlogs.
Acadian has also benefited from high harvest levels on Twin Rivers
Paper Company's Crown licensed timberlands which are managed by
Acadian, resulting in a strong contribution from these management
services to Acadian's net income in 2010. This strong Crown land
services agreement contribution is expected to continue in 2011 as
licensees maintain high harvest levels aimed at utilizing unused
harvest volumes from the 2008 - 2009 period.
Markets for hardwood sawlogs and specialty products improved
during 2010 and are expected to remain relatively stable through
2011. Acadian's major hardwood pulpwood customers continue to
operate and take deliveries, and the recent sale of Domtar's
Woodland pulp mill in Baileyville, Maine to International Grand
Investment Corporation is expected to ensure a more consistent
operating level for this key hardwood pulpwood customer going
forward.
"We expect 2011 to present improving, although uncertain,
conditions and we're sure that Acadian will continue to demonstrate
adeptness in identifying and accessing market opportunities while
keeping costs low. We are confident in Acadian's long-term outlook
and the quality of our asset base, and we expect that our revised
target annual dividend will be supported by steadily improving
market conditions" concluded Mr. Carter.
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, the Corporation is
the second largest timberland operator in New Brunswick and
Maine.
The Corporation 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. The Corporation 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 100 regional customers.
Acadian Timber Corp.'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 the Corporation 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, to the
extent they remain applicable to the Corporation, 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 of Acadian Timber Corp., and other filings of the
Corporation 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, the economic situation of key customers, and the
utilization of the tax basis resulting from the conversion from an
income trust to a corporation. 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, the Corporation 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. The Corporation assumes no obligation to
update or revise these forward-looking statements to reflect new
information, events, circumstances or otherwise, except as required
by applicable law.
Acadian Timber Corp.
Consolidated Balance Sheets
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As at December 31
(CAD millions) 2010 2009
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ASSETS
Current assets
Cash and cash equivalents $ 7.3 $ 2.1
Accounts receivable and other assets 7.2 6.2
Derivative asset 1.6 -
Note receivable - 4.0
Inventory 0.8 1.8
Future income tax asset 2.0 -
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18.9 14.1
Intangible assets 6.1 6.1
Timberlands, logging roads and fixed assets 180.5 190.0
Future income tax asset 12.4 -
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$ 217.9 $ 210.2
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 4.5 $ 4.3
Dividends payable to shareholders 0.8 -
Debt 73.8 -
Deferred credit 1.6 -
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80.7 4.3
Deferred credit 17.2 -
Future income tax liability 3.1 13.9
Long-term debt - 80.7
Shareholders' equity 116.9 111.3
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$ 217.9 $ 210.2
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Acadian Timber Corp.
Consolidated Statements of Operations and Deficit
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For the Three
Months Ended For the Year Ended
December 31 December 31
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(CAD millions) 2010 2009 2010 2009
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Net sales $ 20.5 $ 16.7 $ 71.0 $ 63.4
Operating costs and expenses
Cost of sales 12.2 12.1 46.0 43.3
Selling, administration and other 1.9 2.6 7.0 8.6
Depreciation and depletion 1.7 1.6 6.6 7.1
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15.8 16.3 59.6 59.0
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Operating earnings 4.7 0.4 11.4 4.4
Gain on sale of timberlands - - - (0.6)
Gain on Class B Interest Liability
of a subsidiary - - - (4.7)
Interest:
Interest expense on debt 1.0 0.7 3.8 3.1
Class B Interest Liability of a
subsidiary - - - 0.3
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Earnings (loss) before income tax
recovery 3.7 (0.3) 7.6 6.3
Future income tax recovery 1.7 0.3 1.2 3.0
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Net income for the period 5.4 - 8.8 9.3
Deficit, beginning of period (22.4) (21.6) (23.0) (20.9)
Shareholders' dividends declared (0.8) (1.4) (3.6) (11.4)
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Deficit, end of period $ (17.8) $ (23.0) $ (17.8) $ (23.0)
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Net income per share - basic $ 0.32 $ - $ 0.53 $ 0.58
Net income per share - diluted $ 0.32 $ - $ 0.53 $ 0.30
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Acadian Timber Corp.
Consolidated Statement of Comprehensive Income (Loss)
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For the Three For the Year
Months Ended Ended
December 31 December 31
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(CAD millions) 2010 2009 2010 2009
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Net income $ 5.4 $ - $ 8.8 $ 9.3
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Other comprehensive income (loss)
Unrealized foreign currency
translation loss (0.9) (1.2) (1.7) (6.0)
Fair value gains on derivatives
designated as cash flow hedges, net
of future income tax expense 1.1 - 1.1 -
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Comprehensive income (loss) $ 5.6 $ (1.2) $ 8.2 $ 3.3
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Acadian Timber Corp.
Consolidated Statements of Cash Flows
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For the Three For the Year
Months Ended Ended
December 31 December 31
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(CAD millions) 2010 2009 2010 2009
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Cash provided by (used for):
----------------------------------------------------------------------------
Operating activities
Net income $ 5.4 $ - $ 8.8 $ 9.3
Items not affecting cash:
Future income tax recovery (1.7) (0.3) (1.2) (3.0)
Depreciation and depletion 1.7 1.6 6.6 7.1
Gain on sale of timberlands - - - (0.6)
Gain on Class B Interest Liability of
a subsidiary - - - (4.7)
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5.4 1.3 14.2 8.1
Net change in non-cash working capital
balances and other 0.9 (0.8) - (4.0)
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6.3 0.5 14.2 4.1
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Investing activities
Proceeds from sale of timberlands - - - 0.6
Additions to timberlands, logging roads
and fixed assets (0.1) - (0.4) (0.8)
Silviculture expenditures - - (0.2) (0.1)
Issuance of note receivable - (4.0) - (4.0)
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(0.1) (4.0) (0.6) (4.3)
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Financing activities
Dividends paid to shareholders (0.8) (2.2) (2.8) (12.2)
Deferred financing costs (0.1) - (0.1) -
Borrowing (repayment) from (of)
revolving credit facility (1.0) 5.5 (5.5) 5.5
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(1.9) 3.3 (8.4) (6.7)
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Increase (decrease) in cash and cash
equivalents during the period 4.3 (0.2) 5.2 (6.9)
Cash and cash equivalents, beginning of
period 3.0 2.3 2.1 9.0
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Cash and cash equivalents, end of period $ 7.3 $ 2.1 $ 7.3 $ 2.1
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Cash interest paid $ 1.0 $ 0.7 $ 3.8 $ 3.4
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Acadian Timber Corp.
Reconciliation to EBITDA and Free Cash Flow
----------------------------------------------------------------------------
For the Three For the Year
Months Ended Ended
December 31 December 31
----------------------------------------------------------------------------
(CAD millions) 2010 2009 2010 2009
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Net income(1) $ 5.4 $ - $ 8.8 $ 9.3
Add (deduct)
Interest expense on debt 1.0 0.7 3.8 3.1
Distribution on Class B Interest
Liability of a subsidiary - - - 0.3
Future income tax recovery (1.7) (0.3) (1.2) (3.0)
Depreciation and depletion 1.7 1.6 6.6 7.1
Gain on Class B Interest Liability of
a subsidiary - - - (4.7)
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EBITDA 6.4 2.0 18.0 12.1
Add (deduct)
Interest expense on debt (1.0) (0.7) (3.8) (3.1)
Silviculture and capital expenditures (0.1) - (0.6) (0.5)
Gain on sale of timberlands - - - (0.6)
Proceeds from sale of timberlands - - - 0.6
Acquisition of timberlands - - - (0.4)
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Free cash flow $ 5.3 $ 1.3 $ 13.6 $ 8.1
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Dividends declared $ 0.8 $ 1.4 $ 3.6 $ 11.7
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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 year ended December 31, 2009
only, included the impact of the revaluation of the Class B Interest
Liability of a subsidiary.
(1) On January 1, 2010, Acadian Timber Income Fund completed a
plan of arrangement which allowed for its 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 and year ended December 31, 2009 reflect the results
of Acadian Timber Income Fund and results for the three month
period and year ended December 31, 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.
(2) 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 Acadian'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, as determined in accordance with
Canadian GAAP, to EBITDA and free cash flow.
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607 rlee@acadiantimber.com
www.acadiantimber.com
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