Investors, analysts and other interested parties can access Acadian Timber
Corp.'s 2011 First Quarter Results conference call via webcast on Tuesday, May
3, 2011 at 2:30 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 2:20 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.
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-month period ended March 26,
2011 (the "first quarter").
"Acadian has benefited from relatively high operating rates and tight wood
supplies among its softwood sawmilling customers despite the continued weak U.S.
housing market" said Reid Carter, President and Chief Executive Officer of
Acadian. "This, in addition to strong hardwood pulp pricing has resulted in
strong operating results reflecting the continuing recovery of the North
American wood products industry."
Acadian generated net sales of $21.8 million on consolidated volumes of 426
thousand m3 during the first quarter as compared to net sales of $20.5 million
on consolidated volumes of 401 thousand m3 during the same period last year.
EBITDA for the first quarter was $7.3 million or 33% of net sales, an increase
from EBITDA of $5.7 million or 28% of net sales for the comparable period in
2010.
(1)This news release makes reference to earnings before interest, taxes,
depreciation and amortization, and fair value adjustments ("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 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 and cash
flow from operations, as determined in accordance with IFRS, to EBITDA and
free cash flow.
Review of Operations
First Quarter 2011 Financial and Operating Highlights
----------------------------------------------------------------------------
Three Months Ended
March 26, March 27,
($000s except per share information) 2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net sales $ 21,756 $ 20,458
EBITDA 7,265 5,739
Free cash flow 7,060 4,980
Dividends declared 3,451 1,115
Net income(1) 2,934 25,080
Per share - fully diluted
Net Income(1) 0.18 1.50
Free cash flow 0.42 0.30
Dividends declared 0.21 0.07
Sales volume (000s m3) 426.4 401.0
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(1.)Net income includes the impact of deferred income tax, depreciation and
amortization and fair value adjustments, which are non-cash items
recorded in each respective period.
International Financial Reporting Standards
Effective for the first quarter of 2011, Acadian's financial results are
reported in accordance with International Financial Reporting Standards
("IFRS"). The key differences between IFRS reporting and the previous Canadian
generally accepted accounting principles ("GAAP") can be summarized as follows:
-- Acadian's timber, the land on which the trees grow and the road systems
used to access the timber are carried at current appraised values
(adjusted for growth and harvest since the appraisal date); and
-- Acadian no longer records a charge for depletion. Instead the Company
records a charge for the fair value of timber harvested in a period and,
most importantly, recognizes the estimated value of timber grown. This
accounting treatment recognizes the sustainable nature of Acadian's
operations.
Comparative figures in this press release, previously presented in GAAP, have
been adjusted to conform to IFRS.
Operating Results
Acadian benefited from robust sales to local customers and a higher contribution
from the land management services contract during the first quarter. These sales
to close proximity customers resulted in low delivery costs improving overall
margins. Most of Acadian's customers entered the first quarter with relatively
low inventories and operated normally throughout the quarter creating solid
demand, particularly for hardwood pulpwood where pricing remained strong.
New Brunswick Timberlands
The table below summarizes operating and financial results for New Brunswick
Timberlands ("NB Timberlands").
Three Months Ended March 26, Three Months Ended March 27,
2011 2010
-----------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m3) m3) ($000s) m3) m3) ($000s)
----------------------------------------------------------------------------
Softwood 165.9 156.3 $ 7,583 134.2 122.2 $ 6,320
Hardwood 137.6 126.6 7,606 140.9 141.7 7,713
Biomass 69.7 69.7 1,163 58.0 58.0 1,182
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373.2 352.6 16,352 333.1 321.9 15,215
Other sales 1,579 1,216
----------------------------------------------------------------------------
Net sales $ 17,931 $ 16,431
----------------------------------------------------------------------------
EBITDA $ 6,355 $ 5,076
EBITDA margin 35% 31%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments totaled 156 thousand m3, 127 thousand
m3 and 70 thousand m3, respectively, for the first quarter of 2011. Sales volume
during the quarter was comprised of approximately 40% sawlogs, 40% pulpwood and
20% biomass. This compares to sales volume in the same period of 2010 of 39%
sawlogs, 43% pulpwood and 18% biomass. The sales volume reflects improved demand
for softwood sawlogs allowing Acadian to merchandise a greater proportion of its
higher margin product.
Net sales for the first quarter of 2011 was $17.9 million with an average
selling price across all products of $46.37 per m3. This compares to net sales
of $16.4 million and an average selling price of $47.26 per m3 during the same
period in 2010. The year-over-year increase in net sales resulted from increased
sales volumes and a higher percentage of softwood partially offset by lower
selling prices owing to deliveries to closer proximity markets. Other sales
increased to $1.6 million from $1.2 million in the comparable period of 2010 due
to increased harvest activity on the land Acadian manages on behalf of others.
Costs in the first quarter were $11.6 million compared to $11.4 million during
the same period in 2010. Variable costs per cubic meter were 8% lower than the
first quarter of 2010 as a result of a higher percentage of softwood sales and
an increased proportion of sales made to closer proximity markets which resulted
in lower transportation costs.
EBITDA for the first quarter was $6.4 million, an increase from $5.1 million in
the first quarter of 2010. EBITDA margin increased to 35% from 31% in the first
quarter of 2010.
During the first quarter of 2011, NB Timberlands experienced no recordable
safety incidents among employees and two minor recordable safety incidents among
contractors, from which one of the individuals has fully recovered and the other
is expected to be available for spring start-up.
Maine Timberlands
The table below summarizes operating and financial results for Maine Timberlands.
Three Months Ended March Three Months Ended March
26, 2011 27, 2010
---------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m3) m3) ($000s) m3) m3) ($000s)
----------------------------------------------------------------------------
Softwood 58.3 58.2 $ 3,058 61.0 60.6 $ 3,132
Hardwood 10.6 11.1 665 17.3 16.2 756
Biomass 4.5 4.5 44 2.3 2.3 70
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73.4 73.8 3,767 80.6 79.1 3,958
Other sales 58 69
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Net sales $ 3,825 $ 4,027
----------------------------------------------------------------------------
EBITDA $ 1,229 $ 1,166
EBITDA margin 32% 29%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments for the first quarter were 58 thousand
m3, 11 thousand m3 and 5 thousand m3, respectively. Sales volume in the first
quarter of 2011 was comprised of approximately 58% sawlogs, 36% pulpwood and 6%
biomass. This compares to sales volume in the same period of 2010 of 57%
sawlogs, 40% pulpwood and 3% biomass. Sales volume was constrained in the first
quarter due to contractor availability, a result of the Maine government's
efforts to limit Canadian laborer's access to work in the state.
Net sales for the first quarter were $3.8 million with the average selling price
across all products of $51.03 per m3. This compares to net sales of $4.0 million
and an average selling price of $50.04 per m3 during the first quarter of 2010.
This increase in average selling price is the result of both improved demand and
reduced supply of fiber from regional competitors due to the lack of contractor
availability. This pricing benefit was partially offset by the strengthened
Canadian dollar. The weighted average selling price increased 8% in U.S. dollar
terms year-over-year.
Costs for the first quarter were $2.6 million which compares to costs of $2.9
million during the comparable period of 2010. While overall harvest volume was
lower in the first quarter, variable cost per unit decreased 5% in Canadian
dollar terms and was relatively unchanged in U.S. dollar terms.
EBITDA for the first quarter was $1.2 million, unchanged from the same period in
2010. EBITDA margin increased to 32% in the first quarter from 29% during the
first quarter of 2010.
We are pleased to report that Acadian's Maine Timberlands experienced no
recordable safety incidents among employees or contractors during the first
quarter of 2011.
Market 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 Acadian Timber Corp.'s
2010 Annual Report and Annual Information Form dated March 28, 2011 available on
the website at www.acadiantimber.com or filed with SEDAR at www.sedar.com.
Markets for softwood sawlogs have benefited from relatively high operating rates
and tight wood supplies among regional sawmill operations despite the continued
weak U.S. housing market. Additionally, in our Maine operations, several
regional competitors are struggling to find contractors owing to state
government efforts to limit Canadian laborer's access to work in Maine and this
has further supported pricing for those that are able to operate. While we
remain cautious in our outlook as lumber demand and prices are expected to
remain weak throughout the remainder of 2011, most of Acadian's regional sawmill
customers appear to have entered the spring break-up period with modest
inventories which is expected to result in solid demand during the late second
and early third quarters of 2011.
Markets for softwood pulp logs continue to be strong, although the recent
announcement that a large regional groundwood producer in Maine has not been
able to find a buyer and will be closed indefinitely is expected to put downward
pressure on softwood pulpwood pricing over the medium-term. This mill closure
is, however, expected to be partially offset by a large regional hardwood and
softwood pulp producer's announcement of a conversion of a significant part of
their production from hardwood to softwood-based pulp.
Markets for hardwood pulpwood are expected to remain stable and positive through
2011 owing to high levels of production by local pulp mills. Markets for
hardwood sawlogs have improved over the past year, but the outlook remains less
certain as demand is more closely tied to new home formation and repair and
renovation.
Biomass demand and pricing continue to be stable, although somewhat soft, a
market situation we expect to remain in place unless or until support for
bio-energy markets is put in place.
"We are encouraged by the 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 $0.20625 per share, payable on July
15, 2011 to shareholders of record on June 30, 2011.
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 100 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 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 risks and factors discussed under the heading "Risk
Factors" in each of the Annual Information Form dated March 28, 2011 and the
Management Information Circular dated March 28, 2011, 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:
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 News 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 Statements of Net Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
March 26, March 27,
(CAD thousands) 2011 2010
----------------------------------------------------------------------------
Net sales $ 21,756 $ 20,458
----------------------------------------------------------------------------
Operating costs and expenses
Cost of sales 12,987 12,843
Selling, administration and other 1,505 1,878
Depreciation and amortization 137 120
----------------------------------------------------------------------------
14,629 14,841
----------------------------------------------------------------------------
Operating earnings 7,127 5,617
Interest expense, net (940) (759)
Other items
Fair value adjustments (1,633) 12
Exchange loss on long-term debt (537) -
Gain on sale of timberlands 1 2
Gain on corporate conversion - 21,086
----------------------------------------------------------------------------
Earnings before income taxes 4,018 25,958
Deferred tax expense (1,084) (878)
----------------------------------------------------------------------------
Net income for the period $ 2,934 $ 25,080
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income per share - basic $ 0.18 $ 1.50
Net income per share - diluted $ 0.18 $ 1.50
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statements of Comprehensive Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
March 26, March 27,
(CAD thousands) 2011 2010
----------------------------------------------------------------------------
Net income $ 2,934 $ 25,080
----------------------------------------------------------------------------
Other comprehensive income (loss)
Unrealized foreign currency translation loss (938) (1,433)
Fair value loss on derivatives designated as cash
flow hedges (145) -
----------------------------------------------------------------------------
Comprehensive income (loss) $ 1,851 $ 23,647
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Balance Sheets
(unaudited)
----------------------------------------------------------------------------
As at March 26, December 31, January 1,
(CAD thousands) 2011 2010 2010
----------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 11,298 $ 7,333 $ 2,053
Accounts receivable and other
assets 7,860 7,252 6,265
Inventory 1,641 990 2,289
Derivative asset - 1,557 -
Note receivable - - 4,001
----------------------------------------------------------------------------
20,799 17,132 14,608
Timber 213,047 216,181 216,751
Property, plant and equipment 34,102 34,508 36,275
Investment property 875 875 875
Intangible Assets 6,140 6,140 6,140
Deferred income tax asset 6,696 7,522 -
----------------------------------------------------------------------------
$ 281,659 $ 282,358 $ 274,649
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 6,757 $ 4,483 $ 4,275
Dividends payable to
shareholders 3,451 837 -
Debt - 73,752 -
----------------------------------------------------------------------------
10,208 79,072 4,275
Long-term debt 69,956 - 80,739
Deferred income tax liability 18,759 18,952 34,553
Shareholders' equity 182,736 184,334 155,082
----------------------------------------------------------------------------
$ 281,659 $ 282,358 $ 274,649
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Acadian Timber Corp.
Interim Consolidated Statements of Cash Flows
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
March 26, March 27,
(CAD thousands) 2011 2010
----------------------------------------------------------------------------
Cash provided by (used for):
----------------------------------------------------------------------------
Operating activities
Net income $ 2,934 $ 25,080
Adjustments to net income:
Deferred income tax 1,084 878
Depreciation and amortization 137 120
Fair value adjustments 1,633 (12)
Exchange loss on long-term debt 537 -
Interest expense, net 940 759
Interest paid, net (205) (759)
Gain on sale of timberlands (1) (2)
Gain on corporate conversion - (21,086)
----------------------------------------------------------------------------
7,059 4,978
Net change in non-cash working capital balances and
other 1,986 1,615
----------------------------------------------------------------------------
9,045 6,593
----------------------------------------------------------------------------
Financing activities
Borrowings, net of repayments (3,031) (2,300)
Deferred financing costs (1,205) -
Dividends paid to shareholders (837) (279)
----------------------------------------------------------------------------
(5,073) (2,579)
----------------------------------------------------------------------------
Investing activities
Additions to timberlands, logging roads and fixed
assets (8) (1)
Proceeds from sale of timberlands 1 2
----------------------------------------------------------------------------
(7) 1
----------------------------------------------------------------------------
Increase in cash and cash equivalents during the
period 3,965 4,015
Cash and cash equivalents, beginning of period 7,333 2,053
----------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 11,298 $ 6,068
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of Net Income to EBITDA and Free Cash Flow
----------------------------------------------------------------------------
Three Months Ended
March 26, March 27,
(CAD thousands) 2011 2010
----------------------------------------------------------------------------
Net income(1) $ 2,934 $ 25,080
Add (deduct):
Interest expense, net 940 759
Income tax recovery 1,084 878
Depreciation and amortization 137 120
Fair value adjustments 1,633 (12)
Exchange loss on long-term debt 537 -
Gain on corporate conversion - (21,086)
----------------------------------------------------------------------------
EBITDA 7,265 5,739
Deduct:
Interest paid, net (205) (759)
----------------------------------------------------------------------------
Free cash flow $ 7,060 $ 4,980
----------------------------------------------------------------------------
Dividends declared $ 3,451 $ 1,115
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Net income includes the impact of deferred income tax, depreciation and
amortization and fair value adjustments, which are non-cash items
recorded in each respective period.
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