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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
73.4 73.8 3,767 80.6 79.1 3,958
Other sales 58 69
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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.
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607 rlee@acadiantimber.com
www.acadiantimber.com
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