Investors, analysts and other interested parties can access
Acadian Timber Corp.'s 2012 First Quarter Results conference call
via webcast on Wednesday, May 2, 2012 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 teleconference
taped rebroadcast 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
months ended March 31, 2012 (the "first quarter"). Acadian
generated net sales of $18.6 million on sales volume of 352
thousand m3, which represents a $3.1 million, or 14%, decrease in
net sales compared to the same period in 2011.
Results for the first quarter were impacted by Acadian's
implementation of a short-term vendor managed inventory program
("VMI") with one of its larger customers. At the end of the first
quarter, Acadian held 72 thousand m3 of harvested logs in inventory
related to the VMI. As purchase commitments are filled under the
VMI during the second quarter of 2012, additional sales of
approximately $3.4 million and Adjusted EBITDA of approximately
$1.5 million are expected to be realized.
Adjusted EBITDA of $4.8 million for the first quarter was $2.5
million lower than in the first quarter of 2011, and Adjusted
EBITDA margin decreased to 26% from 33% in the same period of last
year. This decrease in margin is attributed to a lower contribution
from the land management services agreement and significantly lower
sales of higher margin spruce-fir sawlogs owing to the sale of
these volumes being delayed until the second quarter as a result of
the VMI.
"Operating conditions were excellent during January and February
followed by exceptionally warm weather in early March causing an
early spring break-up disrupting production and sales" said Reid
Carter, Chief Executive Officer of Acadian. Mr. Carter further
noted that "we were pleased with the results in our Maine
operations during the first quarter as strategies to improve
contractor availability resulted in harvest levels meeting
targets."
(1) This news release makes reference to Adjusted EBITDA and
free cash flow which are key performance measures in evaluating
Acadian's operations and are important in enhancing investors'
understanding of Acadian's operating performance. Acadian's
management defines Adjusted EBITDA as earnings before interest,
taxes, fair value adjustments, unrealized exchange gain/loss on
debt, depreciation and amortization. As these performance measures
do not have standardized meanings prescribed by International
Financial Reporting Standards ("IFRS"), they may not be comparable
to similar measures presented by other companies. As a result, we
have provided in this news release reconciliations of net income,
as determined in accordance with IFRS, to Adjusted EBITDA and free
cash flow.
Review of Operations
Financial and Operating Highlights
----------------------------------------------------------------------------
Three Months Ended
March 31, March 26,
($000s except per share information) 2012 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net sales $ 18,648 $ 21,756
Adjusted EBITDA 4,770 7,265
Free cash flow 4,035 7,052
Dividends declared 3,451 3,451
Net income 4,368 2,934
Per share (fully diluted)
Net Income 0.26 0.18
Free cash flow 0.24 0.42
Dividends declared 0.21 0.21
Sales volume (000s m3) 351.5 426.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian's weighted average selling price across all products
increased 7% year-over-year although this change was largely due to
changes in the sales mix and sales to more distant markets. Prices
for softwood sawlogs, which represent 38% of net sales, increased
5% year-over-year with this increase in average price primarily
related to a greater proportion of sales coming from Acadian's
Maine operations where softwood sawlogs attract stronger prices.
Prices for hardwood sawlogs, which represent 7% of net sales,
increased by 2%. Selling prices for hardwood and softwood pulpwood
increased by 6% and 14%, respectively, year-over-year. Biomass
markets remained stable with price comparisons having little
utility as they are significantly affected by distance from the
harvest location.
New Brunswick Timberlands
The tables below summarize operating and financial results for
New Brunswick Timberlands:
Three Months Ended March 31, Three Months Ended March 26,
2012 2011
------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 155.5 82.2 $ 4,161 165.9 156.3 $ 7,583
Hardwood 93.2 114.7 6,985 137.6 126.6 7,606
Biomass 59.8 59.8 1,120 69.7 69.7 1,163
----------------------------------------------------------------------------
308.5 256.7 12,266 373.2 352.6 16,352
Other sales 889 1,579
----------------------------------------------------------------------------
Net sales $ 13,155 $ 17,931
----------------------------------------------------------------------------
Adjusted EBITDA $ 3,116 $ 6,355
Adjusted EBITDA
margin 24% 35%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 82 thousand m3,
115 thousand m3 and 60 thousand m3, respectively, for the first
quarter. Approximately 31% was sold as sawlogs, 46% as pulpwood and
23% as biomass. This compares to 40% sold as sawlogs, 40% as
pulpwood and 20% as biomass in the first quarter of 2011.
Net sales for the first quarter were $13.2 million (2011 - $17.9
million) with an average selling price across all products of
$47.79 per m3 which compares to an average selling price of $46.37
per m3 during the first quarter of 2011. This year-over-year change
in the average selling price reflects a higher proportion of
hardwood pulpwood in the sales mix and improved pricing for this
product. Other sales decreased to $0.9 million from $1.6 million in
the comparable period of 2011 due to decreased harvesting activity
on the land Acadian manages on behalf of others.
New Brunswick Timberlands held 72 thousand m3 of harvested logs
in inventory related to the VMI at the end of the first quarter
reducing sales and Adjusted EBITDA during the quarter by
approximately $3.4 million and $1.5 million, respectively. These
amounts are expected to be realized in the second quarter as
purchase commitments under the VMI are filled.
Costs for the first quarter were $10.0 million (2011 - $11.6
million). Variable costs per m3 were 16% higher than the first
quarter of 2011 as a result of increased sales of hardwood pulpwood
to more distant customers in the United States and higher
contractor and fuel costs.
Adjusted EBITDA for the first quarter was $3.1 million, compared
to $6.4 million in the comparable period of 2011. Adjusted EBITDA
margin decreased to 24%, as compared to 35% for the first quarter
of 2011, reflecting higher delivered log costs, lower contribution
from the land management services agreement and the effect of
reduced sales volume on fixed cost absorption.
We are pleased to report that during the first quarter, New
Brunswick Timberlands experienced no recordable safety incidents
among employees or contractors.
Maine Timberlands
The tables below summarize operating and financial results for
Maine Timberlands:
Three Months Ended March 31, Three Months Ended March 26,
2012 2011
---------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 76.0 74.6 $ 4,208 58.3 58.2 $ 3,058
Hardwood 19.8 19.6 1,223 10.6 11.1 665
Biomass 0.6 0.6 19 4.5 4.5 44
----------------------------------------------------------------------------
96.4 94.8 5,450 73.4 73.8 3,767
Other sales 43 58
----------------------------------------------------------------------------
Net sales $ 5,493 $ 3,825
----------------------------------------------------------------------------
Adjusted EBITDA $ 1,808 $ 1,229
Adjusted EBITDA
margin 33% 32%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 75 thousand m3, 20
thousand m3 and 1 thousand m3, respectively, for the first quarter.
Approximately 63% was sold as sawlogs, 36% as pulpwood and 1% as
biomass. This compares to 58% sold as sawlogs, 36% as pulpwood and
6% as biomass in the first quarter of 2011.
Net sales for the first quarter were $5.5 million (2011 - $3.8
million) with an average selling price across all products of
$57.50 per m3, which compares to an average selling price of $51.03
per m3 during the first quarter of 2011. This variance in sales
price was attributable to higher proportions of softwood sawtimber
and hardwood pulpwood and improved prices for hardwood pulpwood.
Strategies implemented by Acadian have allowed for improved
contractor availability which, together with favourable operating
conditions, resulted in increased harvest and sales volumes.
Costs for the first quarter were $3.7 million (2011 - $2.6
million). Variable costs per m3 increased 22% in Canadian dollar
terms due to changes in contractor rates driven by increases in
fuel costs and greater distances from harvest sites to mill
delivery locations.
Adjusted EBITDA for the first quarter was $1.8 million, compared
to $1.2 million in the comparable period of 2011. Adjusted EBITDA
margin averaged 33% in the first quarter as compared to 32% during
the first quarter of 2011.
We are pleased to report that during the first quarter, Maine
Timberlands experienced no recordable safety incidents among
employees or contractors.
Market Outlook
The following Market Outlook contains forward-looking statements
about Acadian Timber Corp.'s market outlook for the remainder of
fiscal 2012. 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 of Acadian's most recent Annual Report and Annual
Information Form available on our website at www.acadiantimber.com
or filed with SEDAR at www.sedar.com.
The U.S. housing market sent mixed signals during the winter
months with the February data for construction and new and existing
homes sales falling slightly while the results of the homebuilders'
survey data and the housing-related question in the consumer
confidence survey improved significantly in March. We continue to
believe, however, that for US housing to fully recover, the economy
must continue to improve with concurrent employment growth and
improving consumer confidence and the inventory of unsold homes and
homes in foreclosure must decline to more normal levels. Despite
these broad economic challenges, most of Acadian's softwood
sawmilling customers are maintaining active operations and, as a
result, demand for spruce-fir sawlogs continues to be reasonably
strong causing our outlook to be cautiously optimistic for the
remainder of 2012. Markets for hardwood sawlogs remain stable and
appear to have a similar outlook for the foreseeable future.
Markets for hardwood pulpwood remain strong with Acadian's major
hardwood pulp customers all operating and actively competing for
deliveries suggesting prices will remain stable through year end.
Softwood pulpwood markets are increasingly soft as there has been
an ample supply of sawmill residuals and too little demand from
regional pulp mills. As a result, we expect softwood pulpwood
prices to continue to soften through the summer. Softwood pulpwood
typically accounts for approximately 7 - 8% of total sales.
Biomass markets continue to face significant market challenges.
Cogeneration plants associated with manufacturing facilities are
generally in good shape, while stand-alone wood-to-energy plants
continue to suffer from depressed prices for electricity and
decade-low prices for natural gas. Despite this challenging market
environment, Acadian continues to be able to sell all of its
biomass with a stable price outlook.
Acadian's efforts in addressing upward cost pressures from
contractor availability appear to have been reasonably successful
during the first quarter and we will continue to work with our
contractors, industry associations and the state and provincial
governments to secure an adequate skilled workforce.
"Acadian benefits from a strong balance sheet, healthy and
diverse markets and a strong operating team that remains committed
to continuously improving our financial performance. Owing to the
additional softwood sawlog and pulpwood volumes held in the VMI at
the end of March, we also expect second quarter sales and related
cash flow to be considerably stronger than has historically been
the case. These factors give us considerable confidence that
Acadian is well positioned to meet its dividend target for 2012 and
beyond," concluded Mr. Carter.
Quarterly Dividend
Acadian is pleased to announce a dividend of $0.20625 per share,
payable on July 13, 2012 to shareholders of record on June 29,
2012.
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 approximately 90 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, 2012 and the Management Information Circular dated March 28,
2012, 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.
Consolidated Statements of Net Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
(CAD thousands) March 31, 2012 March 26, 2011
----------------------------------------------------------------------------
Net sales $ 18,648 $ 21,756
----------------------------------------------------------------------------
Operating costs and expenses
Cost of sales 12,447 12,987
Selling, administration and other 1,435 1,505
Depreciation and amortization 137 137
----------------------------------------------------------------------------
14,019 14,629
----------------------------------------------------------------------------
Operating earnings 4,629 7,127
Interest expense, net (715) (940)
Other items
Fair value adjustments (401) (1,633)
Unrealized exchange gain (loss) on long-
term debt 1,769 (537)
Gain on sale of timberlands 4 1
----------------------------------------------------------------------------
Earnings before income taxes 5,286 4,018
Deferred tax expense (918) (1,084)
----------------------------------------------------------------------------
Net income for the period $ 4,368 $ 2,934
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income per share - basic and diluted $ 0.26 $ 0.18
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Consolidated Statements of Comprehensive Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
(CAD thousands) March 31, 2012 March 26, 2011
----------------------------------------------------------------------------
Net income $ 4,368 $ 2,934
----------------------------------------------------------------------------
Other comprehensive loss:
Unrealized foreign currency translation
loss (2,072) (936)
Amortization of derivatives designated
as cash flow hedges (49) (145)
----------------------------------------------------------------------------
Comprehensive income $ 2,247 $ 1,853
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Consolidated Balance Sheets
(unaudited)
----------------------------------------------------------------------------
As at
(CAD thousands) March 31, 2012 December 31, 2011
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 6,484 $ 4,019
Accounts receivable and other assets 4,117 8,726
Inventory 4,057 2,263
----------------------------------------------------------------------------
14,658 15,008
Timber 228,042 231,370
Land, roads and other fixed assets 32,937 33,438
Intangible assets 6,140 6,140
Deferred income tax asset 2,461 3,038
----------------------------------------------------------------------------
$ 284,238 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 3,040 $ 4,534
Dividends payable to shareholders 3,451 3,451
----------------------------------------------------------------------------
6,491 7,985
Long-term debt 71,370 73,079
Deferred income tax liability 21,223 21,572
Shareholders' equity 185,154 186,358
----------------------------------------------------------------------------
$ 284,238 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Consolidated Statements of Cash Flows
(unaudited)
----------------------------------------------------------------------------
Three Months Ended
(CAD thousands) March 31, 2012 March 26, 2011
----------------------------------------------------------------------------
Cash provided by (used for):
----------------------------------------------------------------------------
Operating activities
Net income $ 4,368 $ 2,934
Adjustments to net income:
Deferred tax expense 918 1,084
Depreciation and amortization 137 137
Fair value adjustments 401 1,633
Unrealized exchange (gain) loss on long-
term debt (1,769) 537
Interest expense, net 715 940
Interest paid, net (720) (205)
Gain on sale of timberlands (4) (1)
----------------------------------------------------------------------------
4,046 7,059
Net change in non-cash working capital
balances and other 1,881 1,986
----------------------------------------------------------------------------
5,927 9,045
----------------------------------------------------------------------------
Financing activities
Borrowing on term facility - 70,608
Repayment of bank term credit facility and
term loan - (73,639)
Deferred financing costs - (1,205)
Dividends paid to shareholders (3,451) (837)
----------------------------------------------------------------------------
(3,451) (5,073)
----------------------------------------------------------------------------
Investing activities
Additions to timber, lands, roads and
other fixed assets (15) (8)
Proceeds from sale of timberlands 4 1
----------------------------------------------------------------------------
(11) (7)
----------------------------------------------------------------------------
Increase in cash and cash equivalents
during the period 2,465 3,965
Cash and cash equivalents, beginning of
period 4,019 7,333
----------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 6,484 $ 11,298
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation to Adjusted EBITDA and Free Cash Flow
----------------------------------------------------------------------------
Three Months Ended
(CAD thousands) March 31, 2012 March 26, 2011
----------------------------------------------------------------------------
Net income $ 4,368 $ 2,934
Add (deduct):
Interest expense, net 715 940
Deferred tax expense 918 1,084
Depreciation and amortization 137 137
Fair value adjustments 401 1,633
Unrealized exchange (gain) loss on long-
term debt (1,769) 537
----------------------------------------------------------------------------
Adjusted EBITDA 4,770 7,265
Deduct:
Interest paid on debt, net (720) (205)
Additions to timber, lands, roads and
other fixed assets (15) (8)
Gain on sale of timberlands (4) (1)
Proceeds on sale of timberlands 4 1
----------------------------------------------------------------------------
Free cash flow $ 4,035 $ 7,052
----------------------------------------------------------------------------
Dividends declared $ 3,451 $ 3,451
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607rlee@acadiantimber.com
www.acadiantimber.com
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