Investors, analysts and other interested parties can access
Acadian Timber Corp.'s 2012 Second Quarter Results conference call
via webcast on Wednesday, August 1, 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 June 30, 2012 (the "second quarter").
"Demand for spruce-fir sawlogs continues to be reasonably strong
with most of Acadian's softwood sawmilling customers maintaining
active operations", said Reid Carter, Chief Executive Officer of
Acadian. "Markets for hardwood pulpwood are also reasonably strong
with Acadian's major hardwood pulp customers all operating and
actively competing for deliveries".
For the second quarter of 2012, Acadian generated net sales of
$14.3 million on sales volume of 306 thousand m3, which represents
a $2.5 million, or 22%, increase in net sales compared to the same
period in 2011. Operating results for the period benefitted from
sales carried over from the first quarter of 2012 under the
short-term vender managed inventory ("VMI") program discussed in
Acadian's First Quarter 2012 Interim Report.
Adjusted EBITDA of $2.2 million for the second quarter of 2012
was $1.6 million higher than in the second quarter of 2011, while
Adjusted EBITDA margin increased to 15% from 5% in the same period
of last year.
For the six months ended June 30, 2012, Acadian generated net
sales of $32.9 million on sales volume of 658 thousand m3 as
compared to net sales of $33.5 million on sales volume of 669
thousand m3 in the comparable period of 2011. Adjusted EBITDA of
$7.0 million during the six months ended June 30, 2012 is $0.9
million lower than the first half of 2011.
(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 Six Months Ended
-------------------------------------------------------
(CAD thousands,
except per share
information) June 30 2012 June 25 2011 June 30 2012 June 25 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales volume (000s
m3) 306.0 242.7 657.5 669.1
Net sales $ 14,257 $ 11,723 $ 32,905 $ 33,479
Adjusted EBITDA 2,196 608 6,966 7,873
Free cash flow 2,087 (37) 6,122 7,015
Dividends declared 3,451 3,451 6,902 6,902
Net income (loss) 575 (261) 4,943 2,673
Per share (fully
diluted)
Net income (loss) 0.03 (0.02) 0.30 0.16
Free cash flow 0.12 - 0.37 0.42
Dividends declared 0.21 0.21 0.41 0.41
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian traditionally experiences very low levels of operating,
marketing and selling activity during the second quarter of each
year owing to spring break-up which causes much of the
infrastructure to be temporarily inoperable. However, results for
the second quarter of 2012 benefitted from sales carried over from
the first quarter under the aforementioned VMI program. As per the
terms of this agreement, all purchase commitments were filled
during the second quarter generating net sales of $3.9 million on a
sales volume of 84 thousand m3 and Adjusted EBITDA of $1.7 million,
slightly above the indication provided in the First Quarter 2012
Interim Report.
New Brunswick Timberlands
The table below summarizes operating and financial results for
New Brunswick Timberlands.
Three Months Ended June 30, Three Months Ended June 25,
2012 2011
-------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 54.2 130.4 $ 6,161 88.9 96.3 $ 5,131
Hardwood 91.9 94.0 5,667 87.6 91.6 5,315
Biomass 46.3 46.3 748 34.2 34.2 472
----------------------------------------------------------------------------
192.4 270.7 12,576 210.7 222.1 10,918
Other sales (184) (301)
----------------------------------------------------------------------------
Net sales $ 12,392 $ 10,617
----------------------------------------------------------------------------
Adjusted EBITDA $ 2,485 $ 1,139
Adjusted EBITDA margin 20% 11%
----------------------------------------------------------------------------
Six Months Ended June 30, Six Months Ended June 25,
2012 2011
------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 209.7 212.6 $ 10,322 254.8 252.6 $ 12,714
Hardwood 185.1 208.7 12,652 225.2 218.2 12,921
Biomass 106.1 106.1 1,868 103.9 103.9 1,635
----------------------------------------------------------------------------
500.9 527.4 24,842 583.9 574.7 27,270
Other sales 705 1,278
----------------------------------------------------------------------------
Net sales $ 25,547 $ 28,548
----------------------------------------------------------------------------
Adjusted EBITDA $ 5,601 $ 7,494
Adjusted EBITDA margin 22% 26%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 130 thousand m3,
94 thousand m3 and 46 thousand m3, respectively, for the second
quarter of 2012. Approximately 39% was sold as sawlogs, 44% as
pulpwood and 17% as biomass. This compares to 37% sold as sawlogs,
48% as pulpwood and 15% as biomass in the second quarter of
2011.
Net sales for the second quarter of 2012 were $12.4 million
(2011 - $10.6 million) with an average selling price across all
products of $46.45 per m3, which compares to an average selling
price of $49.18 per m3 during the second quarter of 2011. This
year-over-year decrease in the average selling price reflects a
higher proportion of sales made to closer proximity markets.
Approximately $3.9 million of the sales during the second quarter
were the result of the completion of purchase commitments under the
VMI. Net sales for the first six months ended June 30, 2012 were
$25.5 million, a decrease of $3.0 million over the first half of
2011 primarily as a result of decreased sales volume.
Costs for the second quarter were $9.9 million (2011 - $9.5
million). Variable costs per m3 were 9% lower than the second
quarter of 2011 due to decreased hauling costs as a greater
proportion of sales were made to closer proximity markets.
Adjusted EBITDA for the second quarter was $2.5 million,
compared to $1.1 million in the comparable period of 2011 as NB
Timberlands realized approximately $1.7 million in Adjusted EBITDA
from the completion of purchase commitments under the VMI. Adjusted
EBITDA margin increased to 20%, as compared to 11% for the second
quarter of 2011, reflecting the effect of increased sales volume on
fixed cost absorption.
NB Timberlands experienced no recordable safety incidents among
contractors and one minor recordable incident involving an employee
during the second quarter of 2012.
Maine Timberlands
The table below summarizes operating and financial results for
Maine Timberlands.
Three Months Ended June 30, Three Months Ended June 25,
2012 2011
------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 20.4 21.6 $ 1,176 11.7 11.8 $ 627
Hardwood 8.4 9.3 550 5.8 6.7 380
Biomass 4.4 4.4 34 2.1 2.1 13
----------------------------------------------------------------------------
33.2 35.3 1,760 19.6 20.6 1,020
Other sales 105 86
----------------------------------------------------------------------------
Net sales $ 1,865 $ 1,106
----------------------------------------------------------------------------
Adjusted EBITDA $ (7) $ (148)
Adjusted EBITDA margin -% (13)%
----------------------------------------------------------------------------
Six Months Ended June 30, Six Months Ended June 25,
2012 2011
------------------------------------------------------------
Harvest Sales Results Harvest Sales Results
(000s m3) (000s m3) ($000s) (000s m3) (000s m3) ($000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 96.4 96.2 $ 5,384 70.0 70.0 $ 3,685
Hardwood 28.2 28.9 1,773 16.4 17.8 1,045
Biomass 5.0 5.0 53 6.6 6.6 57
----------------------------------------------------------------------------
129.6 130.1 7,210 93.0 94.4 4,787
Other sales 148 144
----------------------------------------------------------------------------
Net sales $ 7,358 $ 4,931
----------------------------------------------------------------------------
Adjusted EBITDA $ 1,801 $ 1,081
Adjusted EBITDA margin 24% 22%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 22 thousand m3, 9
thousand m3 and 4 thousand m3, respectively, for the second quarter
of 2012. Approximately 52% was sold as sawlogs, 35% as pulpwood and
13% as biomass. This compares to 50% sold as sawlogs, 40% as
pulpwood and 10% as biomass in the second quarter of 2011.
Net sales for the second quarter of 2012 were $1.9 million (2011
- $1.1 million) with an average selling price across all products
of $49.90 per m3, comparable to the average selling price of $49.61
per m3 during the second quarter of 2011. Strategies implemented by
Acadian have allowed for improved contractor availability which,
together with favourable operating conditions, resulted in
increased sales volume. Net sales for the first six months ended
June 30, 2012 were $7.4 million, an increase of $2.4 million over
the first half of 2011.
Costs for the second quarter were $1.9 million (2011 - $1.3
million). Variable costs per m3 increased 7% in Canadian dollar
terms due to changes in contractor rates driven by increases in
fuel costs and greater distances from the harvest site to mill
delivery locations.
Adjusted EBITDA for the second quarter was nil, compared to
negative $0.1 million in the comparable period of 2011. Adjusted
EBITDA margin was 0% in the second quarter of 2012 as compared to
negative 13% during the second quarter of 2011.
We are pleased to report that during the second quarter of 2012,
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 appears to be gradually gaining
momentum. Milder than usual weather in the Northeast and Midwest
during the seasonally slow winter months, modest gains in
employment, increased household formations and resurgent demand for
apartments has led to a significant improvement in new construction
and sales during the first six months of 2012. Single-family starts
are 20% ahead of their year-ago pace through June with multi-family
starts up an impressive 45%. As well, the inventory of existing
homes for sale declined by 20% year-over-year in June and home
prices have firmed up. We believe the first half of 2012 has been a
promising start to the recovery of the U.S. housing market, but we
continue to expect this recovery to be gradual with normalization
of home inventories and recovery of new home construction to trend
levels not expected before 2014-2015.
Our outlook for the remainder of 2012 and into 2013 remains
cautiously optimistic as demand for spruce-fir sawlogs continues to
be reasonably strong with most of Acadian's softwood sawmilling
customers maintaining active operations and markets for hardwood
sawlogs remain stable and appear to have a similar outlook for the
foreseeable future. Markets for hardwood pulpwood are also
reasonably strong with Acadian's major hardwood pulp customers all
operating and actively competing for deliveries suggesting prices
will remain stable through the remainder of 2012. Softwood pulpwood
markets, however, have become increasingly soft as there has been
an ample supply of sawmill residuals and too little demand from
regional pulp mills due to mill closures. This is particularly true
in our New Brunswick operations where the provincial government has
responded to the oversupply situation by allowing Crown licensees
to leave softwood pulpwood in the woods as an interim solution
until markets improve. We expect markets for softwood pulpwood will
be very challenging through the summer and expect prices to
continue to soften. However, this will not significantly affect
Acadian's financial performance as softwood pulpwood typically
accounts for only 7 - 8% of total sales and an even smaller
proportion of cash flows.
Biomass markets continue to face significant market challenges.
Cogeneration plants associated with manufacturing facilities are
generally in good shape, but 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.
Quarterly Dividend
Acadian is pleased to announce a dividend of $0.20625 per share,
payable on October 15, 2012 to shareholders of record on September
28, 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 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, market
trends 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. 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 Six Months Ended
----------------------------------------------------------------------------
June 30 June 25 June 30 June 25
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net sales $ 14,257 $ 11,723 $ 32,905 $ 33,479
----------------------------------------------------------------------------
Operating costs and
expenses
Cost of sales 10,378 9,237 22,825 22,224
Selling, administration
and other 1,536 1,682 2,971 3,187
Reforestation 162 293 162 293
Depreciation and
amortization 136 135 273 272
----------------------------------------------------------------------------
12,212 11,347 26,231 25,976
----------------------------------------------------------------------------
Operating earnings 2,045 376 6,674 7,503
Interest expense, net (743) (737) (1,458) (1,677)
Other items:
Fair value adjustments 808 1,235 407 (398)
Unrealized exchange gain
(loss) on long-term
debt (1,399) (450) 370 (987)
Gain on sale of
timberlands 15 97 19 98
----------------------------------------------------------------------------
Earnings before income
taxes 726 521 6,012 4,539
Deferred tax expense (151) (782) (1,069) (1,866)
----------------------------------------------------------------------------
Net income (loss) for the
period $ 575 $ (261) $ 4,943 $ 2,673
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per
share - basic and diluted$ 0.03 $ (0.02) $ 0.30 $ 0.16
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statements of Comprehensive Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 30 June 25 June 30 June 25
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net income (loss) $ 575 $ (261) $ 4,943 $ 2,673
----------------------------------------------------------------------------
Other comprehensive
income (loss)
Unrealized foreign
currency translation
income (loss) 1,655 704 (417) (232)
Amortization of
derivatives
designated as hedges (49) (77) (98) (222)
----------------------------------------------------------------------------
Comprehensive income $ 2,181 $ 366 $ 4,428 $ 2,219
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Balance Sheets
(unaudited)
----------------------------------------------------------------------------
As at June 30 December 31
(CAD thousands) 2012 2011
----------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 6,128 $ 4,019
Accounts receivable and other assets 7,112 8,726
Inventory 936 2,263
----------------------------------------------------------------------------
14,176 15,008
Timber 231,830 231,370
Land, roads and other fixed assets 33,193 33,438
Intangible Assets 6,140 6,140
Deferred income tax asset 2,140 3,038
----------------------------------------------------------------------------
$ 287,479 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 5,740 $ 4,534
Dividends payable to shareholders 3,451 3,451
----------------------------------------------------------------------------
9,191 7,985
Long-term debt 72,832 73,079
Deferred income tax liability 21,572 21,572
Shareholders' equity 183,884 186,358
----------------------------------------------------------------------------
$ 287,479 $ 288,994
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statements of Cash Flows
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 30 June 25 June 30 June 25
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Cash provided by (used for):
----------------------------------------------------------------------------
Operating activities
Net income (loss) $ 575 $ (261) $ 4,943 $ 2,673
Items not affecting cash:
Deferred tax expense 151 782 1,069 1,866
Depreciation and amortization 136 135 273 272
Fair value adjustments (808) (1,235) (407) 398
Unrealized exchange (gain)
loss on long term debt 1,399 450 (370) 987
Interest expense, net 743 737 1,458 1,677
Interest paid, net (16) (639) (736) (844)
Gain on sale of timberlands (15) (97) (19) (98)
----------------------------------------------------------------------------
2,165 (128) 6,211 6,931
Net change in non-cash working
capital and other 1,008 (1,264) 2,889 721
----------------------------------------------------------------------------
3,173 (1,392) 9,100 7,652
----------------------------------------------------------------------------
Financing activities
Borrowings 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) (3,451) (6,902) (4,287)
----------------------------------------------------------------------------
(3,451) (3,451) (6,902) (8,523)
----------------------------------------------------------------------------
Investing activities
Additions to timber, property,
plant and equipment (95) (8) (110) (16)
Proceeds from sale of
timberlands 17 99 21 100
----------------------------------------------------------------------------
(78) 91 (89) 84
----------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents during the
period (356) (4,752) 2,109 (787)
Cash and cash equivalents,
beginning of period 6,484 11,298 4,019 7,333
----------------------------------------------------------------------------
Cash and cash equivalents, end
of period $ 6,128 $ 6,546 $ 6,128 $ 6,546
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliations to Adjusted EBITDA and Free Cash Flow
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 30 June 25 June 30 June 25
(CAD thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Net income (loss) $ 575 $ (261) $ 4,943 $ 2,673
Add (deduct):
Interest expense, net 743 737 1,458 1,677
Deferred tax expense 151 782 1,069 1,866
Depreciation and amortization 136 135 273 272
Fair value adjustments (808) (1,235) (407) 398
Unrealized exchange (gain)
loss on long-term debt 1,399 450 (370) 987
----------------------------------------------------------------------------
Adjusted EBITDA 2,196 608 6,966 7,873
Add (deduct):
Interest paid on debt, net (16) (639) (736) (844)
Capital expenditures (95) (8) (110) (16)
Gain on sale of timberlands (15) (97) (19) (98)
Proceeds on sale of
timberlands 17 99 21 100
----------------------------------------------------------------------------
Free cash flow $ 2,087 $ (37) $ 6,122 $ 7,015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dividends declared $ 3,451 $ 3,451 $ 6,902 $ 6,902
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts: Acadian Timber Corp. Robert Lee Investor Relations and
Communications 604-661-9607rlee@acadiantimber.com
www.acadiantimber.com
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