All figures in Canadian dollars unless otherwise noted
Investors, analysts and other interested parties can access Acadian Timber
Corp.'s 2011 Second Quarter Results conference call via webcast on Thursday,
July 28, 2011 at 11:00 a.m. ET at www.acadiantimber.com or via teleconference at
1-800-319-4610, toll free in North America. For overseas calls please dial
+1-604-638-5340, at approximately 9:50 a.m. ET. The teleconference taped
rebroadcast can be accessed at 1-800-319-6413 or +1-604-638-9010 and enter
passcode 2826.
Acadian Timber Corp. ("Acadian" or the "Company") (TSX:ADN) today reported
financial and operating results(1) for the three months ended June 25, 2011 (the
"second quarter").
"The market for hardwood and softwood sawlogs and pulpwood was relatively strong
during the second quarter with demand and pricing for hardwood pulpwood being
particularly strong", said Reid Carter, Chief Executive Officer of Acadian.
"Regional operating levels continued to be positive with most sawmills operating
and many on two shifts and all of Acadian's pulp and paper customers operating
at close to full production during the second quarter."
For the second quarter of 2011, Acadian generated net sales of $11.7 million on
sales volume of 243 thousand m(3), which represents a $0.4 million, or 3%,
decrease in net sales compared to the same period in 2010.
EBITDA of $0.6 million for the second quarter of 2011 was $0.4 million lower
than in the second quarter of 2010, while EBITDA margin decreased to 5% from 8%
in the same period of last year.
For the six months ended June 25, 2011, Acadian generated net sales of $33.5
million on sales volume of 669 thousand m(3) as compared to net sales of $32.6
million on sales volume of 671 thousand m(3) in the comparable period of 2010.
EBITDA of $7.9 million during the six months ended June 25, 2011 is $1.2 million
higher than the first half of 2010 reflecting the strong first quarter 2011
results.
(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
Financial and Operating Highlights
Three Months Ended Six Months Ended
---------------------------------------------
(CAD thousands, except per June 25, June 26, June 25, June 26,
share information) 2011 2010 2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales volume (000s m(3)) 242.7 270.0 669.1 671.0
Net sales $ 11,723 $ 12,137 $ 33,479 $ 32,595
EBITDA 608 971 7,873 6,710
Free cash flow (37) (391) 7,015 4,588
Dividends declared 3,451 836 6,902 1,952
Net income (loss)(1) (261) 565 2,673 25,645
Per share - fully diluted
Net income (loss)(1) (0.02) 0.03 0.16 1.53
Free cash flow - (0.02) 0.42 0.27
Dividends declared 0.20 0.05 0.41 0.12
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)Net income (loss) includes the impact of deferred income tax,
depreciation and amortization expense, and fair value adjustments which
are non-cash items recorded in each respective period and, for 2010
only, the gain resulting from Acadian's corporate conversion on January
1, 2010.
International Financial Reporting Standards
Effective fiscal 2011, Acadian's financial results are reported in accordance
with International Financial Reporting Standards ("IFRS"). Comparative figures
in this press release, previously presented in GAAP, have been adjusted to
conform to IFRS.
Operating Results
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. Cold
weather early in the first quarter of 2011 allowed Acadian's New Brunswick
operations to continue to harvest into early April allowing log sales to
continue into the early part of the quarter. However, this benefit was offset by
wet weather late in the quarter delaying production start-up following spring
break-up, thereby reducing the total sales volume for the period.
New Brunswick Timberlands
The table below summarizes operating and financial results for New Brunswick
Timberlands.
Three Months Ended June 25, Three Months Ended June 26,
2011 2010
--------------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m(3)) m(3)) (thousands) m(3)) m(3)) (thousands)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Softwood 88.9 96.3 $ 5,131 71.6 72.4 $ 3,888
Hardwood 87.6 91.6 5,315 73.0 99.1 5,633
Biomass 34.2 34.2 472 50.2 50.1 393
---------------------------------------------------------------------------
210.7 222.1 10,918 194.8 221.6 9,914
Other sales (301) (190)
---------------------------------------------------------------------------
Net sales $ 10,617 $ 9,724
---------------------------------------------------------------------------
EBITDA $ 1,139 $ 905
EBITDA margin 11% 9%
---------------------------------------------------------------------------
Six Months Ended June 25, 2011 Six Months Ended June 26, 2010
---------------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m(3)) m(3)) (thousands) m(3)) m(3)) (thousands)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 254.8 252.6 $ 12,714 205.8 194.6 $ 10,208
Hardwood 225.2 218.2 12,921 213.9 240.8 13,346
Biomass 103.9 103.9 1,635 108.2 108.1 1,575
----------------------------------------------------------------------------
583.9 574.7 27,270 527.9 543.5 25,129
Other sales 1,278 1,026
----------------------------------------------------------------------------
Net sales $ 28,548 $ 26,155
----------------------------------------------------------------------------
EBITDA $ 7,494 $ 5,981
EBITDA margin 26% 23%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 96 thousand m(3), 92 thousand m(3)
and 34 thousand m(3), respectively, for the second quarter of 2011.
Approximately 37% was sold as sawlogs, 48% as pulpwood and 15% as biomass. This
compares to 36% sold as sawlogs, 41% as pulpwood and 23% as biomass in the
second quarter of 2010.
Net sales for the second quarter of 2011 was $10.6 million (2010 - $9.7 million)
with an average selling price across all products of $49.18 per m(3) which
compares to an average selling price of $44.74 per m(3) during the second
quarter of 2010. The year-over-year increase in the average selling price
resulted from improved spruce-fir sawlog demand and strong hardwood pulpwood
markets. Net sales for the first six months ended June 25, 2011 were $28.5
million, an increase of $2.4 million over the first half of 2010.
Costs for the second quarter were $9.5 million (2010 - $8.8 million). Variable
costs per m(3) were 4% higher than the second quarter of 2010 as a result of
sales made to more distant markets, particularly for hardwood pulpwood.
EBITDA for the second quarter was $1.1 million, compared to $0.9 million in the
comparable period of 2010. For the six months ended June 25, 2011, EBITDA was
$7.5 million as compared to $6.0 million for the first half of 2010. EBITDA
margin increased to 11%, as compared to 9% for the second quarter of 2010,
primarily reflecting the impact of increased proportion of softwood sawlog sales
volume and higher prices for pulpwood.
During the second quarter of 2011, NB Timberlands experienced no recordable
safety incidents among employees and one recordable incident among contractors
from which the individual has fully recovered.
Maine Timberlands
The table below summarizes operating and financial results for Maine Timberlands.
Three Months Ended June 25, Three Months Ended June 26,
2011 2010
---------------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m(3)) m(3)) (thousands) m(3)) m(3)) (thousands)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 11.7 11.8 $ 627 32.9 33.0 $ 1,623
Hardwood 5.8 6.7 380 10.9 11.7 638
Biomass 2.1 2.1 13 3.7 3.7 52
----------------------------------------------------------------------------
19.6 20.6 1,020 47.5 48.4 2,313
Other sales 86 100
----------------------------------------------------------------------------
Net sales $ 1,106 $ 2,413
----------------------------------------------------------------------------
EBITDA $ (148) $ 257
EBITDA margin (13)% 11%
----------------------------------------------------------------------------
Six Months Ended June 25, 2011 Six Months Ended June 26, 2010
----------------------------------------------------------------------------
Harvest Sales Harvest Sales
(000s (000s Results (000s (000s Results
m(3)) m(3)) (thousands) m(3)) m(3)) (thousands)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Softwood 70.0 70.0 $ 3,685 93.9 93.6 $ 4,755
Hardwood 16.4 17.8 1,045 28.2 27.9 1,394
Biomass 6.6 6.6 57 6.0 6.0 122
----------------------------------------------------------------------------
93.0 94.4 4,787 128.1 127.5 6,271
Other sales 144 169
----------------------------------------------------------------------------
Net sales $ 4,931 $ 6,440
----------------------------------------------------------------------------
EBITDA $ 1,081 $ 1,423
EBITDA margin 22% 22%
----------------------------------------------------------------------------
Softwood, hardwood and biomass shipments were 12 thousand m(3), 7 thousand m(3)
and 2 thousand m(3), respectively, for the second quarter of 2011. Approximately
50% was sold as sawlogs, 40% as pulpwood and 10% as biomass. This compares to
49% sold as sawlogs, 43% as pulpwood and 8% as biomass in the second quarter of
2010.
Net sales for the second quarter of 2011 were $1.1 million (2010 - $2.4 million)
with an average selling price across all products of $49.61 per m(3) which
compares to an average selling price of $47.79 per m(3) during the second
quarter of 2010. This variance in sales price was primarily attributable to
greater demand for sawlogs of all species groups. A stronger Canadian/U.S.
dollar exchange rate year-over-year reduced the benefit of these market changes
in Canadian dollar terms. Sales volume was limited due a poor weather conditions
in the region resulting in a late start from spring break up. Net sales for the
first six months ended June 25, 2011 were $4.9 million, a decrease of $1.5
million over the first half of 2010.
Costs for the second quarter were $1.3 million (2010 - $2.2 million). Variable
costs per m(3) decreased 6% in Canadian dollar terms and 2% in U.S. dollar
terms. This decrease reflects increased sales to closer markets in the second
quarter of 2011.
EBITDA for the second quarter was negative $0.1 million, compared to positive
$0.3 million in the comparable period of 2010. For the six months ended June 25,
2011, EBITDA was $1.1 million as compared to $1.4 million for the first half of
2010.
EBITDA margin averaged negative 13% in the second quarter of 2011 as compared to
positive 11% during the second quarter of 2010, although this negative margin
simply reflects the low sales volume which resulted in lower contribution to
fixed costs.
We are pleased to report that during the second quarter of 2011, 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 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 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.
Signals for recovery of the U.S. housing continue to be very weak suggesting
that any robust recovery of this market remains somewhat distant. However,
Acadian continues to benefit from most of its softwood sawmilling customers
maintaining active operations and, as a result, demand for spruce-fir sawlogs
continues to be strong causing our outlook to be cautiously optimistic for the
remainder of 2011. Markets for Acadian's other softwood species are mixed, with
demand for hemlock being very strong while markets for white pine and cedar are
softer. Spruce-fir comprises the majority of softwood sawlog sales.
Markets for hardwood sawlogs remain stable and appear to have a similar outlook
for the foreseeable future.
Markets for both softwood and hardwood pulp logs are strong with demand and
pricing continuing to improve. While consensus expectations appear to forecast
softening pulp markets during the second half of 2011, Acadian's major hardwood
pulpwood customers are currently operating and actively competing for deliveries
suggesting prices will remain stable through the third quarter with a possible
softening of demand late in the year. Acadian continues to be able to sell all
of its biomass, although more optimistic expectations for growth of this market
have moderated with current low natural gas prices and little expectation of new
economic incentives for conversion to renewable fuels in the United States.
Quarterly Dividend
Acadian is pleased to announce a dividend of $0.20625 per share, payable on
October 14, 2011 to shareholders of record on September 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 Statement of Net Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 25, June 26, June 25, June 26,
(CAD thousands) 2011 2010 2011 2010
----------------------------------------------------------------------------
Net sales $ 11,723 $ 12,137 $ 33,479 $ 32,595
----------------------------------------------------------------------------
Operating costs and expenses
Cost of sales 9,237 9,603 22,224 22,446
Selling, administration and other 1,682 1,547 3,187 3,425
Depreciation and amortization 135 121 272 241
----------------------------------------------------------------------------
11,054 11,271 25,683 26,112
----------------------------------------------------------------------------
Operating earnings 669 866 7,796 6,483
Interest expense, net (737) (1,097) (1,677) (1,856)
Interest:
Fair value adjustments 1,235 1,415 (398) 1,427
Unrealized exchange loss on long-
term debt (450) - (987) -
Reforestation (293) (46) (293) (46)
Gain on sale of timberlands 97 30 98 32
Gain on corporate conversion - - - 21,086
----------------------------------------------------------------------------
Earnings before income taxes 521 1,168 4,539 27,126
Deferred tax expense (782) (603) (1,866) (1,481)
----------------------------------------------------------------------------
Net income (loss) for the period $ (261)$ 565 $ 2,673 $ 25,645
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per share - basic $ (0.02)$ 0.03 $ 0.16 $ 1.53
Net income (loss) per share -
diluted $ (0.02)$ 0.03 $ 0.16 $ 1.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statement of Comprehensive Income
(unaudited)
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 25, June 26, June 25, June 26,
(CAD thousands) 2011 2010 2011 2010
----------------------------------------------------------------------------
Net income (loss) $ (261)$ 565 $ 2,673 $ 25,645
----------------------------------------------------------------------------
Other comprehensive income (loss)
Unrealized foreign currency
translation income (loss) 704 533 (232) (900)
Amortization of derivatives
designated as hedges (77) - (222) -
----------------------------------------------------------------------------
Comprehensive income $ 366 $ 1,098 $ 2,219 $ 24,745
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Balance Sheets
(unaudited)
----------------------------------------------------------------------------
As at June 25, December 31, January 1,
(CAD thousands) 2011 2010 2010
----------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 6,546 $ 7,333 $ 2,053
Accounts receivable and other
assets 7,852 7,252 6,265
Inventory 1,403 990 2,289
Derivative asset - 1,557 -
Note receivable - - 4,001
----------------------------------------------------------------------------
15,801 17,132 14,608
Timber 214,725 216,181 216,751
Property, plant and equipment 34,075 34,508 36,275
Investment property 875 875 875
Intangible Assets 6,140 6,140 6,140
Deferred income tax asset 5,906 7,522 -
----------------------------------------------------------------------------
$ 277,522 $ 282,358 $ 274,649
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 4,978 $ 4,483 $ 4,275
Dividends payable to
shareholders 3,451 837 -
Debt - 73,752 -
----------------------------------------------------------------------------
8,429 79,072 4,275
Long-term debt 70,470 - 80,739
Deferred income tax liability 18,972 18,952 34,553
Shareholders' equity 179,651 184,334 155,082
----------------------------------------------------------------------------
$ 277,522 $ 282,358 $ 274,649
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acadian Timber Corp.
Interim Consolidated Statement of Cash Flows
(unaudited)
---------------------------------------------------------------------------
Three Months Ended Six Months Ended
---------------------------------------------------------------------------
June 25, June 26, June 25, June 26,
(CAD thousands) 2011 2010 2011 2010
---------------------------------------------------------------------------
Cash provided by (used for):
---------------------------------------------------------------------------
Operating activities
Net income (loss) $ (261)$ 565 $ 2,673 $ 25,645
Items not affecting cash:
Deferred tax expense 782 603 1,866 1,481
Depreciation and amortization 135 121 272 241
Fair value adjustments (1,235) (1,415) 398 (1,427)
Unrealized exchange loss on long
term debt 450 - 987 -
Interest expense, net 737 1,097 1,677 1,856
Interest paid (639) (1,097) (844) (1,856)
Gain on sale of timberlands (97) (30) (98) (32)
Gain on corporate conversion - - - (21,086)
---------------------------------------------------------------------------
(128) (156) 6,931 4,822
Net change in non-cash working
capital balances and other (1,265) (2,337) 721 (722)
---------------------------------------------------------------------------
(1,393) (2,493) 7,652 4,100
---------------------------------------------------------------------------
Financing activities
Borrowings, net of repayments - (1,200) (3,031) (3,500)
Deferred financing costs - - (1,205) -
Dividends paid to shareholders (3,450) (836) (4,287) (1,115)
---------------------------------------------------------------------------
(3,450) (2,036) (8,523) (4,615)
---------------------------------------------------------------------------
Investing activities
Additions to timber, property, plant
and equipment (8) (263) (16) (264)
Proceeds from sale of timberlands 99 28 100 30
---------------------------------------------------------------------------
91 (235) 84 (234)
---------------------------------------------------------------------------
Decrease in cash and cash
equivalents during the period (4,752) (4,764) (787) (749)
Cash and cash equivalents, beginning
of period 11,298 6,068 7,333 2,053
---------------------------------------------------------------------------
Cash and cash equivalents, end of
period $ 6,546 $ 1,304 $ 6,546 $ 1,304
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Reconciliation to EBITDA and Free
Cash Flow
----------------------------------------------------------------------------
Three Months Ended Six Months Ended
----------------------------------------------------------------------------
June 25, June 26, June 25, June 26,
(CAD thousands) 2011 2010 2011 2010
----------------------------------------------------------------------------
Net income (loss)(1) $ (261)$ 565 $ 2,673 $ 25,645
Add (deduct):
Interest expense, net 737 1,097 1,677 1,856
Deferred tax expense 782 603 1,866 1,481
Depreciation and amortization 135 121 272 241
Fair value adjustments (1,235) (1,415) 398 (1,427)
Unrealized exchange loss on long-
term debt 450 - 987 -
Gain on corporate conversion - - - (21,086)
----------------------------------------------------------------------------
EBITDA 608 971 7,873 6,710
Add (deduct):
Interest paid on debt, net (639) (1,097) (844) (1,856)
Capital expenditures (8) (263) (16) (264)
Gain on sale of timberlands (97) (30) (98) (32)
Proceeds on sale of timberlands 99 28 100 30
----------------------------------------------------------------------------
Free cash flow $ (37)$ (391)$ 7,015 $ 4,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dividends declared $ 3,451 $ 836 $ 6,902 $ 1,952
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)Net income (loss) includes the impact of deferred income tax,
depreciation and amortization expense, and fair value adjustments which are
non-cash items recorded in each respective period and, for 2010 only, the
gain resulting from Acadian's corporate conversion on January 1, 2010.
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