MONTREAL and
VANCOUVER, Nov. 13, 2012 /CNW Telbec/ - EACOM Timber
Corporation (TSXV: ETR) ("EACOM", or the "Company") is pleased to
announce its third quarter results for the three-month period ended
September 30, 2012 and the
commencement of the reconstruction of its Timmins mill.
HIGHLIGHTS
- EACOM recorded a positive adjusted EBITDA of $1.5 million for the third quarter
- EACOM generated positive cash flows from operations of
$2.8 million during the
quarter
- Substantial progress with the upgrades underway at
Nairn Centre and Elk Lake
- Preparation for commencement of the reconstruction of the
Timmins mill
The third quarter saw a continuation of the
significant improvement in housing activity which had a positive
impact on lumber consumption, contributing to a stronger pricing
environment and higher mill realizations for the Company. This
improvement was somewhat offset by start-up costs at two of its
mills which had been temporarily shut down since the second half of
2011, Val-d'Or and Matagami, and by downtime costs related to
upgrades underway at Nairn Centre
and Elk Lake. As a result, the
Company recorded a positive adjusted EBITDA of $1,482,000 for the third quarter ended
September 30, 2012, down from
$2,792,000 in the previous quarter
but up against a negative adjusted EBITDA of $4,367,000 in the corresponding quarter of
2011.
During the third quarter, the Company made
significant progress in its capital improvements targeted at
increasing the production capacity at two of its mills,
Nairn Centre and Elk Lake. Improvements at Nairn Centre are now completed. Construction
at Elk Lake is expected to be
completed shortly following a six-week shutdown of the mill. These
upgrades are expected to partially offset the capacity lost at
Timmins and mitigate some of the
damages incurred as a result of the fire. A significant portion of
these investments will be reimbursed under the business
interruption insurance claim.
The Company has also commenced preliminary
preparation for the reconstruction of the Timmins mill which was destroyed by fire
earlier this year. A substantial portion of the total cost of the
project is being funded from proceeds of insurance related to the
fire. To date, the Company has received $23,700,000 of insurance proceeds, of which
$10,000,000 for damage or destruction
of assets and $13,700,000 related to
business interruption.
'We are progressing well with our capital
expenditure program at Nairn
Centre and Elk Lake. We
also moved forward with the commencement of the rebuilding process
at Timmins. The Company intends to
continue its focused capital investments with a view to increase
capacity and recovery, and reduce manufacturing costs. This should
contribute to improve our competitiveness in the global forestry
sector. It should also provide a more stable and sustainable
employment environment for our employees in the communities where
we operate', stated Rick Doman,
President and CEO.
QUARTER ENDED SEPTEMBER 30, 2012 vs. QUARTERS ENDED
JUNE 30, 2012 AND SEPTEMBER 30, 2011
For the quarter ended September 30, 2012, the net loss attributable to
shareholders amounted to $964,000 or
$0.00 per common share, against a net
loss of $709,000 or $0.00 per common share in the previous quarter
and a net loss of $564,000 or
$0.00 per common share in the
corresponding quarter of 2011. During the corresponding quarter of
2011, the Company recorded a gain of $4,339,000 on the sale of the idled mill located
in Big River, Saskatchewan and a
$2,940,000 recovery of income taxes
as a result of the acquisition of the remaining one-third interest
in the Elk Lake mill.
During the third quarter, the Company recorded
sales of $63,380,000, down 3% against
sales of $65,256,000 in the previous
quarter but up 3% against sales of $61,396,000 in the corresponding quarter of 2011.
The Company's sales include both lumber and by-product sales.
During the quarter, the Company shipped 125 million board feet of
lumber (133 million board feet in the previous quarter and 135
million board feet in the corresponding quarter of 2011) and
127,000 oven-dried metric tons of by-products (119,000 oven-dried
metric tons in the previous quarter and 138,000 oven-dried metric
tons in the corresponding quarter of 2011).
Pricing has improved again in the third quarter
of 2012 with benchmark lumber prices averaging US$394/Mfbm for studs and US$404/Mfbm for random lengths delivered Great
Lakes, up 2% and 3% from US$388/Mfbm
and US$393/Mfbm respectively in the
second quarter of 2012. Mill realizations were impacted by a
slightly stronger Canadian dollar with the exchange rate relative
to the US$ averaging 1.005 in the third quarter of 2012, up 2%
against an average of 0.990 in the previous quarter. Compared to
the corresponding quarter of 2011, studs and random lengths are
trading at prices 24% and 22% above the levels achieved last year,
and the Canadian dollar is down 1% relative to the US$.
Substantially all of the Company's sales were to
North American customers. Sales to U.S. customers are subject to
export taxes and volume quotas under Option B of the Softwood
Lumber Agreement. Effective July 1,
2012, the export tax rate for sales to U.S. customers
decreased from 3% to 2.5%, increasing back to 3% for the months of
August and September. Overall, compared to the corresponding
quarter of 2011, export taxes paid by EACOM decreased from
$1,095,000 to $388,000 as a result of lower shipments and a
decrease in the export tax rate for sales to U.S. customers.
Lumber production for the quarter ended
September 30, 2012 was 112 million
board feet of lumber, against 109 million board feet in the
previous quarter and 126 million board feet in the corresponding
quarter of 2011. During the third quarter, the Company operated at
45% of its capacity (40% during the previous quarter and 51% in the
corresponding quarter of 2011). Mills in Val-d'Or and Matagami resumed their operations during the
third quarter - these mills had been temporarily shut down since
the second half of 2011 due to weak market conditions. Compared to
the corresponding quarter of 2011, the capacity lost at
Timmins where operations have been
interrupted since January 22, 2012 as
a result of the fire at the mill site has been partially mitigated
by higher production levels at two other sites, and by the
additional production at Elk Lake
following the acquisition of the remaining one-third interest in
that mill in the third quarter of 2011.
Unit costs increased compared to those
experienced in the second quarter of 2012 and in the corresponding
quarter of 2011 as a result of the higher cost mills resuming their
operations and downtime costs related to upgrades underway at
Nairn Centre and Elk Lake.
FINANCIAL POSITION
At September 30,
2012, the Company had cash and cash equivalents of
$31,807,000 and restricted cash of
$10,000,000 ($37,711,000 and $10,000,000 respectively at June 30, 2012). Its credit facility was undrawn
against a borrowing availability of $8,432,000 (outstanding advances of nil and a
borrowing availability of $7,900,000
at June 30, 2012).
During the third quarter, the Company generated
positive cash flows from operations of $2,755,000 (prior to net changes in non-cash
working capital), down from $3,211,000 in the previous quarter.
Substantially all of the $6,356,000 in capital spending during the quarter
was targeted at improving the production capacity at two of the
Company's mills which, once completed, will partially offset the
lost capacity at Timmins and
mitigate some of the damages incurred as a result of the fire. A
significant portion of these investments will be reimbursed under
the business interruption insurance claim.
About EACOM
EACOM Timber Corporation is a TSX-V listed
company. The business activities of EACOM consist of the
manufacturing, marketing and distribution of lumber, wood chips and
wood-based value-added products, and the management of forest
resources. EACOM owns eight sawmills, all located in Eastern Canada, and related tenures. The mills
are Timmins, Nairn Centre, Gogama, Elk
Lake and Ear Falls in
Ontario, and Val-d'Or, Ste-Marie and Matagami in Quebec. The mills in Ear Falls, Ontario and Ste-Marie, Quebec are currently idled.
Operations in Val-d'Or and
Matagami which had been
temporarily shut down due to weak market conditions resumed during
the third quarter. The mill in Timmins was substantially damaged by fire in
January 2012 and remains shut down.
EACOM also owns a lumber remanufacturing facility in Val-d'Or, Quebec, and a 50% interest in an "I"
joist plant in Sault Ste-Marie,
Ontario.
The TSX Venture Exchange has neither approved
nor disapproved the content of this press release. All director and
officer appointments are subject to TSX Venture Exchange
approval.
Forward-Looking Statements
All statements in this news release that are
not based on historical facts are "forward-looking statements".
While management has based any forward-looking statements contained
herein on its current expectations, the information on which such
expectations were based may change. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of risks, uncertainties and other
factors, many of which are beyond our control and could cause
actual results to materially differ from such statements. Such
risks, uncertainties and other factors include, but are not
necessarily limited to, those set forth under "RISKS AND
UNCERTAINTIES" in the Company's current MD&A, and under "RISK
FACTORS" in the Company's Filing Statement dated January 8, 2010.
The financial information included in this
release also contains certain data that are not measures of
performance under IFRS. For example, "EBITDA" and "Adjusted EBITDA"
are measures used by management to assess the operating and
financial performance of the Company. We believe that EBITDA and
Adjusted EBITDA are measures often used by investors to assess a
company's operating performance. EBITDA and Adjusted EBITDA have
limitations and you should not consider these items in isolation,
or as substitutes for an analysis of our results as reported under
IFRS. Because of these limitations, EBITDA and Adjusted EBITDA
should not be used as substitutes for net loss or cash flows from
operating activities as determined in accordance with IFRS, nor are
they necessarily indicative of whether or not cash flows will be
sufficient to fund our cash requirements. In addition, our
definition of EBITDA and Adjusted EBITDA may differ from those of
other companies. A reconciliation of EBITDA and Adjusted EBITDA to
net loss attributable to shareholders is set forth under
"Supplemental Information on Non-GAAP Measures" in the Company's
current MD&A.
Additional information relating to EACOM is
available at www.eacom.ca and on SEDAR at www.sedar.com.
SELECTED FINANCIAL INFORMATION AND OPERATING
STATISTICS
The following table provides an overview of the
Company's financial results for the quarters ended September 30, 2012, June
30, 2012 and September 30,
2011, along with some key operating metrics.
|
|
|
|
|
|
|
(in thousands of dollars,
except where otherwise noted)
|
|
Q3
2012 |
|
Q2
2012 |
|
Q3
2011 |
|
|
|
|
|
|
|
Sales |
|
63,380 |
|
65,256 |
|
61,396 |
Operating income (loss) |
|
(900) |
|
228 |
|
(7,898) |
Net loss attributable to
shareholders |
|
(964) |
|
(709) |
|
(564) |
Average lumber price in US$ - RL
2×4 #1&2(1) |
|
404 |
|
393 |
|
332 |
Average lumber price in US$ - Stud
2×4×8(1) |
|
394 |
|
388 |
|
318 |
Average exchange rate (US$ per
C$1.00) |
|
1.005 |
|
0.990 |
|
1.020 |
Production - SPF lumber
(MMfbm) |
|
112 |
|
109 |
|
126 |
Shipments - SPF lumber
(MMfbm) |
|
100 |
|
105 |
|
115 |
Shipments - wholesale lumber
(MMfbm) |
|
25 |
|
28 |
|
20 |
Cdn. housing starts (thousands of
units) |
|
223 |
|
229 |
|
205 |
U.S. housing starts (thousands of
units) |
|
786 |
|
739 |
|
614
|
(1) Eastern spruce/pine/fir, per thousand board feet delivered
Great Lakes (Source: Random Lengths Publications, Inc.) |
The following table reconciles the Company's net
loss attributable to shareholders, as reported in accordance with
IFRS, to EBITDA and adjusted EBITDA for the quarters ended
September 30, 2012, June 30, 2012 and September 30, 2011.
|
|
|
|
|
|
|
(in thousands of
dollars)
|
|
Q3
2012 |
|
Q2
2012 |
|
Q3
2011
|
|
|
|
|
|
|
|
Net loss attributable to
shareholders |
|
(964) |
|
(709) |
|
(564) |
Add (subtract): |
|
|
|
|
|
|
Depreciation |
|
2,585 |
|
2,394 |
|
3,435 |
Financing expense |
|
1,652 |
|
1,444 |
|
397 |
Income tax recovery |
|
- |
|
- |
|
(2,940) |
EBITDA |
|
3,273 |
|
3,129 |
|
328 |
Share of earnings in a joint
venture |
|
(94) |
|
(267) |
|
(363) |
Gain on disposal of property,
plant and equipment |
|
(1) |
|
- |
|
(4,332) |
Gain on business interruption |
|
(1,696) |
|
(70) |
|
- |
Adjusted EBITDA |
|
1,482 |
|
2,792 |
|
(4,367) |
SOURCE EACOM