MONTREAL and
VANCOUVER, March 18, 2013 /CNW Telbec/ - EACOM Timber
Corporation (TSXV: ETR) ("EACOM", or the "Company") is pleased to
announce its fourth quarter and year end results for the three and
twelve-month periods ended December 31,
2012.
HIGHLIGHTS
- EACOM recorded a positive adjusted EBITDA of $3.4 million in the fourth quarter, and
$2.5 million in 2012
- EACOM completed capital upgrades at Nairn Centre and Elk
Lake
- EACOM announced the reconstruction of its Timmins mill
- EACOM concluded the negotiation of a global settlement
with its insurer for the fire at its Timmins mill
Market conditions have improved compared to
2011. In the United States,
housing starts averaged 781,000 units in 2012, up 28% from 2011. In
Canada, a similar pattern emerged
with housing starts averaging 215,000 units, up 11% from 2011. This
improvement in housing activity had a positive impact on lumber
consumption and contributed to a much stronger pricing environment
and higher mill realizations for the Company. As a result, the
Company recorded a positive adjusted EBITDA of $2,481,000 for the year ended December 31, 2012, against a negative adjusted
EBITDA of $26,285,000 in 2011.
During the second half of 2012, the Company
completed capital upgrades targeted at increasing the production
capacity at two of its mills, Nairn
Centre and Elk Lake. 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. On December 12, 2012, the Company entered into an
agreement with USNR Kockums Cancar Inc. to rebuild the Timmins mill. The total cost of the project is
estimated at $25,000,000, of which
$18,900,000 will be funded from the
proceeds of insurance. Construction is expected to be completed in
the third quarter of 2013.
Subsequent to year-end, the Company concluded
with its insurer the negotiation of a global settlement in the
amount of $48,250,000 for the fire at
its Timmins mill. The Company
received advances for an aggregate amount of $30,600,000 in 2012 and, subsequent to year-end,
collected the remaining proceeds of $17,400,000 (net of a $250,000 deductible).
'The Company generated a positive adjusted
EBITDA of $3.4 million in the fourth
quarter and $2.5 million in 2012.
Current lumber markets have improved due to a stronger U.S. housing
market. In 2013, the Company will focus on its cost reduction
efforts to increase productivity and improve recovery', stated
Rick Doman, President and CEO.
YEAR ENDED DECEMBER
31, 2012 vs. YEAR ENDED DECEMBER 31,
2011
For the year ended December 31, 2012, net earnings attributable to
shareholders amounted to $4,285,000
or $0.01 per common share, against a
net loss of $47,412,000 or
$0.10 per common share in 2011. The
2012 results include a gain of $15,183,000 on disposal of property, plant and
equipment destroyed by fire whereas the 2011 results included an
impairment charge of $15,000,000,
partially offset by a gain of $4,339,000 on the sale of the Big River mill and
a $3,769,000 recovery of income
taxes.
In 2012, the Company recorded sales of
$248,937,000, down 11% against sales
of $279,967,000 in 2011. The
Company's sales include both lumber and by-product sales. In 2012,
the Company shipped 506 million board feet of lumber (621 million
board feet in 2011) and 476,000 oven-dried metric tons of
by-products (568,000 oven-dried metric tons in 2011). Compared to
2011, shipments reflect lower production volumes.
Pricing has improved in 2012 with benchmark
lumber prices averaging US$371/Mfbm
for studs and US$395/Mfbm for random
lengths delivered Great Lakes, up 17% and 15% from US$316/Mfbm and US$343/Mfbm respectively in 2011. Mill
realizations also benefited from a slightly softer Canadian dollar
with the exchange rate averaging 1.001
US$/Cdn$ in 2012, down 1% against an average of 1.011 US$/Cdn$ in 2011. The mix of lumber grades
sold during those periods has remained similar. However the overall
prices of by-products decreased during the fourth quarter as a
result of Val d'Or and
Matagami resuming operations
within the context of a competitive by-products market generating
lower chip prices.
Lumber production in 2012 was 447 million board
feet of lumber, against 522 million board feet in 2011. In 2012,
the Company operated at 44% of its capacity with two of its eight
mills idled (53% in the corresponding period of 2011 with no change
to idled mills). Operations in Val-d'Or and Matagami, which had been temporarily shut down
since the second half of 2011 due to weak market conditions,
resumed in the third quarter of 2012, and the Timmins mill closed on January 22, 2012 due to the fire at the mill
site. The volume lost in respect of these closures has been
partially offset 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, and by the addition of a third shift at Nairn at the end of the first quarter of
2012.
QUARTER ENDED DECEMBER
31, 2012 vs. QUARTERS ENDED SEPTEMBER
30, 2012 AND DECEMBER 31,
2011
For the quarter ended December 31, 2012, the net loss attributable to
shareholders amounted to $388,000 or
$0.00 per common share, against a net
loss of $964,000 or $0.00 per common share in the previous quarter
and a net loss of $27,055,000 or
$0.06 per common share in the
corresponding quarter of 2011. In the corresponding quarter of
2011, the Company recorded an impairment charge of $15,000,000.
During the fourth quarter of 2012, housing
starts in the United States
averaged 898,000 units, up 16% from the previous quarter and, more
significantly, 32% from the fourth quarter of 2011. In Canada, housing starts were mixed, down 8%
from the previous quarter but up 2% from the corresponding quarter
of 2011. The improvement in the U.S. housing activity had a
positive impact on lumber consumption and contributed to a strong
pricing environment. As a result, the Company recorded a positive
adjusted EBITDA of $3,383,000 for the
fourth quarter ended December 31,
2012, against a positive adjusted EBITDA of $1,482,000 in the previous quarter and a negative
adjusted EBITDA of $8,554,000 in the
corresponding quarter of 2011.
For the quarter ended December 31, 2012, the Company recorded sales of
$60,360,000, down 5% against sales of
$63,380,000 in the previous quarter
and 11% against sales of $67,445,000
in the corresponding quarter of 2011. During the quarter, the
Company shipped 120 million board feet of lumber (125 million board
feet in the previous quarter and 156 million board feet in the
corresponding quarter of 2011) and 110,000 oven-dried metric tons
of by-products (127,000 oven-dried metric tons in the previous
quarter and 129,000 oven-dried metric tons in the corresponding
quarter of 2011). Compared to the previous quarter and the
corresponding quarter of 2011, shipments reflect lower production
volumes and inventory changes.
Pricing has improved again in the fourth quarter
of 2012 with benchmark lumber prices averaging US$426/Mfbm for random lengths delivered Great
Lakes, up 5% from US$404/Mfbm in the
previous quarter. However, pricing for studs was somewhat mixed
during the quarter, averaging US$375/Mfbm against US$394/Mfbm in the previous quarter. The Canadian
dollar remained stable with the exchange rate relative to the US$
averaging 1.009 in the fourth quarter against an average of
1.005 US$/Cdn$ in the previous
quarter. Compared to the corresponding quarter of 2011, random
lengths and studs are trading at prices 31% and 23% above the
levels achieved last year.
Lumber production in the fourth quarter of 2012
was 113 million board feet of lumber, against 112 million board
feet in the previous quarter and 111 million board feet in the
corresponding quarter of 2011. During the fourth quarter, the
Company operated at 46% of its capacity (45% during the previous
quarter and 45% in the corresponding quarter of 2011). The most
significant changes include some downtime taken at Elk Lake during the fourth quarter of 2012
when the mill went through a substantial capital upgrade, the mills
in Val-d'Or and Matagami resuming their operations in the
third quarter of 2012, and the capacity lost at Timmins as a result of the fire.
FINANCIAL POSITION
At December 31,
2012, the Company had cash and cash equivalents of
$27,028,000 and restricted cash of
$6,664,000 ($14,268,000 and nil respectively at December 31, 2011). Its credit facility was
undrawn against a borrowing availability of $10,200,000 ($2,000,000 drawn against a borrowing availability
of $3,822,000 at December 31, 2011).
During the second quarter of 2012, the Company
closed a $40 million senior secured
debenture financing and repaid the remaining $2,000,000 of advances under its revolving credit
facility. Pursuant to the terms of the $40
million senior secured debentures, insurance proceeds of
$10,000,000 received in respect of
the property damage claim have been segregated and shown as
restricted cash pending the reconstruction of the Timmins mill. This amount was reduced to
$6,664,000 following the initial
payment made upon signature of the USNR contract in the fourth
quarter of 2012.
In 2012, a substantial portion of the
$24,658,000 in capital spending was
targeted at improving the production capacity at two of the
Company's mills, Nairn Centre and
Elk Lake, to partially offset the
capacity lost at Timmins and
mitigate the losses incurred as a result of the fire. A portion of
these investments will be reimbursed under the business
interruption 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. As a
result of improved market conditions, operations in Val-d'Or and Matagami which had been temporarily shut down
in 2011 resumed during the third quarter of 2012. The mill in
Timmins was seriously 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
(YEAR)
The following table provides an overview of the
Company's financial results for the years ended December 31, 2012 and 2011, along with some key
operating metrics.
|
|
|
|
(in thousands of dollars, except where otherwise
noted) |
|
|
|
|
2012 |
|
2011 |
Sales |
248,937 |
|
279,967 |
Operating income (loss) |
(7,436) |
|
(54,263) |
Net earnings (loss) attributable to
shareholders |
4,285 |
|
(47,412) |
Average lumber price in US$ - RL 2×4
#1&2(1) |
395 |
|
343 |
Average lumber price in US$ - Stud
2×4×8(1) |
371 |
|
316 |
Average exchange rate (US$ per C$1.00) |
1.001 |
|
1.011 |
Production - SPF lumber (MMfbm) |
447 |
|
522 |
Shipments - SPF lumber (MMfbm) |
407 |
|
535 |
Shipments - wholesale lumber (MMfbm) |
99 |
|
86 |
Cdn. housing starts (thousands of units) |
215 |
|
194 |
U.S. housing starts (thousands of units) |
781 |
|
612 |
(1) |
Eastern spruce/pine/fir, per thousand board feet delivered
Great Lakes (Source: Random Lengths Publications, Inc.) |
The following table reconciles the Company's net
loss attributable to shareholders, as reported in accordance with
IFRS, to EBITDA and adjusted EBITDA for the years ended
December 31, 2012 and 2011.
|
|
|
|
(in thousands of dollars) |
|
|
|
|
2012 |
|
2011 |
Net earnings (loss) attributable to
shareholders |
4,285 |
|
(47,412) |
Add (subtract): |
|
|
|
Depreciation |
9,804 |
|
13,457 |
Financing expense |
5,208 |
|
1,459 |
Income tax recovery |
- |
|
(3,769) |
EBITDA |
19,297 |
|
(36,265) |
Share of earnings in a joint venture |
(326) |
|
(608) |
Gain on disposal of property, plant and
equipment |
(15,207) |
|
(4,412) |
Gain on business interruption |
(1,283) |
|
- |
Impairment charge |
- |
|
15,000 |
Adjusted EBITDA |
2,481 |
|
(26,285) |
SELECTED FINANCIAL INFORMATION AND OPERATING STATISTICS
(QUARTER)
The following table provides an overview of the Company's
financial results for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, along with some key operating
metrics.
|
|
|
|
|
|
(in thousands of dollars, except where otherwise
noted) |
Q4 |
|
Q3 |
|
Q4 |
|
2012 |
|
2012 |
|
2011 |
Sales |
60,360 |
|
63,380 |
|
67,445 |
Operating income (loss) |
891 |
|
(900) |
|
(27,347) |
Net earnings (loss) attributable to
shareholders |
(388) |
|
(964) |
|
(27,055) |
Average lumber price in US$ - RL 2×4
#1&2(1) |
426 |
|
404 |
|
326 |
Average lumber price in US$ - Stud
2×4×8(1) |
375 |
|
394 |
|
304 |
Average exchange rate (US$ per C$1.00) |
1.009 |
|
1.005 |
|
0.977 |
Production - SPF lumber (MMfbm) |
113 |
|
112 |
|
111 |
Shipments - SPF lumber (MMfbm) |
98 |
|
100 |
|
133 |
Shipments - wholesale lumber (MMfbm) |
22 |
|
25 |
|
23 |
Cdn. housing starts (thousands of units) |
204 |
|
222 |
|
200 |
U.S. housing starts (thousands of units) |
898 |
|
774 |
|
678 |
(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
December 31, 2012, September 30, 2012 and December 31, 2011.
|
|
|
|
|
|
(in thousands of dollars) |
Q4 |
|
Q3 |
|
Q4 |
|
2012 |
|
2012 |
|
2011 |
Net earnings (loss) attributable to
shareholders |
(388) |
|
(964) |
|
(27,055) |
Add (subtract): |
|
|
|
|
|
Depreciation |
2,396 |
|
2,585 |
|
3,400 |
Financing expense |
1,769 |
|
1,652 |
|
325 |
EBITDA |
3,777 |
|
3,273 |
|
(23,330) |
Share of earnings in a joint venture |
181 |
|
(94) |
|
(236) |
Gain on disposal of property, plant and
equipment |
(924) |
|
(1) |
|
12 |
Gain on business interruption |
349 |
|
(1,696) |
|
- |
Impairment charge |
- |
|
- |
|
15,000 |
Adjusted EBITDA |
3,383 |
|
1,482 |
|
(8,554) |
SOURCE EACOM