Investors, analysts and other interested parties can access Acadian
Timber Corp.’s 2018 Third Quarter Results via conference call or
webcast on Thursday November 1, 2018 at 1:00PM ET, please dial
1-866-521-4909 toll free in North America (Canada and the USA), or
for overseas calls, please dial 1-647-427-2311 at approximately
12:50PM ET. For those unable to participate, a taped rebroadcast
will be available until midnight November 30, 2018. To access this
rebroadcast, please dial 1-800-585-8367 or 1-416-621-4642
Conference ID #8389355. |
All figures in Canadian dollars unless otherwise
noted
Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the three months
ended September 29, 2018 (the “third quarter”).
“Acadian performed well in the third quarter,
notably supported by improved sawtimber demand and pricing in
Maine” said Mark Bishop, Chief Executive Officer of Acadian. Mr.
Bishop further noted that “Operating rates for Acadian’s primary
sawmill and pulp and paper customers remained stable suggesting
demand and log pricing should remain firm into next year.”
Acadian generated Adjusted EBITDA of $6.1
million for the three-month period ended September 29, 2018
compared to $6.7 million in the prior year period. The Company
benefited from favourable operating conditions and strong seasonal
demand, however log sales volumes decreased 11% over the prior year
due to timing of harvest activity. Acadian’s weighted average log
selling price increased 6% as prices for most of our products
benefited from improved demand. Third quarter net income of $5.9
million was $3.8 million lower than the prior year period total of
$9.7 million primarily due to the impact of changes in the foreign
exchange revaluation of U.S. dollar denominated long-term debt as
well as lower log sales volumes. During the quarter, Free Cash Flow
was $5.1 million versus $5.3 million in the same period of
2017.
During the first nine months of 2018, we have
declared dividends of $0.84 per share or $14.1 million compared to
$13.8 million during the same period of 2017, reflecting a 3%
increase in our quarterly dividend. This represents a Payout Ratio
of 98%, which is slightly above our long-term annual target of 95%
but in-line with expectations given the seasonality of our
operations. We anticipate that over the long-term we will maintain
a Payout Ratio consistent with target levels.
____________________________________ |
1 |
This news
release makes reference to Adjusted EBITDA, Adjusted EBITDA margin,
Free Cash Flow and Payout Ratio which are key performance measures
in evaluating Acadian’s operations and are important in enhancing
investors’ understanding of Acadian’s operating performance.
Adjusted EBITDA and Adjusted EBITDA margin are used to evaluate
operational performance. Free Cash Flow is used to evaluate
Acadian’s ability to generate sustainable cash flows from our
operations while Payout Ratio is used to evaluate Acadian’s ability
to fund its distribution using Free Cash Flow. Acadian’s management
defines Adjusted EBITDA as earnings before interest, taxes, fair
value adjustments, recovery of or impairment of land and roads,
realized gain/loss on sale of roads and other fixed assets,
unrealized exchange gain/loss on debt, depreciation and
amortization and Adjusted EBITDA margin as Adjusted EBITDA as a
percentage of its total revenue. Free Cash Flow is defined as
Adjusted EBITDA less interest paid, current income tax expense, and
capital expenditures plus net proceeds from the sale of fixed
assets (selling price less gains or losses included in Adjusted
EBITDA). Payout Ratio is defined as dividends declared divided by
Free Cash Flow. 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, Adjusted
EBITDA margin and Free Cash Flow. |
Review of Operations
Financial and Operating
Highlights
|
Three Months Ended |
Nine Months Ended |
(CAD
thousands, except per share information) |
September 29,2018 |
|
September 30,2017 |
|
September 29,2018 |
|
September 30,2017 |
|
Sales
volume (000s m3) |
332 |
|
381 |
|
983.3 |
|
954.4 |
|
Net
sales1 |
$ |
26,634 |
|
$ |
27,238 |
|
$ |
75,681 |
|
$ |
69,578 |
|
Net
income |
5,949 |
|
9,702 |
|
9,823 |
|
18,471 |
|
Adjusted EBITDA |
6,059 |
|
6,687 |
|
17,511 |
|
17,339 |
|
Adjusted EBITDA margin |
23 |
% |
25 |
% |
23 |
% |
25 |
% |
Free
Cash Flow |
5,133 |
|
5,302 |
|
14,388 |
|
14,724 |
|
Dividends declared |
4,726 |
|
4,601 |
|
14,054 |
|
13,803 |
|
Payout Ratio |
92 |
% |
87 |
% |
98 |
% |
94 |
% |
Per
share – basic and diluted |
|
|
|
|
|
|
|
|
Net
income |
$ |
0.36 |
|
$ |
0.58 |
|
$ |
0.59 |
|
$ |
1.10 |
|
Free Cash
Flow |
0.31 |
|
0.32 |
|
0.86 |
|
0.88 |
|
Dividends declared |
0.2825 |
|
0.275 |
|
0.84 |
|
0.825 |
|
1. Certain prior year amounts have been
reclassified to conform to the current year presentation as a
result of adoption of IFRS 15, Revenue From Contracts with
Customers, on January 1, 2018
During the third quarter of 2018, Acadian
generated net sales of $26.6 million compared to $27.2 million in
the prior year period. Acadian benefited from favourable operating
conditions and strong seasonal demand, however, log sales volumes
decreased 11% due to timing of harvest activity. The decrease in
log sales volumes was partially offset by a 6% increase in weighted
average log selling prices, as prices for most of our products
benefited from improved demand, and a meaningful improvement in
biomass revenues due to stronger export markets. Adjusted EBITDA
was $6.1 million, down from $6.7 million in the prior year period,
and the Adjusted EBITDA margin decreased to 23% from 25% as
improved log selling prices were more than offset by the impact of
lower sales volumes and higher variable log harvest costs per
m3.
Net income was $5.9 million, or $0.36 per share,
for the third quarter, compared to $9.7 million, or $0.58 per
share, for the same period in 2017 due to the impact of changes in
the foreign exchange revaluation of U.S. dollar denominated
long-term debt, as well as lower log sales volumes.
For the nine-month period ended September 29,
2018, Acadian’s net sales improved to $75.7 million from $69.6
million during the prior year period, primarily attributable to a
3% increase in log sales volumes driven by favourable harvest
conditions, particularly for spruce and fir stands. The weighted
average log selling price increased 2% compared to the prior year
period driven by higher selling prices for our products, partially
offset by changes in the sales mix. In addition, gross margin
earned from biomass products increased 59% due to stronger export
markets. As a result, Adjusted EBITDA improved to $17.5 million
from $17.3 million during the first nine months of 2017, despite a
$1.1 million decrease in HBU land sales in Maine. Adjusted EBITDA
margin decreased to 23% from 25% in the prior year period as the
increase in log sales volumes was more than offset by changes in
the sales mix and lower HBU land sales in Maine. For the
nine-months ended September 29, 2018, net income was $9.8 million,
or $0.59 per share, which represents a decrease of $8.6 million
over the same period of 2017 primarily due to the impact of changes
in the foreign exchange revaluation of U.S. dollar denominated
long-term debt.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands.
|
Three Months Ended September 29,
2018 |
Three Months Ended September 30, 2017 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s
m3) |
(000s
m3) |
Mix |
($000s) |
(000s
m3) |
(000s
m3) |
Mix |
($000s) |
Softwood |
99.5 |
98.4 |
39% |
$5,417 |
113 |
115.2 |
40% |
$6,265 |
Hardwood |
105 |
96.8 |
38% |
7,063 |
99.5 |
103.2 |
36% |
7,396 |
Biomass |
58.3 |
58.3 |
23% |
1,848 |
70.2 |
70.2 |
24% |
863 |
|
262.8 |
253.5 |
100% |
14,328 |
282.7 |
288.6 |
100% |
14,524 |
Timber
services and other sales1 |
|
|
|
5,792 |
|
|
|
6,100 |
Net
sales1 |
|
|
|
$20,120 |
|
|
|
$20,624 |
Adjusted EBITDA |
|
|
|
$4,495 |
|
|
|
$5,454 |
Adjusted
EBITDA margin1 |
|
|
|
22% |
|
|
|
26% |
|
Nine Months Ended September 29,
2018 |
Nine Months Ended September 30, 2017 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
305.3 |
309.1 |
42% |
$17,232 |
276.1 |
281.1 |
39% |
$15,561 |
Hardwood |
266.2 |
261.7 |
36% |
20,096 |
276.8 |
290 |
40% |
22,184 |
Biomass |
162.3 |
162.3 |
22% |
4,802 |
154.8 |
154.8 |
21% |
2,611 |
|
733.8 |
733.1 |
100% |
42,130 |
707.7 |
725.9 |
100% |
40,356 |
Timber
services and other sales1 |
|
|
|
14,027 |
|
|
|
13,003 |
Net
sales1 |
|
|
|
$56,157 |
|
|
|
$53,359 |
Adjusted EBITDA |
|
|
|
$12,512 |
|
|
|
$13,610 |
Adjusted
EBITDA margin1 |
|
|
|
22% |
|
|
|
2% |
1. Certain prior year amounts have been
reclassified to conform to the current year presentation as a
result of adoption of IFRS 15, Revenue From Contracts with
Customers, on January 1, 2018
Net sales for our New Brunswick Timberlands were
$20.1 million compared to $20.6 million during the prior year
period. Despite continued favourable harvest and demand conditions,
year-over-year third quarter log sales volumes declined by 11% due
to timing of our harvest activities which reflects strong markets
during the first half of 2018 and our commitment to manage New
Brunswick Timberlands’ annual harvest volumes at sustainable
levels. In addition, timber services and other sales decreased 5%
compared to the prior year period primarily due to timing of
harvest activities.
The weighted average log selling price during
the quarter was $63.93 per m3, versus $62.55 per m3 in the prior
year period. Demand for softwood sawlogs and hardwood pulpwood in
New Brunswick remained strong with prices increasing 5% and 3%,
respectively, however this was partially offset by changes in the
sales mix during the period due to higher relative sales volumes of
lower-valued softwood pulpwood. Pricing for this product was,
however, favourable compared to the prior year period.
Export markets for biomass products strengthened
year-over-year resulting in a 50% increase in the gross margin
earned compared to the third quarter of 2017 driven by a 157%
increase in sales prices, partially offset by a 17% decrease in
sales volumes.
Operating costs for the quarter were $15.8
million, compared to $15.3 million in the third quarter of 2017
primarily due to a 7% increase in variable log harvest costs per
m3, attributable to longer average haul distances and higher fuel
costs, partially offset by lower harvest volumes.
Adjusted EBITDA was $4.5 million during the
third quarter of 2018, compared to $5.5 million in the prior year
period, due to lower log sales volumes and higher variable log
harvest costs per m3. As a result, the Adjusted EBITDA margin for
the quarter decreased to 22% from 26% in the prior year period.
During the nine-month period ended September 29,
2018, net sales totaled $56.2 million, a $2.8 million increase
compared to the same period last year, reflecting stronger biomass
export markets and the timing of timber services. The operations
benefited from increases in softwood sawlog and hardwood pulpwood
prices of 3% and 2%, respectively, but these gains were offset by
the impact of changes in the sales mix. Costs of $43.9 million were
$4.1 million higher than the prior year due to higher harvest
volumes and higher fuel costs. As a result, Adjusted EBITDA was
$12.5 million, a decrease of $1.1 million compared to Adjusted
EBITDA of $13.6 million in the same period last year, while the
Adjusted EBITDA margin decreased to 22% from 26%.
There were no recordable safety incidents among
employees and one minor lost time incident among contractors during
the third quarter of 2018.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands.
|
Three Months Ended September 29,
2018 |
Three Months Ended September 30, 2017 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
50 |
50.6 |
64% |
$4,468 |
35 |
34.9 |
38% |
$2,592 |
Hardwood |
24.7 |
23.2 |
30% |
1,859 |
56.8 |
50.2 |
54% |
3,799 |
Biomass |
4.7 |
4.7 |
6% |
7 |
7.3 |
7.3 |
8% |
11 |
|
79.4 |
78.5 |
100% |
6,334 |
99.1 |
92.4 |
100% |
6,402 |
Other
sales |
|
|
|
180 |
|
|
|
212 |
Net
sales |
|
|
|
$6,514 |
|
|
|
$6,614 |
Adjusted EBITDA |
|
|
|
$1,914 |
|
|
|
$1,551 |
Adjusted
EBITDA margin |
|
|
|
29% |
|
|
|
23% |
|
Nine Months Ended September 29,
2018 |
Nine Months Ended September 30, 2017 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
167 |
167.1 |
67% |
$13,703 |
114.4 |
114 |
50% |
$8,498 |
Hardwood |
68.1 |
67.1 |
27% |
5,269 |
100 |
95.4 |
42% |
7,235 |
Biomass |
16 |
16 |
6% |
25 |
19.1 |
19.1 |
8% |
29 |
|
251.1 |
250.2 |
100% |
18,997 |
233.5 |
228.5 |
100% |
15,762 |
Other
sales |
|
|
|
527 |
|
|
|
457 |
Net sales |
|
|
|
$19,524 |
|
|
|
$16,219 |
Adjusted EBITDA |
|
|
|
$5,947 |
|
|
|
$4,616 |
Adjusted
EBITDA margin |
|
|
|
30% |
|
|
|
28% |
Net sales totaled $6.5 million compared to $6.6
million for the same period last year as a 14% increase in the
weighted average log selling price fully offset the 13% decrease in
log sales volumes. While harvest and market conditions continued to
be favourable during the quarter, harvest activities were adjusted
to reflect our commitment to manage Maine Timberlands’ annual
harvest volumes to sustainable levels.
The weighted average log selling price in
Canadian dollar terms was $85.78 per m3, up from $75.29 per m3 in
the same period of 2017. The weighted average log selling price in
U.S. dollar terms was up 9% year-over-year to $65.64 per m3,
reflecting meaningfully improved demand for softwood sawlogs and
hardwood pulpwood for which prices increased by 15% and 5%,
respectively.
Costs for the third quarter of $5.0 million were
$0.4 million lower compared to the same period in 2017 due to lower
log sales volumes and shorter hauling distances, the impacts of
which were partially offset by foreign exchange and higher fuel
costs.
Adjusted EBITDA for the quarter was $1.9 million
compared to $1.6 million in the prior year period as the higher
weighted average log selling price resulted in the Adjusted EBITDA
margin increasing to 29%, from 23% in 2017.
During the nine-month period ended September 29,
2018, net sales totaled $19.5 million, $3.3 million higher than the
first nine months of 2017, driven by a 12% increase in log sales
volumes due to favourable operating conditions and strong demand
for softwood sawlogs compared to the previous year. Year-to-date
softwood and hardwood harvest levels are in-line with expected
harvest levels through the end of 2020 and consistent with our
annual harvest profile as per our Sustainable Forestry Initiative®
certification. Net sales for the Maine Timberlands also benefited
from a 7% increase in the weighted average log selling price,
reflecting meaningfully improved demand and prices for softwood
sawlogs and hardwood pulpwood. Costs were $14.3 million, or $0.9
million higher than the same period of 2017 largely due to higher
log sales volumes, partially offset by the benefit of shorter
hauling distances. Although HBU land sales fell $1.1 million
year-over-year, Adjusted EBITDA increased $1.3 million compared to
the prior year period to $5.9 million due to the aforementioned
factors. Those factors also caused the Adjusted EBITDA margin to
increase to 30% from 28% in the prior year period.
There were no recordable safety incidents among
employees or contractors during the third quarter of 2018 at our
Maine Timberlands.
Adoption of IFRS 15, Revenue from contracts
with customers
IFRS 15 supersedes previous revenue standards
(IAS 18, Revenue) and related interpretations and it applies to all
revenue arising from contracts with customers. On January 1, 2018,
the Company adopted IFRS 15 using the full retrospective approach.
The adoption of this standard on January 1, 2018 resulted in a
change in presentation from net to gross for timber services, which
does not impact the Company’s operating earnings or net income. As
a result of this change in presentation, net sales for the
three-month and nine-month periods ended September 30, 2017
increased by $5.1 million and $11.7 million, respectively, with a
corresponding increase in operating costs and expenses. Net sales
are net of discounts and rebates to customers. Revenue is
recognized when control passes to the customer, which is generally
when timber is delivered to the customer and actual quantities
delivered are determined. Sales are governed primarily by contract
and in some cases by standard industry terms. Pursuant to the Crown
Lands Services Agreement, Acadian provides harvesting,
transportation and other services to Crown licensees and
sub-licensees. Acadian receives payment for these services which
are recognized upon delivery of the timber and when actual
quantities delivered are determined.
Market Outlook
The following contains forward-looking
information about Acadian Timber Corp.’s market outlook for the
remainder of fiscal 2018. Reference should be made to the the
section entitled “Cautionary Statement Regarding 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.
Acadian’s key markets include softwood
sawtimber, hardwood sawtimber and hardwood pulpwood. Northeast
North American softwood dimension sawmills represent over one third
of Acadian’s end-use market and are the primary market for our
softwood sawtimber.
Despite current very strong U.S. economic
performance, key indicators suggest momentum in the U.S. housing
market has slowed over the past few months. Tight construction
labour markets and restrictive building regulations have continued
to weigh on residential construction growth expectations. However,
the primary catalysts to more conservative consensus housing start
forecasts compared to the prior quarter have been persistent weak
wage growth combined with rising interest rates and escalating
negative sentiment on the impact of U.S. trade policy. The most
recent forecasts anticipate year-over-year growth in starts ranging
from flat to 5% for 2019. As single family starts, the largest
lumber consuming segment of U.S. housing starts, are forecast to
continue to recover from recent historically low levels, North
American sawtimber demand is still expected to post modest
year-over-year growth even under more conservative forecasts. The
backdrop for housing demand over the medium term remains very
positive reflecting continued pent-up demand for housing and
improving demographics.
Average Q3 2018 quarterly benchmark Western
Spruce-Pine-Fir and Southern Yellow Pine lumber prices declined 20%
and 18%, respectively, from the prior quarter, with prices sliding
towards average cash-cost levels by early Q4 2018. The significant
swing in pricing, which has been well beyond seasonal norms, has
been exacerbated by severe weather in the U.S. South that has
reduced market demand. Forecasters anticipate that extensive
announced market downtime, principally in the high log cost regions
of British Columbia and the U.S. Pacific Northwest, coupled with
ongoing demand growth, will support continued historically strong
lumber pricing through 2019. By extension, Acadian anticipates
continued strong support in end use markets for softwood sawtimber
pricing through this period.
Hardwood sawtimber markets, typically oriented
to millwork and higher value specialty markets, remain well
balanced with a continued positive outlook for the foreseeable
future. The outlook for global pulp markets remains strong,
supported by encouraging demand and pricing dynamics, particularly
in the containerboard and tissue segments. Hardwood pulpwood demand
in Acadian’s operating region remains stable, with well balanced
supply conditions continuing to support historically strong
pricing. While softwood pulpwood markets, Acadian’s smallest
product segment by volume and margin, remain under pressure, the
recently announced re-start of a pulp mill in Maine during 2019 is
expected to be a catalyst for a recovery in softwood pulpwood
demand and pricing. In New Brunswick, biomass markets continue to
be supported by strong export demand. While the biomass market in
Maine remains weak, early-stage initiatives in wood-based liquid
biofuels and pellets are progressing as are efforts to tap into
biomass export markets.
Quarterly Dividend
Acadian is pleased to announce a dividend of
$0.2825 per share, payable on January 15, 2019 to shareholders of
record on December 31, 2018.
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 third 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 timber services relating to approximately 1.3 million
acres of Crown licensed timberlands in New Brunswick. Acadian's
products include softwood and hardwood sawlogs, pulpwood and
biomass by-products, sold to approximately 85 regional
customers.
Acadian’s business strategy is to maximize cash
flows from its existing timberland assets while growing our
business by acquiring assets on a value basis and utilizing our
operations-oriented approach to drive improved performance.
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 or contact:Jon
SyrnykInvestor RelationsTel: 604-661-9622Email:
jsyrnyk@acadiantimber.com
Cautionary Statement Regarding
Forward-Looking Information and Statements
This News Release contains forward-looking
information and 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 forward-looking
statements may contain such words as “may,” “will,” “intend,”
“should,” “suggest,” “expect,” “believe,” “outlook,” “forecast,”
“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 made in the section entitled “Market
Outlook” and other statements regarding management’s beliefs,
intentions, results, performance, goals, achievements, future
events, plans and objectives, business strategy, growth strategy
and prospects, 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; changes in U.S.
housing starts; 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; Brookfield’s ability to source
and secure potential investment opportunities; the availability of
potential acquisitions that suit Acadian’s growth profile; and
other risks and factors discussed under the heading “Risk Factors”
in each of the Annual Information Form dated March 28, 2018 and the
Management Information Circular dated March 28, 2018, 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: forecasts in the
housing market; anticipated financial performance; anticipated
market conditions; business prospects; the economic situation of
key customers; 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.
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 Condensed Consolidated Statements of
Net Income(unaudited)
|
Three Months Ended |
Nine Months Ended |
(CAD thousands, except per share data) |
September29, 2018 |
September30, 20171 |
September29, 2018 |
September30, 20171 |
|
|
|
|
|
Net sales |
$26,634 |
$27,238 |
$75,681 |
$69,578 |
Operating costs and expenses |
|
|
|
|
Cost of sales |
18,694 |
18,287 |
51,362 |
46,395 |
Selling, administration and other |
2,392 |
2,530 |
7,112 |
7,167 |
Reforestation |
31 |
96 |
453 |
494 |
Depreciation and amortization |
69 |
78 |
230 |
233 |
|
21,186 |
20,991 |
59,157 |
54,289 |
Operating earnings |
5,448 |
6,247 |
16,524 |
15,289 |
Interest expense, net |
(936) |
(698) |
(2,897) |
(2,189) |
Other items |
|
|
|
|
Fair value adjustments |
822 |
(269) |
2,088 |
1,020 |
Unrealized exchange gain / (loss) on long-term
debt |
1,568 |
5,799 |
(2,371) |
7,054 |
Gain on sale of timberlands |
387 |
362 |
850 |
1,817 |
Gain / (loss) on disposal of roads and other fixed
assets |
155 |
— |
(93) |
— |
Earnings before income taxes |
7,444 |
11,441 |
14,101 |
22,991 |
Current income tax expense |
(575) |
(549) |
(1,844) |
(816) |
Deferred income tax expense |
(920) |
(1,190) |
(2,434) |
(3,704) |
Net income |
$5,949 |
$9,702 |
$9,823 |
$18,471 |
Net income per share – basic and diluted |
$0.36 |
$0.58 |
$0.59 |
$1.10 |
1. Certain prior year amounts have been
reclassified to conform to the current year presentation as a
result of adoption of IFRS 15, Revenue From Contracts with
Customers, on January 1, 2018
Acadian Timber
Corp.Interim Condensed Consolidated Statements of
Comprehensive Income(unaudited)
|
Three Months Ended |
Nine Months Ended |
(CAD
thousands) |
September29, 2018 |
September30,
2017 |
September29, 2018 |
September30,
2017 |
|
|
|
|
|
Net income |
$5,949 |
$9,702 |
$9,823 |
$18,471 |
Other
comprehensive income / (loss) |
|
|
|
|
Items
that may be reclassified subsequently to net income: |
|
|
|
|
Unrealized foreign currency translation (loss) / gain |
(2,228) |
(8,144) |
3,226 |
(9,885) |
Deferred
income tax recovery |
— |
369 |
— |
734 |
|
(2,228) |
(7,775) |
3,227 |
(9,151) |
Comprehensive income |
$3,721 |
$1,927 |
$13,049 |
$9,320 |
Acadian Timber
Corp.Interim Condensed Consolidated Balance
Sheets(unaudited)
As at(CAD thousands) |
September 29, 2018 |
December 31, 2017 |
Assets |
|
|
|
|
Current
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
21,599 |
$ |
23,951 |
Accounts receivable and other assets |
|
11,745 |
|
11,007 |
Inventory |
|
1,474 |
|
1,226 |
|
|
34,818 |
|
36,184 |
Timber |
|
335,285 |
|
330,879 |
Land,
roads and other fixed assets |
|
89,186 |
|
89,013 |
Intangible assets |
|
6,140 |
|
6,140 |
|
$ |
465,429 |
$ |
462,216 |
Liabilities and shareholders’ equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
10,247 |
$ |
12,476 |
Dividends payable to shareholders |
|
4,727 |
|
4,601 |
|
|
14,974 |
|
17,077 |
Long-term debt |
|
91,178 |
|
90,866 |
Deferred
income tax liability |
|
84,131 |
|
80,188 |
Shareholders’ equity |
|
275,146 |
|
274,085 |
|
$ |
465,429 |
$ |
462,216 |
Acadian Timber
Corp.Interim Condensed Consolidated Statements of
Cash Flows(unaudited)
|
Three Months Ended |
Nine Months Ended |
(CAD thousands) |
September29,
2018 |
September30, 2017 |
September29,
2018 |
September30, 2017 |
Cash and cash equivalents provided by /
(used for): |
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
5,949 |
|
$ |
9,702 |
|
$ |
9,823 |
|
$ |
18,471 |
|
Adjustments to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax expense |
|
920 |
|
|
1,190 |
|
|
2,434 |
|
|
3,704 |
|
Depreciation and amortization |
|
69 |
|
|
78 |
|
|
230 |
|
|
233 |
|
Fair value adjustments and other |
|
(822 |
) |
|
269 |
|
|
(2,088 |
) |
|
(1,020 |
) |
Unrealized exchange (gain) / loss on long term
debt |
|
(1,568 |
) |
|
(5,799 |
) |
|
2,371 |
|
|
(7,054 |
) |
Gain on sale of timberlands |
|
(387 |
) |
|
(362 |
) |
|
(850 |
) |
|
(1,817 |
) |
(Gain) / loss on disposal of roads and other fixed
assets |
|
(155 |
) |
|
— |
|
|
93 |
|
|
— |
|
Net change in non-cash working capital
balances and other |
|
(1,244 |
) |
|
(1,000 |
) |
|
(1,787 |
) |
|
1,134 |
|
|
|
2,762 |
|
|
4,078 |
|
|
10,226 |
|
|
13,651 |
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to shareholders |
|
(4,726 |
) |
|
(4,601 |
) |
|
(13,928 |
) |
|
(13,385 |
) |
|
|
(4,726 |
) |
|
(4,601 |
) |
|
(13,928 |
) |
|
(13,385 |
) |
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Additions to timber, land, roads and other
fixed assets |
|
(159 |
) |
|
(225 |
) |
|
(190 |
) |
|
(843 |
) |
Acquisition of Katahdin Timberlands LLC |
|
— |
|
|
— |
|
|
— |
|
|
(1,276 |
) |
Proceeds from sale of timberlands |
|
469 |
|
|
382 |
|
|
966 |
|
|
2,476 |
|
Proceeds from sale of roads and other fixed
assets |
|
387 |
|
|
— |
|
|
574 |
|
|
— |
|
|
|
697 |
|
|
157 |
|
|
1,350 |
|
|
357 |
|
(Decrease) / increase in cash and cash equivalents
during the period |
|
(1,267 |
) |
|
(366 |
) |
|
(2,352 |
) |
|
623 |
|
Cash and cash equivalents, beginning of
period |
|
22,866 |
|
|
20,643 |
|
|
23,951 |
|
|
19,654 |
|
Cash and cash equivalents, end of
period |
$ |
21,599 |
|
$ |
20,277 |
|
$ |
21,599 |
|
$ |
20,277 |
|
Reconciliations to Adjusted EBITDA and
Free Cash Flow
|
Three Months Ended |
Nine Months Ended |
(CAD thousands) |
September29,
2018 |
September30, 2017 |
September29,
2018 |
September30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
5,949 |
|
$ |
9,702 |
|
$ |
9,823 |
|
$ |
18,471 |
|
Add / (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
936 |
|
|
698 |
|
|
2,897 |
|
|
2,189 |
|
Current income tax expense |
|
575 |
|
|
549 |
|
|
1,844 |
|
|
816 |
|
Deferred income tax expense |
|
920 |
|
|
1,190 |
|
|
2,434 |
|
|
3,704 |
|
Depreciation and amortization |
|
69 |
|
|
78 |
|
|
230 |
|
|
233 |
|
Fair value adjustments and other |
|
(822 |
) |
|
269 |
|
|
(2,088 |
) |
|
(1,020 |
) |
Unrealized exchange (gain) / loss on long-term
debt |
|
(1,568 |
) |
|
(5,799 |
) |
|
2,371 |
|
|
(7,054 |
) |
Adjusted EBITDA |
$ |
6,059 |
|
$ |
6,687 |
|
$ |
17,511 |
|
$ |
17,339 |
|
Add / (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid on debt, net |
|
(648 |
) |
|
(671 |
) |
|
(2,014 |
) |
|
(2,109 |
) |
Additions to timber, land, roads and other fixed
assets |
|
(17 |
) |
|
(185 |
) |
|
(48 |
) |
|
(349 |
) |
Gain on sale of timberlands |
|
(387 |
) |
|
(362 |
) |
|
(850 |
) |
|
(1,817 |
) |
(Gain) / loss on disposal of roads and other fixed
assets |
|
(155 |
) |
|
— |
|
|
93 |
|
|
— |
|
Proceeds on sale of timberlands |
|
469 |
|
|
382 |
|
|
966 |
|
|
2,476 |
|
Proceeds on sale of roads and other fixed
assets |
|
387 |
|
|
— |
|
|
574 |
|
|
— |
|
Current income tax expense |
|
(575 |
) |
|
(549 |
) |
|
(1,844 |
) |
|
(816 |
) |
Free Cash Flow |
$ |
5,133 |
|
$ |
5,302 |
|
$ |
14,388 |
|
$ |
14,724 |
|
Dividends declared |
$ |
4,726 |
|
$ |
4,601 |
|
$ |
14,054 |
|
$ |
13,803 |
|
Payout Ratio |
|
92 |
% |
|
87 |
% |
|
98 |
% |
|
94 |
% |
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