Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the year ended
December 31, 2018.
“Acadian posted another year of strong
performance. Well-balanced regional supply demand fundamentals in
both softwood and hardwood segments continue to support attractive
stable log pricing across all key markets,” commented Mark Bishop,
Chief Executive Officer of Acadian.
Acadian generated solid results for the
year-ended December 31, 2018. The Company’s Adjusted EBITDA1
totaled $22.1 million in 2018, compared to $23.3 million during
2017. The strong demand and pricing Acadian experienced in the
first half of 2018 carried through to year end reflecting the
favorable attributes of Northeast regional log markets. As a
result, log sales from our freehold operations were strong
throughout the period, with volumes and pricing up year-over-year,
the benefits of which were offset by lower ancillary revenues from
providing timber services and a lower amount of gains on land sales
relative to the prior year.
Acadian declared dividends to its shareholders
of $1.1225 per share during the year, representing a Payout Ratio1
of 106% which is above our long-term target of 95%. We
anticipate that over the long-term we will revert to a Payout Ratio
consistent with our target level and in the near term, Acadian’s
strong cash position supports a Payout Ratio in excess of our
target.
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 |
Year Ended |
(CAD thousands, except per share information) |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
|
Sales volume
(000s m3) |
|
|
323.7 |
|
|
297.6 |
|
|
1,307 |
|
|
1,252.0 |
|
Net
sales1 |
|
$ |
24,167 |
|
$ |
25,805 |
|
$ |
99,848 |
|
$ |
95,383 |
|
Net
income |
|
|
16,441 |
|
|
12,348 |
|
|
26,264 |
|
|
30,819 |
|
Adjusted EBITDA |
|
|
4,631 |
|
|
6,005 |
|
|
22,142 |
|
|
23,344 |
|
Adjusted EBITDA margin1 |
|
|
19 |
% |
|
23 |
% |
|
22 |
% |
|
24 |
% |
Free
Cash Flow |
|
|
3,525 |
|
|
4,756 |
|
|
17,771 |
|
|
19,480 |
|
Dividends declared |
|
|
4,715 |
|
|
4,601 |
|
|
18,769 |
|
|
18,404 |
|
Payout Ratio |
|
|
134 |
% |
|
97 |
% |
|
106 |
% |
|
94 |
% |
Per
share – basic and diluted |
|
|
|
|
|
Net income |
|
$ |
0.98 |
|
$ |
0.74 |
|
$ |
1.57 |
|
$ |
1.84 |
|
Free Cash Flow |
|
|
0.20 |
|
|
0.28 |
|
|
1.06 |
|
|
1.16 |
|
Dividends declared |
|
|
0.2825 |
|
|
0.275 |
|
|
1.1225 |
|
|
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 generated net sales of $99.8 million in
2018, a year-over-year increase of $4.4 million as the Company
benefited from a 3% increase in log sales volumes due to strong
demand and favourable operating conditions. Acadian’s weighted
average log selling price increased 2% reflecting strong markets
for all products, the benefits of which were partially offset by
changes in the sales mix. While log sales from our freehold
operations were strong, ancillary revenues from providing timber
services and gains on land sales were lower in 2018 versus
2017.
Costs of $78.6 million in 2018 increased 6% from
$74.3 million in the prior year primarily due to a 3% increase in
log sales volumes. In addition, variable log harvest costs per m3
increased 2% due to longer average haul distances and higher fuel
costs, the impacts of which were partially offset by changes in the
sales mix.
Acadian generated Adjusted EBITDA of $22.1
million during 2018 compared to $23.3 million in the prior year
while the Adjusted EBITDA margin of 22% for 2018 decreased from 24%
in 2017.
Net income for the year ended December 31, 2018
totaled $26.3 million, or $1.57 per share, compared to $30.8
million, or $1.84 per share, in 2017. The decrease in 2018 is
primarily the result of an unrealized foreign exchange loss on the
revaluation of U.S. dollar-denominated long-term debt compared to
an unrealized gain in the prior year, partially offset by a
favourable fair value revaluation of timber
assets.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands.
|
Three Months Ended December 31,
2018 |
|
Three Months Ended December 31, 2017 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s
m3) |
(000s
m3) |
Mix |
|
($000s) |
|
Softwood |
110.7 |
94.2 |
37 |
% |
$ |
5,242 |
|
103.2 |
97.1 |
50 |
% |
$ |
5,371 |
|
Hardwood |
103.1 |
102.4 |
41 |
% |
|
7,881 |
|
68.8 |
66.9 |
34 |
% |
|
5,111 |
|
Biomass |
56.4 |
56.4 |
22 |
% |
|
1,743 |
|
31.6 |
31.6 |
16 |
% |
|
549 |
|
Freehold net sales |
270.2 |
253.0 |
100 |
% |
|
14,866 |
|
203.6 |
195.6 |
100 |
% |
|
11,031 |
|
Timber
services and other sales1 |
|
|
|
|
3,741 |
|
|
|
|
|
7,272 |
|
Net
sales1 |
|
|
|
$ |
18,607 |
|
|
|
|
$ |
18,303 |
|
Adjusted EBITDA |
|
|
|
$ |
4,057 |
|
|
|
|
$ |
4,463 |
|
Adjusted EBITDA margin1 |
|
|
|
22 |
% |
|
|
|
|
24 |
% |
|
Year Ended December 31, 2018 |
|
Year Ended December 31, 2017 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
416.0 |
403.3 |
41 |
% |
$ |
22,474 |
|
379.3 |
378.2 |
41 |
% |
$ |
20,932 |
|
Hardwood |
369.3 |
364.1 |
37 |
% |
|
27,977 |
|
345.6 |
356.9 |
39 |
% |
|
27,295 |
|
Biomass |
218.7 |
218.7 |
22 |
% |
|
6,545 |
|
186.4 |
186.4 |
20 |
% |
|
3,160 |
|
Freehold net sales |
1,004.0 |
986.1 |
100 |
% |
|
56,996 |
|
911.3 |
921.5 |
100 |
% |
$ |
51,387 |
|
Timber
services and other sales1 |
|
|
|
|
17,768 |
|
|
|
|
|
20,275 |
|
Net sales1 |
|
|
|
$ |
74,764 |
|
|
|
|
$ |
71,662 |
|
Adjusted EBITDA |
|
|
|
$ |
16,569 |
|
|
|
|
$ |
18,073 |
|
Adjusted EBITDA margin1 |
|
|
|
22 |
% |
|
|
|
|
25 |
% |
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
Year ended December 31, 2018:
Net sales for our New Brunswick Timberlands for
the year ended December 31, 2018 totalled $74.8 million, compared
to $71.7 million in 2017. The increase reflects a 4% improvement in
log sales volumes due to strong demand and favourable harvest
conditions. The weighted average log selling price during 2018
remained in-line with the prior year as price increases for all
products were offset by a change in the sales mix.
Adjusted EBITDA for the year ended December 31,
2018 was $16.6 million compared to $18.1 million in 2017. The
decrease was driven by higher variable log harvest costs per m3,
attributable to longer average haul distances and higher fuel
costs, and timing of timber services, the impact of which was
partially offset by the increase in log sales volumes. As a result,
the Adjusted EBITDA margin was 22% for 2018 compared to 25% in the
prior year.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands.
|
Three Months Ended December 31,
2018 |
|
Three Months Ended December 31, 2017 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
46.4 |
46.0 |
65 |
% |
$ |
3,571 |
|
47.0 |
46.8 |
46 |
% |
$ |
3,752 |
|
Hardwood |
19.9 |
22.3 |
32 |
% |
|
1,831 |
|
44.5 |
49.7 |
49 |
% |
|
3,620 |
|
Biomass |
2.4 |
2.4 |
3 |
% |
|
4 |
|
5.5 |
5.5 |
5 |
% |
|
9 |
|
Freehold net sales |
68.7 |
70.7 |
100 |
% |
|
5,406 |
|
97.0 |
102.0 |
100 |
% |
|
7,381 |
|
Other
sales |
|
|
|
|
154 |
|
|
|
|
|
121 |
|
Net
sales |
|
|
|
$ |
5,560 |
|
|
|
|
$ |
7,502 |
|
Adjusted EBITDA |
|
|
|
$ |
892 |
|
|
|
|
$ |
2,135 |
|
Adjusted EBITDA margin |
|
|
|
16 |
% |
|
|
|
|
28 |
% |
|
|
Year Ended December 31, 2018 |
|
Year Ended December 31, 2017 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
213.4 |
213.1 |
66 |
% |
$ |
17,274 |
|
161.4 |
160.8 |
49 |
% |
$ |
12,250 |
|
Hardwood |
88.0 |
89.4 |
28 |
% |
|
7,100 |
|
144.5 |
145.1 |
44 |
% |
|
10,855 |
|
Biomass |
18.4 |
18.4 |
6 |
% |
|
29 |
|
24.6 |
24.6 |
7 |
% |
|
38 |
|
Freehold
net sales |
319.8 |
320.9 |
100 |
% |
|
24,403 |
|
330.5 |
330.5 |
100 |
% |
|
23,143 |
|
Other sales |
|
|
|
|
681 |
|
|
|
|
|
578 |
|
Net sales |
|
|
|
$ |
25,084 |
|
|
|
|
$ |
23,721 |
|
Adjusted
EBITDA |
|
|
|
$ |
6,839 |
|
|
|
|
$ |
6,751 |
|
Adjusted EBITDA margin |
|
|
|
27 |
% |
|
|
|
|
28 |
% |
Year ended December 31, 2018:
Net sales for the year ended December 31, 2018
totaled $25.1 million compared to $23.7 million during the prior
year. The current year results reflect a 6% increase in the
weighted average log selling price due to strong demand for
softwood sawlogs and hardwood pulpwood compared to the prior year.
This benefit was partially offset by a 1% decrease in log sales
volumes as hardwood harvest activities were adjusted to reflect our
commitment to manage Maine Timberlands’ annual harvest volumes to
sustainable levels.
Adjusted EBITDA for the year ended December 31,
2018 was $6.8 million, in-line with 2017. While net sales were
higher and variable log harvest cost per m3 were down
year-over-year due to changes in the sale mix, these positive
effects were offset by lower gains on sale of higher and better use
(“HBU”) land of $1.5 million compared to the prior year. The
Adjusted EBITDA margin for 2018 decreased slightly to 27% from 28%
in the prior year.
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 year
ended December 31, 2017 increased by $17.6 million, respectively,
with a corresponding increase in operating costs and expenses. Net
sales are net of discounts and rebates to customers, if any.
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 contractual terms with customers 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 in revenue 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 2019. 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. Our mixed softwood and hardwood resource,
combined with diversified end use markets, underpin Acadian’s ‘best
in class’ long-term performance. Well-balanced regional supply
demand fundamentals continue to support attractive stable log
pricing across all key markets.
The case for continued steady recovery in U.S.
housing starts over the medium-term remains highly
compelling. Demographics support continued solid growth in
household formation, home inventories are extremely low, and on
average U.S. housing stock is beyond its prime. However, tight
construction labour markets and restrictive building regulations
have combined with near-term concerns of rising interest rates and
fallout from U.S. international trade policy to drive what most
forecasters believe will be a short lived slowdown in construction
activity.
Recent consensus forecasts anticipate average
year-over-year growth in U.S. housing starts for 2019 and 2020 of
about 1% and 3%, respectively. Importantly, most forecasters expect
the proportion of single family starts, the largest lumber
consuming segment of U.S. housing starts, to improve modestly
through 2019 and 2020. Additionally, home repair and remodeling,
the single largest driver of North American lumber consumption, is
also projected to grow modestly over the next two years. North
American sawtimber demand is therefore expected to post modest
year-over-year growth even under more conservative forecasts.
Average Q4 2018 quarterly benchmark Eastern
Spruce-Pine-Fir and Southern Yellow Pine lumber prices declined 30%
and 11%, respectively, from the prior quarter. The continued slide
in pricing from the prior quarter was driven by weaker than
expected home sales and building activity through the quarter.
Despite the robust U.S. economy, buyer apprehension remains high
due to risk of Federal Reserve interest rate increases and the
potential for slowing global economic growth. Forecasters
anticipate that extensive announced market downtime which has been
extended into the first quarter of 2019, principally in the high
log cost region of the interior of British Columbia, coupled with
ongoing steady demand growth, will support continued strong lumber
pricing through 2019, albeit below the levels achieved in 2018.
Considering capacity and log supply constraints exhibited in
Western Canada during late 2018 and early 2019, we anticipate
continued attractive market dynamics to support stable softwood
sawtimber pricing in Acadian’s regional markets. Given
the current state of U.S. trade relations there is no expectation
of any meaningful discussions toward a softwood lumber agreement
with Canada during 2019. Further, we anticipate no material change
in 2019 to the current duty rates for Canadian lumber producers.
Average consensus forecast lumber prices for 2019 would indicate
that a significant proportion of those duties will continue to be
passed on to U.S. consumers. We remain steadfast in our view that
an eventual negotiated settlement will include an exemption for all
Canadian Maritime producers including those in New Brunswick.
Hardwood sawtimber markets, typically oriented
to millwork and higher value specialty markets, remain well
balanced with a continued positive outlook for the foreseeable
future. While there has been modest price erosion in the latest
quarter, the outlook for global pulp markets remains positive,
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. Softwood pulpwood markets, Acadian’s smallest
product segment by volume and margin, have seen some modest
recovery and the recently announced re-start of a pulp mill in
Maine during 2019 is expected to be a catalyst for further recovery
in softwood pulpwood demand and pricing through the second half of
2019. In New Brunswick, biomass markets continue to be supported by
export demand which is expected to remain strong throughout 2019.
While the biomass market in Maine remains weak, efforts to tap into
biomass export markets continue to progress.
Quarterly Dividend
Acadian is pleased to announce a dividend of
$0.29 per share, payable on April 15, 2019 to shareholders of
record on March 31, 2019.
* * * * * * * * *
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 90 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.Consolidated Statements of Net
Income(unaudited)
|
Three Months Ended |
Year Ended |
(CAD thousands, except per share data) |
December 31,
2018 |
December 31, 20171 |
December 31,
2018 |
December 31, 20171 |
|
|
|
|
|
Net sales |
$ |
24,167 |
|
$ |
25,805 |
|
$ |
99,848 |
|
$ |
95,383 |
|
Operating costs and expenses |
|
|
|
|
Cost of sales |
|
16,802 |
|
|
18,199 |
|
|
68,164 |
|
|
64,594 |
|
Selling, administration and
other |
|
2,629 |
|
|
1,956 |
|
|
9,741 |
|
|
9,123 |
|
Reforestation |
|
142 |
|
|
120 |
|
|
595 |
|
|
614 |
|
Depreciation and
amortization |
|
73 |
|
|
80 |
|
|
303 |
|
|
313 |
|
|
|
19,646 |
|
|
20,355 |
|
|
78,803 |
|
|
74,644 |
|
Operating earnings |
|
4,521 |
|
|
5,450 |
|
|
21,045 |
|
|
20,739 |
|
Interest expense, net |
|
(1,004 |
) |
|
(706 |
) |
|
(3,901 |
) |
|
(2,895 |
) |
Other items |
|
|
|
|
Fair value adjustments and
other |
|
26,206 |
|
|
8,307 |
|
|
28,294 |
|
|
9,327 |
|
Unrealized exchange (loss) /
gain on long-term debt |
|
(5,118 |
) |
|
(753 |
) |
|
(7,489 |
) |
|
6,301 |
|
Gain on sale of
timberlands |
|
56 |
|
|
475 |
|
|
906 |
|
|
2,292 |
|
Loss on disposal of roads and
other fixed assets |
|
(19 |
) |
|
— |
|
|
(112 |
) |
|
— |
|
Earnings before income taxes |
|
24,642 |
|
|
12,773 |
|
|
38,743 |
|
|
35,764 |
|
Current income tax expense |
|
(490 |
) |
|
(565 |
) |
|
(2,334 |
) |
|
(1,381 |
) |
Deferred income tax (expense) /
recovery |
|
(7,711 |
) |
|
140 |
|
|
(10,145 |
) |
|
(3,564 |
) |
Net income |
$ |
16,441 |
|
$ |
12,348 |
|
$ |
26,264 |
|
$ |
30,819 |
|
Net income per share – basic and
diluted |
$ |
0.98 |
|
$ |
0.74 |
|
$ |
1.57 |
|
$ |
1.84 |
|
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.Consolidated Statements of Comprehensive
Income(unaudited)
|
Three Months Ended |
Year Ended |
(CAD thousands) |
December 31,
2018 |
December 31, 2017 |
December 31,
2018 |
December 31, 2017 |
|
|
|
|
|
Net income |
$ |
16,441 |
|
$ |
12,348 |
|
$ |
26,264 |
|
$ |
30,819 |
|
Other comprehensive income / (loss) |
|
|
|
|
Items that may be reclassified subsequently to
net income: |
|
|
|
|
Deferred tax recovery |
|
1,459 |
|
|
3,322 |
|
|
1,459 |
|
|
3,322 |
|
Loss on revaluation of land and
roads |
|
(5,064 |
) |
|
(673 |
) |
|
(5,064 |
) |
|
(673 |
) |
Unrealized foreign currency translation gain /
(loss) |
|
7,781 |
|
|
321 |
|
|
11,007 |
|
|
(8,830 |
) |
|
|
4,176 |
|
|
2,970 |
|
|
7,402 |
|
|
(6,181 |
) |
Comprehensive income |
$ |
20,617 |
|
$ |
15,318 |
|
$ |
33,666 |
|
$ |
24,638 |
|
Acadian Timber
Corp.Consolidated Balance
Sheets(unaudited)
As at(CAD thousands) |
December 31, 2018 |
December 31, 2017 |
Assets |
|
|
Current
Assets |
|
|
Cash and
cash equivalents |
$ |
22,320 |
$ |
23,951 |
Accounts receivable and other assets |
|
7,230 |
|
11,007 |
Inventory |
|
2,756 |
|
1,226 |
|
|
32,306 |
|
36,184 |
Timber |
|
367,901 |
|
330,879 |
Land,
roads and other fixed assets |
|
86,103 |
|
89,013 |
Intangible asset |
|
6,140 |
|
6,140 |
|
$ |
492,450 |
$ |
462,216 |
Liabilities and shareholders’ equity |
|
|
Current
liabilities |
|
|
Accounts payable and accrued liabilities |
$ |
7,963 |
$ |
12,342 |
Current tax liabilities |
|
647 |
|
134 |
Dividends payable to shareholders |
|
4,714 |
|
4,601 |
|
|
13,324 |
|
17,077 |
Long-term debt |
|
96,595 |
|
90,866 |
Deferred
income tax liability |
|
92,119 |
|
80,188 |
Shareholders’ equity |
|
290,412 |
|
274,085 |
|
$ |
492,450 |
$ |
462,216 |
Acadian Timber
Corp.Consolidated Statements of Cash
Flows(unaudited)
|
Three Months Ended |
Year Ended |
(CAD thousands) |
December 31, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
Cash and cash equivalents provided by / (used for): |
|
|
|
|
Operating activities |
|
|
|
|
Net income |
$ |
16,441 |
|
$ |
12,348 |
|
$ |
26,264 |
|
$ |
30,819 |
|
Adjustments to net income: |
|
|
|
|
Deferred income tax expense / (recovery) |
|
7,711 |
|
|
(140 |
) |
|
10,145 |
|
|
3,564 |
|
Depreciation and amortization |
|
73 |
|
|
80 |
|
|
303 |
|
|
313 |
|
Fair value adjustments and other |
|
(26,206 |
) |
|
(8,307 |
) |
|
(28,294 |
) |
|
(9,327 |
) |
Unrealized exchange loss / (gain) on long term
debt |
|
5,118 |
|
|
753 |
|
|
7,489 |
|
|
(6,301 |
) |
Gain on sale of timberlands |
|
(56 |
) |
|
(475 |
) |
|
(906 |
) |
|
(2,292 |
) |
Loss on disposal of roads and other fixed assets |
|
19 |
|
|
— |
|
|
112 |
|
|
— |
|
Accretion of long-term debt |
|
273 |
|
|
— |
|
|
1,046 |
|
|
— |
|
Net change in non-cash working capital balances and other |
|
2,604 |
|
|
3,609 |
|
|
44 |
|
|
4,743 |
|
|
|
5,977 |
|
|
7,868 |
|
|
16,203 |
|
|
21,519 |
|
Financing activities |
|
|
|
|
Dividends paid to shareholders |
|
(4,728 |
) |
|
(4,601 |
) |
|
(18,656 |
) |
|
(17,986 |
) |
Common shares repurchased from normal course issuerbid |
|
(636 |
) |
|
— |
|
|
(636 |
) |
|
— |
|
|
|
(5,364 |
) |
|
(4,601 |
) |
|
(19,292 |
) |
|
(17,986 |
) |
Investing activities |
|
|
|
|
Additions to timber, land, roads and other fixed assets |
|
(34 |
) |
|
(100 |
) |
|
(224 |
) |
|
(943 |
) |
Acquisition of Katahdin Timberlands LLC |
|
— |
|
|
— |
|
|
— |
|
|
(1,276 |
) |
Proceeds from sale of timberlands |
|
117 |
|
|
507 |
|
|
1,083 |
|
|
2,983 |
|
Proceeds from sale of roads and other fixed assets |
|
25 |
|
|
— |
|
|
599 |
|
|
— |
|
|
|
108 |
|
|
407 |
|
|
1,458 |
|
|
764 |
|
Increase
/ (decrease) in cash and cash equivalents during the
period |
|
721 |
|
|
3,674 |
|
|
(1,631 |
) |
|
4,297 |
|
Cash and cash equivalents, beginning of period |
|
21,599 |
|
|
20,277 |
|
|
23,951 |
|
|
19,654 |
|
Cash and cash equivalents, end of period |
$ |
22,320 |
|
$ |
23,951 |
|
$ |
22,320 |
|
$ |
23,951 |
|
Reconciliations to Adjusted EBITDA and
Free Cash Flow
|
Three Months Ended |
Year Ended |
(CAD thousands) |
December 31,
2018 |
December 31, 2017 |
December 31,
2018 |
December 31, 2017 |
|
|
|
|
|
Net income |
$ |
16,441 |
|
$ |
12,348 |
|
$ |
26,264 |
|
$ |
30,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add / (deduct): |
|
|
|
|
Interest expense, net |
|
1,004 |
|
|
706 |
|
|
3,901 |
|
|
2,895 |
|
Current income tax expense |
|
490 |
|
|
565 |
|
|
2,334 |
|
|
1,381 |
|
Deferred income tax expense /
(recovery) |
|
7,711 |
|
|
(140 |
) |
|
10,145 |
|
|
3,564 |
|
Depreciation and amortization |
|
73 |
|
|
80 |
|
|
303 |
|
|
313 |
|
Fair value adjustments and other |
|
(26,206 |
) |
|
(8,307 |
) |
|
(28,294 |
) |
|
(9,327 |
) |
Unrealized exchange loss / (gain) on long-term
debt |
|
5,118 |
|
|
753 |
|
|
7,489 |
|
|
(6,301 |
) |
Adjusted EBITDA |
$ |
4,631 |
|
$ |
6,005 |
|
$ |
22,142 |
|
$ |
23,344 |
|
Add / (deduct): |
|
|
|
|
Interest paid on debt, net |
|
(687 |
) |
|
(681 |
) |
|
(2,701 |
) |
|
(2,790 |
) |
Additions to timber, land, roads and
other fixed assets |
|
(34 |
) |
|
(35 |
) |
|
(224 |
) |
|
(384 |
) |
Gain on sale of timberlands |
|
(56 |
) |
|
(475 |
) |
|
(906 |
) |
|
(2,292 |
) |
Proceeds from sale of timberlands |
|
117 |
|
|
507 |
|
|
1,083 |
|
|
2,983 |
|
Proceeds from sale of roads and other
fixed assets |
|
25 |
|
|
— |
|
|
599 |
|
|
— |
|
Loss on disposal of roads and other
fixed assets |
|
19 |
|
|
— |
|
|
112 |
|
|
— |
|
Current income tax expense |
|
(490 |
) |
|
(565 |
) |
|
(2,334 |
) |
|
(1,381 |
) |
Free Cash Flow |
$ |
3,525 |
|
$ |
4,756 |
|
$ |
17,771 |
|
$ |
19,480 |
|
Dividends declared |
$ |
4,715 |
|
$ |
4,601 |
|
$ |
18,769 |
|
$ |
18,404 |
|
Payout Ratio |
|
134 |
% |
|
97 |
% |
|
106 |
% |
|
94 |
% |
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