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“While the second quarter of the year is traditionally our slowest due to seasonal operating conditions, favourable weather allowed harvest to continue later into the winter and to begin earlier after the spring thaw. Combined with increased contractor capacity, Acadian delivered strong second quarter results and recovered much of the volume shortfall of the first quarter,” commented
Acadian generated
On
The total volume of credits expected to be generated from the project over the 10-year crediting period has increased from the initial estimate of 1.6 million credits to 1.9 million credits. Actual credit issuances will be adjusted each reporting period based on actual harvesting, natural disturbances, and other factors, as well as periodic updating for inventory and verification activities.
Acadian is committed to health and safety as our number one priority. We believe that emphasizing and achieving a good safety performance is a leading indicator of success in the broader business. Acadian’s operations experienced no recordable safety incidents during the quarter among employees or contractors.
1 This news release makes reference to Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow and Payout Ratios which are key performance measures in evaluating Acadian’s operations and are important in enhancing investors’ understanding of the Company’s operating performance. Adjusted EBITDA and Adjusted EBITDA margin are indicative of the underlying profitability of Acadian’s operating segments and 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 Ratios are used to evaluate Acadian’s ability to fund its distribution using Free Cash Flow. Acadian’s management defines Adjusted EBITDA as net income before interest, income taxes, fair value adjustments, recovery of or impairment of land and roads and depreciation and amortization, and “Adjusted EBITDA margin” as Adjusted EBITDA as a percentage of Acadian’s sales. 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 timberlands and other fixed assets (proceeds less gains or losses). Reference made to “Payout Ratio” is defined as dividends declared divided by Free Cash Flow, and Payout Ratio with DRIP is defined as dividends paid in cash divided by Free Cash Flow. We have provided in this news release reconciliations of net income, as determined in accordance with International Financial Reporting Standards (“IFRS”), to Adjusted EBITDA and Free Cash Flow. Reference is also made to net liquidity which includes cash and funds available under credit facilities less amounts reserved to support the minimum cash balance related to long-term debt. As these measures do not have standardized meanings prescribed by IFRS, they may not be comparable to similar measures presented by other companies. Please refer to Management’s Discussion and Analysis for further details.
Review of Operations
Financial and Operating Highlights
Three Months Ended | Six Months Ended | |||||||
(CAD thousands, except per share information) | June 25, 2022 | |||||||
Sales volume (000s m3) | 184.2 | 156.7 | 389.4 | 457.9 | ||||
Sales | $ | 20,707 | $ | 16,493 | $ | 43,069 | $ | 43,124 |
Operating income | 5,217 | 2,684 | 10,521 | 9,522 | ||||
Net income | 5,813 | 4,516 | 11,433 | 8,674 | ||||
Adjusted EBITDA | $ | 5,651 | $ | 2,747 | $ | 11,252 | $ | 9,656 |
Adjusted EBITDA margin | 27% | 17% | 26% | 22% | ||||
Free Cash Flow | $ | 4,108 | $ | 1,877 | $ | 7,831 | $ | 6,891 |
Dividends declared | 4,940 | 4,856 | 9,859 | 9,695 | ||||
Dividends paid in cash | 3,724 | 3,713 | 7,445 | 8,552 | ||||
Payout Ratio | n/a | n/a | 126% | 141% | ||||
Payout Ratio with DRIP | n/a | n/a | 95% | 124% | ||||
Per share – basic and diluted | ||||||||
Net income | $ | 0.34 | $ | 0.27 | $ | 0.67 | $ | 0.52 |
Free Cash Flow | 0.24 | 0.11 | 0.46 | 0.41 | ||||
Dividends declared | 0.29 | 0.29 | 0.58 | 0.58 |
During the second quarter, Acadian generated sales of
Sales volume, excluding biomass, was 18% higher compared to the prior year period as a result of favourable weather, which allowed harvest to continue later into the winter and to begin earlier after the spring thaw, and increased contractor availability. Biomass sales volume was 8% higher due to favourable market conditions.
Operating costs and expenses were
Net income for the second quarter totaled
Adjusted EBITDA was
During the first half of 2023, Acadian generated sales of
For the six months ended
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and financial results for New Brunswick Timberlands.
Three Months Ended | Six Months Ended | ||||||||
Harvest (000s m3) | |||||||||
Softwood | 58.6 | 48.3 | 145.5 | 176.4 | |||||
Hardwood | 47.2 | 42.5 | 109.4 | 110.7 | |||||
Biomass | — | 3.5 | 25.8 | 29.5 | |||||
Total | 105.8 | 94.3 | 280.7 | 316.6 | |||||
Sales (000s m3) | |||||||||
Softwood | 60.2 | 55.7 | 145.3 | 181.3 | |||||
Hardwood | 80.2 | 64.0 | 124.4 | 115.8 | |||||
Biomass | 7.1 | 3.5 | 32.9 | 29.5 | |||||
Total | 147.5 | 123.2 | 302.6 | 326.6 | |||||
Sales Mix | |||||||||
Softwood | 41% | 45% | 48% | 56% | |||||
Hardwood | 54% | 52% | 41% | 35% | |||||
Biomass | 5% | 3% | 11% | 9% | |||||
Total | 100% | 100% | 100% | 100% | |||||
Results ($000s) | |||||||||
Softwood | $ | 4,238 | $ | 4,023 | $ | 10,486 | $ | 12,197 | |
Hardwood | 7,899 | 5,641 | 12,760 | 10,146 | |||||
Biomass | 320 | 152 | 1,630 | 1,308 | |||||
Total | $ | 12,457 | $ | 9,816 | $ | 24,876 | $ | 23,651 | |
Timber services and other | 4,112 | 3,728 | 9,600 | 7,902 | |||||
Sales | $ | 16,569 | $ | 13,544 | $ | 34,476 | $ | 31,553 | |
Adjusted EBITDA | $ | 4,996 | $ | 2,710 | $ | 9,879 | $ | 7,378 | |
Adjusted EBITDA margin | 30% | 20% | 29% | 23% |
Sales for New Brunswick Timberlands in the second quarter were
The weighted average selling price, excluding biomass, for the second quarter was
Operating costs and expenses were
Adjusted EBITDA for the quarter was
During the first half of 2023, New Brunswick Timberlands’ sales of
Maine Timberlands
The table below summarizes operating and financial results for Maine Timberlands.
Three Months Ended | Six Months Ended | ||||||||
Harvest (000s m3) | |||||||||
Softwood | 27.7 | 19.5 | 57.0 | 96.6 | |||||
Hardwood | 10.7 | 5.4 | 26.2 | 27.7 | |||||
Biomass | — | 3.0 | 6.5 | 3.2 | |||||
Total | 38.4 | 27.9 | 89.7 | 127.5 | |||||
Sales (000s m3) | |||||||||
Softwood | 24.0 | 19.7 | 52.2 | 96.6 | |||||
Hardwood | 12.7 | 10.8 | 28.1 | 31.5 | |||||
Biomass | — | 3.0 | 6.5 | 3.2 | |||||
Total | 36.7 | 33.5 | 86.8 | 131.3 | |||||
Sales Mix | |||||||||
Softwood | 65% | 59% | 60% | 74% | |||||
Hardwood | 35% | 32% | 32% | 24% | |||||
Biomass | — | 9% | 8% | 2% | |||||
Total | 100% | 100% | 100% | 100% | |||||
Results ($000s) | |||||||||
Softwood | $ | 2,737 | $ | 1,662 | $ | 5,373 | $ | 8,449 | |
Hardwood | 1,182 | 1,127 | 2,734 | 2,853 | |||||
Biomass | — | 6 | 60 | 10 | |||||
Total | $ | 3,919 | $ | 2,795 | $ | 8,167 | $ | 11,312 | |
Timber services and other | 219 | 154 | 426 | 259 | |||||
Sales | $ | 4,138 | $ | 2,949 | $ | 8,593 | $ | 11,571 | |
Adjusted EBITDA | $ | 1,133 | $ | 364 | $ | 2,232 | $ | 3,116 | |
Adjusted EBITDA margin | 27% | 12% | 26% | 27% |
Sales for Maine Timberlands during the second quarter totaled
In
Operating costs and expenses for the second quarter were
Adjusted EBITDA for the quarter was
During the first half of 2023, Maine Timberlands’ sales were
Outlook
North American inflation concerns persist, and interest rates continue to increase, which has put near-term pressure on end use markets. However, we remain confident that the stability of the northeastern forestry sector, combined with the long-term demand for new homes and repair and remodel activity, will support the demand for our products. Consensus forecast for
We experienced increased contractor availability during the second quarter and expect to maintain this capacity throughout the remainder of the year. Inflation continues to impact our financial results through elevated contractor rates and fuel surcharges.
Demand for Acadian’s sawlogs is mainly driven by regional supply and demand, meaning that the stable demand experienced in the first half of 2023 is expected to continue. Pricing for softwood sawtimber is expected to remain stable, however, pricing for hardwood sawtimber may weaken, reflecting the recent weakness in hardwood lumber pricing. While regional inventories of hardwood pulpwood have been replenished and demand has begun to slow, this market is expected to remain stable. Softwood pulpwood markets are expected to remain at the improved levels experienced in 2022.
Quarterly Dividend
Based on a strong balance sheet and outlook for the remainder of the year, Acadian is pleased to announce a dividend of
Acadian’s business strategy is to maximize cash flows from its existing timberland assets through sustainable forest management and other land use activities while growing its business by acquiring assets and actively managing these assets to drive improved performance.
Acadian’s shares are listed for trading on the
For further information, please visit our website at www.acadiantimber.com or contact:
Chief Financial Officer
Tel: 506-737-2345
Email: ir@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
- Expectations regarding the number and timing of carbon credits that will be successfully registered and available for sale. Actual credit issuances will be adjusted each reporting period based on actual harvesting, natural disturbances and other factors, as well as periodic updating for inventory and verification activities.
- Expectations regarding product demand, pricing and end use markets, including expectations for
U.S. housing starts, which may be impacted by changes in interest rates,U.S. population demographics and the inventory of homes for sale. Expectations regarding product demand and pricing are based on anticipated market conditions, anticipated regional inventory levels of key customers, and the economic situation of key customers. Estimates forU.S. housing starts are based on forecasts published by major financial institutions. - Expectations regarding future contractor availability, which may be impacted by regional supply of trained contractors and changes in the demographics of the available workforce.
Other risks and factors are discussed under the heading “Risk Factors” in Management’s Discussion and Analysis dated
Interim Condensed Consolidated Balance Sheets
(unaudited)
As at (CAD thousands) | ||||
Assets | ||||
Current assets | ||||
Cash | $ | 3,978 | $ | 6,230 |
Accounts receivable and other assets | 6,470 | 8,265 | ||
Current income taxes receivable | 597 | — | ||
Inventories | 14,859 | 1,850 | ||
25,904 | 16,345 | |||
Timber | 426,418 | 437,365 | ||
Land, roads, and other fixed assets | 86,989 | 87,986 | ||
Intangible asset | 6,140 | 6,140 | ||
Total assets | $ | 545,451 | $ | 547,836 |
Liabilities and shareholders’ equity | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $ | 7,065 | $ | 11,206 |
Current income taxes payable | — | 20 | ||
Dividends payable to shareholders | 4,940 | 4,897 | ||
12,005 | 16,123 | |||
Long-term debt | 105,238 | 107,937 | ||
Deferred income tax liabilities, net | 121,876 | 120,053 | ||
Total liabilities | 239,119 | 244,113 | ||
Shareholders’ equity | 306,332 | 303,723 | ||
Total liabilities and shareholders’ equity | $ | 545,451 | $ | 547,836 |
Interim Condensed Consolidated Statements of Net Income
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||
(CAD thousands, except per share data) | ||||||||||||
Sales | $ | 20,707 | $ | 16,493 | $ | 43,069 | $ | 43,124 | ||||
Operating costs and expenses | ||||||||||||
Cost of sales | 12,938 | 11,433 | 28,064 | 29,102 | ||||||||
Selling, administration and other | 2,103 | 1,828 | 3,961 | 3,894 | ||||||||
Silviculture | 366 | 485 | 367 | 486 | ||||||||
Depreciation and amortization | 83 | 63 | 156 | 120 | ||||||||
15,490 | 13,809 | 32,548 | 33,602 | |||||||||
Operating income | 5,217 | 2,684 | 10,521 | 9,522 | ||||||||
Interest expense, net | (771 | ) | (763 | ) | (1,580 | ) | (1,500 | ) | ||||
Other items | ||||||||||||
Fair value adjustments and other | 3,350 | 4,430 | 6,533 | 4,158 | ||||||||
Gain on sale of timberlands and other fixed assets | 351 | — | 575 | 14 | ||||||||
Income before income taxes | 8,147 | 6,351 | 16,049 | 12,194 | ||||||||
Income tax expense | (2,334 | ) | (1,835 | ) | (4,616 | ) | (3,520 | ) | ||||
Net income | $ | 5,813 | $ | 4,516 | $ | 11,433 | $ | 8,674 | ||||
Net income per share – basic and diluted | $ | 0.34 | $ | 0.27 | $ | 0.67 | $ | 0.52 |
Interim Condensed Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended | Six Months Ended | |||||||||
(CAD thousands) | ||||||||||
Net income | $ | 5,813 | $ | 4,516 | $ | 11,433 | $ | 8,674 | ||
Other comprehensive income / (loss) | ||||||||||
Items that may be reclassified subsequently to net income: | ||||||||||
Unrealized foreign currency translation gain / (loss) | (2,225 | ) | 1,232 | (1,365 | ) | 679 | ||||
Comprehensive income | $ | 3,588 | $ | 5,748 | $ | 10,068 | $ | 9,353 |
Interim Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||
(CAD thousands) | | June 25, 2022 | | June 25, 2022 | ||||||||
Cash provided by (used for): | ||||||||||||
Operating activities | ||||||||||||
Net income | $ | 5,813 | $ | 4,516 | $ | 11,433 | $ | 8,674 | ||||
Adjustments to net income: | ||||||||||||
Income tax expense | 2,334 | 1,835 | 4,616 | 3,520 | ||||||||
Depreciation and amortization | 83 | 63 | 156 | 120 | ||||||||
Fair value adjustments and other | (3,350 | ) | (4,430 | ) | (6,533 | ) | (4,158 | ) | ||||
Gain on sale of timberlands and other fixed assets | (351 | ) | — | (575 | ) | (14 | ) | |||||
Income taxes paid | (1,973 | ) | (347 | ) | (2,368 | ) | (683 | ) | ||||
Net change in non-cash working capital balances and other | 1,181 | 1,856 | (1,949 | ) | 657 | |||||||
3,737 | 3,493 | 4,780 | 8,116 | |||||||||
Financing activities | ||||||||||||
Dividends paid to shareholders | (3,724 | ) | (3,713 | ) | (7,445 | ) | (8,552 | ) | ||||
Investing activities | ||||||||||||
Additions to timber, land, roads, and other fixed assets | (146 | ) | (39 | ) | (177 | ) | (103 | ) | ||||
Proceeds from sale of timberlands and other fixed assets | 360 | — | 590 | 14 | ||||||||
214 | (39 | ) | 413 | (89 | ) | |||||||
Increase / (decrease) in cash during the period | 227 | (259 | ) | (2,252 | ) | (525 | ) | |||||
Cash, beginning of period | 3,751 | 7,050 | 6,230 | 7,316 | ||||||||
Cash, end of period | $ | 3,978 | $ | 6,791 | $ | 3,978 | $ | 6,791 |
Reconciliations to Adjusted EBITDA and Free Cash Flow
(unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
(CAD thousands) | |||||||||||||||
Net income | $ | 5,813 | $ | 4,516 | $ | 11,433 | $ | 8,674 | |||||||
Add / (deduct): | |||||||||||||||
Interest expense, net | 771 | 763 | 1,580 | 1,500 | |||||||||||
Income tax expense | 2,334 | 1,835 | 4,616 | 3,520 | |||||||||||
Depreciation and amortization | 83 | 63 | 156 | 120 | |||||||||||
Fair value adjustments and other | (3,350 | ) | (4,430 | ) | (6,533 | ) | (4,158 | ) | |||||||
Adjusted EBITDA | $ | 5,651 | $ | 2,747 | $ | 11,252 | $ | 9,656 | |||||||
Add / (deduct): | |||||||||||||||
Interest paid on debt, net | (740 | ) | (731 | ) | (1,519 | ) | (1,439 | ) | |||||||
Additions to timber, land, roads, and other fixed assets | (146 | ) | (39 | ) | (177 | ) | (103 | ) | |||||||
Gain on sale of timberlands and other fixed assets | (351 | ) | — | (575 | ) | (14 | ) | ||||||||
Proceeds from sale of timberlands and other assets | 360 | — | 590 | 14 | |||||||||||
Current income tax expense | (666 | ) | (100 | ) | (1,740 | ) | (1,223 | ) | |||||||
Free Cash Flow | $ | 4,108 | $ | 1,877 | $ | 7,831 | $ | 6,891 | |||||||
Dividends declared | 4,940 | 4,856 | 9,859 | 9,695 | |||||||||||
Dividends paid in cash | 3,724 | 3,713 | 7,445 | 8,552 | |||||||||||
Payout Ratio | n/a | n/a | 126 | % | 141 | % | |||||||||
Payout Ratio with DRIP | n/a | n/a | 95 | % | 124 | % |
Source:
2023 GlobeNewswire, Inc., source