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"Acadian’s operations benefited from favourable winter operating conditions and good demand and pricing for most of our products during the quarter" commented
In response to COVID-19, Acadian’s top priority has been the well-being of its people. Health and safety protocols have been updated on a regular basis based on guidance from regional health authorities. Employees have adapted well to performing office work from home and there has been limited disruption to field work as this work is conducted outdoors and in a manner that, for the most part, naturally allows for ‘social distancing’.
The initial market disruption caused by COVID-19 took place as Acadian entered its seasonally slow period. Harvest operations for the winter season wrapped up at the end of March and since then Acadian has been assessing market conditions while planning and preparing for operations startup, which typically occurs in late May through early June.
Acadian is staying close to its customers to gauge product demand and will respond accordingly. The forest products industry in the regions in which Acadian operates has been deemed essential and commercial trucks continue to be permitted to cross borders. The Company’s largest customers that produce pulp for specialty paper or tissue products are showing resilience and continue to operate, while a few small sawmill customers have taken temporary COVID-19 related downtime. Acadian expects to have a clear understanding as to the demand for its products as operations resume and it will be prepared to make the necessary adjustments to respond to market conditions.
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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 its operations while the 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 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 and Free Cash Flow.
During the quarter, Acadian declared dividends to its shareholders of
Review of Operations
Operating and Financial Highlights
Three Months Ended | ||||||
(CAD thousands, except per share information) | ||||||
Sales volume (000s m3) | 374.9 | 384.2 | ||||
Sales | $ | 31,408 | $ | 30,938 | ||
Operating earnings | 8,263 | 8,746 | ||||
Net income (loss) | (3,711 | ) | 6,182 | |||
Adjusted EBITDA | 8,329 | 8,857 | ||||
Adjusted EBITDA margin | 27% | 29% | ||||
Free Cash Flow | 6,565 | 6,490 | ||||
Dividends declared | 4,839 | 4,840 | ||||
Payout Ratio | 74% | 75% | ||||
Per share – basic and diluted | ||||||
Net income (loss) | $ | (0.22 | ) | $ | 0.37 | |
Free Cash Flow | 0.39 | 0.39 | ||||
Dividends declared | 0.29 | 0.29 |
During the first quarter, Acadian generated sales of
Operating costs and expenses were
Adjusted EBITDA and Adjusted EBITDA margin for the first quarter were
The net loss for the first quarter totaled
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and financial results for New Brunswick Timberlands.
Three Months Ended | Three Months Ended | |||||||||
Harvest | Sales | Sales | Results | Harvest | Sales | Sales | Results | |||
(000s m3) | (000s m3) | Mix | ($000s) | (000s m3) | (000s m3) | Mix | ($000s) | |||
Softwood | 116.5 | 113.4 | 45% | $ | 6,632 | 140.7 | 138.9 | 52% | $ | 8,332 |
Hardwood | 103.8 | 96.0 | 38% | 7,765 | 103.7 | 85.3 | 32% | 6,590 | ||
Biomass | 44.8 | 44.8 | 17% | 1,493 | 43.4 | 43.4 | 16% | 1,499 | ||
265.1 | 254.2 | 100% | 15,890 | 287.8 | 267.6 | 100% | 16,421 | |||
Timber services and other sales | 5,807 | 5,028 | ||||||||
Sales | $ | 21,697 | $ | 21,449 | ||||||
Adjusted EBITDA | $ | 5,878 | $ | 5,762 | ||||||
Adjusted EBITDA margin | 27% | 27% |
Sales for New Brunswick Timberlands during the first quarter totaled
Adjusted EBITDA was
During the first quarter of 2020, our
Maine Timberlands
The table below summarizes operating and financial results for Maine Timberlands.
Three Months Ended | Three Months Ended | |||||||||
Harvest | Sales | Sales | Results | Harvest | Sales | Sales | Results | |||
(000s m3) | (000s m3) | Mix | ($000s) | (000s m3) | (000s m3) | Mix | ($000s) | |||
Softwood | 92.0 | 92.2 | 76% | $ | 7,255 | 87.2 | 86.3 | 74% | $ | 7,036 |
Hardwood | 30.4 | 28.4 | 24% | 2,335 | 30.0 | 26.9 | 23% | 2,281 | ||
Biomass | 0.1 | 0.1 | 0% | 2 | 3.4 | 3.4 | 3% | 5 | ||
122.5 | 120.7 | 100% | 9,592 | 120.6 | 116.6 | 100% | 9,322 | |||
Other sales | 119 | 167 | ||||||||
Sales | $ | 9,711 | $ | 9,489 | ||||||
Adjusted EBITDA | $ | 3,050 | $ | 3,343 | ||||||
Adjusted EBITDA margin | 31% | 35% |
Sales for the first quarter totaled
Adjusted EBITDA for the quarter was
During the first quarter of 2020, there were no recordable safety incidents at our Maine Timberlands among employees and one recordable safety incident among the contractors.
Market Outlook
The following contains forward-looking information about Acadian Timber Corp.’s market outlook for the remainder of fiscal 2020. Reference should be made to the section entitled “Cautionary Statement Regarding Forward-Looking Information and 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.
The market outlook for the remainder of 2020 is highly uncertain as it is dependent on several non-economic factors, including COVID-19 related containment measures across
In the near-term, Acadian is assessing market conditions and working closely with its customers to gauge demand for its products while it plans and prepares for second quarter operations startup which typically occurs in late May through early June.
Acadian’s largest customers continue to operate with several experiencing steady demand for their products, such as specialty paper and tissue products, through this downturn. This demand supports upstream activities such as chipping and the value of sawmill residuals. Having said this, the outlook for North American lumber consumption in 2020, the end use market for softwood sawtimber, has been negatively impacted by the pandemic.
Acadian is prepared to adjust operations as market conditions evolve through the remainder of the year and will seek to manage risk while preserving the ability to increase activities as market conditions return to ‘normal’.
Quarterly Dividend
Acadian is pleased to announce a dividend of
Acadian owns and manages approximately 1.1 million acres of freehold timberlands in
Acadian’s business strategy is to maximize cash flows from its existing timberland assets while growing its business by acquiring assets on a value basis and utilizing its operations-oriented approach 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
Interim Condensed Consolidated Statements of Net Income (Loss)
(unaudited)
Three Months Ended | ||||
(CAD thousands, except per share data) | ||||
Sales | $ | 31,408 | $ | 30,938 |
Operating costs and expenses | ||||
Cost of sales | 20,861 | 19,921 | ||
Selling, administration and other | 2,217 | 2,199 | ||
Reforestation | 1 | — | ||
Depreciation and amortization | 66 | 72 | ||
23,145 | 22,192 | |||
Operating earnings | 8,263 | 8,746 | ||
Interest expense, net | (1,291) | (1,009) | ||
Other items | ||||
Fair value adjustments and other | (1,019) | (1,842) | ||
Unrealized exchange gain (loss) on long-term debt | (8,210) | 2,034 | ||
Gain on sale of timberlands | — | 39 | ||
Earnings (loss) before income tax recovery | (2,257) | 7,968 | ||
Current income tax expense | (902) | (1,700) | ||
Deferred income tax expense | (552) | (86) | ||
Net income (loss) | $ | (3,711) | $ | 6,182 |
Net income (loss) per share – basic and diluted | $ | (0.22 ) | $ | 0.37 |
Interim Condensed Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended | ||||
(CAD thousands) | ||||
Net income (loss) | $ | (3,711 ) | $ | 6,182 |
Other comprehensive income (loss) | ||||
Item that may be reclassified subsequently to net income: | ||||
Unrealized foreign currency translation gain (loss) | 11,624 | (3,102) | ||
Comprehensive income | $ | 7,913 | $ | 3,080 |
Interim Condensed Consolidated Balance Sheets
(unaudited)
As at (CAD thousands) | ||||
Assets | ||||
Current assets | ||||
Cash | $ | 12,029 | $ | 7,601 |
Accounts receivable and other assets | 12,041 | 11,602 | ||
Current taxes receivable | 1,343 | 2,245 | ||
Inventory | 2,693 | 1,545 | ||
28,106 | 22,993 | |||
Timber | 387,000 | 377,992 | ||
Land, roads and other fixed assets | 94,895 | 91,584 | ||
Intangible asset | 6,140 | 6,140 | ||
Total assets | $ | 516,141 | $ | 498,709 |
Liabilities and shareholders’ equity | ||||
Current liabilities | ||||
Short-term debt | $ | 1,195 | $ | 7,793 |
Accounts payable and accrued liabilities | 8,996 | 9,190 | ||
Dividends payable to shareholders | 4,839 | 4,839 | ||
Current portion of long-term debt | — | 93,084 | ||
15,030 | 114,906 | |||
Long-term debt | 111,050 | — | ||
Deferred income tax liability | 100,286 | 97,102 | ||
Shareholders’ equity | 289,775 | 286,701 | ||
Total liabilities and shareholders’ equity | $ | 516,141 | $ | 498,709 |
Interim Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended | ||||
(CAD thousands) | ||||
Cash provided by (used for): | ||||
Operating activities | ||||
Net income (loss) | $ | (3,711) | $ | 6,182 |
Adjustments to net income (loss): | ||||
Deferred income tax expense | 552 | 86 | ||
Depreciation and amortization | 66 | 72 | ||
Fair value adjustments and other | 1,019 | 1,842 | ||
Unrealized exchange (gain) / loss on long term debt | 8,210 | (2,034) | ||
Gain on sale of timberlands | — | (39) | ||
Accretion of long-term debt | 400 | 316 | ||
Net change in non-cash working capital balances and other | 196 | (1,390) | ||
6,732 | 5,035 | |||
Financing activities | ||||
Repayment of operating loans | (7,013) | — | ||
Issuance of long-term debt | 19,795 | — | ||
Repayment of long-term debt | (9,729) | — | ||
Deferred financing costs | (510) | — | ||
Dividends paid to shareholders | (4,839) | (4,714) | ||
Purchase of common shares from NCIB | — | (37) | ||
(2,296) | (4,751) | |||
Investing activities | ||||
Additions to timber, land, roads and other fixed assets | (8) | — | ||
Proceeds from sale of timberlands | — | 40 | ||
(8) | 40 | |||
Increase in cash during the period | 4,428 | 324 | ||
Cash beginning of period | 7,601 | 22,320 | ||
Cash end of period | $ | 12,029 | $ | 22,644 |
Reconciliations to Adjusted EBITDA and Free Cash Flow
Three Months Ended | ||||
(CAD thousands) | ||||
Net income (loss) | $ | (3,711) | $ | 6,182 |
Add (deduct): | ||||
Interest expense, net | 1,291 | 1,009 | ||
Current income tax expense | 902 | 1,700 | ||
Deferred income tax expense | 552 | 86 | ||
Depreciation and amortization | 66 | 72 | ||
FV adjustments and other | 1,019 | 1,842 | ||
Unrealized exchange loss (gain) on long-term debt | 8,210 | (2,034) | ||
Adjusted EBITDA | $ | 8,329 | $ | 8,857 |
Add (deduct): | ||||
Interest paid on debt, net | (854) | (668) | ||
Additions to timber, land, roads and other fixed assets | (8) | — | ||
Gain on sale of timberlands | — | (39) | ||
Proceeds on sale of timberlands | — | 40 | ||
Current income tax expense | (902) | (1,700) | ||
Free Cash Flow | $ | 6,565 | $ | 6,490 |
Dividends declared | $ | 4,839 | $ | 4,840 |
Payout Ratio | 74% | 75% |
Source:
2020 GlobeNewswire, Inc., source