Investors, analysts and other interested parties can access Acadian |
“Operating conditions were favorable during the third quarter, but regional market demand was varied with increased demand for softwood sawlogs more than offset by a weaker than expected hardwood pulpwood market,” commented
Health and safety remained a key focus during the quarter. Acadian experienced no recordable safety incidents among employees and four incidents among contractors. Acadian continued to emphasize the importance of strong safety performance to all members of the organization. Acadian also continued to monitor COVID-19 related developments in the regions in which we operate and updated our COVID-19 operational plans accordingly.
During the quarter, both the
Acadian generated
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 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 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) | |||||||||||||
Sales volume (000s m3) | 302.3 | 313.5 | 816.9 | 911.7 | |||||||||
Sales | $ | 23,236 | $ | 25,357 | $ | 66,102 | $ | 74,213 | |||||
Operating earnings | 4,445 | 4,718 | 13,991 | 15,937 | |||||||||
Net income / (loss) | 5,248 | (10,869 | ) | 6,766 | 1,097 | ||||||||
Adjusted EBITDA | 4,514 | 5,123 | 14,197 | 17,018 | |||||||||
Adjusted EBITDA margin | 19 | % | 20 | % | 21 | % | 23 | % | |||||
Free Cash Flow | 3,149 | 4,186 | 9,506 | 13,426 | |||||||||
Dividends declared | 4,840 | 4,840 | 14,518 | 14,519 | |||||||||
Payout ratio1 | 154 | % | 116 | % | 153 | % | 108 | % | |||||
Per share – basic and diluted | |||||||||||||
Net income / (loss) | $ | 0.31 | $ | (0.65 | ) | $ | 0.41 | $ | 0.07 | ||||
Free Cash Flow | 0.19 | 0.25 | 0.57 | 0.80 | |||||||||
Dividends declared | 0.29 | 0.29 | 0.87 | 0.87 | |||||||||
1. Seasonal fluctuations in volume render third quarter payout ratios not meaningful. |
For the three months ended
Operating costs and expenses were
Adjusted EBITDA was
Net income for the third quarter totaled
During the first nine months of 2020, Acadian generated sales of
For the nine months ended
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 | 123.7 | 122.5 | 52 | % | $ | 7,050 | 103.7 | 102.7 | 43 | % | $ | 5,864 | ||
Hardwood | 75.7 | 73.7 | 31 | % | 5,249 | 109.1 | 111.1 | 47 | % | 8,188 | ||||
Biomass | 40.7 | 40.7 | 17 | % | 1,156 | 24.9 | 24.9 | 10 | % | 818 | ||||
240.1 | 236.9 | 100 | % | 13,455 | 237.7 | 238.7 | 100 | % | 14,870 | |||||
Timber services and other | 4,570 | 4,599 | ||||||||||||
Sales | $ | 18,025 | $ | 19,469 | ||||||||||
Adjusted EBITDA | $ | 4,240 | $ | 4,789 | ||||||||||
Adjusted EBITDA margin | 24 | % | 25 | % |
Nine Months Ended | Nine Months Ended | |||||||||||||
Harvest | Sales | Sales | Results | Harvest | Sales | Sales | Results | |||||||
(000s m3) | (000s m3) | Mix | ($000s) | (000s m3) | (000s m3) | Mix | ($000s) | |||||||
Softwood | 282.5 | 284.2 | 47 | % | $ | 16,188 | 291.4 | 303.3 | 45 | % | $ | 17,817 | ||
Hardwood | 211.5 | 223.3 | 37 | % | 17,262 | 264.3 | 274.0 | 41 | % | 20,849 | ||||
Biomass | 103.2 | 103.2 | 16 | % | 3,280 | 99.0 | 99.0 | 14 | % | 3,554 | ||||
597.2 | 610.7 | 100 | % | 36,730 | 654.7 | 676.3 | 100 | % | 42,220 | |||||
Timber services and other | 12,474 | 13,147 | ||||||||||||
Sales | $ | 49,204 | $ | 55,367 | ||||||||||
Adjusted EBITDA | $ | 11,900 | $ | 13,388 | ||||||||||
Adjusted EBITDA margin | 24 | % | 24 | % |
Sales for our New Brunswick Timberlands were
Operating costs and expenses were
Adjusted EBITDA was
During the first nine months of 2020, New Brunswick Timberlands’ sales of
There were four recordable safety incidents among contractors and no incidents among employees during the third quarter of 2020.
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 | 38.5 | 38.6 | 59 | % | $ | 2,741 | 49.0 | 49.0 | 66 | % | $ | 3,551 | ||
Hardwood | 31.8 | 26.8 | 41 | % | 2,305 | 26.1 | 25.5 | 34 | % | 2,164 | ||||
Biomass | — | — | 0 | % | 2 | 0.3 | 0.3 | 0 | % | 4 | ||||
70.3 | 65.4 | 100 | % | 5,048 | 75.4 | 74.8 | 100 | % | 5,719 | |||||
Other sales | 163 | 169 | ||||||||||||
Sales | $ | 5,211 | $ | 5,888 | ||||||||||
Adjusted EBITDA | $ | 793 | $ | 711 | ||||||||||
Adjusted EBITDA margin | 15 | % | 12 | % |
Nine Months Ended | Nine Months Ended | |||||||||||||
Harvest | Sales | Sales | Results | Harvest | Sales | Sales | Results | |||||||
(000s m3) | (000s m3) | Mix | ($000s) | (000s m3) | (000s m3) | Mix | ($000s) | |||||||
Softwood | 140.9 | 141.0 | 68 | % | $ | 10,806 | 163.1 | 163.3 | 69 | % | $ | 12,471 | ||
Hardwood | 69.5 | 65.0 | 32 | % | 5,665 | 68.7 | 68.3 | 29 | % | 5,894 | ||||
Biomass | 0.2 | 0.2 | 0 | % | 4 | 3.8 | 3.8 | 2 | % | 12 | ||||
210.6 | 206.2 | 100 | % | 16,475 | 235.6 | 235.4 | 100 | % | 18,377 | |||||
Other sales | 423 | 469 | ||||||||||||
Sales | $ | 16,898 | $ | 18,846 | ||||||||||
Adjusted EBITDA | $ | 3,959 | $ | 4,594 | ||||||||||
Adjusted EBITDA margin | 23 | % | 24 | % |
Sales for our Maine Timberlands totaled
The weighted average selling price, excluding biomass, remained stable due to a favourable product mix overall offset by lower quality softwood and hardwood sawtimber in the mix. In Canadian dollar terms the weighted average selling price was
Operating costs and expenses for the third quarter were
Adjusted EBITDA for the quarter was
During the first nine months of 2020, sales were
There were no recordable safety incidents among employees or contractors during the third quarter of 2020.
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.
Acadian’s main products include softwood sawlogs and pulpwood, hardwood sawlogs and pulpwood, and biomass, from which our customers manufacture solid wood, pulp and paper products, engineered wood products, and fuels. This product diversity leads to more stable performance over cycles.
The outlook for softwood sawlogs is positive with an expected increase in North American softwood lumber consumption in 2021. Consensus estimates are for 1.30 million housing starts in 2020 increasing to 1.37 million in 2021 supported by favourable demographics, lower interest rates and old, underbuilt housing stock.
Local markets for hardwood sawlogs are expected to strengthen for the remainder of the year as less product is produced in light of weak hardwood pulpwood markets, matched with strengthening demand for hardwood lumber.
Hardwood and softwood pulpwood demand is expected to remain weak for the remainder of the year, until hardwood pulp markets improve and regional supply is brought in balance with demand.
Biomass markets in
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 owns and manages approximately 761,000 acres of freehold timberlands in
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
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 MD&A 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, 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 MD&A, 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 is included in the Letter to Shareholders which precedes this MD&A and includes statements made in this MD&A in sections entitled “Dividend Policy of the Company” and “Market Outlook” and without limitation 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 MD&A. All forward-looking statements in this MD&A 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 US 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 or
Interim Condensed Consolidated Balance Sheets
(unaudited)
As at (CAD thousands) | ||||||
Assets | ||||||
Current assets | ||||||
Cash | $ | 7,406 | $ | 7,601 | ||
Accounts receivable and other assets | 11,433 | 11,602 | ||||
Current income taxes receivable | 1,299 | 2,245 | ||||
Inventory | 1,178 | 1,545 | ||||
21,316 | 22,993 | |||||
Timber | 385,927 | 377,992 | ||||
Land, roads and other fixed assets | 93,017 | 91,584 | ||||
Intangible assets | 6,140 | 6,140 | ||||
Total assets | $ | 506,400 | $ | 498,709 | ||
Liabilities and shareholders’ equity | ||||||
Current liabilities | ||||||
Short-term debt | $ | — | $ | 7,793 | ||
Accounts payable and accrued liabilities | 10,979 | 9,190 | ||||
Dividends payable to shareholders | 4,839 | 4,839 | ||||
Current portion of long-term debt | — | 93,084 | ||||
15,818 | 114,906 | |||||
Long-term debt | 106,468 | — | ||||
Deferred income tax liability | 100,783 | 97,102 | ||||
Shareholders’ equity | 283,331 | 286,701 | ||||
Total liabilities and shareholders’ equity | $ | 506,400 | $ | 498,709 |
Interim Condensed Consolidated Statements of Net Income / (Loss)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||
(CAD thousands, except per share data) | ||||||||||||
Sales | $ | 23,236 | $ | 25,357 | $ | 66,102 | $ | 74,213 | ||||
Operating costs and expenses | ||||||||||||
Cost of sales | 16,075 | 17,404 | 44,704 | 49,900 | ||||||||
Selling, administration and other | 1,971 | 2,789 | 6,274 | 7,412 | ||||||||
Reforestation | 676 | 375 | 927 | 749 | ||||||||
Depreciation and amortization | 69 | 71 | 206 | 215 | ||||||||
18,791 | 20,639 | 52,111 | 58,276 | |||||||||
Operating earnings | 4,445 | 4,718 | 13,991 | 15,937 | ||||||||
Interest expense, net | (1,142 | ) | (1,010 | ) | (3,605 | ) | (2,989 | ) | ||||
Other items | ||||||||||||
Fair value adjustments and other | 643 | 139 | 3,861 | 1,409 | ||||||||
Unrealized exchange gain / (loss) on long-term debt | 2,240 | (1,030 | ) | (2,940 | ) | 2,907 | ||||||
Management agreement termination fee | — | (18,000 | ) | — | (18,000 | ) | ||||||
Gain on sale of timberlands | — | 333 | — | 864 | ||||||||
Gain on disposal of other fixed assets | — | 1 | — | 2 | ||||||||
Earnings (Loss) before income tax | 6,186 | (14,849 | ) | 11,307 | 130 | |||||||
Current income tax recovery / (expense) | (312 | ) | 1,667 | (1,870 | ) | 335 | ||||||
Deferred income tax recovery / (expense) | (626 | ) | 2,313 | (2,671 | ) | 632 | ||||||
Net income / (Loss) | $ | 5,248 | $ | (10,869 | ) | $ | 6,766 | $ | 1,097 | |||
Net income / (Loss) per share – basic and diluted | $ | 0.31 | $ | (0.65 | ) | $ | 0.41 | $ | 0.07 |
Interim Condensed Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||
(CAD thousands) | ||||||||||||
Net income / (Loss) | $ | 5,248 | $ | (10,869 | ) | $ | 6,766 | $ | 1,097 | |||
Other comprehensive income (loss) | ||||||||||||
Items that may be reclassified subsequently to net income: | ||||||||||||
Unrealized foreign currency translation gain / (loss) | (3,073 | ) | 1,500 | 4,382 | (4,447 | ) | ||||||
Gain on revaluation of roads and land | — | (9 | ) | — | (23 | ) | ||||||
Deferred income tax recovery | — | 3 | — | 7 | ||||||||
Comprehensive income / (Loss) | $ | 2,175 | $ | (9,375 | ) | $ | 11,148 | $ | (3,366 | ) |
Interim Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||
(CAD thousands) | |||||||||||||
Cash provided by (used for): | |||||||||||||
Operating activities | |||||||||||||
Net income / (Loss) | $ | 5,248 | $ | (10,869 | ) | $ | 6,766 | $ | 1,097 | ||||
Adjustment to net income: | |||||||||||||
Deferred income tax expense / (recovery) | 626 | (2,313 | ) | 2,671 | (632 | ) | |||||||
Depreciation and amortization | 69 | 71 | 206 | 215 | |||||||||
Fair value adjustments and other | (643 | ) | (139 | ) | (3,861 | ) | (1,409 | ) | |||||
Unrealized exchange (gain) / loss on long-term debt | (2,240 | ) | 1,030 | 2,940 | (2,907 | ) | |||||||
Gain on sale of timberlands | — | (333 | ) | — | (864 | ) | |||||||
Gain on disposal of other fixed assets | — | (1 | ) | — | (2 | ) | |||||||
Accretion of long-term debt | 315 | 276 | 1,038 | 861 | |||||||||
Net change in non-cash working capital balances and other | (648 | ) | (1,079 | ) | 3,545 | (2,114 | ) | ||||||
2,727 | (13,357 | ) | 13,305 | (5,755 | ) | ||||||||
Financing activities | |||||||||||||
Repayment of operating loans | — | — | (8,169 | ) | — | ||||||||
Issuance of long-term debt | — | 9,930 | 19,795 | 9,930 | |||||||||
Repayment of long-term debt | — | — | (9,729 | ) | — | ||||||||
Deferred financing costs | — | — | (527 | ) | — | ||||||||
Dividends paid to shareholders | (4,840 | ) | (4,840 | ) | (14,518 | ) | (14,394 | ) | |||||
Purchase of common shares under NCIB | — | — | — | (37 | ) | ||||||||
(4,840 | ) | 5,090 | (13,148 | ) | (4,501 | ) | |||||||
Investing activities | |||||||||||||
Additions to timber, land, roads and other fixed assets | (257 | ) | (68 | ) | (352 | ) | (86 | ) | |||||
Proceeds from sale of timberlands | — | 353 | — | 920 | |||||||||
Proceeds from sale of other fixed assets | — | 1 | — | 2 | |||||||||
(257 | ) | 286 | (352 | ) | 836 | ||||||||
Increase / (decrease) in cash during the period | (2,370 | ) | (7,981 | ) | (195 | ) | (9,420 | ) | |||||
Cash beginning of period | 9,776 | 20,881 | 7,601 | 22,320 | |||||||||
Cash end of period | $ | 7,406 | $ | 12,900 | $ | 7,406 | $ | 12,900 |
Reconciliations to Adjusted EBITDA and Free Cash Flow
Three Months Ended | Nine Months Ended | |||||||||||
Net income / (loss) | $ | 5,248 | $ | (10,869 | ) | $ | 6,766 | $ | 1,097 | |||
Add / (deduct) | ||||||||||||
Interest expense, net | 1,142 | 1,010 | 3,605 | 2,989 | ||||||||
Current income tax (recovery) / expense | 312 | (1,667 | ) | 1,870 | (335 | ) | ||||||
Deferred income tax (recovery) / expense | 626 | (2,313 | ) | 2,671 | (632 | ) | ||||||
Depreciation and amortization | 69 | 71 | 206 | 215 | ||||||||
Fair value adjustments and other | (643 | ) | (139 | ) | (3,861 | ) | (1,409 | ) | ||||
Management agreement termination fee | — | 18,000 | — | 18,000 | ||||||||
Unrealized exchange (gain) / loss on long-term debt | (2,240 | ) | 1,030 | 2,940 | (2,907 | ) | ||||||
Adjusted EBITDA | $ | 4,514 | $ | 5,123 | $ | 14,197 | $ | 17,018 | ||||
Add / (deduct) | ||||||||||||
Interest paid on debt, net | (796 | ) | (708 | ) | (2,470 | ) | (2,049 | ) | ||||
Additions to timber, land, roads and other fixed assets | (257 | ) | (68 | ) | (352 | ) | (86 | ) | ||||
Gain on sale of timberlands | — | (333 | ) | — | (864 | ) | ||||||
Gain on disposal of other fixed assets | — | (1 | ) | — | (2 | ) | ||||||
Proceeds on sale of timberlands | — | 353 | — | 920 | ||||||||
Proceeds on sale of other fixed assets | — | 1 | — | 2 | ||||||||
Current tax effect of termination fee | — | (1,848 | ) | — | (1,848 | ) | ||||||
Current income tax (expense) / recovery | (312 | ) | 1,667 | (1,870 | ) | 335 | ||||||
Free Cash Flow | $ | 3,149 | $ | 4,186 | $ | 9,506 | $ | 13,426 | ||||
Dividends declared | $ | 4,840 | $ | 4,840 | $ | 14,518 | $ | 14,519 | ||||
Payout Ratio | 154 | % | 116 | % | 153 | % | 108 | % |
Source:
2020 GlobeNewswire, Inc., source