Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the year ended
December 31, 2019.
“Acadian delivered another year of solid
operating and financial performance. Weighted average prices and
harvesting costs remained stable year-over-year and operating
results benefited from lower year-end harvested log inventories and
decreased administrative costs,” commented Erika Reilly, Interim
Chief Executive Officer of Acadian.
The Company’s Adjusted EBITDA1 totaled $23.6
million in 2019, compared to $22.1 million during 2018, and the
Adjusted EBITDA1 margin climbed to 24% from 22% in 2018. Key
factors contributing to the year-over-year improvement in Adjusted
EBITDA1 include lower management and performance fees due to the
termination of the management agreement with Brookfield Timberlands
Management LP announced in the third quarter of this year and the
benefit of reduced year-end inventory levels compared to the prior
year as the inventory management program with one of Acadian’s
customers that was in place during the fourth quarter of 2018 was
not in place this year.
Acadian declared dividends to its shareholders
of $1.16 per share during the year, representing a Payout Ratio1 of
103% which is above our long-term target, but in line with
expectations given the 3% increase in our quarterly dividend per
share announced in February 2019. We anticipate that over the long
term we will revert to a Payout Ratio consistent with our target
level.
During the fourth quarter, Acadian signed a term
sheet with MetLife Investment Management, LLC to refinance its
credit facilities under essentially the same terms as the existing
facilities, but with slightly more favourable interest rates and
with maturity dates ranging from 5 to 10 years from the date of
closing. Acadian expects to complete this refinancing during the
first quarter of 2020.
_________________________
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, amortization and the management agreement termination
fee 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.
Review of Operations
Financial and Operating
Highlights
|
|
Three Months Ended |
Year Ended |
(CAD thousands, except per share information) |
|
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Sales volume (000s m3) |
|
|
|
339.4 |
|
|
323.7 |
|
|
1,251.1 |
|
|
1,307.0 |
|
Sales |
|
|
$ |
25,835 |
|
$ |
24,167 |
|
$ |
100,048 |
|
$ |
99,848 |
|
Net income |
|
|
|
16,228 |
|
|
16,441 |
|
|
17,325 |
|
|
26,264 |
|
Adjusted EBITDA |
|
|
|
6,586 |
|
|
4,631 |
|
|
23,604 |
|
|
22,142 |
|
Adjusted EBITDA margin |
|
|
|
25 |
% |
|
19 |
% |
|
24 |
% |
|
22 |
% |
Free Cash Flow |
|
|
|
5,296 |
|
|
3,525 |
|
|
18,722 |
|
|
17,771 |
|
Dividends declared |
|
|
|
4,839 |
|
|
4,715 |
|
|
19,358 |
|
|
18,769 |
|
Payout Ratio |
|
|
|
91 |
% |
|
134 |
% |
|
103 |
% |
|
106 |
% |
Per share – basic and diluted |
|
|
|
|
|
|
Net income |
|
|
$ |
0.97 |
|
$ |
0.98 |
|
$ |
1.04 |
|
$ |
1.57 |
|
Free Cash Flow |
|
|
|
0.32 |
|
|
0.20 |
|
|
1.12 |
|
|
1.06 |
|
Dividends declared |
|
|
|
0.29 |
|
|
0.2825 |
|
|
1.16 |
|
|
1.1225 |
|
Acadian generated sales of $100.0 million in
2019, almost unchanged from $99.8 million in the prior year. The
Company benefited from a 3% increase in sales volume, excluding
biomass, due to improved demand for softwood pulpwood, but this was
partially offset by lower biomass sales and a modest decrease in
timber services activity. Acadian’s weighted average selling price,
excluding biomass, was almost unchanged year-over-year with
softwood sawlog and pulpwood price improvements of 2% and 13%,
respectively, offset by a greater proportion of relatively lower
valued softwood pulpwood in the mix of products sold.
Operating costs of $77.8 million in 2019 were
down 1% from $78.8 million in the prior year due to lower harvest
volumes and administrative costs.
Acadian generated Adjusted EBITDA of $23.6
million during 2019, compared to $22.1 million in the prior year,
while the Adjusted EBITDA margin for 2019 increased to 24% from 22%
in 2018.
The net income for the year ended December 31,
2019 totaled $17.3 million, or $1.04 per share, compared to net
income of $26.3 million, or $1.57 per share, in 2018. The variance
from the prior year is primarily due to fees related to the
termination of the management agreement with Brookfield Timberlands
Management LP that was announced in the third quarter of this year
which, after income tax, reduced net income by $12.8 million or
$0.77 per share. This was partially offset by an operating earnings
improvement of $1.2 million for the reasons discussed above and
lower income tax expense of $2.8 million, after adjusting for the
effect of the termination fee. The effect of an unrealized foreign
exchange gain on the revaluation of U.S. dollar-denominated
long-term debt of $4.7 million, compared to an unrealized loss in
the prior year of $7.5 million, was almost entirely offset by a
smaller fair value revaluation of timber assets compared to the
prior year.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands.
|
Three Months Ended December 31, 2019 |
|
Three Months Ended December 31, 2018 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
104.3 |
108.5 |
43 |
% |
$ |
6,207 |
|
110.7 |
94.2 |
37 |
% |
$ |
5,242 |
|
Hardwood |
109.3 |
97.1 |
39 |
% |
|
7,325 |
|
103.1 |
102.4 |
41 |
% |
|
7,881 |
|
Biomass |
44.6 |
44.6 |
18 |
% |
|
1,352 |
|
56.4 |
56.4 |
22 |
% |
|
1,743 |
|
|
258.2 |
250.2 |
100 |
% |
|
14,884 |
|
270.2 |
253.0 |
100 |
% |
|
14,866 |
|
Timber services
and other sales |
|
|
|
|
3,921 |
|
|
|
|
|
3,741 |
|
Sales |
|
|
|
$ |
18,805 |
|
|
|
|
$ |
18,607 |
|
Adjusted EBITDA |
|
|
|
$ |
5,211 |
|
|
|
|
$ |
4,057 |
|
Adjusted
EBITDA margin |
|
|
|
28 |
% |
|
|
|
|
22 |
% |
|
Year Ended December 31, 2019 |
|
Year Ended December 31, 2018 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
395.7 |
411.8 |
44 |
% |
$ |
24,024 |
|
416.0 |
403.3 |
41 |
% |
$ |
22,474 |
|
Hardwood |
373.6 |
371.1 |
40 |
% |
|
28,174 |
|
369.3 |
364.1 |
37 |
% |
|
27,977 |
|
Biomass |
143.6 |
143.6 |
16 |
% |
|
4,906 |
|
218.7 |
218.7 |
22 |
% |
|
6,545 |
|
|
912.9 |
926.5 |
100 |
% |
|
57,104 |
|
1,004.0 |
986.1 |
100 |
% |
|
56,996 |
|
Timber services
and other sales |
|
|
|
|
17,068 |
|
|
|
|
|
17,768 |
|
Sales |
|
|
|
$ |
74,172 |
|
|
|
|
$ |
74,764 |
|
Adjusted EBITDA |
|
|
|
$ |
18,599 |
|
|
|
|
$ |
16,569 |
|
Adjusted
EBITDA margin |
|
|
|
25 |
% |
|
|
|
|
22 |
% |
Year ended December 31, 2019:
Sales for New Brunswick Timberlands totaled
$74.2 million compared to $74.8 million in 2018. The sales volume,
excluding biomass, increased 2% over the prior year primarily due
to lower inventory levels at the end of 2019 and improved demand
for softwood pulpwood. The biomass sales volume fell 34% as a
customer who utilized biomass to generate electricity ceased
operations during the year and a portion of the harvesting during
the year was changed to a system that is more cost-effective but
generates less biomass material. The weighted average selling
price, excluding biomass, was 1% higher than in the prior year as
prices improved for softwood sawlogs and pulpwood, but the product
mix was more heavily weighted to softwood pulpwood. Revenues from
timber services and other sales fell 4% due to lower operating
activity than in the prior year.
Operating costs for the year were $56.2 million,
compared to $58.5 million during 2018, due to lower harvest
volumes. Variable harvest costs per m3, excluding biomass, were
unchanged year-over-year.
Adjusted EBITDA for the year ended December 31,
2019 was $18.6 million, compared to $16.6 million during 2018, and
the Adjusted EBITDA margin for the year increased to 25% from 22%
in the prior year, reflecting the benefit of lower management and
performance fees due to the termination of the management agreement
and reduced year-end inventory levels compared to the prior year as
the inventory management program with one of the operation’s
customers that was in place during the fourth quarter of 2018 was
not in place this year.
For the year ended December 31, 2019, New
Brunswick Timberlands experienced no recordable safety incidents
among employees and three among contractors.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands.
|
Three Months Ended December 31, 2019 |
|
Three Months Ended December 31, 2018 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
71.1 |
71.0 |
80 |
% |
$ |
5,325 |
|
46.4 |
46.0 |
65 |
% |
$ |
3,571 |
|
Hardwood |
17.9 |
18.2 |
20 |
% |
|
1,532 |
|
19.9 |
22.3 |
32 |
% |
|
1,831 |
|
Biomass |
— |
— |
— |
% |
|
— |
|
2.4 |
2.4 |
3 |
% |
|
4 |
|
|
89.0 |
89.2 |
100 |
% |
|
6,857 |
|
68.7 |
70.7 |
100 |
% |
|
5,406 |
|
Other sales |
|
|
|
|
173 |
|
|
|
|
|
154 |
|
Sales |
|
|
|
$ |
7,030 |
|
|
|
|
$ |
5,560 |
|
Adjusted EBITDA |
|
|
|
$ |
2,119 |
|
|
|
|
$ |
892 |
|
Adjusted
EBITDA margin |
|
|
|
30 |
% |
|
|
|
|
16 |
% |
|
Year Ended December 31, 2019 |
|
Year Ended December 31, 2018 |
|
|
Harvest |
Sales |
Sales |
|
Results |
|
Harvest |
Sales |
Sales |
|
Results |
|
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
(000s m3) |
(000s m3) |
Mix |
|
($000s) |
|
Softwood |
234.2 |
234.3 |
72 |
% |
$ |
17,796 |
|
213.4 |
213.1 |
66 |
% |
$ |
17,274 |
|
Hardwood |
86.6 |
86.5 |
27 |
% |
|
7,426 |
|
88.0 |
89.4 |
28 |
% |
|
7,100 |
|
Biomass |
3.8 |
3.8 |
1 |
% |
|
12 |
|
18.4 |
18.4 |
6 |
% |
|
29 |
|
|
324.6 |
324.6 |
100 |
% |
|
25,234 |
|
319.8 |
320.9 |
100 |
% |
|
24,403 |
|
Other sales |
|
|
|
|
642 |
|
|
|
|
|
681 |
|
Sales |
|
|
|
$ |
25,876 |
|
|
|
|
$ |
25,084 |
|
Adjusted EBITDA |
|
|
|
$ |
6,713 |
|
|
|
|
$ |
6,839 |
|
Adjusted
EBITDA margin |
|
|
|
26 |
% |
|
|
|
|
27 |
% |
Year ended December 31, 2019:
Sales for the year ended December 31, 2019
totaled $25.9 million for Maine Timberlands, compared to $25.1
million during the prior year. The sales volume, excluding biomass,
increased 6% year-over-year reflecting improved demand for softwood
pulpwood, however this heavier weighting to pulpwood contributed to
the weighted average selling price, excluding biomass, falling
2%.
The weighted average selling price, excluding
biomass, in U.S. dollar terms, decreased 5% year-over-year as the
benefit of improved prices for softwood and hardwood pulpwood was
more than offset by a decrease in softwood sawlog prices due to
pricing pressure resulting from weakness in lumber prices in North
America and a greater percentage of softwood pulpwood in the mix of
products sold.
Operating costs for the year were $19.9 million
compared to $19.0 million during 2018 reflecting the increase in
softwood harvest volumes. As well, variable harvest costs per m3,
excluding biomass, increased 2% compared with the prior year due to
modest increases in harvesting and hauling contractor rates.
Adjusted EBITDA for the year ended December 31,
2019 was $6.7 million, almost unchanged from $6.8 million during
the prior year, with the benefit of increased sales volumes offset
by lower per m3 margins. Adjusted EBITDA margin slipped to 26% from
27% in the prior year period.
For the year ended December 31, 2019, Maine
Timberlands experienced no recordable safety incidents among
employees and contractors.
Market Outlook
The following contains forward-looking
information about Acadian Timber Corp.’s market outlook for the
remainder of 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 outlook for Acadian’s key products, softwood
sawlogs and hardwood pulpwood, is for demand and pricing to remain
stable in the near term.
The softwood lumber market, the end use market
for our softwood sawlogs, is expected to benefit from slightly
stronger U.S. housing starts in 2020, while the U.S. repair and
remodeling sector is expected to hold flat at its 2019 level,
according to Fastmarkets RISI. The consensus forecast is for 1.31
million U.S. housing starts in 2020 compared to 1.29 million total
starts in 2019, with growth driven by the single-family sector. A
low supply of existing homes, low mortgage rates and a strong
labour market support the improved outlook for U.S. home building.
However, supply side factors, including increased wood supply from
Central Europe and reduced North American exports to China, as well
as builders’ focus on smaller, more affordable homes (which contain
less wood), may mute some of the benefits of this more positive
U.S. housing outlook.
Demand and pricing for our hardwood pulpwood is
expected to remain stable, with our largest hardwood pulpwood
customers operating at full capacity. We expect hardwood pulpwood
supply coming from other major landowners in the region to decrease
as they reduce their harvest levels, which should tighten the
regional market for this product over time.
The outlook for Acadian’s other products is
mixed.
Acadian’s hardwood sawlog sales in the U.S. are
coming under pressure as an indirect result of Chinese duties on
U.S. exports. However, hardwood sawlog sales to Acadian’s Canadian
customers remain stable as they are focused on species such as hard
maple and yellow birch and on industrial lumber products, including
railway ties, pallets, and flooring, that have not been as impacted
by the U.S.-China trade war.
Demand for softwood pulpwood from our New
Brunswick timberlands remains steady, however markets for softwood
pulpwood in Maine have recently weakened with high regional
softwood pulpwood inventories due to the slower than anticipated
startup of a pulp mill in the region. Once this mill reaches full
operating capacity, demand for this product is expected to
improve.
Finally, while the biomass markets in Maine
remain weak without any significant changes in sight, the New
Brunswick biomass market continues to be supported by steady demand
at attractive prices. We have been successful in developing
relationships with new customers to replace volume to customers
that have reduced or closed their operations, which is improving
the outlook for 2020.
Management Team Changes
Acadian announced today that Mr. Adam Sheparski
has been appointed Chief Financial Officer of Acadian effective
February 13, 2020. Mr. Sheparski is a Chartered Professional
Accountant who most recently worked with one of Canada’s largest
grocery retailers. Adam brings a wealth of experience in public
company reporting, treasury, and taxation and has participated in
several large M&A transactions during his career.
Brian Banfill, who was appointed Interim Chief
Financial Officer in September 2019, will remain with the company
for an interim period to ensure a smooth transition of his
responsibilities. “Acadian would like to thank Brian for his
efforts as the company transitions to an internally managed
organization,” said Ms. Reilly.
Acadian also announced today that after nearly
35 years of loyal service, Mr. Luc Ouellet, Senior Vice President
of Operations, has retired. Normand Haché, Senior Vice President of
Marketing and Operations, who has over 35 years of experience in
the timberland sector and more than 14 years with Acadian, will
assume Mr. Ouellet’s responsibilities. “We thank Luc for his
valuable contributions to Acadian since its inception,” commented
Ms. Reilly. “Mr. Hache and Acadian’s senior management team have a
wealth of experience and are well positioned to lead Acadian’s
continued success.”
Quarterly Dividend
Acadian is pleased to announce a dividend of
$0.29 per share, payable on April 15, 2020 to shareholders of
record on March 31, 2020.
* * * * * * * * *
Acadian Timber Corp. is a
leading supplier of primary forest products in Eastern Canada and
the Northeastern U.S. With a total of approximately 2.4 million
acres of land under management, Acadian is one of the largest
timberland operators 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 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
Toronto Stock Exchange under the symbol ADN.
* * * * * * * * *
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 or U.S. income
tax law; economic situation of key customers; Acadian’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, 2019 and the Management Information Circular dated March 28,
2019, 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) |
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
|
|
|
|
|
Sales |
$ |
25,835 |
|
$ |
24,167 |
|
$ |
100,048 |
|
$ |
99,848 |
|
Operating costs and expenses |
|
|
|
|
Cost of sales |
|
17,360 |
|
|
16,802 |
|
|
67,260 |
|
|
68,164 |
|
Selling, administration and other |
|
2,079 |
|
|
2,629 |
|
|
9,491 |
|
|
9,741 |
|
Reforestation |
|
29 |
|
|
142 |
|
|
778 |
|
|
595 |
|
Depreciation and amortization |
|
71 |
|
|
73 |
|
|
286 |
|
|
303 |
|
|
|
19,539 |
|
|
19,646 |
|
|
77,815 |
|
|
78,803 |
|
Operating earnings |
|
6,296 |
|
|
4,521 |
|
|
22,233 |
|
|
21,045 |
|
Interest expense, net |
|
(1,141 |
) |
|
(1,004 |
) |
|
(4,130 |
) |
|
(3,901 |
) |
Other items |
|
|
|
|
Fair value adjustments and other |
|
14,494 |
|
|
26,206 |
|
|
15,903 |
|
|
28,294 |
|
Unrealized exchange gain / (loss) on long-term debt |
|
1,826 |
|
|
(5,118 |
) |
|
4,733 |
|
|
(7,489 |
) |
Management agreement termination fee |
|
— |
|
|
— |
|
|
(18,000 |
) |
|
— |
|
Gain on sale of timberlands |
|
192 |
|
|
56 |
|
|
1,056 |
|
|
906 |
|
Gain / (loss) on disposal of other fixed assets |
|
27 |
|
|
(19 |
) |
|
29 |
|
|
(112 |
) |
Earnings before income taxes |
|
21,694 |
|
|
24,642 |
|
|
21,824 |
|
|
38,743 |
|
Current income tax expense |
|
(446 |
) |
|
(490 |
) |
|
(111 |
) |
|
(2,334 |
) |
Deferred income tax expense |
|
(5,020 |
) |
|
(7,711 |
) |
|
(4,388 |
) |
|
(10,145 |
) |
Net income |
$ |
16,228 |
|
$ |
16,441 |
|
$ |
17,325 |
|
$ |
26,264 |
|
Net income per share – basic and diluted |
$ |
0.97 |
|
$ |
0.98 |
|
$ |
1.04 |
|
$ |
1.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.Consolidated
Statements of Comprehensive
Income(unaudited)
|
Three Months Ended |
|
Year Ended |
|
(CAD thousands) |
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
|
|
|
|
|
Net income |
$ |
16,228 |
|
$ |
16,441 |
|
$ |
17,325 |
|
$ |
26,264 |
|
Other comprehensive (loss) / income |
|
|
|
|
Items that may be reclassified subsequently to net income: |
|
|
|
|
Deferred income tax (expense) / recovery |
|
(2,191 |
) |
|
1,459 |
|
|
(2,184 |
) |
|
1,459 |
|
Gain / (loss) on revaluation of land and roads |
|
7,614 |
|
|
(5,064 |
) |
|
7,591 |
|
|
(5,064 |
) |
Unrealized foreign currency translation (loss) / gain |
|
(2,601 |
) |
|
7,781 |
|
|
(7,048 |
) |
|
11,007 |
|
Comprehensive income |
$ |
19,050 |
|
$ |
20,617 |
|
$ |
15,684 |
|
$ |
33,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.Consolidated
Balance
Sheets(unaudited)
As at(CAD thousands) |
December 31, 2019 |
December 31, 2018 |
Assets |
|
|
Current
assets |
|
|
Cash |
$ |
7,601 |
$ |
22,320 |
Accounts receivable and other assets |
|
11,602 |
|
7,230 |
Current taxes receivable |
|
2,245 |
|
— |
Inventory |
|
1,545 |
|
2,756 |
|
|
22,993 |
|
32,306 |
Timber |
|
377,992 |
|
367,901 |
Land, roads
and other fixed assets |
|
91,584 |
|
86,103 |
Intangible
asset |
|
6,140 |
|
6,140 |
Total assets |
$ |
498,709 |
$ |
492,450 |
Liabilities and shareholders’ equity |
|
|
Current
liabilities |
|
|
Short-term debt |
$ |
7,793 |
$ |
— |
Accounts payable and accrued liabilities |
|
9,190 |
|
7,963 |
Current taxes payable |
|
— |
|
647 |
Dividends payable to shareholders |
|
4,839 |
|
4,714 |
Current portion of long-term debt |
|
93,084 |
|
— |
|
|
114,906 |
|
13,324 |
Long-term
debt |
|
— |
|
96,595 |
Deferred
income tax liabilities |
|
97,102 |
|
92,119 |
Shareholders’ equity |
|
286,701 |
|
290,412 |
Total liabilities and shareholders’ equity |
$ |
498,709 |
$ |
492,450 |
|
|
|
|
|
Acadian Timber Corp.Consolidated
Statements of Cash
Flows(unaudited)
|
Three Months Ended |
|
Year Ended |
|
(CAD thousands) |
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Cash provided by / (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
Net income |
$ |
16,228 |
|
$ |
16,441 |
|
$ |
17,325 |
|
$ |
26,264 |
|
Adjustments to net income: |
|
|
|
|
Deferred income tax expense |
|
5,020 |
|
|
7,711 |
|
|
4,388 |
|
|
10,145 |
|
Depreciation and amortization |
|
71 |
|
|
73 |
|
|
286 |
|
|
303 |
|
Fair value adjustments and other |
|
(14,494 |
) |
|
(26,206 |
) |
|
(15,903 |
) |
|
(28,294 |
) |
Unrealized exchange (gain) / loss on long term debt |
|
(1,826 |
) |
|
5,118 |
|
|
(4,733 |
) |
|
7,489 |
|
Gain on sale of timberlands |
|
(192 |
) |
|
(56 |
) |
|
(1,056 |
) |
|
(906 |
) |
(Gain) / loss on disposal of other fixed assets |
|
(27 |
) |
|
19 |
|
|
(29 |
) |
|
112 |
|
Accretion of gain from refinancing long-term debt |
|
274 |
|
|
273 |
|
|
1,135 |
|
|
1,046 |
|
Net change in non-cash working capital balances and other |
|
(3,439 |
) |
|
2,604 |
|
|
(5,553 |
) |
|
44 |
|
|
|
1,615 |
|
|
5,977 |
|
|
(4,140 |
) |
|
16,203 |
|
Financing activities |
|
|
|
|
(Repayment of) / proceeds from operating loans |
|
(2,137 |
) |
|
— |
|
|
7,793 |
|
|
— |
|
Deferred financing costs |
|
(175 |
) |
|
— |
|
|
(175 |
) |
|
— |
|
Dividends paid to shareholders |
|
(4,839 |
) |
|
(4,728 |
) |
|
(19,233 |
) |
|
(18,656 |
) |
Common shares repurchased under NCIB |
|
— |
|
|
(636 |
) |
|
(37 |
) |
|
(636 |
) |
|
|
(7,151 |
) |
|
(5,364 |
) |
|
(11,652 |
) |
|
(19,292 |
) |
Investing activities |
|
|
|
|
Additions to timber, land, roads and other fixed assets |
|
— |
|
|
(34 |
) |
|
(86 |
) |
|
(224 |
) |
Proceeds from sale of timberlands |
|
210 |
|
|
117 |
|
|
1,130 |
|
|
1,083 |
|
Proceeds from sale of other fixed assets |
|
27 |
|
|
25 |
|
|
29 |
|
|
599 |
|
|
|
237 |
|
|
108 |
|
|
1,073 |
|
|
1,458 |
|
(Decrease) / increase in cash during the period |
|
(5,299 |
) |
|
721 |
|
|
(14,719 |
) |
|
(1,631 |
) |
Cash, beginning of period |
|
12,900 |
|
|
21,599 |
|
|
22,320 |
|
|
23,951 |
|
Cash, end of period |
$ |
7,601 |
|
$ |
22,320 |
|
$ |
7,601 |
|
$ |
22,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations to Adjusted EBITDA and Free Cash
Flow
|
Three Months Ended |
|
Year Ended |
|
(CAD thousands) |
Dec 31, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
|
|
|
|
|
|
Net income |
$ |
16,228 |
|
$ |
16,441 |
|
$ |
17,325 |
|
$ |
26,264 |
|
Add / (deduct): |
|
|
|
|
Interest expense, net |
|
1,141 |
|
|
1,004 |
|
|
4,130 |
|
|
3,901 |
|
Current income tax expense |
|
446 |
|
|
490 |
|
|
111 |
|
|
2,334 |
|
Deferred income tax expense |
|
5,020 |
|
|
7,711 |
|
|
4,388 |
|
|
10,145 |
|
Depreciation and amortization |
|
71 |
|
|
73 |
|
|
286 |
|
|
303 |
|
Fair value adjustments and other |
|
(14,494 |
) |
|
(26,206 |
) |
|
(15,903 |
) |
|
(28,294 |
) |
Management agreement termination fee |
|
— |
|
|
— |
|
|
18,000 |
|
|
— |
|
Unrealized exchange (gain) / loss on long-term debt |
|
(1,826 |
) |
|
5,118 |
|
|
(4,733 |
) |
|
7,489 |
|
Adjusted EBITDA |
$ |
6,586 |
|
$ |
4,631 |
|
$ |
23,604 |
|
$ |
22,142 |
|
Add / (deduct): |
|
|
|
|
Interest paid on debt, net |
|
(785 |
) |
|
(687 |
) |
|
(2,834 |
) |
|
(2,701 |
) |
Additions to timber, land, roads and other fixed assets |
|
— |
|
|
(34 |
) |
|
(86 |
) |
|
(224 |
) |
Gain on sale of timberlands |
|
(192 |
) |
|
(56 |
) |
|
(1,056 |
) |
|
(906 |
) |
(Gain) / loss on disposal of other fixed assets |
|
(27 |
) |
|
19 |
|
|
(29 |
) |
|
112 |
|
Proceeds on sale of timberlands |
|
210 |
|
|
117 |
|
|
1,130 |
|
|
1,083 |
|
Proceeds on sale of other fixed assets |
|
27 |
|
|
25 |
|
|
29 |
|
|
599 |
|
Current income tax expense |
|
(446 |
) |
|
(490 |
) |
|
(111 |
) |
|
(2,334 |
) |
Current tax effect of termination fee |
|
(77 |
) |
|
— |
|
|
(1,925 |
) |
|
— |
|
Free Cash Flow |
$ |
5,296 |
|
$ |
3,525 |
|
$ |
18,722 |
|
$ |
17,771 |
|
Dividends declared |
$ |
4,839 |
|
$ |
4,715 |
|
$ |
19,358 |
|
$ |
18,769 |
|
Payout ratio |
|
91 |
% |
|
134 |
% |
|
103 |
% |
|
106 |
% |
For further information, please visit our website at www.acadiantimber.com or contact:
Brian Banfill
Interim Chief Financial Officer
Tel: 604-669-3141
Email: ir@acadiantimber.com
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