Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the three months
ended June 27, 2020 (the “second quarter”).
“Acadian operations were impacted by challenging
operating conditions during the second quarter,” commented Erika
Reilly, Chief Executive Officer. “While the second quarter of the
year is traditionally our weakest due to seasonal operating
conditions, operating activity was impacted by an earlier end to
winter operations this year compared to 2019, followed by highly
unusual dry and hot weather that led to extreme fire risk and
operating restrictions later in the quarter. All told, Acadian
operated four fewer weeks in the second quarter of 2020 compared to
the same period last year.”
The circumstances surrounding the COVID-19
pandemic caused a minor delay in timber services activity and
resulted in slowed wood deliveries in the early part of the second
quarter, as customers worked through elevated inventory levels from
the winter harvest season while assessing the market outlook for
their products. With the resilience of their end-use markets now
proven, our customers are cautiously optimistic about the remainder
of the year, and they are taking deliveries of our products. We are
pleased to report that none of our employees or contractors have
contracted the virus.
For the three-month period ended June 27, 2020,
Acadian generated $0.2 million of negative Free Cash Flow1 due to a
low level of activity and a one-time income tax expense of $0.7
million, and declared dividends of $4.8 million, or $0.29 per
share, consistent with the same period of 2019. The Payout Ratio
for the second quarter is not considered meaningful given the
traditionally low level of activity during the quarter. Acadian’s
balance sheet continues to be solid with $23.0 million of net
liquidity as at June 27, 2020, which includes funds available under
our credit facilities.
__________________________________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 |
|
Six Months Ended |
|
(CAD thousands) |
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
|
Sales volume (000s m3) |
|
139.7 |
|
|
214.0 |
|
|
514.6 |
|
|
598.2 |
|
Sales |
$ |
11,458 |
|
$ |
17,918 |
|
$ |
42,866 |
|
$ |
48,856 |
|
Operating earnings |
|
1,283 |
|
|
2,473 |
|
|
9,546 |
|
|
11,219 |
|
Net income |
|
5,229 |
|
|
5,784 |
|
|
1,518 |
|
|
11,966 |
|
Adjusted EBITDA |
|
1,354 |
|
|
3,038 |
|
|
9,683 |
|
|
11,895 |
|
Adjusted EBITDA margin |
|
12% |
|
|
17% |
|
|
23% |
|
|
24% |
|
Free Cash Flow |
|
(208 |
) |
|
2,750 |
|
|
6,357 |
|
|
9,240 |
|
Dividends declared |
|
4,839 |
|
|
4,839 |
|
|
9,678 |
|
|
9,679 |
|
Payout ratio1 |
n/a |
|
176% |
|
|
152% |
|
|
105% |
|
Per share – basic and diluted |
|
|
|
|
Net income |
$ |
0.31 |
|
$ |
0.35 |
|
$ |
0.09 |
|
$ |
0.72 |
|
Free Cash Flow |
|
(0.01 |
) |
|
0.16 |
|
|
0.38 |
|
|
0.55 |
|
Dividends declared |
|
0.29 |
|
|
0.29 |
|
|
0.58 |
|
|
0.58 |
|
1. Seasonal
fluctuations in volume render second quarter payout ratios not
meaningful. |
|
While the second quarter of the year is
traditionally our weakest, due to seasonal operating conditions,
operating activity was impacted by an earlier end to winter
operations this year compared to 2019, followed by highly unusually
dry and hot weather that led to extreme fire risk and operating
restrictions later in the quarter. All told, Acadian operated four
fewer weeks in the second quarter of 2020 compared to the same
period last year.
For the three months ended June 27, 2020,
Acadian generated sales of $11.5 million, compared to $17.9 million
in the prior year period. Challenging operating conditions, as
described above, resulted in a 33% decrease in sales volume,
excluding biomass, in the current period compared to the same
period in 2019. The weighted average log selling price, excluding
biomass, was relatively stable with a 1% decrease
year-over-year.
Operating costs and expenses were $10.2 million
during the second quarter, compared to $15.4 million during the
prior year period, reflecting the lower harvest volumes. Variable
log harvest costs per m3, excluding biomass, decreased 1% as a
result of lower log processing costs than in the prior year
period.
Adjusted EBITDA was $1.4 million during the
second quarter compared to $3.0 million in the prior year period
while Adjusted EBITDA margin for the quarter was 12%, compared to
17% in the prior year period. The decrease in Adjusted EBITDA
margin is largely due to a $0.5 million gain recorded on timberland
sales in the second quarter of the prior year, whereas there were
no timberland sales during the second quarter of 2020. Excluding
the impact of the sale of these timberlands in 2019, the comparable
Adjusted EBITDA margin would have been 14% in the prior year
period.
Net income for the second quarter totaled $5.2
million, or $0.31 per share, compared to net income of $5.8
million, or $0.35 per share in the same period of 2019. The
variance from the prior year period is primarily due to higher
gains on non-cash items such as unrealized foreign exchange on
long-term debt and fair value adjustments compared to the prior
year period and a one-time income tax expense of $0.7 million
related to new tax legislation as disclosed last quarter.
During the first half of 2020, Acadian generated
sales of $42.9 million compared to $48.9 million in the prior year
period. The 12% decrease was largely a result of challenging
operating conditions during the second quarter of 2020 that led to
a 13% decrease in sales volumes, excluding biomass, year-to-date.
The weighted average selling price, excluding biomass, remained
relatively stable year-over-year. Operating costs and expenses of
$33.3 million were $4.3 million lower than the prior year period
due to lower harvest volumes. Lower volumes and no gains from
timberland sales in 2020 resulted in Adjusted EBITDA of $9.7
million compared to $11.9 million during the first half of 2019.
Adjusted EBITDA margin remained relatively stable
year-over-year.
For the six months ended June 27, 2020, net
income was $1.5 million, or $0.09 per share, which represents a
decrease of $10.4 million as a result of a non-cash unrealized
foreign exchange loss on long term debt of $5.2 million this year
compared to a gain of $4.0 million in 2019 and the one-time income
tax expense noted above.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands.
|
|
|
|
Three Months Ended June 27, 2020 |
Three Months Ended June 29, 2019 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
42.3 |
48.3 |
40% |
$ |
2,506 |
47.0 |
61.7 |
36% |
$ |
3,621 |
Hardwood |
32.0 |
53.6 |
45% |
|
4,248 |
51.5 |
77.6 |
46% |
|
6,017 |
Biomass |
17.7 |
17.7 |
15% |
|
631 |
30.7 |
30.7 |
18% |
|
1,237 |
|
92.0 |
119.6 |
100% |
|
7,385 |
129.2 |
170.0 |
100% |
|
10,929 |
Timber services and
other |
|
|
|
|
2,097 |
|
|
|
|
3,520 |
Sales |
|
|
|
$ |
9,482 |
|
|
|
$ |
14,449 |
Adjusted EBITDA |
|
|
|
$ |
1,781 |
|
|
|
$ |
2,837 |
Adjusted
EBITDA margin |
|
|
|
19% |
|
|
|
|
20% |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 27, 2020 |
Six Months Ended June 29, 2019 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
158.8 |
161.7 |
43% |
$ |
9,138 |
187.7 |
200.6 |
46% |
$ |
11,953 |
Hardwood |
135.8 |
149.6 |
40% |
|
12,013 |
155.2 |
162.9 |
37% |
|
12,661 |
Biomass |
62.5 |
62.5 |
17% |
|
2,214 |
74.1 |
74.1 |
17% |
|
2,736 |
|
357.1 |
373.8 |
100% |
|
23,275 |
417.0 |
437.6 |
100% |
|
27,350 |
Timber services and
other |
|
|
|
|
7,904 |
|
|
|
|
8,548 |
Sales |
|
|
|
$ |
31,179 |
|
|
|
$ |
35,898 |
Adjusted EBITDA |
|
|
|
$ |
7,660 |
|
|
|
$ |
8,599 |
Adjusted
EBITDA margin |
|
|
|
25% |
|
|
|
|
24% |
|
|
|
|
|
|
|
|
|
|
Sales for our New Brunswick Timberlands were
$9.5 million compared to $14.4 million during the prior year
period. The sales volume, excluding biomass, decreased by 27%
primarily due to challenging operating conditions during the second
quarter. The weighted average selling price, excluding biomass, for
the second quarter was $66.26 per m3, or 5% lower than the prior
year period price of $69.57 per m3, as softwood sawlog pricing was
impacted by customer mix and a lower grade of logs being sold
compared to the prior year.
Operating costs were $7.7 million during the
second quarter, compared to $11.8 million in the prior year period,
primarily due to lower harvesting and hauling activity. Adverse
conditions in the period, resulted in fewer operating weeks than in
the prior year period. Weighted average variable costs, excluding
biomass, decreased by 6% as a result of lower log processing costs
compared to the prior year period.
Adjusted EBITDA was $1.8 million during the
second quarter of 2020 compared to $2.8 million in the prior year
period due to lower sales volumes and $0.2 million from gains on
the sale of timberlands in the prior year period. Adjusted EBITDA
margin decreased to 19% from 20% in the prior year period.
During the first half of 2020, New Brunswick
Timberlands’ sales of $31.2 million fell 13% compared to the prior
year period. The weighted average selling price, excluding biomass,
remained stable, however the sales volume, excluding biomass,
decreased 14% year-over-year. Sales were largely in line with the
prior year period in the first quarter, however challenging
operating conditions during the second quarter resulted in a
decrease for the first half of the year. Costs of $23.6 million
during the first half of 2020 were $4.0 million lower than the
prior year period due to lower harvesting and hauling activity. As
a result of the lower sales volume and no land sales, Adjusted
EBITDA fell to $7.7 million from $8.6 million during the first half
of 2019, however Adjusted EBITDA margin improved to 25% from
24%.
There were no recordable safety incidents
amongst employees or contractors during the second quarter of
2020.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands.
|
|
|
|
Three Months Ended June 27, 2020 |
Three Months Ended June 29, 2019 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
10.4 |
10.2 |
51% |
$ |
810 |
26.9 |
28.0 |
64% |
$ |
1,884 |
Hardwood |
7.3 |
9.8 |
49% |
|
1,025 |
12.6 |
15.9 |
36% |
|
1,449 |
Biomass |
0.1 |
0.1 |
0% |
|
- |
0.1 |
0.1 |
0% |
|
3 |
|
17.8 |
20.1 |
100% |
|
1,835 |
39.6 |
44.0 |
100% |
|
3,336 |
Other sales |
|
|
|
|
141 |
|
|
|
|
133 |
Sales |
|
|
|
$ |
1,976 |
|
|
|
$ |
3,469 |
Adjusted EBITDA |
|
|
|
$ |
117 |
|
|
|
$ |
540 |
Adjusted
EBITDA margin |
|
|
|
6% |
|
|
|
|
16% |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 27, 2020 |
Six Months Ended June 29, 2019 |
|
Harvest |
Sales |
Sales |
Results |
Harvest |
Sales |
Sales |
Results |
|
(000s m3) |
(000s m3) |
Mix |
($000s) |
(000s m3) |
(000s m3) |
Mix |
($000s) |
Softwood |
102.4 |
102.4 |
73% |
$ |
8,065 |
114.1 |
114.3 |
71% |
$ |
8,920 |
Hardwood |
37.7 |
38.2 |
27% |
|
3,360 |
42.6 |
42.8 |
27% |
|
3,730 |
Biomass |
0.2 |
0.2 |
0% |
|
2 |
3.5 |
3.5 |
2% |
|
8 |
|
140.3 |
140.8 |
100% |
|
11,427 |
160.2 |
160.6 |
100% |
|
12,658 |
Other sales |
|
|
|
|
260 |
|
|
|
|
300 |
Sales |
|
|
|
$ |
11,687 |
|
|
|
$ |
12,958 |
Adjusted EBITDA |
|
|
|
$ |
3,166 |
|
|
|
$ |
3,883 |
Adjusted
EBITDA margin |
|
|
|
27% |
|
|
|
|
30% |
|
|
|
|
|
|
|
|
|
|
Sales for our Maine Timberlands totaled $2.0
million compared to $3.5 million for the same period last year.
Sales volumes, excluding biomass, decreased by 54% as customers
were slow to take deliveries, having accumulated significant
inventories over an active winter harvest season. Furthermore,
pulpwood markets were disrupted by reduced demand from the
Androscoggin Mill in Jay, Maine due to the explosion of two of
their digesters that occurred in April 2020.
The weighted average selling price, excluding
biomass, in Canadian dollar terms was $91.45 per m3, up from $76.00
per m3 in the same period of 2019. In U.S. dollar terms, the
weighted average selling price, excluding biomass, was $65.16 per
m3, an increase of 15% year-over-year. The improvement in the
weighted average selling price, excluding biomass, was driven by a
higher value product distribution with less softwood pulpwood in
the mix.
Operating costs for the second quarter were $1.9
million, compared to $3.2 million during the same period of 2019,
mainly due to lower harvesting and hauling activity. Variable
harvest costs per m3, excluding biomass, were higher than in the
prior year period due to longer haul distances combined with
slightly higher harvesting costs.
Adjusted EBITDA for the quarter was $0.1 million
compared to $0.5 million during the prior year period and Adjusted
EBITDA margin was 6% compared to 16% in the prior year period. The
prior year period included $0.2 million of gains recorded on
timberland sales, whereas there were no timberland sales during the
second quarter of 2020. Excluding the impact of the sale of these
timberlands in 2019, Adjusted EBITDA margin would have been 8% in
the prior year period.
During the first half of 2020, Maine
Timberlands’ sales were $11.7 million compared to $13.0 million in
the prior year period. Maine Timberlands’ weighted average selling
price, excluding biomass, increased 1%, however the sales volume,
excluding biomass, decreased 10% year-over-year reflecting the
challenges in the second quarter discussed above. Operating costs
of $8.5 million during the first half of 2020 were $0.8 million
lower than the prior year period due to lower harvesting and
hauling activity during the second quarter. As a result of the
lower sales volume and no land sales, Adjusted EBITDA fell to $3.2
million compared to $3.9 million during the first half of 2019
while Adjusted EBITDA margin slipped to 27% from 30% in 2019.
There were no recordable safety incidents
amongst employees or contractors during the second 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.
The North American economic outlook continues to
be highly uncertain, but end-use markets for our key products have
proven to be relatively resilient.
Softwood lumber demand for home improvements, as
people spend more time at home, as well as new home sales activity,
reflecting underlying trends in the housing market, remains steady.
The consensus forecast is for 1.2 million U.S. housing starts in
2020 and then a return to 1.3 million starts in 2021. Demand
for specialty paper products, such as food packaging and labels, is
expected to remain stable for the duration of 2020.
Regionally, and based on what we know today, we
expect steady demand for our products in New Brunswick, with some
weakness in Maine, as mills continue to work through higher than
usual winter inventories. The softwood sawtimber market is
expected to remain stable with customers having a cautiously
optimistic view based on current end-use market strength, offset by
concerns about the uncertain North American economic outlook for
the remainder of the year. Hardwood sawtimber markets are
relatively weak due to soft demand for high-end, appearance grade
lumber, compared to relatively robust demand for low-end,
industrial grade products. Pulpwood markets are expected to
strengthen as winter inventories are depleted, particularly in
Maine. A bright spot, albeit a small contributor to EBITDA, is
biomass sales in New Brunswick, which are benefiting from strong
demand from both domestic and offshore customers.
Quarterly Dividend
Based on a strong balance sheet and outlook for
the remainder of the year, Acadian is pleased to announce a
dividend of $0.29 per share, payable on October 15, 2020 to
shareholders of record on September 30, 2020.
Acadian Timber Corp.
(“Acadian”, the “Company” or “we”) 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 the second largest timberland operator in New Brunswick
and Maine.
Acadian owns and manages approximately 761,000
acres of freehold timberlands in New Brunswick (“New Brunswick
Timberlands” or “NB Timberlands”), approximately 300,000 acres of
freehold timberlands in Maine (“Maine Timberlands”) 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 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:
Adam SheparskiChief Financial
OfficerTel: 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 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; disease outbreak;
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 27, 2020 and the Management Information Circular
dated March 27, 2020, 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.Interim Condensed Consolidated Balance
Sheets
(unaudited)
|
|
|
|
|
As at(CAD thousands) |
|
June 27,2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash |
$ |
9,776 |
$ |
7,601 |
Accounts receivable and other assets |
|
6,259 |
|
11,602 |
Current taxes receivable |
|
686 |
|
2,245 |
Inventory |
|
554 |
|
1,545 |
|
|
17,275 |
|
22,993 |
Timber |
|
388,351 |
|
377,992 |
Land, roads
and other fixed assets |
|
93,712 |
|
91,584 |
Intangible asset |
|
6,140 |
|
6,140 |
Total assets |
$ |
505,478 |
$ |
498,709 |
Liabilities and shareholders’ equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Short-term debt |
$ |
— |
$ |
7,793 |
Accounts payable and accrued liabilities |
|
5,451 |
|
9,190 |
Dividends payable to shareholders |
|
4,839 |
|
4,839 |
Current portion of long-term debt |
|
— |
|
93,084 |
|
|
10,290 |
|
114,906 |
Long-term
debt |
|
108,357 |
|
— |
Deferred
income tax liability |
|
100,835 |
|
97,102 |
Shareholders’ equity |
|
285,996 |
|
286,701 |
Total liabilities and shareholders’ equity |
$ |
505,478 |
$ |
498,709 |
|
|
|
|
|
Acadian Timber Corp.Interim Condensed
Consolidated Statements of Net Income
(unaudited)
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands, except per share data) |
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
|
Sales |
$ |
11,458 |
|
$ |
17,918 |
|
$ |
42,866 |
|
$ |
48,856 |
|
Operating
costs and expenses |
|
|
|
|
Cost of sales |
|
7,768 |
|
|
12,575 |
|
|
28,629 |
|
|
32,496 |
|
Selling, administration and other |
|
2,086 |
|
|
2,424 |
|
|
4,303 |
|
|
4,623 |
|
Reforestation |
|
250 |
|
|
374 |
|
|
251 |
|
|
374 |
|
Depreciation and amortization |
|
71 |
|
|
72 |
|
|
137 |
|
|
144 |
|
|
|
10,175 |
|
|
15,445 |
|
|
33,320 |
|
|
37,637 |
|
Operating
earnings |
|
1,283 |
|
|
2,473 |
|
|
9,546 |
|
|
11,219 |
|
Interest
expense, net |
|
(1,172 |
) |
|
(970 |
) |
|
(2,463 |
) |
|
(1,979 |
) |
Other
items |
|
|
|
|
Fair value adjustments and other |
|
4,237 |
|
|
3,112 |
|
|
3,218 |
|
|
1,270 |
|
Unrealized exchange gain / (loss) on long-term debt |
|
3,030 |
|
|
1,903 |
|
|
(5,180 |
) |
|
3,937 |
|
Gain on sale of timberlands |
|
— |
|
|
492 |
|
|
— |
|
|
531 |
|
Gain on disposal of other fixed assets |
|
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Earnings before income taxes |
|
7,378 |
|
|
7,011 |
|
|
5,121 |
|
|
14,979 |
|
Current
income tax recovery / (expense) |
|
(656 |
) |
|
368 |
|
|
(1,558 |
) |
|
(1,332 |
) |
Deferred income tax recovery / (expense) |
|
(1,493 |
) |
|
(1,595 |
) |
|
(2,045 |
) |
|
(1,681 |
) |
Net income |
$ |
5,229 |
|
$ |
5,784 |
|
$ |
1,518 |
|
$ |
11,966 |
|
Net income per share – basic and diluted |
$ |
0.31 |
|
$ |
0.35 |
|
$ |
0.09 |
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber
Corp.Interim Condensed Consolidated Statements of
Comprehensive Income
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands) |
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
|
Net income |
$ |
5,229 |
|
$ |
5,784 |
|
$ |
1,518 |
|
$ |
11,966 |
|
Other
comprehensive income (loss) |
|
|
|
|
Item that
may be reclassified subsequently to net income: |
|
|
|
|
Unrealized foreign currency translation gain / (loss) |
|
(4,169 |
) |
|
(2,845 |
) |
|
7,455 |
|
|
(5,947 |
) |
Gain on revaluation of roads and land |
|
— |
|
|
(14 |
) |
|
— |
|
|
(14 |
) |
Deferred income tax recovery |
|
— |
|
|
4 |
|
|
— |
|
|
4 |
|
Comprehensive income |
$ |
1,060 |
|
$ |
2,929 |
|
$ |
8,973 |
|
$ |
6,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.Interim Condensed
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands) |
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
|
Cash provided by (used for): |
|
|
|
|
Operating activities |
|
|
|
|
Net income |
$ |
5,229 |
|
$ |
5,784 |
|
$ |
1,518 |
|
$ |
11,966 |
|
Adjustment to net income: |
|
|
|
|
Deferred income tax expense |
|
1,493 |
|
|
1,595 |
|
|
2,045 |
|
|
1,681 |
|
Depreciation and amortization |
|
71 |
|
|
72 |
|
|
137 |
|
|
144 |
|
Fair value adjustments and other |
|
(4,237 |
) |
|
(3,112 |
) |
|
(3,218 |
) |
|
(1,270 |
) |
Unrealized exchange (gain) / loss on long-term debt |
|
(3,030 |
) |
|
(1,903 |
) |
|
5,180 |
|
|
(3,937 |
) |
Gain on sale of timberlands |
|
— |
|
|
(492 |
) |
|
— |
|
|
(531 |
) |
Gain on disposal of other fixed assets |
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
Accretion of long-term debt |
|
323 |
|
|
269 |
|
|
723 |
|
|
585 |
|
Net change in non-cash working capital balances and other |
|
3,997 |
|
|
355 |
|
|
4,193 |
|
|
(1,035 |
) |
|
|
3,846 |
|
|
2,567 |
|
|
10,578 |
|
|
7,602 |
|
Financing activities |
|
|
|
|
Repayment of operating loans |
|
(1,156 |
) |
|
— |
|
|
(8,169 |
) |
|
— |
|
Issuance of long-term debt |
|
— |
|
|
— |
|
|
19,795 |
|
|
— |
|
Repayment of long-term debt |
|
— |
|
|
— |
|
|
(9,729 |
) |
|
— |
|
Deferred financing costs |
|
(17 |
) |
|
— |
|
|
(527 |
) |
|
— |
|
Dividends paid to shareholders |
|
(4,839 |
) |
|
(4,840 |
) |
|
(9,678 |
) |
|
(9,554 |
) |
Purchase of common shares under NCIB |
|
— |
|
|
— |
|
|
— |
|
|
(37 |
) |
|
|
(6,012 |
) |
|
(4,840 |
) |
|
(8,308 |
) |
|
(9,591 |
) |
Investing activities |
|
|
|
|
Additions to timber, land, roads and other fixed assets |
|
(87 |
) |
|
(18 |
) |
|
(95 |
) |
|
(18 |
) |
Proceeds from sale of timberlands |
|
— |
|
|
527 |
|
|
— |
|
|
567 |
|
Proceeds from sale of roads and other fixed assets |
|
— |
|
|
1 |
|
|
— |
|
|
1 |
|
|
|
(87 |
) |
|
509 |
|
|
(95 |
) |
|
550 |
|
Increase / (decrease) in cash during the period |
|
(2,253 |
) |
|
(1,763 |
) |
|
2,175 |
|
|
(1,439 |
) |
Cash beginning of period |
|
12,029 |
|
|
22,644 |
|
|
7,601 |
|
|
22,320 |
|
Cash end of period |
$ |
9,776 |
|
$ |
20,881 |
|
$ |
9,776 |
|
$ |
20,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations to Adjusted EBITDA and Free Cash
Flow
|
|
|
Three Months Ended |
|
Six Months Ended |
|
(CAD thousands) |
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
|
Net income |
$ |
5,229 |
|
$ |
5,784 |
|
$ |
1,518 |
|
$ |
11,966 |
|
Add / (deduct) |
|
|
|
|
|
Interest expense, net |
|
1,172 |
|
|
970 |
|
|
2,463 |
|
|
1,979 |
|
Current income tax expense / (recovery) |
|
656 |
|
|
(368 |
) |
|
1,558 |
|
|
1,332 |
|
Deferred income tax expense |
|
1,493 |
|
|
1,595 |
|
|
2,045 |
|
|
1,681 |
|
Depreciation and amortization |
|
71 |
|
|
72 |
|
|
137 |
|
|
144 |
|
Fair value adjustments and other |
|
(4,237 |
) |
|
(3,112 |
) |
|
(3,218 |
) |
|
(1,270 |
) |
Unrealized exchange (gain) / loss on long-term debt |
|
(3,030 |
) |
|
(1,903 |
) |
|
5,180 |
|
|
(3,937 |
) |
Adjusted EBITDA |
$ |
1,354 |
|
$ |
3,038 |
|
$ |
9,683 |
|
$ |
11,895 |
|
Add / (deduct) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid on debt, net |
|
(819 |
) |
|
(673 |
) |
|
(1,673 |
) |
|
(1,341 |
) |
Additions to timber, land, roads and other fixed assets |
|
(87 |
) |
|
(18 |
) |
|
(95 |
) |
|
(18 |
) |
Gain on sale of timberlands |
|
— |
|
|
(492 |
) |
|
— |
|
|
(531 |
) |
Gain on disposal of other fixed assets |
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
Proceeds on sale of timberlands |
|
— |
|
|
527 |
|
|
— |
|
|
567 |
|
Proceeds on sale of other fixed assets |
|
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Current income tax (expense) / recovery |
|
(656 |
) |
|
368 |
|
|
(1,558 |
) |
|
(1,332 |
) |
Free Cash Flow |
$ |
(208 |
) |
$ |
2,750 |
|
$ |
6,357 |
|
$ |
9,240 |
|
Dividends declared |
$ |
4,839 |
|
$ |
4,839 |
|
$ |
9,678 |
|
$ |
9,679 |
|
Payout Ratio1 |
n/a |
|
|
176% |
|
|
152% |
|
|
105% |
|
1. Seasonal
fluctuations in volume render second quarter payout ratios not
meaningful. |
|
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