MONTREAL AND VANCOUVER, April 19 /CNW/ -- MONTREAL AND VANCOUVER,
April 19 /CNW Telbec/ - EACOM Timber Corporation (TSXV: ETR)
("EACOM", or the "Company") is pleased to announce its fourth
quarter and year end results for the three and nine-month periods
ended December 31, 2010. The Company has changed its year-end to
December 31 from March 31 effective with the fiscal year ended
December 31, 2010, which contains only nine months or three
quarters of operations. This modification was made as a result of
the acquisition of the Domtar forest products business, which had a
December year-end. On June 30, 2010, EACOM completed the
acquisition of the Domtar forest products business, which
transformed the Company from a lumber trading business to a lumber
manufacturing, marketing and distribution business. The Company
began operating these newly acquired assets on July 1, 2010. As a
result, only six months or two quarters of operations are
indicative of the Company's ongoing operations. OVERVIEW OF
FINANCIAL RESULTS The Company's operating results are significantly
affected by lumber prices and the CDN$/US$ exchange rate. From July
1, 2010 when the Company first began operating the newly acquired
assets, declining lumber prices and a strengthening Canadian dollar
have negatively impacted its results. The Company recorded for the
nine-month period ended December 31, 2010 a negative EBITDA of
$18,381, and a negative EBITDA excluding specific items of $8,604.
The net loss and comprehensive loss for the nine-month period
amounted to $23,721 or $0.08 per common share. For the nine-month
period, the Company recognized sales of $142,239. The Company's
sales include both lumber and by-product sales. During the period,
the Company shipped 291 million board feet of lumber and 294,000
oven-dried metric tons of by-products. Benchmark lumber prices
declined during the second half of calendar 2010, averaging
US$290/Mfbm for studs and US$333/Mfbm for random lengths delivered
Great Lakes, down from lumber prices prevailing during the first
six months of calendar 2010. Price declines were seen for all
grades and dimensions, but were particularly notable for studs. In
addition, the exchange rate averaged 0.974 during the period,
closing at 1.005 on December 31, 2010. Production for the
nine-month period was 270 million board feet of lumber. During the
period, the Company operated at 53% of its capacity with two of the
eight sawmills acquired from Domtar idled, Ear Falls in Ontario and
Ste-Marie in Quebec. The remaining sawmills were subject to
downtime as a result of poor market conditions, low lumber prices
and scheduled maintenance. Unit costs were consistent with those
experienced in the past for these operations. QUARTER ENDED
DECEMBER 31, 2010 vs. QUARTER ENDED SEPTEMBER 30, 2010 During the
quarter ended December 31, 2010, lumber prices somewhat firmed up,
offset however by a stronger Canadian dollar. The Company recorded
for the quarter a negative EBITDA of $8,464 ($7,381 for the quarter
ended September 30, 2010), and a negative EBITDA excluding specific
items of $2,191 ($5,351 for the preceding quarter). The net loss
and comprehensive loss for the quarter amounted to $10,459 or $0.03
per common share ($10,728 or $0.03 per common share for the
preceding quarter). For the quarter ended December 31, 2010, the
Company recorded sales of $68,096, against sales of $73,639 for the
preceding quarter. During the quarter, the Company shipped 136
million board feet of lumber (151 million board feet in the earlier
quarter) and 148,000 oven-dried metric tons of by-products (147,000
oven-dried metric tons in the preceding quarter). The pricing
environment firmed up somewhat with benchmark lumber prices
averaging US$296/Mfbm for studs and US$350/Mfbm for random lengths
delivered Great Lakes. However, the positive impact of a firmer
pricing environment was offset by a strengthening Canadian dollar,
with the exchange rate averaging 0.987 during the quarter and
closing at 1.005 on December 31, 2010. As well, discounts observed
on studs relative to random lengths enlarged to record levels
during the quarter, reflecting the slow housing market. The mix of
grades and dimensions was consistent with our expectations and has
remained constant over the past two quarters. Lumber production for
the quarter ended December 31, 2010 was 140 million board feet of
lumber, compared to 130 million board feet in the preceding
quarter. During the quarter, the Company operated at 55% of its
capacity with two of the eight sawmills acquired from Domtar idled
(51% during the earlier quarter with no change to idled mills).
Unit costs were consistent with those experienced in the past for
these operations. FINANCIAL POSITION At December 31, 2010, the
Company had cash and cash equivalents of $10,476, availability
under its revolving credit facility of $3,547, and working capital
of $73,136. SUBSEQUENT EVENT On April 4, 2011, the Company
announced a private placement of 60,000,000 common shares at $0.50
per share for gross proceeds of $30 million. The financing will be
sold on a commercially reasonable best efforts basis conducted by a
syndicate of agents. The Company has also granted the agents an
over-allotment option to sell up to an additional 10,000,000 common
shares on the same terms and conditions, exercisable 48 hours prior
to the closing of the financing. The net proceeds of the financing
will be used for working capital and general corporate purposes,
including for potential acquisitions. This financing is expected to
close on or around April 20, 2011. About EACOM EACOM Timber
Corporation is a TSX-V listed company. The business activities of
EACOM consist of the manufacturing, marketing and distribution of
lumber, wood chips and wood-based value-added products, and the
management of forest resources. EACOM owns seven sawmills and an
equity interest in an eighth sawmill, all located in Eastern
Canada, and related tenures. The mills are Timmins, Nairn Centre,
Gogama and Ear Falls in Ontario, and Val-d'Or, Ste-Marie and
Matagami in Quebec. The equity interest is in the Elk Lake sawmill
located in Ontario. The sawmills in Ear Falls, Ontario, and
Ste-Marie, Quebec, are currently idled. EACOM also owns an idled
sawmill in Big River, Saskatchewan, a remanufacturing facility and
a 50% interest in an "I" joist plant. Forward-Looking Statements
All statements in this news release that are not based on
historical facts are "forward-looking statements." While management
has based any forward-looking statements contained herein on its
current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of risks, uncertainties and other factors, many of which are
beyond our control and could cause actual results to materially
differ from such statements. Such risks, uncertainties and other
factors include, but are not necessarily limited to, those set
forth under "Risk Factors" in the Company's Filing Statement dated
January 8, 2010 and ''Risks and Uncertainties'' in the Company's
current MD&A filed with the Canadian Securities Commissions.
The financial information included in this release also contains
certain data that are not measures of performance under Canadian
GAAP. For example, "EBITDA" and "EBITDA excluding specific items"
are measures used by management to assess the operating and
financial performance of the Company. Moreover, we believe that
EBITDA is a measure often used by investors to assess a company's
operating performance. EBITDA has limitations and you should not
consider this item in isolation, or as a substitute for an analysis
of our results as reported under Canadian GAAP. Because of these
limitations, EBITDA should not be used as a substitute for net loss
or cash flows from operating activities as determined in accordance
with Canadian GAAP, nor is it necessarily indicative of whether or
not cash flow will be sufficient to fund our cash requirements. In
addition, our definitions of EBITDA may differ from those of other
companies. A reconciliation of EBITDA to net loss is set forth
under "OVERVIEW OF FINANCIAL RESULTS - Supplemental Information on
Non-GAAP Measures" in the Company's current MD&A. Additional
information relating to EACOM is available on SEDAR at
www.sedar.com. SELECTED QUARTERLY INFORMATION The following table
provides an overview of the Company's financial results for the
quarters ended December 31 and September 30, 2010, along with some
key operating metrics. (in thousands of dollars, except where
Quarter ended Quarter ended otherwise December 31 September 30
noted) Sales 68,096 73,639 EBITDA (8,464) (7,381) Net loss (10,459)
(10,728) Average lumber price in US$ - RL 2×4 #1&2 ( 350 316
(1)) Average lumber price in US$ - Stud 2×4×8 ( 296 283 (1))
Average exchange rate 0.987 0.962 Production - SPF lumber (MMfbm)
140 130 Shipments - SPF lumber (MMfbm) 116 128 Shipments -
wholesale lumber (MMfbm) 20 23 U.S. housing starts (thousands of
units) 534 588 ((1)) Eastern spruce/pine/fir, per thousand board
feet delivered Great Lakes (Source: Random Lengths Publications,
Inc.) The following table reconciles, for the quarters ended
December 31 and September 30, 2010, the Company's net loss as
reported in accordance with Canadian GAAP to EBITDA and EBITDA
excluding specific items, providing an overview of those specific
items affecting comparability of the Company's EBITDA and net loss
as reported. (in thousands of dollars) Quarter ended Quarter ended
December 31 September 30 Net loss as reported (10,459) (10,728) Add
(subtract): Depreciation 3,305 3,143 Income tax recovery (1,461) -
Other (income) loss 151 204 EBITDA (8,464) (7,381) Add (subtract)
specific items included: Inventory valuation adjustments( (1)) 194
1,663 Adjustment to working capital acquired ( 5,710 - (2))
Stock-based compensation 369 367 EBITDA excluding specific items
(2,191) (5,351) (1) In accordance with Canadian GAAP, EACOM records
its log and lumber inventories at the lower of cost and net
realizable value. In a period when lumber prices have declined
markedly, this may result in a significant inventory valuation
write-down, especially when inventories are high. To the extent
that these inventories are still on hand at the end of a subsequent
period and lumber prices have increased, this may result in a
significant inventory valuation write-up to original cost, creating
volatility in the Company's reported results. Generally,
inventories are highest in the first calendar quarter to ensure
sufficient volume of logs to operate the mills during the second
calendar quarter when road access to timberlands is limited because
of seasonal conditions. (2) During the quarter ended December 31,
2010, the Company revised its preliminary estimate of the fair
values of the assets acquired and liabilities assumed from Domtar
on June 30, 2010, increasing working capital - mostly inventories -
by $5,710. Since inventories were realized in the third and fourth
quarters of 2010, this adjustment negatively impacted the Company's
operating results. To view this news release in HTML formatting,
please use the following URL:
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bInvestors:/bbr/ Marc Girardbr/ Executive Vice-President and Chief
Financial Officerbr/ (514) 848-5133 /p p align="justify" bMedia
Relations:/bbr/ Frédéric Bérardbr/ HKDPbr/ (514) 917-1040 /p
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