MONTREAL and VANCOUVER, June 15, 2011 /CNW/ -- MONTREAL and
VANCOUVER, June 15, 2011 /CNW Telbec/ - EACOM Timber Corporation
(TSXV: ETR) ("EACOM", or the "Company") is pleased to announce its
first quarter results for the three-month period ended March 31,
2011. 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 capable of producing
approximately 900 million board feet annually. The Company
began operating these newly acquired assets on July 1, 2010.
As a result, only nine months or three quarters of operations are
indicative of the Company's ongoing operations. A sequential
quarterly comparison of the financial results for the quarters
ended March 31, 2011 and December 31, 2010 is
provided, such a comparison being considered more representative of
ongoing operations. OVERVIEW OF FINANCIAL RESULTS The Company's
operating results are significantly affected by lumber prices and
the CDN$/US$ exchange rate. During the quarter ended
March 31, 2011, lumber prices somewhat firmed up, offset
however by a stronger Canadian dollar. The Company recorded for the
quarter a negative EBITDA of $3,637 ($12,065 for the quarter ended
December 31, 2010), and a negative EBITDA excluding specific items
of $3,637 ($6,355 for the preceding quarter). The net loss and
comprehensive loss for the quarter amounted to $6,131 or $0.01
per common share ($13,725 or $0.03 per common share for the
preceding quarter). QUARTER ENDED MARCH 31, 2011 vs. QUARTER ENDED
DECEMBER 31, 2010 For the quarter ended March 31, 2011, the Company
recorded sales of $79,955, against sales of $65,386 for the
preceding quarter. During the quarter, the Company shipped
170 million board feet of lumber (136 million board feet in
the earlier quarter) and 161,000 oven-dried metric tons of
by-products (148,000 oven-dried metric tons in the preceding
quarter). The pricing environment improved with benchmark lumber
prices averaging US$327/Mfbm for studs and US$383/Mfbm for random
lengths delivered Great Lakes, compared to US$296/Mfbm and
US$350/Mfbm respectively for the quarter ended December 31,
2010. However, the positive impact of a firmer pricing environment
was partially offset by a strengthening Canadian dollar, with the
exchange rate averaging 1.015 during the first quarter of 2011,
compared to an average of 0.987 during the preceding quarter. As
well, discounts observed on studs relative to random lengths
remained at record levels during the quarter, reflecting the slow
housing market. The mix of lumber grades and dimensions
deteriorated slightly during the first quarter due to sawmill
operations being negatively impacted by winter conditions. Prices
of by-products have remained constant over the past two quarters.
Lumber production for the quarter ended March 31, 2011 was
166 million board feet of lumber, compared to 140 million
board feet in the preceding quarter. During the quarter, the
Company operated at 65% of its capacity with two of the eight
sawmills acquired from Domtar idled (55% during the earlier quarter
with no change to idled mills). Some sawmills were subject to
market-related downtime during both quarters. Unit costs were
consistent with those experienced in the earlier quarter, except
for a lower recovery factor and higher drying costs due to seasonal
conditions. SG&A expenses were lower in the first quarter of
2011 as compared to the previous quarter, which included some
non-recurring costs incurred in connection with the acquisition of
the Domtar forest products business. FINANCIAL POSITION At March
31, 2011, the Company had cash and cash equivalents of $1,257, and
working capital of $68,432 ($7,206 and $64,772 respectively at
December 31, 2010). Outstanding borrowings under its revolving
credit facility amounted to $20,500 ($9,000 at December 31, 2010).
During the three-month period ended March 31, 2011, the Company
used $17,147 in operating activities as a result of cash operating
losses and a net increase in non-cash working capital. The
Company's working capital requirements vary during the year due to
the seasonality of forestry operations, and those requirements are
usually substantial in the first and second calendar quarters. Cash
drawn from the revolving credit facility was used to finance the
seasonal increase in working capital. SUBSEQUENT EVENTS On April
20, 2011, the Company closed a private placement of
69,122,500 common shares sold at $0.50 per share for gross
proceeds of $34,561. The net proceeds of the financing will be used
for working capital and general corporate purposes, including for
potential acquisitions. And, on May 13, 2011,
the Company entered into an asset purchase agreement with
Liskeard Lumber Limited to acquire the remaining one-third of the
Elk Lake sawmill for a cash consideration of approximately
$15 million. The Company currently owns two-thirds of the
mill. The transaction is subject to customary closing conditions,
and closing is expected on July 31, 2011. Part of the proceeds from
the financing will be used to pay the purchase price. 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 IFRS. For example, "EBITDA" and "EBITDA excluding
specific items" are measures used by management to assess the
operating and financial performance of the Company. 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 IFRS. 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 IFRS, 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 March 31,
2011 and December 31, 2010, along with some key operating metrics.
(in thousands of dollars, except where Quarter ended Quarter ended
otherwise March 31 December 31 noted) Sales 79,955 65,386 EBITDA
(3,637) (12,065) Net loss (6,131) (13,725) Average lumber price in
US$ - RL 2×4 #1&2 ((1)) 383 350 Average lumber price in US$ -
Stud 2×4×8 ((1)) 327 296 Average exchange rate 1.015 0.987
Production - SPF lumber (MMfbm) 166 140 Shipments - SPF lumber
(MMfbm) 146 116 Shipments - wholesale lumber (MMfbm) 24 20 U.S.
housing starts (thousands of units) 580 539 ((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 March 31, 2011 and December 31,
2010, the Company's net loss as reported in accordance with IFRS 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 March 31 December 31 Net loss as reported
(6,131) (13,725) Add (subtract): Depreciation 3,196 3,337 Income
tax recovery (674) (1,461) Other (income) loss (28) (216) EBITDA
(3,637) (12,065) Add (subtract) specific items included: Adjustment
to working capital acquired ( (1)) - 5,710 EBITDA excluding
specific items (3,637) (6,355) (1) 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.
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