MONTREAL and VANCOUVER, April 27, 2012 /CNW Telbec/ - EACOM Timber
Corporation ("EACOM", or the "Company") announces its fourth
quarter and year end results for the three and twelve-month periods
ended December 31, 2011. On June 30, 2010, EACOM
completed the acquisition of the Domtar forest products business,
which transformed the Company from a lumber trading 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 eighteen months or six quarters of
operations are indicative of the Company's current activities and a
comparison of the Company's financial results for the twelve-month
periods ended December 31, 2011 and 2010 respectively may not be
meaningful. The comparison of the Company's annual financial
results is supplemented with a comparison of its financial results
for the six-month periods ended December 31, 2011 and 2010
respectively. A comparison of the fourth quarter results against
those of the same period last year is also provided. OVERVIEW OF
FINANCIAL RESULTS For the year ended December 31, 2011 which
included four quarters of operations indicative of the Company's
current activities, the Company recorded a negative EBITDA of
$26,213,000 against a negative EBITDA of $15,703,000 in 2010 with
only two quarters of operations. The net loss attributable to
shareholders amounted to $47,412,000 or $0.10 per common share in
2011 against a net loss of $27,344,000 or $0.11 per common share in
2010. The 2011 results include an impairment charge of $15,000,000
partially offset by a gain of $4,339,000 on the sale of the Big
River mill and an immediate $2,940,000 recovery of income taxes as
a result of the acquisition of the remaining one-third interest in
the Elk Lake sawmill. YEAR ENDED DECEMBER 31, 2011 vs. YEAR ENDED
DECEMBER 31, 2010 For the year ended December 31, 2011, the Company
recorded sales of $279,967,000, against sales of $138,712,000 in
2010. For the six-month period ended December 31, 2011, the Company
recorded sales of $128,841,000, against sales of $137,288,000 in
the corresponding period of 2010. The Company's sales include both
lumber and by-product sales. During the six-month period, the
Company shipped 294 million board feet of lumber (290 million board
feet in the same six-month period of 2010) and 267,000 oven-dried
metric tons of by-products (294,000 oven-dried metric tons in the
same six-month period of 2010). These shipments in both periods
reflect weak market conditions. Benchmark lumber prices for the
year ended December 31, 2011 averaged US$316/Mfbm for studs and
US$343/Mfbm for random lengths delivered Great Lakes, compared to
US$319/Mfbm and US$341/Mfbm respectively in 2010. Mill realizations
were impacted by a strengthening Canadian dollar, with the exchange
rate averaging 1.011 in 2011 compared to an average of 0.971 in
2010. Lumber production for the year ended December 31, 2011 was
523 million board feet of lumber, compared to 270 million board
feet in 2010. For the six-month period ended December 31, 2011,
lumber production reached 238 million board feet against 270
million board feet in the same six-month period of 2010. During the
six-month period, the Company operated at 48% of its capacity with
two of the eight mills acquired from Domtar idled, Ear Falls in
Ontario and Ste-Marie in Quebec (55% during the same period last
year with no change to idled mills). Sawmills have been subject to
longer market-related downtime with operations in Val-d'Or and
Matagami temporarily shut down due to weak market conditions, and
Gogama closed for about six weeks due to the fire at the mill site.
These closures have been somewhat offset by the additional
production at Elk Lake following the acquisition of the remaining
one-third interest in the mill. As a result of the higher cost
mills taking market-related downtime, unit costs improved compared
to those experienced in the year earlier period. QUARTER ENDED
DECEMBER 31, 2011 vs. QUARTER ENDED DECEMBER 31, 2010 The Company
recorded for the quarter a negative EBITDA of $8,566,000
($6,370,000 in the fourth quarter of 2010). The net loss
attributable to shareholders for the quarter amounted to
$27,055,000 or $0.06 per common share ($13,724,000 or $0.03 per
common share in the fourth quarter of 2010). The results for the
fourth quarter of 2011 include an impairment charge of $15,000,000.
For the quarter ended December 31, 2011, the Company recorded sales
of $67,445,000, against sales of $65,385,000 in the fourth quarter
of 2010. During the quarter, the Company shipped 159 million board
feet of lumber (136 million board feet in the fourth quarter of
2010) and 129,000 oven-dried metric tons of by-products (154,000
oven-dried metric tons in the fourth quarter of 2010). This
increase in lumber shipments compared to the same period last year
is attributable to improving market conditions as the quarter drew
to a close. Benchmark lumber prices for the quarter ended December
31, 2011 have been mixed, averaging US$304/Mfbm for studs and
US$326/Mfbm for random lengths delivered Great Lakes, compared to
US$296/Mfbm and US$350/Mfbm respectively in the fourth quarter of
2010. A weaker pricing environment overall was somewhat offset by a
softer Canadian dollar, the exchange rate averaging 0.977 during
the fourth quarter of 2011 compared to an average of 0.987 during
the corresponding quarter of 2010. Lumber production for the
quarter ended December 31, 2011 was 111 million board feet of
lumber, compared to 140 million board feet in the fourth quarter of
2010. During the quarter, the Company operated at 45% of its
capacity with two of the eight sawmills acquired from Domtar idled
(57% during the same quarter last year with no change to idled
mills). Sawmills have been subject to longer market-related
downtime during the quarter compared to the same quarter last year
with operations in Val-d'Or and Matagami temporarily shut down.
FINANCIAL POSITION As at December 31, 2011, the Company had cash
and cash equivalents of $14,268,000 ($7,206,000 at December 31,
2010) and an amount of $2,000,000 was outstanding under its credit
facility against a borrowing availability of $3,822,000 ($9,000,000
and $12,547,000 respectively at December 31, 2010). The improved
liquidity position resulted from net proceeds of $32,346,000 from a
private placement of the Company's common shares in the second
quarter of 2011, proceeds of $7,500,000 from the disposal of the
idled mill located in Big River, Saskatchewan in the third quarter
of 2011, a substantial reduction of inventories as a result of a
more aggressive management of working capital combined with the
temporary shutdown of operations at Val-d'Or and Matagami, and the
collection of in excess of $10 million of road tax credits in the
fourth quarter of 2011. Part of the net proceeds from the private
placement were used to acquire the remaining one-third interest in
the Elk Lake sawmill and to repay $7,000,000 of outstanding
borrowings under the revolving credit facility. SUBSEQUENT EVENT On
April 11, 2012, the Company closed a $40 million secured debenture
financing, the net proceeds of which will be used for general
corporate purposes. The Debentures were issued at par, are secured
by all of the assets of the Company subject only to a prior lien on
the working capital assets, have a 5-year term and bear interest at
a rate of 10% payable semi-annually. The Debentures contain
covenants consistent with a secured borrowing. An aggregate of 200
million warrants have also been issued with a five-year term and an
exercise price of $0.20 per common share. As part of the
transaction, Fairfax Financial Holdings Limited is entitled to
nominate two directors to EACOM's Board of Directors. 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 eight
sawmills, all located in Eastern Canada, and related tenures. The
mills are Timmins, Nairn Centre, Gogama, Elk Lake and Ear Falls in
Ontario, and Val-d'Or, Ste-Marie and Matagami in Quebec. The mills
in Ear Falls, Ontario, and Ste-Marie, Quebec, are currently idled,
and operations in Val-d'Or and Matagami have been temporarily shut
down due to current market conditions. EACOM also owns a
remanufacturing facility in Val-d'Or, Quebec, and a 50% interest in
an "I" joist plant in Sault Ste-Marie, Ontario. The TSX Venture
Exchange has neither approved nor disapproved the content of this
press release. All director and officer appointments are subject to
TSX Venture Exchange approval. 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" is a measure 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
flows will be sufficient to fund our cash requirements. In
addition, our definition of EBITDA may differ from that 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 FINANCIAL INFORMATION AND OPERATING
STATISTICS (YEAR) ------------------------------ The following
table provides an overview of the Company's financial results for
the years ended December 31, 2011 and 2010, and for the six-month
periods ended December 31, 2011 and 2010, along with some key
operating metrics. (in thousands of dollars, Six-month Six-month
Year ended Year ended except where otherwise noted) period period
December December ended ended 31, 2011 31, 2010 December December
31, 2011 31, 2010 Sales 128,841 137,288 279,967 138,712 EBITDA
(12,941) (12,729) (26,213) (15,703) Net loss attributable to
shareholders (27,619) (22,939) (47,412) (27,344) Average lumber
price in US$ - RL 2×4 #1&2 (1) 329 333 343 341 Average lumber
price in US$ - Stud 2×4×8 (1) 311 290 316 319 Average exchange rate
0.998 0.975 1.011 0.971 Production - SPF lumber (MMfbm) 238 270 523
270 Shipments - SPF lumber (MMfbm) 250 244 530 244 Shipments -
wholesale lumber (MMfbm) 44 46 92 49 U.S. housing starts (thousands
of units) 644 562 609 587 (1) Eastern spruce/pine/fir, per thousand
board feet delivered Great Lakes (Source: Random Lengths
Publications, Inc.) The following table reconciles the Company's
net loss attributable to shareholders as reported to EBITDA for the
years ended December 31, 2011 and 2010, and for the six-month
periods ended December 31, 2011 and 2010. (in thousands of
Six-month Six-month Year ended Year ended dollars) period ended
period ended December December December December 31, 2011 31, 2010
31, 2011 31, 2010 Net loss attributable (27,619) (22,939) (47,412)
(27,344) to shareholders, as reported Add (subtract): Depreciation
6,835 6,227 13,457 6,227 Interest expense 722 129 1,459 129 Income
tax recovery (2,940) (1,461) (3,770) (1,461) Share of earnings in a
(600) (395) (608) (395) joint venture Gain on sale of the Big
(4,339) - (4,339) - River mill Impairment charge 15,000 - 15,000 -
Adjustment to working - 5,710 - 5,710 capital acquired
Acquisition-related - - - 1,431 costs EBITDA (12,941) (12,729)
(26,213) (15,703) SELECTED FINANCIAL INFORMATION AND OPERATING
STATISTICS (QUARTER) ------------------------------ The following
table provides an overview of the Company's financial results for
the quarters ended December 31, 2011 and 2010, along with some key
operating metrics. (in thousands of dollars, except where Quarter
ended Quarter ended otherwise noted) December 31, December 31, 2011
2010 Sales 67,445 65,385 EBITDA (8,566) (6,370) Net loss
attributable to shareholders (27,055) (13,724) Average lumber price
in US$ - RL 2×4 #1&2 326 350 (1) Average lumber price in US$ -
Stud 2×4×8 304 296 (1) Average exchange rate 0.977 0.987 Production
- SPF lumber (MMfbm) 111 140 Shipments - SPF lumber (MMfbm) 136 116
Shipments - wholesale lumber (MMfbm) 23 20 U.S. housing starts
(thousands of units) 673 539 (1) Eastern spruce/pine/fir, per
thousand board feet delivered Great Lakes (Source: Random Lengths
Publications, Inc.) The following table reconciles the Company's
net loss attributable to shareholders as reported to EBITDA for the
quarters ended December 31, 2011 and 2010. (in thousands of
dollars) Quarter ended Quarter ended December 31, December 31, 2011
2010 Net loss attributable to shareholders, as (27,055) (13,724)
reported Add (subtract): Depreciation 3,400 3,337 Interest expense
325 60 Income tax recovery - (1,461) Share of earnings in a joint
venture (236) (292) Impairment charge 15,000 - Adjustment to
working capital acquired - 5710 EBITDA (8,566) (6,370)
EACOM TIMBER CORPORATION CONTACT: Investors:Marc
GirardExecutive Vice-President and Chief Financial Officer(514)
848-5133Media Relations:Frederic BerardH+K Strategies(514)
395-0375, ext. 259
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