MONTREAL and VANCOUVER, Aug. 17, 2012 /CNW Telbec/ - EACOM Timber
Corporation ("EACOM", or the "Company") is pleased to announce its
second quarter results for the three-month period ended June 30,
2012. HIGHLIGHTS -- EACOM recorded a positive EBITDA of $2.9
million for the second quarter -- EACOM generated positive cash
flows from operations of $3.2 million during the quarter --
Upgrades underway at Nairn Centre and Elk Lake -- Commencement of
reconstruction of the Timmins mill A significant improvement in
housing activity had a positive impact on lumber consumption during
the quarter, contributing to a stronger pricing environment and
higher mill realizations for the Company. As a result, the Company
recorded a positive EBITDA of $2,862,000 for the second quarter
ended June 30, 2012, against a negative EBITDA of $5,309,000 in the
previous quarter and a negative EBITDA of $9,892,000 in the
corresponding quarter of 2011. The Company has determined to
commence reconstruction of the Timmins mill which had been
destroyed by fire earlier this year. During the second quarter, the
Company initiated capital improvements targeted at increasing the
production capacity at two of its mills, Nairn Centre and Elk Lake.
Improvements at Nairn Centre are well underway and should be
completed in the third quarter. Construction at Elk Lake has just
started and completion is scheduled in the early part of the fourth
quarter following a three-week shutdown of the mill. Once
completed, these upgrades are expected to partially offset the
capacity lost at Timmins and mitigate some of the damages incurred
as a result of the fire. A significant portion of these investments
will be reimbursed under the business interruption insurance claim.
To date, the Company has received $17,000,000 of insurance
proceeds, of which $10,000,000 for damage or destruction of assets
and $7,000,000 related to business interruption. 'The Company
intends to continue its focused capital investments with a view to
increase capacity and recovery, and reduce manufacturing costs.
This should contribute to improve our competitiveness in the global
forestry sector, and provide a more stable and sustainable
employment environment for our employees in the communities where
we operate', stated Rick Doman, President and CEO. QUARTER ENDED
JUNE 30, 2012 vs. QUARTERS ENDED MARCH 31, 2012 AND JUNE 30, 2011
For the quarter ended June 30, 2012, the net loss attributable to
shareholders amounted to $709,000 or $0.00 per common share,
against net earnings of $6,347,000 or $0.01 per common share in the
previous quarter and a net loss of $13,662,000 or $0.03 per common
share in the corresponding quarter of 2011. The previous quarter
results included a gain of $14,283,000 on disposal of property,
plant and equipment destroyed by fire. During the second quarter,
the Company recorded sales of $65,256,000, up 9% against sales of
$59,941,000 in the previous quarter but down 8% against sales of
$71,171,000 in the corresponding quarter of 2011. The Company's
sales include both lumber and by-product sales. During the quarter,
the Company shipped 133 million board feet of lumber (128 million
board feet in the previous quarter and 160 million board feet in
the corresponding quarter of 2011) and 119,000 oven-dried metric
tons of by-products (120,000 oven-dried metric tons in the previous
quarter and 140,000 oven-dried metric tons in the corresponding
quarter of 2011). Compared to the corresponding quarter of 2011,
shipments reflect lower production volumes. Pricing has improved
again in the second quarter of 2012 with benchmark lumber prices
averaging US$388/Mfbm for studs and US$393/Mfbm for random lengths
delivered Great Lakes, up 18% and 9% from US$329/Mfbm and
US$360/Mfbm respectively in the first quarter of 2012. The Company
also benefited from a slightly softer Canadian dollar with the
exchange rate relative to the US$ averaging 0.990 in the second
quarter of 2012, down 1% against an average of 1.001 in the
previous quarter. Compared to the corresponding quarter of 2011,
studs and random lengths are trading at prices 24% and 17% above
the levels achieved last year, and the Canadian dollar is down 4%
relative to the US$. Substantially all of the Company's sales were
to North American customers. Sales to U.S. customers are subject to
export taxes and volume quotas under Option B of the Softwood
Lumber Agreement. Effective June 1, 2012, the export tax rate for
sales to U.S. customers decreased from 5% to 3%. In addition to
export taxes under the Softwood Lumber Agreement, Canadian
producers have been subject to an additional 10% export tax. On
July 1, 2011, the amount to be collected had been fully recovered
and the Canadian government removed this 10% export tax. Overall,
compared to the corresponding quarter of 2011, export taxes paid by
EACOM decreased from $1,974,000 to $655,000 as a result of lower
shipments, the removal of the additional 10% export tax and a
decrease in the export tax rate for sales to U.S. customers. Lumber
production for the quarter ended June 30, 2012 was 109 million
board feet of lumber, against 113 million board feet in the
previous quarter and 119 million board feet in the corresponding
quarter of 2011. During the second quarter, the Company operated at
40% of its capacity (46% during the previous quarter and 48% in the
corresponding quarter of 2011). Compared to the previous quarter,
the capacity lost at Timmins where operations have been interrupted
since January 22, 2012 as a result of the fire at the mill site has
been partially mitigated by higher production levels at two other
sites. Compared to the second quarter of 2011, operations in
Val-d'Or and Matagami have been temporarily shut down since the
second half of 2011 due to weak market conditions, and the Timmins
mill closed on January 22, 2012. 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 in the
third quarter of 2011. Unit costs improved compared to those
experienced in the second quarter of 2011 as a result of the higher
cost mills taking market-related downtime. The positive impact of
lower unit costs was, however, offset by the fixed costs incurred
in respect of those mills that are either idled or shut down.
FINANCIAL POSITION At June 30, 2012, the Company had cash and cash
equivalents of $37,711,000 and restricted cash of $10,000,000
($12,236,000 and nil respectively at March 31, 2012). Its credit
facility was undrawn against a borrowing availability of $7,900,000
(outstanding advances of $2,000,000 and a borrowing availability of
$6,187,000 at March 31, 2012). During the second quarter, the
Company generated positive cash flows from operations of $3,211,000
(prior to net changes in non-cash working capital), a reversal from
negative cash flows from operations of $5,770,000 in the previous
quarter. On April 11, 2012, the Company closed a $40 million senior
secured debenture financing, the net proceeds of which will be used
for general corporate purposes. As part of this financing, an
aggregate of 200 million warrants have been issued with a five-year
term and an exercise price of $0.20 per common share. Pursuant to
the terms of the debentures, insurance proceeds of $10,000,000
received during the first quarter have been segregated and shown as
restricted cash pending reconstruction of the Timmins mill.
Substantially all of the $5,495,000 in capital spending during the
quarter was targeted at improving the production capacity at two of
the Company's mills which, once completed, will partially offset
the lost capacity at Timmins and mitigate some of the damages
incurred as a result of the fire. A significant portion of these
investments will be reimbursed under the business interruption
insurance claim. 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 which had been temporarily shut down due to weak
market conditions will be resuming in the third quarter. The mill
in Timmins was seriously damaged by fire in January 2012 and
remains shut down due to the fire. EACOM also owns a lumber
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
"RISKS AND UNCERTAINTIES" in the Company's current MD&A, and
under "RISK FACTORS" in the Company's Filing Statement dated
January 8, 2010. 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 those of other companies. A reconciliation of EBITDA to
net loss is set forth under "Supplemental Information on Non-GAAP
Measures" in the Company's current MD&A. Additional information
relating to EACOM is available at www.eacom.ca and on SEDAR at
www.sedar.com. SELECTED FINANCIAL INFORMATION AND OPERATING
STATISTICS ------------------------------ The following table
provides an overview of the Company's financial results for the
quarters ended June 30, 2012, March 31, 2012 and June 30, 2011,
along with some key operating metrics. (in thousands of dollars,
except where otherwise noted) Q2 Q1 Q2 2012 2012 2011 Sales 65,256
59,941 71,171 Operating income (loss) 298 (7,788) (12,467) Net
earnings (loss) attributable to shareholders (709) 6,347 (13,662)
Average lumber price in US$ - RL 2×4 #1&2(1) 393 360 336
Average lumber price in US$ - Stud 2×4×8(1) 388 329 314 Average
exchange rate (US$ per C$1.00) 0.990 1.001 1.033 Production - SPF
lumber (MMfbm) 109 113 119 Shipments - SPF lumber (MMfbm) 105 104
138 Shipments - wholesale lumber (MMfbm) 28 24 22 Cdn. housing
starts (thousands of units) 229 206 195 U.S. housing starts
(thousands of units) 739 715 573 (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 earnings (loss) attributable to shareholders, as
reported in accordance with IFRS, to EBITDA for the quarters ended
June 30, 2012, March 31, 2012 and June 30, 2011. (in
thousands of dollars) Q2 Q1 Q2 2012 2012 2011 Net earnings (loss)
attributable to (709) 6,347 (13,662) shareholders Add (subtract):
Depreciation 2,394 2,429 3,426 Financing expense 1,444 344 366
Income tax recovery - - (155) Share of earnings in a joint venture
(267) (146) 133 Gain on disposal of equipment destroyed by -
(14,283) - fire EBITDA 2,862 (5,309) (9,892) 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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