Norbord Reports First Quarter 2014 Results; Declares Quarterly Dividend

Note:  Financial references in US dollars unless otherwise indicated.


  • EBITDA of $27 million
  • Earnings of $7 million or $0.13 per share
  • Best-ever quarterly production from European panel mills; shipments up 9% year-over-year
  • North American shipments up 8% year-over-year despite 2% lower US housing starts
  • Declared quarterly dividend of CAD $0.60 per share

TORONTO, May 2, 2014 /CNW/ - Norbord Inc. (TSX: NBD) today reported EBITDA of $27 million in the first quarter of 2014 compared to $29 million in the fourth quarter of 2013 and $111 million in the first quarter of 2013.  The year-over-year change is due to the exceptional North American OSB prices in the first quarter of last year - the highest in 10 years.  North American operations generated EBITDA of $17 million in the quarter versus $21 million in the prior quarter and $106 million in the same quarter last year.  European operations generated EBITDA of $13 million in the quarter versus $12 million in the prior quarter and $10 million in the same quarter last year.

"Severe weather conditions across North America presented both market and operational challenges that impacted our business in the first two months of the year," said Peter Wijnbergen, President and CEO.  "Homebuilding activity was delayed, resulting in weaker OSB demand and prices.  Our mills also ran less efficiently.  Looking ahead, the spring homebuilding season is finally starting to take hold and we have already started to see OSB consumption pick up.  Customer inventories are low and increasing demand from new home construction will support a more robust pricing environment."

"Our European panel business delivered its best quarterly EBITDA result in three years.  Panel demand is strengthening and our mills ran very well, supporting almost 10% higher shipments than the same quarter a year ago.  I expect this trend of improved performance to continue throughout the remainder of the year as our core markets recover."

Norbord recorded earnings of $7 million or $0.13 per share (basic and diluted) in the first quarter of 2014 compared to $2 million or $0.04 per share (basic and diluted) in the fourth quarter of 2013 and $67 million or $1.51 per share ($1.26 per diluted share) in the first quarter of 2013.  Reported earnings in the comparative quarters included the following one-time items:

$ millions     Q1-2013     Q4-2013     Q1-2014
Earnings before one-time items     $ 67     $ 9     $ 7
2015 bond early redemption costs, after-tax     -     (16)     -
Non-recurring income tax recovery     -     9     -
Earnings, as reported     $ 67     $ 2     $ 7

Market Conditions

In North America, March year-to-date US housing starts were down 2% versus the same period in 2013.  Permits, however, were 7% higher.  The consensus forecast from US housing economists stands at 1.1 million starts in 2014, a 19% improvement over last year.

New home construction activity was held back during the quarter by the extreme winter conditions experienced across North America, resulting in softer OSB demand and prices.  Benchmark OSB prices traded in a very tight range in the first quarter.  The North Central benchmark averaged $219 per thousand square feet (Msf) (7⁄16-inch basis), compared to $245 per Msf in the previous quarter and $417 per Msf in the same quarter last year.  In the South East region, where more than half of Norbord's North American capacity is located, benchmark prices averaged $193 per Msf, compared to $192 per Msf and $396 per Msf in the comparative quarters.

In Europe, panel markets remained strong, reflecting improving housing markets in the Company's core geographies, particularly the UK and Germany.  First quarter average panel prices held firm, unchanged versus the prior quarter and 4% higher than the same quarter last year.


In North America, Norbord's OSB shipments decreased by 8% quarter-over-quarter, primarily due to fewer fiscal days versus the prior quarter.  However, first quarter shipments increased 8% year-over-year, despite lower US housing starts activity in the first three months of the year.

The North American OSB mills produced at approximately 80% of stated capacity (including the two curtailed mills in Huguley, Alabama and Val-d'Or, Quebec), compared to 75% in the prior quarter and 70% in the same quarter last year.  Quarter-over-quarter, capacity utilization (based on fiscal days in each period) increased due to fewer maintenance shutdown days taken in the quarter.  Year-over-year, capacity utilization increased due to additional volume from the Company's operating mills and the restart of the Jefferson, Texas mill in the third quarter of 2013.

Norbord's North American OSB cash production costs per unit (before mill profit share) were in line with the prior quarter and decreased by 2% versus the same quarter last year.  The impact of extreme weather and higher raw material prices was offset by lower maintenance costs.

As previously announced, Norbord has begun rebuilding the press line at the curtailed Huguley, Alabama mill to prepare it for restart.  The Company has not set a restart date, however, and will do so only when it is sufficiently clear that customers require more product.  Norbord does not currently expect to restart its curtailed mill in Val-d'Or, Quebec in 2014, but will continue to monitor market conditions.

In Europe, Norbord's shipments were 16% higher versus the prior quarter and 9% higher than the same quarter last year due to improving core markets and mill productivity.  All of Norbord's panel mills continued to run on full operating schedules and achieved a quarterly production record, producing at approximately 110% of stated capacity in the quarter.  Capacity utilization was 90% in the prior quarter and 100% in the same quarter last year.

Norbord's mills delivered Margin Improvement Program (MIP) gains of $3 million in the quarter from improved productivity, a richer value-added product mix and lower maintenance costs.

Capital investments totaled $15 million in the first quarter and are currently targeted at $65 million for the full year 2014.  This year's capex target includes preliminary work at the mothballed Huguley, Alabama mill, annual maintenance projects and a continuation of strategic investments across the Company's other mills to improve productivity and reduce manufacturing costs.

Operating working capital was $93 million compared to $44 million at year-end and $101 million at the end of the same quarter last year.  Working capital increased quarter-over-quarter for the usual seasonal reasons, including log inventory builds and the payment of mill profit share and bonuses across the Company.

At quarter-end, Norbord had unutilized liquidity of $459 million, consisting of $117 million in cash and $342 million in unused credit lines.  The Company's tangible net worth was $470 million and net debt to total capitalization on a book basis was 41%.  Both ratios remain well within bank covenants.


The Board of Directors declared a quarterly dividend of CAD $0.60 per common share, payable on June 21, 2014 to shareholders of record on June 1, 2014.

As announced last quarter, the Board expects to maintain the quarterly dividend at this level for the remainder of 2014 (CAD $2.40 per share annualized).  This reflects the Company's positive view of the housing recovery and panel demand in its core North American and European markets.


During the quarter, Norbord renewed its normal course issuer bid in accordance with Toronto Stock Exchange (TSX) rules.  Under the bid, the Company may purchase up to 2,670,496 of its common shares, representing 5% of the Company's issued and outstanding common shares as of February 24, 2014.  No share purchases were made under this bid or the Company's previous bid that expired on February 4, 2014.

Annual Meeting of Shareholders

Norbord's Annual Meeting of Shareholders will be held on Friday, May 2, 2014 at 10:00 a.m.  A live webcast of the meeting will be available and can be accessed via or

Additional Information

Norbord's Q1 2014 letter to shareholders, news release, management's discussion and analysis, consolidated unaudited interim financial statements and notes to the financial statements have been filed on SEDAR ( and are available in the investor section of the Company's website at  Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors on Friday, May 2, 2014 at 2:00 p.m. ET.  The call will be broadcast live over the Internet via and  A replay number will be available approximately one hour after completion of the call and will be accessible until May 30, 2014 by dialing 1-888-203-1112 or 647-436-0148.  The passcode is 9933750.  Audio playback and a written transcript will be available on the Norbord website.

New this quarter, an accompanying presentation will be available in the "Investors/Conference Call" section of prior to the start of the call.

Norbord Profile

Norbord Inc. is an international producer of wood-based panels with assets of more than $1 billion, employing approximately 1,950 people at 13 plant locations in the United States, Europe and Canada.  Norbord is one of the world's largest producers of oriented strand board (OSB).  In addition to OSB, Norbord manufactures particleboard, medium density fibreboard (MDF) and related value-added products.  Norbord is a publicly traded company listed on the Toronto Stock Exchange under the symbol NBD.

This news release contains forward-looking statements, as defined in applicable legislation, including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance. Often, but not always, words such as  "expect," "believe," "forecast," "likely," "support," "target," "consider," "continue," "suggest," "intend,"  "should," "appear," "would," "will," "will not," "plan," "can," "may," and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Although Norbord believes it has a reasonable basis for making these forward-looking statements, readers are cautioned not to place undue reliance on such forward-looking information.  By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur.  Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include:  general economic conditions; risks inherent with product concentration; effects of competition and product pricing pressures; risks inherent with customer dependence; effects of variations in the price and availability of manufacturing inputs; risks inherent with a capital intensive industry; and other risks and factors described from time to time in filings with Canadian securities regulatory authorities.

Except as required by applicable laws, Norbord does not undertake to update any forward-looking statements, whether as a result of new information, future events or otherwise, or to publicly update or revise the above list of factors affecting this information.  See the "Caution Regarding Forward-Looking Information" statement in the March 3, 2014 Annual Information Form and the cautionary statement contained in the "Forward-Looking Statements" section of the 2013 Management's Discussion and Analysis dated January 29, 2014 and Q1 2014 Management's Discussion and Analysis dated May 1, 2014.

Norbord defines EBITDA as earnings before finance costs, income taxes, depreciation and non-recurring items.  EBITDA is a non-International Financial Reporting Standards (IFRS) financial measure, does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. See "Non-IFRS Financial Measures" in Norbord's 2013 Management Discussion and Analysis dated January 29, 2014 and Q1 2014 Management's Discussion and Analysis dated May 1, 2014 for a quantitative reconciliation of EBITDA to earnings (the most directly comparable IFRS measure). 

May 2, 2014

To Our Shareholders,

It will come as no surprise that our first quarter results were negatively impacted by the unusually severe winter across North America. Nonetheless, Norbord's EBITDA was almost unchanged from the prior quarter at $27 million. Our European business had an excellent start to the year and our core markets there are strengthening. European shipments were up 16% over the prior quarter, supported by our highest-ever production volume.

The extreme cold in North America did cause our mills to run less efficiently in January and February, but operating performance was substantially better in March and April. We were not impacted by the severe rail capacity constraints that affected some regions, and our first quarter shipments were up 8% over last year.

North American OSB prices have been lower so far this year. Demand from new home construction was held back as homebuilders lost working days in the regions accustomed to milder winter conditions. As a result, first quarter US housing starts were actually lower than the first quarter of last year. Starts began to recover in March, with the seasonally-adjusted pace of single-family starts up by 6%, a sign that the spring homebuilding season is now kicking in.

Despite the slower start to 2014, I remain optimistic for the remainder of the year. US housing economists are forecasting 1.1 million starts this year. We have probably lost about 50,000 starts off this number due to the weather impact, but this still translates into a healthy 15% year-over-year increase. After six years of below-average home construction, the pent-up demand is significant. Recent headlines indicate that there are now 1.2 million more adult children living with their parents than eight years ago. In addition to these positive indicators for homebuilding, Norbord is also seeing a strong increase in Big Box and industrial shipments as consumer confidence grows and home repair and remodelling expenditures rise. These factors are finally driving an improvement in OSB demand that is reflected in recent prices and will translate into better results for the remainder of the year.

Looking further ahead, I remain committed to the strategy that has successfully guided Norbord for the past two decades: pursuing growth in OSB. We will do this by optimizing our North American operations and exploring the feasibility of expanding our European OSB capacity.

In Europe, we expect our strong Q1 performance will continue as our markets in the UK, Germany and BeNeLux build momentum. In the UK, the average age of first-time homebuyers is now above 35, a symptom of the chronic shortage in housing supply in our largest European market. Some of the restrictions keeping buyers out of the market are starting to ease — for example, 40% more mortgages have been approved so far this year compared to last year. We are very optimistic about the long-term market growth potential and are actively assessing our options to expand our European OSB capacity.

In North America, we continue to invest in our mills. This quarter, we completed the finishing line upgrade at our La Sarre, Quebec mill. The state-of-the-art equipment we installed there now enables us to produce a full range of value-added products with much greater efficiency. At our mothballed Huguley, Alabama mill, we have commenced rebuilding the press, the longest lead-time item in the pre-start-up work plan. We have not yet set a restart date, but want to get the mill ready over the next year so that we can respond to improving customer demand.

I look forward to reporting on our progress in the months to come.

This letter includes forward-looking statements, as defined by applicable securities legislation including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance.  Often, but not always, forward-looking statements can be identified by the use of words such as "expect," "suggest," "support," "believe," "should," "potential," "likely," "continue," "forecast," "plan," "indicate," "consider," "future," or variations of such words and phrases or statements that certain actions "may," "could," "must," "would," "might," or "will" be undertaken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements.  See the cautionary language in the Forward-Looking Statements section of the 2013 Management's Discussion and Analysis dated January 29, 2014 and Q1 2014 Management's Discussion and Analysis dated May 1, 2014.

Consolidated Balance Sheets

(US $ millions)
  Mar 29, 2014 Dec 31, 2013
Current assets      
 Cash and cash equivalents   $           117 $         193
 Accounts receivable                 143             130
 Tax receivable                   11               11
 Inventory                 134             120
                  405             454
Non-current assets      
 Property, plant and equipment                 795             794
 Deferred income tax assets                   13               14
                  808             808
    $       1,213 $      1,262
Liabilities and shareholders' equity      
Current liabilities      
 Accounts payable and accrued liabilities   $           184 $         206
Non-current liabilities      
 Long-term debt                 433             433
 Other liabilities                   27               27
 Deferred income tax liabilities                 117             120
                  577             580
Shareholders' equity                 452             476
    $       1,213 $      1,262

Consolidated Statements of Earnings

Quarters ended Mar 29 and Mar 30 (US $ millions, except per share information)
      Q1 2014 Q1 2013
Sales       $    303 $    365
Cost of sales       (273) (249)
General and administrative expenses       (3) (5)
Earnings before finance costs, income tax and depreciation       27 111
Finance costs       (8) (9)
Earnings before income tax and depreciation       19 102
Depreciation       (13) (13)
Income tax recovery (expense)       1 (22)
Earnings       $        7 $      67
Earnings per common share          
 Basic       $   0.13 $   1.51
 Diluted       0.13 1.26

Consolidated Statements of Comprehensive Income

Quarters ended Mar 29 and Mar 30 (US $ millions)
      Q1 2014 Q1 2013
Earnings       $        7 $      67
Other comprehensive (loss) income, net of tax          
     Items that will not be reclassified to earnings:          
       Actuarial (loss) gain on post-employment obligation                 (1) 9
     Items that may be reclassified subsequently to earnings:          
       Foreign currency translation loss on foreign operations                 (1) (14)
                  (2) (5)
Comprehensive income       $        5 $      62

Consolidated Statements of Changes in Shareholders' Equity

Quarters ended Mar 29 and Mar 30 (US $ millions)
      Q1 2014  Q1 2013
Share capital          
Balance, beginning of period       $    661 $     346
Issue of common shares                   -          294
Balance, end of period       $    661 $     640
Contributed surplus          
Balance, beginning of period       $        6 $       44
Warrants and stock options exercised                   -          (35)
Balance, end of period       $        6 $         9
Retained earnings          
Balance, beginning of period       $   (201) $     (11)
Earnings                   7           67
Common share dividends               (29)            - 
Warrants exercised                   -        (259)
Other comprehensive (loss) income                   (1)             9
Balance, end of periodi       $ (224) $   (194)
Accumulated other comprehensive income (loss)      
Balance, beginning of period       $      10 $         6
Other comprehensive loss                 (1)         (14)
Balance, end of period       $        9 $       (8)
Shareholders' equity       $    452 $     447
i Retained earnings composed of:          
Deficit arising on cashless exercise of warrants in 2013       $  (263) $  (259)
All other retained earnings                39         65

Consolidated Statements of Cash Flows

Quarters ended Mar 29 and Mar 30 (US $ millions)
      Q1 2014 Q1 2013
Operating activities          
Earnings       $         7 $       67
Items not affecting cash:          
   Depreciation       13           13
   Deferred income tax       (3)           22
Other items       4           (2)
        21         100
Net change in non-cash operating working capital balances       (47)         (55)
        (26)           45
Investing activities          
Investment in property, plant and equipment       (20)         (15)
Financing activities          
Dividends       (29)            -  
Debt issue costs       (1)            -  
        (30)            -  
Cash and cash equivalents          
(Decrease) increase during period       (76)           30
Balance, beginning of period       193         128
Balance, end of period       $      117 $     158







SOURCE: Norbord Inc.

For further information:

Heather Colpitts
Manager, Corporate Affairs
Tel. (416) 365-0705


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