MONTREAL and VANCOUVER, May 15, 2012 /CNW Telbec/ - EACOM Timber Corporation (TSXV: ETR) ("EACOM", or the "Company") announces its first quarter results for the three-month period ended March 31, 2012.
OVERVIEW OF FINANCIAL RESULTS
For the quarter ended March 31, 2012, net income attributable to shareholders amounted to $6,347,000 or $0.01 per common share, against a net loss of $27,055,000 or $0.06 per common share in the previous quarter and a net loss of $6,131,000 or $0.01 per common share in the corresponding quarter of 2011. The 2012 results include a gain of $14,283,000 on disposal of property, plant and equipment destroyed by fire whereas the previous quarter results included an impairment charge of $15,000,000.
For the quarter ended March 31, 2012, the Company recorded a negative EBITDA of $5,309,000, against a negative EBITDA of $8,566,000 in the previous quarter and a negative EBITDA of $3,380,000 in the corresponding quarter of 2011. Market conditions have improved since the fourth quarter of 2011, contributing to an improved pricing environment and higher mill realizations.
QUARTER ENDED MARCH 31, 2012 vs. QUARTERS ENDED DECEMBER 31, 2011 AND MARCH 31, 2011
For the quarter ended March 31, 2012, the Company recorded sales of $59,941,000, against sales of $67,445,000 in the previous quarter and sales of $79,955,000 in the corresponding quarter of 2011. The Company's sales include both lumber and by-product sales. During the quarter, the Company shipped 128 million board feet of lumber (159 million board feet in the previous quarter and 170 million board feet in the corresponding quarter of 2011) and 120,000 oven-dried metric tons of by-products (129,000 oven-dried metric tons in the previous quarter and 161,000 oven-dried metric tons in the corresponding quarter of 2011). In the first quarter of 2012, shipments were impacted as the Timmins operations have been interrupted since January 22, 2012 as a result of the fire at the mill site. In the fourth quarter of 2011, shipments benefited from a substantial reduction of inventories. Compared to the first quarter of 2011, shipments reflect lower production volumes. Operations in Val-d'Or and Matagami have been temporarily shut down in the second half of 2011 due to 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.
Pricing has improved in the first quarter of 2012 with benchmark lumber prices averaging US$329/Mfbm for studs and US$360/Mfbm for random lengths delivered Great Lakes, up 8% and 10% from US$304/Mfbm and US$326/Mfbm respectively in the fourth quarter of 2011. Mill realizations were, however, somewhat impacted by a strengthening Canadian dollar with the exchange rate averaging 1.001 in the first quarter of 2012, up 2% against an average of 0.977 in the previous quarter. Pricing for random lengths still remains 6% below the level achieved in the first quarter of 2011, whereas studs are trading at a similar level.
Lumber production for the quarter ended March 31, 2012 was 113 million board feet of lumber, against 111 million board feet in the previous quarter and 166 million board feet in the corresponding quarter of 2011. During the three-month period, the Company operated at 46% of its capacity with two of the eight mills acquired from Domtar idled, Ear Falls in Ontario and Ste-Marie in Quebec (45% during the previous quarter and 65% in the corresponding quarter of 2011 with no change to idled mills). Compared to the previous quarter, the lost capacity at Timmins has been partially mitigated by higher production levels at other mills while production in the fourth quarter was negatively impacted by the six-week closure at Gogama due to a fire at the mill site. Compared to the first quarter of 2011, operations in Val-d'Or and Matagami have been temporarily shut down in the second half of 2011 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 previous quarters 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.
At March 31, 2012, the Company had cash and cash equivalents of $12,236,000 ($14,268,000 at December 31, 2011). An amount of $2,000,000 was outstanding under its credit facility against a borrowing availability of $6,187,000 ($2,000,000 and $3,822,000 respectively at December 31, 2011).
Subsequent to quarter-end, 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.
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 market conditions. The sawmill operations in Timmins have been interrupted due to the fire. 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.
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 "OVERVIEW OF FINANCIAL RESULTS - Supplemental Information on Non-GAAP Measures" in the Company's current MD&A.
SELECTED FINANCIAL INFORMATION AND OPERATING STATISTICS
The following table provides an overview of the Company's financial results for the quarters ended March 31, 2012, December 31, 2011 and March 31, 2011, along with some key operating metrics.
| (in thousands of dollars, except where otherwise noted)
|Operating income (loss)||(7,788)||(27,347)||(6,551)|
|Net income (loss) attributable to shareholders||6,347||(27,055)||(6,131)|
|Average lumber price in US$ - RL 2×4 #1&2(1)||360||326||383|
|Average lumber price in US$ - Stud 2×4×8(1)||329||304||327|
|Average exchange rate (US$ per C$1.00)||1.001||0.977||1.015|
|Production - SPF lumber (MMfbm)||113||111||166|
|Shipments - SPF lumber (MMfbm)||104||136||146|
|Shipments - wholesale lumber (MMfbm)||24||23||24|
|Cdn. housing starts (thousands of units)||205||200||175|
|U.S. housing starts (thousands of units)||687||670||582|
(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 income (loss) attributable to shareholders, as reported in accordance with IFRS, to EBITDA for the quarters ended March 31, 2012, December 31, 2011 and March 31, 2011.
(in thousands of dollars)
|Net income (loss) attributable to shareholders||6,347||(27,055)||(6,131)|
|Income tax recovery||-||-||(674)|
|Share of earnings in a joint venture||(146)||(236)||(142)|
|Gain on disposal of equipment destroyed by fire||(14,283)||-||-|
For further information:
Executive Vice-President and Chief Financial Officer
(514) 395-0375 ext. 259