MONTREAL, May 23, 2013 /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, 2013.
- EACOM recorded net earnings attributable to shareholders of $1.6 million in the first quarter of 2013
- EACOM recorded a negative adjusted EBITDA of $0.9 million in the first quarter of 2013
- EACOM concluded the negotiation of a global settlement with its insurer for the fire at its Timmins mill
During the first quarter of 2013, housing starts in the United States averaged 969,000 units, up 7% from the previous quarter and, more significantly, 36% from the first quarter of 2012. In Canada, a different pattern emerged with housing starts averaging 178,000 units, down 13% from both the previous quarter and the first quarter of 2012. This improvement in the U.S. housing activity had a positive impact on lumber consumption and contributed to a strong pricing environment and higher mill realizations for the Company. However, manufacturing costs relative to sales were higher than those incurred in the previous quarter, mostly due to additional costs still being incurred as a result of the fire at Timmins which, since January 1, 2013, are no longer offset through business interruption claims, and to a longer than expected ramp-up at the Elk Lake mill where a substantial capital upgrade was completed late in the fourth quarter of 2012. As a result, the Company recorded a negative adjusted EBITDA of $855,000 for the quarter ended March 31, 2013, against a positive adjusted EBITDA of $3,150,000 in the previous quarter and a negative adjusted EBITDA of $5,355,000 in the corresponding quarter of 2012.
In February 2013, the Company concluded with its insurer the negotiation of a global settlement in the amount of $48,250,000. Net of a $250,000 deductible and of initial advances for an aggregate amount of $30,600,000, the Company collected the remaining proceeds of $17,400,000, of which $8,900,000 for damage or destruction of assets and $8,500,000 related to business interruption. As such, there are no more receivables or anticipated payments in connection with this claim.
QUARTER ENDED MARCH 31, 2013 vs. QUARTERS ENDED DECEMBER 31, 2012 AND MARCH 31, 2012
For the quarter ended March 31, 2013, net earnings attributable to shareholders amounted to $1,556,000 or $0.00 per common share, against a net loss of $622,000 or $0.00 per common share in the previous quarter and net earnings of $6,168,000 or $0.01 per common share in the corresponding quarter of 2012. First quarter results include a gain of $8,500,000 on business interruption, partially offset by transaction costs of $1,566,000 related to the take-over bid for the Company by ET Acquisition Corporation, a corporation indirectly owned by funds managed by Kelso & Company. In the corresponding quarter of 2012, the Company recorded a gain of $14,283,000 on disposal of property, plant and equipment destroyed by fire.
The Company recorded sales of $70,960,000 for the quarter ended March 31, 2013, up 18% against sales of $60,360,000 in the previous quarter and sales of $59,941,000 in the corresponding quarter of 2012. During the quarter, the Company shipped 128 million board feet of lumber (120 million board feet in the previous quarter and 128 million board feet in the corresponding quarter of 2012) and 120,000 oven-dried metric tons of by-products (110,000 oven-dried metric tons in the previous quarter and 120,000 oven-dried metric tons in the corresponding quarter of 2012). Compared to the previous quarter and the corresponding quarter of 2012, shipments reflect higher production volumes.
Pricing has improved again in the first quarter of 2013 with benchmark lumber prices averaging US$426/Mfbm for studs and US$484/Mfbm for random lengths delivered Great Lakes, up 14% from US$375/Mfbm and US$426/Mfbm respectively in the previous quarter. Mill realizations also benefited from a slightly softer Canadian dollar with the exchange rate relative to the US$ averaging 0.991 in the first quarter, down 2% against an average of 1.009 in the previous quarter. More significantly, studs and random lengths are trading at prices 30% and 35% above the levels achieved in the first quarter of 2012.
Lumber production for the quarter ended March 31, 2013 was 129 million board feet of lumber, against 113 million board feet in the previous quarter and 113 million board feet in the corresponding quarter of 2012. During the first quarter, the Company operated at 48% of its capacity (46% during the previous quarter and 46% in the corresponding quarter of 2012). Compared to the previous quarter, the Elk Lake operations, which had been interrupted late in the third quarter of 2012 to complete a substantial capital upgrade, resumed in the later part of the fourth quarter. Compared to the corresponding quarter of 2012, the Timmins mill was closed throughout the quarter, whereas it had been operating until a fire destroyed the sawmill on January 22, 2012, and mills in Val-d'Or and Matagami were operating after having been temporarily shut down due to weak market conditions between the second half of 2011 and the third quarter of 2012.
At March 31, 2013, the Company had cash and cash equivalents of $12,448,000 and restricted cash of $13,248,000 ($27,028,000 and $6,664,000 respectively at December 31, 2012). Its credit facility was undrawn against a borrowing availability of $22,220,000 (undrawn against a borrowing availability of $10,200,000 at December 31, 2012).
Pursuant to the terms of the $40,000,000 senior secured debentures, insurance proceeds of $18,900,000 received in respect of the property damage claim have been segregated and shown as restricted cash pending the reconstruction of the Timmins mill. Payments made under the contract with USNR Kockums Cancar Inc. for the reconstruction of the Timmins mill have been drawn against these proceeds.
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. As a result of improved market conditions, operations in Val-d'Or and Matagami which had been temporarily shut down in 2011 resumed during the third quarter of 2012. The mill in Timmins which was seriously damaged by fire in January 2012 is under reconstruction. 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.
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" and "Adjusted EBITDA" are measures used by management to assess the operating and financial performance of the Company. We believe that EBITDA and Adjusted EBITDA are measures often used by investors to assess a company's operating performance. EBITDA and Adjusted EBITDA have limitations and you should not consider these items in isolation, or as substitutes for an analysis of our results as reported under IFRS. Because of these limitations, EBITDA and Adjusted EBITDA should not be used as substitutes for net loss or cash flows from operating activities as determined in accordance with IFRS, nor are they necessarily indicative of whether or not cash flows will be sufficient to fund our cash requirements. In addition, our definition of EBITDA and Adjusted EBITDA may differ from those of other companies. A reconciliation of EBITDA and Adjusted EBITDA to net loss attributable to shareholders 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, 2013, December 31, 2012 and March 31, 2012, along with some key operating metrics.
| (in thousands of dollars, except where otherwise noted)
|Operating income (loss)||(3,712)||658||(7,834)|
|Net earnings (loss) attributable to shareholders||1,556||(622)||6,168|
|Average lumber price in US$ - RL 2×4 #1&2(1)||484||426||359|
|Average lumber price in US$ - Stud 2×4×8(1)||426||375||328|
|Average exchange rate (US$ per C$1.00)||0.991||1.009||1.001|
|Production - SPF lumber (MMfbm)||129||113||113|
|Shipments - SPF lumber (MMfbm)||106||98||104|
|Shipments - wholesale lumber (MMfbm)||22||22||24|
|Cdn. housing starts (thousands of units)||178||204||205|
|U.S. housing starts (thousands of units)||969||904||715|
(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 and adjusted EBITDA for the quarters ended March 31, 2013, December 31, 2012 and March 31, 2012.
|(in thousands of dollars)||Q1||Q4||Q1|
|Net income (loss) attributable to shareholders||1,556||(622)||6,168|
|Share of loss (earnings) in a joint venture||161||181||(146)|
|Loss (gain) on business interruption||(8,500)||350||133|
|Gain on disposal of property, plant and equipment||(3)||(923)||(14,283)|
For further information:
Executive Vice-President and Chief Financial Officer
(514) 395-0375 ext. 259