U.S. International Trade Commission Dismisses Trade Case Against Imported Hardwood Plywood from China

TRADING SYMBOL: Toronto Stock Exchange - HWD

LANGLEY, BC, Nov. 5, 2013 /CNW/ - Hardwoods Distribution Inc. ("Hardwoods" or the "Company") today announced that the International Trade Commission ("ITC") made a unanimous negative injury determination in the final phase of its antidumping ("AD") and countervailing ("CVD") duty investigations against hardwood plywood manufactured in China and imported into the United States.  The negative injury determination means that the trade case is immediately dismissed.  Previously announced CVD/AD duties of 73.04%, which were scheduled to come into effect this month, will not be imposed.

The trade case was initiated on September 27, 2012 by a coalition of U.S. plywood manufacturers ("Petitioners").  Petitioners alleged that Chinese imports are sold in the United States at prices below cost and are subsidized by the Government of China.  Hardwoods estimates approximately 14% of its total sales are of product imported from China subject to the outcomes of this trade dispute.

"Our strategy includes selling both imported and domestically produced hardwood plywood to satisfy the demand and diverse product preferences of our customers," said Lance Blanco, President and CEO of Hardwoods.  "Our expectation was that if the proposed 73.04% duties had been imposed, this would have made Chinese plywood uncompetitive in the U.S. market.  Today's trade decision means that hardwood plywood from China will continue to be one of several product choices available to our customers, along with plywood from domestic sources as well as other international markets."

The ITC's decision to dismiss the trade case may be appealed by Petitioners within the U.S. court system, and Hardwoods will closely follow any appeals process that is initiated.  If appeals are filed, it is expected that any ruling by the U.S. court system would not occur until 18 to 24 months in the future, and that no duty liability related to importing Chinese hardwood plywood would arise during that period of time.

"We have an established high quality import product line from China, and accordingly we view today's decision as very positive for Hardwoods in the long run," said Mr. Blanco.  "However, in the short term we consider a period of upset conditions may arise as U.S. hardwood plywood markets adjust for this latest trade development.  The rise of hardwood plywood prices in 2013 has in part reflected the impact of duties which were imposed earlier in the trade investigation.  If eliminating the threat of duties results in downward pressure to U.S. hardwood plywood prices, this could reduce Hardwoods gross profit margin in the next several months while markets adjust.  In contrast we are evaluating the extent to which Hardwoods may be eligible for a refund of duty deposits paid on a portion of our import purchases made from China in 2013.  It is too early to determine any potential duty refund amount, as well as what impact today's decision will have on short term hardwood plywood pricing and margins."

Forward-Looking Statements

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This news release includes forward-looking statements. These involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to: Hardwoods estimates approximately 14% of its total sales are of product imported from China subject to the outcomes of this trade dispute; Hardwoods expectation that if the proposed 73.04% duties had been imposed, this would have made Chinese plywood uncompetitive in the U.S. market; the Company's perspective that today's trade decision means that hardwood plywood from China will continue to be a one of several product choices available to our customers, along with plywood from domestic sources as well as other international markets; Hardwoods expectation that if appeals are filed, it is expected that any ruling by the U.S. court system would not occur until 18 to 24 months in the future, and that no duty liability related to importing Chinese hardwood plywood would arise during that period of time; that Hardwoods views today's decision as very positive for Hardwoods in the long run;  The Company's expectation that in the short term a period of upset conditions may arise as U.S. hardwood plywood markets adjust for this latest trade development; the Company's view that if eliminating the threat of duties results in downward pressure to U.S. hardwood plywood prices, this could reduce Hardwoods gross profit margin in the next several months while markets adjust; the Company's perspective that it may be eligible for a refund of duty deposits paid on a portion of our import purchases made from China in 2013; and the Company's view that it is too early to determine any potential duty refund amount, as well as what impact today's decision will have on short term hardwood plywood pricing and margins.

These forward-looking statements reflect current expectations of management regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: national and local business conditions; political or economic instability in local markets; competition; consumer preferences; spending patterns and demographic trends; legislation or governmental regulation (including trade outcomes that impact upon our business); acquisition and integration risks.

Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, management cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available.

All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as may be required by law, the Company undertakes no obligation to revise or update any forward looking information as a result of new information, future events or otherwise after the date hereof.

About Hardwoods

Hardwoods is one of North America's largest wholesale distributors of hardwood lumber and related sheet good products, operating a network of 32 distribution centres in the US and Canada.

SOURCE: Hardwoods Distribution Inc.

Rob Brown 
Chief Financial Officer 
Phone: [phone] 
Fax: [phone] 
Email: [email protected]

Website: http://www.hardwoods-inc.com