Acadian posts strong results in Q4
Feb. 12, 2014 - Acadian Timber Corp. reported strong financial and operating results for the three months ended December 31, 2013. In the fourth quarter, Acadian generated net sales of $21.8 million on sales volume of 370 thousand m3, which represents a $3.4 million, or 18%, increase in net sales compared to the same period in 2012. All figures are in Canadian dollars unless otherwise noted.
Adjusted EBITDA of $6.1 million for the fourth quarter of 2013 was $1.0 million higher than in the fourth quarter of 2012, while Adjusted EBITDA margin remained unchanged from the same period of last year at 28%.
"Acadian's financial performance for the fourth quarter was strong with good production and improved pricing for all of our products," said Reid Carter, Chief Executive Officer of Acadian. "We continued to actively pursue business development opportunities during the quarter in support of Acadian's growth strategy."
For the year ended December 31, 2013, Acadian generated net sales of $74.4 million on sales volume of 1,383 thousand m3 as compared to net sales of $68.8 million on sales volume of 1,304 thousand m3 in the comparable period of 2012. Adjusted EBITDA of $17.5 million during the year ended December 31, 2013 increased $1.0 million from the same period of 2012.
Acadian continues to focus on profitably growing its business and is well positioned to benefit from Brookfield's broader platform and relationships when sourcing transactions. We are optimistic that Acadian will be in a position to participate in attractive opportunities during 2014.
Operating earnings for the period at $6.0 million increased $1.0 million reflecting higher sales volumes and log selling prices. Net income totaled $3.4 million, or $0.20 per share, for the fourth quarter down $0.4 million or $0.02 per share from the same period in 2012. The decrease in net income is primarily attributable to a $1.7 million rise in the unrealized foreign exchange loss on long-term debt due to the impact of the weaker Canadian dollar on the U.S. dollar denominated debt.
Harvest volume, excluding biomass, for the fourth quarter was 319 thousand m3, an increase of 11% from the same period of 2012. Consolidated sales volume of 370 thousand m3 was up 13% from the fourth quarter of 2012 with the increase primarily coming from Acadian's operations in New Brunswick.
Acadian's weighted average log price for the fourth quarter increased 8% year-over-year with price increases across all products. Stronger softwood sawlog markets resulted in a 10% increase in softwood sawlog prices relative to the fourth quarter of 2012. Prices for hardwood logs in both the New Brunswick and Maine operations improved with selling prices for hardwood sawlogs increasing by 13% and prices for hardwood pulpwood climbing 6% year-over-year. Biomass markets remained stable, however, realized gross margins on this product climbed 27% year-over-year due to better salvage of material in Maine and new export markets in New Brunswick with better realized margins.
New Brunswick Timberlands
Softwood, hardwood and biomass shipments were 120 thousand m3, 110 thousand m3 and 52 thousand m3, respectively, during the fourth quarter. This represents a year-over-year increase in sales volume of 19%. Approximately 43% of sales volume was sold as sawlogs, 38% as pulpwood and 19% as biomass in the fourth quarter. This compares to 42% of sales volume sold as sawlogs, 42% as pulpwood and 16% as biomass in the fourth quarter of 2012.
Net sales for the fourth quarter totaled $16.7 million compared to $13.7 million for the same period last year, primarily due to higher sales volume and increases in selling prices across most products. The weighted average log selling price was $60.13 per m3 in the fourth quarter of 2013, a 7% increase from $56.03 per m3 in the same period of 2012 reflecting a higher proportion of spruce-fir sawlogs in the sales mix and increased prices for most log products. The decrease in other sales reflects lower operating activity on the NB Crown Lands.
Costs for the fourth quarter were $11.7 million, compared to $9.7 million in the same period in 2012. This is attributable to higher volumes sold with variable costs per m3 flat year-over-year.
Adjusted EBITDA for the fourth quarter was $5.0 million, compared to $4.0 million in the same period in 2012. Adjusted EBITDA margin increased to 30% from 29% in the prior year primarily due to improved log selling prices.
During the fourth quarter of 2013, NB Timberlands experienced one recordable incident among employees and three reportable incidents among contractors.
The U.S. housing market continues to improve with total starts in 2013 increasing 18.3% year-over-year. The strengthening U.S. economy and key indicators such as employment growth and consumer confidence suggest continuing recovery. This positive outlook is currently reflected in the plans of Acadian's key solid wood customers as they announce new capital investments, increase operating shifts and increase their requests for additional log purchases.
Our outlook for 2014 is positive. Softwood log prices continue to be very strong in Maine with this trend expected to continue throughout 2014. Markets for hardwood sawlogs are expected to remain stable while demand and pricing for hardwood pulpwood continues to be very strong. Softwood pulpwood markets are our most challenging market as supply continues to outstrip demand. Fortunately, this product represents only a very small portion of Acadian's sales and an even lower proportion of our operating earnings. Biomass markets are expected to continue to benefit from new export markets offering stable demand and pricing with modest margins.