Ainsworth reports improved Q3 results
Increased production at it three mills in the third quarter of 2012 helped Ainsworth Lumber Co. Ltd. post its best earnings since the first quarter of 2006.
“I am pleased to report that Ainsworth recorded strong financial results in the third quarter of 2012,” said Ainsworth President and Chief Operating Officer, Jim Lake. “Adjusted EBITDA for the third quarter was $37.3 million, an increase of $20.2 million compared to the prior quarter and $36.6 million compared to the same quarter last year. These were our best quarterly adjusted EBITDA results since the first quarter of 2006. The improvement in EBITDA reflects a strong pricing environment during the quarter. From an operational standpoint, all three mills ran efficiently and generated an increase in production volumes.”
Ainsworth also announced that Rick Eng has been named to the senior management team as Vice President, Finance and Chief Financial Officer.
Sales were $115.6 million in the third quarter of 2012, an increase of $43.8 million from the third quarter of 2011 due to an improvement in market prices and an increase in shipment volumes. Adjusted EBITDA for the third quarter of 2012 was $37.3 million compared to adjusted EBITDA of $0.7 million in the same quarter last year. Ainsworth recorded net income from continuing operations of $32.6 million in the third quarter of 2012, compared to a net loss of $58.9 million in the third quarter of 2011. This change is primarily the result of a $61.2 million increase in foreign exchange gain on long-term debt, a $36.5 million increase in gross profit (sales less cost of products sold (exclusive of amortization)), and a $12.5 million increase in gain on derivative financial instrument. The increase was partially offset by a $15.4 million increase in income tax expense, a $1.9 million increase in foreign exchange loss from operations, and a $0.8 million increase in interest on long-term debt.
Year to date sales of $291.2 million for 2012 were $43.8 million higher than 2011 as a result of market price increases and higher shipment volumes. Adjusted EBITDA for the nine months ended September 30, 2012 was $64.4 million compared to adjusted EBITDA of $9.8 million in the same period last year. Net income from continuing operations increased from $5.9 million in the first nine months of 2011 to $22.0 million in the first nine months of 2012. The increase resulted from a $54.1 million increase in gross profit, a $45.7 million increase in foreign exchange gain on long-term debt, and an $11.9 million increase in gain on derivative financial instrument. The increase was partially offset by a one-time gain on the High Level acquisition of $72.5 million in 2011, a $17.8 million increase in income tax expense, a $2.8 million increase in interest on long-term debt, and a $1.9 million increase in foreign exchange loss from operations.
Ainsworth believes a recovery in U.S. housing is now underway and should accelerate over the next 12 to 24 months. This will be positive for Ainsworth, notwithstanding certain idle capacity in the industry. We will be prudent in the start up of our High Level mill and will do so when we have identified a market for its production in both the North American and export markets. The High Level mill would represent a 50% increase in our current operating capacity and is a significant growth opportunity. It is one of the largest production facilities in the industry and will be an efficient producer, benefiting from an abundance of high quality, low cost fiber.