Conifex Timber reports Q3 loss
Despite improved lumber sales Conifex Timber Inc. reported a nearly $4 million loss for the third quarter of 2012, nearly $2 million more than it reported for the same period last year.
The company reported a net loss of $3.7 million or $0.19 per share for the third quarter of 2012 compared to a net loss of $2.4 million or $0.13 per share for the second quarter of 2012, and a net loss of $2.2 million or $0.14 per share for the third quarter of 2011.
EBITDA in the third quarter of 2012 was negative $0.5 million compared to positive $0.6 million in the previous quarter and the third quarter of 2011. Consolidated EBITDA of negative $0.5 million was comprised of $1.0 million positive EBITDA from the lumber segment offset by negative EBITDA of $0.3 million from the bioenergy segment and $1.2 million from corporate costs and other items. Costs related to the bioenergy segment, and corporate costs when normalized for the effects of foreign exchange gain or loss, were consistent throughout the comparative periods.
Lumber segment EBITDA was $1.0 million for the current quarter and the third quarter of 2011 and $1.7 million for the second quarter of 2012. Inventory valuation adjustments, short-term consulting fees and gains from lumber future derivatives resulted in a net expense of $0.4 million in the current quarter compared to a net benefit of $1.5 million in the previous quarter and a net benefit of $0.5 million in the third quarter of 2011.
Lumber segment revenue totalled $54.4 million during the third quarter of 2012 compared to $55.8 million in the previous quarter. A small increase in revenue from lumber shipments despite a 4% decrease in shipment volumes was offset by a decrease in revenue from residual products and from the Company’s third party logistics business. Per unit mill net realizations increased by 9% over the previous quarter with one third of the increase attributable to a lower average export tax rate and the balance primarily attributable to the shipment of an improved sales mix. The higher value sales mix was largely attributable to improved grade outturns as a result of the capital upgrade completed during the previous quarter and a return to a more representative sawlog profile at Mackenzie.
Production volumes were approximately 102 million board feet for each of the comparative quarters and represented annualized operating rates of approximately 55%. Production volume and costs during the current and previous quarter were negatively impacted by approximately 5% by the planned maintenance and capital upgrade downtime taken at both of Conifex’s mills to focus on dust mitigation and other workplace safety initiatives. Unit conversion costs during the third quarter of 2012 increased by 5% over the previous quarter with the increase largely attributable to costs related to higher insurance premiums, ongoing dust mitigation activities and a heightened focus on training and preventative maintenance initiatives related to the recently implemented performance improvement program at Fort St. James. The implementation of the remedial program and the continued progress of the new leadership team at the mill contributed to an increase in sawmill productivity in September of 9% over the year to date average.
Conifex also announced it is in well-advanced negotiations with a significant financial institution to secure approximately $75 million in funding for its Mackenzie generation project. One alternative being pursued is to secure approximately $60 million in long-term senior secured project debt and approximately $15 million through a sale of a minority equity interest in the Mackenzie project. However, currently there can be no assurance that the company will obtain the necessary funding for the project on the foregoing terms, other terms reasonably satisfactory to it or at all.