May 19, 2017 - On May 25th and 26th Forests Ontario will host its Forestry Connects educational program in Kenora, Ont., for the first time. As a non-profit organization committed to re-greening the province and beyond, Forests Ontario hosts the Forestry Connects program to provide high school students with the opportunity to visit forestry dependent communities for a behind the scenes look at forestry operations in Ontario. This year’s program is sponsored by the Sustainable Forestry Initiative (SFI) and Ontario Wood. It gives high school students a window into the forestry sector and the careers available and it promotes young people engaging with nature. During the two-day program, students will be introduced to concepts such as sustainable harvesting, tree marking, and developing forest management plans.At the end of Forestry Connects, students leave with a more accurate understanding of our province’s forestry sector, particularly how using raw materials from our forests to create valuable products is balanced with the sustainable management of these natural resources. Founded in 2010, the program connects students and teachers with foresters, forestry operators, First Nations and biologists. WHAT: Forestry Connects in Kenora, Ontario WHO: 50 high school students from Ontario and Manitoba and their teachers will interact with professionals from the forestry sector. Program support provided by SFI and Ontario Wood WHEN: May 25th, 2017 from 10:00 a.m. to 4:00 p.m. & May 26th, 2017 from 9:30 a.m. to 2:00 p.m.WHERE: Reddit, Ontario on Thursday May 25th, 2017; Kenora, Ontario on Friday May 26th About Forests OntarioForests Ontario is the voice for our forests. Working to promote a future of healthy forests sustaining healthy people, Forests Ontario is committed to the re-greening of Ontario through tree planting efforts on rural lands and in urban areas, as well as the renewal and stewardship of Ontario's forests through restoration, education and awareness. Visit www.forestsontario.ca or follow us @Forests_Ontario. About the Sustainable Forestry Initiative (SFI) SFI is a sustainability organization that stands for future forests. SFI Inc. is an independent, non-profit organization that is solely responsible for maintaining, overseeing and improving the internationally recognized SFI Program. SFI works collaboratively with conservation groups, local communities, youth, resource professionals, landowners and others who share our passion for, and commitment to, healthy forests, responsible purchasing and sustainable communities. Visit www.sfiprogram.org or follow us @sfiprogram.
May 17, 2017 - The Forest Products Association of Canada (FPAC) welcomes the new transportation legislation tabled by Transport Minister Marc Garneau Tuesday. CEO Derek Nighbor says the government understands that a more competitive and efficient transportation system is critical for Canada’s forestry dependant communities. The legislation tabled by Minister Garneau today would promote transparency, system efficiency, and strong private sector investment. Key measures would include: •New data reporting requirements for railways on rates, service and performance, to enhance system transparency; •A new mechanism, Long-Haul Interswitching, to provide captive shippers across all sectors and regions of Canada with access to a competing railway, to ensure they have options; •A definition of “adequate and suitable” rail service that confirms railways should provide shippers with the highest level of service that can reasonably be provided in the circumstances; •The ability for shippers to seek reciprocal financial penalties in their service agreements with railways, to enhance accountability; and •More accessible and timely remedies for shippers on both rates and service, to support fair negotiations “Transportation costs represent about one third of total costs for the average forest products company. When we presented our industry’s recommendations in the fall, we emphasized the need for more reliable service and competitive rates in rail, marine and trucking,” says Nighbor. “Most of our mills are in rural and northern communities and have few options on how to get products to market.” “Our sector’s relationships with our supply chain partners in rail, marine and trucking are very important to us. FPAC looks forward to working together to fully maximize the opportunities within this legislation” says Nighbor.
May 16, 2017 - Naturallia is back in from Oct. 16–19, 2017 for its fifth edition. Naturallia is a unique and major networking opportunity for Quebec, Canadian and foreign companies working in the natural resources sector. This fifth edition of Naturallia will bring together more than 300 small and medium enterprises (SMEs), as well as representatives from some 15 countries in the following sectors: • Value-added wood products and processes; • Mining goods and services; • Smart energies and related goods and services; • Advanced manufacturing and cutting-edge technologies.The Naturallia 2017 concept Upon registering for Naturallia, companies benefit from a targeted approach which promotes efficient time management. Described by some as “speed-dating for business”, one-on-one meetings between participating company representatives and other leaders and entrepreneurs are conducted based on their international trade, investment and/or business development goals, with the aim of developing lasting partnerships and alliances. Participants first fill out an online registration form. Two weeks prior to the event, each participant receives a registered business directory. Then, they can submit up to 20 requests for meetings with representatives from their companies of choice. Afterwards, “matchmaking“ software is used to pair companies and participants.Benefits• Up to fourteen qualified 30-minute interviews with companies that meet your selection criteria; • Access to international trade experts (commercial lawyers, financial institutions, insurance companies, customs brokers, transportation specialists, and more); • Participation in the opening ceremony, keynote addresses, and industry roundtables; • Numerous networking opportunities complementing the regular meeting calendar; • Simultaneous translation for all the meetings (English and French); • Industrial tours of leading companies and Plan Nord sites in Quebec; • Participation in the Naturallia 2017 gala dinner and closing ceremony; • Transportation between your hotel and the activity venues; • All meals and coffee breaks throughout the event.See more at http://naturallia2017.com/
May 12, 2017 - On May 11, the Montreal Economic Institute (MEI) presented the John Dobson Medal for Free Enterprise to Mr. Richard Garneau, president and chief executive officer of Resolute Forest Products. "We award this medal to individuals who defend free enterprise, among other things by standing up to lobby groups that attempt to undermine economic end entrepreneurial freedom. And on this count, this year's recipient is quite a fighter!" says Michel Kelly-Gagnon, president and chief executive officer of the MEI. When Greenpeace began targeting his company and his workers by claiming they "destroyed forests" and by producing multiple disinformation campaigns aimed at making them lose important customers, Richard Garneau decided to stand up to them by adopting an attitude of, in his own words, moral leadership. "If you believe you're on firm ground, you stand firm," points out Mr. Garneau. Thus, contrary to many companies in similar situations, Resolute decided to meet Greenpeace's repeated attacks head-on. And in the end, forced to justify its allegations in a court of law, the activist group finally recognized that its accusations against Resolute were "heated rhetoric" and consisted of "non-verifiable statements of subjective opinion," and should be understood as "figurative rather than literal" and not expose them to any legal responsibility. They also recognized that Resolute had caused "no loss of forest cover." Serious admissions, which unfortunately come only after years of irresponsible attacks. "For his courage, and for his commitment to his shareholders, to his employees, and to the rural families and communities for whom the responsible harvesting of the forest is a way of life, Richard Garneau embodies the type of person John Dobson would have been proud to see rewarded with a medal bearing his name. Our society needs more businesspeople willing to stand up to defend the principles and benefits of the free market," concludes Michel Kelly-Gagnon.
May 12, 2017 - Members of the North American Forest Partnership, a diverse group of individuals, companies, state agencies, the U.S. Forest Service, non-profits and professional organizations committed to the management of sustainable, healthy forests, launched a first-of-its-kind communications effort – Walk in the Woods. The effort tells the stories of the men and women who work in the forest sector in the U.S. and Canada and opens a dialogue about the important work they do as caretakers of precious forest resources. “We’re inviting those outside our sector to walk in the woods with us and learn about our work as responsible, innovative stewards of North America’s many different forests,” said Will Novy-Hildesley, executive director of the North American Forest Partnership. “Our goal is to engage those passionate about the future of our forests in an ongoing conversation and provide honest answers to the questions we know people have about what we do and why we do it.” The initiative is born from research which studied the attitudes and perceptions of North America’s forest resources. The research uncovered differences in understanding among the forest sector and the public around key topics such as deforestation, forest management and the sustainability of forest resources. “We learned that while people care deeply about forests, they often come to a conversation about what happens in them with only part of the story. This notion of a ‘Walk in the Woods’ is a way to explore the ‘why’ behind what happens in the forest and build a broader understanding for the many important roles that forests play in our everyday lives,” said Colin Moseley, chairman of the board at the North American Forest Partnership and chairman of Green Diamond Resource Company. “That’s why it’s critically important that we come together to communicate our work and the social, environmental and economic values that forests provide.” NAFP represents a diverse community with shared values and unwavering passion for the forest stewardship. NAFP members come from across the forest sector to engage in real conversations – both online and offline – that will shape the future of North America’s forests. “We have many forests. Protected ones, intensively managed ones, firs, hardwoods and pines,” said Tom Martin, chief executive officer and executive director of the American Forest Foundation. “All of them produce incredible benefits, individually and collectively, for all of us in the form of clean water, clean air, wildlife habitat, good paying rural jobs and a quiet place to reflect. Those benefits, these values, bind the forest sector.” “Now more than ever, it is important to demonstrate how choices we make today impact the future of our forests,” said Katie Fernholz, executive director at Dovetail Partners. “We’re excited about this partnership and the diverse community it includes, all of whom share a commitment to the future of forests and a shared ethic of responsible stewardship.” “When people appreciate all the benefits we receive from forests,” said Rebecca Barnard, national forestry programs manager at the National Wild Turkey Federation, “they understand the importance of keeping forests as forests. When we recognize and value the diverse benefits our forests provide, including wildlife habitat and recreational opportunities, we will wisely manage and conserve our forests for future generations.” Walk in the woods with us by visiting www.walkinthewoodswith.us, and following Walk In the Woods on Facebookand Twitter.
May 11, 2017 - Although sometimes the forest sector still seems like a man’s world, there have been powerful and inspiring women paving the way for several decades, and there is room for more. Women in Wood (WIW) was started in 2015 as a way of bringing together women in the forest, office, woodshop and elsewhere in the sector, to learn from each other. Women in Wood officially started with the creation of a private Facebook group. We had joked about starting an official “club” for women in forestry for a few years before this, since we identified ourselves as a minority when we met up at forestry events. Our group was meant to grow connections with other women in the forest sector in Ontario, foster relationships, seek advice and share experiences. Over the past two years, this network has grown to be Canada-wide with almost 200 members, and certainly surpassed our expectations of the benefits to be gained from building a community. We are so encouraged to see the members of the group initiating discussions, meeting mentors, sharing employment opportunities and organizing activities in their areas. Womeninwood.ca was launched in February of this year, around the same time as we started a Twitter account. With these developments, we defined some objectives for WIW: build a community of women who work in, with and for the woods; encourage women to pursue careers in the forest, wood and related sectors; and help Women in Wood succeed in their career goals by collaborating for success, sharing information, improving skills and navigating the workplace. We hope to achieve these objectives by continuing to grow our network and encourage mentoring, using social media as an outreach opportunity to women considering a career in the forest sector, and by hosting events that focus on skills and information women in the sector identify as needing. But why are we doing all this? It’s no secret that there’s a gender imbalance in the forest sector. There is impressive enrollment by women in many forest-related programs, yet recent research shows that women only have an 18.4 per cent share of the forestry and logging industry in Canada (see the WIW blog for more). These statistics are similar in other forest related fields such as woodworking. The ratio of women around the table at the management, corporate and board level is even more dismal. We believe the forest sector is an amazing place to make a career for yourself – no matter your gender. The forestry community we are honoured to be surrounded by in our day jobs is like no other: passionate people carefully managing and sustainably utilizing our only renewable, natural resource. Given the looming workforce shortage, there will be plenty of upcoming opportunities to be excited about. We hope to encourage more women to join us, and help each other succeed. You can help with this! Identify women in your workplace and take the time to teach them the skills they need to be on equal footing as their male co-workers. Well-meaning mentors often encourage women to emphasize their soft skills, which leaves them lagging behind in business, financial and the technical know-how they need to advance in their careers. Encourage them to be confident, but give them a leg-up in becoming knowledgeable enough to be. If you are a woman reading this article, please join our network, and reach out on how you can get involved: by planning an event, writing a guest blog post, or mentoring a WIW new to the sector. Share a photo on social media of you in your element and tag with #womeninwood to inspire other WIW across the county. If you see potential for your company to increase diversity in your workforce, drop us a line. We are looking for partners and supporters to help us spread the word that there is a place for everyone in Canada’s forest sector. Lacey Rose, RP, and Jessica Kaknevicius, MFC, are the women behind www.womeninwood.ca
May 16, 2017 - Conifex Timber Inc. has reported results for the first quarter ended March 31, 2017. Adjusted EBITDA* in the first quarter of 2017 was $6.1 million, compared to $9.3 million in the fourth quarter of 2016 and $6.8 million in the first quarter of 2016. Compared to the previous quarter, lumber segment adjusted EBITDA declined by $1.0 million and bioenergy segment adjusted EBITDA by $1.6 million. Compared to the first quarter of 2016, lumber segment adjusted EBITDA improved by $0.6 million and bioenergy segment adjusted EBITDA declined by $1.4 million. Selected financial and operating highlights for each of the comparison periods are provided below. Q1 Q4 Q1 2017 2016 2016 Financial Highlights (millions of dollars except share and per share amounts and as otherwise noted) Sales - lumber segment $ 93.5 $ 94.4 $ 91.8 Sales - bioenergy segment 6.8 7.6 7.7 $ 100.3 $ 102.0 $ 99.5 Adjusted EBITDA $ 6.1 $ 9.3 $ 6.8 Operating income $ 1.5 $ 6.7 $ 3.0 Net income (loss) $ (1.4 ) $ 5.1 $ 28.5 Net income (loss) per share - basic $ (0.06 ) $ 0.24 $ 1.35 Net income (loss) per share - basic and diluted(1) $ (0.06 ) $ 0.24 $ 1.24 Shares outstanding - weighted average (millions) 22.5 21.2 21.1 Operating Highlights Lumber production (MMfbm) 123.7 118.7 135.8 Lumber shipments - Conifex produced (MMfbm) 110.7 124.4 127.0 Lumber shipments - wholesale (MMfbm) 41.0 40.5 40.7 Electricity production (GWh) 46.3 53.0 54.9 Average exchange rate - US$/Cdn$(2) 0.756 0.750 0.727 Average WSPF 2x4 #2&Btr lumber price (US$)(3) $ 345 $ 316 $ 272 Reconciliation of adjusted EBITDA to Net Income (Loss) Net income (loss) $ (1.4 ) $ 5.1 $ 28.5 Add: Finance costs $ 2.6 $ 2.1 $ 2.5 Amortization $ 4.9 $ 4.6 $ 4.8 EBITDA(4) $ 6.1 $ 11.8 $ 35.8 Less: Gain on sale of asset $ - $ - $ (29.0 ) Less: Net proceeds from insurance settlement $ - $ (2.5 ) $ - Adjusted EBITDA* $ 6.1 $ 9.3 $ 6.8 Notes: (1) Diluted net income per share excludes the assumed conversion of convertible notes and/or the exercise of warrants if the effect on net income per share is anti-dilutive. (2) Source: Bank of Canada, www.bankofcanada.ca. (3) Source: Random Lengths Publications Inc. (4) The Company's EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization. *Adjusted EBITDA is calculated to exclude unusual items or items that are not ongoing and do not reflect ongoing operations of the Company. The Company's adjusted EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization, and gains or losses from asset sales, disposals or revaluation and the net proceeds from our business interruption insurance claim settlement. The Company discloses EBITDA, adjusted EBITDA and adjusted EBITDA margin as they are measures used by analysts and by Conifex's management to evaluate the Company's performance. As EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures, it may not be comparable to EBITDA, adjusted EBITDA and adjusted EBITDA margin calculated by others and is not a substitute for net earnings. Overview Revenues of $100.3 million in the first quarter of 2017 were generally consistent with the comparative quarters. First quarter lumber segment operating income of $1.8 million represented a decline of $1.1 million from the prior quarter and an improvement of $0.6 million over the first quarter of 2016. The bioenergy segment contributed operating earnings of $1.3 million in the current quarter compared to $5.2 million in the previous quarter and $2.6 million in the same quarter last year. Bioenergy segment operating income for the previous quarter included net proceeds of $2.5 million from the settlement of a business interruption insurance claim. Corporate costs of $1.6 million were similar to the prior quarter and increased by $0.8 million over the first quarter of 2016, during which we recorded a positive adjustment related to compensation related provisions. Excluding the gain from the net proceeds of the insurance settlement in 2016, operating earnings were $1.5 million for the current quarter compared to $4.2 million in the previous quarter and $3.0 million in the first quarter of 2016. Net loss for the first quarter of 2017 was $1.4 million, or $0.06 per basic share, compared to net income of $5.1 million or $0.24 per basic and diluted share in the previous quarter and net income of $28.5 million or $1.35 per basic and $1.24 diluted share in the first quarter of 2016. Net income for the first quarter of 2016 included a net gain on the sale of assets of $29.0 million resulting from the redemption of our outstanding payment-in-kind note. Excluding this unusual item and the aforementioned gain on settlement of the insurance claim, normalized net income was $2.6 million in the previous quarter and net loss was $0.5 million in the first quarter of 2016. Lumber Segment Lumber segment adjusted EBITDA was $5.1 million in the first quarter of 2017 compared to $6.1 million in the previous quarter and $4.5 million in the first quarter of 2016. Prices for the bell-weather WSPF #2 & Btr product averaged US$345 during the first quarter of 2017, an improvement of 9% over the previous quarter and 27% over the first quarter of 2016.(1) The Canadian dollar strengthened against the U.S. dollar during the first quarter of 2017 and averaged US$0.756, an appreciation of 1% over the previous quarter and 4% over the same quarter last year.(2) Revenue from Conifex produced lumber was $56.7 million in the first quarter of 2017. The decline of 8% from the previous quarter was mostly attributable to 11% lower shipment volumes which were somewhat offset by an improvement in sales realizations. Lumber shipments were hampered by lower production volumes and challenging weather conditions which constrained availability of railcars and trucks in Western Canada. The gain in sales realizations generally reflected stronger benchmark lumber prices. Lumber revenues were relatively flat compared to the same quarter last year as an improvement in sales realizations of 14% was largely offset by lower shipment volumes. The higher sales realizations in the most recent quarter were due primarily to stronger benchmark prices which were somewhat offset by a stronger Canadian currency. The increase in wholesale lumber revenues of approximately 14% over the comparative quarters was largely attributable to gains in sales realizations as shipment volumes were similar in each quarter. The improvement in sales realization is attributable to higher lumber prices and favorable variation in product mix. Lumber production totalled 124 million board feet during the first quarter of 2017 and represented an annualized operating rate of 94% compared to 90% in the previous quarter and 103% in the same quarter last year. Production in the first quarter of 2017 and the previous quarter was reduced by planned downtime taken in late December at the Mackenzie sawmill for an upgrade of the log line, and the completion and ramp up of the new log line in the current quarter and to a lesser extent, was hampered by inclement weather conditions. Unit log costs increased by 4% over the previous quarter and 15% over the same quarter last year. The higher log costs were mainly attributable to higher market based stumpage and purchased log costs. Unit cash conversion costs increased by 6% from the previous quarter as the benefits of an improved operating rate were more than offset by higher energy, labour and weather related maintenance costs. An increase in unit cash conversion costs of 17% over the first quarter of 2016 was due primarily to lower operating rates and higher energy costs. The lumber segment recorded operating income of $1.8 million in the first quarter of 2017 compared to $2.9 million in the previous quarter and $1.2 million in the first quarter of 2016. Compared to the previous quarter, lumber segment operating results were impeded by lower shipment volumes and higher unit manufacturing costs which outweighed the benefit of improved sales realizations from higher benchmark lumber prices. Compared to the first quarter of 2016, current quarter operating results were adversely impacted by higher unit manufacturing costs and lower revenues from residual sales. The impact of revenues from Conifex produced lumber were neutral as improved sales realizations largely offset the impact of lower shipment volumes. (1) As quoted in Random Lengths Publications Inc. (2) Source: Bank of Canada, www.bankofcanada.ca Bioenergy Segment Our power generation plant (the "Mackenzie Plant") sold 46.3 gigawatt hours of electricity under our Electricity Purchase Agreement with BC Hydro ("EPA") and operated at approximately 85% of targeted operating rates in the first quarter of 2017, compared to 97% in the previous quarter and 100% in the first quarter of 2016. Electricity sales and plant operating costs in the first quarter of 2017 were adversely impacted by several unplanned outages and challenging weather conditions earlier in the quarter, which impacted feedstock quality and deliverability. The unplanned outages contributed to increased maintenance related expenses, including the use of outside service contractors. Electricity revenues were lower by $0.8 million compared to the previous quarter and $0.9 million compared to the first quarter of 2016, and cash operating costs were higher by $0.8 million and $0.5 million, respectively. Bioenergy segment adjusted EBITDA was lower by $1.6 million compared to the previous quarter and $1.4 million compared to the same quarter last year and reflected adjusted EBITDA margin of 41% compared to approximately 56% in the comparative quarters. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of sales. Dispatch Notice The EPA, similar to other electricity purchase agreements, provides BC Hydro with the option to "turn down" electricity purchased from independent power producers during periods of low demand by issuing a "dispatch order" outlining the requested dispatch period. In April 2017, BC Hydro issued a dispatch order with respect to, among others, the Plant advising of a dispatch period of 122 days, encompassing the months of April, June, July and August. Last year, the Mackenzie Plant, among others, was dispatched for 61 days in the second quarter. During the dispatch period, we will only produce electricity to fulfill volume commitments under our Load Displacement Agreement with BC Hydro. We will continue to be paid revenues based upon a reduced rate and on volumes that are generally reflective of contracted amounts. Although the dispatch period is similar to the dispatch period in the same quarter of 2016, we expect year-over-year operating results to be somewhat lower in the second quarter of 2017 due to planned maintenance days. We expect an improvement in year-over-year operating results in the third quarter of 2017, as operating results in the third quarter of last year were hampered by maintenance downtime. The Mackenzie Plant achieved average hourly production of 105% of our operating target over the first twelve months of commercial operations. We expect the improvements to be made during the planned maintenance days in June 2017 will result in operating rates approaching historic levels. Commenting on our first quarter results, Conifex's President and Chief Executive Officer, Ken Shields, said, "Our first quarter of 2017 results do not reflect normal ongoing operations. Our results were held back by a major capital project installation and ramp up which reduced lumber production and shipments, and reduced the availability of quality feedstock for our power generation business. Power generation and lumber production targets are being achieved in the second quarter." Liquidity and Capital Resources Our net debt to capitalization ratio was 41% at March 31, 2017 compared to 38% at December 31, 2016. Net debt at March 31, 2017 was $131.6 million, an increase of $22.8 million from December 31, 2016. The quarter over quarter increase was due primarily to a seasonal increase in non-cash working capital of $14.4 million and capital expenditures related to the El Dorado Mill, partially offset by net proceeds from our early financings completed in the quarter. Excluding the effects of borrowings by our subsidiary, Conifex Power Limited Partnership, which are non-recourse to our other operations, the net debt to capitalization ratio was 24% compared to 16% at December 31, 2016. In January, 2017, we completed the $130 million secured revolving credit facility (the "Credit Facility") with a syndicate of institutional lenders. The Credit Facility is available for a term of 5 years and is secured by substantially all of our assets, other than our bioenergy segment assets. The Credit Facility bears interest at CDOR or LIBOR plus a margin of between 2.5% and 3.0%, depending upon our leverage ratio. The Credit Facility provides for calculation of availability on an expanded borrowing base, relative to our previous lumber segment revolving credit facilities, which enhances liquidity. Total liquidity was $61.6 million at March 31, 2017 compared to $22.2 million at December 31, 2016. Market Outlook Through the remainder of 2017, we expect benchmark lumber prices for Western SPF to average approximately 10% higher than the levels achieved in the first quarter of 2017. We expect the imposition of duties on U.S. lumber shipments will lead to greater volatility in pricing and erode a portion of the increase in mill nets resulting from higher prices. We expect prices on the premium grade and lower grade products shipped to Japan and China, respectively, will be primarily determined by traditional supply and demand factors and will not be materially impacted by duties imposed by the U.S. We expect demand and pricing to continue to remain solid in the Japanese and Chinese markets through the balance of the year. We expect our mill net price realizations from the sale of construction grade lumber to the Canadian and other non-U.S. markets will be somewhat discounted as a result of the duty impositions on U.S. exports. In the lumber segment, we expect a sequential improvement in lumber shipments as weather related transportation delays are largely alleviated and lumber inventories return to normalized levels. We expect higher operating rates for the balance of the year due to the completion in the current quarter of the ramp up phase of the new log line at Mackenzie and improved weather conditions. We expect productivity gains to result in lower quarter-over-quarter unit conversion costs. Overall in 2017, we expect higher log costs and modest improvements in unit cash conversion costs and grade outturns. El Dorado Mill Capital Project Upon completion of the Credit Facility in January 2017, we commenced the construction phase of our capital project to modernize and re-start our El Dorado Mill (the "Project"). Upon completion, the Project is planned to incorporate significant capital upgrades to the log processing yard and sawmill and planer and add two continuous dry kilns. The Project has been designed to maximize both log recovery and lumber grade yield and quality. Upon completion, the El Dorado Mill is expected to have approximately 180 million board feet of annual lumber capacity on a two-shift basis. We expect to complete the Project by or about the end of the third quarter or early in the fourth quarter of this year. We currently estimate that the Project will require capital expenditures of approximately US$50 million, consisting of approximately US$27 million for equipment and materials, US$16 million in subcontract costs and US$7 million for indirect costs, including engineering, construction management, freight and project contingency. At March 31, 2017, approximately 57% of budgeted expenditures had been committed. The Project is currently within management's budgeted amounts and progressing as scheduled.
May 12, 2017 - Fortress Paper Ltd. ("Fortress Paper" or the "Company") reported 2017 first quarter operating EBITDA of $7.5 million, an increase of $6.4 million relative to the comparative prior year period and an increase of $1.1 million over the previous quarter. The Dissolving Pulp Segment generated operating EBITDA of $8.3 million and the Security Paper Products Segment generated operating EBITDA of $1.5 million. Corporate costs included in operating EBITDA were $2.3 million. Yvon Pelletier, chief executive officer, commented: "Management is pleased to report one of the best consolidated quarterly operating EBITDA results since the restart of our Fortress Specialty Cellulose mill as a dissolving pulp mill. We are particularly pleased to have been able to achieve this result during one of our seasonally slower winter quarters. Contributing to this positive result were stabilized results in our Security Paper Products Segment as well as increased uptime and improved production at our dissolving pulp operation. Management continues to have a positive outlook for the 2017 fiscal year with material improvement in consolidated operating EBITDA." First Quarter 2017 Results by Segment Dissolving Pulp Segment operating EBITDA was $8.3 million for the first quarter of 2017, representing an increase of $7.0 million over the prior year comparative period and an increase of $1.6 million when compared to the fourth quarter of 2016. The results of the first quarter of 2017 were positively impacted by improvements in production rates and quality, particularly during the normally slower winter season, as well as better pricing relative to the prior year comparative period. Improved operations, increased uptime and the resolution of a technical issue also positively impacted power generation and cogeneration revenue. Production rates per operating day in the quarter improved by 4.3% relative to the prior year comparative period and 7.6% compared to the previous quarter. The Fortress Specialty Cellulose mill ("FSC") produced 37,102 air dried metric tonnes ("ADMT") of dissolving pulp in the first quarter of 2017, significantly higher than the prior year comparative period and the previous quarter as both comparative periods were impacted by shut downs. The Company sold 37,833 ADMT of dissolving pulp in the first quarter of 2017, an increase of 19.1% and 22.2% from the previous year comparative period and the previous quarter, respectively. Costs per ADMT in the quarter were $945 which, although above medium and long term goals, compare favorably to costs of $1,033 per ADMT in the prior year comparative period primarily due to improved uptime. Ongoing initiatives to reduce operational costs are focused primarily in the following areas: productivity improvement, reducing fuel consumption, increasing power generation, and chemical cost optimization. Separately, the fifth digester project is scheduled to be completed in the first quarter of 2018. Security Paper Products Segment operating EBITDA was $1.5 million for the first quarter of 2017, representing a decrease of $0.3 million compared to the prior year comparative period and a decrease of $0.1 million compared to the fourth quarter of 2016. Quarterly rent of approximately $0.9 million has been incurred since the sale and leaseback of the land and buildings transaction closed in July 2016. Adjusting for rent, the first quarter of 2017 compares favourably to the prior year comparative quarter. The Landqart mill continues to implement new initiatives to improve efficiencies and profitability. The build-out and installation of the second finishing machine, scheduled to be operational in the third quarter of 2017, is expected to de-bottle-neck the mill and provide more production flexibility. The Landqart mill sold 2,836 tonnes of security paper in the first quarter of 2017, compared to 2,474 tonnes in the fourth quarter of 2016 and 2,655 in the prior year comparative period. Results in the first quarter of 2017 were impacted primarily by product mix. Management's Outlook Dissolving Pulp Segment Despite some seasonal weakness, dissolving pulp and viscose staple fibre ("VSF") prices have increased by US$20 per tonne and US$334 per tonne, respectively, when compared to this time last year. Management continues to believe that demand is positive and growing, and expects full year 2017 pricing to compare favorably to full year 2016 pricing. Assuming stable pricing and exchange rates, operating results for the Dissolving Pulp Segment are anticipated to be materially higher in the second quarter relative to the prior year comparative period. Management continues to focus on positioning the FSC mill further down the global cost curve. The Lean Six Sigma program, implemented at the mill, is expected to continue to drive production costs down with a number of active projects showing positive signals. Security Paper Products Segment The Landqart mill continues to build on a strong order book for 2017 and 2018 comprised of a mix of new and repeat orders including for Durasafe®. Operating EBITDA at the Landqart mill for the quarter ended March 31, 2017 was comparable to the fourth quarter of 2016, which is in line with management expectations. Operating EBITDA in the second quarter is expected to be similar when compared to the first quarter with improved results anticipated in the second half of the year, assuming expectations relating to improved product mix and cost reduction initiatives. Based on multiple Durasafe® trials being conducted at various stages, management continues to anticipate additional orders in the near, medium and long term. Corporate and Cash Corporate expenses in the fourth quarter increased by $0.4 million compared to the previous quarter to $2.3 million. In the short term, corporate quarterly expenses are expected to be modestly lower. Cash and restricted cash ended the first quarter at $57.8 million, up from $37.1 million at the 2016 fiscal year end. Management anticipates that the cash balance, excluding any potential new growth initiatives, will continue to build in 2017 both from operations as well as assuming the positive outcome of pursuing opportunities to reduce working capital. Management remains pleased with this increased liquidity profile and believes that cash on hand and anticipated cash generated from operations and other initiatives will be sufficient to meet all debt obligations and to contribute to future business growth initiatives. For a summary of significant developments please refer to the Management's Discussion and Analysis for the three month period ended March 31, 2017 (available on SEDAR at www.sedar.com). Selected Financial Information The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the Company's unaudited condensed consolidated financial statements as at and for the three month period ended March 31, 2017 and the related notes thereto and Management's Discussion and Analysis, which are available on SEDAR. Reference is made in this news release to operating EBITDA (defined as net income before interest, income taxes, depreciation, amortization, non-operating income and expenses and stock-based compensation), which the Company considers to be an indicative measure of operating performance and a metric to evaluate profitability. Operating EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to net loss or cash flows as determined in accordance with IFRS. As there is no standardized method of calculating this measure, the Company's operating EBITDA may not be directly comparable with similarly titled measures used by other companies. Reconciliation of operating EBITDA to net loss reported in accordance with IFRS is included below. Selected Financial Information and Statistics (thousands of dollars, except shipments, unaudited) Q1 2017 Q4 2016 Q1 2016 Sales 92,460 80,863 80,012 Operating EBITDA(1) 7,489 6,352 1,055 Net loss (2,745 ) (7,274 ) (13,041 ) Adjusted net loss (2,999 ) (6,980 ) (12,189 ) Paper shipments (tonnes) 2,836 2,474 2,655 Pulp shipments (ADMT) 37,833 30,962 31,762 (1) See Net Loss to Operating EBITDA Reconciliation. Financial Reconciliations Net Loss to Operating EBITDA Reconciliation: (thousands of dollars, unaudited) Q1 2017 Q4 2016 Q1 2016 Net loss (2,745 ) (7,274 ) (13,041 ) Income tax expense 21 (44 ) 5 Foreign exchange (gain) loss (254 ) 294 852 Net finance expense 1,846 4,706 5,179 Amortization 8,522 8,518 7,882 (Gain) loss on financial instruments (26 ) 78 137 Stock-based compensation 125 74 41 Operating EBITDA 7,489 6,352 1,055
May 8, 2017 - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today reported a net loss for the quarter ended March 31, 2017, of $47 million, or $0.52 per share, compared to a net loss of $8 million, or $0.09 per share, in the same period in 2016. Sales were $872 million in the quarter, down $5 million, or 1%, from the first quarter of 2016. Excluding special items, the company reported a net loss of $30 million, or $0.33 per share, compared to a net loss, excluding special items, of $22 million, or $0.25 per share, in the first quarter of 2016. "While we continued to face strong headwinds in our paper businesses this quarter, our three other segments (pulp, tissue and wood products) recorded stronger results than in the fourth quarter," said Richard Garneau, president and chief executive officer. "We saw key achievements in the quarter, particularly in our tissue segment. Our Calhoun tissue machine started-up one month ahead of schedule in structured mode, a first for this technology which allowed us to manufacture premium products right from the start. Those achievements were overshadowed by the imposition of countervailing duties on our softwood lumber exports from Canada to the United States. We firmly believe that central Canadian forestry regimes are market-based and we should expect nothing less than unencumbered and free access to the U.S. lumber market." Non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are explained and reconciled below. Operating Income Variance Against Prior Period Consolidated The company recorded an operating loss of $6 million in the quarter, compared to an operating loss of $18 million in the fourth quarter of 2016. Compared to the same period, adjusted EBITDA declined by $2 million, to $61 million. The company's operating results were positively impacted by a reduction in maintenance expenses mostly associated with reduced repairs when compared to the last quarter of 2016, as well as an overall increase in product pricing. Those improvements were offset by adjustments to selling, general and administrative expenses, seasonally higher energy costs and reductions in volumes, mainly newsprint. As more fully described below, in the quarter the company changed its presentation of pension and OPEB costs to present the amortization of prior service credits component as a special item adjustment used in its non-GAAP performance measures, including adjusted EBITDA. As such, adjusted EBITDA in the first quarter of 2017 would have been $65 million without this change, compared to the $67 million previously disclosed for the fourth quarter of 2016. The amortization of prior service credits component of pension and OPEB costs is now allocated solely to "corporate and other" in its segment presentation of operating income. Market Pulp Operating income in the market pulp segment was $7 million, $3 million more than the fourth quarter of the prior year. After falling during the fourth quarter of 2016, our realized pricing gradually increased during the quarter reaching an average of $593 per metric ton. Shipments to third parties fell by 15,000 metric tons compared to the fourth quarter, partly due to the planned annual outage at Catawba (South Carolina) at the end of March. The operating cost per unit (the "delivered cost"), was down by $4 per metric ton, falling to $575 per metric ton, resulting mostly from lower maintenance spending due to reduced repairs. EBITDA per unit was $42 per metric ton compared to $35 per metric ton in the fourth quarter of 2016. Finished goods inventory increased by 1,000 metric tons to 92,000 metric tons. Tissue Our tissue segment reported a break-even position on operating income. The overall transaction price declined by $130 per short ton, as shipments of parent rolls rose by 2,000 short tons. The delivered cost increased by $68 per short ton, due to a favorable depreciation and amortization adjustment in the last quarter of 2016. EBITDA per unit increased to $71 per short ton, reaching $1 million for the segment. Finished goods inventory rose by 3,000 short tons to 8,000 short tons due to the start-up of the Calhoun (Tennessee) tissue machine. Wood Products The wood products segment recorded operating income of $20 million for the quarter, an improvement of $3 million against the previous quarter. Shipments rose, reaching 505 million board feet, despite adverse weather conditions causing logistical challenges during the quarter. Supported by better U.S. housing starts and market expectations on softwood lumber duties, the average transaction price rose by $23 per thousand board feet to $350. The delivered cost increased to $310 per thousand board feet, resulting from higher log costs and production curtailments. EBITDA for the segment was $29 million, a $4 million increase compared to the previous quarter and equivalent to $57 per thousand board feet, an increase of $7 per thousand board feet. Finished goods inventory rose by 19% to 147 million board feet, mostly as a result of this year's challenging winter conditions and market volatility caused by the anticipated U.S. trade barriers. Newsprint The newsprint segment incurred an operating loss of $4 million in the quarter, compared to operating income of $1 million in the fourth quarter of 2016. Pricing for our products fell only marginally to $510 per metric ton, pressured by continued weaknesses in export markets. Shipments decreased by 50,000 metric tons, resulting from the combination of the indefinite idling of our paper mill in Thorold (Ontario) and the permanent closure of our newsprint mill in Mokpo (South Korea) as well as continued structural demand decline. The delivered cost in the segment rose by $6 per metric ton compared to the previous quarter. This was mostly as a result of lower volumes and higher distribution and energy costs, which were partially offset by lower maintenance and a reduction in fixed costs. EBITDA was $12 million for the quarter, equivalent to $27 per metric ton, compared to $39 in the previous quarter. Finished goods inventory was substantially unchanged from the end of the fourth quarter at 107,000 metric tons. Specialty Papers Operating income in the specialty papers segment was $4 million in the first quarter, up by $1 million from the fourth quarter of 2016. The average transaction price was lower by $6 per short ton, mainly due to demand decreases in supercalendered and coated grades. Despite continuing structural market weakness, shipments increased by 9,000 short tons compared to the fourth quarter of 2016, rising to 364,000 short tons. The delivered cost in the quarter improved by $11 per short ton, supported by lower maintenance and chemical costs, partially offset by seasonally higher steam costs. EBITDA for the segment reached $16 million in the quarter, equivalent to $44 per short ton, up from $39 per short ton for the last quarter of 2016. Finished goods inventory rose to 100,000 short tons, a 9% increase compared to the fourth quarter of 2016. Consolidated Quarterly Operating Income Variance Against Year-Ago Period The company recorded an operating loss of $6 million for the first quarter, compared to a break-even position in the first quarter of 2016. The difference is mostly explained by closure costs associated with our newsprint mill in Mokpo, start-up costs related to the Calhoun tissue facility and the unfavorable impact of the stronger Canadian dollar. These elements were partially offset by improved pricing and reduced manufacturing costs, particularly due to our asset optimization initiatives. Gains of $17 million in pricing, excluding impact from foreign exchange, are mostly the result of increases in our wood products and newsprint segments, which rose by 14% and 3% respectively. On the other hand, the average transaction price for tissue fell by 7%, specialty papers by 3%, and market pulp by 1%. Changes in sales volumes had a minimal impact on results. Strong improvements in wood products shipments, which recorded an increase of 115 million board feet compared to the first quarter of 2016, were offset by declines in newsprint (15%), specialty papers (7%), and tissue (7%), while market pulp was substantially unchanged. Corporate and Finance The company invested $69 million in fixed assets during the quarter, $51 million of which was spent on the Calhoun tissue project. We anticipate that the total project cost will be about $295 million. A net amount of $118 million was drawn on our revolving credit facilities primarily to support the completion of the tissue project and an increase in inventories in our wood products segment. Total liquidity remained healthy at $380 million. In the first quarter of 2017, we changed our presentation of segment operating income to reallocate the amortization of prior service credits component of pension and OPEB costs from the reportable segments to "corporate and other". Current service costs will continue to be allocated to the reportable segments. The company now also treats the amortization of prior service credits component of pension and OPEB costs as a special item to be adjusted for purposes of establishing its non-GAAP performance measures, such as adjusted EBITDA and adjustments to earnings for special items. The change was applied retroactively to comparative financial information, including the information presented in this earnings release. During the first quarter, the company reached an agreement with the province of Ontario with respect to capacity reduction contributions under that province's special funding relief regulations. We are no longer required to make any further contributions in respect of capacity reductions that occurred after April 15, 2014. Consequently, contributions to the affected pension plans will be lower by approximately $12 million in 2017 and $6 million in 2018. In addition, estimated contributions to our Quebec pension plans from 2017 to 2020 are expected to be lower than previously disclosed by approximately $30 million, including $6 million for this year, based on the exchange rate in effect on March 31, 2017. Outlook Mr. Garneau added: "As our long-term strategy continues to unfold, we expect to gradually increase the relative contribution of our pulp, tissue and lumber segments to our overall results. However, we will continue to position our network to compete effectively. We believe that upward trends in pulp pricing will continue until at least mid-year, and possibly into the second half given the residual impact of already announced increases, including those of May. In wood products, we expect steady increases in housing starts for the foreseeable future. However, we anticipate short-term volatility in the market caused by U.S. trade barriers. In tissue, the key to our success will be in our marketing and sales efforts. We can now offer a full complement of our integrated tissue and towel products. We believe that customers will be increasingly receptive to our offering."
May 8, 2017 - Stella-Jones Inc. (TSX:SJ) ("Stella-Jones" or the "Company") has announced financial results for its first quarter ended March 31, 2017. "As anticipated, results for the first quarter of 2017 reflected both lower sales volume and weaker pricing in the railway tie category. Utility poles showed improved performance, reflecting sales synergies directly related to Stella-Jones' expansion in the southeastern United States over the past two years. During the quarter, our new treating facility in Cameron, Wisconsin became fully operational, providing us with additional capacity to service the utility pole market," said Brian McManus, President and Chief Executive Officer. Financial highlights Quarters ended March 31, (in millions of Canadian dollars, except per share data) 2017 2016 Sales 396.9 421.0 Operating income 40.8 54.6 Net income for the period 25.9 35.0 Per share - basic and diluted ($) 0.37 0.51 Weighted average shares outstanding (basic, in '000s) 69,306 69,138 FIRST QUARTER RESULTS Sales reached $396.9 million, versus $421.0 million last year. Acquisitions contributed sales of approximately $22.8 million, while the conversion effect from fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, versus the U.S. dollar, had a negative impact of $11.3 million on the value of U.S. dollar denominated sales. Excluding these factors, sales decreased approximately $35.5 million, or 8.4%. Railway tie sales amounted to $158.5 million, compared with sales of $200.3 million in last year's first quarter. Excluding the conversion effect, railway tie sales decreased approximately $35.9 million, or 17.9%, primarily as a result of lower year-over-year industry demand and lower pricing. Last year's railway tie sales also benefitted from the timing of deliveries that had been pushed from the fourth quarter of 2015 into the first quarter of 2016 by certain customers. Utility pole sales reached $151.0 million in the first quarter of 2017, representing an increase of 14.5% over sales of $131.8 million a year ago. Excluding the contribution from acquisitions and the currency conversion effect, sales increased approximately $1.0 million, reflecting sales synergies from acquisitions in the southeastern United States concluded in 2015 and 2016. Sales in the residential lumber category totalled $38.6 million, versus $41.9 million a year earlier. The variation mainly reflects unfavourable weather conditions earlier this year compared to last in the northwestern United States, the Company's main U. S. customer base. Industrial product sales reached $21.9 million, compared with $26.7 million a year ago. Excluding the contribution from acquisitions and the currency conversion effect, sales decreased 18.5%, mainly due to the timing of orders for rail-related products in the United States. Logs and lumber sales amounted to $26.9 million, versus $20.2 million in the first quarter of last year. The variation reflects the timing of lumber purchase and resale activities as well as the timing of timber harvesting. Operating income stood at $40.8 million, or 10.3% of sales, compared with $54.6 million, or 13.0% of sales in the first quarter of the previous year. The decrease in absolute dollars essentially reflects lower business activity, as explained above, and the effect of currency translation, partially offset by the contribution from acquisitions. The decrease as a percentage of sales reflects lower business activity, weaker pricing for railway ties and a less favourable geographical mix in the utility pole category. Net income for the first quarter of 2017 was $25.9 million, or $0.37 per diluted share, down from $35.0 million, or $0.51 per diluted share, in the first quarter of 2016. SOLID FINANCIAL POSITION As at March 31, 2017, the Company's long-term debt, including the current portion, stood at $698.5 million compared with $694.4 million three months earlier. The increase mainly reflects higher working capital requirements, as per normal seasonal demand patterns, partially offset by the effect of local currency translation on U.S. dollar denominated long-term debt. As at March 31, 2017, Stella-Jones' total debt to total capitalization ratio of 0.40:1 was stable compared with three months earlier. QUARTERLY DIVIDEND OF $0.11 PER SHARE On May 3, 2017, the Board of Directors declared a quarterly dividend of $0.11 per common share, payable on June 27, 2017 to shareholders of record at the close of business on June 5, 2017. OUTLOOK "Given first-quarter results, we continue to expect sales to be weaker in the first half of 2017 when compared to 2016, with an expected year-over-year increase in the second half of the year. Over the short term, operating margins will remain affected by lower railway tie selling prices and a less favourable geographical sales mix for utility poles. The Company is taking the necessary steps to adjust production levels, maximize operating efficiencies and minimize costs throughout the organization. We will also continue to study any expansion opportunity that offers strategic value in our main product categories. This strategy has helped Stella-Jones become a consistent force in its industry, while steadily enhancing shareholder value," concluded Mr. McManus.
May 8, 2017 - As previously reported, Western Forest Products Inc. (TSX:WEF) ("Western" or the "Company") suffered a tragic loss on April 20 when five employees were injured, three fatally, during a rail incident at our TFL 37 Englewood Operation near Woss, British Columbia. "I would like to express our deepest concerns and condolences to the families, friends and coworkers affected by this tragedy. Our focus at this time remains on caring for the families impacted by this loss and providing support to help employees, their family members and the community cope during this extremely difficult time. The well-being and safety of our employees is of paramount importance," said Don Demens, President and Chief Executive Officer. "I would like to thank the emergency responders throughout northern Vancouver Island that responded to the incident. We are humbled by the support we have received from them, the community and the industry." Western reported adjusted EBITDA of $34.0 million in the first quarter of 2017, compared to adjusted EBITDA of $35.7 million in the first quarter of 2016, and $33.8 million reported in the fourth quarter of 2016. Accelerating log and lumber pricing largely offset the impacts of poor coastal winter weather which drove higher costs for timberlands and manufacturing. Improved average price realizations for log and lumber of 16% and 8%, respectively, were supported by strong specialty log and lumber markets, constrained supply and the continued gradual improvement in lumber demand, as compared to the same quarter of 2016. The Company successfully grew revenue to $287.7 million in the first quarter of 2017, as compared to $269.8 million in the first quarter of 2016, and $293.0 million in the fourth quarter of 2016. Growing demand and accelerating pricing for the Company's log and lumber products as compared to the same quarter last year, drove the Company's first quarter revenue growth. Q1 2017 HIGHLIGHTS Delivered adjusted EBITDA of $34.0 million notwithstanding poor coastal winter harvest conditions Improved specialty sales mix to 57% of lumber shipments from 54% in the same quarter of 2016 Achieved Company record quarterly average realized lumber price of $985 per thousand board feet Returned $7.9 million to shareholders via the Company's quarterly dividend program Reduced net debt by $15.4 million in the quarter to zero and increased liquidity to $268.7 million "We grew specialty lumber shipments and capitalized on accelerating lumber pricing to overcome weather constrained log supply and deliver another strong adjusted EBITDA result," said Don Demens, President and Chief Executive Officer. "We're disappointed in the US Department of Commerce's decision to implement a duty on Canadian lumber, especially as it pertains to our specialty, appearance lumber. We are confident that Western's robust balance sheet, lack of debt, and global market positioning will help overcome any market uncertainty from the US duty." Net income of $16.2 million ($0.04 per diluted share) was reported for the first quarter of 2017, as compared to $17.3 million ($0.04 per diluted share) for the first quarter of 2016. Improved price realizations largely offset the impacts of difficult winter weather conditions on operating costs. FINANCIAL SUMMARY As at and for the three months ended March 31, (millions of dollars except per share amount and where otherwise noted) 2017 2016 Revenue $ 287.7 $ 269.8 Adjusted EBITDA 34.0 35.7 Adjusted EBITDA margin 11.8 % 13.2 % Operating income prior to restructuring items and other income 23.9 26.3 Net income from continuing operations 16.2 17.3 Net income for the period 16.2 17.3 Basic and diluted earnings per share (in dollars) $ 0.04 $ 0.04 Net Debt - 47.9 Liquidity 268.7 183.9 First Quarter 2017 In the first quarter of 2017 we generated adjusted EBITDA of $34.0 million, a 5% decrease from the same quarter in 2016 due to difficult winter weather conditions which impacted operations and limited log availability. Improved log and lumber pricing, a 2% increase in lumber shipments and a stronger specialty lumber sales mix partially offset the weather-related impacts on our operations. First quarter lumber revenue was $225.6 million in 2017, an increase of 9% from the same quarter of 2016. We realized an average lumber price of $985 per thousand board feet in the first quarter of 2017. Specialty lumber mix increased to 57% from 54% in the same quarter of last year, while we grew lumber shipments by 2% to capitalize on accelerating pricing through the quarter. We realized improved Western Red Cedar ("WRC") pricing notwithstanding cutting a lower quality grade mix of logs. WRC lumber shipments remained stable despite a 25% reduction in total coastal cedar log harvest, as reported by the Province of BC's Harvest Billing system. We increased volumes to Japan and improved Niche shipments as compared to the same quarter last year. While commodity lumber sales volume declined, we directed volume from the US market to China to meet strong demand and to mitigate potential US-Canada softwood lumber duty exposure. First quarter log revenue was $45.5 million in 2017, a decrease of $0.8 million from the same period in 2016. Strong price realizations offset a 17% decline in sales volume due to reduced opening log inventories and poor harvest volumes. By-product revenue was $16.6 million in the first quarter of 2017, as compared to $17.3 million in the same period in 2016. By-product revenue declined commensurate with reduced lumber production. Lumber production was 214 million board feet, a decrease of 3% from the first quarter of 2016. Stronger operating performance from our Saltair and Ladysmith sawmills largely offset log related downtime at our Somass and Alberni Pacific sawmills. Beginning in early February 2017, the Somass sawmill was fully curtailed and operations at our Alberni Pacific division were reduced to one shift. Operating curtailments and reduced log supply contributed to an increase in manufacturing costs. Timberlands log harvest decreased by 12% as compared to the same quarter of 2016, as prolonged winter weather limited harvest production. Log supply was supplemented by sawlog purchases of 231,000 cubic metres, a reduction from 268,000 in the same quarter last year due to reduced coastal supply. Harvest costs increased by 6% in the first quarter of 2017 due to the reduced harvest volume and storm damage costs. Increased China shipments coupled with higher lumber sales volumes resulted in a $5.1 million increase in first quarter freight costs as compared to the same period of 2016. Selling and administration expense in the first quarter of 2017 increased to $8.4 million from $6.8 million in the same period of 2016. A significant relative increase in the value of the Company's common share price, period-over-period, and more outstanding share units were the primary drivers for a $1.0 million increase in mark-to-market, performance and share-based compensation. The Company's common share price appreciated by 15% in the first quarter of 2017, as compared 2% in the same period last year. In addition, the Company incurred incremental costs as a result of ongoing system and process improvement initiatives. Net income for the first quarter of 2017 was $16.2 million, compared to $17.3 million for the same period of 2016. A decrease in operating income was partially offset by lower finance costs and reduced tax expense. Finance Costs First quarter finance costs were $0.7 million in 2017, a reduction of $0.4 million from the same quarter of 2016. All drawings on the Company's debt facilities were fully repaid in the first quarter of 2017 resulting in lower interest expense. Income Taxes During the first quarter of 2017, current income tax expense of $0.2 million and deferred income tax expense of $6.1 million was recognized on net income, primarily relating to operating earnings. Strategy and Outlook Western's long-term business objective is to create superior value for shareholders by building a margin- focused log and lumber business of scale to compete successfully in global softwood markets. We believe this will be achieved by maximizing utilization of our forest tenures, operating efficient, low-cost manufacturing facilities and producing high-value softwood lumber and logs for global markets. We seek to manage our business with a focus on operating cash flow and maximizing the value of our fibre resource through the production cycle, from the planning of our logging operations to the production, marketing and sale of our log and lumber products. The following strategic initiatives will continue to guide our focus: Strengthen the Foundation We have developed a track record for consistently delivering positive operating income and positioning the balance sheet to maximize flexibility in the face of uncertainty. We have announced or implemented $101.9 million of strategic capital investments to strengthen our operating platform and position Western as the only company on the coast of BC capable of consuming the profile of the coastal forest and competitively manufacturing a diverse product mix. Recent capital investment information is presented below under Strategic Capital Program Update. Recently completed and activated strategic capital investments have facilitated the consolidation of our manufacturing operations. By advancing the recapitalization and consolidation of our coastal operating base, we have improved the financial performance and stability of our business. We continue to invest in people and systems to create a platform for growth and to facilitate the acceleration of our pursuit of margin-focused growth opportunities. Grow the Base We grew annual revenue to $1,187.3 million in 2016, more than double the revenue reported in 2009. We continue to optimize our operations and invest in our mills and timberlands to reduce costs, improve margins, and grow our business through increased production. The success of our business relationships with First Nations communities continues to grow incremental log supply and has enabled Western to grow specialty lumber production. We continue to pursue opportunities for long-term, mutually beneficial relationships with coastal First Nations. We have implemented a non-capital margin improvement program to optimize our supply chain and further consolidate our business. From a product marketing perspective, we are delivering on a strategy that drives increased market share through the sale of targeted products of scale to selected customers who value our product offerings. Explore Opportunities We are evaluating all opportunities to grow market share in targeted products and drive shareholder value. Our ongoing reinvestment in and consolidation of our coastal operating base, steady improvements in our operating performance and a strong balance sheet have positioned Western to actively pursue external growth opportunities. Market Outlook We remain confident that over the mid to long term, growth in the US new home construction and repair and renovation markets, as well as increasing demand from China, combined with reduced supply from the BC Interior as a result of Mountain Pine Beetle, will deliver an improved pricing environment for our products. In the near-term, we expect US lumber prices to increase as a result of improved market conditions and the application of duties on Canadian lumber. Higher US lumber prices are expected to impact global softwood flows by motivating US lumber and log exporters to redirect supply to their domestic market and by attracting European supply to the US market. We believe these global market dynamics will create opportunities for Western. A combination of reduced supply and improved demand from an active repair and renovation segment has driven WRC lumber prices higher. As annualized lumber consumption peaks in the second quarter we anticipate that pricing will continue to rise. Demand and pricing for our Niche products should remain stable. We expect lumber demand in Japan to remain robust as we close out the first half of 2017. We believe strong demand, coupled with rising freight costs for European suppliers, will support pricing for our lumber in the second quarter. China imported a record amount of softwood logs and lumber in 2016. Demand from China continued to grow in the first quarter and we expect that trend to continue through the second quarter, supporting higher pricing. Strong demand in export and domestic log markets and constrained supply is expected to deliver further price improvements. The pulp log market is expected to improve modestly as pulp log inventories remain low, also due to reduced coastal harvest. Updated on Softwood Lumber Dispute In November 2016, a petition was filed by a coalition of US lumber producers to the US Department of Commerce ("DoC") and International Trade Commission ("ITC") requesting an investigation into alleged subsidies provided to Canadian lumber producers. The Canadian industry and Canadian governments strongly deny these assertions which have previously been disproven in international courts. On April 24, 2017, the DoC announced a countervailing duty ("CVD") of 19.88% for "all other" Canadian lumber producers including Western. The DoC also made a preliminary determination on critical circumstances that resulted in 90-day retroactive application of CVD. Cash deposits for CVD were required for lumber imports to the US effective April 28, 2017, and we have estimated that the 90-day retroactive duty obligations arising from the DoC's April 24, 2017 preliminary finding of critical circumstances is USD $8.8 million. Preliminary findings of the anti-dumping investigation are expected in late June 2017. We intend to maintain our strong balance sheet and diversified product and geographic mix as we await the outcome of the trade discussions. Strategic Capital Program Update We continue to implement a strategic capital program that is designed to position Western as the only company on the coast of BC capable of sustainably consuming the complete profile of the coastal forest and competitively manufacturing a diverse product mix for global markets. Our strategic capital program is focused on the installation of proven technology that will deliver top quartile performance and improve our ability to manufacture the products that yield the best margin. In addition to investments in our manufacturing assets, we also allocate capital to strategic, high-return projects involving our information systems, timberlands assets, and forest inventories. In the first quarter of 2017, we continued the strategic investment in our Chemainus sawmill with the commencement of a timber deck expansion project, and advanced the Duke Point planer modernization. The Chemainus sawmill timber deck expansion and Duke Point planer modernization are scheduled for completion in 2017. We have announced plans for $101.9 million of our $125 million strategic capital program. Through the first quarter of 2017, we have implemented and capitalized $90.0 million under that program. Uncertainty arising from the softwood lumber trade dispute has caused us to defer the commencement of additional potentially significant capital projects plans, however a number of high-return, low-cost strategic capital projects are in the late stages of planning or ready for implementation. Non-Core Assets Update On March 29, 2017, we entered into a conditional agreement for the sale of our former South Vancouver Island Remanufacturing operation for $3.2 million. The South Island Remanufacturing plant was indefinitely curtailed in March 2016. Material conditions of this agreement were removed on April 21, 2017 and the completion date is August 19, 2017. Net of closing costs, proceeds are estimated to be $3.0 million and we expect to recognize a gain on disposition in the third quarter of 2017. We continue to evaluate the timing of sale of non-core assets and expect to accelerate the marketing and disposition of certain non-core assets.
May 8, 2017 - Acadian Timber Corp. ("Acadian" or the "Company") (TSX:ADN) has reported financial and operating results1 for the three months ended March 25, 2017 (the "first quarter"). "Acadian generated strong free cash flow during the first quarter resulting in a payout ratio down to 62% inclusive of the impact of our recent 10% dividend increase" said Mark Bishop, Chief Executive Officer of Acadian. "Our operations benefited from favorable winter conditions which supported seasonally strong log production". Acadian maintained its momentum and posted strong performance for the three-month period ending March 25, 2017. For the quarter we generated Adjusted EBITDA1 of $8.0 million up from $7.0 million in the prior year, as our operations benefitted from favourable winter harvest conditions driving a 10% increase in harvest volumes compared to the same quarter of 2016. Demand for most of our products continues to be solid, with our average log selling price remaining in line with the end of last year. During the first quarter of 2017, Acadian generated $7.4 million of Free Cash Flow1 and declared dividends of $4.6 million to our shareholders. This represents a payout ratio of 62%, which is comfortably below our long term annual target of 95% but in-line with expectations given the seasonality of our operations. 1 This news release makes reference to Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow which are key performance measures in evaluating Acadian's operations and are important in enhancing investors' understanding of Acadian's operating performance. Acadian's management defines Adjusted EBITDA as earnings before interest, taxes, fair value adjustments, recovery of or impairment of land and roads, unrealized exchange gain/loss on debt, depreciation and amortization and Adjusted EBITDA margin as Adjusted EBITDA as a percentage of its total revenue. Free Cash Flow is defined as Adjusted EBITDA less interest paid, current income tax expense, and capital expenditures plus net proceeds from the sale of fixed assets (selling price less gains or losses included in Adjusted EBITDA). As these performance measures do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS"), they may not be comparable to similar measures presented by other companies. As a result, we have provided in this news release reconciliations of net income, as determined in accordance with IFRS, to Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow. Review of Operations Financial and Operating Highlights Three Months Ended (CAD thousands, except per share information) March 25, 2017 March 26, 2016 Sales volume (000s m3) 356.0 301.6 Net sales $ 23,072 $ 21,447 Net income / (loss) 4,758 4,342 Adjusted EBITDA 8,030 7,044 Free Cash Flow 7,388 6,170 Dividends declared 4,601 4,183 Payout ratio 62% 68% Per share (fully diluted) Net income / (loss) 0.28 0.26 Free Cash Flow 0.44 0.37 Dividends declared 0.27 0.25 For the first quarter, Acadian generated net sales of $23.1 million compared to $21.4 million in the comparable period of 2016, driven primarily by favourable winter harvest conditions, particularly for spruce and fir stands. Total sales volumes were 18% higher than the same period in the prior year, driven by a 34% increase in softwood sawlog sales volumes. Sales volumes for other non-biomass products were in-line with the same period in the prior year. The increase in sales volumes was partially offset by a 6% decrease in the weighted average log selling price due to a year-on-year decline in the U.S. dollar exchange rate, unfavorable mix and weaker pricing for hardwood products. Adjusted EBITDA for the first quarter was $8.0 million compared to $7.0 million during the comparable period in 2016. Adjusted EBITDA margin for the quarter was 35%, up from 33% in the same period last year, as the decrease in average selling price was more than offset by operating leverage from higher sales volumes and the benefit of higher and better use (HBU) land sales in Maine. Net income totaled $4.8 million, or $0.28 per share, for the first quarter, compared to $4.3 million, or $0.26 per share, for the same period in 2016. The increase is primarily due to the aforementioned sales volumes increase and partially offset by higher fair value adjustments due to higher harvest volumes. Acadian's balance sheet continues to be solid with $100.5 million of net liquidity as at March 25, 2017, including funds available under Acadian's Revolving Facility and our stand-by equity commitment with Brookfield. Total dividends declared to shareholders during the three months ended March 25, 2017 were $4.6 million, or $0.275 per share, up from $4.2 million or $0.25 per share, in 2016. New Brunswick Timberlands The table below summarizes operating and financial results for New Brunswick Timberlands. Three Months Ended March 25, 2017 Three Months Ended March 26, 2016 Harvest (000s m3) Sales (000s m3) Sales Mix Results ($000s) Harvest (000s m3) Sales (000s m3) Sales Mix Results ($000s) Softwood 135.3 126.5 47% $ 7,258 111.0 80.5 40% $ 4,359 Hardwood 115.3 94.7 36% 7,602 109.6 90.0 44% 7,559 Biomass 45.3 45.3 17% 965 33.3 33.3 16% 1,338 295.9 266.5 100% 15,825 253.9 203.8 100% 13,256 Other sales 488 675 Net sales $ 16,313 $ 13,931 Adjusted EBITDA $ 6,128 $ 4,958 Adjusted EBITDA margin 38% 36% Three months ended March 25, 2017: Net sales totaled $16.3 million compared to $13.9 million for the same period last year. Log sales volumes excluding biomass increased 30% to 221 thousand m3 from 170 thousand m3 in the prior year, reflecting more favourable harvest conditions for spruce and fir stands and strong demand for softwood sawlogs. Furthermore, in the prior year, sales volumes for the quarter were lower as our operations carried higher than typical inventories at quarter end due to an inventory management program with one of the operation's major customers that was not in place in the current year. The weighted average log selling price for the quarter was $67.18 per m3, down from $69.87 per m3 in the prior year. Strength in softwood sawlog selling prices, which were up 4% compared to the prior year, was more than offset by the impact of sales mix and weaker pricing for hardwood products. Strong local demand for biomass products resulted in a 36% increase in sales volumes compared to the same period in the prior year. Overall, the gross margin earned on our biomass products decreased 36% compared to the first quarter of 2016, reflecting lower sales to export markets. Adjusted EBITDA and costs for the quarter were $6.1 million and $10.2 million, respectively, compared to $5.0 million and $9.0 million, respectively, in the first quarter of 2016 due primarily to the aforementioned increase in log sales volumes. Adjusted EBITDA margin for the quarter increased to 38% from 36% in the same period in the prior year due to the increase in log sales as well as a 13% reduction in variable costs per m3 due to shorter hauling distances. Safety There were no recordable safety incidents among employees and one lost time incident among contractors during the first quarter of 2017. Maine Timberlands The table below summarizes operating and financial results for Maine Timberlands. Three Months Ended March 25, 2017 Three Months Ended March 26, 2016 Harvest (000s m3) Sales (000 m3) Sales Mix Results ($000s) Harvest (000s m3) Sales (000s m3) Sales Mix Results ($000s) Softwood 62.8 62.6 70% $ 4,751 65.2 64.9 66% $ 5,142 Hardwood 29.4 25.7 29% 1,892 29.8 27.4 28% 2,298 Biomass 1.2 1.2 1% 2 5.5 5.5 6% 37 93.4 89.5 100% 6,645 100.5 97.8 100% 7,477 Other sales 114 39 Net sales $ 6,759 $ 7,516 Adjusted EBITDA $ 2,156 $ 2,281 Adjusted EBITDA margin 32% 30% Three months ended March 25, 2017: Net sales totaled $6.8 million compared to $7.5 million for the same period last year as log sales volumes decreased to 88 thousand m3 from 92 thousand m3 in the prior year. This decrease is driven primarily by a decrease in the number of operating days in the first quarter of 2017, as compared to the same quarter of 2016. Adjusting for this difference, log sales volumes were in-line with the prior year. The weighted average log selling price in Canadian dollar terms was $75.26 per m3, down from $80.63 per m3 in the same period of 2016. The weighted average log selling price in U.S. dollar terms was $56.86 per m3, down 3% year-over-year, reflecting a 2% increase in softwood sawlog pricing offset by a 9% decline in hardwood pulp pricing reflecting high customer inventories. Adjusted EBITDA for the quarter was $2.2 million, compared to $2.3 million in the prior year. Costs for the first quarter were $5.1 million, compared to $5.3 million during the same period in 2016, due to the decrease in sales volumes and a 5% decrease in variable costs per m3 in Canadian dollar terms. Adjusted EBITDA margin for the quarter increased to 32% from 30% due primarily to the benefit of HBU land sales and the above noted decrease in variable costs per m3. Safety There were no recordable safety incidents among employees or contractors during the first quarter of 2017. Market Outlook The following contains forward-looking statements about Acadian Timber Corp.'s market outlook for the remainder of fiscal 2017. Reference should be made to the "Forward-looking Statements" section of this news release. For a description of material factors that could cause actual results to differ materially from the forward-looking statements in the following, please see the Risk Factors section of our management's discussion and analysis of Acadian's most recent Annual Report and Annual Information Form available on our website at www.acadiantimber.com or filed with SEDAR at www.sedar.com. Acadian's key markets include softwood sawtimber, hardwood sawtimber and hardwood pulpwood. Northeast North American softwood dimension sawmills represent over one third of Acadian's end-use market and are the primary market for our softwood sawtimber. Economic forecasters continue to call for steady growth in housing starts, with year-over-year improvements averaging over 7% in each of 2017 and 2018. As a result, North American sawtimber demand is expected to grow at over 3% per year over the next few years to support expanding domestic construction needs. Despite the expectation for steadily improving lumber consumption, the near to medium term outlook for softwood sawtimber pricing remains uncertain in the face of expected punitive duties to be imposed by the U.S. Government on imports of Canadian softwood lumber. Preliminary countervailing duties (CVD) averaging 19.9% were announced last week, and anti-dumping duties (ADD) are scheduled to be announced in late June. Lumber prices jumped significantly through the first quarter in anticipation of high duty levels expected to be applied retroactively. As in past disputes, we have been anticipating relatively high initial combined duties, which are likely to be reduced over time during the litigation period. We anticipate a highly politicized process may obscure visibility on progress towards a negotiated settlement for at least most of 2017. During past U.S./Canada softwood lumber disputes, Canada's Atlantic lumber producers, along with Québec border mills, experienced lower relative CVD & ADD duties than the rest of Canada and were ultimately exempted in past negotiated settlements due to the significantly greater proportion of private timberlands in the Atlantic region relative to the rest of Canada as well as a long history of active cross-border log exports within the Northeast region. However, there is little current visibility as to where final duty determination will land for the region at the end of this year, and in fact whether the region will be exempted from any final settlement as in the past. Hardwood sawtimber markets, typically oriented to millwork and higher value specialty markets, are expected to remain at healthy current levels throughout the upcoming year. While hardwood pulpwood markets remain historically very strong, we expect seasonally high consumer inventories will continue to impact pricing through mid-year, and in any case, remain vulnerable in the current strong U.S. dollar environment. While continued oversupply of softwood sawmill residuals and softwood pulpwood markets remains a concern, we anticipate regional timberland owners will continue to target reduced pulpwood harvest levels through 2017. Biomass is also an important market for Acadian. We anticipate domestic biomass markets will remain stable in New Brunswick and expect a gradual recovery in export volumes during the second half of the year. Maine's biomass market appears positioned for a gradual recovery as state subsidies and higher natural gas pricing have supported the restart of three previously idled biomass generation facilities. Additionally, we expect that the Maine recreational real estate market will remain favorable through the year and therefore anticipate conditions will support the sale of additional properties throughout the remainder of 2017.
May 19, 2017 - The chances of arriving at a softwood lumber solution during NAFTA renegotiations this August are not high, an anonymous source told Reuters. "It's hard to imagine a deal being done that soon," the source said. | READ MORE
May 5, 2017 - Despite not being surprised by the preliminary softwood lumber tariffs imposed by the U.S. last week, EACOM Timber Corporation’s president and chief executive officer Kevin Edgson is not any less concerned. Edgson sat down with me outside the main room at the Ontario Natural Resources Forum in downtown Toronto; two days after President Trump made the preliminary tax announcement from Washington on April 24. “We knew it was coming for a long time… It’s in the neighbourhood of what we expected,” Edgson said. “We were disappointed in terms of the retroactivity, especially because it seems that was manufactured as opposed to anything that was reasonable or expected.” Montreal-based EACOM owns five sawmills in Ontario and two in Quebec. It also owns a remanufacturing facility in Val-d’Or, Que., and an engineered wood mill in Sault Ste. Marie, Ont. Acquiring the latter is one way Edgson says EACOM is expanding its market reach. “The Sault Ste. Marie operation produces a product that isn’t covered under this duty, so that was really us investing in and widening our product scope,” Edgson said. “Outside of that what we’ve done is we’ve minimized the amount of capital that we’ve spent in the last two years to build up our balance sheet, which is really to ensure that we have the liquidity to be able to take the hit.” Earlier in the day, Edgson sat down with Ontario Premier Kathleen Wynne to discuss industry concerns including partnerships with Aboriginal communities and exposing young people to the forestry industry, particularly young women. Softwood lumber was at the top of the list. During the discussion, Wynne announced that Ontario would be providing an additional $20 million in funding for the construction and maintenance of forest access roads. Wynne said she discussed the preliminary duty situation with other premiers and is ready to work with them along with the federal government to find a solution. “This has been a contentious file with the U.S. for years and we continue to go through a cycle,” she noted. “There is a real willingness to find common ground across the country in the best way that we can.” “It’s clear that [U.S./Canada relations are] in a rougher, rockier patch than in the past,” Edgson told me. “I think, eventually, cooler heads will prevail. It is the largest trading relationship in the world. It is in the best interest of people on both sides of that to find solutions.” Edgson said he is optimistic that ultimately, there will be a good relationship established between the two governments on the softwood lumber issue. “When you look at our side of this dispute, it is an unjust accusation and therefore, what we need to do is take the higher road,” Edgson said. “We need to be calm in tone and response. What we need to do is defend ourselves with honesty and integrity and continue to believe in the process.”
April 28, 2017 - Monday’s announcement of preliminary softwood lumber duties on Canadian imports to the U.S. has raised tensions south of the border. “These duties are unwarranted and this determination is completely without merit,” said president of the BC Lumber Trade Council Susan Yurkovich. “Reaching a new agreement is in the best interest of producers and consumers on both sides of the border,” Yurkovich said from B.C. on Tuesday. More than half of B.C.’s lumber exports currently go to the U.S. Yurkovich said the Canadian industry needs to focus on expanding its markets and consequently decreasing dependence on the U.S. market. “The Canadian industry has worked very hard over the last number of years to diversify our markets including moving a whole lot of our lumber into Asia,” she said. The Asian expansion plans include China, the Philippines, Malaysia, Vietnam and also India. ‘Misguided effort’ Duncan Davies is president and chief executive officer of Vancouver-based lumber producer Interfor. He noted how counter-productive a trade dispute is when there are so many opportunities for Canada and the U.S. to work together. “The real loser in all of this is the U.S. home builder and U.S. consumer… That’s why we think this is such a misguided effort,” Davies said. “Log costs are actually significantly less in some regions of the U.S. than they are in Canada.” Davies said Interfor was not surprised by the announcement, adding that the company is well-financed to deal with any tariffs. “I don’t see Interfor materially changing any of our practices as a result of these duties.” He noted lumber prices in Canada have seen a rise by about 30 per cent in anticipation of the duties. Davies said the U.S. is using this method to put pressure on Canada in its goal to find a long-term solution that will be more favourable to the U.S. ‘Completely unprecedented’ “It’s completely unprecedented what the U.S. Department of Commerce has done here,” Yurkovich said referring to the two periods the Commerce Department chose to compare in its investigation. “They’ve picked an arbitrary period to make the periods match what they wanted to find all along. It doesn’t make any sense and I will be very interested to see how they’ve come up with that calculation,” she said. Yurkovich said government and councils are working together to put forward evidence in defense of the Canadian industry. “While we support reaching a new agreement we are also fully prepared to vigorously defend our workers and traders,” she said. “This kind of action creates volatility,” Yurkovich said.Solutions Going forward Yurkovich said there is an initiative underway by federal Minister of Natural Resources Jim Carr along with other ministers across the country to “provide industry support during this adversity.” “We’re not going to be rattled. We are resilient,” Yurkovich said. “We’re going to continue to fight this fight and we’re going to be successful.”
April 25, 2017 - The U.S. Department of Commerce has announced preliminary countervailing duties on Canadian softwood lumber. The duties, a response to a petition filed by the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations (COALITION), are set at: West Fraser 24.12%, Canfor 20.26%, Tolko 19.5 per cent, Resolute 12.82 per cent, JD Irving 3.02 per cent, and 19.88 per cent for all other Canadian producers. “These duties stand to hurt hard working men and women in our mill communities across Canada,” says Derek Nighbor, CEO, Forest Products Association of Canada. “The duties are unwarranted and without merit. We 100 per cent support the federal government’s “Team Canada” position and we must have a fair and equitable trading structure for both our industry and U.S. customers.” These duties will have a negative impact not only here in Canada but also on U.S. consumers. Currently, American demand for lumber far exceeds what the American industry is able to produce. They need Canada’s softwood lumber. Research from the National Association of Home Builders in the United States found that for every $1,000 increase in house prices (due to higher lumber costs), 150,000 families are priced out of purchasing a home. It was also found that at just a 15 percent tariff, 4,600 American jobs and $265 million in wages and salaries would be lost. “We will stand up for our industry’s workers and impacted mill communities in Canada and call on federal and provincial governments to work with us to ensure they can maintain their livelihoods during this difficult period,” says Nighbor. Canada is the largest softwood lumber exporter to the United States. The Canadian forest products industry is vital to the national economy and the economies of many forest dependent communities across the country. The sector is one of Canada’s largest employers, providing 230,000 direct jobs and supporting one million families across the country.
April 25, 2017 – President Donald Trump has announced the dreaded news about countervailing duties on imports of Canadian softwood lumber. After launching an official investigation in December 2016, the U.S. Department of Commerce decided that preliminary subsidies ranging from three to 24 per cent will be applied to Canadian softwood lumber imports going into the U.S. The announcement came on Monday afternoon, one day before the news was originally set to be released. "It has been a bad week for U.S.-Canada trade relations… The Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us,” said U.S. Secretary of Commerce Wilbur Ross in a statement. “This is not our idea of a properly functioning Free Trade Agreement." Canada’s Minister of Natural Resources Jim Carr and Minister of Foreign Affairs Chrystia Freeland said the imposition will negatively affect both Canadian and American workers. .@Canada disagrees strongly with @CommerceGov’s decision to impose unfair & punitive duties on Cdn softwood products https://t.co/cXZs3pEszD — Natural Resources (@NRCan) April 25, 2017 "The Government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty. The accusations are baseless and unfounded,” they said in a joint statement released Monday. The following four companies were investigated by the Department of Commerce as Canada’s top four lumber exporting companies: · West Fraser, 24.12 per cent. · Canfor, 20.26 per cent. · Tolko, 19.50 per cent. · Resolute, 12.82 per cent. The lowest subsidies of 3.02 per cent are being imposed on J.D. Irving, which requested a separate investigation. All other Canadian softwood lumber producers will be hit with a 19.88 per cent duty following this announcement. The U.S. Lumber Coalition petitioned the American government to apply taxes on Canadian lumber in November 2016, citing unfair government subsidies being provided on the Canadian side. “Today’s ruling confirms that Canadian lumber mills are subsidized by their government and benefit from timber pricing policies and other subsidies which harm U.S. manufacturers and workers,” said the Coalition’s legal chair Cameron Krauss in a statement. “We appreciate today’s actions by the Department of Commerce, which has examined massive amounts of evidence presented by the Coalition, the Canadian industry and the Canadian Federal and provincial governments.” “The Coalition is hopeful that the duties imposed by today’s decision will begin the process of creating a level playing field for the future and allow for U.S. manufacturers to make essential investments and expand the domestic lumber industry to its natural market and protect and grow the jobs that are so essential to our workers and our communities,” Krauss said. There are 202,000 Canadian forestry workers who will be impacted by this announcement, according to labour union Unifor. “In the early 2000s when the U.S. imposed a combined duty of 27 per cent, 15,000 Canadians were laid off within months,” the company said in a statement Monday. Canadian forestry councils expressed their frustration following the announcement, as well as Ontario's Minister of Natural Resources Kathryn McGarry. Disappointed that US gov imposed taxes on Ontario lumber producers. Open trade is the best outcome for both US and Can #Onpoli #Softwood — Kathryn McGarry (@Kathryn_McGarry) April 25, 2017 “These duties are unwarranted, and this determination is completely without merit,” said Susan Yurkovich, president of the BC Lumber Trade Council. This new trade action is driven by the same protectionist lumber lobby in the U.S. whose sole purpose is to create artificial supply constraints on lumber and drive prices up for their benefit, at the expense of American consumers.” “The fact is, Canadian lumber imports don’t pose a threat to the U.S. lumber industry. There is enough North American demand to grow the U.S. industry while also allowing Canada to supply its U.S. customers as we have been doing for decades,” Yurkovich said. The softwood products subject to the countervailing duties include softwood lumber, siding, flooring and “certain other coniferous wood,” according the Department of Commerce. “We are disappointed that the United States has chosen this course of action,” said Paul Whittaker, co-chair of the Alberta Softwood Lumber Trade Council on Tuesday. “Alberta’s timber pricing practices have repeatedly been found to be fair and competitive by international tribunals. We plan to work closely with the Government of Canada and the Government of Alberta to vigorously challenge these tariffs and fight for Alberta jobs that depend on a healthy, sustainable forest sector. All options, including litigation, are on the table. We expect to be fully vindicated,” he said. Canadian softwood lumber imports were valued at approximately $5.66 billion in 2016.The results of the Commerce Department’s preliminary anti-dumping duty investigation will be released on June 23, after it was pushed back by the U.S. Lumber Coalition from May 4. "The Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation,” Freeland and Carr said. "Canada will continue to press their American counterparts to rescind this unfair and unwarranted trade action. We are committed to working with the U.S. Administration to achieve a durable solution. We remain confident that a negotiated settlement is not only possible but in the best interests of both countries."
April 24, 2017 - Canada's forest industry has transformed itself into one of the most innovative sectors of our economy, investing in research, developing new products and expanding its markets as it also sets the pace on environmental performance. Hundreds of thousands of Canadian workers and their local communities depend upon this industry's continued success to support good middle-class jobs, create new opportunities and ensure sustainable prosperity for generations to come. Federal cabinet ministers are targeting new markets around the globe in a concerted effort to enhance trade and market diversification for Canadian wood and wood products as part of the clean-growth economy. International Trade Minister François-Philippe Champagne is in China to promote the use of Canadian wood in home construction while Pamela Goldsmith-Jones, Parliamentary Secretary to the Minister of International Trade, is in Vietnam, Singapore and Brunei Darussalam to explore further opportunities for Canadian wood exporters in the Asia-Pacific region. "Canada will not be deterred and will vigorously defend our industry. We will also seek new opportunities and provide greater access to the burgeoning economies of the world for Canada's high-quality products, notably softwood, where my mission to China has been met with eagerness to explore the sustainable, eco-friendly and safe softwood products where our industry excels,” Champagne said. “We will leave no stone unturned. Canada's softwood will help build the economies of tomorrow, especially in Asia, and together we will ensure the future prosperity of our producers and the good jobs they sustain." Canada's Minister of Natural Resources, the Honourable Jim Carr, will also lead a delegation of Canadian forestry leaders to China in early June to maintain momentum from Minister Champagne's efforts this week. "Canada's forest industry is uniquely positioned to help address some of the biggest challenges facing our country: combating climate change, driving innovation, creating jobs for Indigenous and rural communities and advancing trade,” Carr said. “Our government will vigorously defend its interests as a way to strengthen the industry and support the people and communities that rely upon it." These trade missions build on the $6 million in funding provided this year by Natural Resources Canada's Expanding Market Opportunities program to eight Canadian forest product associations to promote Canadian wood products in overseas markets, and $18 million to FPInnovations for research and development. "Thousands of middle-class Canadian jobs depend on our wood and wood products. Our government is firmly committed to promoting and defending the interests of workers and producers from across Canada. My colleagues and I will continue to work very closely with the industry, its workers, the provinces and territories to ensure continued success at home and abroad," said Minister of Foreign Affairs Chrystia Freeland. Budget 2017 announced measures to continue investing in Canada's forest sector, including $40 million over four years to support projects and activities that increase the use of wood in construction. This helps create new markets for sustainable Canadian products. "Our government stands ready to take action to protect and support the workers, families and communities who may be affected by the softwood lumber trade dispute. The softwood lumber industry is a priority for our government, as this industry provides employment in communities across the country and is a source of economic prosperity," said Federal Minister of Families, Children and Social Development Jean-Yves Duclos. These initiatives are part of the Government of Canada's continuing effort to maintain and increase access to global markets for Canadian wood and wood products.
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