Markets
Nov. 16, 2017 - Roughly half of all hardwood chips traded in the Pacific Rim have been destined for Chinese ports in the 1H/17 with Vietnam and Australia being the major suppliers, reports the Wood Resource Quarterly.

Pulpmills in China and Japan continue to rely on large volumes of imported hardwood wood chips from a number of countries around the Pacific Rim. The biggest changes in trade over the past five years, according to the Wood Resource Quarterly, have been the increase in chip exports from Vietnam, record import volumes to China and a shift in Australian export shipments from Japan to China.

Shipments of hardwood chips in the Pacific Rim have increased for six consecutive years and reached a record-high of 22.9 million odmt in 2016. Last year was also the year when China took over Japan’s role as the world’s largest importer of hardwood chips - roughly half of all hardwood chips traded in the Pacific Rim were destined for Chinese ports in 2016. Based on import volumes to China in the first nine months of 2017, it is likely that Chinese imports will hit a new record high of over 11.5 million odmt in 2017, according to the Wood Resource Quarterly (WRQ).

There have been a number of alterations in the trade flows of hardwood chips in the Pacific Rim over the past decade based on price fluctuations, chip quality preferences and changes in business relationships. In the latest issues of the WRQ we have chosen to highlight how the chip trade has evolved from 2012 to 2016 as an example of the shifting market that exists in this part of the world. The major changes over the past five years have been

Vietnam’s expansion in exports to both China and Japan, Australia’s increase in shipments to China (equal to Vietnam’s volumes in the 2Q/17), Chile’s diversion of volumes from Japan to China, and Japan’s increasing reliance on hardwood chips from Vietnam and South Africa, at the expense of Australia and Chile.

The top-five trade flows of hardwood chips in 2016 were (more details in the WRQ):

1. Vietnam – China

2. Australia – China

3. Vietnam – Japan

4. Chile – Japan

5. Australia – Japan

During the first half of 2017, hardwood chip shipments from most of the major supplying countries in the Pacific Rim have gone up with the notable exceptions of Australia, Thailand, Brazil and Uruguay, which reduced their export volumes by between four and twenty-one percent as compared to the first half of 2016. The biggest increases in chip supply to Japan and China year-over-year have been from Chile and Indonesia. Chilean chip exports are likely to reach a new all-time high in 2017 and the country will remain the third largest chip exporter in the world.



Global lumber, sawlog and pulpwood market reporting is included in the 56-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
Nov. 10, 2017 - Conifex Timber Inc. has reported results for the third quarter ended September 30, 2017. Adjusted EBITDA*, including countervailing ("CVD") and anti-dumping duty ("ADD") deposits of $3.4 million, was $12.1 million, compared to $10.2 million in the second quarter of 2017 and $8.5 million in the third quarter of 2016.

Our lumber segment operating results include CVD and ADD deposits on exports to the U.S. of $3.4 million in the third quarter of 2017 and $4.6 million in the second quarter of 2017. On November 2, 2017, the U.S. Department of Commerce ("USDOC") announced that the final CVD and ADD rates would be reduced from the preliminary rates by a total of 5.92%. In the third quarter of 2017, we recorded an adjustment to reflect the reduction in CVD rates on shipments made during the second quarter of 2017. Approximately $1.3 million of the $4.6 million in CVD deposits expensed in the second quarter of 2017 was reversed, which led to reduced CVD and ADD deposit expenses of $3.4 million in the third quarter of 2017.

Compared to the previous quarter, the improvement in lumber segment adjusted EBITDA of $1.2 million and bioenergy segment adjusted EBITDA of $1.5 million was partially offset by an increase in corporate costs and a variance in foreign exchange translation loss. Compared to the third quarter of 2016, lumber segment adjusted EBITDA improved by $3.0 million and bioenergy segment adjusted EBITDA improved by $2.2 million.

Adjusted EBITDA for the nine month period ended September 30, 2017, which included CVD and ADD deposits of $8.0 million, was a record $28.5 million. Adjusted EBITDA was $24.3 million for the first nine months of 2016.

Start-Up of El Dorado Mill
In October 2017, we completed construction of our sawmill, two continuous dry kilns, and planer mill in El Dorado, Arkansas (the "ED Mill") on schedule and on budget. We are operating the sawmill and conducting evaluations as the sawmill goes through a customary "ramp-up" period. We expect to begin testing and commissioning of our planer mill this month and commence commercial operations in December. We will initially operate the ED Mill on a one-shift basis and expect to ramp-up production to approximately 90% of capacity by December 2018.

The ED Mill is designed to have annual production capacity of 180 million board feet on a two-shift basis, representing approximately 25% of total lumber capacity of our mills at this level.

We believe our planned expansion into the U.S. South will provide an important new source of revenue diversification not subject to punitive trade actions on Canadian softwood lumber recently initiated by the U.S.

Overview
Our revenues totaled $120.3 million in the third quarter of 2017, an improvement of 3% over the prior quarter and 16% over the same quarter last year. Our revenue growth over the previous quarter was mainly attributable to a slight increase in our lumber segment revenues, and a 30% increase in revenues from electricity sales. Compared to the third quarter of 2016, our lumber segment revenues increased by 15% and our bioenergy segment revenues by 24%.

Our operating income for the third quarter of 2017, which includes the CVD and ADD deposits, was $8.8 million compared to $6.4 million in the previous quarter and $3.3 million in the same quarter last year. Compared to the prior quarter, an increase in lumber segment operating earnings of $1.4 million and bioenergy segment operating earnings of $1.6 million was partially offset by an increase in corporate costs of $0.6 million. Lumber segment operating earnings increased by $2.9 million and bioenergy segment operating earnings by $3.0 million compared to the third quarter of 2016.

Net income for the third quarter of 2017 was $6.2 million, or $0.23 per diluted share, compared to $4.2 million or $0.16 per diluted share in the previous quarter and $1.4 million or $0.07 per diluted share in the third quarter of 2016. Year to date net income was $9.0 million, or $0.36 per diluted share, compared to a normalized net income of $3.7 million or $0.18 per diluted share for the same period last year. Unusual items totaling $61.4 million were included in net income in the first six months of 2016. Including these unusual items, net income was $65.1 million, or $3.08 per basic and $2.85 per diluted share for the first nine months of 2016.

Lumber Segment
Lumber segment adjusted EBITDA, which includes CVD and ADD deposits, was $12.0 million in the third quarter of 2017, compared to $10.8 million in the second quarter of 2017 and $9.0 million in the third quarter of 2016. Lumber segment adjusted EBITDA was $27.9 million for the nine months ended September 30, 2017 and $22.2 million for the nine months ended September 30, 2016.

Prices for the bell-weather WSPF #2 & Btr product averaged US$406 during the third quarter of 2017, an improvement of 5% over the previous quarter and 26% over the third quarter of 2016.1 The U.S. dollar, which averaged US$0.798 for each Canadian dollar during the third quarter of 2017, appreciated by 7% over the previous quarter and 4% over the same quarter last year.2

1 As quoted in Random Lengths Publications Inc.
2 Source: Bank of Canada, www.bankofcanada.ca.

Revenue from Conifex produced lumber was $73.3 million in the third quarter of 2017. The 4% increase over the previous quarter was generally attributable to 5% higher shipment volumes offset by a modest decline in unit sales realizations. The slightly lower sales realizations reflected stronger lumber prices which were more than offset by the appreciation in Canadian currency. The growth in revenue of 15% over the third quarter of 2016 was mainly due to improved sales realizations from higher lumber prices. Our wholesale lumber revenues were largely consistent in the second and third quarters of 2017 and increased by 8% over the third quarter of 2016. The growth in revenue from the third quarter of 2016 was primarily attributable to improved sales realizations due to higher lumber prices.

Our lumber production totalled approximately 133 million board feet during the third quarter of 2017 representing an annualized operating rate of 102%. Year to date production was 4% lower compared to the same period last year, largely as a result of the implementation of a capital project at the Mackenzie sawmill and, to a lesser extent, inclement weather conditions in Western Canada which led to lower productivity in the first quarter of this year.

Unit log costs declined by 3% compared to the previous quarter and increased by 9% over the same quarter last year. Compared to the third quarter of 2016, the higher log costs were mainly attributable to higher market based stumpage and purchased log costs.

Higher operating rates contributed to an improvement in unit cash conversion costs of 3% over the previous quarter. Unit cash conversion costs were in line with the same quarter last year, although production volumes modestly declined.

We expensed CVD and ADD deposits of $3.4 million in the third quarter of 2017, and $4.6 million in the second quarter of 2017, on lumber shipments to the U.S. As previously noted, approximately $1.3 million of the adjustment made to reflect lower final CVD and ADD rates in the third quarter of 2017 was attributable to shipments made during the second quarter of 2017.

Including the CVD and ADD deposits expense, the lumber segment recorded operating income of $8.5 million in the third quarter of 2017 compared to $7.1 million in the previous quarter and $5.6 million in the third quarter of 2016. Compared to the previous quarter, the benefits of stronger lumber prices, increased shipments of Conifex produced lumber, improved productivity, lower unit log and cash conversion costs, and lower softwood lumber duties, partially due to an adjustment related to previous quarter shipments, outweighed the impact of appreciation of the Canadian currency.

Compared to the third quarter of 2016, the benefit of higher lumber prices and shipments of Conifex produced lumber in the current quarter was partially offset by the expensing of CVD and ADD deposits, stronger Canadian currency, lower production volumes, and higher unit log costs. Year-to-date lumber segment operating earnings were $17.4 million, an improvement of $5.2 million over the same period last year.

Bioenergy Segment

Operating Results
The Mackenzie Plant sold 55.2 gigawatt hours of electricity under our Electricity Purchase Agreement ("EPA") with BC Hydro in the third quarter of 2017, which represents approximately 100% of targeted operating rates, compared to 95% in the prior quarter and 70% in the third quarter of 2016. The reduced production in the third quarter of 2016 was mostly attributable to maintenance downtime taken to effect certain operating improvements. On a year to date basis, electricity sales were 3% higher than over the same period last year. Electricity sales and plant operating costs in the first quarter of 2017 were impacted by some unplanned outages and challenging weather conditions, which impacted feedstock quality and deliverability.

Electricity revenues in the current quarter were $6.1 million, an increase of 30% over the previous quarter, which was mostly attributable to higher seasonal rates and, to a lesser extent, an 8% increase in production. The improvement in electricity revenues of 24% compared to the third quarter of 2016 was largely due to higher production volume, somewhat offset by lower seasonal rates and discounted prices earned during the dispatch period. Cash operating costs were consistent in the third and second quarters of 2017 and improved by 21% over the third quarter of last year. Amortization expense was lower compared to the third quarter of 2016 as idled components were not depreciated during dispatch periods.

Bioenergy segment adjusted EBITDA was $8.0 million for the first nine months of 2017 compared to $7.7 million for the first nine months of 2016 and reflected an adjusted EBITDA margin of 45%, which was consistent with the comparative period last year. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of sales.

The Mackenzie Plant achieved hourly production of 105% of our operating target over the first 12 months of commercial operations. The Mackenzie Plant resumed operations in September 2017 (after the dispatch period, discussed below) and operating rates approached historic levels during the first month of operations.

Dispatch Notice
Our EPA with BC Hydro, similar to electricity purchase agreements with other independent power producers, provides BC Hydro with the option to "turn down" electricity purchased from us 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 Mackenzie 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 only produce electricity to fulfill volume commitments under our Load Displacement Agreement with BC Hydro. We continue to be paid revenues under the EPA based upon a reduced rate and on volumes that are generally reflective of contracted amounts.

Liquidity and Capital Resources
Our net debt to capitalization ratio was 42% at September 30, 2017 compared to 38% at December 31, 2016. Excluding the effects of borrowings for our wholly-owned power subsidiary that are non-recourse to our other operations, our net debt to capitalization ratio was 27% at September 30, 2017 compared to 16% at December 31, 2016.

At September 30, 2017, we had total liquidity of $55.7 million, compared to $22.3 million at December 31, 2016 and $43.6 million at September 30, 2016.

Lumber Market and Operations Outlook
Through the closing months of 2017, we expect sustained steady demand in the U.S. and Canadian lumber markets will result in average benchmark Western SPF prices that are somewhat higher than average levels achieved in the first nine months of this year. We expect that continued uncertainty around the softwood lumber dispute will contribute to further volatility in U.S. market conditions and pricing. We expect demand and pricing to continue to remain solid in the Chinese and Japanese markets through the balance of the year.

We expect the further strengthening of WSPF prices early in the fourth quarter of 2017, the continued suspension of CVD, a solid order file, and relatively flat unit log costs will contribute to a sequential improvement in cash flow generation in our lumber segment. We expect the ED Mill to begin production in the fourth quarter of 2017 and lumber shipments to commence in December.

In our bioenergy segment, we expect higher seasonal electricity rates and operating rates at the Mackenzie Plant near targeted levels will lead to a quarter over quarter improvement in operating results.

Subsequent Event
On November 2, 2017, the USDOC announced final determinations in its CVD and ADD investigations. As a result of its findings, the USDOC lowered the final CVD rate from 19.88% to 14.25% and the final ADD rate from 6.87% to 6.58% for "all other" Canadian lumber producers, including Conifex. The final CVD will not be collected until final injury determination by the United States International Trade Commission ("USITC"), which is expected to occur in December 2017.

On November 2, 2017, the USDOC also made a final determination that critical circumstances did not exist for CVD, but did exist for ADD. We have not accrued any retroactive ADD, which could total approximately US$1.5 million, in the current or previous quarters. Management believes that the critical circumstances finding for ADD by the USDOC will not be upheld by the USITC in its final determination, consistent with the result of past softwood lumber disputes.



*Adjusted EBITDA is calculated to exclude unusual items or items that are not ongoing and do not reflect our ongoing operations. Our adjusted EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization, and gains or losses from asset sales, disposals or revaluations. Adjusted EBITDA for the second quarter of 2017 previously included $4.6 million representing CVD deposit expense based upon the USDOC preliminary rates. As the USDOC recently made its final determination of CVD and ADD rates, we are no longer including an adjustment for duty deposits in adjusted EBITDA. We disclose EBITDA, adjusted EBITDA and adjusted EBITDA margin as they are measures used by analysts and by our management to evaluate our performance. As EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures that do not have any standardized meaning prescribed by International Financial Reporting Standards, they may not be comparable to EBITDA, adjusted EBITDA and adjusted EBITDA margin calculated by others and are not a substitute for net earnings or cash flows.
Nov. 10, 2017 - Taiga Building Products Ltd. has reported its financial results for the three and six months ended September 30, 2017.
Nov. 7, 2017 - Lucrative log markets in China have resulted in a tripling of softwood log export volumes from Australia the past four years, reports the Wood Resource Quarterly.
Nov. 6, 2017 - Resolute Forest Products Inc. has reported net income for the quarter ended September 30, 2017, of $24 million, or $0.26 per share, compared to net income of $14 million, or $0.15 per share, in the same period in 2016. Sales were $885 million in the quarter, essentially unchanged from the third quarter of 2016. Excluding special items, the company reported net income of $31 million, or $0.34 per share, compared to net income, excluding special items, of $15 million, or $0.17 per share, in the third quarter of 2016.

"This quarter's solid performance builds on the momentum established earlier in the year," said Richard Garneau, president and chief executive officer. "Our results benefitted from continued strength in our market pulp and wood products segments as well as from substantial improvements in the cost position of our paper segments following capacity closures and restructuring of operations announced earlier this year. In tissue, our sales effort continues to progress, but our results were negatively impacted by Hurricane Irma."

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 operating income of $48 million in the quarter, an improvement of $95 million compared to the second quarter of 2017, as adjusted EBITDA increased to $118 million from $83 million in the previous quarter. 

The company's operating results were positively impacted by increases in sales of market pulp and wood products, where shipments and pricing improved compared to the previous quarter. Profitability was also supported by lower manufacturing costs and savings derived from the closure of a high cost machine in our specialty papers segment, resulting in operating margin improvements that offset volume declines. 

The company incurred $21 million of closure costs, impairment and other related charges, and inventory write-downs in the third quarter linked primarily to the permanent closure of two paper machines at Calhoun (Tennessee). This compares favorably to the $65 million recorded in the second quarter.   

Market Pulp
Operating income in the market pulp segment was $19 million, $3 million more than the second quarter. Realized prices continued to rise from the lows of 2016, reaching $650 per metric ton, an increase of $18 per metric ton, or 3%, when compared to the previous quarter. Shipments to third parties rose by 12,000 metric tons, largely resulting from reduced annual maintenance outages. The operating cost per unit (the "delivered cost") rose by $12 per metric ton, reaching $595 per metric ton. This was the result of the relative strengthening of the Canadian dollar and a lower contribution from cogeneration operations. EBITDA per unit was $78 per metric ton compared to $71 per metric ton in the previous quarter. Finished goods inventory rose by 6,000 metric tons.

Tissue
In our tissue segment, which includes only the former Atlas tissue operations in Florida, the operating loss increased by $2 million compared to the second quarter. While pricing remained essentially unchanged, the delivered cost increased by $160 per short ton, mostly as a result of facility damage and approximately 10 days of business interruption associated with Hurricane Irma. Overall shipments were largely unchanged, with inventories drawn down by 2,000 short tons.

Wood Products
The wood products segment recorded operating income of $64 million for the quarter, an improvement of $19 million compared to the previous quarter. With supply disruptions owing mostly to forest fires in British Columbia, shipments increased by 22 million board feet, reaching 531 million board feet for the quarter. The average transaction price rose by $27 per thousand board feet to $413. The delivered cost improved by $8 per thousand board feet, mostly a result of higher volumes. EBITDA for the segment was $73 million, a $21 million increase from the previous quarter, and equivalent to $137 per thousand board feet, compared to $102 in the second quarter. Finished goods inventory declined by 3 million board feet to 122 million board feet.

Newsprint
The newsprint segment incurred an operating loss of $6 million in the quarter, compared to a loss of $7 million in the second quarter. Pricing increased slightly to $511 per metric ton. Shipments fell by 9,000 metric tons, mostly due to downtime at Baie-Comeau (Quebec) and Augusta (Georgia). The delivered cost in the segment was largely unchanged compared to the previous quarter, as lower maintenance costs and higher contributions from cogeneration were mostly offset by the impacts of the strengthening Canadian dollar. EBITDA was unchanged at $10 million for the quarter, equivalent to $26 per metric ton. Finished goods inventory fell by 16,000 metric tons.  

Specialty Papers
The specialty papers segment recorded operating income of $7 million during the third quarter, an improvement of $14 million from the previous quarter. The average transaction price rose by $8 per short ton. Despite continued declines in demand and the closure of a coated paper machine in Catawba (South Carolina) at the end of the second quarter, shipments of specialty papers fell by only 16,000 short tons in the third quarter. The segment's delivered cost decreased by $34 per short ton. This was mostly derived from the elimination of $11 million in cost associated with the restructuring at Catawba in the second quarter. EBITDA was $18 million in the quarter, equivalent to $54 per short ton, an improvement of $43 per short ton compared to the previous quarter. Finished goods inventory declined by 8% to 86,000 short tons.

Consolidated Quarterly Operating Income Variance Against Year-Ago Period
The company recorded operating income of $48 million for the third quarter, compared to operating income of $10 million for the same period in 2016. The difference is mostly a result of higher volumes and pricing in our market pulp and wood products segments, which benefited from favorable market dynamics when compared to the year-ago period, as well as improvements in operating costs, particularly in our paper segments.

Overall, pricing gains were $50 million, as $58 million from our wood products and pulp segments was slightly offset by reductions in specialty papers ($4 million), newsprint ($3 million) and tissue ($1 million). Combined volume growth in wood products and market pulp was equivalent to $7 million in the quarter while decreased volumes in newsprint, specialty papers and tissue, resulted in a negative variance of $13 million during this same period.

Our overall cost position, net of volume impacts, improved by $18 million compared to the third quarter of 2016 and is mostly attributable to reductions associated with capacity closures in our paper segments.        

Corporate and Finance
The company invested $20 million on capital expenditures in the quarter. $7 million was spent on the Calhoun tissue project. We made countervailing duty deposits of $19 million in the third quarter which were recorded on our balance sheet, of which $14 million were attributable to softwood lumber and $5 million to supercalendered papers. 

Despite higher net pension and OPEB contributions due to timing as well as a seasonal increase in working capital, which were $37 million and $28 million, respectively, the company repaid an additional $7 million on its revolving credit facilities. We repaid a further $30 million since the end of the third quarter. However, due mainly to additional letters of credit required in connection with trade disputes, total liquidity declined by $14 million and stood at $400 million at the end of September.
Oct. 27, 2017 - Weyerhaeuser Company (NYSE: WY) has reported third quarter net earnings of $130 million, or 17 cents per diluted share, on net sales of $1.9 billion. This compares with earnings from continuing operations of $162 million, or 21 cents per diluted share, on net sales of $1.7 billion for the same period last year. Adjusted EBITDA for the third quarter was $569 million compared with $434 million for the third quarter of last year. 

Excluding after-tax special charges of $129 million, primarily comprised of previously announced charges for product remediation, the company reported net earnings of $259 million, or 34 cents per diluted share for the third quarter. This compares with net earnings from continuing operations before special items of $172 million for the same period last year and $212 million for the second quarter of 2017.

"I am very pleased with our third quarter performance, as each of our businesses delivered strong operating results despite various weather-related challenges in the quarter," said Doyle R. Simons, president and chief executive officer. "We also continued to simplify our business and strategically optimize our timberland portfolio by completing the sale of our Uruguay operations, and we redeemed our interest in the Twin Creeks joint venture in October. Looking forward, we remain focused on driving value for shareholders by delivering continued operational improvements and capturing the full benefit of improving market conditions."

TIMBERLANDS

FINANCIAL HIGHLIGHTS (millions)

2Q 2017




3Q 2017




Change

Net sales

$632




$670




$38

Contribution to pre-tax earnings

($12)




$131




$143

Pre-tax charge for special items

$147




$0




($147)

Contribution to pre-tax earnings before special items

$135




$131




($4)

Adjusted EBITDA

$222




$220




($2)

3Q 2017 Performance - In the West, higher average sales realizations for domestic and export logs were more than offset by lower fee harvest volumes due to fire season related logging restrictions. In the South, log sales volumes increased, and average sales realizations were comparable to the second quarter, as slightly higher sawlog pricing was offset by a higher proportion of pulpwood sales. Forestry costs increased slightly.

4Q 2017 Outlook - Weyerhaeuser expects higher earnings and Adjusted EBITDA in the fourth quarter compared with the third quarter. In the West, the Company anticipates increased fee harvest volumes and slightly higher average log sales realizations, partially offset by higher road spending.  In the South, the company anticipates slightly higher fee harvest volumes, more than offset by higher forestry expense due to weather-related deferral of third quarter activities. Average log sales realizations should be comparable to the third quarter.

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS (millions)

2Q 2017




3Q 2017




Change

Net sales

$46




$82




$36

Contribution to pre-tax earnings

$23




$47




$24

Adjusted EBITDA

$37




$74




$37

3Q 2017 Performance - Earnings and Adjusted EBITDA increased compared with the second quarter due to seasonally higher Real Estate sales. Energy & Natural Resources royalties decreased slightly.

4Q 2017 Outlook - Weyerhaeuser expects significantly higher earnings and Adjusted EBITDA in the fourth quarter compared with third quarter. The company anticipates full year Adjusted EBITDA for the Real Estate, Energy & Natural Resources segment will be approximately $250 million.

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS (millions)

2Q 2017




3Q 2017




Change

Net sales

$1,293




$1,299




$6

Contribution to pre-tax earnings

$177




$40




($137)

Pre-tax charge for special items

$61




$201




$140

Contribution to pre-tax earnings before special items

$238




$241




$3

Adjusted EBITDA

$274




$278




$4

3Q 2017 Performance - Average sales realizations improved compared with the second quarter, with oriented strand board realizations increasing 11 percent. Sales volumes for most products decreased slightly, operating rates declined, and per unit manufacturing costs increased due to downtime from fire season related operating constraints and planned maintenance.

Third quarter results include pre-tax special charges of $201 million, which are comprised of $190 million for product remediation, $6 million for a non-cash impairment and $5 million for softwood lumber countervailing and antidumping duties.

4Q 2017 Outlook - Weyerhaeuser anticipates fourth quarter earnings and Adjusted EBITDA will be comparable to the third quarter. The company expects modestly higher average sales realizations for lumber and oriented strand board will be partially offset by slightly higher Western log costs.  In engineered wood products, the company anticipates seasonally lower sales volumes, higher input costs, and increased per unit manufacturing costs due to planned seasonal and maintenance downtime.

Oct. 27, 2017 - Norbord Inc. has reported Adjusted EBITDA of $200 million for the third quarter of 2017 versus $115 million in the third quarter of 2016 and $165 million in the second quarter of 2017. The improvement is primarily due to higher North American oriented strand board (OSB) prices and shipment volumes. North American operations generated Adjusted EBITDA of $184 million compared to $106 million in the same quarter last year and $157 million in the prior quarter. European operations delivered Adjusted EBITDA of $14 million versus $10 million in the same quarter last year and $9 million in the prior quarter.

"Our third quarter performance continued to accelerate and we delivered our best Adjusted EBITDA result in 13 years," said Peter Wijnbergen, Norbord's President and CEO. "In North America, our shipment volumes increased 5% and benchmark OSB prices were 36% higher year-over-year due to already strong OSB demand that was pushed even further by the hurricanes in the US south. In Europe, our financial performance is back on track as improved panel prices outpaced the currency translation headwind from the weaker Pound Sterling and the negative impact of higher resin prices."

"I am pleased to report that our Huguley, Alabama mill and the new line at our Inverness, Scotland mill both produced first board in September and started production in October. Once fully ramped up, this additional capacity will help us fulfill contract requirements for next year and serve rapidly growing customer demand in both our North American and European markets."

Norbord recorded Adjusted earnings of $121 million or $1.39 per diluted share ($1.40 per basic share) in the third quarter of 2017 versus $58 million or $0.67 per diluted share ($0.68 per basic share) in the third quarter of 2016 and $95 million or $1.10 per share (basic and diluted) in the second quarter of 2017.

Market Conditions
In North America, year-to-date US housing starts were up 3% versus the same period in 2016 with single-family starts (which use approximately three times more OSB than multi-family) up by 9%. The seasonally adjusted annualized rate (SAAR) was 1.13 million in September, 6% higher than the pace at this time last year, while the pace of housing permits (the more forward-looking indicator) was 1.22 million. Both the starts and permits SAAR numbers for September were negatively impacted by the hurricanes in Texas and Florida. The consensus forecast from US housing economists is approximately 1.21 million starts in 2017, which suggests a 3% year-over-year improvement, with the single family component at 71%, up from 67% in 2016.

North American benchmark OSB prices increased significantly in the third quarter of 2017 as new home construction activity and OSB demand continue to improve. OSB demand was pushed even further in the quarter due to hurricanes in the US south. Benchmark OSB prices increased steadily in all regions throughout the quarter and continued to reach multi-year highs, with the North Central benchmark OSB price averaging $409 per Msf (7⁄16-inch basis) for the quarter.

In Europe, Norbord's core panel markets continued to strengthen, with double-digit year-over-year OSB demand growth in both the UK and Germany. In local currency terms, average panel prices were up 12% from the same quarter last year and 6% versus the prior quarter.

Performance
North American OSB shipments increased 5% year-over-year due to increased mill productivity, and were in line with the prior quarter due to the approximately two weeks of lost production at the 100 Mile House, BC mill resulting from wildfire evacuations. Year-to-date, approximately 25% of Norbord's North American OSB sales volume went to specialty end-uses (industrial applications and export markets), which is continued progress toward the Company's long-term goal of 50%. Norbord's operating North American OSB mills produced at 97% of stated capacity (excluding the two curtailed mills in Huguley, Alabama and Chambord, Quebec), up from 95% in the same quarter last year and down from 99% in the prior quarter. Capacity utilization decreased quarter-over-quarter due to weather-related curtailments (wildfires in British Columbia and hurricanes in the US south) taken during the quarter.

Norbord's North American OSB cash production costs per unit (before mill profit share) increased 2% compared to the prior quarter and 4% versus the same quarter last year. Costs increased versus both comparative quarters due to the stronger Canadian dollar relative to the US dollar and costs related to preparing the Huguley mill for restart. The year-over-year increase was further impacted by higher resin prices.

In Europe, Norbord's shipments were 8% higher than the same quarter last year and in line with the prior quarter. The European mills produced at 100% of stated capacity in the quarter compared to 99% in the same quarter last year and 105% in the prior quarter. Capacity utilization increased year-over-year due to improved productivity, while the quarter-over-quarter decrease was due to annual maintenance shuts taken at three mills.

The Company generated $1 million of Margin Improvement Program (MIP) gains year-to-date from improved mill productivity, partially offset by the timing of annual maintenance shuts and related costs as well as costs associated with executing on strategic initiatives. These costs include adding in-house technical and engineering expertise to support the execution of capital projects in addition to investing in sales, marketing and production resources and capabilities to execute on the Company's North American specialty products growth strategy. MIP gains are measured relative to the prior year at constant prices and exchange rates.

The Company's $135 million modernization and expansion of its Inverness, Scotland OSB mill is substantially complete and the new line was put into production subsequent to quarter-end. The Huguley mill restarted production subsequent to quarter-end with the goal of achieving a sufficient run rate by the end of the first quarter of 2018 to meet customer commitments for next year.

Norbord's 2017 capital expenditures (excluding the Inverness project) are expected to be $145 million. Looking ahead to next year's capital expenditures, while the Company is still in the process of finalizing its capital plans, the 2018 capital expenditures target is expected to be approximately $150 million. This will include investments to improve production efficiency and reduce manufacturing costs across the Company's mills as well as to maintain high standards for environmental and safety performance. It will also include investments to support the Company's strategy to increase the production of specialty products for industrial and export markets.

Operating working capital was $156 million at quarter-end, unchanged from the end of the same quarter last year and down from $181 million at the end of the prior quarter. Quarter-over-quarter, working capital decreased due to higher accrued capital expenditures related to the Inverness project and higher incentive program accruals, which were only partially offset by the impact of higher North American OSB prices on accounts receivable. Working capital continues to be managed at minimal levels across the Company.

At quarter-end, Norbord had unutilized liquidity of $476 million, consisting of $126 million in cash and $350 million in unused credit lines. The Company's tangible net worth was $1,128 million and net debt to total capitalization on a book basis was 28%, with both ratios well within bank covenants.

Developments
On August 2, 2017, Norbord announced a bought deal secondary offering with a syndicate of underwriters through which a fund managed by Brookfield Asset Management Inc. (Brookfield) agreed to sell 3,550,000 common shares of Norbord at an offering price of $42.35 per common share. On August 9, 2017, upon closing of the offering, Brookfield's ownership of the Company decreased from approximately 53% to 49%. Norbord did not receive any proceeds from the offering.

On October 13, 2017, a fund managed by Brookfield completed a distribution of 7,069,705 common shares of Norbord to its fund investors. Upon completion of the distribution, Brookfield owned or controlled 34,787,535 or approximately 40% of the common shares of Norbord.

Dividend
The Board of Directors declared a quarterly dividend of C $0.60 per common share, payable on December 21, 2017 to shareholders of record on December 1, 2017. This is a C $0.10 per common share or 20% increase over last quarter's level. The increase reflects the strength in North American benchmark OSB prices this year and resulting robust operating cash flow for the Company, the positive market outlook for the Company's products and the continuing expectation that free cash flow will be sufficient to fund current growth and other attractive capital investment commitments for the foreseeable future. Any dividends reinvested on December 21, 2017 under the Company's Dividend Reinvestment Plan will be used by the transfer agent to purchase common shares from Norbord's treasury.

Norbord's dividends are declared in Canadian dollars. Registered and beneficial shareholders may opt to receive their dividends in either Canadian dollars or the US dollar equivalent. Unless they request the US dollar equivalent, shareholders will receive dividends in Canadian dollars. The US dollar equivalent of the dividend will be based on the Bloomberg FX Fixings Service (BFIX) noon exchange rate on the record date or, if the record date falls on a weekend or holiday, on the BFIX noon exchange rate of the preceding business day.

Registered shareholders wishing to receive the US dollar dividend equivalent should contact Norbord's transfer agent, AST Trust Company (Canada), by phone at 1-800-387-0825 or by email at  This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Beneficial shareholders (i.e., those holding their Norbord shares with their brokerage) should contact the broker with whom their shares are held.

Norbord's variable dividend policy targets the payment to shareholders of a portion of free cash flow based upon the Company's financial position, results of operations, cash flow, capital requirements and restrictions under the Company's revolving bank lines, as well as the market outlook for the Company's principal products and broader market and economic conditions, among other factors. The Board retains the discretion to amend the Company's dividend policy in any manner and at any time as it may deem necessary or appropriate in the future. For these reasons, as well as others, the Board in its sole discretion can decide to increase, maintain, decrease, suspend or discontinue the payment of cash dividends in the future.

Normal Course Issuer Bid
Norbord also announced today that the Toronto Stock Exchange (TSX) has accepted its notice of intention to renew its normal course issuer bid in accordance with TSX rules. Under the bid, Norbord may purchase up to 5,142,773 of its common shares, representing 10% of the Company's public float of 51,427,739 as of October 20, 2017, pursuant to TSX rules (a total of 86,387,210 Common Shares were issued and outstanding as of such date).

Purchases under the bid may commence on November 3, 2017, and will terminate on the earlier of November 2, 2018, the date Norbord completes its purchases pursuant to the notice of intention to make a normal course issuer bid filed with the TSX or the date of notice by Norbord of termination of the bid. Purchases will be made on the open market by Norbord through the facilities of the TSX, the New York Stock Exchange or Canadian or US alternative trading systems, if eligible, in accordance with the requirements of the TSX and applicable securities laws. The price that Norbord will pay for any such common shares will be the market price of such shares at the time of acquisition. Common shares purchased under the bid will be cancelled. Norbord's average daily trading volume on the TSX during the last six calendar months was 201,830 common shares. Daily purchases of common shares will not exceed 50,457 subject to the Company's ability to make "block" purchases under the rules of the TSX. Under its prior bid that commenced on November 3, 2016 and expires on November 2, 2017, Norbord previously sought and received approval from the TSX to repurchase up to 4,280,997 common shares. Norbord did not acquire any common shares under such bid in the past 12 months.

Norbord believes that the market price of its common shares at certain times may be attractive and that the purchase of these common shares from time to time would be an appropriate use of Norbord's funds in light of potential benefits to remaining shareholders.

From time to time, when Norbord does not possess material non-public information about itself or its securities, it may enter into an automatic purchase plan with its broker to allow for the purchase of common shares at times when Norbord ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Any such plans entered into with Norbord's broker will be adopted in accordance with applicable Canadian securities laws.
Oct. 24, 2017 - West Fraser Timber Co. Ltd. reports third quarter 2017 results:

Highlights
• Completed acquisition of six sawmills and a finger-joint mill in Florida and Georgia.
• Adjusted EBITDA of $269 million for the quarter.
• Quarter ending net debt to capital ratio of 16%.

Gilman acquisition
On August 31, 2017 we completed the acquisition of the Gilman Companies for net cash consideration of $525 million (US$418 million). The Gilman Companies are comprised of six sawmills and a finger-joint mill in Florida and Georgia as well as an administrative office in St. Marys, Georgia. Ted Seraphim, our President and CEO said, “We are delighted to welcome the - 2 - Gilman leadership and employees to the West Fraser family. This acquisition is a major step in our growth strategy as we expand our lumber business in the United States.” 

Forest fires in British Columbia and hurricanes in the U.S. South
A number of wildfires throughout the interior region of British Columbia resulted in a provincial state of emergency being declared from July 7 to September 15, 2017. Our operations in 100 Mile House, Williams Lake and Chasm were briefly suspended due to the wildfires, reducing our production by 55 MMfbm of lumber and 15 Msf of plywood. The 2017 hurricane season was more severe than normal causing significant damage to areas in South East Texas and Florida. We were fortunate that our facilities were undamaged and that disruptions to our operations were minimal. 

Operational results
Our lumber segment generated operating earnings of $126 million (Q2-17 - $171 million) and Adjusted EBITDA of $195 million (Q2-17 - $240 million). This quarter’s results were negatively impacted by lower product pricing and lower SPF production as a result of the British Columbia forest fires. Countervailing and antidumping duties, which commenced in the previous quarter, resulted in an expense of $31 million for the current quarter. Our panels segment generated operating earnings in the quarter of $45 million (Q2-17 - $23 million) and Adjusted EBITDA of $48 million (Q2-17 - $26 million). Improved plywood pricing was the primary driver of improved results. Our pulp & paper segment generated operating earnings of $21 million (Q2-17 - $32 million) and Adjusted EBITDA of $30 million (Q2-17 - $42 million). The major factors contributing to the decrease in operating earnings were lower Canadian dollar pulp prices and increased maintenance costs from our Hinton pulp mill major maintenance shutdown.

Softwood lumber dispute
The U.S. Department of Commerce’s preliminary review resulted in a West Fraser specific countervailing duty rate of 24.12% effective April 28, 2017 and an antidumping duty rate of 6.76% effective June 30, 2017, resulting in an expense of $31 million for the current quarter and $65 million for the first nine months of 2017. The requirement that we pay countervailing duties was suspended on August 24, 2017 until final determination is determined by the U.S. International Trade Commission.
Oct. 24, 2017 - Canfor Pulp Products Inc. has reported net income of $12.6 million, or $0.19 per share, for the third quarter of 2017, compared to $20.2 million, or $0.31 per share, for the second quarter of 2017 and $22.4 million, or $0.34 per share, for the third quarter of 2016. For the nine months ended September 30, 2017, the Company’s net income was $56.9 million, or $0.86 per share, compared to $47.7 million, or $0.70 per share, for the nine months ended September 30, 2016.

The Company reported operating income of $21.1 million for the third quarter of 2017, down $10.4 million from the $31.5 million reported for the second quarter of 2017. While pulp shipments and production were both up quarterover-quarter, the related increase in operating income was more than offset by the impact on unit pulp and paper sales realizations of a significantly stronger Canadian dollar.

Entering the third quarter of 2017, global pulp markets showed signs of weakness; however, as the quarter progressed, demand and pricing rebounded particularly in China, in part due to China’s new regulations restricting the import of recycled mixed paper. The resulting positive price momentum will largely be realized in the fourth quarter of 2017, reflecting the timing of shipments (versus orders). As a result average Northern Bleached Softwood Kraft (“NBSK”) pulp US-dollar list prices to China were consistent quarter-over-quarter; however, NBSK pulp unit sales realizations experienced a moderate decrease, due to a 5 cent or 7% stronger Canadian dollar. Bleached Chemi-Thermo Mechanical Pulp (“BCTMP”) US-dollar list prices trended positively through the third quarter of 2017, but BCTMP unit sales realizations were also negatively impacted by a stronger Canadian dollar. Energy revenues were well up in the current quarter reflecting a return to more normalized power generation levels.

Pulp shipments and production volumes were up 10% and 11%, respectively, from the previous quarter, principally reflecting a decline in scheduled maintenance outages. In the current quarter, the Company completed a scheduled maintenance outage at the Intercontinental NBSK pulp mill which reduced pulp production by approximately 10,000 tonnes. In the second quarter, a scheduled maintenance outage at the Company’s larger Northwood NBSK pulp mill resulted in approximately 33,000 tonnes of reduced production. Shipments for the third quarter of 2017 were also impacted by a 14,000 tonne vessel slippage into early October. Pulp unit manufacturing costs improved from the previous quarter, largely reflecting the lower quarter-over-quarter scheduled maintenance outages coupled with seasonally lower energy prices and usage.

Operating income in the Company’s paper segment at $4.9 million was down $1.7 million from the second quarter of 2017, largely reflecting a modest decline in paper unit sales realizations, due to higher market-driven US-dollar paper pricing being more than offset by the stronger Canadian dollar. Partially offsetting this decline in paper unit sales realizations was a moderate improvement in paper unit manufacturing costs, primarily driven by lower slush pulp costs, combined with a decline in maintenance spend.

Commenting on the Company’s third quarter of 2017 results, CPPI’s Chief Executive Officer, Don Kayne said, “Despite the stronger Canadian dollar, market conditions were somewhat better than anticipated, allowing us to generate solid results for the quarter. With global pulp markets strong as we head into the fourth quarter, and our major NBSK pulp maintenance shutdowns now behind us, we are very focused on optimizing our production performance and sales mix through the balance of the year.”

For the month of October 2017, the Company announced increases of US$105 per tonne and US$30 per tonne for NBSK pulp list prices to China and North America, respectively, reflecting a surge in demand, principally from China, News Release Canfor Pulp Products Inc. 2 as well as supply disruptions. Global pulp markets are anticipated to remain strong through the fourth quarter of 2017.

Results in the fourth quarter of 2017 will reflect a scheduled outage at the Taylor pulp mill to complete preliminary work associated with the previously announced energy project, with a projected 3,000 tonnes of reduced BCTMP production as well as lower projected shipment volumes.

On October 20, 2017, the Board of Directors declared a quarterly dividend of $0.0625 per share, payable on November 9, 2017 to the shareholders of record on November 2, 2017.
Sept. 26, 2017 - Sales of newly built, single-family homes in August fell 3.4 per cent to a seasonally adjusted annual rate of 560,000 units from an upwardly revised July reading, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This was the lowest sales reading since December 2016. However, year-to-date, new home sales are 7.5 per cent above their level over the same period last year.

"This month's report is another reminder that builders need to manage rising supply-side costs to meet consumer demand for affordably priced homes," said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas.   

"The year-to-date growth shows that new home sales are continuing to make consistent, long-term gains," said NAHB chief economist Robert Dietz. "However, we may see more volatility in the next few months as communities affected by the recent hurricanes experience construction delays and other economic disruptions."

The inventory of new homes for sale was 284,000 in August, which is a 6.1-month supply at the current sales pace. 

Regionally, new home sales remained unchanged in the Midwest. Sales fell 2.6 per cent in the Northeast, 2.7 per cent in the West and 4.7 per cent in the South.
Production cost margins for sawmills in Brazil, Russia and Finland have fallen during the first half of 2017, while they increased to their second highest level in 13 years in the US South in the 2Q/17, according to the Wood Resource Quarterly.

Sept. 19, 2017 - Nationwide housing starts fell 0.8 per cent in August to a seasonally adjusted annual rate of 1.18 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department.

Single-family production rose 1.6 per cent in August to a seasonally adjusted annual rate of 851,000 after a downwardly revised July reading. Year-to-date, single-family starts are 8.9 per cent above their level over the same period last year. Multifamily starts dropped 6.5 per cent to 329,000 units after an upward July revision.  

"This month's report shows that single-family starts continue to move forward at a gradual, consistent pace," said NAHB chief economist Robert Dietz. "The three-month average for single-family production has reached a post-recession high, but the months ahead may show volatility given that the building markets affected by Hurricanes Harvey and Irma represent about 14 per cent of national production."  

"We are playing close attention to the communities affected by these hurricanes, and are helping them start on the rebuilding and restoration process," said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas.  

Regionally in August, combined single- and multifamily housing production rose 22.0 per cent in the Midwest and 4.0 per cent in the West. Starts fell 7.9 per cent in the South and 8.7 per cent in the Northeast. 

Overall permit issuance in August was up 5.7 per cent to a seasonally adjusted annual rate of 1.30 million units. Single-family permits edged down 1.5 per cent to 800,000 units while multifamily permits rose 19.6 per cent to 500,000.

Regionally, overall permits rose 15.3 per cent in the West, 8.8 per cent in the Midwest and 3.7 per cent in the South. Permits fell 13.0 per cent in the Northeast. 
Sept. 14, 2017 - International trade of softwood lumber is on pace to a new record high in 2017 if the trend from the first six months of 2017 continues in the second half of the year.
Sept. 11, 2017 - As negotiators for Canada, the United States, and Mexico revealed last week they’ve made little progress on revising the North American Free Trade Agreement (NAFTA), the latest public opinion survey from the Angus Reid Institute finds Canadians increasingly looking to partners other than the U.S. to safeguard international trade.
Aug. 29, 2017 - The U.S. Department of Commerce has postponed its final determinations in the anti-dumping duty (ADD) and countervailing duty (CVD) investigations of imports of softwood lumber from Canada until no later than Nov. 14.
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