Builders are familiar with standard plywood sheets that measure 4-feet wide, 8-feet long and between a quarter-inch and more than one-inch thick. The new panels made by the Freres Lumber Company of Lyons, Oregon, can be as much 12-feet wide, 48-feet long and 2-feet thick.
The company announced its new panels in October, capping more than a year of development and performance testing at Oregon State’s Advanced Wood Products Laboratory. “The results look very promising,” said Ari Sinha, assistant professor in OSU’s College of Forestry, who oversaw the tests. “This is a unique product with the potential for creating jobs in rural Oregon.”
Versatility is one of the benefits of the product known as a Mass Plywood Panel (MPP). “These panels can be customized for different applications. Because they have very good compression qualities, they could be used for columns as well as panels,” said Sinha.
The veneer manufacturing process enables manufacturers to orient wood grain and to distribute the defects found in smaller trees, such as knots, in a way that maintains the strength of the final product, Sinha added.
Tests in Sinha’s lab focused on the panels’ structural and physical properties such as density, adhesive bonding and resistance to the kinds of vertical and horizontal stresses experienced in an earthquake. Additional tests are planned after the first of the year.
Mass Plywood Panels can achieve the performance characteristics of a similar product known as Cross Laminated Timber panels with 20 to 30 per cent less wood.
“The market is wide enough that this product can compete in niche applications,” said Sinha. “MPP can be made to order.”
Sinha’s lab conducts wood-product testing year-around for companies in Oregon, Washington and other states. He evaluates connections between building components as well as component stresses stemming from wind, earthquakes and other forces.
With support from businesses, Oregon BEST and the U.S. Economic Development Administration, the new National Center for Advanced Wood Products Manufacturing and Design will continue to conduct tests on Mass Plywood Panels and on Cross Laminated Timber panels manufactured by companies in the Northwest and elsewhere. Housed at the OSU College of Forestry, the center is a collaboration between the college, the OSU College of Engineering and the University of Oregon School of Architecture and Allied Arts.
"Williams Lake Plywood has been operating at its Williams Lake location since 1953, but it didn’t start out as a West Fraser owned plant and it didn’t always make plywood. It was originally known as “All Fir”- finishing rough lumber from the surrounding bush mills."
Read the full story.
Aug. 12, 2016 - Higher demand and strong sales to construction accounts are reasons behind Hardwoods Distribution Inc.'s increase in sales in the second quarter. The company reports that total sales increased by 9.5% to $157.0 million from $143.4 million in Q2 2015. Hardwoods' U.S. operations increased sales by 3.7% to $95.5 million (USD).
July 26, 2016 - Norbord Inc. reported Adjusted EBITDA of $94 million for the second quarter of 2016 versus $19 million in the second quarter of 2015 and $61 million in the first quarter of 2016. The improvement versus both comparative periods is primarily due to higher North American oriented strand board (OSB) prices and shipment volumes.
North American operations generated Adjusted EBITDA of $85 million in the quarter compared to $11 million in the same quarter last year and $53 million in the prior quarter. European operations delivered Adjusted EBITDA of $11 million compared to $10 million in both comparative quarters.
"Our financial and operational performance continued to improve in the second quarter. Our Adjusted EBITDA has increased for six consecutive quarters and so far in 2016, we have generated $120 million more in Adjusted EBITDA than this time last year. Further, our Adjusted earnings were more than double the first quarter," said Peter Wijnbergen, Norbord's President and CEO. "Our North American mills produced at 96% of stated capacity during the quarter. The benchmark OSB spot price is currently up 44% since its February low, the highest level in over three years. We see further upside to our performance as recovering US housing starts, particularly single-family, continue to drive increasing OSB demand."
"In Europe, our panel business delivered a 10% improvement in Adjusted EBITDA. The underlying fundamentals of our European business remain favourable in spite of the political uncertainty following the Brexit referendum. The UK is a net importer of panelboard and as a primarily UK-based producer, the recent pressure on the Pound Sterling makes Norbord's domestically-produced panels more competitive than imports. Our modernization project at Inverness will lower our manufacturing costs and is underpinned by growing European OSB demand, largely driven by increasing substitution of OSB for higher cost plywood."
In North America, year-to-date US housing starts were up 7% versus the same period last year. Single-family starts, which use approximately three times more OSB than multi-family, increased by 13% and single-family permits were 10% higher. The seasonally-adjusted annualized rate was 1.19 million in June. The consensus forecast from US housing economists is for approximately 1.20 million starts in 2016, which suggests an 8% year-over-year improvement.
Second quarter North American benchmark OSB prices increased significantly from both the same quarter last year and the previous quarter as new home construction activity and OSB demand continue to improve. OSB prices increased rapidly during the month of May before pulling back in June, and the North Central benchmark price finished the quarter at $275 per thousand square feet (Msf) (7/16-inch basis). The North Central benchmark price averaged $264 per Msf for the quarter, compared to $193 per Msf in the same quarter last year and $226 per Msf in the previous quarter. In the South East region, where approximately 35% of Norbord's North American OSB capacity is located, benchmark prices averaged $245 per Msf in the quarter, compared to $174 in the same quarter last year and $215 in the prior quarter. In the Western Canada region, where approximately 30% of Norbord's North American capacity is located, benchmark prices averaged $242 per Msf in the quarter, compared to $152 in the same quarter last year and $191 in the previous quarter.
In Europe, Norbord's core panel markets in the UK and Germany continued to experience strong demand growth in the quarter. Second quarter average panel prices were in line with both the same quarter last year and the previous quarter. OSB prices were stable in the UK and continued to rise on the continent, resulting in average prices that were 4% higher year-over-year and 2% higher quarter-over-quarter. Medium density fibreboard (MDF) and particleboard prices were 5% lower year-over-year due to increased import competition when the Pound Sterling was stronger earlier this year, but were in line with the previous quarter.
Norbord's North American OSB shipments increased 8% year-over-year and 11% quarter-over-quarter due to fewer maintenance and market shuts and improved mill productivity. Norbord's operating North American OSB mills produced at 96% of stated capacity (excluding the two curtailed mills in Huguley, Alabama and Val-d'Or, Quebec), up from 89% in the same quarter last year and 92% in the prior quarter. Capacity utilization increased versus both comparative periods due to improved productivity, as well as fewer maintenance shuts and production curtailments, partially offset by approximately three weeks of lost production due to the fire at the High Level, Alberta mill. Three of Norbord's North American mills achieved quarterly production records.
Norbord's North American OSB cash production costs per unit (before mill profit share) decreased 6% year-to-date due to improved productivity, lower resin prices, improved raw material usages, fewer maintenance shuts and production curtailments and the weaker Canadian dollar, which were partially offset by higher supplies and maintenance costs.
In Europe, Norbord's shipments were 5% higher than the same quarter last year and 6% higher than the prior quarter. The European mills produced at 104% of stated capacity in the quarter compared to 101% in the same quarter last year and 100% in the prior quarter due to improved productivity. One of Norbord's European mills achieved a quarterly production record.
Norbord's mills delivered Margin Improvement Program (MIP) gains of $14 million year-to-date from improved productivity and lower raw material use as well as merger synergies and returns on recent capital investments. MIP gains are measured relative to the prior year at constant prices and exchange rates.
In the 15 months since the merger with Ainsworth, Norbord has captured $32 million in cumulative merger synergies ($39 million annualized), or 87% of the $45 million total commitment. The Company remains on track to deliver its full $45 million target by the end of 2016. In addition to these synergies, the merger has enabled the Company to avoid significant cash outlays it would otherwise have had to incur. Norbord estimates this capital and operating cost avoidance at $18 million, which includes transferring formerly idle assets, maintaining lower inventory levels and optimizing the timing of supplier payments.
In January 2016, the Board of Directors approved a $135 million investment over the next two years to modernize and expand the Company's Inverness, Scotland OSB mill. During the quarter, on-site construction work commenced and work began to move the unused second press from the Grande Prairie, Alberta mill to Inverness.
Capital investments year-to-date were $34 million (including $6 million related to the Inverness project) compared to $28 million in the first half of last year. Norbord's 2016 regular capital expenditure budget is $75 million. In addition, the Company expects to spend $45 million on the Inverness project in 2016.
Operating working capital was $163 million at quarter-end compared to $151 million at the end of the same quarter last year and $172 million at the end of the prior quarter. Working capital increased year-over-year primarily due to the impact of higher North American OSB prices on accounts receivable and the insurance receivable related to the High Level fire. Working capital decreased quarter-over-quarter primarily due to the seasonal inventory drawdown at the northern mills and the loss of log inventory due to the High Level fire (which is covered by insurance).
Due to improved Adjusted EBITDA, cash generated from operations for the first six months of 2016 was $86 million compared with $55 million of cash consumed in the same period of 2015.
At quarter-end, Norbord's unutilized liquidity improved by $50 million to $374 million and consisted of $12 million in cash and $362 million in unused credit lines. During the quarter, the Company repaid $55 million that had previously been drawn under the accounts receivable securitization program. In June 2016, the Company amended its bank lines to reset the tangible net worth covenant to $500 million and extend the maturity date for $225 million of the total aggregate commitment to May 2019. The remaining $20 million commitment matures in May 2018. The Company's tangible net worth was $799 million and net debt to total capitalization on a book basis was 48%. Both ratios remain well within bank covenants.
Norbord has $200 million senior secured notes that are due in February 2017, which the Company intends to permanently repay at maturity using cash on hand, cash generated from operations and if necessary, by drawing upon the accounts receivable securitization program.
On the back of strong North American pricing, we delivered Adjusted EBITDA of $94 million during the quarter (Adjusted earnings per share of $0.49) – over 50% more than the previous quarter. Across our global operations, manufacturing costs declined 4% year-over-year and we had record quarterly production at four mills. Our improved mill productivity enabled a 7% increase in sales volume year-over-year, consistent with the demand increases we had been forecasting. While still a small part of our revenues, sales to Asia are also improving, with exports to both Japan and China up over last year.
We continue to make progress on the synergies from our merger with Ainsworth. To-date we have captured $39 million (annualized) in cumulative synergies, or 87% of our overall $45 million target. In addition to these synergies, our now larger post-merger operations have enabled us to avoid significant cash outlays we would otherwise have had to incur. We estimate this capital and operating cost avoidance at $18 million, which includes transferring and putting formerly idle assets to productive use, maintaining lower inventory levels and optimizing the timing of supplier payments.
While we continue to allocate capital toward optimizing and growing our operations, we are also reducing our debt. During the second quarter we completely paid down our $55 million in accounts receivable securitization drawings, improving our liquidity position by more than $50 million to $374 million. Deleveraging remains a priority and we are committed to using our free cash flow and this liquidity to pay down our $200 million 2017 bonds when they come due next February.
Well positioned to navigate political uncertainty in the UK
While Norbord, like all companies active in the UK, is affected by the prevailing political environment following the referendum result, the underlying fundamentals and market dynamics that relate to our specific industry continue to be favourable. For context, our European business represents 24% of our shipments volume (of which about two-thirds remains in the UK) and contributed 12% of our Adjusted EBITDA this quarter. We are are well positioned to navigate the current economic uncertainties and this perspective is founded on two principal facts.
First, OSB represents only about 45% of structural panel consumption in Europe compared to over 65% in North America. Substitution of OSB for higher cost plywood has been driving double-digit demand growth for the past several years. Since the vast majority of competing plywood is imported from outside Europe and denominated in US dollars, it has become 10% more expensive in the UK market since the referendum. Further, the UK is a net importer of OSB, MDF and particleboard, and Norbord is the largest domestic panelboard producer. The Pound Sterling has also devalued almost 10% versus the Euro, making our domestically produced panels even more appealing for UK customers.
Second, there is a chronic undersupply of new housing in the UK. The UK government acknowledges that the number of new homes built annually needs to double from its current level. Over the past few years, a number of measures have been legislated to debottleneck the cumbersome planning process. This new supply may not be built out as quickly now as before the referendum, but the fact remains there is a housing gap that needs to be filled. While new home construction drives only about one-quarter of UK OSB demand, this continues to represent a significant opportunity for Norbord.
We are confident the underlying fundamentals are positive and that we have the right strategy and operational approach in place.
Our Inverness project is a unique and low-risk way to further strengthen our European business. Our $135 million project budget translates to $190 per thousand square feet of capacity. This is half the cost of greenfield and represents the new low water mark for capacity cost in our industry. The referendum has not changed the project economics and the benefits will be driven by significantly lowering the mill's manufacturing cost through the installation of larger scale, modern press technology that has been sitting idle at our Grande Prairie, Alberta mill. The opportunity is further underpinned by the site's access to a growing and low-cost wood basket in Europe.
July 25, 2016 - Toronto-based Norbord Inc. is positioned to profit from the rise in the OSB benchmark price after years of carefully building its presence in the OSB space.
According to a feature in the Globe & Mail, North American OSB prices in the first quarter of 2016 were 17 per cent higher than last year. That, and Norbord's acquisitions in the OSB sector position it for solid growth and profitability after years of challenges.
Chris Damas, an analyst and editor of BCMI Report, says the benchmark OSB price is now in the range of $306 (U.S.) per thousand square feet, well above the $229 15-year average.
Once a diversified forestry company, Norbord shed assets over the years to focus on OSB. Now boasting annual sales in the $1.5-billion range and a market capitalization of about $2.4-billion (Canadian), it bills itself as the world’s largest producer of OSB.
Read the complete feature here.
June 6, 2016 - Back in the fall, Columbia Forest Products mills in the U.S. were producing such a high-quality veneer that the company was having to ship it north to its mill in Hearst, Ont. to keep up with Canadian demand. The demand was so great, that Columbia ended up investing $15 million into its production facility in Hearst to upgrade the plant’s core-peeling capabilities with the same Meinan state-of-the-art peeling technology used in its U.S. mill operations.
As previously reported, in the afternoon of May 4, a fire broke out in the mill yard which, as a result of the hot, dry, windy weather conditions in northern Alberta, quickly spread to the log storage area outside the plant. As a precaution, Norbord immediately suspended production at the mill. Shipping from finished goods inventory resumed the weekend of May 6.
The High Level mill has a stated annual production capacity of 860 million square feet (3/8-inch basis) and has been ramping up towards full production since resuming operations in late 2013. High Level is located approximately 720 kilometres northwest of Edmonton and 400 kilometres west of Fort McMurray.
Norbord Inc. is a leading global manufacturer of wood-based panels and the world's largest producer of oriented strand board (OSB). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products. Norbord has assets of approximately $1.7 billion and employs approximately 2,600 people at 17 plant locations in the United States, Canada and Europe. Norbord is a publicly traded company listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol "OSB".
This news release contains forward-looking statements, as defined by applicable securities legislation, including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance. Often, but not always, forward-looking statements can be identified by the use of words such as "expect," "believe," "forecast," "likely," "support," "target," "consider," "continue," "suggest," "intend," "should," "appear," "would," "will," "will not," "plan," "can," "may," and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Although Norbord believes it has a reasonable basis for making these forward-looking statements, readers are cautioned not to place undue reliance on such forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include: assumptions in connection with the economic and financial conditions in the US, Europe, Canada and globally; risks inherent to product concentration and cyclicality; effects of competition and product pricing pressures; risks inherent to customer dependence; effects of variations in the price and availability of manufacturing inputs; risks inherent to a capital intensive industry; ability to realize synergies; and other risks and factors described from time to time in filings with Canadian securities regulatory authorities.
Except as required by applicable law, Norbord does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by, or on behalf of, the Company, whether as a result of new information, future events or otherwise, or to publicly update or revise the above list of factors affecting this information. See the "Caution Regarding Forward-Looking Information" statement in the January 27, 2016 Annual Information Form and the cautionary statement contained in the "Forward-Looking Statements" section of the 2015 Management's Discussion and Analysis dated January 27, 2016 and Q1 2016 Management's Discussion and Analysis dated April 28, 2016.
The company purchased the shares of Nova Wood Lamination from its founding owners, Frank and Donna Decicco.
"Frank, Donna and the rest of the Nova Wood Lamination team have built an outstanding reputation for delivering a diverse mix of high quality products and services to the decorative hardwood panel industry," said Columbia's executive vice-president of Canadian plywood and decorative veneer operations, Gary Gillespie. "We are extremely happy to bring the Nova lamination facility into the Columbia Forest Products family.”
"The Nova Wood plant’s flexible, quality-based production line and its proximity to attractive Canadian and U.S. markets will give many Columbia customers a new competitive edge,” added Gilles Levesque, Columbia's general manager of Canadian plywood operations.
Columbia's purchase of Nova Wood Lamination is the third major investment made by the company in the province over the past 12 months. The company also commissioned a new Meinan core peeling lathe at its Hearst, Ont. plywood plant this past fall and re-started hardwood veneer peeling operations in Rutherglen, Ont. earlier this month.
"We are high on Ontario: its resources, suppliers, the close working relationships we enjoy with the government agencies, and especially, the dedicated workforce we employ across the province,” said Gillespie.
About Columbia Forest Products
Established in 1957, Columbia Forest Products has provided fine decorative hardwood plywood panels to the woodworking industry for nearly 60 years. Columbia’s decorative veneers and panels are used in high-quality cabinetry, fine furniture, architectural millwork and commercial fixtures. An employee stock owned firm (ESOP), Columbia is committed to offering products with integrity, originating from responsibly-managed forestlands and assembled with EPA award-winning PureBond® formaldehyde-free technology. All Columbia products are backed by exceptional customer service and technical support. Website address: www.cfpwood.com.
Federal government invests over $1.43M in forestry initiative in YukonDec. 7, 2018 – To promote greener heating solutions, create…
Canada to remain major supplier of softwood lumber to the U.S.Dec. 11, 2018 – Consumption of softwood lumber in the U.S.…
Interior overhaul: John Deere redesigns its L-Series machinesDec. 11, 2018 – Sitting side by side at the…
John Deere unveils new 655K and 755K crawler loadersDec. 7, 2018 – Continuing to build on the strengths of…
TLA Convention & Trade Show
January 16-18, 2019
B.C. Natural Resources Forum
January 22-24, 2019
6th Annual Forest Industry and Timberlands Conference
January 24, 2019
Western Forestry Contractors' Association Conference and Trade Show
January 30-1, 2019