Eacom Timber Corporation (TSXV:ETR)
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MONTREAL and VANCOUVER, Aug. 23, 2011 /CNW/ --
MONTREAL and VANCOUVER, Aug. 23, 2011 /CNW Telbec/ - EACOM Timber
Corporation (ETR: TSX-V) ("EACOM", or the "Company") is pleased to
announce its second quarter results for the three-month period ended
June 30, 2011.
On June 30, 2010, EACOM completed the acquisition of the Domtar forest
products business which transformed the Company from a lumber trading
business to a lumber manufacturing, marketing and distribution business
capable of producing approximately 900 million board feet annually. The
Company began operating these newly acquired assets on July 1, 2010. As
a result, only twelve months or four quarters of operations are
indicative of the Company's ongoing activities. A sequential quarterly
comparison of the financial results for the quarters ended
June 30, 2011 and March 31, 2011 is provided, such a comparison being
considered more representative of ongoing operations.
OVERVIEW OF FINANCIAL RESULTS
The Company's operating results are significantly affected by lumber
prices and the CDN$/US$ exchange rate. For the quarter ended
June 30, 2011, a weaker pricing environment and a stronger Canadian
dollar translated into a lower EBITDA compared to the previous quarter.
The Company recorded for the quarter a negative EBITDA of $10,026
($3,238 for the quarter ended March31, 2011). The net loss and
comprehensive loss for the quarter amounted to $13,662 or $0.03 per
common share ($6,132 or $0.01 per common share for the preceding
quarter).
QUARTER ENDED JUNE 30, 2011 vs. QUARTER ENDED MARCH 31, 2011
For the quarter ended June 30, 2011, the Company recorded sales
of $71,171, against sales of $79,955 for the preceding quarter. During
the quarter, the Company shipped 158 million board feet of lumber (170
million board feet in the earlier quarter) and 140,000 oven-dried
metric tons of by-products (161,000 oven-dried metric tons in the
preceding quarter). This decrease in shipments quarter over quarter is
attributable to a lower production with three mills taking
market-related downtime due to weak market conditions. The pricing
environment deteriorated with benchmark lumber prices averaging
US$314/Mfbm for studs and US$336/Mfbm for random lengths delivered
Great Lakes, compared to US$327/Mfbm and US$383/Mfbm respectively for
the quarter ended March 31, 2011. The impact of a weaker pricing
environment was compounded by a stronger Canadian dollar, the exchange
rate averaging 1.033 during the second quarter of 2011 compared to
1.015 during the preceding quarter. The mix of lumber grades and
dimensions sold during the second quarter remained similar to that of
the preceding quarter. Prices of by-products have remained constant
over the past two quarters.
Lumber production for the quarter ended June 30, 2011 was 119 million
board feet of lumber compared to 166 million board feet in the
preceding quarter. During the quarter, the Company operated at 47% of
its capacity with two of the eight sawmills acquired from Domtar idled
(65% during the earlier quarter with no change to idled mills).
Sawmills were subject to longer market-related downtime during the
second quarter as market conditions deteriorated. Unit costs were
consistent with those experienced in the earlier quarter. SG&A expenses
were higher in the second quarter of 2011 as compared to the previous
quarter due to some non-recurring costs.
FINANCIAL POSITION
At June 30, 2011, the Company had cash and cash equivalents of $13,577
($1,257 at March 31, 2011), and outstanding borrowings under its
revolving credit facility amounted to $3,330 against a borrowing
availability of $12,119 ($20,500 and $20,535 respectively at March 31,
2011). During the three-month period ended June 30, 2011, the Company
used $4,608 in operating activities as a result of cash operating
losses of $10,382, offset by a non-cash working capital recovery of
$5,774. The Company's working capital requirements vary during the year
due to the seasonality of forestry operations, and those requirements
are usually reaching their peak at the end of the first calendar
quarter. On April 20, 2011, the Company closed a private placement of
69,122,500 common shares sold at $0.50 per share for net proceeds of
$32,346. The net proceeds of this financing have been used to reduce
outstanding borrowings under the revolving credit facility and,
post-quarter end, to fund the acquisition of the remaining one-third
interest in the Elk Lake sawmill.
SUBSEQUENT EVENTS
Effective July 30, 2011, EACOM acquired from Liskeard Lumber Limited the
remaining one-third interest in the Elk Lake sawmill for a total
consideration of $15 million, comprised of a cash component of $10
million and a secured promissory note of $5 million due November 30,
2011. The Company previously owned two-thirds of the mill.
About EACOM
EACOM Timber Corporation is a TSX-V listed company. The business
activities of EACOM consist of the manufacturing, marketing and
distribution of lumber, wood chips and wood-based value-added products,
and the management of forest resources. EACOM owns eight sawmills, all
located in Eastern Canada, and related tenures. The mills are Timmins,
Nairn Centre, Gogama, Elk Lake and Ear Falls in Ontario, and Val-d'Or,
Ste-Marie and Matagami in Quebec. The sawmills in Ear Falls, Ontario,
and Ste-Marie, Quebec, are currently idled. EACOM also owns an idled
mill in Big River, Saskatchewan, a remanufacturing facility in
Val-d'Or, Quebec, and a 50% interest in an "I" joist plant in Sault
Ste-Marie, Ontario.
The TSX Venture Exchange has neither approved nor disapproved the
content of this press release. All director and officer appointments
are subject to TSX Venture Exchange approval.
Forward-Looking Statements
All statements in this news release that are not based on historical
facts are "forward-looking statements". While management has based any
forward-looking statements contained herein on its current
expectations, the information on which such expectations were based may
change. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of
risks, uncertainties and other factors, many of which are beyond our
control and could cause actual results to materially differ from such
statements. Such risks, uncertainties and other factors include, but
are not necessarily limited to, those set forth under "Risk Factors" in
the Company's Filing Statement dated January 8, 2010 and "Risks and
Uncertainties" in the Company's current MD&A filed with the Canadian
Securities Commissions.
The financial information included in this release also contains certain
data that are not measures of performance under IFRS. For example,
"EBITDA" and "EBITDA excluding specific items" are measures used by
management to assess the operating and financial performance of the
Company. We believe that EBITDA is a measure often used by investors to
assess a company's operating performance. EBITDA has limitations and
you should not consider this item in isolation, or as a substitute for
an analysis of our results as reported under IFRS. Because of these
limitations, EBITDA should not be used as a substitute for net loss or
cash flows from operating activities as determined in accordance with
IFRS, nor is it necessarily indicative of whether or not cash flow will
be sufficient to fund our cash requirements. In addition, our
definitions of EBITDA may differ from those of other companies. A
reconciliation of EBITDA to net loss is set forth under "OVERVIEW OF
FINANCIAL RESULTS - Supplemental Information on Non-GAAP Measures" in
the Company's current MD&A.
Additional information relating to EACOM is available on SEDAR at www.sedar.com.
SELECTED QUARTERLY INFORMATION
The following table provides an overview of the Company's financial
results for the quarters ended June 30, 2011 and March 31, 2011, along
with some key operating metrics.
(in thousands of dollars, except where Quarter ended Quarter ended
otherwise noted) June 30 March 31
Sales 71,171 79,955
EBITDA (10,026) (3,238)
Net loss (13,662) (6,132)
Average lumber price in US$ - RL 2×4 #1&2
((1)) 336 383
Average lumber price in US$ - Stud 2×4×8
((1)) 314 327
Average exchange rate 1.033 1.015
Production - SPF lumber (MMfbm) 119 166
Shipments - SPF lumber (MMfbm) 134 146
Shipments - wholesale lumber (MMfbm) 24 24
U.S. housing starts (thousands of units) 576 582
((1)) Eastern spruce/pine/fir, per thousand board feet delivered Great Lakes
(Source: Random Lengths Publications, Inc.)
The following table reconciles, for the quarters ended June 30, 2011 and
March 31, 2011, the Company's net loss as reported in accordance with
IFRS to EBITDA, providing an overview of those specific items affecting
comparability of the Company's EBITDA and net loss as reported.
(in thousands of dollars) Quarter ended Quarter ended
June 30 March 31
Net loss as reported (13,662) (6,132)
Add (subtract):
Depreciation 3,426 3,196
Income tax recovery (155) (675)
Interest expense (366) (371)
EBITDA (10,026) (3,238)
To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/August2011/23/c5729.html
p align="justify" bInvestors:/bbr/ Marc Girardbr/ Executive Vice-President and Chief Financial Officerbr/ (514) 848-5133 /p p align="justify" bMedia Relations:/bbr/ Frédéric Bérardbr/ HKDPbr/ (514) 917-1040 /p