EACOM Timber Corporation announces its second quarter results
August 23 2011 - 4:11PM
PR Newswire (Canada)
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
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