Acadian Timber Corp. (“Acadian” or the “Company”) (TSX:ADN) today
reported financial and operating results1 for the three months
ended June 29, 2024 (the “second quarter”).
“The agreement reached during the first quarter
to sell nearly all of our registered carbon credits was fulfilled
during the second quarter and resulted in record quarterly Adjusted
EBITDA and Free Cash Flow,” said Adam Sheparski, President and
Chief Executive Officer. “Within our timber operations, favourable
weather and improved contractor availability enabled Acadian to
harvest and sell additional volume, despite starting to experience
some pricing pressure."
Adjusted EBITDA for the quarter was $20.6
million, compared to $5.7 million in the same period of 2023.
Acadian generated $16.4 million of Free Cash Flow during the
quarter, compared to $4.1 million in the second quarter of 2023,
and declared dividends of $5.0 million or $0.29 per share to our
shareholders.
Acadian is committed to health and safety as our
number one priority. We believe that emphasizing and achieving a
good safety record is a leading indicator of success in the broader
business. Acadian’s operations experienced three recordable safety
incidents during the quarter among contractors, which were minor in
nature, and none among employees. We remain committed to
maintaining a culture across the organization that emphasizes the
importance of strong safety performance and incident reduction will
be a primary focus for the remainder of 2024 and beyond.
Carbon Credit Project
An agreement was reached during the first
quarter of 2024 to sell approximately 752,100 of Acadian’s
registered voluntary carbon credits, which relate to the first
reporting period of its ongoing carbon credit project in Maine.
Acadian delivered 152,100 of these credits in March. The remaining
600,000 credits were delivered in May and are included in our
second quarter results.
Acadian’s project is registered on the ACR under
the name Anew – Katahdin Forestry Project, and requires balancing
harvest and growth, long-term planning, periodic carbon inventory
verification, and maintenance of Acadian’s sustainable forestry
certification.
The project is expected to generate an
additional 1.1 million credits over the remainder of the 10-year
crediting period. The registration process for the second and third
tranches of carbon credits for this project is expected to be
completed in the second half of 2024 and is expected to result in
approximately 360,000 credits being made available for sale. This
project has provided valuable experience to the Acadian management
team and has formed the foundation for potential further carbon
credit developments in the future.
__________________________
1 |
This news release makes reference is made to “Adjusted EBITDA”,
which Acadian’s management defines as net income before interest,
income taxes, fair value adjustments, non-cash cost of sales
related to carbon credits, recovery of or impairment of land and
roads and depreciation and amortization, and to “Adjusted EBITDA
margin”, which is Adjusted EBITDA as a percentage of sales.
Reference is also made to “Free Cash Flow”, which Acadian’s
management defines as Adjusted EBITDA less interest paid, current
income tax expense, and capital expenditures excluding acquisitions
of timberlands, plus net proceeds from the sale of timberlands and
other fixed assets (proceeds less gains or losses). Reference made
to “Payout Ratio” is defined as dividends declared divided by Free
Cash Flow and “Payout Ratio with DRIP” is defined as dividends paid
in cash divided by Free Cash Flow. Management believes that
Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, and Payout
Ratios are key performance measures in evaluating Acadian’s
operations and are important in enhancing investors’ understanding
of the Company’s operating performance. Adjusted EBITDA and
Adjusted EBITDA margin are indicative of the underlying
profitability of Acadian’s operating segments and are used to
evaluate operational performance. Free Cash Flow is used to
evaluate Acadian’s ability to generate sustainable cash flows from
our operations while Payout Ratios are used to evaluate Acadian’s
ability to fund its distribution using Free Cash Flow. Please refer
to the section entitled “Non-IFRS Measures” in Management’s
Discussion and Analysis for further details. |
|
|
Review of Operations
Financial and Operating Highlights
(CAD thousands, |
Three Months Ended |
|
Six Months Ended |
except volume and per share information) |
June 29, 2024 |
|
June 24, 2023 |
|
June 29, 2024 |
|
June 24, 2023 |
Timber sales volume (000s m3) |
|
210.5 |
|
|
|
184.2 |
|
|
|
457.5 |
|
|
|
389.4 |
|
Carbon credit sales volume (000s credits) |
|
600.0 |
|
|
|
— |
|
|
|
752.1 |
|
|
|
— |
|
Timber sales and services |
$ |
21,533 |
|
|
$ |
20,707 |
|
|
$ |
45,412 |
|
|
$ |
43,069 |
|
Carbon credit sales |
|
19,658 |
|
|
|
— |
|
|
|
24,588 |
|
|
|
— |
|
Operating income |
|
8,947 |
|
|
|
5,217 |
|
|
|
16,545 |
|
|
|
10,521 |
|
Net income |
|
7,913 |
|
|
|
5,813 |
|
|
|
13,938 |
|
|
|
11,433 |
|
Adjusted EBITDA |
$ |
20,556 |
|
|
$ |
5,651 |
|
|
$ |
31,155 |
|
|
$ |
11,252 |
|
Adjusted EBITDA margin |
|
50 |
% |
|
|
27 |
% |
|
|
45 |
% |
|
|
26 |
% |
Free Cash Flow |
$ |
16,370 |
|
|
$ |
4,108 |
|
|
$ |
24,140 |
|
|
$ |
7,831 |
|
Dividends declared |
|
5,044 |
|
|
|
4,940 |
|
|
|
10,048 |
|
|
|
9,859 |
|
Dividends paid in cash |
|
2,589 |
|
|
|
3,724 |
|
|
|
6,312 |
|
|
|
7,445 |
|
Payout Ratio |
|
31 |
% |
|
|
120 |
% |
|
|
42 |
% |
|
|
126 |
% |
Payout Ratio with DRIP1 |
|
16 |
% |
|
|
91 |
% |
|
|
26 |
% |
|
|
95 |
% |
Per share – basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.81 |
|
|
$ |
0.67 |
|
Free Cash Flow |
|
0.94 |
|
|
|
0.24 |
|
|
|
1.39 |
|
|
|
0.46 |
|
Dividends declared |
|
0.29 |
|
|
|
0.29 |
|
|
|
0.58 |
|
|
|
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the second quarter, Acadian generated
sales of $41.2 million, compared to $20.7 million in the prior year
period. The sale of 600,000 voluntary carbon credits contributed
$19.7 million to total sales. Timber sales volume, excluding
biomass, increased 17% year-over-year primarily as a result of
increased contractor availability and favourable weather
conditions. Biomass sales volume was negligible during the second
quarter due to limited processing capacity.
Weighted average selling price of timber,
excluding biomass, decreased 8% year-over-year. Softwood sawlog
pricing decreased primarily due to a lower value product mix and
hardwood sawlog pricing decreased due to weakness in hardwood
lumber markets. Softwood pulpwood pricing increased as a result of
strong demand while hardwood pulpwood pricing remained relatively
flat, as compared to the prior year period.
Operating costs and expenses were $32.2 million
during the second quarter, compared to $15.5 million during the
prior year period. The year-over-year increase reflects the
addition of costs related to carbon credit sales as well as higher
timber sales volumes. Weighted average variable harvesting costs,
excluding biomass, decreased 4% over the prior year period as a
result of a higher proportion of softwood products which carry
lower variable costs and shorter hauling distances, partially
offset by higher contractor rates.
Adjusted EBITDA was $20.6 million during the
second quarter compared to $5.7 million in the prior year period,
as a result of carbon credit sales. Adjusted EBITDA margin for the
quarter was 50% compared to 27% in the prior year period. Free Cash
Flow was $16.4 million, which is $12.3 million higher than the same
period in the prior year.
Net income for the second quarter totaled $7.9
million, or $0.46 per share, compared to $5.8 million, or $0.34 per
share in the same period of 2023. Higher operating income was
partially offset by lower non-cash fair value adjustments and lower
gains on sale of timberlands and other fixed assets, as well as
higher income tax expense, as compared to the prior year
period.
During the first half of 2024, Acadian generated
sales of $70.0 million as compared to $43.1 million in the prior
year period. The sale of 752,100 voluntary carbon credits
contributed $24.6 million to total sales. Timber sales volume,
excluding biomass, was 26% higher than the first half of 2023 but
was partially offset by a 5% decrease in the weighted average
selling price, excluding biomass, as well as lower timber services
activity. Operating costs and expenses of $53.5 million were $20.9
million higher year-over-year due to the addition of costs related
to carbon credit sales as well as increased timber sales volumes.
Weighted average variable harvesting costs remained consistent with
the same period in the prior year. Adjusted EBITDA of $31.2 million
was $19.9 million higher compared to the prior year period.
For the six months ended June 29, 2024, net
income was $13.9 million, or $0.81 per share, which represents an
increase of $2.5 million compared to the prior year period,
primarily the result of higher operating income, partially offset
by lower non-cash fair value adjustments and lower gains on sale of
timberlands and other fixed assets, as well as higher income tax
expense.
Segment Performance
New Brunswick Timberlands
The table below summarizes operating and
financial results for New Brunswick Timberlands for the second
quarter:
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Harvest (000s m3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Softwood |
|
|
87.0 |
|
|
|
58.6 |
|
|
|
200.2 |
|
|
|
145.5 |
|
Hardwood |
|
|
61.8 |
|
|
|
47.2 |
|
|
|
136.4 |
|
|
|
109.4 |
|
Biomass |
|
|
0.9 |
|
|
|
— |
|
|
|
13.9 |
|
|
|
25.8 |
|
Total |
|
|
149.7 |
|
|
|
105.8 |
|
|
|
350.5 |
|
|
|
280.7 |
|
Sales (000s m3) |
|
|
|
|
|
Softwood |
|
|
87.6 |
|
|
|
60.2 |
|
|
|
201.5 |
|
|
|
145.3 |
|
Hardwood |
|
|
63.8 |
|
|
|
80.2 |
|
|
|
135.9 |
|
|
|
124.4 |
|
Biomass |
|
|
0.9 |
|
|
|
7.1 |
|
|
|
13.9 |
|
|
|
32.9 |
|
Total |
|
|
152.3 |
|
|
|
147.5 |
|
|
|
351.3 |
|
|
|
302.6 |
|
Sales Mix |
|
|
|
|
|
Softwood |
|
|
58 |
% |
|
|
41 |
% |
|
|
57 |
% |
|
|
48 |
% |
Hardwood |
|
|
41 |
% |
|
|
54 |
% |
|
|
39 |
% |
|
|
41 |
% |
Biomass |
|
|
1 |
% |
|
|
5 |
% |
|
|
4 |
% |
|
|
11 |
% |
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Sales ($000s) |
|
|
|
|
|
Softwood |
|
$ |
6,319 |
|
|
$ |
4,238 |
|
|
$ |
15,234 |
|
|
$ |
10,486 |
|
Hardwood |
|
|
5,959 |
|
|
|
7,899 |
|
|
|
12,703 |
|
|
|
12,760 |
|
Biomass |
|
|
13 |
|
|
|
320 |
|
|
|
708 |
|
|
|
1,630 |
|
Total |
|
$ |
12,291 |
|
|
$ |
12,457 |
|
|
$ |
28,645 |
|
|
$ |
24,876 |
|
Timber services and other |
|
|
3,926 |
|
|
|
4,112 |
|
|
|
6,642 |
|
|
|
9,600 |
|
Total Sales ($000s) |
|
$ |
16,217 |
|
|
$ |
16,569 |
|
|
$ |
35,287 |
|
|
$ |
34,476 |
|
Adjusted EBITDA ($000s) |
|
$ |
4,523 |
|
|
$ |
4,996 |
|
|
$ |
10,519 |
|
|
$ |
9,879 |
|
Adjusted EBITDA margin |
|
|
28 |
% |
|
|
30 |
% |
|
|
30 |
% |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for New Brunswick Timberlands were $16.2
million compared to $16.6 million during the prior year period,
with increased sales volumes offset by a lower weighted average
selling price and lower timber services activity. Timber sales
volume, excluding biomass, increased 8% due primarily to increased
contractor availability. Biomass sales volume was negligible due to
limited processing capacity.
The weighted average selling price, excluding
biomass, for the second quarter was $81.05 per m3, or 6% lower than
the prior year period. Softwood sawlog pricing decreased 3%
primarily due to a change in customer mix and hardwood sawlog
pricing decreased 11% due to weakness in hardwood lumber markets,
as compared to the prior year period. Softwood pulpwood pricing
increased 18% as a result of strong demand while hardwood pulpwood
pricing decreased 4% due to shorter hauling distances, as compared
to the prior year period.
Operating costs and expenses were $11.8 million
during the second quarter, compared to $11.9 million in the prior
year period. Increased harvesting activity was offset by decreased
weighted average variable costs and lower timber services activity.
Weighted average variable costs, excluding biomass, decreased 6% as
a result of a higher proportion of softwood products which carry
lower variable costs and shorter hauling distances, partially
offset by higher contractor rates.
Adjusted EBITDA for the quarter was $4.5 million
compared to $5.0 million during the prior year period and Adjusted
EBITDA margin was 28% compared to 30%.
During the first half of 2024, New Brunswick
Timberlands’ sales of $35.3 million were 2% higher than the prior
year period. Timber sales volume, excluding biomass, increased 25%
due to increased contractor availability but was offset by a
decrease in the weighted average selling price, excluding biomass,
of 4% and a decrease in timber services activity. Operating costs
and expenses of $24.9 million during the first half of 2024 were
$0.3 million lower than the prior year period, due primarily to a
higher proportion of softwood products which carry lower variable
costs and shorter hauling distances, partially offset by higher
contractor rates. Adjusted EBITDA was $10.5 million compared to
$9.9 million in the first half of 2023, and Adjusted EBITDA margin
increased to 30% from 29%.
Maine Timberlands
The table below summarizes operating and
financial results for Maine Timberlands for the second quarter:
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Harvest (000s m3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Softwood |
|
|
32.5 |
|
|
|
27.7 |
|
|
|
61.4 |
|
|
|
57.0 |
|
Hardwood |
|
|
23.7 |
|
|
|
10.7 |
|
|
|
44.2 |
|
|
|
26.2 |
|
Biomass |
|
|
2.2 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
6.5 |
|
Total |
|
|
58.4 |
|
|
|
38.4 |
|
|
|
108.0 |
|
|
|
89.7 |
|
Sales (000s m3) |
|
|
|
|
Softwood |
|
|
30.4 |
|
|
|
24.0 |
|
|
|
60.1 |
|
|
|
52.5 |
|
Hardwood |
|
|
25.6 |
|
|
|
12.7 |
|
|
|
43.7 |
|
|
|
28.1 |
|
Biomass |
|
|
2.2 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
6.5 |
|
Total |
|
|
58.2 |
|
|
|
36.7 |
|
|
|
106.2 |
|
|
|
86.8 |
|
Sales Mix |
|
|
|
|
Softwood |
|
|
52 |
% |
|
|
65 |
% |
|
|
57 |
% |
|
|
60 |
% |
Hardwood |
|
|
44 |
% |
|
|
35 |
% |
|
|
41 |
% |
|
|
32 |
% |
Biomass |
|
|
4 |
% |
|
|
— |
|
|
|
2 |
% |
|
|
8 |
% |
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Sales ($000s) |
|
|
|
|
Softwood |
|
$ |
2,745 |
|
|
$ |
2,737 |
|
|
$ |
5,703 |
|
|
$ |
5,373 |
|
Hardwood |
|
|
2,294 |
|
|
|
1,182 |
|
|
|
3,878 |
|
|
|
2,734 |
|
Biomass |
|
|
21 |
|
|
|
— |
|
|
|
23 |
|
|
|
60 |
|
Total |
|
$ |
5,060 |
|
|
$ |
3,919 |
|
|
$ |
9,604 |
|
|
$ |
8,167 |
|
Other sales |
|
|
256 |
|
|
|
219 |
|
|
|
521 |
|
|
|
426 |
|
Total Sales ($000s) |
|
|
5,316 |
|
|
|
4,138 |
|
|
|
10,125 |
|
|
|
8,593 |
|
Adjusted EBITDA ($000s) |
|
$ |
887 |
|
|
$ |
1,133 |
|
|
$ |
2,050 |
|
|
$ |
2,232 |
|
Adjusted EBITDA margin |
|
|
17 |
% |
|
|
27 |
% |
|
|
20 |
% |
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for Maine Timberlands during the second
quarter totaled $5.3 million compared to $4.1 million in the prior
year period. Timber sales volume, excluding biomass, increased 53%
reflecting increased contractor availability.
The weighted average selling price, excluding
biomass, in Canadian dollar terms was $89.97 per m3, compared to
$106.92 per m3 during the same period of 2023. In U.S. dollar
terms, the weighted average selling price, excluding biomass, was
$65.76 per m3, compared to $79.55 per m3 in 2023. Increased
softwood pulpwood pricing of 9% due to increased demand was offset
by a decrease in softwood sawlog pricing of 15% as a result of a
lower value product mix. Hardwood pulpwood pricing was consistent
with the same period of 2023. Hardwood sawlog volumes were minimal
during the quarter.
Operating costs and expenses for the second
quarter were $4.6 million, compared to $3.1 million during the same
period in 2023, due primarily to increased sales volumes and higher
land management and silviculture costs. Weighted average variable
costs, excluding biomass, decreased 1% in Canadian dollar terms as
a result of changes in equipment mix partially offset by higher
contractor rates.
Adjusted EBITDA for the quarter was $0.9 million
compared to $1.1 million during the prior year period and Adjusted
EBITDA margin was 17% compared to 27%.
During the first half of 2024, Maine
Timberlands’ sales were $10.1 million compared to $8.6 million in
the first half of 2023. Maine Timberlands’ timber sales volumes,
excluding biomass, were 29% higher than the first half of 2023 due
to increased contractor availability, however, the weighted average
selling price, excluding biomass, decreased 9% in Canadian and U.S.
dollar terms. Operating costs and expenses of $8.3 million during
the first half of 2024 were $1.8 million higher than the prior year
period as a result of higher harvesting activity and contractor
rates, partially offset by changes in equipment mix.
Environmental Solutions
As a result of increased diversification in
business activities, an additional reportable segment,
Environmental Solutions, was added in the first quarter of 2024.
Environmental Solutions leverages the ecological functions of
Acadian’s land to address pressing environmental challenges, such
as climate change and biodiversity. In line with these objectives,
Acadian has undertaken a voluntary carbon credit project which
increases carbon sequestration and provides significant
environmental benefits. See section entitled “Carbon Credit
Project” above.
The table below summarizes operating and
financial results for Environmental Solutions for the second
quarter:
|
Three Months Ended |
|
Six Months Ended |
|
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Sales volume (000s credits) |
|
600.0 |
|
|
|
— |
|
|
|
752.1 |
|
|
|
— |
|
Sales ($000s) |
$ |
19,658 |
|
|
|
— |
|
|
$ |
24,588 |
|
|
|
— |
|
Adjusted EBITDA ($000s) |
$ |
15,701 |
|
|
|
— |
|
|
$ |
19,839 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The current model for the project estimates an
additional 1.1 million credits to be generated over the remainder
of the 10-year crediting period. The registration process for the
second and third tranches of carbon credits for this project is
expected to be completed in the second half of 2024. Actual credit
issuances will be adjusted each reporting period based on actual
harvesting, natural disturbances, and other factors, as well as
periodic updating for inventory and verification activities.
Outlook
While North American interest rates remain
elevated and near-term pressure on end use markets persists,
inflation shows signs of easing. U.S. housing starts for the first
half of 2024 were lower than originally expected, but June starts
indicated improvement. The consensus forecast for U.S. housing
starts is steady at approximately 1.39 million starts in 2024, as
compared to 1.42 million in 2023. We remain confident that the
stability of the northeastern forestry sector, combined with
long-term demand for new homes and repair and remodel activity,
will support the long-term demand for our products as has been
demonstrated in recent years.
Although labour markets remained tight in Maine,
we continued to experience increased contractor availability in New
Brunswick through the second quarter. Management will continue to
focus on further increasing harvesting capacity through the
remainder of 2024 while controlling operating costs. In the short
to medium term, inflation is expected to impact our financial
results through elevated contractor rates and fuel surcharges,
offset by the stable pricing of primary forest products like
sawlogs and pulpwood.
Demand and pricing for Acadian’s sawlogs is
mainly driven by regional supply and demand. Regional sawlog
inventories have been replenished following the favourable
operating conditions experienced in the spring which, combined with
weak lumber markets, may impact near-term demand. Pricing for
softwood sawtimber may experience downward pressure and while some
stabilization in hardwood lumber pricing was noted during the
quarter, hardwood sawtimber pricing may remain lower for the
foreseeable future. Demand and pricing for softwood and hardwood
pulpwood is expected to be steady, mainly impacted by supply in the
region.
During 2023, purchasers of voluntary carbon
credits increased their focus on carbon credits of high quality,
and expended greater time and effort performing due diligence. This
shift may have delayed some sales, however, underlying demand and
pricing for voluntary carbon credits are expected to remain stable.
The protocol for developing compliance market carbon credits from
managed forests in Canada was recently finalized. Acadian is
evaluating the protocol and the opportunities to develop eligible
carbon credits that it may present.
Quarterly Dividend
Based on a strong balance sheet and positive
outlook for the remainder of the year, Acadian is pleased to
announce a dividend of $0.29 per share, payable on October 15, 2024
to shareholders of record September 30, 2024.
Acadian Timber Corp.
(“Acadian”) is one of the largest timberland owners in Eastern
Canada and the Northeastern U.S. and has a total of approximately
2.4 million acres of land under management. Acadian owns and
manages approximately 777,000 acres of freehold timberlands in New
Brunswick, approximately 300,000 acres of freehold timberlands in
Maine and provides timber services relating to approximately 1.3
million acres of Crown licensed timberlands in New Brunswick.
Acadian’s products include softwood and hardwood sawlogs, pulpwood
and biomass by-products, sold to approximately 90 regional
customers. Acadian also develops carbon credits for sale in
voluntary carbon credit markets.
Acadian’s business strategy is to maximize cash
flows from its existing timberland assets through sustainable
forest management and other land use activities while growing its
business by acquiring assets and actively managing these assets to
drive improved performance.
Acadian’s shares are listed for trading on the
Toronto Stock Exchange under the symbol ADN.
For further information, please visit our
website at www.acadiantimber.com or contact:
Susan Wood Chief Financial Officer Tel:
506-737-2345 Email: ir@acadiantimber.com
Cautionary Statement Regarding
Forward-Looking Information and Statements
This News Release contains forward-looking
information and statements within the meaning of applicable
Canadian securities laws that involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Acadian Timber Corp. and its
subsidiaries (collectively, “Acadian”), or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Forward-looking information is included in this News
Release and includes statements made in the sections entitled
“Segment Performance – Environmental Solutions” and “Outlook” and
without limitation other statements regarding management’s beliefs,
intentions, results, performance, goals, achievements, future
events, plans and objectives, business strategy, growth strategy
and prospects, access to capital, liquidity and trading volumes,
dividends, taxes, capital expenditures, projected costs, market
trends and similar statements concerning anticipated future events,
results, achievements, circumstances, performance or expectations
that are not historical facts. All forward-looking statements in
this News Release are qualified by these cautionary statements.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, should not be unduly relied upon, and will
not necessarily be accurate indications of whether or not such
results will be achieved. Actual results may vary. These
forward-looking statements include, but are not limited to:
- Expectations regarding the number and timing of carbon credits
that will be successfully registered and available for sale, as
well as the timing of sales. Actual credit issuances will be
adjusted each reporting period based on actual harvesting, natural
disturbances and other factors, as well as periodic updating for
inventory and verification activities. The timing of sales is
dependent on negotiations with third parties.
- Expectations regarding product demand, pricing and end use
markets, including expectations for U.S. housing starts, which may
be impacted by changes in interest rates, U.S. population
demographics and the inventory of homes for sale. Expectations
regarding product demand and pricing are based on anticipated
market conditions, anticipated regional inventory levels of key
customers, and the economic situation of key customers. Estimates
for U.S. housing starts are based on forecasts published by major
financial institutions.
Other risks and factors are discussed in each of
the Annual Information Form dated March 28, 2024 and the Management
Information Circular dated March 28, 2024 and other filings of
Acadian made with securities regulatory authorities, which are
available on SEDAR+ at www.sedarplus.ca. Forward-looking
information is based on various material factors or assumptions,
which are based on information currently available to Acadian.
Readers are cautioned that the preceding list of material factors
or assumptions is not exhaustive. Although the forward-looking
statements contained in this News Release are based upon what
management believes are reasonable assumptions, Acadian cannot
assure readers that actual results will be consistent with these
forward-looking statements. The forward-looking statements in this
News Release are made as of the date of this News Release based on
information currently available to management and should not be
relied upon as representing Acadian’s views as of any date
subsequent to the date of this News Release. Acadian assumes no
obligation to update or revise these forward-looking statements to
reflect new information, events, circumstances or otherwise, except
as may be required by applicable law.
Acadian Timber Corp.
Interim Condensed Consolidated Balance Sheets
(unaudited)
As at (CAD thousands) |
June 29,
2024 |
|
|
December 31, 2023 |
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ |
12,448 |
|
|
$ |
1,831 |
|
Accounts receivable and other assets |
|
7,645 |
|
|
|
9,301 |
|
Current income taxes receivable |
|
— |
|
|
|
1,668 |
|
Inventories |
|
1,767 |
|
|
|
15,329 |
|
|
|
21,860 |
|
|
|
28,129 |
|
Timber |
|
459,872 |
|
|
|
442,830 |
|
Land, roads, and other fixed assets |
|
95,126 |
|
|
|
90,854 |
|
Intangible asset |
|
6,140 |
|
|
|
6,140 |
|
Total assets |
$ |
582,998 |
|
|
$ |
567,953 |
|
Liabilities and shareholders’ equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
$ |
7,383 |
|
|
$ |
9,370 |
|
Current income taxes payable |
|
920 |
|
|
|
— |
|
Dividends payable to shareholders |
|
5,044 |
|
|
|
4,983 |
|
Current portion of long-term debt |
|
43,798 |
|
|
|
— |
|
|
|
57,145 |
|
|
|
14,353 |
|
Long-term debt |
|
65,466 |
|
|
|
105,515 |
|
Deferred income tax liabilities, net |
|
131,484 |
|
|
|
129,103 |
|
Total liabilities |
|
254,095 |
|
|
|
248,971 |
|
Shareholders’ equity |
|
328,903 |
|
|
|
318,982 |
|
Total liabilities and shareholders’ equity |
$ |
582,998 |
|
|
$ |
567,953 |
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.
Interim Condensed Consolidated Statements of Net
Income
(unaudited)
|
Three Months Ended |
|
Six Months Ended |
(CAD thousands, except per share data) |
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Sales |
$ |
41,191 |
|
|
$ |
20,707 |
|
|
$ |
70,000 |
|
|
$ |
43,069 |
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
26,842 |
|
|
12,938 |
|
|
45,107 |
|
|
28,064 |
|
Selling, administration and other |
5,041 |
|
|
2,103 |
|
|
7,874 |
|
|
3,961 |
|
Silviculture |
233 |
|
|
366 |
|
|
244 |
|
|
367 |
|
Depreciation and amortization |
128 |
|
|
83 |
|
|
230 |
|
|
156 |
|
|
32,244 |
|
|
15,490 |
|
|
53,455 |
|
|
32,548 |
|
Operating income |
8,947 |
|
|
5,217 |
|
|
16,545 |
|
|
10,521 |
|
Interest expense, net |
(887 |
) |
|
(771 |
) |
|
(1,746 |
) |
|
(1,580 |
) |
Other items |
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments and other |
2,894 |
|
|
3,350 |
|
|
5,083 |
|
|
6,533 |
|
Gain on sale of timberlands and other fixed assets |
129 |
|
|
351 |
|
|
202 |
|
|
575 |
|
Income before income taxes |
11,083 |
|
|
8,147 |
|
|
20,084 |
|
|
16,049 |
|
Income tax expense |
(3,170 |
) |
|
(2,334 |
) |
|
(6,146 |
) |
|
(4,616 |
) |
Net income |
$ |
7,913 |
|
|
$ |
5,813 |
|
|
$ |
13,938 |
|
|
$ |
11,433 |
|
Net income per share – basic and diluted |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.81 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.
Interim Condensed Consolidated Statements of Comprehensive
Income
(unaudited)
|
Three Months Ended |
|
Six Months Ended |
(CAD thousands)
|
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Net income |
$ |
7,913 |
|
|
$ |
5,813 |
|
|
$ |
13,938 |
|
|
$ |
11,433 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain / (loss) |
|
944 |
|
|
|
(2,225 |
) |
|
|
2,371 |
|
|
|
(1,365 |
) |
Comprehensive income |
$ |
8,857 |
|
|
$ |
3,588 |
|
|
$ |
16,309 |
|
|
$ |
10,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.
Interim Condensed Consolidated Statements of Cash
Flows
(unaudited)
|
Three Months Ended |
|
Six Months Ended |
(CAD thousands) |
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Cash provided by (used for): |
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
7,913 |
|
|
$ |
5,813 |
|
|
$ |
13,938 |
|
|
$ |
11,433 |
|
Adjustments to net income: |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
3,170 |
|
|
2,334 |
|
|
6,146 |
|
|
4,616 |
|
Depreciation and amortization |
128 |
|
|
83 |
|
|
230 |
|
|
156 |
|
Fair value adjustments and other |
(2,894 |
) |
|
(3,350 |
) |
|
(5,083 |
) |
|
(6,533 |
) |
Non-cash cost of sales related to carbon credits |
11,352 |
|
|
— |
|
|
14,178 |
|
|
— |
|
Gain on sale of timberlands and other fixed assets |
(129 |
) |
|
(351 |
) |
|
(202 |
) |
|
(575 |
) |
Income taxes paid |
(1,792 |
) |
|
(1,973 |
) |
|
(2,243 |
) |
|
(2,368 |
) |
Net change in non-cash working capital balances and other |
4,016 |
|
|
1,181 |
|
|
(387 |
) |
|
(1,949 |
) |
|
21,764 |
|
|
3,737 |
|
|
26,577 |
|
|
4,780 |
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
Repayment of short-term debt |
(10,298 |
) |
|
— |
|
|
— |
|
|
— |
|
Dividends paid to shareholders |
(2,589 |
) |
|
(3,724 |
) |
|
(6,312 |
) |
|
(7,445 |
) |
|
(12,887 |
) |
|
(3,724 |
) |
|
(6,312 |
) |
|
(7,445 |
) |
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
Additions to timber, land, roads, and other fixed assets |
(615 |
) |
|
(146 |
) |
|
(9,865 |
) |
|
(177 |
) |
Proceeds from sale of timberlands and other fixed assets |
138 |
|
|
360 |
|
|
217 |
|
|
590 |
|
|
(477 |
) |
|
214 |
|
|
(9,648 |
) |
|
413 |
|
Increase / (Decrease) in cash during the period |
8,400 |
|
|
227 |
|
|
10,617 |
|
|
(2,252 |
) |
Cash, beginning of period |
4,048 |
|
|
3,751 |
|
|
1,831 |
|
|
6,230 |
|
Cash, end of period |
$ |
12,448 |
|
|
$ |
3,978 |
|
|
$ |
12,448 |
|
|
$ |
3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acadian Timber Corp.
Reconciliations to Adjusted EBITDA and Free Cash
Flow
(unaudited)
|
Three Months Ended |
|
Six Months Ended |
(CAD thousands) |
June 29, 2024 |
|
|
June 24, 2023 |
|
|
June 29, 2024 |
|
|
June 24, 2023 |
|
Net income |
$ |
7,913 |
|
|
$ |
5,813 |
|
|
$ |
13,938 |
|
|
$ |
11,433 |
|
Add / (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
887 |
|
|
|
771 |
|
|
|
1,746 |
|
|
|
1,580 |
|
Income tax expense |
|
3,170 |
|
|
|
2,334 |
|
|
|
6,146 |
|
|
|
4,616 |
|
Depreciation and amortization |
|
128 |
|
|
|
83 |
|
|
|
230 |
|
|
|
156 |
|
Fair value adjustments and other |
|
(2,894 |
) |
|
|
(3,350 |
) |
|
|
(5,083 |
) |
|
|
(6,533 |
) |
Non-cash cost of sales related to carbon credits |
|
11,352 |
|
|
|
— |
|
|
|
14,178 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
20,556 |
|
|
$ |
5,651 |
|
|
$ |
31,155 |
|
|
$ |
11,252 |
|
Add / (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid on debt, net |
|
(892 |
) |
|
|
(740 |
) |
|
|
(1,721 |
) |
|
|
(1,519 |
) |
Additions to land, roads, and other fixed assets |
|
(320 |
) |
|
|
(146 |
) |
|
|
(448 |
) |
|
|
(177 |
) |
Gain on sale of timberlands and other fixed assets |
|
(129 |
) |
|
|
(351 |
) |
|
|
(202 |
) |
|
|
(575 |
) |
Proceeds from sale of timberlands and other assets |
|
138 |
|
|
|
360 |
|
|
|
217 |
|
|
|
590 |
|
Current income tax expense |
|
(2,983 |
) |
|
|
(666 |
) |
|
|
(4,861 |
) |
|
|
(1,740 |
) |
Free Cash Flow |
$ |
16,370 |
|
|
$ |
4,108 |
|
|
$ |
24,140 |
|
|
$ |
7,831 |
|
Dividends declared |
$ |
5,044 |
|
|
$ |
4,940 |
|
|
$ |
10,048 |
|
|
$ |
9,859 |
|
Dividends paid in cash |
$ |
2,589 |
|
|
$ |
3,724 |
|
|
$ |
6,312 |
|
|
$ |
7,445 |
|
Payout Ratio |
|
31 |
% |
|
|
120 |
% |
|
|
42 |
% |
|
|
126 |
% |
Payout Ratio with DRIP |
|
16 |
% |
|
|
91 |
% |
|
|
26 |
% |
|
|
95 |
% |
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