Third qrtr summary Reduced net debt by $7.2 million, which improved liquidity to $141.3 million
Shipped 90 million feet of lumber to our customers despite the USW strike
Achieved 80% of third quarter 2018 log sales volumes despite not harvesting in Company timberlands
Returned $8.4 million to shareholders via regular, quarterly dividend
Completed $1.9 million of share repurchases, cancelling 1.2 million common shares
Western’s negative adjusted EBITDA of $16.6 million in the third quarter of 2019 compared to adjusted EBITDA of $32.3 million in the third quarter of 2018, and $15.1 million reported in the second quarter of 2019. Operating loss prior to restructuring and other income was $24.2 million in the third quarter of 2019, compared to operating income prior to restructuring and other income of $23.4 million in third quarter of 2018, and $1.4 million reported in the second quarter of 2019.
Net loss of $18.7 million ($0.05 net loss per diluted share) was reported for the third quarter of 2019, as compared to net income of $15.1 million ($0.04 net income per diluted share) for the third quarter of 2018 and net loss of $0.7 million ($nil per diluted share) in the second quarter of 2019.
“In the third quarter, we focused on delivering targeted products to our selected customers and limiting the impacts of the USW strike on our financial position,” said Don Demens, President and Chief Executive Officer. “Looking ahead, we are committed to resolving the current labour dispute in a manner that supports our customers and employees, while ensuring that Western remains globally competitive.”
The Company generated revenue of $141.6 million in the third quarter of 2019, as compared to $292.5 million in the third quarter of 2018, and $310.3 million in the second quarter of 2019. The Company partially mitigated the impacts of the strike by selling unencumbered lumber and log inventories during the third quarter of 2019.
Summary of Third Quarter 2019 Results
Third quarter results were significantly impacted by ongoing strike action (the “Strike”) by the USW and weak markets. All of our timberlands and most of our BC based manufacturing divisions did not operate in the third quarter of 2019 due to the Strike. We took steps to mitigate the Strike’s impact on our customers, business and cash flows by actively selling unencumbered inventories, drawing down working capital, and deferring certain expenditures.
Adjusted EBITDA for the third quarter of 2019 was negative $16.6 million, as compared to positive EBITDA of $32.3 million from the same period last year. Operating loss prior to restructuring and other items was $24.2 million, as compared to operating income of $23.4 million in the same period last year.
Our near-term focus remains on managing our balance sheet, cash flow and working capital, and reaching a reasonable collective agreement that creates certainty for our employees while maintaining Western’s globally competitive position.
Sales
Lumber revenue of $109.7 million was 53.9% lower than the same period last year. Lumber shipment volumes of 90 million board feet were 57.5% lower than the same period last year due to the Strike, as most of our manufacturing operations were shutdown in the third quarter of 2019. We sold the majority of our unencumbered inventory, processed certain unencumbered logs at custom cut facilities, and grew our wholesale lumber program to service our customers and help mitigate the impact of the Strike. Our U.S.-based Columbia Vista division continues to perform in line with our expectations and has been a positive addition to our business and product mix.
Despite difficult market conditions, our average realized lumber pricing increased 8.5% due to an improved specialty product mix and a weaker Canadian dollar (“CAD”) to United States dollar (“USD”). Specialty lumber represented 64.4% of third quarter shipments compared to 50.0% in the same period last year, as we increased wholesale lumber and custom cut volumes to meet customer needs.