Ainsworth Announces Second Quarter 2013 Results
Press Release: Ainsworth Lumber Co. Ltd. –
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug 13, 2013) - Ainsworth Lumber Co. Ltd. (ANS.TO) today announced its financial results for the second quarter ended June 30, 2013.
Highlights:
- Adjusted EBITDA of $50.7 million compared to $16.9 million in the same quarter last year
- Continued strong progress on the restart of our High Level mill
- Available liquidity increased to $170.8 million during the quarter
- Announced redemption of U.S.$35 million of our senior notes, transaction will close in August 2013
Ainsworth Reports Strong Second Quarter Results
Ainsworth President and Chief Executive Officer, Jim Lake said, "The second quarter of 2013 was another solid period for Ainsworth. The Company generated adjusted EBITDA of $50.7 million, which represented a $33.8 million improvement versus the second quarter of 2012. We continued to benefit from the early stages of the U.S. housing market recovery, generating adjusted EBITDA of $113.2 million in the first half of 2013 compared to $26.5 million in the same period in 2012."
Financial Results
Sales were $127.5 million in the second quarter of 2013, representing a $37.0 million increase over the second quarter of 2012, due to a 45.9% increase in realized pricing that was partially offset by a 3.4% decrease in sales volumes. Adjusted EBITDA was $50.7 million in the second quarter of 2013 compared to $16.9 million in the same period of 2012. Net income from continuing operations in the second quarter of 2013 was $2.8 million compared to a net loss from continuing operations of $11.4 million in the second quarter of 2012. The $14.2 million increase included a $33.9 million increase in gross profit and a $5.7 million reduction in finance expense, partially offset by increased costs of curtailed operations associated with activity at the High Level mill, and fluctuations in non-cash accounting gains and losses and income tax expense.
In the first half of 2013, sales were $269.3 million compared to $175.6 million in the same period of 2012. The $93.7 million increase was related to a 57.7% increase in realized pricing, partially offset by a 2.7% decrease in sales volumes. Adjusted EBITDA for the year to date was $113.2 million in 2013 compared to $26.5 million in 2012. Net income from operations in the first six months of 2013 was $39.3 million, compared to a net loss from continuing operations of $10.8 million for the same period in 2012, representing an increase of $50.1 million. The increase included an $86.8 million increase in gross profit, an $11.9 million decrease in finance expense, and a $2.9 million variation in foreign exchange gain/loss on operations, partially offset by increased costs of curtailed operations, and fluctuations in non-accounting gains and losses and income tax expense.
Margins
Adjusted EBITDA margin on sales for the second quarter of 2013 was 39.8% compared to 18.7% in the second quarter of 2012 (42.0% in the first half of 2013 compared to 15.1% in the same period of 2012).
Benchmark OSB pricing decreased during the second quarter of 2013, but remained stronger than the same period last year, with the North Central price for 7/16" OSB averaging U.S.$347 per msf (an increase of 48% compared to the second quarter of 2012, and a 17% decrease compared to prior quarter). The Western Canadian price for 7/16" OSB averaged U.S.$328 per msf in the second quarter of 2013 (an increase of 41% compared to the second quarter of 2012, and a 22% decrease compared to prior quarter).
Selected financial information is presented in the table below. The full financial report is available to be viewed at the following link: https://media3.marketwire.com/docs/fs813ans.pdf.
| Selected Financial Information |
|
| In millions of Canadian dollars, except per share data |
|
|
|
|
Three months ended June 30 |
|
Six months ended June 30 |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
| Sales |
$ 127.5 |
|
$ 90.5 |
|
$ 269.3 |
|
$ 175.6 |
|
| Cost of products sold |
72.7 |
|
69.6 |
|
148.1 |
|
141.1 |
|
| Net income from continuing operations |
2.8 |
|
(11.4 |
) |
39.3 |
|
(10.8 |
) |
| Net income |
2.6 |
|
(11.5 |
) |
38.9 |
|
(11.0 |
) |
| Adjusted EBITDA (1) |
50.7 |
|
16.9 |
|
113.2 |
|
26.5 |
|
| Adjusted EBITDA margin (2) |
39.8 |
% |
18.7 |
% |
42.0 |
% |
15.1 |
% |
| Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
0.01 |
|
(0.11 |
) |
0.16 |
|
(0.10 |
) |
|
Net income |
0.01 |
|
(0.11 |
) |
0.16 |
|
(0.10 |
) |
|
Weighted average common shares outstanding (3) |
240.8 |
|
100.8 |
|
240.8 |
|
100.8 |
|
| (1) |
Adjusted EBITDA, a non-IFRS financial measure, is defined as net income (loss) from continuing operations before amortization, gain on disposal of property, plant and equipment, cost of curtailed operations, stock option expense, finance expense, foreign exchange (gain) loss on long-term debt, other foreign exchange loss (gain), interest income earned on investments, income tax expense (recovery), and non-recurring items. Adjusted EBITDA for 2012 has been restated to reflect an increase in pension expense related to the adoption of the amended IAS 19 - Employee Benefits, and to exclude interest income earned on investments. |
| (2) |
Adjusted EBITDA margin, a non-IFRS financial measure, is defined as adjusted EBITDA divided by sales. |
| (3) |
240,861,888 common shares were outstanding on June 30, 2013. |
Liquidity
At June 30, 2013, Ainsworth's available liquidity, consisting of cash and cash equivalents, was $170.8 million, an improvement of $64.0 million since December 31, 2012 resulting from our stronger operating results. In light of this strengthened liquidity position, in July we exercised an option to redeem U.S.$35 million of our senior secured notes, which represents 10% of the outstanding principal balance. This transaction, which closes on August 14, 2013, will further deleverage the balance sheet and reduce interest costs going forward.
Outlook
U.S. housing market indicators remain positive, with U.S. home sales reaching their highest levels in five years in June 2013. Foreclosures and existing home inventories continue to trend downwards, and activity levels for the U.S. single-family housing market, the largest driver of OSB demand, remain on a growth track. Year-to-date single-family starts and permits increased 20% and 24% over last year, respectively, and in our primary North American market, the Western U.S., year-to-date single-family housing starts were 30% higher than last year. As a result, we feel confident that the market will require additional supply in the months and years ahead and we are preparing to meet that demand with the restart of our High Level mill. We are pleased with both the progress and the safety record as we have ramped up activity in the mill.
New Barwick Union Agreement
As we announced previously, we reached a new four-year agreement with the unionized employees at our Barwick facility, which was ratified on July 17, 2013. Key provisions of the agreement include: a four year term expiring on July 31, 2017, with annual wage increases of 2.5% per year. The previous contract was set to expire on July 31, 2013.