VANCOUVER, BRITISH COLUMBIA - Ainsworth Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) today announced its audited financial results for the fourth quarter and full year ended December 31, 2011.
2011 Highlights:
- Positive annual adjusted EBITDA of $12.5 million for 2011 and annual net income from continuing operations of $7.6 million.
- Positive fourth quarter adjusted EBITDA of $2.7 million and net income from continuing operations of $1.7 million.
- Overseas sales in 2011 increased 56.3% from 2010 in support of Japan's temporary housing needs.
- Operational efficiency improvements resulted in enhanced product quality and cost reductions.
- Acquisition of remaining 50% of High Level OSB mill.
- Jim Lake appointed President and Chief Operating Officer.
Ainsworth Records Positive 2011 Results Despite All-Time Low Housing Starts
Ainsworth President and Chief Operating Officer Jim Lake said, "2011 was clearly another challenging year for our industry. However, I am pleased that Ainsworth posted positive adjusted EBITDA and net income results for the year ending December 31, 2011. Although we are not satisfied with these results, we take some measure of pride in achieving positive results in a year that hit an all-time low of 420,000 single-family housing starts in the United States and a strong Canadian dollar."
Financial Results
For the fourth quarter of 2011, Ainsworth recorded net income from continuing operations of $1.7 million, compared to $2.8 million in the fourth quarter of 2010. Sales increased 26% from the fourth quarter of 2010, to $69.5 million in the fourth quarter of 2011, due to a reduction in downtime taken by our three active mills from eleven weeks in 2010 to five weeks in 2011. Adjusted EBITDA for the fourth quarter was $2.7 million compared to adjusted EBITDA of negative $1.8 million in the same quarter last year.
For the year ended December 31, 2011, Ainsworth recorded net income from continuing operations of $7.6 million, compared to net income of $12.7 million in 2010. Sales decreased 11% to $293.3 million due to a significant drop in OSB pricing, most notably in Western Canada. Adjusted EBITDA for 2011 was $12.5 million compared to adjusted EBITDA of $59.3 million in 2010.
Margins
Adjusted EBITDA margin for the full year 2011 was 4.3% compared to an adjusted EBITDA margin of 18.0% in 2010. Again, the decrease was primarily the result of lower prices in Western Canada for much of the year. The cost of products sold per msf (3/8-inch basis) for the full year was 1.5% lower than in 2010 and 15.4% lower in the fourth quarter of 2011 compared to the same period in 2010. Throughout the year, our mills steadily reduced per unit costs, despite rising raw material costs.
In 2011, the average annual North Central market price for 7/16" OSB was U.S. $186 per msf, a decrease of 14% from an average annual price of U.S. $216 per msf in 2010. The average annual Western Canadian market price for 7/16" OSB was U.S. $154 per msf in 2011, down 27% from U.S. $210 per msf in 2010. In December Western Canadian OSB prices trended up, ending the year at $170 per msf (7/16-inch basis).
In the fourth quarter of 2011, the average North Central market price for 7/16" OSB was U.S. $190 per msf compared to U.S. $191 per msf in the fourth quarter of 2010. The average Western Canadian market price for 7/16" OSB was U.S. $149 per msf in the fourth quarter of 2011 compared to U.S. $166 per msf in the fourth quarter of 2010.
Acquisition of High Level Mill
On February 17, 2011, Ainsworth completed the purchase of the remaining 50% of Footner Forest Products Inc.'s OSB mill in High Level, Alberta. The $20 million purchase was funded from cash and generated a purchase gain of $72.5 million. The Company now owns 100% of the High Level mill. The mill is a state-of-the art, highly-flexible, continuous-press facility that can produce commodity and value-add products for both domestic and export OSB markets. High Level also benefits from an excellent wood supply.
Selected financial information is presented in the table below. The full financial report is available to be viewed at the following link: http://file.marketwire.com/release/ANS-FS2011.pdf.
| Selected Financial Information | |||||||||||||
| In millions of Canadian dollars, except per share data | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | Year Ended | ||||||||||||
| December 31 | December 31 | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Sales | $ | 69.5 | $ | 55.0 | $ | 293.3 | $ | 329.5 | |||||
| Cost of products sold | 62.7 | 54.3 | 264.6 | 254.0 | |||||||||
| Net income from continuing operations | 1.7 | 2.8 | 7.6 | 12.7 | |||||||||
| Net income | 2.8 | 2.8 | 8.3 | 11.9 | |||||||||
| Adjusted EBITDA (1) | 2.7 | (1.8 | ) | 12.5 | 59.3 | ||||||||
| Adjusted EBITDA margin (2) | 3.9 | % | -3.3 | % | 4.3 | % | 18.0 | % | |||||
| Basic and diluted earnings (loss) per share: | |||||||||||||
| Net income from continuing operations | 0.07 | 0.13 | |||||||||||
| Net income | 0.08 | 0.12 | |||||||||||
| Weighted average common shares outstanding (3) | 100.6 | 100.3 | |||||||||||
| (1) Adjusted EBITDA, a non-IFRS financial measure, is defined as net income from continuing operations before amortization, gain on disposal of property, plant and equipment, cost of curtailed operations, stock option (recovery) expense, finance expense, foreign exchange loss (gain) on long-term debt, other foreign exchange (gain) loss, income tax (recovery) expense, and non-recurring items. |
| (2) Adjusted EBITDA margin, a non-IFRS financial measure, is defined as adjusted EBITDA divided by sales. |
| (3) 100,768,888 common shares were outstanding on December 31, 2011. |
Liquidity
At December 31, 2011, Ainsworth's available liquidity, consisting of cash and cash equivalents, restricted cash, and short-term investments, was $62.5 million, down from $126.9 million at December 31, 2010. The Company continues to review various alternatives which could enhance our liquidity, which could include the sale of non-core assets, cost reduction initiatives, refinancing or repayment of debt and issuance of new debt or equity.
Ainsworth is permitted, under the terms of its Senior Unsecured Notes and Senior Secured Term Loan, to borrow an additional US$125 million of Senior Secured Debt and US$75 million of Senior Unsecured Debt. The availability of additional sources of capital will depend on capital markets at the time and may not be available on acceptable terms.
Outlook
While the long-awaited U.S. homebuilding recovery is expected to be a couple of years away, 2012 is expected to be another transitional year with U.S. housing starts, OSB demand and prices expected to slowly but steadily improve. The Company is hopeful that operating income will improve from 2011 as a result of marginal improvements in the North American market and growth in export demand, in conjunction with the execution of our strategic plan.
Source: Ainsworth Lumber Co. Ltd.
Have something to say? Share your thoughts with us in the comments below.