VANCOUVER, BRITISH COLUMBIA - Ainsworth Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) today announced its financial results for the second quarter ended June 30, 2012.
Second Quarter Highlights:
Achieved positive adjusted EBITDA of $17.1 million - $7.1 million higher than the prior quarter and $14.4 million higher than the second quarter of 2011.
Maintained liquidity balances from the beginning of the year despite the seasonal working capital demands of the log inventory build and our semi-annual interest payment on the senior notes.
Achieved a significant safety milestone - Barwick and Grande Prairie mills have operated accident-free for one full year.
Ainsworth Performance Improves In Second Quarter
Ainsworth President and Chief Operating Officer, Jim Lake said, "I am pleased to report that Ainsworth recorded positive financial results and achieved another safety milestone in the second quarter of 2012. The Company recorded positive EBITDA of $17.1 million, which was $7.1 million higher than the prior quarter and $14.4 million higher than the same quarter last year. Our EBITDA improvement reflects a stronger pricing environment and better operating results. In addition, for the first time in Ainsworth's history, our Grande Prairie, Alberta mill and our Barwick, Ontario mill have both operated accident-free for one year and counting."
Sales were $90.5 million in the second quarter of 2012, an increase of $10.0 million from the second quarter of 2011 due to an improvement in market prices, most notably in Western Canada, partially offset by a decrease in sales volumes. Adjusted EBITDA for the second quarter of 2012 was $17.1 million compared to adjusted EBITDA of $2.7 million in the same quarter last year. Ainsworth recorded a net loss from continuing operations of $11.3 million in the second quarter of 2012, compared to a loss of $12.9 million in the second quarter of 2011. This change is primarily the result of a $14.4 million improvement in gross margin, partially offset by unrealized foreign exchange losses on long-term debt.
Year to date sales of $175.6 million for 2012 were $23.6 million higher than 2011 as a result of market prices increases, most notably in Western Canada, and higher shipment volumes. Adjusted EBITDA for the six months ended June 30, 2012 was $27.1 million compared to adjusted EBITDA of $9.0 million in the same period last year. Results from continuing operations decreased from net income of $64.8 million in the first half 2011 to a net loss of $10.6 million in the first half of 2012. The decrease resulted from a one-time gain of $72.5 million on the High Level acquisition in 2011.
Adjusted EBITDA margin for the second quarter of 2012 was 18.9% compared to an adjusted EBITDA margin of 3.4% for the same period in 2011. For the year to date, the 2012 adjusted EBITDA margin of 15.4% was 9.5% better than the same period of 2011.
In the second quarter of 2012, the Western Canadian price for the benchmark 7/16" OSB averaged U.S. $232 per msf, a 54% increase relative to the second quarter of 2011. The North Central price for the benchmark 7/16" OSB averaged U.S. $235 per msf, an increase of 35% relative to the second quarter of 2011. Compared to the first quarter of 2012, the Western Canadian price for the benchmark 7/16" OSB increased by 15% in the second quarter of 2012 from $201 per msf in the first quarter of 2012.
Selected financial information is presented in the table below. The full financial report is available to be viewed at the following link: http://media3.marketwire.com/docs/ains802i.pdf.
|Three months ended June 30||Six months ended June 30|
|Cost of products sold||69.5||73.9||140.9||134.8|
|Net (loss) income from continuing operations||(11.3)||(12.9)||(10.6)||64.8|
|Net (loss) income||(11.5)||(13.0)||(10.9)||64.7|
|Adjusted EBITDA (1)||17.1||2.7||27.1||9.0|
|Adjusted EBITDA margin (2)||18.9%||3.4%||15.4%||5.9%|
|Basic and diluted (loss) earnings per share:|
|Net (loss) income from continuing operations||(0.11)||(0.13)||(0.10)||0.64|
|Net (loss) income||(0.11)||(0.13)||(0.10)||0.64|
|Weighted average common shares outstanding (3)||100.8||100.6||100.8||100.6|
- 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 expense (recovery), finance expense, foreign exchange (gain) loss on long-term debt, other foreign exchange loss (gain), income tax (recovery) expense, and non-recurring items.
- Adjusted EBITDA margin, a non-IFRS financial measure, is defined as adjusted EBITDA divided by sales.
- 100,768,888 common shares were outstanding on June 30, 2012.
At June 30, 2012, Ainsworth's available liquidity, consisting of cash and cash equivalents, restricted cash, and short-term investments, was $59.4 million, slightly lower than $62.5 million at December 31, 2011. Our strong operating results year to date allowed us to substantially maintain our liquidity position from the beginning of the year, despite the seasonal working capital demands of the log inventory build and our semi-annual interest payment on the senior notes.
Although we are encouraged by our improved financial performance and reduced working capital use, 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 U.S. $125 million of Senior Secured Debt and U.S. $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.
The U.S. housing indicators continue to show positive signs, with total housing starts, building permits and single-family starts up sharply by 29%, 23% and 23%, respectively year-over-year (commencing from a low base). On a regional basis, the West experienced the largest year-over-year gains compared to all other regions, with total housing starts, building permits and single-family starts up 37%, 30% and 32%, respectively. This same trend was experienced on a year-to-date basis, with the West leading the year-over-year growth across all regions.
Industry forecasts for 2012 housing starts now range between 723,000 and 800,000, which is 19% to 27% higher than last year's 610,000 starts. Provided that improvements in U.S. housing starts continue, we expect demand to trend incrementally better for the remainder of the year, particularly in our key Western markets.
Source: Ainsworth Lumber Co. Ltd.
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