VANCOUVER, BC — GLOBE NEWSWIRE — Acadian Timber Corp., has reported financial and operating results for the three months ended June 30, 2018.
“Acadian’s second quarter benefited from favourable operating conditions and strong seasonal demand”, said Mark Bishop, chief executive officer of Acadian. “As the outlook for softwood sawtimber demand and pricing continues to be supported by steady growth in U.S. housing starts and residential home improvement, Acadian is well positioned to continue its favourable momentum for the remainder of the year.”
Acadian continued to perform well during the three-month period ended June 30, 2018, posting Adjusted EBITDA1 of $2.6 million, in-line with the prior year period. Acadian benefited from a 4% increase in log sales volumes during the period, resulting from favourable operating conditions and strong seasonal demand, the benefits of which were
offset by a decline in higher and better use (“HBU”) land sales in Maine. Log selling prices for most of our products benefited from improved demand while our weighted average log selling price per cubic metre remained in-line with the prior year period due to a change in the sales mix.
During the quarter we generated $2.0 million of Free Cash Flow1 consistent with the same period of 2017.
During the first half of 2018, we have declared dividends of $0.5575 per share to our shareholders or $9.3 million compared to $9.2 million during the same period of 2017, reflecting a 3% increase in our quarterly dividend as approved by our Board of Directors in April 2018. This represents a payout ratio of 101%, which is slightly above our long-term annual target of 95% but in-line with expectations given the seasonality of our operations. We anticipate that over the long-term we will maintain the 95% target payout ratio.
This news release makes reference to Adjusted EBITDA margin and Free Cash Flow which are key performance measures in evaluating Acadian’s operations and are important in enhancing investors’ understanding of Acadian’s operating performance. Adjusted EBITDA is used to evaluate operational performance while Free Cash Flow is used to evaluate Acadian’s ability to generate sustainable cash flows from our operations.
Acadian typically experiences low levels of operating, marketing and selling activity during the second quarter of each year owing to the spring thaw period that causes much of the infrastructure to be temporarily inoperable. As a result, year to year variations in sales volumes and operating costs are less meaningful.
Net income was $1.9 million, or $0.11 per share, for the second quarter, compared to $4.0 million, or $0.24 per share, for the same period in 2017 due to the impact of foreign exchange revaluation of U.S. dollar denominated long-term debt.
During the first half of 2018 Acadian’s net sales improved to $49.0 million from $42.3 million during the prior year period, primarily attributable to a 12% increase in log sales volumes driven by favourable harvest conditions, particularly for spruce and fir stands. The weighted average log selling price remained in-line with the prior year period as improvements in the selling prices for most products were offset by changes in the sales mix. As a result, Adjusted EBITDA improved to $11.5 million from $10.7 million during the first half of 2017, despite HBU sales decreasing $1.0 million from the prior year period.
The Adjusted EBITDA margin of 23% is down from 25% in the prior year period as the increase in log sales volumes was more than offset by lower HBU land sales in Maine. For the six months ended June 30, 2018, net income was $3.9 million, or $0.23 per share, which represents a decrease of $4.9 million over the same period of 2017 primarily due to the impact of foreign exchange revaluation of U.S. dollar denominated long-term debt.