Ainsworth Lumber Co. Ltd.

Ainsworth Lumber Co. Ltd.

November 15, 2005 00:02 ET

Ainsworth Reports Financial Results for the Third Quarter of 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2005) - Ainsworth Lumber Co. Ltd. (TSX:ANS) -

($ millions, except Three months ended Nine months ended
per share data) September 30 September 30
2005 2004 2005 2004
Sales 270.7 225.2 946.2 657.0
Operating earnings 26.1 87.4 212.5 298.6
Foreign exchange gain
on long-term debt 47.0 33.5 28.5 27.7
Net Income 46.8 71.1 133.2 122.7
Earnings: $ per share 3.19 4.85 9.09 8.37
EBITDA (1) 55.9 84.4 294.3 321.8
Cash flow from
operations (2) 43.3 111.8 131.5 306.3

(1) EBITDA, a non-GAAP financial measure, represents operating
earnings before amortization of capital assets plus other

(2) Cash provided by operations after changes in non-cash
working capital.

Ainsworth Lumber Co. Ltd. today reported its financial results for the quarter ended September 30, 2005.

The company generated net income of $46.8 million or $3.19 per share for the third quarter of 2005, compared to $71.1 million or $4.85 for the same period in 2004. The decline in profitability during the quarter is a combined result of a $61.3 million decrease in operating earnings, an $8.3 million increase in finance expense due to an increase in the average outstanding debt compared to 2004, a $13.5 million increase in foreign exchange gain on long-term debt due to the strengthening of the Canadian currency, and a $15.3 million decrease in income tax expense due to lower profitability. In addition, other income increased by $16.4 million largely attributed to a foreign exchange gain of $0.8 million in 2005 compared to a foreign exchange loss of $12.6 million in 2004.

Operating earnings for the third quarter were $26.1 million compared to $87.4 million for the same period in 2004, representing a 70.1% decline. Third quarter sales of $270.7 million were $45.5 million or 20.2% higher than the third quarter sales in 2004. As a result of the acquisition of the three Minnesota oriented strand board (OSB) production facilities and the Barwick OSB facility during 2004, OSB shipment volumes increased by 59.6% compared to the third quarter of 2004. At the same time, Ainsworth's OSB per unit cost of sales increased by 17.0% as a direct result of increases in wood fibre costs and resin and wax prices.

EBITDA, defined as operating earnings before amortization of capital assets plus other income, was $55.9 million compared to $84.4 million in the same period last year. While OSB production capacity and shipments increased significantly compared to the same period in 2004, operating earnings decreased with the decline in OSB prices and the overall increase in OSB production costs compared to 2004. EBITDA for the nine months ended September 30, 2005 was $294.3 million compared to $321.8 million in the same period last year.

Cash provided by operations (after changes in non-cash working capital) during the quarter was $43.3 million compared to $111.8 million in the third quarter of 2004. The decline in cash provided by operations is attributable to lower margins, and smaller changes in non-cash working capital.

There were no significant financing activities for the current quarter, while in the third quarter of 2004 the Company issued long term debt for the acquisition of the three Minnesota OSB facilities as well as paid a special dividend to its shareholders.

During the third quarter of 2005 the Company invested $26.3 million in capital and other assets, largely related to the expansion of our Grande Prairie facility, a deposit towards an aircraft purchase, and upgrades to our facilities. In addition, during the quarter the Company completed the purchase of Chatham Forest Products, Inc.

At September 30, 2005 Ainsworth had a cash balance of $210.3 million compared to $212.6 million at December 31, 2004 and $194.8 million at June 30, 2005.

"The fundamentals driving North American OSB demand continue to be strong and the end of the third quarter saw considerable increase in OSB prices over the lows experienced this summer. With continuing strong demand, and customer recognition of our premium quality products, the Company is well established in the industry, and continues to benefit from its expanded capacity and new markets," said Brian Ainsworth, Chairman and Chief Executive Officer.

The company will hold a conference call at 8:30 A.M. PST (11:30 A.M. EST) on Tuesday, November 15, 2005 to discuss the company's third quarter results. The dial-in phone number is 1-800-337-2650, Reservation #21268996. To access the post-view line, dial 1-800-558-5253 or 1-416-626-100, Reservation #21268996. This recording will be available until November 22, 2005.

Forward-looking statements in this news release relating to the Company's expectations regarding OSB demand and pricing are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. When used herein, words such as "expect" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions made by and information available to Ainsworth Lumber Co. Ltd. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements include, without limitation, the future demand for, and sales volumes of, the Company's products, future production volumes, efficiencies and operating cots, increases or decreases in the prices of the Company's products, the Company's future stability and growth prospects, the Company's future profitability and capital needs, including capital expenditures, and the outlook for and other future developments in the Company's affairs or in the industries in which the Company participates and factors detailed from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission, and other regulatory authorities. The Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information