Ainsworth Lumber Co. Ltd.
TSX : ANS
TSX : ANS.WT

Ainsworth Lumber Co. Ltd.

November 08, 2011 20:26 ET

Retransmission: Ainsworth Announces 2011 Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2011) - Ainsworth Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) -

Highlights

  • Recorded positive adjusted EBITDA in third quarter
  • Maintained strong cash position during the quarter
  • Company recorded the best quarter in terms of safety
  • Appointed Jim Lake President & COO upon the retirement of CEO Rick Huff

Ainsworth Lumber Co. Ltd. today reported its financial results for the third quarter of 2011.

Adjusted EBITDA for the third quarter of 2011 was $0.7 million compared to $9.8 million in the same quarter of 2010. EBITDA margin on sales was 1.0% compared to 12.1% in the third quarter of 2010. The decrease was primarily the result of a $9.5 million decrease in gross profit (sales less cost of products sold (exclusive of amortization)) due to a decrease in the Western Canadian pricing for OSB compared with the same quarter in 2010. The Canadian dollar was an average of six cents stronger than the U.S. dollar in the third quarter of 2011 compared to the same period in 2010, which had a negative impact on gross profit. If foreign exchange rates had been consistent with the third quarter of 2010, adjusted EBITDA would have been $2.8 million higher.

Ainsworth President and Chief Operating Officer Jim Lake said, "In the third quarter of 2011 Ainsworth recorded positive EBITDA from continuing operations despite facing considerable market challenges, including an unfavourable foreign exchange position, historically low North American oriented strand board ("OSB") prices, and an expected decline in overseas sales. We achieved this on the strength of ongoing market share gains with our value added product segments and several operational successes."

"Despite the difficult conditions we continue to face, I believe Ainsworth is well positioned to emerge from this period well positioned for growth and continued value creation. The Company recorded the best quarter in its history in terms of safety. I have always held true the belief that people that are conscientious about safety tend to pay close attention to detail in everything they do, and that is now translating into improved operational and financial performance across our organization," added Mr. Lake.

In the third quarter of 2011, the published benchmark price indicator for North Central delivered 7/16" OSB averaged U.S. $184 per msf, a marginal increase from an average quarterly price of U.S. $180 per msf in the third quarter of 2010. The average Western Canadian published price for 7/16" OSB was U.S. $137 per msf in the third quarter of 2011, down from an average price of U.S. $164 msf in the same period of 2010.

Ainsworth recorded a net loss from continuing operations of $58.9 million in the third quarter of 2011 compared to net income of $10.5 million in the third quarter of 2010. This decrease is primarily due to a $60.5 million increase in the unrealized foreign exchange loss on long-term debt and a $9.5 million decrease in gross profit, partially offset by a $5.7 million increase in income tax recovery.

Selected Financial Information
In millions of Canadian dollars, except per share data
(Unaudited)
Three months ended Nine months ended
September 30 September 30
2011 2010 2011 2010
Sales $ 71.8 $ 81.1 $ 223.8 $ 274.5
Cost of products sold 67.1 66.9 201.9 199.7
Net income from continuing operations (58.9) 10.5 5.9 10.0
Net income (loss) (59.2) 10.4 5.5 9.0
Adjusted EBITDA 0.7 9.8 9.8 61.0
Adjusted EBITDA margin 1.0% 12.1% 4.4% 22.2%
Basic and diluted earnings (loss) per share:
Net income from continuing operations (0.59) 0.10 0.05 0.10
Net income (loss) (0.59) 0.10 0.05 0.08
Weighted average common shares outstanding 100.6 100.3 100.6 100.1

Conference Call Information

Ainsworth will hold a conference call on Wednesday, November 9, 2011 at 10:00 a.m. PST (1:00 p.m. EST) to discuss the 2011 third quarter results. The dial-in phone number is 1-800-319-4610 from inside the U.S. or Canada and 1-604-638-5340 from outside the U.S. or Canada. To access the post-view line, dial 1-800-319-6413, or 1-604-638-9010, Reservation 4176#. This recording will be available until the end of the day on November 16, 2011.

Forward-Looking Statements

Forward-looking information provided in this news release relating to the Company's expectations regarding OSB demand and pricing and the Company's future prospects are forward-looking information pursuant to National Instrument 51-102 promulgated by the Canadian Securities Administrators. The Company believes that expectations reflected in such information are reasonable, but no assurance is given that such expectations will be correct. Forward-looking information is based on the Company's beliefs and assumptions based on information available at the time the assumption was made and on management's experience and perception of historical trends, current conditions and expected further developments as well as other factors deemed appropriate in the circumstances. Investors are cautioned that there are risks and uncertainties related to such forward-looking information and actual results may vary. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking information include, without limitation, factors detailed from time to time in the Company's periodic reports filed with the Canadian Securities Administrators and other regulatory authorities. The forward-looking information is made as of the date of this news release and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as explicitly required by securities laws.

AINSWORTH LUMBER CO. LTD.
Condensed Interim Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
(Unaudited)

September 30 December 31
2011 2010
ASSETS
Current Assets
Cash and cash equivalents $ 33,706 $ 67,577
Short-term investments 50,511 59,413
Trade and other receivables 20,851 15,537
Inventories 33,605 39,400
Prepaid expenses 5,074 6,557
143,747 188,484
Property, Plant and Equipment 644,397 535,192
Intangible Assets 19,777 21,439
Other Assets 1,972 10,053
Assets Held for Disposal - 7,042
$ 809,893 $ 762,210
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade and other payables $ 29,209 $ 24,833
Income taxes payable 1,441 1,302
Current portion of long-term debt 4,994 22,270
Liabilities related to discontinued operations 786 827
36,430 49,232
Accrued Pension Benefit Liability 10,445 10,445
Reforestation Obligation 2,922 2,076
Long-term Debt 530,850 485,625
Deferred Income Tax Liabilities 35,199 27,208
Liabilities Related to Discontinued Operations 1,729 1,669
617,575 576,255
SHAREHOLDERS' EQUITY
Capital Stock 411,509 410,950
Contributed Surplus 1,727 1,349
Accumulated Other Comprehensive Loss (9,414) (9,414)
Deficit (211,504) (216,930)
192,318 185,955
$ 809,893 $ 762,210

AINSWORTH LUMBER CO. LTD.
Condensed Interim Consolidated Statements of Operations and Comprehensive (Loss) Income
(In thousands of Canadian dollars, except share and per share data)
(Unaudited)

Three months ended
September 30
Nine months ended
September 30
2011 2010 2011 2010
Sales $ 71,806 $ 81,069 $ 223,753 $ 274,512
Costs and Expenses
Costs of products sold 67,062 66,860 201,871 199,669
Selling and administration 4,654 5,012 13,293 15,362
Amortization of property, plant and equipment and intangible assets 6,113 5,834 18,097 23,954
77,829 77,706 233,261 238,985
(Loss) Income before Other Items (6,023) 3,363 (9,508) 35,527
Finance Expense (12,489) (13,384) (36,699) (39,715)
Foreign Exchange (Loss) Gain (41,739) 16,756 (27,319) 11,814
(Loss) Gain on Derivative Financial Instrument (7,031) (335) (6,227) 5,344
Costs of Curtailed Operations (872) 35 (2,261) (1,752)
Gain on Acquisition of High Level - - 72,544 -
Other Items 900 1,468 995 3,375
(Loss) Income Before Income Taxes (67,254) 7,903 (8,475) 14,593
Income Tax Recovery (Expense) 8,311 2,632 14,335 (4,626)
(Loss) Income from Continuing Operations (58,943) 10,535 5,860 9,967
Net Loss from Discontinued Operations (292) (84) (434) (832)
Net (Loss) Income, being Total Comprehensive (Loss) Income $ (59,235) $ 10,451 $ 5,426 $ 9,135
Basic and diluted net (loss) income per common share:
Continuing operations $ (0.59) $ 0.10 $ 0.06 $ 0.10
Discontinued operations 0.00 (0.01) 0.00 (0.01)
Basic and diluted net (loss) income per common share $ (0.59) $ 0.09 $ 0.06 $ 0.09
Weighted average number of common shares outstanding 100,633,018 100,302,174 100,605,274 100,168,132
Effect of dilutive stock options on continuing operations - 390,093 419,260 490,920
100,633,018 100,692,267 101,024,534 100,659,052

AINSWORTH LUMBER CO. LTD.
Condensed Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)

Three months ended
September 30
Nine months ended
September 30
2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) Income $ (59,235) $ 10,451 $ 5,426 $ 9,135
Items not affecting cash
Amortization of property, plant and equipment and intangibles 6,113 5,834 18,097 23,954
Non-cash portion of interest expense 5,233 5,459 15,669 16,129
Non-cash stock based compensation 211 216 655 515
Foreign exchange loss (gain) on long-term debt 42,782 (17,741) 27,798 (12,257)
Loss (Gain) on derivative financial instrument 7,031 335 6,227 (5,344)
(Gain) Loss on disposal of property, plant and equipment (526) (351) (258) (465)
Write-down of property, plant and equipment - - 1,614 -
Write-down of long-term wood deposits - - - 648
Change in non-current reforestation obligation (52) 33 (527) 38
Deferred taxes (10,155) (7,333) (16,190) 37
Adjustment to net accrued pension benefit liability 138 (30) 60 (18)
Gain on acquisition of High Level - - (72,544) -
Other (725) (233) (161) (420)
(9,185) (3,360) (14,134) 31,952
Change in non-cash operating working capital 20,228 19,825 22,712 20,766
Interest paid (1,579) (1,812) (16,574) (17,569)
Income taxes paid (82) - (85) (23)
Cash from (used in) operating activities 9,382 14,653 (8,081) 35,126
CASH FLOWS FROM FINANCING ACTIVITIES
Reduction in long-term debt (16,788) (5,807) (21,803) (11,492)
Issue of long-term debt 14,089 - 14,089 -
Exercise of stock-options 150 700 324 699
Reduction in finance lease obligations (1,041) (169) (2,260) (361)
Cash used in financing activities (3,590) (5,276) (9,650) (11,154)
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) Redemption of short-term investments (170) 11,848 8,902 2,282
Acquisition of High Level - - (20,000) -
Additions to property, plant and equipment (1,838) 77 (5,683) (8,884)
Proceeds on disposal of property, plant and equipment 674 451 777 604
Derease (Increase) in other assets 12 (19) (297) (182)
Cash from (used in) investing activities (1,322) 12,357 (16,301) (6,180)
Effect of foreign exchange rate changes on cash and cash equivalents 725 (542) 161 (354)
NET CASH INFLOW (OUTFLOW) 5,195 21,192 (33,871) 17,438
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 28,511 88,321 67,577 92,075
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 33,706 $ 109,513 $ 33,706 $ 109,513
Cash and cash equivalents 28,982 98,370 28,982 98,370
Restricted cash 4,724 11,143 4,724 11,143
$ 33,706 $ 109,513 $ 33,706 $ 109,513

To view a copy of the Financial Statements and Notes, visit the following link: http://media3.marketwire.com/docs/ans118fs.pdf

Contact Information