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SMALL BUSINESS
Ainsworth Financial Results for the Third Quarter of 2009
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/05/09 -- Ainsworth Lumber Co. Ltd. (TSX: ANS)(TSX: ANS.WT) today reported its unaudited financial results for the quarter ended September 30, 2009.
During the third quarter of 2009, Ainsworth's three active OSB mills operated at capacity, taking no demand related downtime. Our facility at High Level, Alberta remains idle until market conditions improve. Net income from continuing operations for the third quarter of 2009 was $21.6 million compared to a net loss of $42.3 million for the same period in 2008. The improvement was largely attributable to foreign exchange gains associated with the Company's outstanding U.S. dollar denominated debt.
Ainsworth President and CEO Rick Huff said, "We recorded positive EBITDA and net income in the third quarter of 2009 despite a decline in revenues as a result of persistent, challenging market conditions. We attribute much of this accomplishment to the strategic decisions we made to focus our resources on our best performing assets, divest underperforming ones, adjust our cost structure to meet the realities of this market, and better capitalize on the expertise and dedication of our people."
"We are committed to supporting our customers through all phases of the business cycle while focusing on safety, operational excellence and innovation. Going forward, we will remain disciplined with our capital and continue to identify new opportunities to diversify the business geographically outside North America and expand our leading portfolio of value-added product offerings. Our primary goal is to build Ainsworth into a company that is sustainable and profitable over the long-term," said Mr. Huff.
Selected Financial Information
In millions of Canadian dollars, except share and per share data
Three months ended Nine months ended
(Unaudited) September 30 September 30
--------------------------------------------------------------------------
2009 2008(1) 2009 2008(1)
------- -------- -------- ---------
Sales $ 85.3 $ 98.0 $ 247.3 $ 268.9
Operating (loss) earnings (8.8) (8.9) (38.9) (33.9)
Foreign exchange gain (loss) on
long-term debt 47.8 (23.6) 76.5 (52.8)
Net income (loss) from continuing
operations 21.6 (42.3) 6.3 (153.5)
Net income (loss) 20.3 (42.7) (9.3) (165.1)
Adjusted EBITDA (2) 1.2 3.2 (2.5) (2.5)
Basic and diluted earnings (loss)
per share:
Net income (loss) from continuing
operations 0.22 (0.58) 0.06 (4.48)
Net income (loss) 0.21 (0.58) (0.09) (4.81)
Weighted average common shares
outstanding (in millions) (3) 100.0 73.1 100.0 34.3
(1) On July 29, 2008 the Company completed a major financial
recapitalization of its balance sheet. The results for the three and
nine months ended September 30, 2009, as discussed above represent the
results of the recapitalized Company. The comparative results for the
three and nine months ended September 30, 2008 include the one month
and seven month periods ended July 29, 2008, respectively, for the
Predecessor Company, plus the two month period ended September 30, 2008
for the recapitalized Company. Details regarding the financial
recapitalization are included in Note 1 of the consolidated financial
statements for the period ended December 31, 2008, which are available
on SEDAR and the Company's website.
(2) Adjusted EBITDA, a non-GAAP financial measure, is defined as net income
(loss) from continuing operations before amortization, (gain) loss on
disposal of capital assets, finance expense, foreign exchange (gain)
loss on long-term debt, other foreign exchange (gain) loss, income tax
recovery and non-recurring items. See our Management's Discussion and
Analysis for the quarter ended September 30, 2009 for a reconciliation
of non-GAAP measures.
(3) 89,905,712 common shares and noteholder warrants exercisable for
10,094,288 common shares (for no additional consideration) were
outstanding on September 30, 2009 bringing total common shares and
noteholder warrants outstanding to 100,000,000.
Adjusted EBITDA was $1.2 million in the third quarter of 2009 compared with $3.2 million in the same period of 2008. The decline in adjusted EBITDA was primarily the result of lower realized prices. Foreign exchange partially offset the decline in gross profit as the Canadian dollar was an average of five cents lower in the third quarter of 2009 compared with the third quarter of 2008. The foreign exchange impact on adjusted EBITDA was an estimated $2.2 million improvement compared with the third quarter of 2008. For the year to date, adjusted EBITDA of negative $2.5 million did not change compared to 2008.
The average of the market prices reported by Random Lengths during the third quarter of 2009 was U.S.$178 per msf (North Central region, on a 7/16-inch basis) compared to U.S.$201 per msf in the third quarter of 2008.
OSB shipments from our continuing operations of 413,583 msf (3/8-inch basis) in the third quarter of 2009 were 5% higher than in the same period of 2008.
Until North American market conditions improve, we have minimized discretionary capital expenditures. In the meantime, we continue to focus on maintaining sufficient working capital to fund any shortfall from operations, interest payments, debt repayments and essential capital expenditures. During the fourth quarter of 2008 and the first nine months of 2009, as a result of the global economic crisis, the terms and availability of debt and equity capital have been materially restricted. As of September 30, 2009, our adjusted working capital was $186.3 million, compared to $226.8 million as at December 31, 2008.
Excerpts from the Company's financial statements for the period ended September 30, 2009 are attached. To view the complete financial statements, including the notes to the financial statements, click on the following link: http://media3.marketwire.com/docs/ans1105.pdf.
The Company will hold a conference call on Friday, November 6, 2009 at 10:00 pm PDT (1:00 pm EDT) to discuss the third quarter 2009 results. The dial-in phone number is 1-888-612-1050, Reservation #21442382. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21442382. This recording will be available until the end of the day on November 13, 2009.
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.
Interim Consolidated Balance Sheets
(In thousands of Canadian dollars)
(Unaudited)
--------------------------------------------------------------------------
September 30 December 31
2009 2008
---------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 166,058 $ 192,584
Short-term investments 1,563 1,586
Accounts receivable 19,625 19,916
Inventories 34,252 53,251
Prepaid expenses 5,549 5,681
Restricted cash 4,135 5,344
Assets held for disposal 3,038 5,337
--------------------------------------------------------------------------
234,220 283,699
Capital Assets, Net 627,161 652,448
Other Assets 12,064 14,512
Assets Held for Disposal 5,622 33,019
--------------------------------------------------------------------------
$ 879,067 $ 983,678
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 29,319 $ 27,539
Income taxes payable 2,336 2,764
Current portion of future income tax
liabilities 2,824 8,492
Current portion of long-term debt 10,981 12,366
Liabilities related to assets held
for disposal 1,168 8,933
--------------------------------------------------------------------------
46,628 60,094
Accrued Pension Benefit Liability 4,278 4,278
Other Liabilities 3,000 3,512
Long-term Debt 559,582 627,115
Future Income Tax Liabilities 45,529 60,160
Liabilities Related to Assets Held for Disposal 2,081 2,368
--------------------------------------------------------------------------
661,098 757,527
SHAREHOLDERS' EQUITY
Capital Stock 409,613 409,613
Contributed Surplus 839 -
Deficit (190,256) (180,984)
Accumulated Other Comprehensive Loss (2,227) (2,478)
--------------------------------------------------------------------------
217,969 226,151
--------------------------------------------------------------------------
$ 879,067 $ 983,678
--------------------------------------------------------------------------
--------------------------------------------------------------------------
AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Operations
(In thousands of Canadian dollars, except share and per share data)
(Unaudited)
The Company The Predecessor
-------------------------------------------------- ----------------------
Three Nine Two One Seven
months months months month months
to Sept. to Sept. to Sept. to July to July
30 30 30 29 29
2009 2009 2008 2008 2008
-------------------------------------------------- ----------------------
Sales $ 85,333 $247,322 $ 65,814 $ 32,146 $ 203,073
-------------------------------------------------- ----------------------
Costs and
Expenses
Costs of
products sold
(exclusive
of amortization) 79,511 235,742 59,456 29,356 194,919
Selling and
administration 4,836 15,018 3,940 1,900 14,667
Amortization of
capital assets 9,824 28,343 7,138 3,729 21,973
Net gain on
disposal of
capital
assets - (899) (199) (141) (3,092)
Write-off of
capital assets - - - - 837
Write-down of
capital assets
held for sale - 8,219 - - -
Write-down of
inventory related
to assets held
for sale - 4,262 - - -
(Net proceeds)
cost of claim - (4,435) 1,194 230 1,404
Cost of class
action lawsuit - - 209 - 318
-------------------------------------------------- ----------------------
94,171 286,250 71,738 35,074 231,026
-------------------------------------------------- ----------------------
Operating Loss (8,838) (38,928) (5,924) (2,928) (27,953)
Finance Expense
Interest 12,847 40,722 8,649 5,670 39,536
Transaction
costs - - - 12,285 25,363
-------------------------------------------------- ----------------------
12,847 40,722 8,649 17,955 64,899
Other (Loss)
Income (189) 381 856 (960) 729
Foreign Exchange
Gain (Loss) on
Long-term Debt 47,787 76,508 (19,588) (3,991) (33,261)
Loss on
Derivative
Financial
Instrument - - (8,713) - -
Other Foreign
Exchange (Loss)
Gain (4,440) (6,160) 7,207 137 383
-------------------------------------------------- ----------------------
Income (Loss)
Before Income
Taxes 21,473 (8,921) (34,811) (25,697) (125,001)
Income Tax
(Recovery)
Expense (104) (15,251) (8,887) (9,277) 2,623
-------------------------------------------------- ----------------------
Net Income (Loss)
from Continuing
Operations 21,577 6,330 (25,924) (16,420) (127,624)
Net (Loss) Income
from Discontinued
Operations (1,316) (15,602) 1,605 (1,995) (13,176)
-------------------------------------------------- ----------------------
Net Income (Loss) $ 20,261 $ (9,272) $(24,319) $ (18,415) $(140,800)
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Earnings (loss)
per share:
Basic
Continuing
operations $ 0.22 $ 0.06 $ (0.26) $ (1.12) $ (8.71)
Discontinued
operations (0.01) (0.15) 0.02 (0.14) (0.90)
-------------------------------------------------- ----------------------
Net Income (Loss) $ 0.21 $ (0.09) $ (0.24) $ (1.26) $ (9.61)
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Diluted
Continuing
operations $ 0.22 $ 0.06 $ (0.26) $ (1.12) $ (8.71)
Discontinued
operations (0.01) (0.15) 0.02 (0.14) (0.90)
-------------------------------------------------- ----------------------
Net Income (Loss) $ 0.21 $ (0.09) $ (0.24) $ (1.26) $ (9.61)
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
AINSWORTH LUMBER CO. LTD.
Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)
The Company The Predecessor
-------------------------------------------------- ----------------------
Three Nine Two One Seven
months months months month months
to Sept. to Sept. to Sept. to July to July
30 30 30 29 29
2009 2009 2008 2008 2008
-------------------------------------------------- ----------------------
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net income (loss) $ 20,261 $ (9,272) $(24,319) $(18,415) $(140,800)
Items not
affecting cash
Amortization of
capital assets 9,824 28,343 7,522 4,317 27,152
Non-cash portion
of interest
expense 4,786 15,086 2,938 255 929
Non-cash stock
based compensation 128 839 - - -
Foreign exchange
(gain) loss on
long-term debt (47,787) (76,508) 19,588 3,991 33,261
Loss on
derivative
financial
instrument - - 8,713 - -
Gain on disposal
of capital assets (97) (2,391) (200) (140) (3,264)
Write-off of
capital assets - - - - 837
Adjustment to
accrued pension
benefit liability - - (412) - -
Impairment of
capital assets
of discontinued
operations 2,494 16,797 - - -
Write-down of
capital assets
held for sale - 8,219 - - -
Change in
non-current
reforestation
obligation 44 (512) 254 (141) (405)
Future income
taxes (2,397) (20,299) (7,744) (8,087) 11,146
Unrealized
foreign exchange
loss 2,768 4,540 - - -
Realized currency
translation
adjustment - - - - 1,465
Change in non-cash
operating working
capital 26,811 15,275 (11,489) 12,162 23,520
-------------------------------------------------- ----------------------
Cash provided by
(used in)
operating
activities 16,835 (19,883) (5,149) (6,058) (46,159)
-------------------------------------------------- ----------------------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Repayment of
long-term debt (2,190) (7,213) (1,433) - (5,762)
Repayment of
capital lease
obligations (89) (282) (55) (29) (179)
-------------------------------------------------- ----------------------
Cash used in
financing
activities (2,279) (7,495) (1,488) (29) (5,941)
-------------------------------------------------- ----------------------
CASH FLOWS FROM
INVESTING
ACTIVITIES
Short-term
investments 13 23 (3) - (51)
Restricted cash 202 1,209 (79) (22) 107
Additions to
capital assets (974) (2,883) (726) (456) (4,530)
Decrease
(increase)
in other
assets 574 2,690 144 489 (133)
Proceeds on
disposal of
capital assets 107 4,639 200 221 6,764
Settlement of
warranty holdback - - - - 2,852
-------------------------------------------------- ----------------------
Cash (used in)
provided by
investing
activities (78) 5,678 (464) 232 5,009
-------------------------------------------------- ----------------------
Effect of foreign
exchange rate
changes
on cash and cash
equivalents (2,947) (4,826) (23) 32 30
-------------------------------------------------- ----------------------
NET CASH INFLOW
(OUTFLOW) 11,531 (26,526) (7,124) (5,823) (47,061)
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 154,527 192,584 208,827 28,389 69,627
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
CASH AND CASH
EQUIVALENTS,
END OF PERIOD $166,058 $166,058 $201,703 $ 22,566 $ 22,566
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
SUPPLEMENTAL
INFORMATION
Taxes paid $ - $ 110 $ 2,377 $ 180 $ 345
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Interest paid $ 1,719 $ 18,305 $ 1,549 $ 554 $ 13,406
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Contacts:
Ainsworth Lumber Co. Ltd.
Bruce Gibson
Investor Relations Contact
604-661-3200
604-661-3201 (FAX)
bruce.gibson@ainsworth.ca
www.ainsworthengineered.com