Ainsworth Financial Results and Conference Call Notification for the First Quarter of 2009
13.5.09
Vancouver, British Columbia – Ainsworth Lumber Co. Ltd. (TSX: ANS and ANS.WT) today reported its unaudited financial results for the quarter ended March 31, 2009.
The U.S., Ainsworth’s most important geographic market for structural panels, is in a severe recession. U.S. housing demand faces many challenges, such as mortgage market contraction, an excess supply of new and existing homes, rising foreclosures, and home price deflation. As a result, we expect U.S. market conditions will not improve in the near term. Canadian housing market conditions also weakened in 2008 and the outlook is uncertain for 2009 and beyond.
After a strategic review, we decided to permanently close the Grand Rapids OSB mill in August 2008 and the other two Minnesota-based OSB mills in January 2009. For financial accounting purposes, the U.S. OSB operations met the criteria to qualify for discontinued operations, and the results of the Minnesota mills have been excluded from sales, operating loss and adjusted EBITDA for both 2009 and 2008.
Net loss from continuing operations for the quarter was $34.8 million on sales of $81.0 million compared to net loss from continuing operations of $77.7 million on sales of $73.8 million for the first quarter of 2008. The main factors in the decreased loss from continuing operations were improvements in operating earnings, a decrease in foreign exchange losses and a reduction in finance expense.
Adjusted EBITDA was negative $2.3 million in the first quarter of 2009 compared with negative $18.0 million in the same period of 2008. The improvement was the result of higher realized prices and a decline in cost of goods sold, which increased our gross profit (sales less cost of
products sold (exclusive of amortization)). The weaker Canadian dollar, which was an average of 19 cents lower in the first quarter of 2009 compared with the first quarter of 2008, also contributed to improving gross profit. The foreign exchange impact on adjusted EBITDA was an estimated $7.5 million improvement compared with the first quarter of 2008.
The average of the market prices reported by Random Lengths during the first quarter of 2009 was U.S.$154 per msf (North Central region, on a 7/16th-inch basis) compared to U.S.$137 per msf in the first quarter of 2008.
OSB shipments from our continuing operations of 363,282 msf in the first quarter of 2009 were 16% higher than in the same period of 2008. Our Grande Prairie, Alberta and 100 Mile, British Columbia OSB facilities took temporary shutdowns totalling 38 days and 14.5 days of production time, respectively, during the first quarter of 2008.
On July 29, 2008 we completed a recapitalization plan which resulted in a realignment of equity and non-equity interests. The outcome of the recapitalization was a significant de-leveraging of our balance sheet. Our total debt and cash interest expense was reduced, and we are in a significantly better position to meet future market challenges. 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.
Until North American market conditions improve, we have frozen all discretionary capital expenditures. In the meantime, based on current and forecasted pricing, we believe that we have 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 quarter of 2009, as a result of the global economic crisis, the terms and availability of debt and equity capital have been materially restricted. As a result, should such conditions continue through to maturity of our senior unsecured notes in 2015 and should the Company require debt or equity financing, debt capital may not be available on acceptable terms, which may require management to explore strategic alternatives to improve its capital structure, enhance liquidity, refinance debt, sell non-core assets and reduce costs and expenditures. Adjusted working capital as at March 31, 2009 was $211.7 million compared to $226.8 million at December 31, 2008.
The Company will hold a conference call on Tuesday, May 19, 2009 at 8:00 a.m. PDT (11:00 am EDT) to discuss the first quarter 2009 results. The dial-in phone number is 1-800-954-0692, Reservation #21424714. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21424714. This recording will be available until the end of the day on May 26, 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.
For further information please contact:
Ainsworth Lumber Co. Ltd.
Suite 3194, Bentall 4
P.O. Box 49307
1055 Dunsmuir Street
Vancouver, B.C. V7X 1L3
Telephone: 604-661-3200
Facsimile: 604-661-3201
www.ainsworth.ca
Investor Relations Contact:
Robert Allen
robert.allen@ainsworth.ca