Ainsworth Announces Financial Results for the Second Quarter of 2009
13.8.09
Vancouver, British Columbia – Ainsworth Lumber Co. Ltd. (TSX: ANS and ANS.WT) today
reported its unaudited financial results for the quarter ended June 30, 2009.
During the second quarter of 2009, Ainsworth’s three active OSB mills, all in Canada, took no
demand related downtime. Net income from continuing operations for the second quarter of 2009
was $19.5 million compared to a net loss of $33.5 million for the same period in 2008. The
improvement was largely attributable to foreign exchange gains associated with the Company’s
outstanding debt.
Beginning with the recapitalization of the Company in July 2008, Ainsworth has taken a number
of substantive measures to realign its business with the current economic environment. In
addition to previously announced mill closures in Minnesota and temporarily curtailing production
at three of its six Canadian mills, Ainsworth has implemented a number of cost reduction
initiatives, including minimizing all discretionary expenditures. Until market conditions improve,
the Company is committed to focusing its resources on its best performing assets.
Over the near term our priorities will continue to be managing our costs and returning our
company to EBITDA positive results. Strategically, Ainsworth is focused on diversifying its
business geographically, expanding its value-added product offerings, and leveraging the
Company’s proven track record of operational excellence, innovation and technical product
development to become a company that is sustainable and profitable throughout business cycles.
- On July 29, 2008 the Company completed a major financial recapitalization of its balance sheet. The results for the three and six month periods ended June 30, 2008, as disclosed above, are the results of the Predecessor Company while the results for the three and six month periods ended June 30, 2009 are the results of 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.
- Adjusted EBITDA, a non-GAAP financial measure, is defined as net (loss) income 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 June 30, 2009 for a reconciliation of non-GAAP measures.
- 89,905,712 common shares and noteholder warrants exercisable for 10,094,288 common shares (for no additional consideration) were outstanding on June 30, 2009 bringing total common shares and noteholder warrants outstanding to 100,000,000.
Adjusted EBITDA was negative $3.5 million in the second quarter of 2009 compared with positive
$11.6 million in the same period of 2008. The decline in adjusted EBITDA was primarily the result
of lower realized prices and an increase in costs of products sold, which reduced our gross profit
(sales less costs of products sold (exclusive of amortization)). Foreign exchange partially offset
the decline in gross profit as the Canadian dollar was an average of 13 cents lower in the second
quarter of 2009 compared with the second quarter of 2008. The foreign exchange impact on
adjusted EBITDA was an estimated $4.9 million improvement compared with the second quarter
of 2008. In the first six months of 2009, adjusted EBITDA was negative $3.9 million, which was an
improvement of $1.8 million from negative $5.7 million in the first six months of 2008.
The average of the market prices reported by Random Lengths during the second quarter of 2009
was U.S.$147 per msf (North Central region, on a 7/16th -inch basis) compared to U.S.$176 per msf in the second quarter of 2008.
OSB shipments from our continuing operations of 408,944 msf in the second quarter of 2009
were 1.2% higher than in the same period of 2008. Our operating OSB facilities experienced 1.25
days of unplanned maintenance down time during the second quarter of 2009.
On July 29, 2008 we completed a recapitalization 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 minimized all 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 half 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 June 30, 2009, our adjusted working capital was $200.8 million, compared to
$226.8 million as at December 31, 2008.
The Company will hold a conference call on Thursday, August 13, 2009 at 1:00 pm PDT (4:00 pm
EDT) to discuss the second quarter 2009 results. The dial-in phone number is 1-800-909-4792,
Reservation #21434155. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100,
Reservation #21434155. This recording will be available until the end of the day on August 20,
2009.
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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