Ainsworth Announces Financial Results for the Third Quarter of 2009
5.11.09
Vancouver, British Columbia – Ainsworth Lumber Co. Ltd. (TSX: ANS and 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.
(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.
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 #21442382This 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.
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
Investor Relations Contact:
Bruce Gibson
bruce.gibson@ainsworth.ca