Ainsworth Announces 2009 Fourth Quarter and Year End Results
25.2.10
Vancouver, British Columbia – Ainsworth Lumber Co. Ltd. (TSX: ANS and ANS.WT) reported its unaudited financial results for the fourth quarter and full year ended December 31, 2009 today.
Highlights
- Recorded positive adjusted EBITDA of $5.2 million in 2009 compared to a loss of $0.1 million in 2008
- Completed a full strategic review of the business
- Added considerable depth and breadth of experience to the management team
- Divested all of the company’s non-core assets, focused resources on the best operations
- Continue to focus on transitioning to higher margin products
In 2009, Ainsworth recorded a net loss of $21.6 million, relative to a net loss of $321.8 million in 2008. For the fourth quarter, the Company recorded a net loss of $12.4 million in 2009, compared to a net loss of $156.7 million in the fourth quarter of 2008. For the full year ended December 31, 2009, Ainsworth recorded positive adjusted EBITDA of $5.2 million for the full year, compared to an adjusted EBITDA of negative $0.1 million in 2008. In the fourth quarter of 2009, the Company recorded positive adjusted EBITDA of $2.4 million, relative to negative adjusted EBITDA of $0.7 million for the same period in 2008.
Ainsworth completed a full strategic review, divested its portfolio of non-core assets, strengthened the management team and continued to find ways to cut costs and improve operational efficiency. The Company’s President and CEO Rick Huff said, “2009 saw us take decisive action to streamline the business, strengthen our foundation and ensure we emerge from this period stronger and well positioned for growth. In all, we ended the year with positive adjusted EBITDA for the first time since 2006, despite North American housing starts falling by 33% in 2009.”
“Ainsworth began 2010 with a clear strategic direction. We are focusing our resources on our best assets, leveraging our highly skilled workforce and flexible mill technology to produce more high value, high margin products, and continuing to pursue opportunities in overseas markets. With a strong balance sheet, great assets, exceptional people, and approximately 1.1 billion square feet of incremental capacity that will be available to us in the future, we are well positioned to anticipate an increase in the demand for OSB” added Mr. Huff.
Performance, Operational Efficiency and Liquidity
OSB shipments from our continuing operations were 361,598 msf and 1,546,825 msf for the 2009 fourth quarter and full year respectively. On a full year basis, OSB shipments increased by 3.8% in 2009 compared to the previous year.
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. As of December 31, 2009, our adjusted working capital from continuing operations was $166.8 million, compared to $215.5 million as at December 31, 2008.
Ainsworth successfully divested all of its non-core assets, including the Savona specialty plywood mill, the Lillooet veneer mill and its three Minnesota mills in 2009. This has enabled the Company to focus its resources on its best assets and continue to drive improvements in operational efficiency.
Selected Financial Information
- On July 29, 2008 the Company completed a major financial recapitalization of its balance sheet. The results for the year 2008, as disclosed above, include the period from January 1 to July 29, 2008 before the recapitalization and the period from July 30 to December, 2008 under 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.
- Adjusted EBITDA, a non-GAAP financial measure, is defined as net (loss) income before amortization, (gain) loss on disposal of property, plant and equipment, costs of curtailed operations, stock option expense, finance expense, realized currency translation adjustments, foreign exchange (gain) loss on long-term debt, other foreign exchange (gain) loss, income tax recovery and other non-recurring items. See our Management’s Discussion and Analysis for the year ended December 31, 2009 for a reconciliation of non-GAAP measures.
- Adjusted working capital, a non-GAAP financial measure, is defined as current assets less restricted cash, current portion of future income tax assets and current liabilities plus current portion of future income tax liabilities.
Market Conditions and Outlook
In 2009, the average annual North Central market price for 7/16” oriented strand board (OSB) was $162 (per msf), down 5.8% from $172 in 2008. The average annual Western Canadian market price for 7/16” OSB was $145 (per msf) in 2009, down 7.6% from $157 in 2008.
In 2008 and through the balance of 2009, North American housing starts, the key measure of demand for our products, remained at historic lows. Looking ahead, we are cautiously optimistic about the return of stronger market fundamentals in the U.S., Canada and Japan in 2010. We expect to see a modest increase in housing starts in North America in 2010, but not a return to the peak levels seen earlier in the decade.
In the U.S., the Company’s primary market, macroeconomic trends such as high unemployment and tight credit markets are expected to continue to put downward pressure on home prices and demand for new home construction. Over the long term, however, demographic trends clearly indicate there will be strong, sustainable demand for our products as new home construction returns.
The outlook for OSB prices is also expected to be turbulent. As demand for OSB increases with a gradual rise in new home construction, we expect prices to fluctuate as OSB manufacturers bring idled capacity back on line to increase supply.
Conference Call Information
Ainsworth will hold a conference call on Friday, February 26, 2010 at 10:00 am PDT (1:00 pm EDT) to discuss the fourth quarter and full year 2009 results. The dial-in phone number is 1-800-954-0650, Reservation #21459032. To access the post-view line, dial 1-800-558-5253, or 1-416-626-4100, Reservation #21459032. This recording will be available until the end of the day on March 5, 2010.
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.
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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