West Fraser ("WFT") Announces Third Quarter Results
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 10/27/14 -- West Fraser Timber Co. Ltd. (TSX: WFT) today reported earnings of $70 million or $0.83 per share on sales of $1,030 million in the third quarter of 2014. These results compare with previous periods as follows:
(1) In this Report, reference is made to EBITDA (defined as earnings plus (i) amortization, (ii) restructuring charges, (iii) finance expense, (iv) exchange (gain) loss on long-term debt, (v) other (income) expense and (vi) tax (recovery) provision. Our management believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, acquisitions, capital expenditures and income taxes. Reference is also made to Adjusted earnings (calculated as set out in the tables described in footnote 2) and Adjusted basic EPS (collectively, with EBITDA, "these measures"). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none have a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities.
(2) Refer to the table titled "Earnings Adjustments for Certain Non-Operational Items" in Management''s Discussion and Analysis of our third quarter 2014 results for details of these adjustments.
Operational Results
In the quarter our lumber operations generated operating earnings of $101 million (Q2 - $81 million) and EBITDA of $131 million (Q2- $106 million). The increased earnings were largely the result of reduced costs and certain manufacturing productivity improvements related to capital investments.
Our panel segment generated operating earnings of $25 million (Q2 - $10 million) and EBITDA of $29 million (Q2 - $13 million), the result of substantially improved plywood prices.
Our pulp and paper operations generated an operating loss of $2 million compared to operating earnings of $19 million in the previous quarter and EBITDA of $9 million (Q2 - $30 million). The loss was largely the result of scheduled maintenance downtime at our Hinton pulp mill followed by a difficult startup.
Outlook
We have seen gradual recovery in U.S. home construction and expect the recovery to continue. Log costs are expected to trend higher in Canada as competition for purchased wood increases in certain areas of B.C. and contractor costs increase. However, as we complete our capital projects, we expect productivity improvements and cost reductions to continue.
"The largest capital program in our Company''s history is currently underway and I expect combined capital expenditures for 2013 and 2014 to exceed $700 million," said Ted Seraphim, our President and CEO. "I''m excited about what these investments are doing to improve the competitiveness of the Company and how we are positioning our operations to succeed as U.S. housing continues its slow recovery."
Management''s Discussion & Analysis ("MD&A")
The Company''s MD&A is available on the Company''s website: and on the System for Electronic Document Analysis and Retrieval at under the Company''s profile.
West Fraser
We are an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. We have operations in western Canada and the southern United States.
Forward-Looking Statements
This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook" are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect our ability to execute our business plans, including those matters described in the 2013 annual MD&A and our 2014 third quarter MD&A under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and we undertake no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.
Conference Call
Investors are invited to listen to the quarterly conference call on Tuesday, October 28, 2014 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-769-8320 (toll-free North America). The call may also be accessed through our website at .
West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".
West Fraser Timber Co. Ltd.
Notes to Condensed Consolidated Interim Financial Statements
(figures are in millions of dollars, except where indicated - unaudited)
1. Nature of operations
West Fraser Timber Co. Ltd. ("West Fraser", "we", "us" or "our") is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange under the symbol WFT.
2. Basis of presentation and statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and using the same accounting policies and methods of their application as the December 31, 2013 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2013 annual financial statements.
3. Acquisitions
During the year, we made the following acquisitions:
We accounted for each of these transactions as an acquisition of a business and have allocated the preliminary purchase price based on the estimated fair value of the assets acquired and the liabilities assumed. The preliminary purchase price allocation is as follows:
Goodwill of $76 million, recorded in the lumber segment, is deductible for tax purposes.
The acquired mills have generated revenues of $83 million and earnings of $4 million since the dates of the acquisitions. Acquisition costs of $1 million have been expensed in selling, general and administration.
4. Inventories
Inventories at September 30, 2014 were written down by $6 million (June 30, 2014 - $7 million; December 31, 2013 - $6 million; September 30, 2013 - $7 million) to reflect net realizable value being lower than cost.
5. Long-term debt and operating loans
Long-term debt
The fair value of the long-term debt is $346 million (December 31, 2013 - $341 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.
On October 15, 2014 we repaid the US$300 million senior notes and issued new US$300 million of unsecured senior notes due October 15, 2024, see note 12.
Operating loans
We have $580 million in revolving lines of credit of which $41 million (net of deferred financing costs of $3 million) were drawn as at September 30, 2014 (December 31, 2013 - undrawn). Deferred financing costs of $4 million were included in other assets at December 31, 2013.
Our revolving lines of credit include a $500 million revolving credit facility which matures September 30, 2018, two demand lines of credit totalling $75 million dedicated to letters of credit and a $5 million demand line of credit dedicated to a jointly-owned newsprint operation. Interest on the facilities is payable at floating rates based on Prime, U.S. base, Bankers'' Acceptances or LIBOR at our option. As at September 30, 2014, letters of credit in the amount of $51 million were issued under these facilities.
All debt is unsecured except the $5 million joint operation demand line of credit, which is secured by that joint operation''s current assets.
6. Other liabilities
7. Post-retirement benefits
We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.
The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:
The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows:
The change in the discount rate on obligations and the difference between the actual rate of return and the discount rate on plan assets generated an actuarial gain (loss) on post-retirement benefits, included in other comprehensive earnings, as follows:
8. Share capital
Issued
On April 29, 2014 the shareholders of the Company voted to increase the number of authorized Common shares from 200,000,000 to 400,000,000. This increase returns the proportion of Common shares available for issuance to the same level as before the December 10, 2013 stock dividend (the "Stock Dividend").
During 2014 we repurchased 1,842,000 (2013 - 64,554) Common shares under our normal course issuer bid (NCIB) program at an average price of $50.78 per share (2013 - $44.60), for a total cost of $93 million (2013 - $3 million).
On September 5, 2014 we announced the renewal of our NCIB program providing for the repurchase and cancellation of up to 4,000,000 Common shares, representing approximately 5% of our issued and outstanding Common shares. Repurchases will be effected through the facilities of the Toronto Stock Exchange and may take place over a 12-month period ending no later than September 16, 2015.
Stock dividend
On December 10, 2013 the Board of Directors declared a Stock Dividend of one Common share for each issued and outstanding Common share and Class B Common share in the capital of the Company, which has the same effect as a two-for-one stock split. The Stock Dividend was paid on January 13, 2014 to shareholders of record on December 31, 2013. For comparative purposes the Stock Dividend has been applied retroactively to earlier periods so that the number of shares used to calculate earnings per share is doubled resulting in earnings per share for prior years being half of the amount that would otherwise have been reported.
On January 13, 2014 we issued 42,835,752 Common shares pursuant to the Stock Dividend. Also on January 13, 2014 the number of options and units outstanding under our share option, phantom share, and directors'' deferred share unit plans were doubled and the exercise price of outstanding share options was halved to reflect the Stock Dividend.
9. Other income (expense)
10. Tax provision
The tax provision differs from the amount that would have resulted from applying the Canadian statutory income tax rate to earnings before income taxes as follows:
11. Earnings per share
Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.
Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity-settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.
12. Subsequent event
On October 15, 2014 we issued US$300 million of senior unsecured notes. The notes bear interest of 4.35% per year and are due October 15, 2024. The net proceeds were used to repay our outstanding US$300 million senior notes that matured that day.
13. Segmented information
The geographic distribution of external sales is as follows(1):
Contacts:
West Fraser Timber Co. Ltd.
Larry Hughes
Vice-President, Finance and Chief Financial Officer
(604) 895-2700
West Fraser Timber Co. Ltd.
Rodger Hutchinson
Vice-President, Corporate Controller and Investor Relations
(604) 895-2700
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Datum: 27.10.2014 - 16:01 Uhr
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