Ainsworth Announces 2012 Fourth Quarter and Year End Results

Ainsworth Announces 2012 Fourth Quarter and Year End Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/07/13 -- Ainsworth
Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) today announced its financial
results for the fourth quarter and year ended December 31, 2012.  
2012 Highlights: 


 
--  Achieved best annual operating results since 2005, with annual adjusted
    EBITDA of $106.7 million versus $12.5 million in 2011 
--  Exceeded previous annual production record by 4% for the three currently
    operating mills 
--  Completed comprehensive refinancing during the fourth quarter and
    significantly improved our balance sheet 
--  Commenced plans to restart our High Level, Alberta OSB facility in the
    second half of 2013

 
Ainsworth's Performance Continues to Improve 
Ainsworth President and Chief Executive Officer, Jim Lake said, "I am
pleased to report that Ainsworth's adjusted EBITDA for the year was
$106.7 million in 2012, an increase of $94.2 million compared to
2011. Adjusted EBITDA margins were 26.1% on shipment volumes of 1.62
billion square feet (3/8" basis) and sales of $409.1 million. These
impressive results not only reflect improving market conditions but
were also made possible by our unrelenting focus on operational
performance and our strategic commitment to value-added products and
markets." 
"Our three operating mills continued to generate efficiency gains,
which enabled us to increase shipments and benefit from higher OSB
prices. In 2012, we exceeded our prior year output by over 5% while
also establishing a new annual production record. Looking forward
into 2013, we expect that demand will remain strong and we are
working towards restarting the High Level mill in the second half of
the year, to meet both North American and export market demand." 
Financial Results 
Fourth quarter sales were $117.9 million in 2012 compared to $69.5
million in 2011. The $48.4 million increase in sales was mainly due
to a 59.4% increase in realized pricing and a 6.4% increase in sales
volumes as the Company responded to increased demand from the
customers. Adjusted EBITDA for the fourth quarter of 2012 was $42.3
million compared to $2.7 million in the fourth quarter of 2011. Net
income from continuing operations was $6.7 million in the
 fourth
quarter of 2012 compared to $1.7 million in the same quarter last
year. The $5.0 million increase in net income included a $39.1
million increase in gross profit. This increase was largely offset by
fluctuations in non-cash accounting gains and losses and income tax
expense. 
Full year sales were $409.1 million in 2012 compared to $293.3
million in 2011. The $115.8 million increase in sales was the result
of a 32.6% increase in realized pricing and a 5.2% increase in sales
volume. Annual adjusted EBITDA was $106.7 million in 2012 compared to
$12.5 million in 2011. Net income from continuing operations was
$28.8 million in 2012 compared to $7.6 million in 2011. The $21.2
million increase in net income included a $93.2 million increase in
gross profit. This increase was largely offset by fluctuations in
non-cash accounting gains and losses and income tax expense. 
Margins 
Adjusted EBITDA margin on sales was 35.9% compared to 3.9% in the
same period of 2011. For the full year, adjusted EBITDA margin on
sales was 26.1% in 2012 compared to 4.3% in 2011.  
The North Central price indicator for the benchmark 7/16" OSB
averaged U.S.$271/msf in 2012 (a 46% increase over 2011) with the
Western Canadian price indicator for the benchmark 7/16" OSB very
close behind at U.S.$269/msf (a 75% increase over 2011). During the
fourth quarter, pricing continued to strengthen, with the North
Central and Western Canada price indicators averaging U.S.$332 and
U.S.$331/msf, respectively.  
Selected financial information is presented in the table below. The
full financial report is available to be viewed at the following
link: http://media3.marketwire.com/docs/ans37fs.pdf 


 
Selected Financial Information                                           
In millions of Canadian dollars, except per share data
                                                                         
-------------------------------------------------------------------------
                                    Quarter ended              Year ended
                                      December 31             December 31
                                 2012        2011        2012        2011
-------------------------------------------------------------------------
                                                                         
Sales                         $ 117.9      $ 69.5     $ 409.1     $ 293.3
Cost of products sold            72.0        62.7       287.2       264.6
Net income from                                                          
 continuing operations            6.7         1.7        28.8         7.6
Net income                        6.7         2.8        28.4         8.3
Adjusted EBITDA (1)              42.3         2.7       106.7        12.5
Adjusted EBITDA margin                                                   
 (2)                            35.9%        3.9%       26.1%        4.3%
-------------------------------------------------------------------------
Basic and diluted earnings per share:                                    
Net income from                                                          
 continuing operations           0.06        0.02        0.28        0.07
Net income                       0.06        0.03        0.28        0.08
Weighted average common                                                  
 shares outstanding (3)         106.9       100.8       102.3       100.6
-------------------------------------------------------------------------
 
1.  Adjusted EBITDA, a non-IFRS financial measure, is defined as net income
    (loss) from continuing operations before amortization, gain on disposal
    of property, plant and equipment, cost of curtailed operations, stock
    option expense, finance expense, foreign exchange (gain) loss on long-
    term debt, other foreign exchange loss (gain), income tax expense
    (recovery), and non-recurring items. 
2.  Adjusted EBITDA margin, a non-IFRS financial measure, is defined as
    adjusted EBITDA divided by sales. 
3.  240,833,888 common shares were outstanding on December 31, 2012.

 
Comprehensive Refinancing 
During the fourth quarter of 2012, the Company completed a private
placement of U.S.$350 million of Senior Secured Notes and a fully
backstopped equity rights offering for gross proceeds of $175
million. The net proceeds from the Senior Secured Notes issuance and
the rights offering were used to repay the Company's Senior Secured
term loan and Senior Unsecured Notes, which were otherwise due in
2014 and 2015. The Senior Secured Notes are secured by substantially
all of the Company's assets on a first priority basis. These
refinancing transactions have increased our financial flexibility by
reducing our debt levels, lowering our borrowing costs, and extending
our debt maturity profile substantially to 2017.  
At December 31, 2012, Ainsworth's available liquidity, consisting of
cash and cash equivalents, was $106.8 million, an improvement of
$20.2 million from September 30, 2012, and $49.1 million since
December 31, 2011 resulting from our stronger operating results.
Ainsworth is also permitted under the terms of the Senior Secured
Notes to borrow at least an additional U.S.$170 million of senior
secured and unsec
ured debt subject to the limitations set forth in
the indenture. 
Outlook 
At the time of this news release, all indicators regarding market
conditions are positive. U.S. foreclosures and existing home
inventories are trending down, home prices and builder confidence are
improving and housing forecasts are being upgraded. At the same time,
OSB inventories in the supply chain are lean, mill order files are
long and structural panel prices are at the highest levels since May
2004. Against this backdrop of optimism with respect to market
demand, structural panel producers are making some plans to bring
idle capacity back on line. However, we are of the view that supply
will come on gradually and lag demand growth in the near-term. 
We are actively working towards restarting our High Level mill in the
second half of this year. At 860 million square feet of production
capacity, the mill is one of the largest facilities in the industry
and will be an efficient producer with strong access to high quality,
low cost fiber. High Level will enable us to continue to meet the
growing requirements of our existing customer base while allowing us
to service new market segments, both in terms of geography and
technical innovation. The unique characteristics of the High Level
continuous press and equipment will also enable us to expand our
reach into industrial applications as well as markets such as China
where we have identified and are developing significant opportunities
for innovative and proprietary products. These diversification
efforts are strategic to our Company as we establish a sustainable
business throughout the cycle. 
Appointment 
The Board of Directors is pleased to announce the appointment of Jim
Lake as President and Chief Executive Officer of the Company,
effective immediately. Mr. Lake joined Ainsworth in June 2010 and has
held the role of President and Chief Operating Officer since
September 2011. "We look forward to Jim's continued strong leadership
as Ainsworth executes its strategy as a leading forest products
company," said Peter Gordon, Chairman of the Board. In addition, Mr.
Lake has been appointed to the Board of Directors. 
Conference Call Information 
Ainsworth will hold a conference call on Friday, March 8, 2013 at
10:00 am PDT (1:00 pm EDT) to discuss the 2012 fourth quarter and
year end results. The dial-in phone number is 1-800-319-4610 from
inside the U.S. or Canada, and +1-604-638-5340 from outside of the
U.S. and Canada. A recording of this conference call will be
available until the end of day March 15, 2013. To access the
post-view line, dial 1-800-319-6413, or +1-604-638-9010, reservation
4176#. 
The financial results are based on International Financial Reporting
Standards. Investors, analysts and other interested parties can
access Ainsworth's Financial Statements, Management's Discussion and
Analysis, Shareholders' Letter, and Supplemental Information on
Ainsworth's website under the Investors / Financial Reports section
at www.ainsworthengineered.com. 
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 and financial position 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. 
Contacts:
Ainsworth Lumber Co. Ltd.
604-661-3200
604-661-3201 
Ainsworth Lumber Co. Ltd.
Rick Eng
Vice President, Finance and Chief Financial Officer
Rick.Eng@ainsworth.ca
www.ainsworthengineered.com
 
 
Press spacebar to pause and continue. Press esc to stop.