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Norbord Reports Improved First Quarter 2013 Results; Declares Dividend


Norbord Reports Improved First Quarter 2013 Results; Declares Dividend

Note:  Financial references in US dollars unless otherwise indicated.

Q1 2013 HIGHLIGHTS


    --  Earnings of $1.26 per share (diluted) - versus break-even in Q1
        2012
    --  EBITDA of $111 million - a fivefold increase over $21 million
        in Q1 2012
    --  North Central benchmark OSB price averaged $417 per Msf -
        double Q1 2012 and the highest average price in 9 years
    --  Announcement of new variable dividend policy and declaration of
        quarterly dividend of CAD $0.60 per share to shareholders of
        record on June 1

TORONTO, April 30, 2013 /CNW/ - Norbord Inc. (TSX: NBD, NBD.WT) today reported 
EBITDA of  $111 million in the first quarter of 2013, a $90 million 
improvement over the first quarter of 2012 and a $41 million improvement over 
the prior quarter.  North American operations generated EBITDA of $106 
million in the first quarter of 2013 versus $14 million and $67 million in the 
first and fourth quarters of 2012, respectively.  European operations 
generated EBITDA of $10 million in the first quarter of 2013 versus $11 
million and $9 million in the first and fourth quarters of 2012, respectively.

Norbord recorded $67 million of earnings ($1.26 per share diluted) in the 
first quarter of 2013 compared to break-even in the first quarter of 2012 and 
$38 million ($0.76 per share diluted) in the fourth quarter of 2012.

"Our strong first quarter results reflect a broad-based US housing recovery 
that is accelerating," said Barrie Shineton, President and CEO. "Average North 
American OSB prices climbed to their highest level in nine years during what 
is normally the weakest season of the year.  We are working hard to bring our 
Jefferson, Texas mill back up by mid-year in spite of persistent equipment 
delays and the challenge of recruiting a new workforce.  While we will likely 
see increasing market volatility, I believe improving OSB demand will continue 
to outstrip supply for at least the rest of this year."

"In Europe, our panel business delivered another quarter of strong numbers in 
spite of uncertainty in the Eurozone economies.  OSB demand in particular is 
strengthening and we continue to run all our panel mills full out."

"The variable dividend policy we are announcing today reflects the improvement 
in our operating cash flow over the past year.  Norbord now has strong 
liquidity and is deleveraging quickly with our net debt to total 
capitalization moving towards the bottom of our target range.  We expect to 
continue delivering significant free cash flow in the near term as the US 
housing recovery supports increasing demand for OSB."

Market Conditions

First quarter US housing starts were 36% higher than the same quarter last 
year and permits were 22% higher.  The seasonally adjusted US housing starts 
number for March was 1,036,000, 47% higher than the year-ago pace.  In this 
rapidly improving demand environment, the North American North Central 
benchmark OSB price averaged $417 per thousand square feet (Msf) (7⁄16-inch 
basis) in the first quarter compared to $203 per Msf in the same quarter last 
year and $332 per Msf in the prior quarter.  In the South East region, where 
approximately 55% of Norbord's North American capacity is located, prices 
averaged $396 per Msf, compared to $190 per Msf in the same quarter last year 
and $296 per Msf in the prior quarter.  The consensus forecast from US 
housing economists is for 1.0 million starts in 2013, which would be a 28% 
improvement over 2012.

In Europe, despite continuing macroeconomic uncertainty, panel markets remain 
steady.  Average panel prices increased in the first quarter, rising 2% 
year-over-year and 5% quarter-over-quarter.  OSB and particleboard markets 
were strong and MDF markets remain stable.  The Pound Sterling remained in a 
range versus the Euro that continues to support Norbord's primarily UK-based 
manufacturing.

Performance

In North America, OSB shipment volumes increased 4% year-over-year and 
decreased 3% versus the prior quarter.  The quarter-over-quarter decrease is 
due to scheduled annual maintenance shuts and fewer fiscal days in the first 
quarter.  Norbord's OSB mills produced at approximately 70% of capacity, up 
5% versus the first quarter of 2012 and unchanged from the fourth quarter of 
2012.

In response to increased customer demand for OSB, Norbord continues to staff 
up and prepare its curtailed mill in Jefferson, Texas for restart by mid-2013. 
 The mill has been mothballed since the first quarter of 2009 and represents 
9% of the Company's 4.4 billion square feet (3/8-inch basis) of North American 
OSB capacity.  Norbord will continue to monitor market conditions, but does 
not currently expect to restart its curtailed mills in Huguley, Alabama or 
Val-d'Or, Quebec in 2013.

Norbord's North American OSB cash production costs per unit (excluding mill 
profit share) increased by 12% year-over-year and 8% quarter-over-quarter.  
Excluding the impact of higher input prices, the scheduled annual maintenance 
shuts and Jefferson, Texas restart costs, unit costs increased by 4% and 3%, 
respectively, compared to the prior quarter and prior year.  The remaining 
increase in unit costs was driven primarily by higher resin and fibre prices.

In Europe, shipments were 3% lower than the same quarter last year due to 
lower retail furniture sales over the holiday period, but shipments increased 
by 5% over the prior quarter.  Norbord's European panel mills produced at 
approximately 100% of capacity in the quarter, compared to 95% in the same 
quarter last year and 90% in the prior quarter.

Norbord did not generate any gains from its Margin Improvement Program (MIP) 
due to the impact of the first quarter scheduled annual maintenance shuts.  
Lower production volumes and shutdown-related costs effectively offset any raw 
material usage and productivity gains.

Capital investments totaled $12 million, $9 million higher year-over-year due 
to capital spending to prepare the Jefferson, Texas mill for restart, and in 
line with the prior quarter.  Norbord's 2013 planned capital expenditures are 
targeted at $70 million.

Operating working capital was $101 million compared to $71 million at the end 
of the same quarter last year and $50 million at year-end.  Both the 
year-over-year and quarter-over-quarter increases were primarily driven by the 
impact of higher North American OSB prices on accounts receivable.  In 
addition, seasonal logging in the northern mills increased inventories 
quarter-over-quarter.  Finished goods inventory remains at minimal levels and 
accounts receivable performance is in line with prior periods.

Taking into account an increase in the accounts receivable securitization 
program subsequent to quarter-end, Norbord had unutilized liquidity of $500 
million, including $158 million of cash.  The Company's tangible net worth 
was $488 million and net debt to total capitalization on a book basis was 37%, 
well within bank covenants.

Developments

Capital Plan

Norbord announces today that its Board of Directors (the Board) has approved a 
new variable dividend policy which targets the pay-out to shareholders of a 
portion of expected future free cash flow through the cycle.  For 2013, the 
dividend is targeted at CAD $0.60 per share per quarter, which amounts to an 
annualized dividend of CAD $2.40 per share.  Norbord's liquidity is 
improving, with cash of $158 million on the balance sheet and undrawn bank and 
securitization lines of $342 million at quarter-end.  The Company's balance 
sheet is deleveraging quickly with net debt of just $285 million, representing 
37% of total capitalization, and rapidly approaching the bottom of the 
Company's target range over the cycle. 

The decision to introduce a dividend policy at this point in the cycle 
demonstrates the Board's and management's confidence that Norbord has 
sufficient capital resources in the near term and the ability to generate 
strong cash flow over the next few years.  However, the Company operates in 
highly cyclical markets, and the Board will review the pay-out as the cycle 
progresses and adjust the dividend as appropriate.  

Dividends are declared at the discretion of the Board.  In determining its 
ability to distribute capital to its shareholders, the Company considers 
current and anticipated capital needs and its ability to generate free cash 
flow in the future, subject to the covenants in its bank line agreements and 
bond indentures.

Dividend

Under the new dividend policy, the Board declared a quarterly dividend of CAD 
$0.60 per common share, payable on June 21, 2013 to shareholders of record on 
June 1, 2013.

Warrant Indenture Amendment

Effective March 25, 2013, Norbord amended certain terms of the Warrant 
Indenture dated December 24, 2008 to include a cashless exercise feature. 
 This feature allows warrant holders to elect to exercise their warrants on a 
cashless basis, and receive common shares based on the in-the-money amount of 
their warrants.  The Board approved this amendment on the recommendation of 
an independent committee comprised of the five members of the audit committee.

On March 25, 2013, Brookfield Asset Management Inc. (Brookfield) exercised all 
their warrants on a cashless basis, receiving an additional 8.2 million common 
shares and increasing their ownership of the Company to 59%.

Secondary Offering

On March 25, 2013, Brookfield and the Company entered into an agreement with a 
syndicate of investment dealers to complete a secondary offering of Norbord's 
common shares.  Under the agreement, the syndicate agreed to purchase 3.3 
million common shares at a purchase price of CAD $33.00 per common share. 
 Brookfield offered 2.75 million shares and the Company's senior management 
offered 0.55 million shares.  Brookfield also granted the underwriters an 
over-allotment option to purchase up to an additional 0.5 million shares, 
which was exercised in full prior to the closing.  On April 16, 2013, upon 
closing of the offering, Brookfield sold a total of 3.25 million shares to the 
underwriters, decreasing their ownership of the Company to 53%.  Norbord did 
not receive any proceeds from the offering.

Additional Information

Norbord's Q1 2013 letter to shareholders, news release, management's 
discussion and analysis, consolidated unaudited financial statements and notes 
to the financial statements have been filed on SEDAR (www.sedar.com) and are 
available in the investor section of the Company's website at 
www.norbord.com.  Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors 
on Tuesday, April 30, 2013 at 2:00 p.m. ET.  The call will be broadcast live 
over the Internet via www.norbord.com and www.newswire.ca.  A replay number 
will be available approximately one hour after completion of the call and will 
be accessible until May 29, 2013 by dialing 1-888-203-1112 or 647-436-0148. 
 The passcode is 5721346.  Audio playback and a written transcript will be 
available on the Norbord website.

Norbord Profile

Norbord Inc. is an international producer of wood-based panels with assets of 
$1 billion, employing approximately 1,900 people at 13 plant locations in the 
United States, Europe and Canada.  Norbord is one of the world's largest 
producers of oriented strand board (OSB).  In addition to OSB, Norbord 
manufactures particleboard, medium density fibreboard (MDF) and related 
value-added products.  Norbord is a publicly traded company listed on the 
Toronto Stock Exchange under the symbols NBD and NBD.WT.

This news release contains forward-looking statements, as defined in 
applicable legislation, including statements related to our strategy, 
projects, plans, future financial or operating performance and other 
statements that express management's expectations or estimates of future 
performance. Often, but not always, words such as  "expect," "believe," 
"forecast," "likely," "support," "target," "consider," "continue," "suggest," 
"intend,"  "should," "appear," "would," "will," "will not," "plan," "can," 
"may," and other expressions which are predictions of or indicate future 
events, trends or prospects and which do not relate to historical matters 
identify forward-looking statements.  Forward-looking statements involve 
known and unknown risks, uncertainties and other factors which may cause the 
actual results, performance or achievements of Norbord to be materially 
different from any future results, performance or achievements expressed or 
implied by the forward-looking statements.

Although Norbord believes it has a reasonable basis for making these 
forward-looking statements, readers are cautioned not to place undue reliance 
on such forward-looking information.  By its nature, forward-looking 
information involves numerous assumptions, inherent risks and uncertainties, 
both general and specific, which contribute to the possibility that the 
predictions, forecasts and other forward-looking statements will not occur.  
Factors that could cause actual results to differ materially from those 
contemplated or implied by forward-looking statements include:  general 
economic conditions; risks inherent with product concentration; effects of 
competition and product pricing pressures; risks inherent with customer 
dependence; effects of variations in the price and availability of 
manufacturing inputs; risks inherent with a capital intensive industry; and 
other risks and factors described from time to time in filings with Canadian 
securities regulatory authorities.

Except as required by applicable laws, Norbord does not undertake to update 
any forward-looking statements, whether as a result of new information, future 
events or otherwise, or to publicly update or revise the above list of factors 
affecting this information.  See the "Caution Regarding Forward-Looking 
Information" statement in the March 1, 2013 Annual Information Form and the 
cautionary statement contained in the "Forward-Looking Statements" section of 
the 2012 Management's Discussion and Analysis dated January 30, 2013 and Q1 
2013 Management's Discussion and Analysis dated April 29, 2013.

April 30, 2013

To Our Shareholders,

I'm pleased to report a very positive first quarter result.  Norbord 
generated earnings of $1.26 per share on EBITDA of $111 million, a more than 
$40 million improvement from the previous quarter.  In fact, this was our 
best quarterly EBITDA result in the past seven years.  Our improved 
performance reflects increasing North American OSB demand and prices, driven 
by the strength of the US housing recovery.  And while our North American 
business was the biggest contributor this quarter, our European operations 
also delivered a solid performance.

In my previous shareholder letter I said that capital allocation had become a 
priority.  Today in our press release, we announced that the Board of 
Directors approved a new variable dividend policy.  We also declared the 
first quarterly dividend payout in four and a half years, reflecting 
confidence in our financial position and future cash flow generation.  This 
equates to an annualized dividend of CAD $2.40 per share.  We know our 
business is cyclical and the level of payout will vary over time.  However, 
the US housing recovery has momentum and I believe Norbord's peak earning 
years are still ahead.

In March, our major shareholder Brookfield exercised their warrants on a 
cashless basis and sold some of the new shares through a secondary offering.  
This is a positive development, as there are now almost four million more 
shares in our trading float available to other investors. 

All US housing indicators point to a broad-based recovery.  The key metrics - 
home prices, new and existing home sales, affordability and the foreclosure 
inventory - are improving.  The seasonally-adjusted 1 million housing starts 
number for March is more than double the pace when housing bottomed in 2009.  
And underlying pent-up demand will support a return to the 1.5 million 
normalized level over the next few years.

Heading into the second quarter, I remain positive about the rest of this 
year.  In April, North American OSB prices corrected - the result of weather 
related delays in spring construction, some new capacity and a build in 
inventory in the supply chain.  We expect pricing volatility to continue.  
However, I am not concerned and expect overall pricing to remain at 
above-trend levels, particularly as we move toward the peak demand summer 
months.  To this end, we are working hard to bring our idled mill in 
Jefferson, Texas back on-line by mid-year.  So far, we are on track and all 
of the volume from this mill is already spoken for by existing Norbord 
customers.

In Europe, our UK-based manufacturing is benefitting from an ongoing currency 
advantage.  We have extended order files for all our panel products and OSB 
markets, in particular, are strengthening.  Barring any significant currency 
swings, I expect continued steady performance from our European business. 

Norbord's liquidity is strong and our balance sheet is deleveraging quickly.  
And I'm pleased that we're now in a position to start returning some of our 
cash to our shareholders.  The US housing recovery is accelerating, but given 
that we're only halfway back to a longer-term sustainable trend, I continue to 
see strong earnings potential ahead for Norbord.

I look forward to reporting our results as the year progresses.

[signed]
J. Barrie Shineton
President & CEO

This letter includes forward-looking statements, as defined by applicable 
securities legislation including statements related to our strategy, projects, 
plans, future financial or operating performance and other statements that 
express management's expectations or estimates of future performance.  Often, 
but not always, forward-looking statements can be identified by the use of 
words such as "expect," "suggest," "support," "believe," "should," 
"potential," "likely," "continue," "forecast," "point to," "plan," "indicate," 
"consider," "future," or variations of such words and phrases or statements 
that certain actions "may," "could," "must," "would," "might," or "will" be 
undertaken, occur or be achieved.  Forward-looking statements involve known 
and unknown risks, uncertainties and other factors that may cause the actual 
results, performance or achievements of Norbord to be materially different 
from any future results, performance or achievement expressed or implied by 
the forward-looking statements.  See the cautionary language in the 
Forward-Looking Statements section of the 2012 Management's Discussion and 
Analysis dated January 30, 2013 and Q1 2013 Management's Discussion and 
Analysis dated April 29, 2013.

Consolidated Balance Sheets
                                                        

(unaudited)                                           
(US $ millions)                       Mar 30, 2013         Dec 31, 2012

Assets                                                                 

Current assets                                                         

  Cash and cash equivalents   $                158   $              128

  Accounts receivable                          152                  125

  Inventory                                    110                   98
                                               420                  351

Non-current assets                                                     

  Property, plant and                          755                  764
  equipment
                              $              1,175   $            1,115

Liabilities and                                                        
Shareholders' Equity

Current liabilities                                                    

  Accounts payable and        $                161   $              173
  accrued liabilities

Non-current liabilities                                                

  Long-term debt                               434                  433

  Other liabilities                             38                   42

  Deferred income taxes                         95                   82
                                               567                  557
                                                                       

Shareholders' equity                           447                  385
                              $              1,175   $            1,115
                                                        
                                                        

Consolidated Statements of Earnings
                                                                       

(unaudited)                              
Quarters ended Mar 30 and Mar 31
(US $ millions, except per share
information)                                    Q1 2013        Q1 2012 

Sales                                           $    365     $      253

Cost of sales                                      (249)          (228)

General and administrative expenses                  (5)            (4)

Earnings before finance costs,           
income tax and depreciation                          111             21
                                                                       

Finance costs                                        (9)            (8)

Earnings before income tax and           
depreciation                                         102             13
                                                                       

Depreciation                                        (13)           (13)

Income tax expense                                  (22)              -

Earnings                                      $       67   $          -

Earnings per common share                                              
    Basic                                         $  1.51   $          -
    Diluted                                          1.26              -
                                                          

Consolidated Statements of Comprehensive Income
                                                         

(unaudited)                             
Quarters ended Mar 30 and Mar 31 (US $
millions)                                       Q1 2013        Q1 2012

Earnings                                      $      67  $         -  

Other comprehensive income (loss), net                                
of tax

Items that will not be reclassified to earnings

Actuarial gain on 9 - post-employment obligation

Items that may be reclassified subsequently to earnings

Foreign currency translation (14) 6 (loss) gain on foreign operations

Net loss on hedge of net - (1) investment in foreign operations

(14) 5

(5) 5

Comprehensive income $ 62 $ 5

Consolidated Statements of Changes in Shareholders' Equity

(unaudited) Quarters ended Mar 30 and Mar 31 (US $ millions) Q1 2013 Q1 2012

Share capital

Balance, beginning of period $ 346 $ 340

Issue of common shares 294 -

Balance, end of period $ 640 $ 340

Contributed surplus

Balance, beginning of period $ 44 $ 43

Stock-based compensation - 1

Warrants and stock options exercised (35) -

Balance, end of period $ 9 $ 44

Retained earnings

Balance, beginning of period $ (10) $ (82)

Adoption of new accounting standard (1) (1)

Adjusted balance, beginning of (11) (83) period

Earnings 67 -

Warrants exercised (259) -

Other comprehensive income 9 -

Balance, end of period $ (194) $ (83)

Accumulated Other Comprehensive Income (Loss)

Balance, beginning of period $ 6 $ (1)

Other comprehensive (loss) income (14) 5

Balance, end of period $ (8) $ 4

Shareholders' equity $ 447 $ 305

Consolidated Statements of Cash Flows


                                                           

(unaudited)                                   
Quarters ended Mar 30 and Mar 31 (US $
millions)                                         Q1 2013       Q1 2012

CASH PROVIDED BY (USED FOR):                                           

Operating Activities                                                   

Earnings                                       $       67 $           -

Items not affecting cash:                                              
    Depreciation                                        13            13
    Deferred income tax                                 22             -

Other items                                           (2)             1
                                                      100            14

Net change in non-cash operating working             (55)          (42)
capital balances

Net change in tax receivable                            -             1
                                                       45          (27)

Investing Activities                                                   

Investment in property, plant and                    (15)           (3)
equipment

Realized net investment hedge gain                      -             3
                                                     (15)             -

Financing Activities                                                   

Accounts receivable securitization                      -             4
proceeds

Cash and Cash Equivalents                                              

Increase (decrease) during the period                  30          (23)

Balance, beginning of period                          128            83

Balance, end of period                          $     158   $        60

 

 

 

 

 

 

Heather Colpitts Manager, Corporate Affairs Tel. (416) 365-0705 
info@norbord.com

SOURCE: Norbord Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/April2013/30/c9514.html

CO: Norbord Inc.
ST: Ontario
NI: PAP ERN 

-0- Apr/30/2013 10:00 GMT

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