Montréal, Québec and Vancouver, British Columbia – EACOM Timber
Corporation (ETR: TSX-V) (“EACOM”, or the “Company”) is pleased to announce its fourth
quarter and year end results for the three and nine-month periods ended December 31,
The Company has changed its year-end to December 31 from March 31 effective with the
fiscal year ended December 31, 2010, which contains only nine months or three quarters of
operations. This modification was made as a result of the acquisition of the Domtar forest
products business, which had a December year-end.
On June 30, 2010, EACOM completed the acquisition of the Domtar forest products
business, which transformed the Company from a lumber trading business to a lumber
manufacturing, marketing and distribution business. The Company began operating these
newly acquired assets on July 1, 2010. As a result, only six months or two quarters of
operations are indicative of the Company’s ongoing operations.
OVERVIEW OF FINANCIAL RESULTS
The Company’s operating results are significantly affected by lumber prices and the
CDN$/US$ exchange rate. From July 1, 2010 when the Company first began operating the
newly acquired assets, declining lumber prices and a strengthening Canadian dollar have
negatively impacted its results. The Company recorded for the nine-month period ended
December 31, 2010 a negative EBITDA of $18,381, and a negative EBITDA excluding
specific items of $8,604. The net loss and comprehensive loss for the nine-month period
amounted to $23,721 or $0.08 per common share.
For the nine-month period, the Company recognized sales of $142,239. The Company’s
sales include both lumber and by-product sales. During the period, the Company shipped
291 million board feet of lumber and 294,000 oven-dried metric tons of by-products.
Benchmark lumber prices declined during the second half of calendar 2010, averaging
US$290/Mfbm for studs and US$333/Mfbm for random lengths delivered Great Lakes, down
from lumber prices prevailing during the first six months of calendar 2010. Price declines
were seen for all grades and dimensions, but were particularly notable for studs. In
addition, the exchange rate averaged 0.974 during the period, closing at 1.005 on
December 31, 2010.
Production for the nine-month period was 270 million board feet of lumber. During the
period, the Company operated at 53% of its capacity with two of the eight sawmills
acquired from Domtar idled, Ear Falls in Ontario and Ste-Marie in Quebec. The remaining
sawmills were subject to downtime as a result of poor market conditions, low lumber prices
and scheduled maintenance. Unit costs were consistent with those experienced in the past
for these operations.
QUARTER ENDED DECEMBER 31, 2010 vs. QUARTER ENDED SEPTEMBER 30, 2010
During the quarter ended December 31, 2010, lumber prices somewhat firmed up, offset
however by a stronger Canadian dollar. The Company recorded for the quarter a negative
EBITDA of $8,464 ($7,381 for the quarter ended September 30, 2010), and a negative
EBITDA excluding specific items of $2,191 ($5,351 for the preceding quarter). The net loss
and comprehensive loss for the quarter amounted to $10,459 or $0.03 per common share
($10,728 or $0.03 per common share for the preceding quarter).
For the quarter ended December 31, 2010, the Company recorded sales of $68,096, against
sales of $73,639 for the preceding quarter. During the quarter, the Company shipped 136
million board feet of lumber (151 million board feet in the earlier quarter) and 148,000
oven-dried metric tons of by-products (147,000 oven-dried metric tons in the preceding
quarter). The pricing environment firmed up somewhat with benchmark lumber prices
averaging US$296/Mfbm for studs and US$350/Mfbm for random lengths delivered Great
Lakes. However, the positive impact of a firmer pricing environment was offset by a
strengthening Canadian dollar, with the exchange rate averaging 0.987 during the quarter
and closing at 1.005 on December 31, 2010. As well, discounts observed on studs relative
to random lengths enlarged to record levels during the quarter, reflecting the slow housing
market. The mix of grades and dimensions was consistent with our expectations and has
remained constant over the past two quarters.
Lumber production for the quarter ended December 31, 2010 was 140 million board feet of
lumber, compared to 130 million board feet in the preceding quarter. During the quarter,
the Company operated at 55% of its capacity with two of the eight sawmills acquired from
Domtar idled (51% during the earlier quarter with no change to idled mills). Unit costs were
consistent with those experienced in the past for these operations.
At December 31, 2010, the Company had cash and cash equivalents of $10,476, availability
under its revolving credit facility of $3,547, and working capital of $73,136.
On April 4, 2011, the Company announced a private placement of 60,000,000 common
shares at $0.50 per share for gross proceeds of $30 million. The financing will be sold on a
commercially reasonable best efforts basis conducted by a syndicate of agents. The
Company has also granted the agents an over-allotment option to sell up to an additional
10,000,000 common shares on the same terms and conditions, exercisable 48 hours prior
to the closing of the financing. The net proceeds of the financing will be used for workingcapital and general corporate purposes, including for potential acquisitions. This financing is
expected to close on or around April 20, 2011.
EACOM Timber Corporation is a TSX-V listed company. The business activities of EACOM
consist of the manufacturing, marketing and distribution of lumber, wood chips and woodbased
value-added products, and the management of forest resources. EACOM owns seven
sawmills and an equity interest in an eighth sawmill, all located in Eastern Canada, and
related tenures. The mills are Timmins, Nairn Centre, Gogama and Ear Falls in Ontario, and
Val-d’Or, Ste-Marie and Matagami in Quebec. The equity interest is in the Elk Lake sawmill
located in Ontario. The sawmills in Ear Falls, Ontario, and Ste-Marie, Quebec, are currently
idled. EACOM also owns an idled sawmill in Big River, Saskatchewan, a remanufacturing
facility and a 50% interest in an “I” joist plant.
All statements in this news release that are not based on historical facts are “forwardlooking
statements.” While management has based any forward-looking statements
contained herein on its current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of risks, uncertainties
and other factors, many of which are beyond our control and could cause actual results to
materially differ from such statements. Such risks, uncertainties and other factors include,
but are not necessarily limited to, those set forth under “Risk Factors” in the Company’s
Filing Statement dated January 8, 2010 and ‘‘Risks and Uncertainties’’ in the Company’s
current MD&A filed with the Canadian Securities Commissions.
The financial information included in this release also contains certain data that are not
measures of performance under Canadian GAAP. For example, “EBITDA” and “EBITDA
excluding specific items” are measures used by management to assess the operating and
financial performance of the Company. Moreover, we believe that EBITDA is a measure
often used by investors to assess a company’s operating performance. EBITDA has
limitations and you should not consider this item in isolation, or as a substitute for an
analysis of our results as reported under Canadian GAAP. Because of these limitations,
EBITDA should not be used as a substitute for net loss or cash flows from operating
activities as determined in accordance with Canadian GAAP, nor is it necessarily indicative of
whether or not cash flow will be sufficient to fund our cash requirements. In addition, our
definitions of EBITDA may differ from those of other companies. A reconciliation of EBITDA
to net loss is set forth under “OVERVIEW OF FINANCIAL RESULTS – Supplemental
Information on Non-GAAP Measures” in the Company’s current MD&A.
Additional information relating to EACOM is available on SEDAR at www.sedar.com.
Executive Vice-President and Chief Financial Officer