Conifex Announces Third Quarter 2021 Results
VANCOUVER, B.C., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Conifex Timber Inc. ("Conifex", "we" or "us") (TSX: CFF) today reported results for the third quarter ended September 30, 2021. EBITDA* from continuing operations was positive $3.3 million compared to EBITDA of $7.6 million in the third quarter of 2020. Net loss was $0.9 million or $0.02 per share in the quarter versus earnings in the year-earlier quarter of $0.04 per share.
Selected Financial Highlights
The following table summarizes our selected financial information for the comparative periods. Unless otherwise noted, financial information reflects results of continuing operations from our Mackenzie sawmill and power plant.
(unaudited, in
millions of dollars,
except earnings per
share and share Q3 Q2 2021 YTD Q3 2020 YTD 2020
information) 2021 2021
-------------------- ------------- ---------- ------------------- ---------- ----------
Sales
Lumber -- Conifex
produced 25.9 80.1 145.9 30.7 56.3
Lumber --
wholesale 12.5 9.0 22.1 0.5 1.7
By-products 2.1 2.7 7.2 0.4 2.3
Bioenergy 7.1 4.7 15.5 6.0 18.7
-------------------- ------------ ---------- ------------------- ---------- ----------
47.6 96.5 190.7 37.6 79.0
-------------------- ------------ ---------- ------------------- ---------- ----------
Operating income
(loss) (0.7) 33.5 41.4 7.0 (1.2)
EBITDA from
continuing
operations(2) 3.3 37.8 50.7 7.6 7.0
Net income (loss)
from continuing
operations (0.9) 26.1 29.7 2.0 (8.9)
Net income (loss)
from discontinued
operations - - - - 0.2
Net income (loss) (0.9) 26.1 29.7 2.0 (8.8)
-------------------- ------------ ---------- ------------------- ---------- ----------
Basic and diluted
earnings (loss)
per share
Continuing
operations (0.02) 0.56 0.65 0.04 (0.19)
Discontinued
operations - - - - -
-------------------- ------------ ---------- ------------------- ---------- ----------
Total basic and
diluted earnings
(loss) per share (0.02) 0.56 0.65 0.04 (0.19)
-------------------- ------------ ---------- ------------------- ---------- ----------
Shares outstanding
-- weighted average
(millions) 44.6 46.0 45.7 47.0 47.0
Reconciliation of
EBITDA to net
income (loss)
Net income (loss)
from continuing
operations (0.9) 26.1 29.7 2.0 (8.9 )
Add: Finance costs 1.1 1.1 3.4 1.2 5.9
Amortization 3.4 2.1 7.6 2.9 6.9
Income tax expense
(recovery) (0.3) 8.5 10.0 1.5 (1.0 )
-------------------- ------------ ---------- ------------------- ---------- ----------
EBITDA from
continuing
operations(2) 3.3 37.8 50.7 7.6 2.9
-------------------- ------------ ---------- ------------------- ---------- ----------
* Conifex's EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization. We disclose EBITDA as it is a measure used by analysts and by our management to evaluate our performance. As EBITDA is a non-GAAP measure that does not have any standardized meaning prescribed by International Financial Reporting Standards, it may not be comparable to EBITDA calculated by others and is not a substitute for net earnings or cash flows, and therefore readers should consider those measures in evaluating our performance.
Selected Operating Information
Q3 Q2 YTD Q3 YTD
2021 2021 2021 2020 2020
Production --
WSPF lumber
(MMfbm)((3)
() 40.1 49.0 140.1 48.0 88.6
Shipments --
WSPF lumber
(MMfbm) ((3)
() 34.1 55.5 127.4 39.2 85.3
Shipments --
wholesale
lumber
(MMfbm)((3)
() 6.0 5.8 12.5 0.7 2.3
Electricity
production
(GWh) 53.7 50.9 129.6 54.9 160.8
Average
exchange
rate --
$/US$((4)
() 0.794 0.814 0.799 0.751 0.739
Average WSPF
2x4 #2 & Btr
lumber price
(US$)((5) () $ 478 $ 1,290 $ 917 $ 768 $ 508
Average WSFP
2x4 #2 & Btr
lumber price
($)((6) () $ 602 $ 1,584 $ 1,144 $ 1,023 $ 684
------------- -------- -------- --- ------- --- ------- --- -------
(1) Reflects results of continuing operations, except where otherwise noted.
(2) Conifex's EBITDA calculation represents earnings before finance costs, taxes, depreciation and amortization.
(3) MMfbm represents million board feet.
(4) Bank of Canada, www.bankofcanada.ca.
(5) Random Lengths Publications Inc.
(6) Average SPF 2x4 #2 & Btr lumber prices (US$) divided by average exchange rate.
Summary of Third Quarter 2021 Results
Consolidated Net Earnings
During the third quarter of 2021, we incurred a net loss from continuing operations of $0.9 million or $0.02 per share compared to net income of $26.1 million or $0.56 per share in the previous quarter and $2.0 million or $0.04 per share in the third quarter of 2020.
Lumber Operations
North American lumber market prices declined sharply in the first half of the third quarter of 2021 following the elevated lumber prices seen in the first half of the year. Market prices experienced a slide from the record-high levels driven by a slowdown in North American repair and remodelling activities and elevated lumber inventory supply in the market. US housing starts on a seasonally adjusted annual basis remained steady, averaging 1,565,000 in the third quarter of 2021, up 1% from the previous quarter and up 9% from the third quarter of 2020(1) . With the recovery of the repair and remodelling demand towards the end of the quarter, lumber market prices saw a gradual recovery, improving from a low of US$385 in mid-August 2021 to US$533 at the end of September 2021(2) .
The US dollar averaged US$0.794 for each Canadian dollar during the third quarter of 2021, a level which represented a weakening of the Canadian dollar over the previous quarter(3) . Canadian dollar-denominated benchmark Western Spruce/Pine/Fir ("WSPF") prices, which averaged $602 in the third quarter of 2021, decreased by 62% or $982 from the previous quarter and by 41% or $421 from the third quarter of 2020.
Our lumber production in the third quarter of 2021 totalled approximately 40.1 million board feet, representing operating rates of approximately 67% of annualized capacity. In the previous quarter, 49.0 million board feet of lumber was produced. The decrease in lumber production for the third quarter was largely driven by the temporary curtailment of lumber production operations for two weeks in August 2021. This curtailment was necessitated by the combined impact of record high delivered log costs and a collapse in lumber prices following the record high peak in pricing seen in the second quarter. In the third quarter of 2020, 48.0 million board feet of lumber was produced, reflecting the gradual ramp-up to normalized operating levels following a pandemic-related curtailment.
Shipments of Conifex produced lumber totaled 34.1 million board feet in the third quarter of 2021, representing a decrease of 39% from the 55.5 million board feet shipped in the previous quarter and 13% from the 39.2 million board feet of lumber shipped in the third quarter of 2020. Shipments of Conifex produced lumber in the third quarter of 2021 were affected by the temporary curtailment at our Mackenzie sawmill and a shift in focus to offshore markets to minimize the impact of the depressed lumber pricing. Our wholesale lumber program shipped 6.0 million board feet in the third quarter of 2021, representing an increase of 3% from the 5.8 million board feet shipped in the second quarter of 2021 and 757% from the 0.7 million board feet shipped in the third quarter of 2020.
Revenues from lumber products were $38.4 million in the third quarter of 2021 representing a decrease of 57% from the previous quarter and an increase of 23% from the third quarter of 2020. Compared to the previous quarter, the lower revenues in the current quarter were driven by lower shipment volumes and significantly reduced realized lumber prices. The revenue increase in the current quarter over the same period in the prior year is largely the result of the higher proportion of premium grade lumber shipped and sold.