Taiga (TBL) announces Q3 loss due to falling treated wood sales prices

Canada NewsWire

BURNABY, BC, Nov. 5, 2021

BURNABY, BC, Nov. 5, 2021 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") today reported its financial results for the three and nine months ended September 30, 2021.

Third Quarter Ended September 30, 2021 Earnings Results

Sales for the quarter ended September 30, 2021 were $484.6 million compared to $500.7 million over the same period last year. The decrease in sales by $16.1 million or 3% was largely due to decreased selling prices for commodity products.

Gross margin for the quarter ended September 30, 2021 decreased to $7.6 million from $91.5 million over the same period last year. Gross margin percentage was 1.6% for the three months ended September 30, 2021 compared to 18.3% in the same period last year. These decreases were due to commodity prices falling dramatically during the quarter. Furthermore, the Company booked a $13.4 million inventory reserve due to the impact falling commodity prices had on its treated inventory values.

Net earnings (loss) for the quarter ended September 30, 2021 decreased to a loss of ($5.2) million from $33.4 million over the same period last year primarily due to decreased gross margin.

EBITDA for the quarter ended September 30, 2021 was ($1.8) million compared to $50.5 million for the same period last year. EBITDA decreased primarily due to lower margin earned during the quarter.

Nine Months Ended September 30, 2021 Earnings Results

Sales for the nine months ended September 30, 2021 were $1,807.2 million compared to $1,177.8 million over the same period last year. The increase in sales by $629.4 million or 53% was largely due to the Company experiencing higher selling prices for its commodity products at the beginning of the period before prices fell dramatically partway through the third quarter.

Gross margin for the nine months ended September 30, 2021 increased to $245.9 million from $164.8 million over the same period last year. Gross margin percentage decreased to 13.6% for the nine months ended September 30, 2021 compared to the same period last year at 14.0%. The increase in margin is primarily due to rising commodity prices at the beginning of the period before prices fell dramatically partway through the third quarter.

Net earnings for the nine month period ended September 30, 2021 were $82.4 million compared to $53.2 million for the same period last year.

EBITDA for the nine months ended September 30, 2021 was $127.8 million compared to $87.5 million for the same period last year. EBITDA increased primarily due to higher margin earned during the current period.

Management Update on the COVID-19 Pandemic

The outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. As at the financial statement approval date, the pandemic has had a positive impact on Taiga's business and financial performance in fiscal 2020 and the first half of fiscal 2021. This is a direct result of the increased demand for detached housing, record high commodity prices and low borrowing rates experienced during the pandemic. However, commodity prices did fall dramatically during the Company's third quarter which had a material impact on its results. The extent to which these events may continue to impact the Company's business activities in the same manner in future periods will depend on a number of factors, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, the rate at which vaccines are administered, the effectiveness of vaccines against the coronavirus and its mutations, subsequent outbreaks, business disruptions, and the effectiveness of actions taken in Canada, the United States and other countries to contain and treat the disease, the demand for detached housing in North America, future commodity prices, interest rates and the strength of the general economy. These events are highly uncertain and as such, the Company cannot predict with any certainty how the progression of the coronavirus pandemic and these events will ultimately impact the Company's financial performance in 2021.

Condensed Consolidated Statement of Earnings

For the Three Months Ended

                                                    September 30, 
(in thousands of Canadian dollars, except for per   2021     2020 
 share amounts) 
Sales                                               484,563  500,667 
Gross margin                                          7,646   91,515 
Distribution expense                                  6,834    6,766 
Selling and administration expense                    5,399   36,898 
Finance expense                                       1,855    1,910 
Subordinated debt interest expense                      218      218 
Canada Emergency Wage Subsidy                             -     (17) 
Other (income) expense                                   12      174 
Earnings (loss) before income taxes                 (6,672)   45,566 
Income tax expense (recovery)                       (1,432)   12,136 
Net earnings (loss)                                 (5,240)   33,430 
Net earnings (loss) per share(1)                     (0.05)     0.31 
EBITDA(2)                                           (1,841)   50,489 
The following is the reconciliation of net earnings    September 30, 
 to EBITDA: 
(in thousands of Canadian dollars)                     2021     2020 
Net earnings (loss)                                    (5,240)  33,430 
Income tax expense (recovery)                          (1,432)  12,136 
Finance and subordinated debt interest expense           2,073   2,128 
Amortization                                             2,758   2,795 
EBITDA                                                 (1,841)  50,489 

For the Nine Months Ended

                                                    September 30, 
(in thousands of Canadian dollars, except for per   2021       2020 
 share amounts) 
Sales                                               1,807,213  1,177,840 
Gross margin                                          245,907    164,809 
Distribution expense                                   20,708     19,404 
Selling and administration expense                    105,493     69,046 
Finance expense                                         5,795      6,393 
Subordinated debt interest expense                        656        656 
Canada Emergency Wage Subsidy                               -    (2,919) 
Other income                                              302         91 
Earnings before income taxes                          112,953     72,138 
Income tax expense                                     30,549     18,947 
Net earnings                                           82,404     53,191 
Net earnings per share(1)                                0.76       0.48 
EBITDA(2)                                             127,756     87,494 
The following is the reconciliation of net earnings    September 30, 
 to EBITDA: 
(in thousands of Canadian dollars)                     2021     2020 
Net earnings                                            82,404  53,191 
Income tax expense                                      30,549  18,947 
Finance and subordinated debt interest expense           6,451   7,049 
Amortization                                             8,352   8,307 
EBITDA                                                 127,756  87,494 
Notes: 
 (1) Earnings per share is calculated using the weighted 
 average number of shares. 
 (2) Reference is made above to EBITDA, which represents 
 earnings before interest, taxes, and amortization. 
 As there is no generally accepted method of calculating 
 EBITDA, the measure as calculated by Taiga might not 
 be comparable to similarly titled measures reported 
 by other issuers. EBITDA is presented as management 
 believes it is a useful indicator of a company's ability 
 to meet debt service and capital expenditure requirements 
 and because management interprets trends in EBITDA 
 as an indicator of relative operating performance. 
 EBITDA should not be considered by an investor as 
 an alternative to net income or cash flows as determined 
 in accordance with IFRS. For the disclosure of the 
 manner in which EBITDA is calculated and reconciliation 
 to net earnings refer to the "EBITDA" section of the 
 Company's management's discussion and analysis which 
 will be available shortly on SEDAR at www.sedar.com. 

The foregoing selected financial information is qualified in its entirety by and should be read in conjunction with, our unaudited condensed interim consolidated financial statements for three and nine months ended September 30, 2021 and accompanying notes and management's discussion and analysis which will be available shortly on SEDAR at www.sedar.com.

SOURCE Taiga Building Products Ltd.

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/CONTACT:

For further information regarding Taiga, please contact: Mark Schneidereit-Hsu, CFO and VP, Finance & Administration, Tel: 604.438.1471, Email: mschneidereit@taigabuilding.com

/Web site: http://www.taigabuilding.com/

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