Mr. Ted Seraphim reports
WEST FRASER ANNOUNCES FIRST QUARTER RESULTS
West Fraser Timber Co. Ltd. earned $42-million or 51 cents (basic) per share on sales of $1,077-million in the first quarter of 2016. These results compare with previous periods as shown in the accompanying table.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted earnings and adjusted basic EPS (earnings per share) as described in this news release reflect the adjustments described in the tables referred to in the section entitled "Non-IFRS [international financial reporting standards] measures" of the company's 2016 first quarter MD&A (management's discussion and analysis).
(in millions of dollars, except EPS) Q1 2016 Q4 2015 Q1 2015
Sales $ 1,077 $ 1,013 $ 1,014
Adjusted EBITDA(1) 130 90 173
Operating earnings 79 18 125
Earnings 42 (15) 49
Basic EPS ($) 0.51 (0.18) 0.58
Adjusted earnings(1) 49 30 99
Adjusted basic EPS ($)(1) 0.60 0.38 1.17
1. In this news release, reference is made to adjusted EBITDA, adjusted earnings
and adjusted earnings per share. The company believes that, in addition to
earnings, these measures are useful performance indicators. None of these
measures are generally accepted earnings measures under IFRS, and none have
standardized meanings prescribed by IFRS. Investors are cautioned that none
of these measures should be considered as an alternative to earnings, EPS or
cash flow, as determined in accordance with IFRS. As there is no standardized
method of calculating any of these measures, the company's method of
calculating each of them may differ from the methods used by other entities,
and, accordingly, the company's use of any of these measures may not be
directly comparable with similarly titled measures used by other entities.
Refer to the tables in the section titled "Non-IFRs measures" in the company's
2016 first quarter MD&A for details of these adjustments.
Operational results
In the quarter, the company's lumber operations generated operating earnings of $63-million (fourth quarter 2015 -- $17-million) and adjusted EBITDA of $100-million (fourth quarter 2015 -- $55-million). Higher prices and shipments, combined with a weaker Canadian dollar, contributed to the improved results. Lumber markets improved slightly, as generally milder weather conditions produced above-normal home-building activity in many parts of the United States.
The panel segment, which includes plywood, LVL (laminated veneer lumber) and MDF (medium-density fibreboard), generated operating earnings in the quarter of $12-million (fourth quarter 2015 -- $16-million) and adjusted EBITDA of $15-million (fourth quarter 2015 -- $19-million), mostly reflecting weakening plywood and MDF prices.
Pulp and paper operations generated operating earnings in the quarter of $5-million (fourth quarter 2015 -- $8-million) and adjusted EBITDA of $14-million (fourth quarter 2015 -- $17-million). Pulp results benefited from a weaker Canadian dollar, as U.S.-dollar-denominated pulp prices were relatively stable in the quarter. This benefit was offset by increased maintenance costs at the company's Hinton pulp mill, the result of a minor maintenance shutdown during the period.
Outlook
Discussions between Canada and the U.S. regarding a replacement of the softwood lumber agreement are under way. West Fraser supports a reasonable negotiated settlement of this potential dispute, but is prepared for alternative outcomes.
Ted Seraphim, president and chief executive officer, said: "We have made significant investments in growth, capital and innovation, and we are starting to see the benefits of the most comprehensive five-year capital plan in our history. We are geographically diversified and have a modern and efficient group of assets, which positions us well in addressing any trade sanctions arising from the dispute."
MD&A
The company's MD&A is available on the company's website and on SEDAR under the company's profile.
Conference call
Investors are invited to listen to the quarterly conference call on Tuesday, April 26, 2016, at 8:30 a.m. PT (11:30 a.m. ET) by dialling 1-866-225-0198 (toll-free North America). The call may also be accessed through West Fraser's website.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
(in millions of Canadian dollars, except where indicated)
Jan. 1 to March 31,
2016 2015
Sales $ 1,077 $ 1,014
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Costs and expenses
Cost of products sold 749 657
Freight and other distribution costs 159 144
Amortization 49 47
Selling, general and administration 39 40
Equity-based compensation 2 1
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998 889
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Operating earnings 79 125
Finance expense (8) (8)
Other (16) (47)
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Earnings before tax 55 70
Tax provision (13) (21)
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Earnings $ 42 $ 49
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Earnings per share ($)
Basic $ 0.51 $ 0.58
Diluted $ 0.50 $ 0.53
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Comprehensive earnings
Earnings $ 42 $ 49
Other comprehensive earnings
Translation gain (loss) on foreign operations (32) 51
Actuarial (loss) on postretirement benefits(1) (60) (45)
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Comprehensive earnings $ (50) $ 55
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1. Net of tax recovery of $21-million (three months ended March 31, 2015 --
$17-million).
We seek Safe Harbor.
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