Mr. Ted Seraphim reports
WEST FRASER ANNOUNCES 2016 ANNUAL AND FOURTH QUARTER RESULTS
West Fraser Timber Co. Ltd. had earnings of $79-million or $1.01 in basic earnings per share on sales of $1,107-million in the fourth quarter of 2016 and earnings of $326-million or $4.06 in basic earnings per share on sales of $4.45-billion for 2016. These results compare with previous periods as shown in the attached tables.
Fourth quarter:
-
Sales exceed $1.1-billion;
- Earnings of $79-million or basic EPS of $1.01;
- Adjusted earnings (1) of $101-million or adjusted basic EPS (1) of $1.28;
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $193-million or 17 per cent of sales;
- Net cash provided by operating activities of $182-million;
- Quarterly cash dividend of seven cents declared.
2016:
- Record sales exceed $4.4-billion;
- Earnings of $326-million or basic EPS of $4.06;
- Adjusted earnings (1) of $330-million and adjusted basic EPS (1) of $4.11;
- Adjusted EBITDA (1) up 62 per cent compared with 2015; improves to 15 per cent of sales;
- Lumber segment leads improvement as U.S. housing continues to recover and previous capital investment contributes to improved productivity;
- Capital spending of $273-million and combined dividend and share buybacks of $212-million;
- Year-end balance sheet strong with net-debt-to-total-capital ratio of 14 per cent.
FINANCIAL HIGHLIGHTS
($ millions except earnings per share)
Q4 Q3 YTD Q4 YTD
2016 2016 2016 2015 2015
Sales $1,107 $1,155 $4,450 $1,013 $4,100
Adjusted EBITDA (1) 193 213 674 90 417
Operating earnings 127 156 482 18 249
Earnings 79 107 326 (15) 104
Basic EPS ($) 1.01 1.35 4.06 (0.18) 1.25
Adjusted earnings (1) 101 115 330 30 176
Adjusted basic EPS ($) (1) 1.28 1.45 4.11 0.38 2.12
------- ------- ------- ------- -------
(1) In this news release, reference is made to
adjusted EBITDA, adjusted earnings and adjusted
basic EPS. The company believes that, in
addition to earnings, these measures are useful
performance indicators. None of these measures
are a generally accepted earnings measure under
international financial reporting standards,
and none have a standardized meaning 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.
Operational results
In the quarter, the company's lumber operations generated operating earnings of $107-million (third quarter 2016: $114-million) and adjusted EBITDA of $144-million (third quarter 2016: $151-million). Production and shipments declined quarter over quarter due to cold weather in several of the company's operating areas and fewer operating days. The segment's results benefited from a weaker Canadian dollar while Canadian log costs continued to rise.
The company's panels segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $17-million (third quarter 2016: $30-million) and adjusted EBITDA of $20-million (third quarter 2016: $33-million). The major contributor to the decline was plywood pricing as winter weather slowed Canadian construction.
The company's pulp and paper segment generated operating earnings of $20-million (third quarter 2016: $22-million) and adjusted EBITDA of $30-million (third quarter 2016: $31-million). NBSK operations were able to offset additional costs associated with cold weather with higher shipments while BCTMP price improvements offset reduced shipments caused by port congestion.
Outlook
The company's president and chief executive officer, Ted Seraphim, said: "During 2016, we faced a number of challenges, and, although we still have important work to do, I have been greatly encouraged by the progress that we have made across the company in achieving operational excellence. This will continue to be our focus in the coming years as it is the critical component of our business over which we have control. I'm grateful to our many employees whose commitment to this standard of excellence is evident in their daily activities."
Mr. Seraphim also commented on the current softwood lumber dispute: "In light of the operational progress that we are making as a company, it is particularly disappointing that we find ourselves once again caught up in another dispute with our American neighbours over softwood lumber exports from Canada to the U.S. West Fraser has worked hard to contribute to a resolution of this long-standing dispute, as have various levels of government in Canada and other Canadian industry participants. West Fraser was recently selected by the U.S. Department of Commerce as a mandatory respondent in separate subsidy and dumping investigations, which has imposed substantial time commitments and costs on us. Despite this, we continue to support a negotiated settlement that will manage trade in a fair and reasonable manner, but, as always, we would prefer no agreement to a bad agreement."
Annual financial statements and management's discussion and analysis
The company's consolidated financial statements for the year ended Dec. 31, 2016, and related MD&A are available on the company's website and on the System for Electronic Document Analysis and Retrieval under the company's profile.
Dividend declared
The board of directors of the company has declared a dividend of seven cents per share on the common shares and the Class B common shares in the capital of the company, payable on April 3, 2017, to shareholders of record on March 20, 2017.
Dividends are designated to be eligible dividends pursuant to Subsection 89 (14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends.
About West Fraser Timber Co. Ltd.
West Fraser is a diversified wood products company, producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in Western Canada and the southern United States.
Conference call
Investors are invited to listen to the quarterly conference call on Feb. 17, 2017, at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) 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 dollars, except where indicated)
Oct. 1 to Dec. 31, Jan. 1 to Dec. 31,
2016 2015 2016 2015
Sales $ 1,107 $ 1,013 $ 4,450 $ 4,100
------- ------- ------- -------
Costs and expenses
Cost of products sold 708 712 2,971 2,874
Freight and other distribution costs 156 160 629 627
Export taxes - 3 - 29
Amortization 50 50 197 191
Selling, general and administration 50 48 176 153
Equity-based compensation 16 22 (5) (23)
------- ------- ------- -------
980 995 3,968 3,851
------- ------- ------- -------
Operating earnings 127 18 482 249
Finance expense (7) (6) (29) (29)
Other (1) (16) (9) (64)
------- ------- ------- -------
Earnings before tax 119 (4) 444 156
Tax provision (40) (11) (118) (52)
------- ------- ------- -------
Earnings 79 (15) 326 104
======= ======= ======= =======
Earnings per share (dollars)
Basic 1.01 (0.18) 4.06 1.25
Diluted 1.01 (0.18) 3.90 0.89
======= ======= ======= =======
Comprehensive earnings
Earnings 79 (15) 326 104
Other comprehensive earnings
Translation gain (loss) on foreign operations 13 25 (14) 109
Actuarial gain (loss) on postretirement benefits 72 19 (7) (12)
------- ------- ------- -------
Comprehensive earnings 164 29 305 201
======= ======= ======= =======
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.