Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Acadian Timber Corp (ACAZF, Financial) experienced favorable operating conditions, resulting in a 15% increase in sales volume excluding biomass compared to the prior year period.
- The company maintained steady harvest volumes during the third quarter, supported by sufficient contractor capacity in New Brunswick.
- Acadian Timber Corp (ACAZF) is advancing efforts to maximize cash flows from timberland assets and real estate activities, including the purchase of a meteorological tower to explore renewable energy opportunities.
- The company entered into an agreement to sell approximately 2,100 acres of timberland, expected to result in gross proceeds of $1.4 million and a gain of approximately $400,000.
- Acadian Timber Corp (ACAZF) is progressing with its carbon credit project in Maine, expecting to register additional credits for sale by the end of the year.
Negative Points
- Sales for the third quarter were $26 million, a decrease from $26.6 million in the same quarter of 2023, due to pricing impacts from changes in product mix and end-use markets.
- The weighted average selling price excluding biomass decreased 5% year over year, with softwood sawlog pricing decreasing 13% and hardwood sawlog pricing decreasing 5%.
- Operating costs and expenses increased to $22.1 million during the third quarter, reflecting higher timber sales volumes and increased variable costs.
- Adjusted EBITDA was $4 million during the third quarter, down from $4.9 million in the prior year period, with a margin decrease from 18% to 16%.
- Net income for the third quarter totaled $2.2 million, a significant drop from $6.4 million in the same period of 2023, primarily due to lower non-cash fair value adjustments and operating income.
Q & A Highlights
Q: Can you provide more color on the tight labor markets in Maine and any short-term changes in contractor availability from the prior quarter?
A: We haven't seen any improvement or movement in contractor availability. We are actively analyzing the situation and have dedicated staff in Maine to ensure we have the necessary harvesting capacity in the near term. - Adam Sheparski, President and CEO
Q: Regarding the greater hauling distances for softwood sawlogs, is this due to where you were harvesting or a need to haul logs further due to demand? Should we expect higher costs going forward?
A: The increased hauling distances were due to a shift in customer mix, requiring us to haul to a customer further away. We expect this to revert back as demand from closer customers increases, likely by late Q1 or Q2 next year. - Adam Sheparski, President and CEO
Q: What is the timeline for gathering wind data from your new meteorological tower, and is this investment exploratory or to confirm high potential sites?
A: The investment is expected to confirm our desktop research indicating a strong asset. It will allow us to have informed conversations with developers to ensure we get top dollar for leases. This was not urged by any particular party but has received support from multiple organizations. - Adam Sheparski, President and CEO
Q: Are there any updates on the carbon credit project in Maine?
A: We are in the process of registering our second and third tranches of carbon credits, expecting approximately 350,000 additional credits available for sale by the end of the year. We are also evaluating opportunities under the new compliance protocol in Canada. - Adam Sheparski, President and CEO
Q: How do you view the current market conditions and their impact on Acadian's operations?
A: Despite near-term pressure on end-use markets, we remain confident in the long-term demand for our products. We expect regional demand to remain stable, and as markets improve, pricing should follow. We are also focused on maximizing cash flows from our timberland assets and exploring growth opportunities. - Adam Sheparski, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
