November 21, 2013
Montreal, Quebec – Consolidated sales for the three-month period ended September 28, 2013, were $352 million, as compared to $443 million in the same quarter a year ago. The Company generated net earnings of $6 million or $0.06 per share in the September 2013 quarter compared to a net loss of $47 million or $0.47 per share in the September 2012 quarter. Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $25 million for the three-month period ended September 28, 2013, as compared to adjusted EBITDA of $23 million a year ago and adjusted EBITDA of $30 million in the prior quarter.
For the fiscal year ended September 28, 2013, consolidated sales were $1.5 billion, as compared to $1.7 billion in the prior year. The Company generated a net loss of $34 million or $0.34 per share compared to a net loss of $82 million or $0.82 per share in fiscal 2012. Adjusted EBITDA was $98 million compared to $64 million in the prior year.
Business Segment Results
The Specialty Cellulose Pulp segment generated adjusted EBITDA of $22 million on sales of $117 million for the quarter ended September 2013, compared to adjusted EBITDA of $19 million on sales of $120 million in the prior quarter. The sales decline of $3 million was due to lower shipments of pulp. Demand for specialty grades was flat while US and euro prices were relatively unchanged quarter-over-quarter. However, with the Canadian dollar weakening versus the US dollar and the euro, Canadian dollar equivalent pricing increased by $23 per tonne. Shipments were equal to 74% of capacity as compared to 79% in the prior quarter. Mill level manufacturing costs declined by $2 million.
The Forest Products segment generated adjusted EBITDA of $1 million on sales of $105 million for the quarter ended September 2013, compared to adjusted EBITDA of $7 million on sales of $110 million in the prior quarter. Sales decreased by $5 million due to lower lumber prices. The weaker market conditions that began in the month of June continued into the month of July. However, prices for random lumber rallied in August and September. Stud lumber prices did not rally and continue to sell at a relatively high discount compared to random lumber prices. Overall, US $ reference prices for random lumber decreased by US $19 per mbf while stud lumber decreased by US $64 per mbf. Currency was favourable as the Canadian dollar weakened versus the US dollar. The net effect decreased sales and adjusted EBITDA by $8 million or $41 per mbf. Lumber shipments were equal to 86% of capacity versus 83% in the prior quarter. Sawmill manufacturing costs were unchanged from the prior quarter.
The Paper Pulp segment generated negative adjusted EBITDA of $2 million on sales of $73 million for the quarter ended September 2013, compared to adjusted EBITDA of $3 million on sales of $106 million in the prior quarter. The $33 million decrease in sales was due to lower shipments of pulp. In May 2013, the Company completed the sale of its remaining NBSK mill located in Skookumchuck, BC. During the prior quarter, the mill generated sales of $23 million and adjusted EBITDA of $3 million. Market conditions for paper pulp remained relatively weak although demand was stable. The benchmark price (delivered China) for bleached eucalyptus kraft (BEK) decreased by US $45 per tonne. However, this decline did not affect high-yield pulp prices in the quarter. This grade, unlike BEK, had not experienced a price increase in the June 2013 quarter. Currency was a positive as the Canadian dollar was weaker. Overall, average prices increased by $8 per tonne, improving adjusted EBITDA by $1 million. Pulp shipments were equal to 88% of capacity as compared to 98% in the prior quarter. Manufacturing costs increased by $2 million, due primarily to under-absorption of fixed costs as the two pulp mills produced 7.8% fewer tonnes.
The Paper segment generated adjusted EBITDA of $8 million on sales of $81 million for the quarter ended September 2013, compared to adjusted EBITDA of $6 million on sales of $86 million in the prior quarter. Lower shipments led to the $5 million decrease in sales. In terms of markets, coated bleached board improved slightly. The newsprint market weakened due to continued lower North American demand combined with the restart of previously idled capacity. The US $ reference prices for coated bleached board increased by US $24 per short ton while the US $ reference price for newsprint declined by US $2 per tonne. The net effect was a small increase in average prices, increasing adjusted EBITDA by $1 million. Coated bleached board shipments were equal to 94% of capacity as compared to 102% in the prior quarter. The shipment to capacity percentage for newsprint was 81%, compared to 91% in the prior quarter. Manufacturing costs were relatively unchanged quarter-over-quarter.