VANCOUVER, BC / ACCESSWIRE / September 21, 2015 / Jemi Fibre Corp. (TSXV: JFI) (“Jemi Fibre” or the “Company”) is pleased to announce its first quarter results for the three month period ended July 31, 2015.
Adjusted EBITDA for the three month period ended July 31, 2015 was $4.1 million on quarterly revenue of $20.5 million, compared to $0.1 million adjusted EBITDA on quarterly revenue of $7 million for the three month period ended July 31, 2014. These were solid results for the first quarter which is a period during which the Company’s harvesting production is anticipated to be lower than the second and third quarters due to spring seasonal road bans.
First Quarter Highlights
– Acquired
– Aallcann Wood Suppliers Inc., a wood treatment and post-peeling operation in Prince Albert, Saskatchewan with a 36,000 m3 annual Crown timber license
– a 50% joint venture ownership in a 55,000 m3 annual Crown license in Kispiox, B.C. with a current undercut of 180,000 m3
– Bond Ventures Ltd., a newly integrated trucking division
– Entered into a Letter of Intent to acquire L&M Wood Products Ltd., a sawmill and wood treatment and post-peeling operation in Saskatchewan with a 205,000 m3 annual Crown timber license
– Completed a five year agreement with the Northern Village of Beauval, in Northern Saskatchewan, to lease and operate a timber post-peeling operation and to manage a 40,000 m3 annual Crown license
“We are pleased with Jemi’s start to the 2016 fiscal year, especially, the performance of our growing wood treatment division, a high margin business with increasing exposure to U.S. dollar sales,” stated Chairman and CEO, Mike Jenks. “Looking forward, Jemi is working to complete the L&M acquisition, which would propel the Company to be Canada’s largest integrated producer of treated posts and poles for the agricultural market. In addition, the Company is focused on improving operations and margins at its WoodEx lumber mill, which, despite industry wide weakening lumber prices, continues to have a stable market for its high-value specialty product.”
Total assets increased by approximately $3.94 million, which included the Aallcann and Bond acquisitions, new rolling stock and depreciation. Total liabilities increased by approximately $3.65 million which relates to the purchase of new rolling stock. Approximately $3.2 million of rolling stock was purchased for the Company’s new Saskatchewan operations and to expand the Company’s trucking operations in the Kootenay, BC region. Approximately $1.2 million of rolling stock was purchased in connection with the Company’s ongoing sustaining capital expenditures requirements.
Summary by Division
Timberlands
In the first quarter, the Company generated $1.65 million of adjusted EBITDA on quarterly revenue of $6.6 million and harvested timber volume of approximately 85,000 m3 from its private timberlands, and approximately 28,000 m3 from its Crown licenses. Volumes were consistent with the Company’s expectations for the first quarter. Adjusted EBITDA margins in the first quarter, particularly for the private timberlands (30%), were lower than annual anticipated adjusted EBITDA margins of 40% for the private timberlands (45% for the fiscal year end 2015) mostly due to logging and trucking expenses which are not consistent on a monthly or quarterly basis. In the first quarter, the Company, by plan, harvested in areas with higher logging and transportation costs.
Logging and Trucking
In the first quarter, the Company generated $0.41 million of adjusted EBITDA from its logging and trucking division on quarterly revenue of $7.26 million, with an adjusted EBITDA margin of 5.6% . The Company is targeting over 12% adjusted EBITDA margins for this division on an annual basis. The lower margins in the first quarter are reflective of higher costs for the period related to repairs and maintenance and transportation of rolling stock which the Company anticipates decreasing for the balance of the fiscal year.
The Company harvested approximately 232,000 m3 for the three month period ended July 31, 2015, which included logging timber it owns or manages, using its own equipment and managing contractors, and logging timber as a contractor for third parties. Based on harvesting seasonality factors described above, these volumes exceeded are consistent with the Company’s forecast to harvest 1.45 million m3 in volume on an annual basis.
Wood Treatment
In the first quarter, the Company generated $2.65 million of adjusted EBITDA from its wood treatment division on quarterly revenue of $8.96 million, with an adjusted EBITDA margin of 29%. These were strong results for this division and were seen at both of the Company’s operations in Cranbrook and Prince Albert. The results are reflective of both firm demand for the Company’s treated wood product, and increased production capacity as a result of the Company’s investment in post-peeling yards and logging and trucking capacity in Saskatchewan. To meet demand throughout the colder seasons, the Company increased inventory levels in this division to $3.4 million at July 31, 2015 from $468,000 at the start of the first quarter. A majority of the Company’s revenue from this division is received in U.S. dollars.
Specialty Lumber Manufacturing
In the first quarter, the Company lost $(0.13) million of adjusted EBITDA from its specialty lumber division on quarterly revenue of $2.93 million. The loss is attributable to higher than anticipated log shortages during the spring season and more maintenance down time than anticipated, both of which are operational issues being addressed by the Company. Inventory levels in this division dropped to $1.1 million at July 31, 2015 from $1.9 million at the start of the first quarter mostly due to a draw down on increased inventory levels at the start of the spring season. A majority of the Company’s revenue from this division is received in U.S. dollars.
Outlook
U.S. housing starts reached an eight-year high in July 2015 at 1.2 million on an annualized basis and forecasts call for 1.4 million annualized starts in calendar 2016. In addition, there are several leading economic indicators which point to a stronger outlook for the U.S. economy heading into calendar 2016 including forecasted real GDP growth of 2.7%, a current unemployment rate under 6% and personal income and consumer spending at their highest points in three years. These macro-economic trends in the U.S. factor significantly in the Company’s business as they drive demand for the Company’s logs and treated wood products.
The Company continues to benefit from US dollar foreign exchange gains in its wood treatment division, and anticipates further US dollar sales exposure from both its growing wood treatment business and its timber business which is starting to sell logs to US customers.
The Company’s second and third quarters have historically produced the highest volume of timber harvesting, positively impacting revenue for Jemi’s timber division and its logging and trucking division. In addition, the Company has a strong order profile for its treated wood products through the remainder of this fiscal year and expects to benefit from rising prices for logs from its private timberlands and Crown licenses, mostly due to tightened timber supply throughout British Columbia.
Despite an improving outlook for the U.S. housing market, lumber prices are at the lowest level since early 2012 and the Company has seen some weakening of prices for its specialty lumber sold into Japan. The pricing drop has been offset by the increase in value of the US dollar as the Company’s lumber sales are in US dollars. Most projections indicate a rise in lumber prices toward the end of calendar 2015 and into 2016 as North American lumber supply and inventory is likely to be curtailed to improve weak margins at current pricing levels.
For the balance of fiscal 2016, the Company is focused on maximizing production from all of its operations, and increasing contribution from its higher margin, wood treatment operations. The Company anticipates continued growth from this division, both organically and through acquisitions currently being targeted by Jemi, including the L&M acquisition announced in May 2015. In addition, the Company continues working on securing a larger line of credit to meet its growing inventory, and refinancing its short term, high-yield debt.
Financial Information
For complete details of financial results, please refer to the unaudited condensed consolidated interim financial statements and accompanying Management’s Discussion and Analysis (“MD&A”) for the three months ended July 31, 2015. These financial statements and MD&A, and the comparative financial statements for the three months ended July 31, 2014 are all available on SEDAR at www.sedar.com and on the Company’s website at www.jemifibre.com.
Teleconference call details:
Jemi Fibre will host a telephone conference call on Tuesday, September 22, 2015 at 7:30 a.m. PST (10:30 a.m. EST) to discuss these results. The conference call may be accessed by dialing 1-800-319-4610 in Canada and the United States.
The conference call will be available for instant replay until October 22, 2015 and can be accessed by dialing 1-800-319-6413 (passcode: 1416#).
For further information, please contact:
Brent Lokash, President
Tel: 1-604-428-1075 ext: 200
Email: brent.lokash@jemifibre.com
About Jemi Fibre
Jemi is a Western Canadian based forest products company which trades on the TSX Venture Exchange under the symbol JFI. Jemi Fibre’s operations consist of timber ownership and management of private timberlands and Crown forest licenses, full service logging and trucking operations, post-peeling and wood treatment operations for the agricultural market and specialty lumber manufacturing. The Company’s head office and principal place of business is located at 1110-1111 West Georgia Street, Vancouver, British Columbia, Canada.
Forward Looking Statements
Certain statements included herein constitute forward-looking statements. The words “expect”, “intend”, “anticipate”, “propose” and “may” and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, such risks, uncertainties and other factors set forth under “Risk Factors” in the Company’s current MD&A filed with the British Columbia Securities Commission. Forward-looking statements are necessarily based upon a number of estimates and assumptions. While such estimates and assumptions are considered reasonable by the management teams of Jemi, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks and accordingly may not occur as described herein or at all. Investors are cautioned that forward-looking statements are not guarantees of future performance or events and, accordingly are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty of such statements.
The financial information included in this release also contains certain data that are not measures of performance under IFRS. For example, “EBITDA” and “adjusted EBITDA” are measures used by management to assess the operating and financial performance of the Company. The Company defines EBITDA as earnings before income, interest, taxes and depreciation. Adjusted EBITDA excludes non-cash items such as restructuring income or expenses, impairment adjustments and changes in fair value of biological assets. The Company believes that EBITDA and adjusted EBITDA are measures often used by investors to assess a company’s operating performance and is meaningful for the Company to measure the performance of its divisions on a cash basis. EBITDA and adjusted EBITDA have limitations and should not be considered in isolation, or as a substitute for an analysis of the Company’s results as reported under IFRS. Because of these limitations, EBITDA and adjusted EBITDA should not be used as a substitute for net loss or cash flows from operating activities as determined in accordance with IFRS, nor is it necessarily indicative of whether or not cash flow will be sufficient to fund our cash requirements. In addition, the Company’s definitions of EBITDA and adjusted EBITDA may differ from those of other companies.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE: Jemi Fibre Corp.
ReleaseID: 432121
