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Acadian Timber Corp.

Exchange: TSX Exchange | Oct 17, 2017, 3:33 AM EDT

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Acadian Timber Corp. Reports Second Quarter Results and Changes to Management Team

VANCOUVER, BRITISH COLUMBIA--(Marketwired - July 26, 2017) -

Investors, analysts and other interested parties can access Acadian Timber Corp.'s 2017 Second Quarter Results conference call via webcast on Thursday, July 27, 2017 at 1:00 p.m. ET at www.acadiantimber.com or via teleconference at 1-800-319-4610, toll free in North America. For overseas calls please dial +1-604-638-5340, at approximately 12:50 p.m. ET. The recorded teleconference rebroadcast can be accessed at 1-800-319-6413 or +1-604-638-9010 and enter passcode 2826.

All figures in Canadian dollars unless otherwise noted

Acadian Timber Corp. ("Acadian" or the "Company") (TSX:ADN) today reported financial and operating results(1) for the three months ended June 24, 2017 (the "second quarter").

"Acadian's second quarter benefited from favourable winter conditions which supported strong seasonal log production," said Mark Bishop, Chief Executive Officer of Acadian. "Acadian continues to experience strong regional demand for hardwood logs and the outlook for softwood sawtimber continues to be supported by steady growth in U.S. housing starts and residential home improvement." 

Acadian continued to perform well and recorded solid results for the second quarter. In the quarter, we generated Adjusted EBITDA(1) of $2.6 million, benefiting from strong seasonal demand, favorable operating conditions, and higher and better use land sales in Maine. However, this was lower than the $3.3 million generated in the prior year period. While log sales volumes and the weighted average log selling price for the quarter were largely consistent year-over-year, operating costs increased primarily due to an increase in average haul distances.

Total shareholder dividends during the first half of 2017 were $0.55 per share or $9.2 million, representing a 10% increase over the same period of 2016 and a payout ratio of 98% which is relatively consistent with our long term target of 95%.

Management Team Changes

Acadian announced today that Mr. Wyatt Hartley will be leaving the position of Chief Financial Officer effective July 27, 2017 to take on new responsibilities within Brookfield Asset Management. Mr. Hartley has been a member of the senior management of Acadian since his initial appointment as Chief Financial Officer in 2016. "The entire management team would like to thank Mr. Hartley for his hard work, dedication and significant contributions to Acadian and wish him the best in his new endeavors" commented Mr. Bishop. Effective July 27, 2017, Ms. Mabel Wong will replace Mr. Hartley as Acadian's Senior Vice-President and Chief Financial Officer. Ms. Wong has been a key member of Brookfield's team for the past ten years and has held a number of senior finance roles within the organization. Ms. Wong is a Chartered Accountant and worked at one of the big four accounting firms prior to joining Brookfield.

Review of Operations

Financial and Operating Highlights

  Three Months Ended   Six Months Ended  
(CAD thousands, except per share information) June 24
2017
  June 25
2016
  June 24
2017
  June 25
2016
 
Sales volume (000s m3)   217.4     208.9     573.4     510.5  
Net sales $ 12,630   $ 13,656   $ 35,702   $ 35,103  
Net income   4,011     5,830     8,769     10,172  
Adjusted EBITDA   2,622     3,301     10,652     10,345  
Free Cash Flow   2,034     2,743     9,422     8,913  
Dividends declared   4,601     4,183     9,202     8,366  
Payout ratio   226 %   152 %   98 %   94 %
Per share - basic and diluted                        
  Net income $ 0.24   $ 0.35   $ 0.52   $ 0.61  
  Free Cash Flow   0.12     0.16     0.56     0.53  
  Dividends declared   0.27     0.25     0.55     0.50  

For the second quarter of 2017, Acadian generated net sales of $12.6 million compared to $13.7 million in the prior year primarily due to lower selling prices for biomass products. Total log sales volumes increased 1% compared to the prior year, driven by a 30% increase in hardwood pulpwood sales volumes resulting from favourable spring harvest conditions, which was largely offset by the impact of a softwood sawlog inventory management program at one of the operation's major customers that was not in place in the current year. The weighted average log selling price remained flat as the benefits from a favourable change in mix and foreign currency were offset by weaker pricing for hardwood products. 

Adjusted EBITDA margin decreased to 21% from 24% in the prior year as higher operating costs due to longer average haul distances were only partially offset by the contribution from higher and better use (HBU) land sales in Maine. 

Acadian traditionally experiences low levels of operating, marketing and selling activity during the second quarter of each year owing to the spring thaw period that causes much of the infrastructure to be temporarily inoperable. As a result, year to year variations in sales volumes and operating costs are less meaningful.

Net income for the second quarter totaled $4.0 million, or $0.24 per share, compared to $5.8 million, or $0.35 per share, respectively for the same period in 2016. The decrease is primarily due to lower Adjusted EBITDA as described above and a lower foreign exchange gain from the revaluation of long-term debt.

During the first half of 2017, Acadian's net sales were $35.7 million, reflecting a slight improvement over the same prior year period of $35.1 million, primarily attributed to an 11% increase in log sales volumes from favourable harvest conditions, particularly for spruce and fir stands. The impact of this increase was partially offset by a 4% decrease in the weighted average log selling price driven by a change in product mix and weaker pricing for hardwood products. Adjusted EBITDA improved to $10.7 million from $10.3 million in the first half of 2016 while Adjusted EBITDA margin improved to 30% from 29%. For the six months ended June 24, 2017, net income was $8.8 million, or $0.52 per share, which represents a decrease of $1.4 million over the same period in 2016 primarily due to lower foreign exchange revaluation gains from long-term debt, partially offset by lower deferred tax expense.

Acadian's financial position continues to be solid with $98.0 million of net liquidity as at June 24, 2017, including funds available under the Company's Revolving Facility and the stand-by equity commitment from Brookfield.

Total shareholder dividends during the first half of 2017 were $0.55 per share or $9.2 million, representing a 10% increase over the same period of 2016 ($0.50 per share or $8.4 million).

New Brunswick Timberlands

The table below summarizes operating and financial results for New Brunswick Timberlands.

  Three Months Ended June 24, 2017   Three Months Ended June 25, 2016  
  Harvest Sales Results   Harvest Sales Results  
  (000s m3) (000s m3) ($000s)   (000s m3) (000s m3) ($000s)  
Softwood 27.8 39.4 $ 2,038   35.4 65.5 $ 3,588  
Hardwood 62.0 92.1   7,186   49.5 76.6   6,475  
Biomass 39.3 39.3   783   40.8 40.8   1,561  
  129.1 170.8   10,007   125.7 182.9   11,624  
Other sales       (223 )       116  
Net sales     $ 9,784       $ 11,740  
Adjusted EBITDA     $ 2,028       $ 3,887  
Adjusted EBITDA margin       21 %       33 %
                 
  Six Months Ended June 24, 2017   Six Months Ended June 25, 2016  
  Harvest Sales Results   Harvest Sales Results  
  (000s m3) (000s m3) ($000s)   (000s m3) (000s m3) ($000s)  
Softwood 163.1 165.9 $ 9,296   146.4 146.0 $ 7,947  
Hardwood 177.3 186.8   14,788   159.1 166.6   14,034  
Biomass 84.6 84.6   1,748   74.1 74.1   2,899  
  425.0 437.3   25,832   379.6 386.7   24,880  
Other sales       265         791  
Net sales     $ 26,097       $ 25,671  
Adjusted EBITDA     $ 8,156       $ 8,845  
Adjusted EBITDA margin       31 %       34 %

Three months ended June 24, 2017:

Net sales totaled $9.8 million compared to $11.7 million for the same period last year. Excluding biomass, log sales volumes decreased 7% to 132 thousand m3 from 142 thousand m3 in the prior year, as softwood sawlog sales were impacted by an inventory management program with one of the operation's major customers that was not in place in the current year. This was partially offset by the benefit from increased demand for hardwood pulpwood primarily reflecting the sale of inventory which was at higher than normal levels at the beginning of the quarter due to favourable winter harvest conditions.

The weighted average log selling price for the quarter was $70.13 per m3, compared to $70.84 per m3 in the prior year as strength in softwood sawlog selling prices and the benefit of sales mix was offset by weaker pricing for hardwood products.

Continued strong local demand for biomass products resulted in sales volumes remaining largely in-line with the same period of 2016. Overall, the gross margin earned on our biomass products decreased 55% compared to the second quarter of 2016 reflecting limited export markets for products.

Adjusted EBITDA and costs for the quarter were $2.0 million and $7.8 million, respectively, compared to $3.9 million and $7.8 million, respectively, in the second quarter of 2016 primarily due to the aforementioned absence of the inventory management program, as well as an increase in variable costs per m3 due to longer average haul distances. As a result, Adjusted EBITDA margin for the quarter decreased to 21% from 33% in the prior year.

Six months ended June 24, 2017:

Net sales of $26.1 million, which increased $0.4 million compared to the same period last year, benefited from a 13% increase in log sales volumes, which was partially offset by the impact of lower selling prices. Costs were $17.9 million, or $1.0 million higher than the prior year due to the aforementioned increase in sales volumes. As a result, Adjusted EBITDA was $8.2 million, a decrease of $0.6 million compared to the same period last year, while Adjusted EBITDA margin decreased to 31% from 34%.

Safety

There were no recordable safety incidents among employees and contractors during the second quarter of 2017.

Maine Timberlands

The table below summarizes operating and financial results for Maine Timberlands.

  Three Months Ended June 24, 2017   Three Months Ended June 25, 2016  
  Harvest Sales Results   Harvest Sales Results  
  (000s m3) (000s m3) ($000s)   (000s m3) (000s m3) ($000s)  
Softwood 16.6 16.5 $ 1,155   11.8 11.6 $ 776  
Hardwood 13.8 19.5   1,544   8.6 11.8   984  
Biomass 10.6 10.6   16   2.6 2.6   16  
  41.0 46.6   2,715   23.0 26.0   1,776  
Other sales       131         140  
Net sales     $ 2,846       $ 1,916  
Adjusted EBITDA     $ 909       $ (167 )
Adjusted EBITDA margin       32 %       (9 %)
                 
  Six Months Ended June 24, 2017   Six Months Ended June 25, 2016  
  Harvest Sales Results   Harvest Sales Results  
  (000s m3) (000s m3) ($000s)   (000s m3) (000s m3) ($000s)  
Softwood 79.4 79.1 $ 5,906   77.0 76.5 $ 5,918  
Hardwood 43.2 45.2   3,436   38.4 39.2   3,282  
Biomass 11.8 11.8   18   8.1 8.1   53  
  134.4 136.1   9,360   123.5 123.8   9,253  
Other sales       245         179  
Net sales     $ 9,605       $ 9,432  
Adjusted EBITDA     $ 3,065       $ 2,114  
Adjusted EBITDA margin       32 %       22 %

Three months ended June 24, 2017:

Net sales totaled $2.8 million compared to $1.9 million for the same period last year, as log sales volumes increased 54% to 36 thousand m3 from 23 thousand m3. This increase was driven primarily by favourable spring harvest conditions relative to the same quarter of 2016. 

The weighted average log selling price in Canadian dollar terms was $74.84 per m3, compared to $74.97 per m3 in the same period of 2016. The weighted average log selling price in U.S. dollar terms was $55.67 per m3, down 4% year-over-year as softwood sawlog prices declined 9% primarily from weak demand for our customers' softwood residuals while hardwood pulp prices stabilized as demand strengthened with customers replenishing inventories which were higher than normal during the first quarter. 

Costs for the second quarter were $2.9 million, compared to $2.1 million during the same period in 2016, due to higher sales volumes while variable costs per m3 increased due to longer average haul distances. Adjusted EBITDA for the quarter was $0.9 million, compared to a loss of $0.2 million in the prior year while Adjusted EBITDA margin increased to 32% from (9)% due primarily to the benefit of HBU land sales.

Six months ended June 24, 2017:

Net sales were $9.6 million, or $0.2 million higher than the first half of 2016, primarily from a 7% increase in log sales volumes due to favourable spring harvest conditions, while weighted average log selling prices decreased 5% due to high customer inventories earlier in the year. Costs were $8.0 million, or $0.6 million higher than during the same period of 2016 largely due to higher sales volumes and longer average haul distances . Adjusted EBITDA was $3.1 million, an increase of $1.0 million compared to the same period last year, while Adjusted EBITDA margin increased to 32% from 22% primarily driven by the benefit of HBU land sales.

Safety

There were no recordable safety incidents among employees or contractors during the second quarter of 2017.

Freehold Timberlands

Maine Timberlands invested $0.5 million during the first six months of 2017 on approximately 1,200 acres of freehold timberlands to eliminate third party common and undivided ownership interests which will strengthen our regional operating position.

Market Outlook

The following contains forward-looking statements about Acadian Timber Corp.'s market outlook for the remainder of fiscal 2017. Reference should be made to the "Forward-looking Statements" section of this news release. For a description of material factors that could cause actual results to differ materially from the forward-looking statements in the following, please see the Risk Factors section of our management's discussion and analysis of Acadian's most recent Annual Report and Annual Information Form available on our website at www.acadiantimber.com or filed with SEDAR at www.sedar.com.

Acadian's key markets include softwood sawtimber, hardwood sawtimber and hardwood pulpwood. Northeast North American softwood dimension sawmills represent over one third of Acadian's end-use market and are the primary market for our softwood sawtimber. While sluggish wage growth, tight construction labor markets and potential further Fed rate increases continue to represent risks to growth in U.S. housing starts, the underlying fundamental driver of pent-up household formation continues to strengthen. Economic forecasters continue to call for steady growth in housing starts, with year-over-year improvements averaging 5% for 2017 and over 8% for 2018. Residential home improvements are also expected to remain strong. As a result, demand growth expectations for North American sawtimber remain in the 3% per year range over the next few years to support expanding domestic construction needs. 

As anticipated, lumber prices continued to be volatile during the second quarter primarily reflecting anticipation and the declaration of preliminary duty levels and producer and wholesaler efforts to manage inventories during this highly uncertain period. Following the announcement in April of preliminary countervailing duties (CVD) averaging 19.9%, average preliminary anti-dumping duties (ADD) of 6.9% were announced at the end of the second quarter. Notably, the U.S. Department of Commerce (DoC) also announced at the end of the quarter that all Atlantic provinces with the exception of New Brunswick would be excluded from duty investigation, a significant departure from past disputes. Historically, Canadian Atlantic lumber producers from all provinces experienced lower relative CVD & ADD duties than the rest of Canada and were ultimately exempted in past negotiated settlements due to the significantly greater proportion of wood supply from private timberland sources.

Subsequent to the DoC ADD announcement, industry press reports revealed that a preliminary framework for a negotiated market share-based 10 year settlement has been agreed to between Canadian and U.S. government officials. At this time, however, there is little visibility on a definitive final agreement being reached and, importantly, how Canadian officials would apportion market share restrictions across Canadian provincial lumber producers, and in fact whether the entire Atlantic region will again be exempted from any final settlement as in the past. 

We highlight that in past cycles during periods of strong U.S. lumber demand, duties imposed against Canadian softwood lumber producers are more easily passed through to U.S. buyers in the form of higher prices. Despite media headlines on the softwood dispute, given the current robust U.S. housing market and positive near term drivers of housing starts and home improvements noted above, we would not anticipate any material negative impact on Acadian's business.

Hardwood sawtimber markets remain strong and stable and are unaffected by U.S. trade initiatives. We remain encouraged that hardwood pulpwood markets remain historically strong, and that Acadian continues to be a preferred partner for hardwood fibre supply to this important market segment. Acadian's domestic biomass markets appear to have stabilized, although the anticipated recovery in export shipments from our New Brunswick operations has been delayed into 2018. Additionally, we expect that the Maine recreational real estate market will remain favourable through the year and therefore anticipate conditions will support the sale of additional properties throughout the remainder of 2017.

Quarterly Dividend

Acadian is pleased to announce a dividend of $0.275 per share, payable on October 13, 2017 to shareholders of record on September 30, 2017.

Acadian Timber Corp. is a leading supplier of primary forest products in Eastern Canada and the Northeastern U.S. With a total of 2.4 million acres of land under management, Acadian is the third largest timberland operator in New Brunswick and Maine.

Acadian owns and manages approximately 1.1 million acres of freehold timberlands in New Brunswick and Maine, and provides management services relating to approximately 1.3 million acres of Crown licensed timberlands in New Brunswick. Acadian also owns and operates a forest nursery in Third Falls, New Brunswick. Acadian's products include softwood and hardwood sawlogs, pulpwood and biomass by-products, sold to approximately 100 regional customers.

Acadian's business strategy is to maximize cash flows from its existing timberland assets while growing our business by acquiring assets on a value basis and utilizing our operations-oriented approach to drive improved performance.

Acadian's shares are listed for trading on the Toronto Stock Exchange under the symbol ADN.

For further information, please visit our website at www.acadiantimber.com.

Forward-Looking Statements

This News Release contains forward-looking information within the meaning of applicable Canadian securities laws that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Acadian Timber Corp. and its subsidiaries (collectively, "Acadian"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this News Release, such statements may contain such words as "may," "will," "intend," "should," "expect," "believe," "outlook," "predict," "remain," "anticipate," "estimate," "potential," "continue," "plan," "could," "might," "project," "targeting" or the negative of these terms or other similar terminology. Forward-looking information in this News Release includes, without limitation, statements made in the section entitled "Market Outlook" and other statements regarding management's beliefs, intentions, results, performance, goals, achievements, future events, plans and objectives, business strategy, growth strategy and prospects, access to capital, liquidity and trading volumes, dividends, taxes, capital expenditures, projected costs, market trends and similar statements concerning anticipated future events, results, achievements, circumstances, performance or expectations that are not historical facts. These statements, which reflect management's current expectations regarding future events and operating performance, are based on information currently available to management and speak only as of the date of this News Release. All forward-looking statements in this News Release are qualified by these cautionary statements. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, should not be unduly relied upon, and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements include, but are not limited to: general economic and market conditions; product demand; concentration of customers; commodity pricing; interest rate and foreign currency fluctuations; seasonality; weather and natural conditions; regulatory, trade or environmental policy changes; changes in Canadian income tax law; economic situation of key customers; Brookfield's ability to source and secure potential investment opportunities; the availability of potential acquisitions that suit Acadian's growth profile; and other risks and factors discussed under the heading "Risk Factors" in each of the Annual Information Form dated March 29, 2017 and the Management Information Circular dated March 29, 2017, and other filings of Acadian made with securities regulatory authorities, which are available on SEDAR at www.sedar.com.
Forward-looking information is based on various material factors or assumptions, which are based on information currently available to Acadian. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: anticipated financial performance; anticipated market conditions; business prospects; the economic situation of key customers; strategies; regulatory developments; exchange rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services and the ability to obtain financing on acceptable terms. Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. Although the forward-looking statements contained in this News Release are based upon what management believes are reasonable assumptions, Acadian cannot assure readers that actual results will be consistent with these forward-looking statements. The forward-looking statements in this News Release are made as of the date of this News Release, and should not be relied upon as representing Acadian's views as of any date subsequent to the date of this News Release. Acadian assumes no obligation to update or revise these forward-looking statements to reflect new information, events, circumstances or otherwise, except as may be required by applicable law.

Acadian Timber Corp.
Interim Consolidated Statements of Net Income
(unaudited)
 
  Three Months Ended   Six Months Ended  
(CAD thousands) June 24
2017
  June 25
2016
  June 24
2017
  June 25
2016
 
                         
Net sales $ 12,630   $ 13,656   $ 35,702   $ 35,103  
Operating costs and expenses                        
  Cost of sales   8,868     8,561     22,815     21,647  
  Selling, administration and other   1,700     1,660     3,292     3,070  
  Reforestation   398     134     398     134  
  Depreciation and amortization   77     122     155     247  
    11,043     10,477     26,660     25,098  
Operating earnings   1,587     3,179     9,042     10,005  
Interest expense, net   (744 )   (723 )   (1,491 )   (1,453 )
Other items                        
  Fair value adjustments   2,764     2,674     1,289     1,903  
  Unrealized exchange gain on long-term debt   790     1,935     1,255     6,054  
  Gain on sale of timberlands   958     -     1,455     93  
Earnings before income taxes   5,355     7,065     11,550     16,602  
Current income tax (expense) / recovery   (120 )   154     (267 )   (1 )
Deferred income tax expense   (1,224 )   (1,389 )   (2,514 )   (6,429 )
Net income $ 4,011   $ 5,830   $ 8,769   $ 10,172  
Net income per share - basic and diluted $ 0.24   $ 0.35   $ 0.52   $ 0.61  
 
Acadian Timber Corp.
Interim Consolidated Statements of Comprehensive Income
(unaudited)
 
  Three Months Ended   Six Months Ended  
(CAD thousands) June 24
2017
  June 25
2016
  June 24
2017
  June 25
2016
 
                         
Net income $ 4,011   $ 5,830   $ 8,769   $ 10,172  
Other comprehensive loss                        
Items that may be reclassified subsequently to net income:                        
  Unrealized foreign currency translation loss   (847 )   (2,758 )   (1,376 )   (8,322 )
Comprehensive income $ 3,164   $ 3,072   $ 7,393   $ 1,850  
 
Acadian Timber Corp.
Interim Consolidated Balance Sheets
(unaudited)
 
As at
(CAD thousands)
June 24,
2017
December 31,
2016
         
ASSETS        
Current Assets        
  Cash and cash equivalents $ 20,643 $ 19,654
  Accounts receivable and other assets   6,278   6,952
  Inventory   1,232   2,149
    28,153   28,755
Timber   328,949   328,477
Land, roads and other fixed assets   91,385   91,206
Intangible assets   6,140   6,140
  $ 454,627 $ 454,578
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities        
  Accounts payable and accrued liabilities $ 4,477 $ 3,529
  Dividends payable to shareholders   4,601   4,183
    9,078   7,712
Long-term debt   95,864   97,066
Deferred income tax liability   83,643   81,949
Shareholders' equity   266,042   267,851
  $ 454,627 $ 454,578
 
Acadian Timber Corp.
Interim Consolidated Statements of Cash Flows
(unaudited)
 
  Three Months Ended   Six Months Ended  
(CAD thousands) June 24
2017
  June 25
2016
  June 24
2017
  June 25
2016
 
Cash provided by / (used for):                        
Operating activities                        
Net income $ 4,011   $ 5,830   $ 8,769   $ 10,172  
Adjustments to net income:                        
  Deferred income tax expense   1,224     1,389     2,514     6,429  
  Depreciation and amortization   77     122     155     247  
  Fair value adjustments   (2,764 )   (2,674 )   (1,289 )   (1,903 )
  Unrealized exchange gain on long term debt   (790 )   (1,935 )   (1,255 )   (6,054 )
  Interest expense, net   744     723     1,491     1,453  
  Interest paid, net   (717 )   (695 )   (1,438 )   (1,399 )
  Gain on sale of timberlands   (958 )   -     (1,455 )   (93 )
  Other, net   (1,250 )   (2,021 )   (457 )   (986 )
Net change in non-cash working capital   2,479     1,756     2,538     1,506  
    2,056     2,495     9,573     9,372  
Financing activities                        
Dividends paid to shareholders   (4,601 )   (4,183 )   (8,784 )   (8,366 )
    (4,601 )   (4,183 )   (8,784 )   (8,366 )
Investing activities                        
Additions to timber, land, roads and other fixed assets   (504 )   (17 )   (618 )   (34 )
Acquisition of Katahdin Timberlands LLC         -     (1,276 )   -  
Proceeds from sale of timberlands   1,257     -     2,094     95  
    753     (17 )   200     61  
(Decrease) / increase in cash and cash equivalents during the period   (1,792 )   (1,705 )   989     1,067  
Cash and cash equivalents, beginning of period   22,435     20,488     19,654     17,716  
Cash and cash equivalents, end of period $ 20,643   $ 18,783   $ 20,643   $ 18,783  

Reconciliations to Adjusted EBITDA and Free Cash Flow

  Three Months Ended   Six Months Ended  
(CAD thousands) June 24
2017
  June 25
2016
  June 24
2017
  June 25
2016
 
                         
Net income $ 4,011   $ 5,830   $ 8,769   $ 10,172  
Add / (deduct):                        
  Interest expense, net   744     723     1,491     1,453  
  Current income tax expense / (recovery)   120     (154 )   267     1  
  Deferred income tax expense   1,224     1,389     2,514     6,429  
  Depreciation and amortization   77     122     155     247  
  Fair value adjustments   (2,764 )   (2,674 )   (1,289 )   (1,903 )
  Unrealized exchange gain on long-term debt   (790 )   (1,935 )   (1,255 )   (6,054 )
Adjusted EBITDA   2,622     3,301     10,652     10,345  
Add / (deduct):                        
  Interest paid on debt, net   (717 )   (695 )   (1,438 )   (1,399 )
  Additions to timber, land, roads and other fixed assets   (50 )   (17 )   (164 )   (34 )
  Gain on sale of timberlands   (958 )   -     (1,455 )   (93 )
  Proceeds from sale of timberlands   1,257     -     2,094     95  
  Current income tax (expense) / recovery   (120 )   154     (267 )   (1 )
Free Cash Flow $ 2,034   $ 2,743   $ 9,422   $ 8,913  
Dividends declared $ 4,601   $ 4,183   $ 9,202   $ 8,366  
Payout ratio   226 %   152 %   98 %   94 %

(1) This news release makes reference to Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow which are key performance measures in evaluating Acadian's operations and are important in enhancing investors' understanding of Acadian's operating performance. Acadian's management defines Adjusted EBITDA as earnings before interest, taxes, fair value adjustments, recovery of or impairment of land and roads, unrealized exchange gain/loss on debt, depreciation and amortization and Adjusted EBITDA margin as Adjusted EBITDA as a percentage of its total revenue. Free Cash Flow is defined as Adjusted EBITDA less interest paid, current income tax expense, and capital expenditures plus net proceeds from the sale of fixed assets (selling price less gains or losses included in Adjusted EBITDA). As these performance measures do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS"), they may not be comparable to similar measures presented by other companies. As a result, we have provided in this news release reconciliations of net income, as determined in accordance with IFRS, to Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow.

Acadian Timber Corp.
Jon Syrnyk
Investor Relations
604-661-9622
jsyrnyk@acadiantimber.com
www.acadiantimber.com

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