VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/14/13 -- West Fraser Timber Co. Ltd. (TSX: WFT) today reported earnings of $22 million or $0.51 per share on sales of $773 million in the fourth quarter of 2012 and earnings of $87 million or $2.02 per share, on sales of $3 billion for 2012.
These results compare with previous periods as follows:
---------------------------------------------------------------------------
($ millions except earnings per 2012 2011
share ("EPS")) Q4 Q3 YTD YTD Q4
---------------------------------------------------------------------------
Sales 773 772 3,000 2,762 650
EBITDA(1) 76 102 279 226 18
Operating earnings 37 66 127 58 (22)
Earnings (loss) from continuing
operations 22 55 87 27 (11)
Basic EPS from continuing
operations ($) 0.51 1.27 2.02 0.63 (0.25)
Adjusted earnings (loss) from
continuing operations2 53 55 138 23 (15)
Adjusted basic EPS from continuing
operations ($)(2) 1.25 1.27 3.22 0.54 (0.35)
Earnings 22 55 87 73 6
Basic EPS ($) 0.51 1.27 2.02 1.70 0.14
Diluted EPS ($) 0.51 1.27 2.02 1.47 0.14
---------------------------------------------------------------------------
1. In this News Release, reference is made to EBITDA (defined as operating
earnings plus amortization). Our management believes that, in addition to
earnings, EBITDA is a useful performance indicator and is a useful
measure of cash available prior to debt service, capital expenditures and
income taxes. Reference is also made to Adjusted earnings (loss) from
continuing operations (calculated as set out in the tables described in
footnote 2 and Adjusted EPS (collectively, with EBITDA, "these
measures")). None of these measures is a generally accepted earnings
measure under International Financial Reporting Standards ("IFRS") and
none has a standardized meaning prescribed by IFRS. Investors are
cautioned that none of these measures should be considered as an
alternative to earnings, earnings per share or cash flow, as determined
in accordance with IFRS. As there is no standardized method of
calculating any of these measures, our method of calculating each of them
may differ from the methods used by other entities and, accordingly, our
use of any of these measures may not be directly comparable to similarly
titled measures used by other entities.
2. Refer to the tables titled "Annual Earnings Adjustments for Certain Non-
Operational Items" and "Quarterly Earnings Adjustments for Certain Non-
Operational Items" in Management's Discussion and Analysis of our 2012
results for details of adjustments.
"In the second half of 2012 we saw encouraging signs that the U.S. housing market is recovering," said Hank Ketcham, West Fraser's Chairman and CEO. "This has led to gradual improvement of results from our building products operations."
Operational Results
In the quarter our lumber operations generated operating earnings of $52 million (Q3 -$37 million) and EBITDA of $75 million (Q3 - $58 million). The improvement in our results reflects improved prices for SPF and SYP lumber.
The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $7 million (Q3 -$22 million) and EBITDA of $12 million (Q3 - $25 million) as Canadian dollar plywood prices weakened from third quarter levels.
Pulp and paper operations generated operating earnings in the quarter of $13 million (Q3 - $17 million) and EBITDA of $24 million (Q3 - $28 million). Improved NBSK pricing was offset by weakening BCTMP and newsprint markets.
Outlook
We are approaching 2013 with guarded optimism that the long-awaited U.S. housing recovery is taking hold. We will continue to invest in our existing facilities in order to maintain and improve our competitiveness.
Leadership Succession
The Company also announced that, as part of its ongoing leadership succession process, effective March 1, 2013 Hank Ketcham will assume the role of Executive Chairman and Ted Seraphim, who is currently the Company's President and Chief Operating Officer, will be appointed President and Chief Executive Officer. Mr. Seraphim will also be nominated for election as a director of the Company at the Company's April 30, 2013 Annual General Meeting.
Annual Financial Statements and Management's Discussion & Analysis ("MD&A")
The Company's consolidated financial statements for the year ended December 31, 2012 and related MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.
Dividend Declared
The Board of Directors of the Company has declared a dividend of $0.14 per share on the Common shares and the Class B Common shares in the capital of the Company, payable on April 5, 2013 to shareholders of record on March 22, 2013.
The Company
West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.
Forward-Looking Statements
This news release contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2012 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.
Conference Call
Investors are invited to listen to the quarterly conference call on Friday, February 15, 2013 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-952-6845 (toll-free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.
West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".
West Fraser Timber Co. Ltd.
Condensed Consolidated Balance Sheets
(in millions of Canadian dollars, except where indicated - unaudited)
December 31 December 31
2012 2011
---------------------------------------------------------------------------
Assets
Current assets
Cash and short-term investments $ 102 $ 68
Receivables 251 266
Income taxes receivable - 4
Inventories (note 3) 459 398
Prepaid expenses 11 9
---------------------------------------------------------------------------
823 745
Property, plant and equipment 959 936
Timber licences 496 490
Goodwill and other intangibles 330 336
Other assets 10 11
---------------------------------------------------------------------------
$ 2,618 $ 2,518
---------------------------------------------------------------------------
Liabilities
Current liabilities
Payables and accrued liabilities $ 322 $ 274
Income taxes payable 20 -
Reforestation and decommissioning obligations 43 41
---------------------------------------------------------------------------
385 315
Long-term debt 300 306
Other liabilities 313 270
Deferred income taxes 128 144
---------------------------------------------------------------------------
1,126 1,035
---------------------------------------------------------------------------
Shareholders' Equity
Share capital 602 601
Accumulated other comprehensive earnings (9) (6)
Retained earnings 899 888
---------------------------------------------------------------------------
1,492 1,483
---------------------------------------------------------------------------
$ 2,618 $ 2,518
---------------------------------------------------------------------------
Number of Common shares and Class B Common shares outstanding at February
14, 2013 was 42,863,296.
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(in millions of Canadian dollars, except where indicated - unaudited)
October 1 to December 31 January 1 to December 31
2012 2011 2012 2011
---------------------------------------------------------------------------
Retained earnings
Balance -
beginning of
period $ 836 $ 902 $ 888 $ 943
Actuarial gain
(loss) on
employee future
benefits (net of
tax) 47 (14) (52) (104)
Earnings for the
period 22 6 87 73
Dividends (6) (6) (24) (24)
---------------------------------------------------------------------------
Balance - end of
period $ 899 $ 888 $ 899 $ 888
---------------------------------------------------------------------------
Accumulated other
comprehensive
earnings
Balance -
beginning of
period $ (12) $ 1 $ (6) $ (10)
Translation gain
(loss) on
foreign
operations 3 (7) (3) 4
---------------------------------------------------------------------------
Balance - end of
period $ (9) $ (6) $ (9) $ (6)
---------------------------------------------------------------------------
Share capital
Balance -
beginning of
period $ 602 $ 601 $ 601 $ 601
Issuance of
Common shares - - 1 -
---------------------------------------------------------------------------
Balance - end of
period $ 602 $ 601 $ 602 $ 601
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Shareholders'
equity $ 1,492 $ 1,483 $ 1,492 $ 1,483
---------------------------------------------------------------------------
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(in millions of Canadian dollars, except where indicated - unaudited)
October 1 to December 31 January 1 to December 31
2012 2011 2012 2011
---------------------------------------------------------------------------
Sales $ 773 $ 650 $ 3,000 $ 2,762
---------------------------------------------------------------------------
Costs and
expenses
Cost of products
sold 505 476 2,020 1,917
Freight and other
distribution
costs 118 111 477 460
Export taxes 11 15 48 58
Amortization 39 40 152 168
Selling, general
and
administration 33 26 115 104
Equity-based
compensation 30 4 61 (3)
---------------------------------------------------------------------------
736 672 2,873 2,704
---------------------------------------------------------------------------
Operating
earnings 37 (22) 127 58
Finance expense (5) (5) (19) (20)
Exchange gain
(loss) on long-
term debt (3) 9 7 (7)
Other income 2 1 - 14
---------------------------------------------------------------------------
Earnings from
continuing
operations
before tax
provision 31 (17) 115 45
Tax recovery
(provision)
(note 4) (9) 6 (28) (18)
---------------------------------------------------------------------------
Earnings from
continuing
operations 22 (11) 87 27
Earnings from
discontinued
operations
(note 5) - 17 - 46
---------------------------------------------------------------------------
Earnings $ 22 $ 6 $ 87 $ 73
---------------------------------------------------------------------------
Earnings per
share (dollars)
(note 6)
Basic from
continuing
operations $ 0.51 $ (0.25) $ 2.02 $ 0.63
Diluted from
continuing
operations $ 0.51 $ (0.25) $ 2.02 $ 0.41
Basic after
discontinued
operations $ 0.51 $ 0.14 $ 2.02 $ 1.70
Diluted after
discontinued
operations $ 0.51 $ 0.14 $ 2.02 $ 1.47
---------------------------------------------------------------------------
Comprehensive
earnings
Earnings $ 22 $ 6 $ 87 $ 73
Other
comprehensive
earnings
Translation gain
(loss) on
foreign
operations 3 (7) (3) 4
Actuarial gain
(loss) on
employee future
benefits 47 (14) (52) (104)
---------------------------------------------------------------------------
Comprehensive
earnings $ 72 $ (15) $ 32 $ (27)
---------------------------------------------------------------------------
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except where indicated - unaudited)
October 1 to December 31 January 1 to December 31
2012 2011 2012 2011
---------------------------------------------------------------------------
Operating
activities
Earnings from
continuing
operations $ 22 $ (10) $ 87 $ 27
Adjustments
Amortization 39 40 152 168
Finance expense 5 5 19 20
Exchange loss
(gain) on
long-term debt 3 (9) (7) 7
Tax provision
(recovery) 9 (6) 28 18
Income taxes
received
(paid) (1) - 2 (75)
Reforestation
and
decommissioning
obligations (3) - (2) 6
Employee future
benefits
expense 9 7 38 35
Contributions
to employee
future benefit
plans (39) (64) (64) (93)
Other 1 (3) (8) (9)
Changes in non-
cash working
capital
Receivables 2 32 (22) 8
Inventories (36) (40) (58) (24)
Prepaid
expenses 2 4 (2) (1)
Payables and
accrued
liabilities 8 (7) 32 (2)
---------------------------------------------------------------------------
Cash flows from
operating
activities 21 (51) 195 85
---------------------------------------------------------------------------
Financing
activities
Repayment of
operating loans - - - (15)
Finance expense
paid (8) (9) (18) (20)
Dividends (6) (6) (24) (24)
Other (1) - - -
---------------------------------------------------------------------------
Cash flows from
financing
activities (15) (15) (42) (59)
---------------------------------------------------------------------------
Investing
activities
Acquisition (30) - (30) -
Additions to
capital assets (44) (89) (150) (213)
Proceeds from
Green
Transformation
Program 4 5 49 37
Proceeds from
disposal of
capital assets - - 9 10
Other 2 1 3 2
---------------------------------------------------------------------------
Cash flows from
investing
activities (68) (83) (119) (164)
---------------------------------------------------------------------------
Change in cash
from continuing
operations (62) (149) 34 (138)
Change in cash
from
discontinued
operations - 9 - 45
Cash - beginning
of period 164 208 68 161
---------------------------------------------------------------------------
Cash - end of
period $ 102 $ 68 $ 102 $ 68
---------------------------------------------------------------------------
West Fraser Timber Co. Ltd.
Notes to Condensed Consolidated Interim Financial Statements
(figures are in millions of dollars, except where indicated - unaudited)
1. Nature of operations
West Fraser Timber Co. Ltd. ("West Fraser", "we", "us" or "our") is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. We are listed on the Toronto Stock Exchange under the symbol WFT.
2. Basis of presentation and statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board and using the same accounting policies and methods of their application as the December 31, 2012 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with the Company's 2012 annual financial statements.
3. Inventories
Inventories at December 31, 2012 were written down by $3 million (September 30, 2012 - $6 million; December 31, 2011 - $15 million) to reflect net realizable value being lower than cost.
4. Tax provision
The tax provision differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings before income taxes as follows:
--------------------------------------------------------------------------
October 1 to December 31 January 1 to December 31
2012 2011 2012 2011
---------------------------------------------------------------------------
Income tax
expense at
statutory rate
of 25% (2011 -
26.5%) $ (8) $ 4 $ (29) $ (12)
Non-taxable
amounts (5) 2 (9) 2
Rate
differentials
between
jurisdictions
and on specified
activities - 1 (1) 6
Recognized
(unrecognized)
tax assets 3 (1) 11 (12)
Other 1 - - (2)
---------------------------------------------------------------------------
Tax recovery
(provision) $ (9) $ 6 $ (28) $ (18)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
5. Discontinued operations
We permanently closed our linerboard and kraft paper mill, located in Kitimat, B.C. in January 2010 and the windup was substantially completed in December 2011.
6. Earnings per share
Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.
Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.
October 1 to December 31
2012 2011
---------------------------------------------------------------------------
From After From After
continuing discontinued continuing discontinued
operations operations operations operations
---------------------------------------------------------------------------
Earnings
Basic $ 22 $ 22 $ (11) $ 6
Share option
expense 23 23 3 3
---------------------------------------------------------------------------
Diluted $ 45 $ 45 $ (8) $ 9
---------------------------------------------------------------------------
Weighted average
number of shares
(thousands)
Basic 42,862 42,862 42,845 42,845
Share options 675 675 280 280
---------------------------------------------------------------------------
Diluted 43,537 43,537 43,125 43,125
---------------------------------------------------------------------------
Earnings per
share (dollars)
Basic $ 0.51 $ 0.51 $ (0.25) $ 0.14
Diluted $ 0.51 $ 0.51 $ (0.25) $ 0.14
---------------------------------------------------------------------------
January 1 to December 31
2012 2011
---------------------------------------------------------------------------
From After From After
continuing discontinued continuing discontinued
operations operations operations operations
---------------------------------------------------------------------------
Earnings
Basic $ 87 $ 87 $ 27 $ 73
Share option
expense
(recovery) 45 45 (6) (6)
Equity settled
share option
adjustment (3) (3) (3) (3)
---------------------------------------------------------------------------
Diluted $ 129 $ 129 $ 18 $ 64
---------------------------------------------------------------------------
Weighted average
number of shares
(thousands)
Basic 42,857 42,857 42,840 42,840
Share options 555 555 434 434
---------------------------------------------------------------------------
Diluted 43,412 43,412 43,274 43,274
---------------------------------------------------------------------------
Earnings per
share (dollars)
Basic $ 2.02 $ 2.02 $ 0.63 $ 1.70
Diluted $ 2.02 $ 2.02 $ 0.41 $ 1.47
---------------------------------------------------------------------------
7. Segmented information
Pulp & Corporate
Lumber Panels paper & other Consolidated
---------------------------------------------------------------------------
October 1,
2012 to
December 31,
2012
Sales at
market
prices
To external
customers $ 477 $ 109 $ 187 $ - $ 773
---------------
To other
segments 18 1 - -
----------------------------------------------------------
$ 495 $ 110 $ 187 $ -
----------------------------------------------------------
EBITDA(1) $ 75 $ 12 $ 24 $ (35) $ 76
Amortization (23) (5) (11) - (39)
---------------------------------------------------------------------------
Operating
earnings 52 7 13 (35) 37
Finance
expense (2) (1) (2) - (5)
Exchange loss
on long-term
debt - - - (3) (3)
Other income
(expense) (1) - 4 (1) 2
---------------------------------------------------------------------------
Earnings from
continuing
operations
before tax
provision $ 49 $ 6 $ 15 $ (39) $ 31
---------------------------------------------------------------------------
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization.
Pulp & Corporate
Lumber Panels paper & other Consolidated
---------------------------------------------------------------------------
October 1,
2011 to
December 31,
2011
Sales at
market
prices
To external
customers $ 370 $ 93 $ 187 $ - $ 650
---------------
To other
segments 22 1 - -
----------------------------------------------------------
$ 392 $ 94 $ 187 $ -
----------------------------------------------------------
EBITDA(1) $ (8) $ 4 $ 26 $ (4) $ 18
Amortization (22) (4) (13) (1) (40)
---------------------------------------------------------------------------
Operating
earnings (30) - 13 (5) (22)
Finance
expense (2) (1) (1) (1) (5)
Exchange gain
on long-term
debt - - - 9 9
Other income
(expense) 2 - (6) 5 1
---------------------------------------------------------------------------
Earnings from
continuing
operations
before tax
provision $ (30) $ (1) $ 6 $ 8 $ (17)
---------------------------------------------------------------------------
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization.
Pulp & Corporate
Lumber Panels paper & other Consolidated
---------------------------------------------------------------------------
January 1,
2012 to
December 31,
2012
Sales at
market
prices
To external
customers $ 1,783 $ 442 $ 775 $ - $ 3,000
---------------
To other
segments 72 6 - -
---------------------------------------------------------------------------
$ 1,855 $ 448 $ 775 $ -
---------------------------------------------------------------------------
EBITDA(1) $ 180 $ 55 $ 109 $ (65) $ 279
Amortization (86) (16) (48) (2) (152)
---------------------------------------------------------------------------
Operating
earnings 94 39 61 (67) 127
Finance expense (10) (3) (6) - (19)
Exchange gain on
long-term debt - - - 7 7
Other income
(expense) (4) - 1 3 -
---------------------------------------------------------------------------
Earnings from
continuing
operations
before tax
provision $ 80 $ 36 $ 56 $ (57) $ 115
---------------------------------------------------------------------------
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization.
Pulp & Corporate
Lumber Panels paper & other Consolidated
---------------------------------------------------------------------------
January 1,
2011 to
December 31,
2011
Sales at
market
prices
To external
customers $ 1,579 $ 370 $ 813 $ - $ 2,762
---------------
To other
segments 91 8 - -
---------------------------------------------------------------------------
$ 1,670 $ 378 $ 813 $ -
---------------------------------------------------------------------------
EBITDA(1) $ 65 $ 8 $ 148 $ 5 $ 226
Amortization (85) (15) (65) (3) (168)
---------------------------------------------------------------------------
Operating
earnings (20) (7) 83 2 58
Finance expense (11) (3) (6) - (20)
Exchange loss
on long-term
debt - - - (7) (7)
Other income 10 - 3 1 14
---------------------------------------------------------------------------
Earnings from
continuing
operations
before tax
provision $ (21) $ (10) $ 80 $ (4) $ 45
---------------------------------------------------------------------------
1. Non-IFRS measure:
EBITDA is defined as operating earnings plus amortization.
The geographic distribution of external sales is as follows:
----------------------------------------------------------------------------
October 1 to December 31 January 1 to December 31
2012 2011 2012 2011
----------------------------------------------------------------------------
United States $ 368 $ 318 $ 1,435 $ 1,303
Canada 194 157 747 652
China 139 96 513 456
Other Asia 47 53 201 229
Other 25 26 104 122
----------------------------------------------------------------------------
$ 773 $ 650 $ 3,000 $ 2,762
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales distribution is based on the location of product delivery by the Company.
Contacts:
West Fraser Timber Co. Ltd.
Larry Hughes
Vice-President, Finance and Chief Financial Officer
(604) 895-2700
West Fraser Timber Co. Ltd.
Rodger Hutchinson
Vice-President, Corporate Controller
(604) 895-2700
(604) 681-6061 (FAX)
www.westfraser.com
