Acadian Timber (ADN) Q3 2024 earnings summary

Executive summary

• Q3 sales were CAD 26 million, down from CAD 26.6 million year-over-year, with steady harvest volumes but lower average selling prices and reduced timber services activity.

• Net income for Q3 was CAD 2.2 million, down from CAD 6.4 million in Q3 2023, mainly due to lower non-cash fair value adjustments.

• Adjusted EBITDA was CAD 4 million, down from CAD 4.9 million year-over-year.

• Free cash flow was CAD 2.5 million, compared to CAD 4.3 million in the prior year; dividends declared were CAD 5.1 million (CAD 0.29 per share).

• Real estate and renewable energy initiatives advanced, including a meteorological tower purchase and an agreement to sell 2,100 acres for CAD 1.4 million.

Financial highlights

• Timber sales volume increased to 287,400 m³ from 272,900 m³ year-over-year in Q3.

• Weighted average selling price (excluding biomass) decreased 5% year-over-year.

• Adjusted EBITDA margin declined to 16% from 18% year-over-year.

• Operating costs rose to CAD 22.1 million from CAD 21.9 million, reflecting higher sales volumes and variable costs.

• For the nine months, sales were CAD 96 million, with CAD 24.6 million from carbon credit sales.

Outlook and guidance

• Near-term pressure on end-use markets is expected to persist, but North American interest rates and inflation are easing.

• U.S. housing starts forecasted at 1.35 million for 2024, down from 1.42 million in 2023.

• Saw log demand expected to remain stable, but pricing may stay challenged until markets improve.

• Carbon credit sales and real estate initiatives are expected to contribute to future cash flows.

• Carbon credit demand and pricing expected to remain stable; new compliance market opportunities being evaluated.