Acadian Timber (ADN) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales were CAD 26 million, down from CAD 26.6 million year-over-year, due to lower average selling prices and reduced timber services activity, despite a 15% increase in freehold sales volume excluding biomass.

• Net income for Q3 2024 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 (16% margin), down from CAD 4.9 million (18% margin) year-over-year.

• Free cash flow was CAD 2.5 million, compared to CAD 4.3 million in the prior year; dividends of CAD 5.1 million were declared.

• Net liquidity stood at CAD 27.8 million as of September 28, 2024.

Financial highlights

• Weighted average selling price (excluding biomass) decreased 5% year-over-year; softwood sawlog pricing fell 13%, hardwood sawlog pricing fell 5%.

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

• For the nine months ended September 28, 2024, sales were CAD 96 million, with CAD 24.6 million from carbon credit sales.

• Adjusted EBITDA for the nine months was CAD 35.2 million, up from CAD 16.2 million in the prior year, driven by carbon credit sales.

• Q3 payout ratio was 200%; payout ratio with DRIP was 102%.

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.

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

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

• Elevated contractor rates are expected to continue impacting results through the first half of 2025.