VANCOUVER – Conifex Timber’s results for the second quarter ended June 30, 2017, showed an improvement in lumber sector earnings, but lower results in the bioenergy sector. Adjusted EBITDA in the second quarter of 2017, which excludes countervailing duty (CVD) deposits of $4.6 million, was a record $14.8 million, compared to $6.1 million in the first quarter of 2017 and $9.0 million in the second quarter of 2016. Compared to the previous quarter, an improvement in lumber segment adjusted EBITDA of $10.3 million was partially offset by seasonally lower bioenergy segment adjusted EBITDA and foreign exchange translation loss.
The company’s revenues totaled $116.4 million in the second quarter of 2017, an improvement of 16 per cent over the prior quarter and 12 per cent over the same quarter last year. The revenue growth over the previous quarter was mainly attributable to a 19 per cent increase in our lumber segment revenues.
Operating income, which includes preliminary CVD deposits of $4.6 million on lumber shipments to the U.S., improved to $6.4 million compared to $1.5 million in the previous quarter and $5.1 million in the same quarter last year.
Lumber segment adjusted EBITDA, which excludes CVD deposits, was $15.4 million in the second quarter of 2017 compared to $5.1 million in the previous quarter and $8.7 million in the second quarter of 2016. Lumber segment adjusted EBITDA was $20.5 million for the six months ended June 30, 2017 and $13.2 million for the six months ended June 30, 2016.
Prices (as quoted by Random Lengths) for the bell-weather WSPF #2 & Btr product averaged US$388 during the second quarter of 2017, an improvement of 11 per cent over the previous quarter and 25 per cent over the second quarter of 2016.
Revenue from Conifex produced lumber was $70.8 million in the second quarter of 2017. The 25 per cent increase over the previous quarter was generally attributable to 16 per cent higher shipment volumes and a 7-per-cent improvement in unit sales realizations. Lumber shipments, which were somewhat hampered by challenging weather conditions and resulted in some logistical constraints in the prior quarter, returned to more typical levels.
Lumber production totalled approximately 132 million board feet during the second quarter of 2017 and represented an annualized operating rate of 100 per cent compared to 94 per cent in the previous quarter and 103 per cent in the same quarter last year.
Unit log costs increased by 2 per cent over the previous quarter and 18 per cent over the same quarter last year. The higher log costs were mainly attributable to higher market based stumpage and purchased log costs.
Through the remainder of 2017, the company expects average benchmark lumber prices for Western SPF to be similar to average levels achieved in the first six months of this year. “We expect continued uncertainty around the softwood lumber dispute, including the suspension of preliminary CVD in September 2017, and timing related to the final determination of CVD and antidumping duty (“ADD”) rates and the potential resolution of the dispute, will contribute to further volatility in U.S. market conditions and pricing,” says the quarter results news release.