For the 3Q 2020, Acadian Timber Corp. generated sales of $23.2 million, compared to $25.4 million in the prior year period. Sales volume, excluding biomass, decreased 9% and the weighted average selling price, excluding biomass, decreased 3% year-over-year. While demand for softwood sawlogs increased during the quarter driven by a strong North American softwood lumber market, demand for hardwood pulpwood declined. The negative effects of COVID-19 impacted select hardwood pulpwood end use markets. In addition, regional consumption was further impacted by the substitution of softwood for hardwood pulpwood and the ongoing market disruption caused by the Androscoggin Mill explosion in Jay, Maine that occurred earlier this year.
Operating costs and expenses were $18.8 million during the 3Q 2020, compared to $20.6 million during the prior year period. This year-over-year decrease reflects lower harvesting activity and administrative costs. Weighted average variable costs, excluding biomass, decreased 2% reflecting a lower cost product mix in the period.
Adjusted EBITDA was $4.5 million during the 3Q 2020, compared to $5.1 million in the prior year period and Adjusted EBITDA margin for the quarter was 19%, compared to 20% in the prior year period, or 19% excluding a $0.3 million gain in timberland sales in 2019.
Net income for the 3Q 2020 totaled $5.2 million, or $0.31 per share, compared to a net loss of $10.9 million, or $0.65 per share in the same period of 2019.
“Operating conditions were favorable during the 3Q, but regional market demand was varied with increased demand for softwood sawlogs more than offset by a weaker than expected hardwood pulpwood market,” commented Erika Reilly, CEO. “With a deep customer base and diversified product mix, Acadian responded to changing market conditions by staying close to our customers and shifting production, all while aiming to protect our margins.”
During the first nine months of 2020, Acadian generated sales of $66.1 million compared to $74.2 million in the prior year period. The 11% decrease reflects an abbreviated operating period during the 2Q and reduced demand for hardwood pulpwood during the 3Q compared to 2019. The weighted average selling price, excluding biomass, remained relatively stable with a 1% decrease. Operating costs and expenses of $52.1 million were $6.2 million lower than the prior year period due to lower harvesting activity and administrative costs.
As a result, year-to-date Adjusted EBITDA was $14.2 million compared to $17 million during the first nine months of 2019. Adjusted EBITDA margin of 21% compares to 23% in 2019, or 22% on a comparable basis, excluding 2019 land sales.
For the nine months ended September 26, 2020, net income was $6.8 million, or $0.41 per share, which represents an increase of $5.7 million year-over-year.
Acadian Timber Corp. is a leading supplier of primary forest products in Eastern Canada and the Northeastern U.S. With a total of approximately 2.4 million acres of land under management, Acadian is the second largest timberland operator in New Brunswick and Maine.
