Acadian Timber Corp. reported financial and operating results for the three months ended September 28, 2024.
Acadian generated sales of $26.0 million in the Q3 2024, compared to $26.6 million in the prior year period. Increased sales volumes from its freehold land were offset by a lower weighted average selling price and lower timber services activity.
Adjusted EBITDA for the quarter was $4.0 million, compared to $4.9 million in the same period of 2023. Acadian generated $2.5 million of Free Cash Flow during the quarter, compared to $4.3 million in the Q3 2023, and declared dividends of $5.1 million or $0.29 per share to our shareholders.
“We maintained steady harvest volumes during the Q3, supported by sufficient contractor capacity and favourable operating conditions. However, pricing pressure caused by weak end user markets continued, affecting our total sales,” said Adam Sheparski, President and CEO. “We have advanced our real estate initiatives in the second half of the year and we are excited about the opportunities ahead.”
Outlook
While near-term pressure on end use markets persists, North American interest rates and inflation are showing signs of easing. U.S. housing starts year-to-date are lower than originally expected, but the consensus forecast for U.S. housing starts is steady at approximately 1.35 million starts in 2024, as compared to 1.42 million in 2023. Acadian Timber remains confident that the stability of the northeastern forestry sector, combined with long-term demand for new homes and repair and remodel activity, will support the long-term demand for our products as has been demonstrated in recent years.
Although labour markets remained tight in Maine, the Company maintained sufficient contractor availability in New Brunswick through the third quarter. Management will continue to focus on further increasing harvesting capacity in Maine through the remainder of 2024 while controlling operating costs. In the short to medium term, elevated contractor rates are expected to impact our financial results, offset by the stable pricing of primary forest products like sawlogs and pulpwood.
Demand for Acadian’s sawlogs is mainly driven by regional supply and demand. Near-term sawlog demand is expected to remain stable while pricing may remain challenged until end-use markets improve. Demand and pricing for softwood pulpwood is expected to remain at reduced levels in the near term due to abundant regional sawmill residuals and hardwood pulpwood is expected to be steady. During 2023, purchasers of voluntary carbon credits increased their focus on carbon credits of high quality, and expended greater time and effort performing due diligence. This shift may have delayed some sales, however, underlying demand and pricing for voluntary carbon credits are expected to remain stable. The protocol for developing compliance market carbon credits from managed forests in Canada was recently finalized. Acadian is evaluating the opportunities to develop eligible carbon credits that the compliance protocol may present, in conjunction with the opportunities that exist under the current protocols.
Acadian Timber Corp. is one of the largest timberland owners in Eastern Canada and the Northeastern U.S. and has a total of approximately 2.4 million acres of land under management.
