Acadian Timber Corp. reported financial and operating results for the three months and full year ended December 31, 2022.
Acadian generated sales of $23.8 million in Q4 2022, compared to $25.9 million in the prior year period. Sales volume, excluding biomass, decreased 26% primarily due to contractor availability which resulted in lower harvesting activity, combined with unfavourable weather conditions. Biomass sales volume increased 25% due to favourable market conditions. The weighted average selling price, excluding biomass, increased 17% year-over-year, benefiting from strong demand for all products.
Adjusted EBITDA was $4.1 million during the Q4 2022, compared to $6.3 million in the prior year period and Adjusted EBITDA margin for the quarter was 17% compared to 24% in the prior year period. The year-over-year decrease is primarily driven by reduced sales volumes, particularly in Maine, and increased variable costs. Free Cash Flow was $2.0 million compared to $5.1 million in the same period of 2021.
Net income for the Q4 2022 totaled $22.0 million, or $1.30 per share, compared to $6.5 million, or $0.39 per share in the same period of 2021. The increase in net income was largely due to the impact of higher gains on non-cash fair value adjustments in 2022 compared to 2021, resulting from the increased fair value of our timberlands, offset by lower operating income due to lower harvesting activity.
Full-Year 2022
Acadian generated sales of $90.5 million, compared to $95.7 million in the prior year as a result of decreased sales volumes, partially offset by increased pricing. Although demand for softwood sawlogs remained stable and demand for hardwood sawlogs, hardwood pulpwood and softwood pulpwood strengthened throughout the year, sales volume, excluding biomass, decreased 13% primarily as a result of limited contractor availability.
Operating costs and expenses were $72.6 million during 2022, compared to $74.0 million in the prior year, reflecting lower harvesting and timber services activity partially offset by higher contractor costs. Weighted average variable costs, excluding biomass, increased 16% due to higher contractor rates and fuel prices.
Adjusted EBITDA for the year ended December 31, 2022 was $18.2 million, compared to $22.5 million in the prior year, while Adjusted EBITDA margin was 20% compared to 23% in the prior year. Key factors impacting the year-over-year decrease in Adjusted EBITDA were lower harvesting volumes due to contractor availability, higher contractor rates and fuel costs, and lower gains on sales of land, partially offset by strong pricing for products. Free Cash Flow was $12.2 million compared to $16.9 million in 2021.
Net income for the year ended December 31, 2022 totaled $35.5 million, or $2.11 per share, compared to net income of $18.7 million, or $1.12 per share, in 2021. Net income was primarily impacted by higher gains on non-cash fair value adjustments in 2022 compared to 2021 resulting from the increased fair value of our timberlands.
“While 2022 presented a challenging operating year for Acadian due to limited contractor availability, demand for our products remained strong and pricing continued to increase throughout the year. Costs were elevated across the business, however, we are proud of the continued efforts and success of our management team in controlling or recovering these costs from our customers,” commented Adam Sheparski, President and CEO. “As we enter our busiest season, we have already begun to increase contractor capacity with expectations of improvement in 2023, which we believe will make us well-positioned to take advantage of the opportunities presented by current regional market conditions."
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.
