VANCOUVER, BC–(Marketwired – October 24, 2016) – West Fraser Timber Co. Ltd. (TSX: WFT) reported earnings of $107 million or $1.35 basic earnings per share on sales of $1,155 million in the third quarter of 2016. These results compare with previous periods as shown in the table below.
Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this News Release reflect the adjustments described in the tables referred to in the section titled “Non-IFRS Measures” of our 2016 third quarter Management’s Discussion & Analysis.
| ($ millions except earnings per | 2016 | 2015 | ||||||||
| share (“EPS”)) | Q3 | Q2 | YTD | Q3 | YTD | |||||
| Sales | 1,155 | 1,111 | 3,343 | 1,044 | 3,087 | |||||
| Adjusted EBITDA1 | 213 | 138 | 481 | 82 | 327 | |||||
| Operating earnings | 156 | 120 | 355 | 88 | 231 | |||||
| Earnings | 107 | 98 | 247 | 56 | 119 | |||||
| Basic EPS ($) | 1.35 | 1.22 | 3.06 | 0.67 | 1.43 | |||||
| Adjusted Earnings1 | 115 | 64 | 229 | 35 | 145 | |||||
| Adjusted basic EPS ($)1 | 1.45 | 0.80 | 2.84 | 0.42 | 1.74 | |||||
| 1. In this News Release, reference is made to Adjusted EBITDA, Adjusted earnings and Adjusted EPS (collectively “these measures”). We believe that, in addition to earnings, these measures are useful performance indicators. None of these measures is a generally accepted earnings measure under International Financial Reporting Standards (“IFRS”) and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, EPS or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. | ||||||||||
Operational Results
In the quarter our lumber operations generated operating earnings of $114 million (Q2-16 – $78 million) and Adjusted EBITDA of $151 million (Q2-16 – $113 million). Higher U.S. dollar lumber prices contributed to the improvement in earnings.
The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $30 million (Q2-16 – $18 million) and Adjusted EBITDA of $33 million (Q2-16 – $21 million). Higher plywood prices were the main contributor to the improved earnings.
Our pulp & paper operations generated operating earnings of $22 million (Q2-16 – loss of $5 million) and Adjusted EBITDA of $31 million (Q2-16 – $4 million). Pulp and newsprint prices increased and pulp production was higher resulting in increased earnings.
Outlook
“We’re pleased with the ongoing improvements from our capital spending program. I’m also very proud of our committed and focused employee group who continue to strive to improve operational performance each and every day,” said Ted Seraphim, our President and CEO.
Management’s Discussion & Analysis (“MD&A”)
The Company’s MD&A is available on the Company’s website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company’s profile.
The Company
West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.
Forward-Looking Statements
This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading “Outlook”, are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2015 annual Management’s Discussion & Analysis under “Risks and Uncertainties”, and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.
Conference Call
Investors are invited to listen to the quarterly conference call on Tuesday, October 25, 2016 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-866-225-0198 (toll-free North America). The call may also be accessed through West Fraser’s website at www.westfraser.com.
| West Fraser Timber Co. Ltd. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (in millions of Canadian dollars, except where indicated – unaudited) | ||||||
| September 30 | December 31 | |||||
| 2016 | 2015 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and short-term investments | $ | 52 | $ | 13 | ||
| Receivables | 332 | 298 | ||||
| Income taxes receivable | – | 11 | ||||
| Inventories (note 3) | 536 | 631 | ||||
| Prepaid expenses | 17 | 18 | ||||
| 937 | 971 | |||||
| Property, plant and equipment | 1,632 | 1,609 | ||||
| Timber licences | 555 | 570 | ||||
| Goodwill and other intangibles | 365 | 369 | ||||
| Other assets | 18 | 36 | ||||
| Deferred income tax assets | 49 | 80 | ||||
| $ | 3,556 | $ | 3,635 | |||
| Liabilities | ||||||
| Current liabilities | ||||||
| Cheques issued in excess of funds on deposit | $ | 36 | $ | 29 | ||
| Operating loans (note 4) | 46 | 178 | ||||
| Payables and accrued liabilities | 355 | 351 | ||||
| Income taxes payable | 9 | – | ||||
| Reforestation and decommissioning obligations | 48 | 48 | ||||
| 494 | 606 | |||||
| Long-term debt (note 4) | 403 | 423 | ||||
| Other liabilities (note 5) | 372 | 269 | ||||
| Deferred income tax liabilities | 186 | 190 | ||||
| 1,455 | 1,488 | |||||
| Shareholders’ Equity | ||||||
| Share capital (note 7) | 551 | 579 | ||||
| Accumulated other comprehensive earnings | 137 | 164 | ||||
| Retained earnings | 1,413 | 1,404 | ||||
| 2,101 | 2,147 | |||||
| $ | 3,556 | $ | 3,635 | |||
| Number of Common shares and Class B Common shares outstanding at October 24, 2016 was 78,552,469. | ||||||
| West Fraser Timber Co. Ltd. | ||||||||||||||||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity | ||||||||||||||||
| (in millions of Canadian dollars, except where indicated – unaudited) | ||||||||||||||||
| July 1 to September 30 | January 1 to September 30 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Share capital | ||||||||||||||||
| Balance – beginning of period | $ | 560 | $ | 587 | $ | 579 | $ | 587 | ||||||||
| Common share repurchases | (9 | ) | (8 | ) | (28 | ) | (8 | ) | ||||||||
| Balance – end of period | $ | 551 | $ | 579 | $ | 551 | $ | 579 | ||||||||
| Accumulated other comprehensive earnings | ||||||||||||||||
| Balance – beginning of period | $ | 129 | $ | 98 | $ | 164 | $ | 55 | ||||||||
| Translation gain (loss) on foreign operations | 8 | 41 | (27 | ) | 84 | |||||||||||
| Balance – end of period | $ | 137 | $ | 139 | $ | 137 | $ | 139 | ||||||||
| Retained earnings | ||||||||||||||||
| Balance – beginning of period | $ | 1,332 | $ | 1,447 | $ | 1,404 | $ | 1,387 | ||||||||
| Actuarial gain (loss) on post-retirement benefits | 26 | (40 | ) | (79 | ) | (31 | ) | |||||||||
| Common share repurchases | (47 | ) | (52 | ) | (142 | ) | (52 | ) | ||||||||
| Earnings for the period | 107 | 56 | 247 | 119 | ||||||||||||
| Dividends | (5 | ) | (5 | ) | (17 | ) | (17 | ) | ||||||||
| Balance – end of period | $ | 1,413 | $ | 1,406 | $ | 1,413 | $ | 1,406 | ||||||||
| Shareholders’ Equity | $ | 2,101 | $ | 2,124 | $ | 2,101 | $ | 2,124 | ||||||||
| West Fraser Timber Co. Ltd. | ||||||||||||||||
| Condensed Consolidated Statements of Earnings and Comprehensive Earnings | ||||||||||||||||
| (in millions of Canadian dollars, except where indicated – unaudited) | ||||||||||||||||
| July 1 to September 30 | January 1 to September 30 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Sales | $ | 1,155 | $ | 1,044 | $ | 3,343 | $ | 3,087 | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of products sold | 739 | 756 | 2,263 | 2,162 | ||||||||||||
| Freight and other distribution costs | 158 | 164 | 473 | 467 | ||||||||||||
| Export taxes | – | 14 | – | 26 | ||||||||||||
| Amortization | 50 | 49 | 147 | 141 | ||||||||||||
| Selling, general and administration | 45 | 28 | 126 | 105 | ||||||||||||
| Equity-based compensation | 7 | (55 | ) | (21 | ) | (45 | ) | |||||||||
| 999 | 956 | 2,988 | 2,856 | |||||||||||||
| Operating earnings | 156 | 88 | 355 | 231 | ||||||||||||
| Finance expense | (7 | ) | (8 | ) | (22 | ) | (23 | ) | ||||||||
| Other (note 9) | 1 | (22 | ) | (8 | ) | (48 | ) | |||||||||
| Earnings before tax | 150 | 58 | 325 | 160 | ||||||||||||
| Tax provision (note 10) | (43 | ) | (2 | ) | (78 | ) | (41 | ) | ||||||||
| Earnings | $ | 107 | $ | 56 | $ | 247 | $ | 119 | ||||||||
| Earnings per share (dollars) (note 11) | ||||||||||||||||
| Basic | $ | 1.35 | $ | 0.67 | $ | 3.06 | $ | 1.43 | ||||||||
| Diluted | $ | 1.35 | $ | 0.05 | $ | 2.73 | $ | 0.83 | ||||||||
| Comprehensive earnings | ||||||||||||||||
| Earnings | $ | 107 | $ | 56 | $ | 247 | $ | 119 | ||||||||
| Other comprehensive earnings | ||||||||||||||||
| Translation gain (loss) on foreign operations | 8 | 41 | (27 | ) | 84 | |||||||||||
| Actuarial gain (loss) on post-retirement benefits (note 6) | 26 | (40 | ) | (79 | ) | (31 | ) | |||||||||
| Comprehensive earnings | $ | 141 | $ | 57 | $ | 141 | $ | 172 | ||||||||
| West Fraser Timber Co. Ltd. | |||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||||
| (in millions of Canadian dollars, except where indicated – unaudited) | |||||||||||||||||
| July 1 to September 30 | January 1 to September 30 | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Cash provided by operations | |||||||||||||||||
| Earnings | $ | 107 | $ | 56 | $ | 247 | $ | 119 | |||||||||
| Adjustments | |||||||||||||||||
| Amortization | 50 | 49 | 147 | 141 | |||||||||||||
| Finance expense | 7 | 8 | 22 | 23 | |||||||||||||
| Foreign exchange loss (gain) on long-term financing | 2 | 20 | (8 | ) | 43 | ||||||||||||
| Loss on power agreements, net of settlement costs | – | 17 | 11 | 29 | |||||||||||||
| Post-retirement expense | 18 | 23 | 53 | 51 | |||||||||||||
| Contributions to post-retirement benefit plans | (18 | ) | (23 | ) | (46 | ) | (44 | ) | |||||||||
| Tax provision | 43 | 2 | 78 | 41 | |||||||||||||
| Income taxes received (paid) | 6 | (8 | ) | 1 | (62 | ) | |||||||||||
| Other | (22 | ) | (9 | ) | (51 | ) | (5 | ) | |||||||||
| Changes in non-cash working capital | |||||||||||||||||
| Receivables | (6 | ) | 7 | (36 | ) | (19 | ) | ||||||||||
| Inventories | 5 | (10 | ) | 89 | 52 | ||||||||||||
| Prepaid expenses | 16 | 10 | 1 | (6 | ) | ||||||||||||
| Payables and accrued liabilities | 41 | (53 | ) | (1 | ) | (34 | ) | ||||||||||
| 249 | 89 | 507 | 329 | ||||||||||||||
| Cash used for financing | |||||||||||||||||
| Proceeds from (repayment of) operating loans | (99 | ) | 6 | (133 | ) | (69 | ) | ||||||||||
| Finance expense paid | (3 | ) | (1 | ) | (14 | ) | (12 | ) | |||||||||
| Dividends | (5 | ) | (5 | ) | (17 | ) | (17 | ) | |||||||||
| Common share repurchases | (58 | ) | (60 | ) | (170 | ) | (60 | ) | |||||||||
| Other | 3 | (1 | ) | 3 | (1 | ) | |||||||||||
| (162 | ) | (61 | ) | (331 | ) | (159 | ) | ||||||||||
| Cash used for investing | |||||||||||||||||
| Additions to capital assets | (76 | ) | (51 | ) | (182 | ) | (169 | ) | |||||||||
| Government assistance | 1 | – | 8 | – | |||||||||||||
| Other | 1 | (1 | ) | 1 | 5 | ||||||||||||
| (74 | ) | (52 | ) | (173 | ) | (164 | ) | ||||||||||
| Change in cash | 13 | (24 | ) | 3 | 6 | ||||||||||||
| Foreign exchange effect on cash | 12 | 5 | 29 | 12 | |||||||||||||
| Cash – beginning of period | (9 | ) | 22 | (16 | ) | (15 | ) | ||||||||||
| Cash – end of period | $ | 16 | $ | 3 | $ | 16 | $ | 3 | |||||||||
| Cash consists of | |||||||||||||||||
| Cash and short-term investments | $ | 52 | $ | 21 | |||||||||||||
| Cheques issued in excess of funds on deposit | (36 | ) | (18 | ) | |||||||||||||
| $ | 16 | $ | 3 | ||||||||||||||
West Fraser Timber Co. Ltd.
Notes to Condensed Consolidated Interim Financial Statements
(figures are in millions of dollars, except where indicated – unaudited)
1. Nature of operations
West Fraser Timber Co. Ltd. (“West Fraser”, “we”, “us” or “our”) is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange under the symbol WFT.
2. Basis of presentation and statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting as issued by the International Accounting Standards Board and using the same accounting policies and methods of their application as the December 31, 2015 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2015 annual financial statements.
3. Inventories
Inventories at September 30, 2016 were written down by $10 million (June 30, 2016 – $11 million; December 31, 2015 – $21 million; September 30, 2015 – $37 million) to reflect net realizable value being lower than cost.
4. Long-term debt and operating loans
Long-term debt
| September 30, 2016 | December 31, 2015 | |||||||
| US$300 million senior notes due October 2024; interest at 4.35% | $ | 394 | $ | 415 | ||||
| US$8 million note payable due October 2020; interest at 2.00% | 10 | 10 | ||||||
| Notes payable | 3 | 2 | ||||||
| 407 | 427 | |||||||
| Deferred financing costs | (4 | ) | (4 | ) | ||||
| $ | 403 | $ | 423 | |||||
The fair value of the long-term debt is $390 million (December 31, 2015 – $406 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.
Operating loans
We have $616 million in revolving lines of credit of which $46 million (net of deferred financing costs of $3 million) were drawn as at September 30, 2016 (December 31, 2015 – $178 million, net of deferred financing costs of $3 million).
Our revolving lines of credit consist of a $500 million revolving credit facility which matures September 30, 2020, a $33 million (US$25 million) demand line of credit dedicated to our U.S. operations, two demand lines of credit totalling $75 million dedicated to letters of credit, and an $8 million demand line of credit dedicated to our jointly owned newsprint operation. Interest on the facilities is payable at floating rates based on Prime, U.S. base, Bankers’ Acceptances or LIBOR at our option. As at September 30, 2016, letters of credit in the amount of $47 million have been issued under these facilities.
All debt is unsecured except the $8 million joint operation demand line of credit, which is secured by that joint operation’s current assets.
5. Other liabilities
| September 30, 2016 | December 31, 2015 | |||||
| Post-retirement (note 6) | $ | 259 | $ | 142 | ||
| Reforestation | 68 | 76 | ||||
| Decommissioning | 28 | 29 | ||||
| Other | 17 | 22 | ||||
| $ | 372 | $ | 269 | |||
6. Post-retirement benefits
We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service. We also provide group life insurance, medical and extended health benefits to certain employee groups.
The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:
| September 30, 2016 | December 31, 2015 | |||||||
| Projected benefit obligations | $ | (1,759 | ) | $ | (1,532 | ) | ||
| Fair value of plan assets | 1,511 | 1,409 | ||||||
| Impact of minimum funding requirement | (5 | ) | (11 | ) | ||||
| $ | (253 | ) | $ | (134 | ) | |||
| Represented by | ||||||||
| Post-retirement assets | $ | 6 | $ | 8 | ||||
| Post-retirement liabilities (note 5) | (259 | ) | (142 | ) | ||||
| $ | (253 | ) | $ | (134 | ) | |||
The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows:
| September 30, 2016 | June 30, 2016 | December 31, 2015 | ||||
| Discount rate | 3.25% | 3.25% | 4.00% | |||
| Future compensation rate increase | 3.50% | 3.50% | 3.50% | |||
The change in the discount rate on obligations and the difference between the actual rate of return and the discount rate on plan assets generated an actuarial gain (loss) on post-retirement benefits, included in other comprehensive earnings, as follows:
| July 1 to September 30 | January 1 to September 30 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Actuarial gain (loss) | $ | 35 | $ | (54 | ) | $ | (108 | ) | $ | (43 | ) | |||||
| Tax recovery (provision) | (9 | ) | 14 | 29 | 12 | |||||||||||
| $ | 26 | $ | (40 | ) | $ | (79 | ) | $ | (31 | ) | ||||||
7. Share Capital
During the three months ended September 30, 2016 we purchased 1,284,558 of our Common shares (nine months ended September 30, 2016 – 3,914,306 Common shares) under our normal course issuer bid (“NCIB”) program, which expired on September 16, 2016. The purchase price averaged $43.23 per share and totalled $56 million for the three months ended September 30, 2016 (nine months ended September 30, 2016 – $43.39 per share and $170 million).
On September 8, 2016 our Board of Directors authorized the renewal of our NCIB to repurchase for cancellation up to 3,834,226 Common shares or approximately 5% of our issued and outstanding Common shares. The NCIB will expire September 18, 2017.
8. Insurance proceeds
Our WestPine MDF mill, located in Quesnel British Columbia, was closed due to a fire on March 9, 2016 and will remain closed until repairs are complete. The mill is insured for property damage and business interruption. The impact on pre-tax earnings is as follows:
| July 1 to September 30 |
January 1 to September 30 |
|||||
| 2016 | ||||||
| Estimated business interruption, less policy deductible | $ | 7 | $ | 13 | ||
| Estimated gain on disposal of equipment (note 9) | – | 5 | ||||
| $ | 7 | $ | 18 | |||
Estimated business interruption insurance is recorded as a reduction of cost of products sold in each period the mill remains closed. Estimated insurance proceeds to be spent to replace equipment are accounted for as proceeds of disposition, and the resulting gain has been included in other income.
The final amount of the insurance claim will be determined after the mill reconstruction is complete and the mill returns to expected production rates.
9. Other
| July 1 to September 30 | January 1 to September 30 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Foreign exchange gain (loss) on working capital | $ | 2 | $ | 10 | $ | (8 | ) | $ | 19 | |||||||
| Foreign exchange gain (loss) on intercompany financing1 | 4 | 5 | (14 | ) | 9 | |||||||||||
| Foreign exchange gain (loss) on long-term debt | (6 | ) | (25 | ) | 22 | (52 | ) | |||||||||
| Gain on disposal of WestPine equipment (note 8) | – | – | 5 | – | ||||||||||||
| Loss on power agreements | – | (17 | ) | (19 | ) | (29 | ) | |||||||||
| Other | 1 | 5 | 6 | 5 | ||||||||||||
| $ | 1 | $ | (22 | ) | $ | (8 | ) | $ | (48 | ) | ||||||
| 1. Relates to US$200 million of financing provided to our U.S. operations. IAS 21 requires that the exchange gain or loss be recognized through earnings as the financing is not considered part of our permanent investment in our U.S. subsidiaries. The balance sheet amounts and related financing expense are eliminated in these consolidated financial statements. | ||||||||||||||||
In March 2016 the termination of our three-year power strip agreement was negotiated. In addition, Capital Power Corporation gave notice of its intent to terminate its role as buyer of the Sundance C Power Arrangement (“the Acquired PPA”) effective March 24, 2016. As a result of this termination, our role as a party to the Power Syndicate Agreement also terminated. These agreements had provided us with a portion of the electricity generated from two power plants in Alberta at substantially predetermined rates.
Prior to the termination we recorded the agreements at fair value with the resulting gains or losses being recorded through other income. As at the release date of these condensed consolidated financial statements, we have been advised that the Government of Alberta has challenged the right of Capital Power Corporation to terminate the Acquired PPA. If the termination is successfully challenged additional losses would be incurred, although the amount of such losses is not reasonably determinable at this time. The amount of such loss will be recorded through earnings at such time as it can be determined.
10. Tax provision
The tax provision differs from the amount that would have resulted from applying the British Columbia statutory income tax rates to earnings before tax as follows:
| July 1 to September 30 | January 1 to September 30 | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Income tax expense at statutory rate of 26% | $ | (40 | ) | $ | (15 | ) | $ | (85 | ) | $ | (42 | ) | ||||
| Non-taxable amounts | (1 | ) | 12 | 9 | 10 | |||||||||||
| Rate differentials between jurisdictions and on specified activities | (3 | ) | 3 | (7 | ) | 4 | ||||||||||
| Increase in Alberta provincial tax rate | – | – | – | (7 | ) | |||||||||||
| Unrecognized capital losses | – | (3 | ) | 1 | (6 | ) | ||||||||||
| Other | 1 | 1 | 4 | – | ||||||||||||
| Tax provision | $ | (43 | ) | $ | (2 | ) | $ | (78 | ) | $ | (41 | ) | ||||
11. Earnings per share
Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.
Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity-settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.
| July 1 to September 30 | January 1 to September 30 | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Earnings | |||||||||||||||
| Basic | $ | 107 | $ | 56 | $ | 247 | $ | 119 | |||||||
| Share option expense (recovery) | 4 | (52 | ) | (21 | ) | (46 | ) | ||||||||
| Equity-settled share option adjustment | – | (1 | ) | (3 | ) | (3 | ) | ||||||||
| Diluted | $ | 111 | $ | 3 | $ | 223 | $ | 70 | |||||||
| Weighted average number of shares (thousands) | |||||||||||||||
| Basic | 79,310 | 82,906 | 80,819 | 83,320 | |||||||||||
| Share options | 799 | 1,207 | 863 | 1,352 | |||||||||||
| Diluted | 80,109 | 84,113 | 81,682 | 84,672 | |||||||||||
| Earnings per share (dollars) | |||||||||||||||
| Basic | $ | 1.35 | $ | 0.67 | $ | 3.06 | $ | 1.43 | |||||||
| Diluted | $ | 1.35 | $ | 0.05 | $ | 2.73 | $ | 0.83 | |||||||
12. Segmented information
| Pulp & | Corporate | ||||||||||||||||||||
| Lumber | Panels | paper | & other | Total | |||||||||||||||||
| July 1, 2016 to September 30, 2016 | |||||||||||||||||||||
| Sales | |||||||||||||||||||||
| To external customers | $ | 788 | $ | 137 | $ | 230 | $ | – | $ | 1,155 | |||||||||||
| To other segments | 26 | 2 | – | – | |||||||||||||||||
| $ | 814 | $ | 139 | $ | 230 | $ | – | ||||||||||||||
| Operating earnings before amortization | $ | 151 | $ | 33 | $ | 31 | $ | (9 | ) | $ | 206 | ||||||||||
| Amortization | (37 | ) | (3 | ) | (9 | ) | (1 | ) | (50 | ) | |||||||||||
| Operating earnings | 114 | 30 | 22 | (10 | ) | 156 | |||||||||||||||
| Finance expense | (4 | ) | (1 | ) | (2 | ) | – | (7 | ) | ||||||||||||
| Other | 1 | – | 1 | (1 | ) | 1 | |||||||||||||||
| Earnings before tax | $ | 111 | $ | 29 | $ | 21 | $ | (11 | ) | $ | 150 | ||||||||||
| July 1, 2015 to September 30, 2015 | |||||||||||||||||||||
| Sales | |||||||||||||||||||||
| To external customers | $ | 668 | $ | 146 | $ | 230 | $ | – | $ | 1,044 | |||||||||||
| To other segments | 29 | 2 | – | – | |||||||||||||||||
| $ | 697 | $ | 148 | $ | 230 | $ | – | ||||||||||||||
| Operating earnings before amortization | $ | 26 | $ | 29 | $ | 25 | $ | 57 | $ | 137 | |||||||||||
| Amortization | (35 | ) | (3 | ) | (11 | ) | – | (49 | ) | ||||||||||||
| Operating earnings | (9 | ) | 26 | 14 | 57 | 88 | |||||||||||||||
| Finance expense | (5 | ) | (1 | ) | (2 | ) | – | (8 | ) | ||||||||||||
| Other | 3 | – | (4 | ) | (21 | ) | (22 | ) | |||||||||||||
| Earnings before tax | $ | (11 | ) | $ | 25 | $ | 8 | $ | 36 | $ | 58 | ||||||||||
| Pulp & | Corporate | ||||||||||||||||||||
| Lumber | Panels | paper | & other | Total | |||||||||||||||||
| January 1, 2016 to September 30, 2016 | |||||||||||||||||||||
| Sales | |||||||||||||||||||||
| To external customers | $ | 2,288 | $ | 399 | $ | 656 | $ | – | $ | 3,343 | |||||||||||
| To other segments | 79 | 6 | – | – | |||||||||||||||||
| $ | 2,367 | $ | 405 | $ | 656 | $ | – | ||||||||||||||
| Operating earnings before amortization | $ | 364 | $ | 69 | $ | 49 | $ | 20 | $ | 502 | |||||||||||
| Amortization | (109 | ) | (9 | ) | (27 | ) | (2 | ) | (147 | ) | |||||||||||
| Operating earnings | 255 | 60 | 22 | 18 | 355 | ||||||||||||||||
| Finance expense | (13 | ) | (3 | ) | (6 | ) | – | (22 | ) | ||||||||||||
| Other | (2 | ) | 3 | (21 | ) | 12 | (8 | ) | |||||||||||||
| Earnings before tax | $ | 240 | $ | 60 | $ | (5 | ) | $ | 30 | $ | 325 | ||||||||||
| January 1, 2015 to September 30, 2015 | |||||||||||||||||||||
| Sales | |||||||||||||||||||||
| To external customers | $ | 1,998 | $ | 409 | $ | 680 | $ | – | $ | 3,087 | |||||||||||
| To other segments | 82 | 6 | – | – | |||||||||||||||||
| $ | 2,080 | $ | 415 | $ | 680 | $ | – | ||||||||||||||
| Operating earnings before amortization | $ | 188 | $ | 76 | $ | 63 | $ | 45 | $ | 372 | |||||||||||
| Amortization | (100 | ) | (10 | ) | (30 | ) | (1 | ) | (141 | ) | |||||||||||
| Operating earnings | 88 | 66 | 33 | 44 | 231 | ||||||||||||||||
| Finance expense | (14 | ) | (3 | ) | (6 | ) | – | (23 | ) | ||||||||||||
| Other | 5 | (2 | ) | (7 | ) | (44 | ) | (48 | ) | ||||||||||||
| Earnings before tax | $ | 79 | $ | 61 | $ | 20 | $ | – | $ | 160 | |||||||||||
| The geographic distribution of external sales is as follows1: | ||||||||||||
| July 1 to September 30 | January 1 to September 30 | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Canada | $ | 261 | $ | 223 | $ | 759 | $ | 669 | ||||
| United States | 666 | 588 | 1,942 | 1,672 | ||||||||
| China | 118 | 140 | 351 | 470 | ||||||||
| Other Asia | 94 | 76 | 242 | 224 | ||||||||
| Other | 16 | 17 | 49 | 52 | ||||||||
| $ | 1,155 | $ | 1,044 | $ | 3,343 | $ | 3,087 | |||||
| 1. Sales distribution is based on the location of product delivery. | ||||||||||||
For more information:
Larry Hughes
Vice-President, Finance and Chief Financial Officer
Rodger Hutchinson
Vice-President, Corporate Controller and Investor Relations
(604) 895-2700
www.westfraser.com
