Net sales at Ainsworth Lumber Co. fell 24.4% during the second quarter, compared to the same period a year ago, to finish at C$80.5 million (US$81.6 million), the company announced Friday. The company did manage to shrink its net loss, however, by almost C$5 million to C$13 million (US$13.2 million).
Adjusted EBITDA, which the Vancouver, B.C.-based company defines a net income (or loss) from continuing operations before amortization, gain on disposal of property, plant and equipment, costs of curtailed operations, stock option expense, finance expense, foreign exchange loss (or gain) on long-term debt, other foreign exchange gains (or losses), income tax expense (or recovery) and non-recurring items, fell 92.3% to C$2.7 million (US$2.7 million). The company cited lower North American oriented strand board (OSB) pricing during the second quarter as the reason for the subdued performance.
Net loss from continuing operations was C$12.9 million (US$13.1 million), an improvement of more than C$4 million over the C$17.8 million (US$18 million) loss the company suffered during the same period last year.
The company said the decrease in net loss was due mainly to a C$27.2 million (US$27.6 million) increase in unrealized foreign exchange gain on long-term debt, a C$3 million (US$3 million) decrease in amortization expense, a C$1.1 million (US$1.1 million) decrease in finance expense and a C$10.9 million (US$11.1 million) increase in income tax recovery, partially offset by a C$33.1 million (US$33.6 million) decrease in gross profit.
Even with the declines in net sales and adjusted EBITDA, Huff remained optimistic about its performance and said it was some decisions the company made during the final quarter of 2010 that allowed it to perform better than expected.
"The decision we made to implement strategic capital projects in the fourth quarter of 2010, which is typically a period of seasonally lower demand, resulted in operational efficiency gains in the second quarter of 2011," said Huff.
He said the company's OSB mill in Barwick, Ontario recorded its highest production volumes since Ainsworth purchased it in 2004. He also said equipment improvements at its 100 Mile House and Grand Prairie mills allowed the facilities to complete changes in product mix.
"Despite persistently challenging market conditions, Ainsworth achieved improvements in operational efficiency at our three OSB mills and a marked increase in overseas sales volumes as we worked to fulfill our commitment to supply our valued, long-term customers in Japan with the building materials they need to continue to their recovery effort," said president and CEO Rick Huff.