Timberwest quarterly results are modestly better

TimberWest generated modestly better earnings and distributable cash this quarter as compared to last quarter despite extremely weak business conditions.

While log prices are not showing any improvement yet, and log sales realizations are under pressure with a strengthening Canadian dollar, Timberwest says they have begun to see stability in prices with log sales volumes firming up for the first time in many quarters. Real estate sales were also higher this quarter at $7.9 million at values averaging $4,060 per acre.

Timberwest generated a distributable cash loss for the quarter of $3.8 million, or $0.05 per Stapled Unit. That compares to a distributable cash loss of $5.4 million, or $0.07 per Stapled Unit for last quarter and a loss of $6.3 million, or $0.08 per Stapled Unit in Q3 2008. Year to date, the distributable cash loss was $24.5 million, or $0.32 per Stapled Unit, including $9.0 million of financing costs, compared to a distributable cash loss of $13.4 million, or $0.17 per Stapled Unit, for the first three quarters of 2008.

"While there were small increases in US housing starts during Q3, 2009, they are at significantly lower than historical levels with housing starts in Japan up slightly from historic lows. Asian log markets and hence our sales volumes continued to perform better than both the US and domestic markets during the quarter," said Paul McElligott, President and Chief Executive Officer, TimberWest. "In spite of the slight improvement in volumes, we have not experienced any improvement in underlying prices."

"Our outlook for the remainder of the year remains weak as we expect the very difficult economic and business conditions to continue," added McElligott. "As a result, the Company will continue to defer private land harvests, conserve cash, and protect its balance sheet. We are also doing everything we can to manage costs and are aggressively pursuing real estate sales opportunities." As previously announced, the Company is deferring the quarterly cash distributions on the Stapled Units and has elected to pay interest on the convertible debentures in kind by the issuance of additional convertible debentures. "We continue to have a very positive view of the mid- and long-term potential for both our timberland and real estate businesses. The fact we own outstanding assets located in one of the most attractive locations in the world means that TimberWest's prospects are strong as economic conditions improve."

Read more: TimberWest announces 2009 third quarter results and bank covenant amendments (Timberwest)