Western Forest Products is reporting a net income of $22.8 million in the first quarter of 2013, on sales of $233.8 million, compared to a net income of $14.3 million for the previous quarter, and a net income of $1.7 for the same quarter last year.
EBITDA is $31.9 million for the first quarter, compared to EBITDA of $14.3 million for the fourth quarter of 2012 and $9.4 million for the first quarter of 2012.
“This was the best quarter in company history as we delivered $31.9 million of operating EBITDA. Improved log and lumber markets supported by solid execution from our team led to these record results. We ended the quarter in a sound financial position: no net debt and liquidity of $207 million. With our strong balance sheet we are more capable than ever to reinvest in our business, and consider other capital allocation alternatives that will enhance long term shareholder value,” said Don Demens, Chief Executive Officer.
Western Forest Products is reporting they have spent $11.3 million of the projected total cost of $38.0 million for the Saltair mill upgrade, which is expected to be approximately 60% complete in the third quarter of 2013. This capital project will make Saltair the largest, most efficient single line sawmill on the coast of British Columbia. The upgrades will increase production by approximately 15%, reduce the unit cost of production, and will increase the company’s ability to provide a greater variety of finished products to their customers.
Western’s second project is the development and subsequent installation of automated coastal species lumber grading technology. The company expects this project to be ready in the third quarter and the initial installation will be in the Alberni Pacific sawmill, which will yield benefits later in 2013. The technology will allow the company to better tailor lumber grades to their customer needs and generally improve processing efficiency. Western Forest Products believes this will be the first application of this technology, now in common use in the British Columbia interior mills, on the more challenging coastal species.
On January 28, 2013, Western Forest Products announced that they had entered into a conditional agreement for the sale of their former Woodfibre Pulp Mill site located near Squamish, British Columbia for the gross purchase price of $25.5 million. Closing is subject to certain conditions, and Western will be responsible for satisfactorily remediating the property to applicable environmental standards prior to closing the sale. After incurring the estimated required remediation costs, Western anticipates receiving net proceeds from the sale and remediation of approximately $17 million. Work is currently in progress by the company’s environmental engineers to prepare a detailed assessment of the remediation costs associated with the site. Western expect to have the results of this assessment in the third quarter of 2013.
Western Forest Products said it will continue to pursue further opportunities that may arise to sell non-core or other land assets as appropriate.