Ainsworth Lumber Turns To Q3 Profit, Provides Bullish Outlook; Shrs Jump 6% To Just Shy of 52 Week High Wednesday
Ainsworth Lumber Co Ltd (ANS.TO), which jumped 6% to just shy of a 52 week high Wednesday, recorded net income from continuing operations of $32.6 million in the third quarter of 2012, compared to a net loss of $58.9 million in the third quarter of 2011, boosted by much higher sales. Basic and diluted EPS was $0.32. According to Yahoo! Finance, the average earnings estimate was $0.14.
ANS said the turn to profit is primarily the result of a $61.2 million increase in foreign exchange gain on long-term debt, a $36.5 million increase in gross profit (sales less cost of products sold (exclusive of amortization)), and a $12.5 million increase in gain on derivative financial instrument. The increase was partially offset by a $15.4 million increase in income tax expense, a $1.9 million increase in foreign exchange loss from operations, and a $0.8 million increase in interest on long-term debt.
Sales were $115.6 million in the third quarter of 2012, an increase of $43.8 million from the third quarter of 2011 due to an improvement in market prices and an increase in shipment volumes.
On its outlook it said: "The U.S. housing market during the quarter continued to show signs of improvement with significant increases in housing starts and building permits being registered year-over-year and sequentially. On a seasonally adjusted annual rate, housing starts during the quarter increased 28% relative to the same period last year and 7% relative to the second quarter of 2012. More importantly, housing permits, which are a measure of future demand, increased 33% relative to the same period last year and 11% relative to the second quarter of 2012. Industry forecasts of U.S. housing starts for 2012 and 2013 have recently been raised to 760,000 and 930,000 respectively. These levels are a marked improvement relative to the 610,000 starts recorded in 2011.
"We believe a recovery in U.S. housing is now underway and should accelerate over the next 12 to 24 months. This will be positive for Ainsworth, notwithstanding certain idle capacity in the industry. We will be prudent in the start up of our High Level mill and will do so when we have identified a market for its production in both the North American and export markets. The High Level mill would represent a 50% increase in our current operating capacity and is a significant growth opportunity. It is one of the largest production facilities in the industry and will be an efficient producer, benefiting from an abundance of high quality, low cost fiber."
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