TimberWest Forest Corp. (TWF.UN), Western Canada's largest owner of private forestlands, reported weak third-quarter results and expects much the same for the remainder of the year.
The Vancouver-based company generated a distributable cash loss for the quarter of $3.8 million, or $0.05 per stapled unit, compared with distributable cash losses of $5.4 million in the last quarter and $6.3 million in 2008's third quarter.
For the year to date, TimberWest racked up losses of $24.5 million, or $0.32 per stapled unit.
President and CEO Paul McElligott said that bleak near-term prospects mean the company will continue to conserve cash and protect its balance sheet while continuing to defer private-land harvests.
"We're also doing everything we can to manage costs and are aggressively pursuing real estate sales opportunities," said McElligott.
While there were small increases in U.S. housing starts during the quarter, McElligott added that they're at significantly lower than historical levels.
However, housing starts in Japan were up slightly from historic lows, helping Asian log markets.
The company, a major exporter of logs to the Japanese, Korean and U.S. Pacific Northwest markets, said log sales volumes performed better than both the U.S. and domestic markets during the quarter. It added, however, that log prices are not showing any improvement yet.
With approximately 17% of the company's private forest lands on Vancouver Island identified as having greater value as real estate properties, TimberWest's real estate division, Couverdon, fared better in the quarter.
Real estate sales totalled $7.9 million, bringing year-to-date revenue to $14.8 million.
But year to date, per-acre real estate sales values averaged $3,755, which was well below the $10,008 realized in the same period last year, noted RBC Dominion Securities Inc. analyst Paul Quinn.
However, he said that direct comparisons were difficult without knowing the characteristics of the properties.
Quinn described the company's overall results as "weak as expected," but said its bank covenant amendments were positive.
TimberWest said it has reached an agreement with its lenders to waive EBITDA covenants for the remaining term of its loan through 2010 and 2011.
The maximum availability under the line is set at $220 million for 2010 and $215 million for 2011, with the potential to increase this maximum to $230 million if certain minimum EBITDA targets are achieved.
On the Toronto Stock Exchange, TimberWest's stapled units were trading at $3.78 on October 23, up from $2.26 in March. In November 2008, they reached a 52-week high of $7.64.