Acadian Timber’s Earnings Call: Mixed Results and Strategic Moves

Acadian Timber ((TSE:ADN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Acadian Timber’s recent earnings call presented a mixed sentiment, highlighting both significant achievements and notable challenges. While the company made substantial progress in sales volume growth and internal operations in Maine, these were overshadowed by declines in revenue, pricing, and profitability metrics. Despite these hurdles, Acadian’s financial position remains robust, though operational challenges and market conditions contribute to a cautious outlook.

Increased Sales Volume

Acadian Timber reported an increase in both timber sales volumes from timberlands and timber services activity compared to the same period last year. The company saw a $1 million year-over-year increase in timber sales and services revenue, with timber sales volume, excluding biomass, rising by 3%.

Biomass Sales Volume Surge

The company experienced a significant surge in biomass sales volumes, which doubled compared to the first quarter of 2024. This increase highlights a growing demand for biomass within the market.

New Brunswick Operations Growth

Sales for New Brunswick timberlands grew to $22.1 million from $19.1 million in the prior year period. This growth was driven by a 15% increase in sales volume, excluding biomass, due to strong demand for sawlogs.

Establishment of Internal Logging Operations in Maine

To address limited contractor availability, Acadian established internal logging operations in Maine. This strategic move involved purchasing harvesting equipment and acquiring additional logging assets, with a total cash consideration of $6.9 million.

Strong Financial Position

Acadian ended the quarter with a net liquidity position of $17.6 million, including cash balances and undrawn revolving credit facilities. The company also refinanced $46 million of long-term debt at a rate of 5.25%, underscoring its strong financial footing.

Decreased Revenue

The company generated sales of $24.8 million compared to $28.8 million in the prior year period. This decrease was largely attributed to the absence of carbon credit sales in the first quarter of 2025.

Decline in Pricing

Pricing for softwood sawlogs and hardwood sawlogs decreased by 10% and 8%, respectively. The overall weighted average selling price, excluding biomass, fell by 5% compared to the same quarter last year.

Adjusted EBITDA and Margin Decline

Acadian’s adjusted EBITDA for the first quarter was $4.7 million, down from $10.6 million in the prior year period. The adjusted EBITDA margin also declined to 19% from 37%.

Challenges in Maine Operations

Sales in Maine during the first quarter were $2.8 million, down from $4.8 million in the same period last year. Timber sales volume, excluding biomass, decreased by 44% due to reduced contractor capacity and unfavorable weather conditions.

Negative EBITDA in Maine

The adjusted EBITDA for Maine was negative $700,000, compared to $1.2 million in the prior year period, with an adjusted EBITDA margin of negative 24% compared to 24%.

Forward-Looking Guidance

Looking ahead, Acadian Timber provided guidance for the remainder of the year, focusing on several key metrics and operational strategies. Despite a decrease in sales primarily due to the absence of carbon credit sales, the company expects new internal logging operations in Maine to enhance production capacity and reduce costs throughout 2025. Acadian anticipates stable demand for softwood sawlogs and potential pricing increases for hardwood sawlogs, while near-term demand for pulpwood may remain subdued. The registration of additional carbon credits is expected in Q2, alongside further real estate and renewable energy investments planned for the year.

In conclusion, Acadian Timber’s earnings call reflected a mixed sentiment, with notable achievements in sales volume growth and internal operations, yet overshadowed by declines in revenue, pricing, and profitability. The company’s strong financial position offers a buffer against operational challenges and market conditions, with strategic initiatives poised to address these hurdles moving forward.