Acadian Timber reports slight increase in biomass pricing, 17 per cent drop in sales for 2023

Acadian Timber Corp. has announced its 2023 financial results, reporting adjusted EBITDA for the year of $20.6 million, up from $18.2 million in 2022.

Despite facing operational challenges, including labour shortages and adverse weather conditions, the Edmundston, N.B.-based company said it generated “solid results.”

“Acadian performed well and generated solid results for 2023, despite challenges resulting from labour shortages, unfavourable weather conditions, and inflationary pressures. Demand and pricing for our products remained stable, reflecting the favourable attributes of Northeast regional log markets,” said Adam Sheparski, president and chief executive officer. “We are also pleased with the progress made early in 2024 toward our growth objectives, including executing our first long-term agreement related to renewable energy.”

Biomass updates

Overall, the company reported a modest four per cent increase in biomass pricing over 2022, but noted the sales volume of biomass dropped 17 per cent.

That reduction was attributed to “limited processing capacity combined with fiber availability as biomass represents a by-product of our harvesting operations,” it said.

In the New Brunswick Timberlands area, biomass sales volume declined 28 per cent in 2023, it said, noting the same factors of availability related to harvesting operations.

Overall updates

Biomass is a relatively small component of Acadian Timber’s overall operations. For example, in the last quarter of 2023, the sales mix for its New Brunwsick Timberlands operations were:

• 54% softwood
• 33% hardwood
• 13% biomass

At its operations in Maine, the breakdown in the final quarter of 2023 was:

• 40% softwood
• 47% hardwood
• 13% biomass

It reported sales of $93.5 million in 2023, compared to $90.5 million in 2022. Operating costs and expenses were $73.9 million during 2023, compared to $72.6 million in the prior year, reflecting higher variable costs and increased investment in silviculture.

Outlook

Acadian Timber said it remains “confident” that the stability of the northeastern forestry sector, combined with the long-term demand for new homes and repair and remodel activity, will support the demand for products.

“Although labour markets remain tight, we continued to experience increased contractor availability in New Brunswick as we closed out the year. Management will continue to focus on further increasing our harvesting capacity through 2024,” it said.

Renewable energy

On Feb. 6, 2024, Acadian executed an agreement for the option to lease about 10,000 acres of its Maine timberlands for the purpose of the development, construction, operation, and maintenance of a solar powered electric generating facility, it said.

The agreement includes inspection, development, construction, and commercial operations terms with escalating leasing fees. The incremental cash flows attributable to the inspection and development terms are modest. However, should the project reach the construction term, which is not expected to occur for several years, the incremental cash flows may become material to Acadian, it said.

Carbon credit project

On June 8, 2023, 770,071 voluntary carbon credits were registered on the American Carbon Registry and made available for sale under the project name Anew – Katahdin Forestry Project, it said.

“The total volume of credits expected to be generated from the project over the 10-year crediting period is 1.9 million credits. Our focus has now turned to the marketing and sale of these credits as well as the registration of future tranches,” it said. “We completed our first sale in December 2023. While the volume sold was modest at 1,500 credits, the sale demonstrated solid pricing of $24.85 U.S. per credit.”

This project has provided valuable experience to the Acadian team and has formed the foundation for potential further carbon credit developments in the future, it said.