PRT Announces Results for Third Quarter of 2009
VICTORIA, BRITISH COLUMBIA--(Marketwire - Nov. 4, 2009) - PRT Forest Regeneration Income Fund (the "Fund") (TSX:PRT.UN - News) today announced results for its third quarter ended September 30, 2009. The Fund's interim financial report is enclosed as part of this release.
For the nine month period, the Fund reported operating earnings of $1,271,000 and Cash Available for Distribution of $636,000 ($0.07 per unit) as compared to operating earnings of $3,269,000 and Cash Available for Distribution of $2,355,000 ($0.25 per unit) respectively for 2008. Operating Earnings and Cash Available for Distribution decreased year-over-year due to approximately 27% lower seedling volumes in 2009. Operating Earnings and Cash Available for Distribution are terms which do not have standardized meaning under Canadian generally accepted accounting principles, and may not be comparable to similar measures provided by other reporting entities. Cash Available for Distribution is the Fund's measure of free cash flow from operating activities; however, in the current economic environment, the Fund is not making distributions in order to preserve cash flow for debt coverage. Standardized Distributable Cash - a comparable measure of cash flow prepared under guidance issued by the Canadian Institute of Chartered Accountants - totaled $0.50 per unit for the first nine months of 2009, as compared to $0.96 per unit in 2008.
The reported net loss for the nine month period was $1,317,000 or ($0.14) per unit compared to a net loss of $19,000,000 for the comparable period in 2008 which was impacted by a $19.2 million non-cash write-down of goodwill. Excluding the write down, the net earnings for the 2008 nine month period would have been $175,000 ($0.02 per unit).
For the three months ended September 30, 2009, the Fund reported a net loss of $1,404,000 ($0.14 per unit) and Cash Available for Distribution of ($762,000) or ($0.07) per unit. Quarterly results were in line with management's expectations given consideration for the current economic recession and the seasonal nature of PRT's business. The third quarter is typically the lowest seasonal revenue period in PRT's business cycle.
Revenues in the nine month period decreased by $6.3 million or 21.7%, with lower contract volumes and prices being the primary cause. Of note however, is that despite the lower volumes, management estimates that market share remained relatively stable. While production expenditures were scaled to the lower volumes, margins declined due to lower efficiencies of scale and higher relative materials and utility costs. Selling, general and administration costs were 13.5% lower than the first nine months of 2008 due to cost reduction efforts as a response to the economic downturn.
Commenting on the PRT's performance this year, President and CEO, Rob Miller, said, "Despite the significant challenges posed by the forest industry downturn, our employees have been executing well on our operating plan. This was aided by above average growing conditions in several regions this summer. We remain on track to reliably deliver quality crops to our customers' specifications, with good value and a high level of service. These factors are core to our operating philosophy, and together with innovation, cost control and prudent balance sheet management, are essential to running our business successfully for the long term."
"Our current operating strategy is underpinned by our belief that the downturn in seedling demand has been primarily caused by cyclical, rather than structural factors. US housing starts are at unprecedented lows and are well below their long-term trend line. Higher future starts are supported by current and projected demographics. We are encouraged by recent indications that the housing market bottomed in 2009 and has been stabilizing, and expect that seedling markets will gradually improve as house construction recovers and returns to more typical levels. While seedling demand may lag the housing markets slightly, due to the timing of reforestation relative to logging, we are also cognizant of the large and growing reforestation backlog in British Columbia caused by the mountain pine beetle and forest fire damage. When the growing recognition of the importance of our forests to the environment is considered, we see a solid base of opportunities for PRT beyond the current economic cycle. Nevertheless, as an economic recovery could be gradual, we are continuously reviewing capacity, structure, and spending plans to maximize our opportunities during this cycle."
Management's Discussion and Analysis for the Fund is available at www.sedar.com.
About the Fund
PRT is the largest producer of container grown forest seedlings in North America, with 14 nursery locations producing approximately 124 million seedlings in 2009. Units of the Fund are listed for trading on the Toronto Stock Exchange under the trading symbol PRT.UN.
Conference Call and Taped Replay
The Fund will host a conference call to further discuss the matters contained in this press release. The call will take place on Thursday, November 5, 2009 at 11:00 AM PST, 2:00 PM EST. To participate in this conference, please call 1-877-407-8031 or 201-689-8031.
Persons unable to attend the conference call may listen to a recorded version by dialing 1-877-660-6853, account # 286, and the conference ID# 3334626. This option is available through November 12, 2009. A recorded web cast version of the call may also be accessed from the Fund's website at www.prt.com.
The Fund's conference call for the 2009 year end and fourth quarter is expected to take place on March 25, 2010.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations for future order volumes, pricing, operating costs and other expenditures; the outlook for future energy prices; plans and opportunities for capital spending; and other statements contained in this discussion that are not historical fact. Words such as "anticipate", "expect", "potential", "intends", "opportunity", "believes", "may", "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and actual events or results may differ materially. Risks and uncertainties include, but are not limited to, agricultural risks and crop yields, future commodity prices, exchange rate risks, customer credit risks and customer insolvency, liquidity risks, the ability of PRT to comply with its debt covenants, the outlook for the forest industry, the impact of proposed changes to income trust taxation, and other risks identified from time to time in the Fund's annual report, annual information return, prospectus, and other filing documents. These documents are available in electronic form at www.sedar.com, or by contacting the Fund directly. Forward-looking statements are based on current expectations and the Company assumes no obligation to update such information to reflect later events or developments, except as required by law. Readers are cautioned not to place undue reliance on forward looking statements.