Acadian Timber Q4 2025 Earnings Report

Acadian Timber EPS Results

• Actual EPS: C$2.18
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Acadian Timber Revenue Results

• Actual Revenue: $21.98 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Acadian Timber Announcement Details

• Quarter: Q4 2025
• Date: 2/11/2026
• Time: After Market Closes
• Conference Call Date: Thursday, February 12, 2026
• Conference Call Time: 1:00PM ET

Acadian Timber (TSE:ADN) Corp is a Canada-based supplier of primary forest products in Eastern Canada and the Northeastern United States. The company's operating segments include NB Timberlands and Maine Timberlands. It generates maximum revenue from the NB Timberlands segment. The company's product includes softwood and hardwood sawlogs, pulpwood and biomass by-products.

Acadian Timber Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q4 results showed improvement with sales of CAD 22.0M (vs. CAD 20.2M), adjusted EBITDA of CAD 5.2M (margin 23%), CAD 1.9M free cash flow, and dividends of CAD 5.3M paid in the quarter.
• Negative Sentiment: The strategic shift in Maine to internal harvesting caused a temporary production shortfall and operating costs roughly 30% above long‑term targets, though production improved in Q4 and management targets ~10% below allowable volumes for 2026.
• Positive Sentiment: New Brunswick outperformed with sales of CAD 19M, volumes up 23% (ex‑biomass), a 15% reduction in weighted average variable costs, and improved adjusted EBITDA margin to 29%.
• Negative Sentiment: Market and policy headwinds persist — weak hardwood lumber and pulp demand plus escalating U.S. duties/tariffs on softwood and wood products could dampen cross‑border demand and put pressure on pricing.
• Positive Sentiment: Near‑term upside from carbon and real estate initiatives — management expects registration of ~400,000 carbon removal credits, is evaluating additional projects across remaining acres, and plans continued residential lot sales and renewable energy investments.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Acadian Timber fourth quarter 2025 analyst conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Wood, Chief Financial Officer. Ma'am, please go ahead.

[Susan Wood, CFO at Acadian Timber]

Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's fourth quarter conference call. With me on the call today is Adam Sheparski, Acadian's President and Chief Executive Officer. Before discussing Acadian's results, I will first remind everyone that in discussing our fourth quarter and full year financial and operating performance, the outlook for 2026, and in responding to your questions, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com. I'll begin by outlining the financial and operational highlights for our fourth quarter ended December 31st, 2025.

[Susan Wood, CFO at Acadian Timber]

Adam will then comment on our operational activities and financial results for the full year, as well as our outlook for the remainder of 2026. Acadian delivered solid fourth quarter results, with overall freehold timber sales volumes, excluding biomass, 21% higher than the fourth quarter of 2024. Increased freehold sales volumes were partially offset by a decrease in our weighted average selling price, in large part due to changes in product mix, hauling distances, and fuel adjustment surcharges and lower timber services activity. Sales for the fourth quarter were CAD 22 million, an increase from CAD 20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions.

[Susan Wood, CFO at Acadian Timber]

In New Brunswick, a favorable shift in customer mix resulted in more harvesting on our freehold timberlands and less on Crown licensed timberlands, which increased freehold sales and reduced timber services revenue. Contractor availability improved in New Brunswick. However, limited trucking capacity continued to be a significant challenge in Maine. Softwood sawlog pricing decreased 2% year-over-year, with a higher value product mix offset by shorter hauling distances. Hardwood sawlog pricing declined 10%, reflecting a lower value product mix and ongoing weakness in lumber markets. Softwood pulpwood pricing was consistent with the prior year period, while hardwood pulpwood pricing decreased 12% due to shorter hauling distances and lower fuel adjustment surcharges. Biomass sales volumes were 12% higher than Q4 2024, while pricing decreased 12% as a greater proportion of sales were made roadside rather than delivered.

[Susan Wood, CFO at Acadian Timber]

Overall, our weighted average selling price, excluding biomass, decreased 6% year-over-year. Operating costs and expenses were $17.7 million during the fourth quarter, compared to $17 million during the fourth quarter of 2024. The increase was primarily due to higher sales volumes and higher land management costs, partially offset by lower timber services activity. In New Brunswick, weighted average variable costs decreased due to a higher proportion of softwood versus hardwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and reduced fuel adjustment costs. In Maine, cost of sales per cubic meter increased as compared to the prior year period due to lower production levels.

[Susan Wood, CFO at Acadian Timber]

Adjusted EBITDA for the fourth quarter was CAD 5.2 million, up from CAD 3.7 million in the prior year period, and adjusted EBITDA margin improved to 23%, compared to 18% in Q4 2024. Our net income for the fourth quarter was CAD 39.7 million, or CAD 2.18 per share, compared to CAD 5.6 million, or CAD 0.32 per share in the same period of 2024. The increase in net income was largely due to the impact of higher gains on non-cash fair value adjustments in 2025 compared to 2024, partially offset by lower operating income and higher income tax expense. Acadian generated CAD 1.9 million of free cash flow and declared dividends of CAD 5.3 million to our shareholders during the fourth quarter, or CAD 0.29 per share.

[Susan Wood, CFO at Acadian Timber]

I'll now move into the fourth quarter results for our New Brunswick operations. Sales for our New Brunswick timberlands were CAD 19 million, up from CAD 17.2 million in the prior year period. Sales volume, excluding biomass, increased 23%, driven by increased contractor availability and a favorable shift in customer mix, which shifted harvesting volumes from Crown licensed timberlands to our freehold timberlands. Favorable weather conditions further supported higher sales volumes. With regard to softwood sawlogs, demand was strong and volumes increased 54% compared to Q4 2024, largely due to the favorable shift in customer mix noted earlier. Pricing was consistent with the prior year period, supported by modest improvement in softwood lumber markets and a higher value product mix, partially offset by shorter hauling distances. Hardwood sawlogs demand and pricing were negatively affected by weakness in end-use markets.

[Susan Wood, CFO at Acadian Timber]

Sales volumes declined 23% and pricing decreased 12% year-over-year, reflecting both market conditions and a lower-value product mix. Softwood pulpwood demand was also steady. Volumes increased 21% in New Brunswick, and pricing was consistent year-over-year. Hardwood pulpwood volumes decreased 18% as compared to Q4 2024, with demand impacted by tariff uncertainty. Pricing decreased 13% due to shorter hauling distances and lower fuel adjustment surcharges. Overall, New Brunswick's weighted average selling price, excluding biomass, decreased 6% as compared to Q4 2024. Operating costs and expenses were CAD 13.6 million during the fourth quarter, compared to CAD 13.4 million in the prior year period. Higher costs associated with increased freehold sales volumes were offset by lower timber services activity and reduced weighted average variable costs.

[Susan Wood, CFO at Acadian Timber]

Weighted average variable costs, excluding biomass, decreased 15% compared to the fourth quarter of 2024, due to a higher proportion of softwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances, and lower fuel adjustment costs. New Brunswick generated CAD 5.5 million of adjusted EBITDA for the fourth quarter, up from CAD 4.2 million in the prior period. Adjusted EBITDA margin improved to 29%, compared to 24% last year. Switching over to Maine. Sales during the fourth quarter totaled $3 million, consistent with Q4 of last year. Sales volume, excluding biomass, increased 5% compared to the same period of 2024, supported by more favorable weather conditions. However, deliveries were hindered by limited trucking capacity. Softwood sawlog volumes increased 12%, although pricing decreased 12% in U.S. and Canadian dollar terms.

[Susan Wood, CFO at Acadian Timber]

Pricing was impacted by the incurrence of stumpage sales, which did not occur in the fourth quarter of 2024, and increased roadside sales, partially offset by a higher-value product mix. Excluding stumpage sales, softwood sawlog pricing increased 6%. Hardwood sawlog volumes were negligible during the fourth quarter of the year. Softwood pulpwood volumes were also negligible in Maine due to the extended shutdown of a major softwood pulpwood customer. Hardwood pulpwood volumes were consistent with the prior period, though pricing decreased 6% due to lower demand. Overall, the weighted average selling price in Maine, excluding biomass, decreased 8% compared to the fourth quarter of 2024, primarily due to stumpage sales. Excluding stumpage sales, the weighted average selling price, excluding biomass, increased 3%.

[Susan Wood, CFO at Acadian Timber]

Operating costs and expenses for the fourth quarter were $3.8 million, compared to $3.3 million during the same period in 2024, as a result of higher average operating costs and expenses per cubic meter produced. Adjusted EBITDA for the quarter was -$53,000, compared to -$223,000, and adjusted EBITDA margin was -2%, compared to -7% in the prior period. Lower operating income was offset by higher gains on sale of timberlands and other fixed assets. With respect to Acadian's financial position at the end of the quarter, it remained strong, ending with a net liquidity position of $17.4 million, including a cash balance of $4.8 million, and our revolving credit facilities, which remain undrawn. With that, I'll turn the call over to Adam.

[Adam Sheparski, President and CEO at Acadian Timber]

Thank you, Susan, and good afternoon, everyone. As always, health and safety remain Acadian's top priority. I'm pleased to report that we had no recordable safety incidents during the fourth quarter. As we have said many times, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business, and incident reduction continues to be a primary focus. 2025 was another busy year for Acadian. As part of our year-end review, I want to again highlight the meaningful steps we took to address the ongoing challenge of limited contractor availability in Maine by establishing our own internal logging operations. In January, we purchased several pieces of harvesting equipment and hired equipment operators. Then, in February, we acquired additional logging and related assets, including harvesting, trucking, and road building equipment, and related real estate.

[Adam Sheparski, President and CEO at Acadian Timber]

These assets, combined with an established workforce, constituted an operational logging business, which has operated on the Acadian land base for many years. As part of the transition, some operations are, and will continue to be, performed by external contractors in Maine, including a significant portion of our trucking. During 2025, we experienced a shortfall in external trucking capacity, which impacted our ability to meet delivery demands. To address this, we are actively expanding our contractor network, working with our customers to align on solutions, and exploring options within our internal operations to ensure greater reliability moving forward. Our strategic transition in Maine from contractor-based logging to internal logging operations has temporarily reduced production volumes.... During 2025, production volumes were below anticipated long-term levels, and operating costs per cubic meter of timber produced remained elevated relative to long-term targets by approximately 30% as of the fourth quarter.

[Adam Sheparski, President and CEO at Acadian Timber]

The shift to a more fixed cost structure has also changed our historical cost patterns, making costs less directly tied to revenue, which is more noticeable during periods of lower sales volumes. To support long-term improvement, we are investing in operator training and optimizing equipment utilization to enhance efficiency, build long-term capabilities, and ensure sustained cost improvements. We expanded the operational workforce in the third quarter, and production levels notably improved in the fourth quarter and have continued to improve since. Turning to our operating and financial results for the year, Acadian's 2025 revenues for timber sales and services were $87 million, compared to $91.6 million in 2024. In 2024, carbon credit sales contributed an additional $24.6 million to total sales, while no carbon credit sales occurred in 2025.

[Adam Sheparski, President and CEO at Acadian Timber]

Adjusted EBITDA totaled $15.8 million, compared to $38.9 million during 2024, and adjusted EBITDA margin was 18%, compared to 33% in the prior year. Overall, we achieved solid results from our timber operations in 2025, despite a multitude of challenges and amid a high level of economic uncertainty. We are very pleased with the performance of our New Brunswick operations, which delivered increased sales and sales volumes, lower variable costs, and higher adjusted EBITDA as compared to 2024. New Brunswick's steady operations helped to offset the operational challenges in Maine. Overall, demand for our timber products was mixed but generally stable. Despite the heightened economic uncertainty, underscoring the resilience of Northeast regional log markets, timber pricing softened modestly, but remained relatively stable over the year.

[Adam Sheparski, President and CEO at Acadian Timber]

Timber sales volume, excluding biomass, was consistent year-over-year, but was offset by a decrease in our weighted average selling price and lower timber services activity. New Brunswick benefited from increased contractor capacity and delivered a 10% increase in sales volumes, excluding biomass. In contrast, Maine sales volumes declined 40%, reflecting unfavorable weather in the first half of the year, limited trucking capacity, and the short-term productivity impacts of our operational transition. Our weighted average selling price for 2025 was 4% lower than 2024. Softwood sawlog pricing was consistent year-over-year, supported by modest improvements in end-use markets. Softwood pulpwood demand started low early in the year, which contributed to a 5% decrease in pricing year-over-year, but improved in the second half of the year.

[Adam Sheparski, President and CEO at Acadian Timber]

Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices and, combined with a lower value product mix, resulted in a 7% decrease in pricing from 2024. However, demand for Acadian's hardwood sawlogs remained stable. Hardwood pulpwood demand softened due to tariff-related uncertainty, and shorter hauling distances contributed to a pricing decrease of 3%. Operating costs and expenses related to timber sales and services were relatively consistent, with lower average costs in New Brunswick offset by higher average costs in Maine. Now turning to our outlook for the remainder of 2026. Near-term pressures on end-use markets have continued, with trade policy developments adding further complexity for forest products companies on both sides of the border. The escalation of U.S. duties on Canadian softwood lumber, along with tariffs on select wood-based products, poses a potential risk to Canadian exporters and may dampen cross-border demand.

[Adam Sheparski, President and CEO at Acadian Timber]

That said, macroeconomic indicators remain supportive. North American interest rates are easing, and the outlook for U.S. housing starts is steady at approximately 1.38 million starts in 2026, compared to 1.35 million in 2025. We remain confident that the stability of the Northeastern forestry sector, combined with long-term demand for new homes and repair and remodel activity, will support the long-term demand for our products. On the operations side, we maintained sufficient contractor availability in New Brunswick through 2025, and we expect this to continue into 2026. As I mentioned earlier, production from our internal harvesting operations in Maine improved during the fourth quarter of 2025, and we expect this to continue through the winter, supporting further progress towards our targeted cost structure.

[Adam Sheparski, President and CEO at Acadian Timber]

We do expect production levels to ease somewhat in the second and third quarters of 2026, reflecting the usual spring slowdown and lower productivity of the harvest stands planned for the warmer months. Demand for Acadian sawlogs continues to be driven by regional supply and demand and is expected to remain stable in the near term, while pricing may remain challenged until end-use markets improve. Demand and pricing for softwood pulpwood and hardwood pulpwood is expected to remain at reduced levels in the near term. With respect to voluntary carbon credits, demand and pricing are expected to remain stable. Registration of the next batch of credits for our ongoing project in Maine was delayed in 2025 as a result of transitioning our project to version 2.1 of the ACR's Improved Forest Management Protocol.

[Adam Sheparski, President and CEO at Acadian Timber]

However, we are expecting registration in the near term, which is expected to be approximately 400,000 credits. While the updated protocol may result in slightly fewer total credits than originally expected, all credits generated will be carbon removal credits, which are generally more attractive to customers and expected to command higher pricing. Beyond our current project, we are also evaluating future opportunities to develop additional projects for the remaining 900,000 acres under either the Canadian compliance protocol that was finalized in 2024, or voluntary programs similar to our current project. We also expect to remain active in our real estate business in 2026, as we begin selling residential lots and continue pursuing investments and partnerships in renewable energy in both Maine and New Brunswick.

[Adam Sheparski, President and CEO at Acadian Timber]

In closing, our priorities for 2026 remain clear: We will lead with the highest standards of safety and environmental stewardship. We will stay focused on achieving the best possible margins across our product lines, and we will keep pushing targeted improvements throughout the business to strengthen cash flow and support long-term value. A key focus for 2026 will be improving productivity in our internal harvesting operations in Maine, while keeping a close eye on costs. We will also continue working closely with our contractors in both New Brunswick and Maine to meet our harvesting goals and ensure we are meeting the delivery demands of our customers. As always, our work is grounded in sustainable forestry practices. That commitment will continue to guide us as we strengthen the business and deliver long-term value for our shareholders. With that, we are now available to take your questions. Operator?

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question will come from the line of Matthew McKellar with RBC Capital Markets. Your line is open. Please go ahead.

[Matthew McKellar, VP at RBC Capital Markets]

Thanks, and good afternoon. First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production's continued to improve into Q1. Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then second, you noted that operating costs per cubic meter are about 30% above the long-term target. Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs? Thanks.

[Adam Sheparski, President and CEO at Acadian Timber]

Thanks, Matthew. Starting with your first question regarding volumes, how we see it, I think the easiest way to address that is to look at our allowable volumes on an annual basis, as we disclose in our AIF, call that 240,000 cubic meters. Probably about 10% less than that, just as we have some marketability issues with, you know, softwood pulpwood is really what it comes down to. So I would take approximately 10% off of that to give you a volume for the rest of the year, for 2026. That's our target. We believe we can achieve that. Regarding the second question on the 30% cost levers, most of our levers are internally generated through the internal logging operations.

[Adam Sheparski, President and CEO at Acadian Timber]

You know, it's a very fixed cost structure that we are operating in right now. You know, even some of the things that you would think would be quite variable, like fuel, were, you know, over the last 12 months, we've realized it's actually quite fixed in a lot of the equipment, believe it or not. And productivity is just gonna be so crucial to achieving that 30%. But, most of, if not all of that 30%, is under our control, as far as productivity is concerned.

[Matthew McKellar, VP at RBC Capital Markets]

Okay, that's helpful. Thank you. Next for me, could you maybe just talk a little bit about how U.S. tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side? And with that, how are you thinking about risk to maybe volumes and pricing, if those tariffs end up stepping higher into 2027? Thank you.

[Adam Sheparski, President and CEO at Acadian Timber]

Yeah. Great question. Tariff duties have really been causing a lot of noise in the news in particular. Hardwood is an interesting one for Acadian. Hardwood timber, in particular, is probably more important of a conversation than hardwood lumber, especially in our region. Hardwood timber volumes across the region, or the supply of hardwood timber, logs in particular, is expected to continue to decrease. So more or less supporting our volumes moving forward. I think where we find ourselves right now is these end-use markets, which are probably being driven by cabinets, as you say, the number of things crossing the border, home starts, for instance, you know, less hardwood floors, less cabinets. That's keeping the price of end-use markets or hardwood lumber, the pricing down.

[Adam Sheparski, President and CEO at Acadian Timber]

So it's hard for us to push through pricing. Volume isn't the problem for Acadian, for hardwood sawlog. It's being able to push that pricing through to our customers and keep them running, to be frank. And so that's what we're remaining focused on is those hardwood lumber markets and pushing through as many price increases as we possibly can, as those hopefully will improve over the next near to midterm.

[Matthew McKellar, VP at RBC Capital Markets]

Great. That's helpful. If I could just sneak one last one in.

[Adam Sheparski, President and CEO at Acadian Timber]

Sure.

[Matthew McKellar, VP at RBC Capital Markets]

You brought up, you know, trucking constraints, and certainly this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December.

[Adam Sheparski, President and CEO at Acadian Timber]

Mm-hmm.

[Matthew McKellar, VP at RBC Capital Markets]

Is that, something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one? Thanks.

[Adam Sheparski, President and CEO at Acadian Timber]

Yeah, it's a great question. We've been talking about it internally, and literally that's all we've been doing is talking about it. We've been talking a lot about AI and data, especially as it relates to inventory, which is really, really neat. And some of the information that's coming out and some of the data that we're receiving has been really interesting to consume. Nothing obviously to report. On the trucking side, there probably is some availability for us in the future when those systems get refined, because we do have a significant amount of off-road hauling that happens on our roads that are restricted. So there is potentially something there. We are keeping an eye on it, but certainly haven't done anything in that regard as of yet.

[Adam Sheparski, President and CEO at Acadian Timber]

But, I would say the off-road availability to Acadian, which you know, locally, you probably don't realize, but locally is a very big benefit to us to allow us to do hauling a lot longer than a lot of our friends here in New Brunswick, and would lend itself to an autonomous driving vehicle as well.

[Matthew McKellar, VP at RBC Capital Markets]

Thanks very much for all the color. I'll turn it back.

[Adam Sheparski, President and CEO at Acadian Timber]

Thanks, Matthew.

[Operator]

Thank you, and I would like to hand the conference back over to Adam Sheparski for closing remarks.

[Adam Sheparski, President and CEO at Acadian Timber]

Thanks, operator. On behalf of the board and management of Acadian, I would like to thank all of our shareholders for their ongoing support. Thank you, stay safe, and we look forward to you joining us for our virtual AGM and first quarter of 2026 conference call, both of which are on May seventh. Goodbye.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Adam Sheparski, President and CEO
• Susan Wood, CFO

Analysts

• Matthew McKellar, VP at RBC Capital Markets