Earnings are out, after close. The good news is that they're cashflow positive, but that was more or less expected given improving lumber prices. More troubling however is that Eacom still recorded a Net Loss for the quarter. I was hoping that increased demand, increased pricing would result in a positive Net Income. I guess this stock won't be shooting up to 30¢ on this news, so it's still a bit more of a wait and see on improvements in the US Housing sector.
Lumber prices were higher, but production was down, resulting in lower quarter over quarter revenue.
Although ETR provides a rationale for lower production, I nevertheless was expecting higher production, and stronger revenue, especially given stronger housing starts in the US.
In theory, the company is using this downtime to invest in some capital improvements at some of its plants to make them more cost efficient, which should bode well for future quarter's profitability; but unfortunately, for the near term, ETR remains a bit of a "show me" story.
The financing costs of > $1 MM contributed to the net loss. I shouldn't be surprised at this, but it tells us that ETR, in order to achieve full profitability, will need even higher lumber prices, and stronger production numbers from even stronger US housing starts. I don't think that this will come until annualized housing starts in the US begin to approach 1 million per year. If the USA falls back into recession, then this milestone will be delayed (for how long is anybody's guess), and ETR's financial situation will continue to suffer.
I'm not selling on this news release; but, by the same token, I won't be buying on this news either.
Just some random thoughts to share with the board.