HispanicBusiness

Revenues

Lumber sales revenues in the first quarter of 2013 were the same as in the first quarter of 2012. However, we sold 214 million board feet, or approximately 3% less volume this quarter, but achieved 3% higher average prices on the volume sold. Prices increased in the current quarter with commodity lumber and western red cedar ("WRC"), in particular, showing improvements compared to the first quarter of 2012.

Log sales revenues in the first quarter of 2013 increased by 22% compared to the same quarter last year. The increase is due to a combination of both favourable log selling prices and the mix of logs that we sold. Our overall average log price was 24% higher than in the first quarter of 2012 as prices for domestic peeler and shingle logs and export logs were all higher in the current quarter compared to the same quarter in 2012, and also because we sold proportionately more of the higher priced peeler and shingle logs.

By-product revenues decreased by $0.7 million in the current quarter compared to the first quarter of 2012. The decrease is primarily the result of a 6% decline in chip volumes sold quarter over quarter, as overall prices received for chips sold were close to those in the first quarter of 2012. Our mills produced more chips in the current quarter compared to the first quarter of 2012 as they were operating at higher rates, but we both purchased and custom chipped lower volumes of chips this quarter, leading to the lower sales volumes.

EBITDA

EBITDA of $31.9 million reported for the first quarter of 2013, compares to EBITDA reported in the same quarter last year of $9.4 million and to $14.3 million in the fourth quarter of 2012. The significantly improved EBITDA result for the first quarter of 2013 primarily reflects improved market conditions and the resulting higher prices for our products, combined with reduced costs in our timberland operations compared to the first quarter of 2012. Also contributing to the improved EBITDA in the current quarter were lower freight costs and reduced export taxes. Partially offsetting these positives has been the relative impact of foreign exchange, particularly the weakening of the Japanese yen, and higher selling and administration costs.

Log production levels in the first quarter of 2013 were close to those in the same quarter a year ago, and marginally less than in the fourth quarter 2012. Logging costs improved in the current quarter compared to the first quarter of 2012 by approximately $3 per cubic metre harvested as a result of operating proportionately less in higher cost logging areas. In addition, we benefited from the effects of more temperate weather this year, and incurred lower spur road construction and maintenance costs.

Lumber primary mill production was 190.3 million board feet in the first quarter of 2013, marginally less than the production in the first quarter of 2012. We continue to face the challenge of a very tight fibre supply situation on the coast and addressed it in the quarter by running a broadened mix of species and quality of logs through our primary mills. As a result, the primary mills ran at capacity (on a shifts available basis) in the first quarter of this year. Productivity, as measured on a production volume per shift basis, was 5% higher in the current quarter compared to the same quarter in 2012. While we increased production volumes compared to the first quarter of 2012, our recoveries were lower as a result of the mix of fibre processed.