Statistics Canada blamed the drop on lower mining and oil extraction as well a dip in construction activity. And the result weakened the Canadian dollar, which this week slipped back to rough parity with the US dollar.

It’s hard to see any real weakness, however, in the third-quarter operating numbers of Canadian Edge Portfolio Holdings that have reported so far.

Rather, what we’ve seen is universally solid dividend coverage, continued growth of key operations and more conservative balance sheet management. And despite overall market chop investors have greeted the results favorably, with several companies earning analyst upgrades and share prices ticking up after the news.

That doesn’t guarantee shares of these companies won’t be negatively affected by events beyond their control, such as continuing volatility in energy prices. And there’s still a lot of reporting left, which could include stumbles at one or more Portfolio Holdings.

But what we’ve seen so far is encouraging indeed, and we’re sticking with all seven companies to turn in numbers to date.

Acadian Timber Corp (TSX: ADN OTC: ACAZF) posted a solid third quarter, backing the robust 33.6 percent return from its shares thus far in 2012.

Sales volumes dropped from 341 thousand cubic meters in the year earlier quarter to just 319,000 cubic meters. But that was more than made up for by a 3 percent jump in selling prices across all log products, which lifted cash flow margins to 25 percent of sales from last year’s 22 percent.

Free cash flow is the primary measure of profits when it comes to setting Acadian’s dividend. The third quarter’s CAD0.21 per share was up 10.5 percent from 2011 and covered at about a 1-to-1 ratio (a 98.2 percent payout ratio).

That’s consistent with management’s stated objective of paying out most or all of free cash flow, which is essentially cash flow after capital expenditures.

Digging a bit deeper, the company’s higher prices/lower volumes picture was in part due to a shift in production mix, as Acadian sold a higher percentage of sawtimber. The company enjoyed higher prices for hardwood pulpwood and was able to sell to distant markets. That was partly offset by a 3 percent rise in production costs.

The company also maintained a solid safety record, despite the sidelining of two contractor employees in New Brunswick.

Looking ahead, management describes itself as “cautiously optimistic.” One reason is capacity closures in the softwood pulpwood market that will keep demand soft for that product line (6 percent of sales). Another is weak pricing for biomass power (0.7 percent of sales).

That’s more than offset now, however, by the growing strength in the long-moribund US home building market. And management continues to maintain conservative financial policies, cutting interest expense by another 4.6 percent during the quarter and having no debt maturities until 2016.

The bottom line is these numbers are supportive of the current dividend rate. They also likely mean that prices and/or selling volumes are going to have to rise from here for us to see a dividend increase. Consequently, I’m keeping the buy target for Acadian Timber at USD13.

AltaGas Ltd’s (TSX: ALA, OTC: ATGFF) third-quarter cash flow and funds from operations rose 16 percent and 24 percent, respectively. The primary driver was once again the addition of fee-generating assets anchored by long-term contracts, including the USD1.156 billion purchase of gas distribution utility SEMCO Energy.

The company is on track to complete $1.8 billion of acquisitions and construction of energy midstream and low-emissions electric generation this year. That includes its first wind farm in the US, a 50 percent interest in a 29 megawatt facility selling power to regulated utility Black Hills Corp (NYSE: BKH) in southern Colorado under a 25-year contract.

AltaGas is now 70 percent finished building the 195 megawatt Forrest Kerr hydro project, which by the end of 2013 will begin selling electricity under a 60-year contract with BC Hydro. The contract is indexed to the Consumer Price Index, ensuring profits will keep pace with inflation.

The company’s overall generating capacity has grown by 13 percent this year and is locked up under similar deals.

The results back up AltaGas’ 4.3 percent dividend increase announced in September. Funds from operations of CAD0.57 per share cover the current payout by a solid 1.62-to-1 ratio, with a payout ratio of 61.7 percent. The only debt due before 2014, meanwhile, is a CAD5 million note due at the end of 2013, a sum easily covered by cash on hand.

These numbers also demonstrate AltaGas’ invest-to-grow strategy is working better than ever to keep cash flows and dividends rising for future years. Safe enough for even the most conservative investors, the stock’s a buy up to USD35 for those who don’t yet own it.

Pengrowth Energy Corp (TSX: PGF, NYSE: PGH) posted record quarterly production of oil and gas, boosting output 26 percent to 94,284 barrels of oil equivalent per day after absorbing the assets of the former NAL Energy Corp.

Funds from operations per share, meanwhile, rose 21.7 percent to CAD0.28 cents. That covered the CAD0.04 monthly dividend by a solid 2.3-to-1 ratio, equivalent to a 42.9 percent payout ratio.

These numbers should lay to rest any concern about Pengrowth’s current dividend, at least so long as oil stays above USD70 a barrel.

Another encouraging sign was a 15 percent drop in general and administrative costs per barrel of oil equivalent, the result of NAL merger synergies. That was partly offset by higher-than-expected operating expenses of CAD15.22 per barrel of oil equivalent. These were mostly due to one-time factors, however, and should come down going forward.

The greatest attraction of the NAL deal was it added significant current and potential light oil production from lands where Pengrowth could develop scale. In the third quarter, the company added 3,100 barrels of oil equivalent per day of light oil in its Swan Hills properties, ramped up development of light oil in the Cardium region and posted solid results at its Lindbergh oil sands project.

Overall development inventory now includes 700 drillable oil and liquids locations.

To fund development without rolling up debt Pengrowth has targeted asset sales and expanded its hedging program. Management now has authority to lock in pricing for 65 percent of expected output the next two years, 30 percent for the third year out and 25 percent for the fourth and fifth years.

A recent successful debt financing netted USD385 million in notes with interest rates ranging from just 3.45 percent to 4.74 percent for maturities of seven to 12 years. That cuts maturities before the end of 2013 to just USD50 million, while leaving CAD1 billion of its total CAD1.25 billion in credit lines untapped.

The company has reduced its expected average fourth-quarter daily output to 93,000 to 96,000 barrels of oil equivalent, from a prior projection of 100,000. That’s raised its forecast for full-year 2012 operating costs to CAD14.60 per barrel of oil equivalent from a prior CAD13.75. Both changes are consistent, however, with moves to shut in uneconomic gas production and the extended outages at several facilities to ensure future output.

Pengrowth is the most aggressive of the current oil and gas producer lineup in the Aggressive Holdings. Despite the stepped-up hedging, energy prices will continue to affect cash flow in a big way. These numbers, however, show the NAL merger integration is going well, which is management’s road to building value going forward.

We may be under water on this position for a while. But yielding nearly 8 percent, Pengrowth is a solid buy for aggressive investors who don’t already own it up to USD7.

Vermilion Energy Inc (TSX: VET, OTC: VEMTF) posted a drop in third-quarter production compared to the second quarter of 2012. But output of 36,546 barrels of oil equivalent per day was still 5.4 percent ahead of year-earlier levels, as development of Cardium light oil continues to progress and the company added to its holdings in France.

Global output–which includes holdings in Australia–is now two-thirds oil and natural gas liquids. Canadian production went from 45 percent to 59 percent oil and liquids over the past year. Coupled with oil-based pricing for gas in Europe and Asia, that leaves little output tied to still weak North American gas prices.

The company’s average selling price for Netherlands gas, for example, has averaged more than four times the average Alberta, Canada, price of gas.

The upshot is Vermilion’s output, capital investment and cash flows have remained remarkably steady and rising this year, even as energy prices have been all over the map, particularly in North America.

Funds from operations per share came in at CAD1.37 in the third quarter, a 7.9 percent lift from the year-earlier quarter and even 7 percent better than the second quarter despite lower production.

That was good enough to cover the dividend by better than a 2.4-to-1 margin; the payout ratio for the period was 41.6 percent.

Meanwhile, its average global selling prices for oil were CAD100.70 per barrel of oil equivalent in third quarter, only a penny less than a year earlier. Selling prices for natural gas were CAD6.12 per thousand cubic foot, less than the year-earlier figure of CAD6.50 but actually besting the CAD5.79 realized in the second quarter. Operating expenses were CAD13.27 per barrel of oil equivalent, down from last year’s CAD13.57.

Overall the results were slightly better than management’s stated expectations, and capital spending remained on track as well. The most important project remains the potential breakthrough Corrib field.  Five wells are currently drilled, tested and ready for output, while construction of most related energy midstream infrastructure is largely complete. That leaves tunneling of the onshore pipeline, for which all key regulatory approvals have now been attained.

Corrib remains on track to start pumping energy in late 2014, at which time Vermilion will attain its 2015 overall production target of at least 50,000 barrels of oil equivalent per day. That adds up to a 50 percent jump in cash flow at current commodity prices, and will allow management to resume dividend increases.

Until then Vermilion Energy remains a solid buy up to USD50.

Here’s when recommended companies are expected to report their third-quarter numbers. And you can also find my analysis on companies that have already reported by clinking on the relevant hyperlink.

I don’t send Flash Alerts for non-Portfolio companies, but I will recap their numbers in your regular issue of Canadian Edge, which will be published on Nov. 9.

Portfolio Holdings not reporting before press time will be highlighted in subsequent Flash Alerts and recapped along with the rest of the How They Rate universe in the December issue.

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Nov. 2 Flash Alert
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 7 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 5 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Nov. 9 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–Oct. 30 (confirmed)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–Nov. 8 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–Nov. 8 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Nov. 8 (confirmed)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Nov. 6 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Nov. 5 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Nov. 5 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–November 9 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Nov. 6 (confirmed)
• Just Energy Group Inc (TSX: JE, NYSE: JE)–Nov. 8 (confirmed)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Nov. 6 (confirmed)
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–Nov. 7 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–Nov. 6 (confirmed)
• RioCan REIT (TSX: REI, OTC: RIOCF)–Nov. 6 (confirmed)
• Shaw Communications Inc (TSX: SJR/A. NYSE: SJR)–Oct. 26 Flash Alert
• Student Transportation Inc (TSX: STB, NSDQ: STB)–Nov. 9 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Oct. 26 Flash Alert

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–Nov. 2 Flash Alert
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Nov. 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Nov. 5 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Nov. 12 (confirmed)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–Oct. 23 Flash Alert
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Nov. 9 (estimate)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–Nov. 7 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Nov. 7 (confirmed)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Nov. 8 (estimate)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Nov. 9 (confirmed)
• Pengrowth Energy Corp (TSX: PGF, NYSE: PGH)–Nov. 2 Flash Alert
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–Nov. 8 (confirmed)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Nov. 9 (estimate)
• Poseidon Concepts Corp (TSX: PSN, OTC: POOSF)–Nov. 8 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Nov. 2 Flash Alert
• Wajax Corp (TSX: WJX, OTC: WJXFF)–Nov. 5 (estimate)