Arriscraft International Income Fund
TSX : AIN.UN

Arriscraft International Income Fund

May 12, 2005 15:47 ET

Arriscraft International Income Fund Announces First Quarter 2005 Results

CAMBRIDGE, ONTARIO--(CCNMatthews - May 12, 2005) - (TSX:AIN.UN) Arriscraft International Income Fund ("Arriscraft" or the "Fund") announced today results for the three months ended March 31, 2005. Historic seasonality combined with unusually severe winter weather in the quarter reduced revenue to $15.3 million and operating losses normally incurred in the quarter widened to $1.1 million. The results are for the first full quarter reporting period for the Fund; and, consequently, no comparative information is provided in the consolidated interim financial statements. However, certain financial and operating results of the Fund are compared in this release and Management's Discussion and Analysis to unaudited historical combined financial statements of the predecessor companies (reflecting the new financial structure of the Fund) for the three-month period ended March 31, 2004. Such information is for reference purposes only and is not intended to represent a comprehensive comparison of the consolidated financial results.



Financial Highlights:

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Three Months Ended March 31 2005
(in $'000 except per Unit amounts)
Revenue 15,346
EBITDA 2,250
Net Income (Loss) (1,074)
Net Income per Unit (basic and diluted) $(0.153)
Distributable Cash 679
Distributable Cash per Unit $0.097
Cash Distributions Declared 2,102
Cash Distributions Paid and Declared per Unit $0.30
Weighted Average Units Outstanding 70,083
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As almost all materials produced by Arriscraft require outdoor installation, which is dependent on weather conditions, sales are always subject to seasonal variation. This was a factor in many of Arriscraft's key markets in the quarter where masonry construction was often delayed by weather.

As a result of increased production capacity installed during 2004, the Fund re-introduced its popular winter-booking program during the first quarter of 2005. Under this program, Arriscraft offers its dealers incentives to purchase and inventory product during the winter months in preparation for the strong spring construction season. Capacity restrictions and low inventories had significantly restricted this program in 2004. Management is pleased to report that the Fund's dealers took advantage of the program through the quarter to purchase more than $5.9 million of Arriscraft's products as compared to a previous high of $4.7 million.

"The record participation in this year's winter-booking program clearly demonstrates Arriscraft's industry-leading market position and our dealers' highly positive outlook on 2005," commented Randy White, President and CEO. "We are confident that our higher production capacity, increased inventory levels and improved product availability will help us meet increased demand as we build our sales in all aspects of our business. We look to these factors to translate into increased market share and higher sales through the balance of 2005 and beyond and based on this are confident that aggregate cash flows for the Fund in 2005 will be sufficient to meet targeted distribution on the Fund's units of $1.20 per unit for the year ended December 31, 2005."

Revenues of $15.3 million in the first quarter of 2005 compared with $17.0 million in the prior year period mainly reflect the effects of severe winter weather. Revenues from the Fund's accessories product line in the period were lower due in part to sales of approximately $1.0 million recognized under its winter-booking program in late 2004. The increase in the Canadian dollar reduced sales by $377,000 compared to the prior year period. Primarily due to the lower sales, gross profit reduced to $6.3 million or 41% of sales from $8.4 million or 50% of sales in the prior year period.

Selling, general and administrative expenses were reduced in the quarter from the prior year period due to lower staff costs, reduced selling costs and lower shipping costs. Amortization expenses rose in the first quarter of 2005 due primarily to investments made in new production equipment in 2004. Interest costs increased due to a new term loan related to the acquisition of the Arriscraft business by the Fund. The Fund incurred a net loss of $1.1 million or $0.153 per Unit in the period.

Distributable cash for the three months ended March 31, 2005 was $679,000 or $0.097 per Unit. Due to the seasonal nature of the business, the Fund typically utilizes its borrowing facilities in the first quarter to equalize cash distributions throughout the year. Cash distributions were declared in the period of $2.1 million or $0.30 per Unit.

Cash used by operating activities in the first quarter of 2005 was $6.7 million, due primarily to increases in receivables of $4.6 million and a decrease in payables of $2.6 million. The receivables increase is a result of the record winter-booking program while inventory increases were implemented in anticipation of a strong spring construction season. Capital expenditures in the period were $637,000, including a new premix operation at the Georgia facility. Management estimates that maintenance capital expenditures will be $1.8 million for the year ending December 31, 2005.

The Fund announced on April 15, 2005, a distribution of $0.30 per unit was made to holders of record of the Exchangeable LP units of Arriscraft International Limited Partnership on April 15, 2005 for a total payment of $284,665. In addition, a payment of $488,100 was made to members of the Management Group under the terms of the Management Discretionary Payment Plan on April 15, 2005. Payments made to the Management Group did not exceed distributions that would have been paid to group members if they had held ordinary units.

Conference Call

Management will conduct a conference call to discuss its results on May 17, 2005 at 10 am ET. Interested parties can dial (416) 405-9310 or toll free at (877) 211-7911. The conference call will also be broadcast over Arriscraft's website at http://www.arriscraft.com. Please call or log in 10 minutes prior to the call. The telephone numbers to listen to the conference call after it is completed (Instant Replay) are (416) 695-5800 or (800) 408-3053. Please enter the passcode 3152677# when instructed. The Instant Replay will be available until midnight, May 24, 2005. The conference call will also be archived on Arriscraft's web site.

Arriscraft International Income Fund

The Fund owns the Arriscraft International manufactured stone, brick and natural stone masonry products business conducted through Arriscraft International LP, Arriscraft International LLC and certain affiliates in Canada and the United States. Arriscraft is the leading producer of manufactured stone masonry products in Canada and the United States. These products are produced using the Company's proprietary The Natural Edge® manufacturing process and offer the aesthetic and physical benefits of natural stone combined with the strength, simplicity of construction and cost-effectiveness of traditional masonry. Arriscraft also produces brick and natural stone masonry products and distributes its masonry products across Canada and most of the United States.

Certain statements in the press release may constitute "forward-looking" statements which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund or Arriscraft, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties are more fully discussed in the Fund's regulatory filings available at http://www.sedar.com.

The Fund uses earnings before interest, taxes, depreciation and amortization ("EBITDA") to measure its financial performance. "Adjusted EBITDA" is determined by making adjustments to EBITDA for certain items that Management believes will not affect the Company's cash flow. EBITDA and Adjusted EBITDA are not recognized measures under Canadian generally accepted accounting principles ("GAAP"); however, Management believes EBITDA and Adjusted EBITDA are useful supplemental measures to net earnings as they provide investors with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Distributable Cash is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. Management believes Distributable Cash is a relevant measure of the ability of the Fund to earn and distribute cash returns to Unitholders. A reconciliation of cash provided by operating activities to EBITDA, Adjusted EBITDA and Distributable Cash is set out in Management's Discussion and Analysis ("MD&A") of the Fund for the quarter ended March 31, 2005 available on the Fund's web site or at http://www.sedar.com.

The Fund's Consolidated Financial Statements for the three months ended March 31, 2005, including Management's Discussion and Analysis, are available on the Fund's web site and at http://www.sedar.com.

Contact Information

  • Arriscraft International Limited Partnership
    Randy White
    President and CEO
    (519) 653-3275