CanWel Building Materials Group Ltd.
TSX : CWX.UN

CanWel Building Materials Group Ltd.

November 04, 2009 08:00 ET

CanWel Building Materials Income Fund Reports Results for the Three Months Ended September 30, 2009

- Payout ratio at 46 percent

- EBITDA amounts to $10.1 million

- Gross margin increases to 13 percent

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 4, 2009) -

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES

CanWel Building Materials Income Fund ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) announced today its third quarter fiscal 2009 financial results for the period ended September 30, 2009.

During the three-month period ended September 30, 2009(2), CanWel reported sales of $188 million compared to $227 million for the comparable period in 2008. Gross margin as a percentage of sales increased to 13.0 percent or $24.5 million, versus 12.6 percent or $28.6 million during the corresponding period a year ago. The decrease in revenue related to both a decrease overall in the selling prices of lumber and panel products for the third quarter of 2009 versus the third quarter of 2008 and an overall weakening of revenue reflecting the downturn in the Canadian economy. However, for the quarter, EBITDA(3) amounted to $10.1 million compared to $10.9 million for the comparable period last year. EBITDA as a percentage of sales increased to 5.3 percent during the third quarter of 2009, approximately a 10 percent improvement to the 4.8 percent generated during the same period in 2008. Net earnings amounted to $7.0 million compared to $5.6 million during the same period in 2008.

During the third quarter of 2009, the Fund generated distributable cash(3) of $9.5 million, or 27.0 cents per unit(4), versus $9.3 million, or 26.3 cents per unit during the corresponding period in 2008, for a payout ratio of 46 percent in the quarter.

Reconciliation of Net Earnings to EBITDA:

  Three months ended September 30
(in thousands of dollars) 2009 2008
 
 
Net Earnings $6,996 $5,560
Income tax (recovery) 690 653
Cash interest expense 564 1,326
Depreciation of property plant and equipment 1,312 1,672
Amortization of intangible and other assets 400 402
Amortization of deferred gain (19) (18)
Amortization of financing costs 64 64
Accretion of promissory notes 32 32
Loss/(gain) on disposal of fixed assets - 936
Unit-based compensation 66 260
 
EBITDA $10,105 $10,887

"We continue to experience year-over-year deflation within the quarter in regard to the overall construction material product family. The average prices for lumber products for example decreased by 21 percent in comparison to the same period of 2008," noted Tom Donaldson, President and CEO of CanWel. "We continue to monitor all our costs in an effort to maximize earnings and value for all unitholders."

"Our focus on increasing margins and controlling costs is helping the Fund mitigate the impact of the reduction in revenue dollars we are experiencing due to continued downward price pressures on lumber and a reduction in home construction activity," stated Amar Doman, Chairman of CanWel. "We will continue to monitor the strength of the Canadian economy and continue to adjust our business model to match the economic activity."

The full text version of the unaudited interim financial statements is included in CanWel's second quarter report, which is available on www.sedar.com or at www.canwel.com.

CanWel continues to emphasize its commitment to be a value-based organization. CanWel's values of being customer and supplier centric are being driven throughout the organization using an in-house marketing program. Through these internal initiatives, CanWel ensures that sales and purchasing actions each day are focused on developing value added products and services for its customers and suppliers, thereby focusing on creating value for our unitholders.

The Fund will also hold a conference call to discuss the financial results today at 11:30 a.m. EST.

Scheduled speakers for the call include Amar S. Doman, Chairman, Tom Donaldson, President and Chief Executive Officer, and Martin Hope, Chief Financial Officer of CanWel Building Materials Income Fund.

Participants should dial 416-340-8018 or 1-866-225-0198 at least 10 minutes prior to the conference time of 11:30 a.m. EST. For those unable to attend the call, a replay will be available after 6:00 p.m. at 416-695-5800 or 1-800-408-3053 until midnight, November 11, 2009.

About CanWel

The Fund trades on the Toronto Stock Exchange under the symbol CWX.UN and is one of Canada's largest national distributors in the building materials and related products sector, operating 16 distribution centres across Canada. The Fund distributes a wide range of hardware, building materials, lumber, and renovation products.

Further information can be found in the disclosure documents filed by CanWel Building Materials Income Fund with the securities regulatory authorities, available at www.sedar.com

Certain statements in this press release may constitute "forward-looking" statements. When used in this press release, such statements use words, including but not limited to, "may", "will", "expect", "believe", "plan", "intend", "anticipate", "future" and other similar terminology. These forward-looking statements reflect the current expectations of the Fund's management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, including the distributable cash(3), distributions or EBITDA(3) generated by the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors.

These factors would include, but are not limited to, dependence on market and economic conditions, sales and margin risk, competition, information system risks, availability of supply of products, risks associated with the introduction of new product lines, product design risk, environmental risks, volatility of commodity prices, inventory risks, customer and vendor risks, acquisition and integration risks, availability of credit, credit risks and interest rate risks. In addition, there are numerous risks associated with an investment in units, which are also further described in the "Risk Factors" section of our annual information form dated March 31, 2009 and our other public filings on SEDAR. Additional risks and uncertainties affecting the Fund, which could cause results to differ materially from those described in these forward-looking statements, include, among others: increased debt and interest costs, general economic and business conditions, pension funding risk, product selling prices, product performance, design and liability risk, software and software design risk, information systems risk, interest rate changes, operating costs, legislative changes, accounting pronouncements and competitive conditions. A further description of these and other factors can be found in the periodic and other reports filed by the Fund with Canadian securities commissions and available on SEDAR (http://www.sedar.com). These forward- looking statements speak only as of the date of this press release. The Fund does not undertake, and specifically disclaims, any obligation to update or revise any forward looking information, whether as a result of new information, future developments or otherwise, except as required by applicable law.

(1) References to the Fund or CanWel include references to CanWel Building Materials Ltd. as the context may require.

(2) Please refer to our Q3 2009 MD&A for further information.

(3) Reference is made above to EBITDA and distributable cash. We define EBITDA as earnings before interest expense, provision for income taxes, gain or loss on sale of fixed assets, depreciation and amortization, goodwill impairment and unit-based compensation expense. We define distributable cash as cash flow from operating activities before changes in non-cash working capital and pension and other post-retirement benefits and after maintenance of business capital expenditure and contributions to any reserves the Board of Trustees of the Fund deem to be reasonable and necessary for the operations of the Fund. Please refer to our Q3 2009 MD&A for further information.

EBITDA is a measure used by management of CanWel to evaluate financial performance. In addition, management of CanWel believes that distributable cash is a useful financial measure as it provides investors with an indication of cash available for distribution and is a measure generally used by Canadian income funds as an indicator of financial performance. EBITDA and distributable cash, however, are not measures of earnings or financial performance recognized by Canadian generally accepted accounting principles (''GAAP'') and do not have standardized meanings prescribed by GAAP. Items excluded from EBITDA and distributable cash are significant to understanding and assessing financial performance. EBITDA and distributable cash should not be considered in isolation or as alternatives to net income, cash flows generated by operations or other financial statement data presented in the consolidated financial statements of the Fund, as indicators of financial performance or liquidity under GAAP. Because neither EBITDA nor distributable cash is a measure determined in accordance with GAAP, as presented, investors are cautioned that EBITDA and distributable cash may not be comparable to similarly-titled measures presented by other issuers (such as other income funds).

(4) Per unit figures are based on the weighted average number of fund units outstanding. The weighted average number of fund units outstanding for the period is the number of units determined by relating the portion of time within the reporting period that the fund units have been outstanding to the total time in the period.

Contact Information

  • CanWel Building Materials Income Fund
    Ali Mahdavi
    (416) 962-3300 or +1 (866) 430-6247
    am@spinnakercmi.com