CanWel Building Materials Group Ltd.

CanWel Building Materials Group Ltd.

November 01, 2007 08:30 ET

CanWel Building Materials Income Fund Reports Strong Third Quarter Results for the Three Months Ended September 30, 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 1, 2007) -


CanWel Building Materials Income Fund ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) announced today its third quarter fiscal 2007 financial results for the period ended September 30, 2007.

Third Quarter Highlights(2):

- EBITDA(3) was a record $12.0 million representing a year-over-year increase of 51%.

- Gross margin was $29.4 million, a year-over-year increase of 21%.

- Distributable Cash(3) was $10.1 million or $0.276 per unit.

During the three-month period ended September 30, 2007, CanWel reported sales of $235 million compared to $243 million for the comparable period in 2006. The lower sales were affected by industry wide lower prices and downward price pressure on lumber and panel products during the third quarter of 2007 compared to the same period last year. For the quarter, the Fund reported gross margin of $29.4 million or 12.5 percent of sales, versus $24.2 million or 10.0 percent of sales in 2006.

EBITDA for the quarter amounted to $12.0 million compared to $8.0 million for the comparable period last year. For the quarter, distributable cash was $10.1 million or $0.276 cents per unit during the third quarter of 2007, for a payout ratio of 63 percent, compared to $6.0 million or $0.179 cents per unit in the same period of 2006. Net earnings during the third quarter were $7.5 million compared to net earnings of $4.4 million during the same period in 2006.

For the nine-month period ended September 30, 2007, CanWel reported sales of $673 million compared to $719 million for the comparable period in 2006. For the nine-month period, the Fund reported gross margin of $83.6 million or 12.4 percent of sales, versus $74.4 million or 10.4 percent of sales in 2006. During the nine-month period, CanWel reported net earnings of $16.2 million compared to net earnings of $12.1 million during the same period in 2006. For the period, EBITDA increased to $29.1 million, compared to $22.4 million for the same period in 2006.

"I am pleased with our ongoing efforts to mitigate the negative impact of lower lumber and panel products," noted Tom Donaldson, President and CEO of CanWel. "As a result, during the quarter we continued to grow specialty and hardware sales, thus significantly increasing gross margin, EBITDA and net earnings."

"The Fund's performance during the quarter was consistent with our strategy to increase specialty and hardware sales during a period when the pricing for lumber and panel products remained depressed due to market conditions and to maintain our focus on cost control," stated Amar Doman, Chairman of CanWel.

Pursuant to the Fund's announcement of a Normal Course Issuer Bid on June 7, 2007, the Fund repurchased and cancelled 349,060 fund units during the quarter, representing approximately 20 percent of the total fund units targeted for repurchase. For the nine-months ended September 30, 2007, the Fund repurchased and cancelled 654,060 fund units, representing approximately 37 percent of the total fund units targeted for repurchase. As at September 30, 2007, the Fund had 25,227,837 fund units issued and outstanding.

The full text version of the unaudited interim financial statements is included in CanWel's third quarter report, which is available on or at

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 its unitholders.

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 17 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

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" 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 performance of, and distributable cash3 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 include (i) the risk that the integration of the acquisition of the business of five pressure treating plants (the "Plants") announced on January 2, 2007 (the "Acquisition") may result in significant challenges, and management of CanWel may be unable to accomplish the integration of the Acquisition smoothly or successfully or without spending significant amounts of money; any inability of management to successfully integrate the operations of the combined business, including, but not limited to, information technology and financial reporting systems, any of which could have a material adverse effect on the business, financial condition and results of operations of CanWel; (ii) the risk that Plant revenues, profits and margins may not remain consistent with historical levels, (iii) the risk that competing firms which manufacture or distribute competitive product lines will aggressively defend or seek market share, or that existing customers of the Plants (some of whom are competitors of CanWel) cease doing business with the Plants or CanWel, in each case reducing, eliminating or reversing any potential positive economic impact on the Fund of the Acquisition; (iv) the risk that any increased sales, margin, profit or distributable cash resulting from the Acquisition may not be fully realized, realized at all or may take longer to realize than expected; (v) the risk of disruption from the introduction and implementation of the Acquisition making it more difficult to maintain relationships with customers, employees or suppliers, (vi) risks related to the operation of pressure treatment facilities, including but not limited to environmental risks, labour risks, risks related to maintenance capital expenditures for manufacturing facilities and risks related to capital expenditures for environmental risks, and (vii) the risk that the Acquisition is not completed or completed on terms that are different than as indicated herein.

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, product selling prices, product performance, design and liability risk, software and software design risk, commodity price fluctuations, information systems risk, interest rate changes, operating costs, and competitive conditions. A further description of these additional factors can be found in the periodic and other reports filed by the Fund with Canadian securities commissions and available on Sedar ( 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 2007 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.

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).

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