The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund

October 25, 2007 20:55 ET

The Consumers' Waterheater Income Fund Reports 7.8% Revenue Increase in Third Quarter of 2007

TORONTO, ONTARIO--(Marketwire - Oct. 25, 2007) -


The Consumers' Waterheater Income Fund (TSX:CWI.UN) (the "Fund") today reported an increase in revenue of 7.8% in conjunction with the Fund's financial results for the third quarter ended September 30, 2007.


- Total revenue increased 7.8% over the third quarter of 2006 to $42.1 million

- EBITDA increased 4.8% over the third quarter of 2006 to $36.2 million

- Cash flow from operating activities prior to changes in non-cash working capital increased 5.5% over the third quarter of 2006

- In the quarter, the Fund added net 1,138 units, reflecting new construction and conversion additions

- On December 1, 2007 the Fund expects to internalize administrative services currently provided by Direct Energy

- Subsequent to quarter-end, the Fund entered into an agreement with Festival Hydro Services Inc. to purchase approximately 3,500 electric water heaters

"We are very pleased with the Fund's performance during the third quarter of 2007," said John Macdonald, President and Chief Executive Officer. "We continued to demonstrate our ability to perform well financially and operationally in the third quarter of 2007. In addition to the integration of our Toronto Hydro Energy Services Inc. ("TH Energy") acquisition, we added net 1,138 units to our portfolio."

Revenues for the third quarter were $42.1 million, representing an increase of $3.0 million or 7.8%, compared to the same period last year. Slightly more than half of the revenue increase can be attributed to the acquisition of approximately 85,000 water heaters from TH Energy in the first quarter of 2007. The balance of the increase was due to the 2.5% increase in rental rates applicable to the non-TH Energy portfolio of assets. Revenues for the nine months ended September 30, 2007, increased 7.2% to $125.6 million over the comparable period in 2006.

EBITDA for the quarter was $36.2 million, representing a 4.8% increase over the same quarter of 2006. EBITDA for the nine months ended September 30, 2007 increased 3.1% to $107.4 million compared to $104.2 million over the same period last year.

Cash flow from operating activities prior to changes in non-cash working capital during the third quarter of 2007 increased 5.7% to $31.4 million compared to $29.7 million for the third quarter of 2006. The increase was primarily the result of higher total revenues of approximately $3.0 million, net of higher cost of sales and general and administrative expenses in part reflecting the higher costs associated with the billing and servicing of the water heaters acquired from TH Energy of $0.7 million.

Selected Financial and Operating Highlights(1)

Three months ended Nine months ended
(Unaudited) (in thousands September 30 September 30
of dollars, except unit
and per unit amounts) 2007 2006 2007 2006

Operating Highlights

Total revenue $ 42,135 $ 39,084 $ 125,625 $ 117,170
Net earnings (loss) 7,178 7,966 (8,131) 40,541
Earnings before interest,
taxes, depreciation and
amortization (EBITDA)(2) 36,167 34,513 107,432 104,227
Cash flow from operating
activities 24,054 24,289 89,081 83,846

Investing Highlights

Capital expenditures
(net)(3) 14,764 11,740 45,380 38,158
Acquisition of TH Energy
Units - - 41,030 -

Total capital
expenditures (net)(3) 14,764 11,740 86,410 38,158
Unitholder distributions
declared 15,972 14,813 47,420 43,775

Balance Sheet

Total assets 1,034,105 1,050,157 1,034,105 1,050,157
Total debt(4) 530,603 500,000 530,603 500,000
Unitholders' equity 245,540 311,891 245,540 311,891
Average Fund units
outstanding 49,524,092 49,524,092 49,524,092 49,524,092

Per Unit Analysis

Net earnings (loss) $ 0.145 $ 0.161 $ (0.164) $ 0.819
Cash flow from operating
activities 0.486 0.490 1.799 1.693
Total capital
expenditures 0.298 0.237 0.916 0.770
Unitholder distributions
declared 0.323 0.299 0.958 0.884

Asset Portfolio

Asset replacements 13,826 12,512 47,707 43,797
Additions 7,582 6,116 19,822 17,915
Removals 6,342 4,878 20,038 15,161
Acquisition of TH Energy
Units (102) - 85,866 -
Assets in service 1,418,583 1,329,710 1,418,583 1,329,710

(1) Financial results have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). Specific accounting policies are disclosed in the Fund's audited annual financial statements, which are available on SEDAR at On January 1, 2007, the Fund adopted the CICA pronouncements concerning the accounting and reporting of financial instruments. Refer to note 2 in the interim consolidated financial statements.

(2) EBITDA is a non-GAAP financial measure, and therefore has no standardized meaning prescribed by GAAP and may not be comparable to similar terms and measures by other similar issuers. EBITDA is intended to provide additional information on the Fund's performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. More specific details can be found in the Operating Margins section of the MD&A.

(3) Net of proceeds realized from the disposition of assets.

(4) Includes the current portion of long-term debt.

The Fund expects to internalize administrative services provided by Direct Energy on December 1, 2007. This will provide clarity to management and will simplify the Fund's relationship with Direct Energy.

The Fund's financial statements and management discussion and analysis for the third quarter 2007 are available on line at or by visiting the Fund's website at

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss the Fund's performance for the third quarter of 2007 on Friday, October 26, 2007 at 10 a.m. ET. To access via conference call please dial 416.644.3414 or 1.800.733.7560. The audio webcast will be archived at A taped rebroadcast will also be available until midnight ET on November 2, 2007. The rebroadcast can be accessed by dialing 1.877.289.8525 or 416.640.1917 pass code 21246032 followed by the "#" key.

About The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund indirectly owns a portfolio of approximately 1.4 million installed water heaters and other assets, rented primarily to residential customers in Ontario.

The Fund is an unincorporated open-ended trust established with an unlimited number of trust units under the laws of the Province of Ontario pursuant to a Declaration of Trust dated October 28, 2002, as amended.

The Fund commenced operations on December 17, 2002, when it completed its initial public offering of Fund units, the proceeds of which were used to fund the purchase of the rental portfolio from Direct Energy Marketing Limited ("Direct Energy").

Direct Energy continues to provide service support to approximately 94% of the Fund's rental portfolio and receives 35% of aggregate rental revenues for its co-ownership interest in those water heater related assets (with the Fund owning and receiving the remaining 65%). As a result, the Fund's exposure to operating risk is significantly reduced. The remaining 6% of the rental portfolio is serviced by Direct Energy on a fee for service basis. The Fund receives 100% of the rental revenues from this portfolio. The Fund has no investment interest in Direct Energy's services business or operations.

Additional information regarding the Fund, including its current Annual Information Form is available on SEDAR at

Contact Information