Arriscraft International Income Fund
TSX : AIN.UN

Arriscraft International Income Fund

November 14, 2005 16:01 ET

Arriscraft International Income Fund Announces Improved Third Quarter 2005 Results

CAMBRIDGE, ONTARIO--(CCNMatthews - Nov. 14, 2005) - Arriscraft International Income Fund ("Arriscraft" or the "Fund")(TSX:AIN.UN) announced today its results for the three and nine months ended September 30, 2005.

Financial and operating results in the third quarter and first nine months of 2005 were lower than for the same periods in 2004. For the third quarter of this year, the Fund's earnings were $1.9 million ($0.265 per Unit) compared with $2.3 million in 2004, and the Fund reduced its year-to-date loss to $605,000 ($0.086 per Unit) compared to earnings of $2.8 million for the same period in 2004. The Fund generated distributable cash of $2.1 million in the quarter and a total of $3.6 million for the nine-month period.

Consolidated sales declined by 14% for both the three and nine months ended September 30, 2005 compared to the same periods last year.

Canadian sales declined 7% in the third quarter to $10.9 million from $11.7 million last year. For the nine months ended September 30, 2005, Canadian sales declined 15% to $28.4 million from $33.5 in the prior year. The decrease was primarily due to the 17% and 12% year-to-date decline in single-detached housing starts in Ontario and Quebec (as reported by the Canada Mortgage and Housing Corporation), respectively, Arriscraft's largest Canadian residential markets.

Sales in the United States in the third quarter of 2005 were down 10% to $8.4 million compared to $9.3 million last year. For the nine months ended September 30, 2005, United States sales were $23.9 million, 10% lower than United States sales of $26.7 million in the same period last year. The depreciation of the US dollar relative to the Canadian dollar is largely responsible for these decreases. In US dollars, the Fund's United States sales decreased by approximately 3% in the third quarter compared to the same period last year and were down 2% for the nine months ended September 30, 2005.

The decline in consolidated sales resulted in a reduction in adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) to $2.9 million in the third quarter from $6.1 million last year, and to $6.7 million in the first nine months of 2005 from $11.5 million for the same period in 2004.

"Consistent with the effects of seasonality, the third quarter has exhibited an improving trend in our results of operations compared to the first half of 2005. This trend has continued in the fourth quarter with October sales exceeding October 2004 sales, the first month since January that this has occurred," commented Randy White, President and CEO. "In particular, we are pleased with the steps we have taken to increase our presence in the United States residential market, and we look to our efforts there to generate continued United States sales growth in the years to come."

In order to deal with the lower overall sales and earnings in 2005, in the quarter the Fund has reduced staff and production at all plants to ensure production levels and inventory are balanced with current sales levels. The Fund has also eliminated or reduced capital and discretionary expenditures wherever possible in order to maximize working capital and conserve cash. For the nine-month period ended September 30, 2005, the Fund has generated $3.6 million in distributable cash and has paid $4.6 million in distributions. It is the intention of the Board of Trustees to resume cash distributions by the Fund at a prudent and sustainable rate during 2006.

As previously announced on August 31, 2005, Arriscraft replaced its $16 million senior secured term debt facility held by certain Canadian chartered banks with a new $16 million subordinated unsecured exchangeable debenture provided by the vendor of the Arriscraft business sold to the Fund at its initial public offering. The Fund also renegotiated the terms of its operating line with its existing Canadian banks to better suit the nature of Arriscraft's business.

"Looking ahead, our focus remains on building upon our strong market presence, extensive and supportive dealer network, broad and distinctive product line, and experienced management team to grow our business. The recently completed refinancing provides us with the enhanced flexibility our business requires in order to meet this objective," Mr. White concluded.



Financial Highlights:
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Period Ended September 30, 2005 Three Months Nine Months
(in $'000 except per Unit amounts)
Revenue 19,234 52,297
Adjusted EBITDA 2,857 6,650
Net Income (Loss) 1,854 (605)
Basic Income (Loss) per Unit $ 0.265 $(0.086)
Diluted Income (Loss) per Unit $ 0.188 $(0.086)
Distributable Cash 2,127 3,551
Distributable Cash per Unit $ 0.304 $ 0.507
Cash Distributions Declared(a) - 4,204
Cash Distributions Declared per Unit(a) - $ 0.600
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(a) As announced on July 27, 2005, the Fund elected to suspend the August 15 distribution to Unitholders and subsequently suspended further cash distributions. It is the intention of the trustees to resume cash distributions by the Fund at a prudent and sustainable rate during 2006.

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 produces manufactured stone masonry products in Canada and the United States using its proprietary The Natural Edge® manufacturing process. These products 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 this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For more information on the risks, uncertainties and other factors that could adversely affect the Fund's results of operations, see Management's Discussion and Analysis for the three and nine months ended September 30, 2005 and the Fund's Annual Information Form, both of which are available on SEDAR at www.sedar.com. All such risks, uncertainties and factors should be considered carefully when making decisions with respect to the Fund, and undue reliance should not be placed on the Fund's forward-looking statements. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this press release and the Fund assumes no obligation to update or revise them to reflect new events or circumstances.

"Adjusted EBITDA" is determined by making adjustments to earnings before interest, taxes, depreciation and amortization ("EBITDA") for certain items that Management believes do not affect Arriscraft'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 of the Fund for the three and nine-month periods ended September 30, 2005.

The Fund's Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2005, including Management's Discussion and Analysis, are available on the Fund's web site at www.arriscraft.com and on SEDAR.


Contact Information

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