Arriscraft International Income Fund

Arriscraft International Income Fund

August 11, 2006 10:44 ET

Arriscraft International Income Fund Announces Second Quarter Results, Reinstitutes Cash Distributions

CAMBRIDGE, ONTARIO--(CCNMatthews - Aug. 11, 2006) - Arriscraft International Income Fund (TSX:AIN.UN)('Arriscraft' or the 'Fund') today announced its financial results for the three and six months ended June 30, 2006.

Compared to last year's second quarter, consolidated sales rose by 16% in the latest quarter, gross profits increased by 27% and adjusted EBITDA was up by 38%. Distributable cash for the quarter rose to $2.1 million ($0.239 per unit) from $0.7 million ($0.086 per unit) in the same period last year.

Compared to last year's first half, consolidated sales for the six months to June 30, 2006 were up 15%, gross profit was up 30% and adjusted EBITDA increased by 19%. Distributable cash for the first six months of this year has more than doubled to $3.2 million ($0.371 per unit) from $1.4 million ($0.165 per unit) during the same period last year.

Second quarter and year-to-date financial highlights are summarized below (in $ thousands, except per unit amounts):

--- Three Months --- Six Months ---
Ended June 30 Ended June 30
2006 2005 2006 2005
------- -------- ------ --------

Sales 20,553 17,717 37,929 33,063
Gross Profit 10,355 8,140 18,648 14,392
% 50.4 45.9 49.2 43.5
EBITDA 3,767 1,228 5,302 3,477
Adjusted EBITDA 2,670 1,937 4,503 3,792
Net Income (Loss) 1,410 (1,385) 482 (2,459)
Net Income (Loss) per Unit (a) $0.163 $(0.160) $0.056 $(0.285)
Distributable Cash 2,066 744 3,206 1,423
Distributable Cash per Unit (a) $0.239 $0.086 $0.371 $0.165
Cash Distributions Declared (b) NIL 2,102 NIL 4,204
Distributions Declared per Unit (b) NIL $0.300 NIL $0.600

(a) For purposes of calculating Net Income (Loss) per Unit and Distributable Cash per Unit, the aggregate number of Units issued and outstanding assumes conversion of all Management Units into Units. No distributions were paid on Management Units during the quarter.

(b) As announced on July 27, 2005, the Fund elected to suspend the August 15, 2005 distribution to Unitholders and subsequently suspended further cash distributions.

Sales progress was made on both sides of the border in the second quarter. Canadian second quarter sales increased by 32% to $10.9 million, representing 53% of the Fund's quarterly consolidated sales. All of the increase came from higher sales of residential products. After conversion to Canadian dollars, second quarter sales in the U.S. increased by 2% to $9.7 million, representing the remaining 47% of consolidated sales. Before conversion to Canadian dollars, U.S. sales were up US$1.1 million over last year's second quarter, an increase of 15%, with increases coming from both non-residential and residential product sales. For the first half of the year Canadian and U.S. sales were up 13% and 16%, respectively. Canadian sales represented 52% of the Fund's total sales for the first half of 2006, with U.S. sales representing 48%.

Adjusted EBITDA, which removes from EBITDA the non-controlling interest in the Fund's income or loss for the period and all unrealized foreign exchange gains and losses, increased to $2.7 million for the second quarter, a 38% improvement over last year's second quarter amount of $1.9 million. Distributable cash for the quarter also increased, rising to $2.1 million from $0.7 million last year as a result of higher sales and gross profit margins translating into higher earnings. For the six months to June 30, 2006, the Fund has realized increases in Adjusted EBITDA (up 19% compared to the first six months of 2005) and distributable cash (up 125%).

Consistent with the announcement made on July 27, 2005, no cash distributions were declared in the quarter. However, taking into account the improved financial performance of the Fund thus far in 2006, combined with the possible need for internally generated growth capital should the expansion of the Georgia facility currently being considered by management proceed (see "Outlook" in the Management's Discussion and Analysis for the period ended June 30, 2006 for further details), the Trustees of the Fund have decided to reinstitute monthly cash distributions at a level of $0.035 for unitholders of record as of August 31, 2006, payable on September 15, 2006. The Trustees believe that this is a prudent level of distributions which balances unitholders' expectations for cash distributions with the Fund's potential need for growth capital to finance its value enhancement initiatives. The Trustees will also take into account the Fund's estimated taxable income for the year in determining the full cash distributions for 2006.

David Boles, President & Chief Executive Officer, commented, "We are pleased with the progress being made by the Fund. Our Cambridge and Georgia plants are effectively operating at capacity and the Quebec plant's utilization is increasing. Demand for our products remains strong on both sides of the border, in spite of softness in some of our key Canadian markets such as Toronto and Montreal. As we've discussed before, we are particularly excited about the opportunity that we believe exists to grow our business in the strong South and South-Eastern U.S. residential market, where close to half of all U.S. housing starts are taking place. We are currently assessing the economics of expanding our Georgia plant to accommodate this business growth initiative and anticipate being in a position to make a recommendation to the Trustees with the release of our third quarter financial results."

Arriscraft International Income Fund

The Fund owns the Arriscraft International manufactured stone, brick and natural stone masonry products business conducted through Arriscraft International Limited Partnership, 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.

This press release contains forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking statements. Refer to Management's Discussion and Analysis for the quarter ended June 30, 2006 (see "Forward Looking Statements") for further discussion.

"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 quarter ended June 30, 2006.

The Fund's Consolidated Financial Statements for the quarter ended June 30, 2006 and Management's Discussion and Analysis are available on the Fund's web site at and on SEDAR at

Contact Information

  • Arriscraft International Limited Partnership
    David Boles
    President and CEO
    (519) 653-3275