CanWel Building Materials Group Ltd.
TSX : CWX.UN

CanWel Building Materials Group Ltd.

March 22, 2006 23:35 ET

CanWel Building Materials Income Fund Announces Fourth Quarter and Full Year 2005 Financial Results

VANCOUVER, BRITISH COLMUBIA--(CCNMatthews - March 22, 2006) -

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES

CanWel Building Materials Income Fund (the "Fund") (TSX:CWX.UN) today reported its results for the three-month and full year periods ended December 31, 2005. For year-over-year comparison purposes, it should be noted that the fiscal 2005 results include the effect of the Sodisco-Howden Group Inc. ("Sodisco-Howden") acquisition completed in February 2005.

For the three month period ended December 31, 2005, revenues increased by 61 percent to $205.5 million compared to $128 million for the same period in 2004. Gross margin during the fourth quarter of 2005 was 12.3 percent or $25.3 million versus 9.0 percent or $11.5 million in 2004. EBITDA(1) was $5.8 million for the fourth quarter of 2005, compared to $3.2 million for the corresponding period in 2004, an increase of 81 percent.

For the twelve-month period ended December 31, 2005, revenues increased by 68 percent to $1.0 billion compared to $598 million in 2004. During the period, the Fund's percentage of sales of lumber and panel products increased by 8.5 percent, but decreased as a percentage of total sales from 63 percent to 41 percent in 2005. This sales increase was accomplished despite the average price of lumber decreasing approximately 13 percent and the average price of panel products decreasing approximately 25 percent in 2005. Specialty and hardware product sales also increased on a year-over-year basis to $593 million versus $222 million in 2004, representing a 167 percent increase.

Gross margin for the year was 10.2 percent or $102.1 million versus 10.0 percent or $59.6 million in 2004. The lower than expected gross margins on lumber and panel products, increased one-time expenses associated with the trust reorganization, and costs associated with the Sodisco-Howden integration combined to reduce operating earnings to $18.1 million compared to $19.5 million in fiscal 2004. EBITDA for the period increased to $26.5 million, or 2.6 percent of revenues, versus $22.3 million or 3.7 percent of revenues in 2004. The decrease in EBITDA as a percentage of sales was also related the same factors impacting gross margin during 2005. Adjusting for the $2.0 million in non-recurring charges related to the integration of Sodisco-Howden and income trust reorganization, normalized EBITDA for 2005 was $28.5 million.

"Despite the weak commodity environment in 2005, we managed to grow the top line, and fully integrate the Sodisco-Howden acquisition," noted Tom Donaldson, President and CEO of CanWel Building Material Income Fund. "We have completed all the necessary realignments and created an efficient, scalable infrastructure which will allow Canwel to better leverage its position as a leading national distributor of building materials."

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 at www.canwel.com and with the securities regulatory authorities, available at www.sedar.com.

Certain forward looking statements are made in this news release and in other public filings by the Fund, within the meaning of applicable securities laws, including (but not limited to) statements about the integration of the Sodisco-Howden acquisition, the efficiency and scalea of the infrastructure of CanWel Building Materials Ltd. and the other subsidiary entities of the Fund (collectively, "CanWel"), and the ability of CanWel to leverage its position as a leading national distributor of building materials, as well as similar statements concerning anticipated future events, results, circumstances, performance or expectations, which reflect CanWel's current expectations and are based on information currently available to management. The words "may", "will", "should", "believe", "expect", "plan", "anticipate", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms, or other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward looking matters. These statements speak only as of the date of this press release and should not be read as guarantees of future performance or results, as actual results could differ materially from those anticipated in these forward looking statements.

Reliance should not be placed on forward looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Fund to differ materially from anticipated future results, performance or achievement expressed or implied by such forward looking statements. Factors that could cause actual results to differ materially from those set forth in the forward looking statements include, but are not limited to, the risk that the Sodisco-Howden acquisition will not be integrated successfully; the risk that any cost savings and any synergies from the transaction may not be fully realized or may take longer to realize than expected; the risk of disruption caused by the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk associated with general economic and business conditions; product selling prices risks; commodity price fluctuations; information systems risks; interest rate changes; increases in operating costs; the intensifying of competitive conditions; and other factors detailed in the periodic and other reports filed by the Fund with Canadian Securities Commissions and available on Sedar (that can be found at www.sedar.com). The preceding list is not an exhaustive list of possible factors. These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward looking statements.

Although the forward looking statements contained in this press release are based upon what CanWel believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements, and differences may be material. The Fund undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.

(1) EBITDA is defined to mean Earnings before Interest expense, provision for income taxes, gain or loss on sale of fixed assets, depreciation and amortization and stock based compensation expense. Normalized EBITDA means EBITDA for the relevant period adjusted for one time acquisition integration costs and income trust conversion costs. EBITDA and normalized EBITDA are key measures used by management to evaluate the Fund's profitability. EBITDA and normalized EBITTDA are not considered a measure of financial performance under generally accepted accounting principles. Items excluded from EBITDA and normalized EBITDA are significant to understanding and assessing financial performance. EBITDA and normalized EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operations or other financial statement data presented in the Consolidated Financial Statements as indicators of financial performance or liquidity. Because EBITDA and normalized EBITDA are not measurements determined in accordance with generally accepted accounting principles, as presented, it may not be comparable to other similarly titled measures of other companies.

Contact Information

  • CanWel Building Materials Income Fund
    Ali Mahdavi
    Investor Relations
    (416) 962-3300 or +1 (866) 430-6247
    amahdavi@genoa.ca