CanWel Building Materials Group Ltd.
TSX : CWX.UN

CanWel Building Materials Group Ltd.

March 24, 2009 08:00 ET

CanWel Building Materials Income Fund Announces Fourth Quarter and Full Year 2008 Financial Results

2008 Financial Highlights - Revenues amount to $804 million - Full year Gross Margin increases to 12.6 percent - EBITDA(3) strong at $32.0 million - Payout ratio at 99 percent(5)

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 24, 2009) -

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES

CanWel Building Materials Income Fund(1) ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) today reported its results for the three-month and full year periods ended December 31, 2008.

For the year ended December 31, 2008(2), revenues amounted to $804 million compared to $862 million in 2007. Gross margin for the year was $101 million or 12.6 percent of sales versus $108 million or 12.5 percent of sales in the prior year. EBITDA for the year amounted to $32.0 million, versus $36.2 million in 2007. Net earnings amounted to $16.9 million compared to $17.3 million in 2007. In 2008, the Fund generated distributable cash(3) of 70.4 cents per unit(4), versus 77.0 cents per unit in 2007. Sales were lower on a year-over-year basis, primarily due to the continued industry wide downward price pressure in lumber and panel products, while gross margin remained strong due to the Fund's focus on higher margins in sales of specialty and hardware products.

"Overall, I am pleased with the Fund's strong performance in 2008 given the challenging macro economic environment we have been working through," noted Amar Doman, Chairman of CanWel. "The management team and all of our employees have done an exceptional job in maintaining and positioning the Fund to weather the economy as best we can, while we wait for signs of improvement in home renovation, housing starts and other long-term leading indicators of the prosperity of our business. On behalf of the Board, I would like to thank all of our employees for the ongoing commitment to the success of the Fund."

For the three month period ended December 31, 2008(2), the Fund reported revenues of $165.5 million compared to $188.7 million for the same period in 2007. Gross margin during the fourth quarter of 2008 amounted to 12.2 percent or $20 million versus 12.8 percent or $24 million in 2007. For the quarter, EBITDA(3) amounted to $4.4 million compared to $7.1 million for the comparable period last year. Net earnings amounted to $2.5 million compared to $1.1 million during the same period in 2007. During the fourth quarter of 2008, the Fund generated distributable cash of 8.8 cents per unit(4), versus 15.7 cents per unit during the corresponding period in 2007.



Reconciliation of Net Income to EBITDA:

Three months ended Year ended
December 31 December 31

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(in thousands of dollars) 2008 2007 2008 2007

Net Earnings $ 2,467 $ 1,096 $16,896 $17,333
Income tax provision (recovery) 39 2,299 78 1,003
Cash interest expense 998 1,372 5,783 7,384
Depreciation of property plant and
equipment 271 1,586 5,353 6,783
Amortization of intangible and other
assets 371 434 1,576 1,629
Amortization of deferred gain (18) (18) (73) (74)
Amortization of financing costs 65 62 257 246
Amortization of promissory notes 33 32 129 118
Loss on disposal and write down of fixed
assets 17 121 953 115
Unit-based compensation 191 149 1,163 1,655

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EBITDA $ 4,434 $ 7,133 $32,045 $36,192


"As a result of the current weak economic environment and a deterioration of the home renovation market and housing starts in the second half of 2008, our focus has been to maintain the strength and stability of our operations," noted Tom Donaldson, President and CEO of the Fund. "With the Fund's payout ratio at approximately 99 percent(5) in 2008, we are closely monitoring our markets and focusing on cost management. We are continually reviewing our operations on an ongoing basis in an effort to maintain a sustainable level of distributions while enduring the global economic climate."

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 16 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 www.sedar.com.

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", "future" 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 distributable cash(3), distributions or EBITDA(3) 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 would include, but are not limited to, dependence on market economic conditions, sales and margin risk, competition, information system risks, availability of supply of products, risks associated with the introduction of new product lines, product design risk, environmental risks, volatility of commodity prices, inventory risks, customer and vendor risks, acquisition and integration risks, availability of credit, credit risks and interest rate risks. In addition, there are numerous risks associated with an investment in units, which are also further described in the "Risk Factors" section of our annual information form dated March 31, 2008 and our other public filings on SEDAR. 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, pension funding risk, product selling prices, product performance, design and liability risk, software and software design risk, information systems risk, interest rate changes, operating costs, legislative changes, accounting pronouncements and competitive conditions. A further description of these and other factors can be found in the periodic and other reports filed by the Fund with Canadian securities commissions and available on SEDAR (http://www.sedar.com). 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 Q4/Year-End 2008 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).

(4) Distributable cash per unit is based on the weighted average number of fund units outstanding. The weighted average number of fund units outstanding for the period is the number of units determined by relating the portion of time within the reporting period that the fund units have been outstanding to the total time in the period.

(5) Not including a one time special distribution of $0.05 paid in April, 2008.

Contact Information

  • CanWel Building Materials Income Fund
    Ali Mahdavi
    (416) 962-3300 or 1-866-430-6247
    Email: am@spinnakercmi.com