CanWel Building Materials Group Ltd.

CanWel Building Materials Group Ltd.

August 09, 2006 08:00 ET

CanWel Building Materials Income Fund Reports its Second Quarter Results for the Three Months Ended June 30, 2006

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 9, 2006) -


CanWel Building Materials Income Fund ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) announced today its second quarter fiscal 2006 financial results for the period ended June 30, 2006.

Second Quarter Highlights(2):

- Distributable Cash(3) was $8.5 million

- EBITDA(4) increases to $10.7 million

- Net earnings more than double to $5.3 million

Net earnings increased to $5.3 million compared to net earnings of $2.6 million during the same period in 2005. For the quarter, EBITDA increased by 16 percent to $10.7 million compared to $9.2 million for the comparable period last year. Distributable cash was $8.5 million or $0.253 cents per unit during the second quarter of 2006.

During the three-month period ended June 30, 2006, CanWel reported sales of $259 million compared to $302 million for the comparable period in 2005. The lower sales were affected by downward price pressure on lumber and panel products during the second quarter of 2006 compared to the same period last year. For the quarter, the Fund reported gross margin of $29.1 million or 11.2 percent of sales, versus $29.7 million or 9.8 percent of sales in 2005.

For the six-month period ended June 30, 2006, CanWel reported sales of $476 million compared to $529 million for the comparable period in 2005. For the six-month period, the Fund reported gross margin $50.2 million or 10.6 percent of sales, versus $52.4 million or 9.9 percent of sales in 2005. During the six-month period, Canwel reported net earnings of $7.7 million compared to net earnings of $2.4 million during the same period in 2005. For the period, EBITDA increased to $14.4 million, compared to $12.3 million for the same period in 2005.

"We are pleased to report strong and improved margins as well as achievement of a 69 percent payout ratio(2) on distributable cash during the second quarter," noted Tom Donaldson, President and CEO of CanWel. "We continue to build our business on higher margin products as we offset the negative impact on gross margin that the decline in the average value of lumber and panel products has had on our results."

"During the second quarter of 2006, focus within the operating entities has been on improving our operational efficiencies as we launch our new hardware and specialty product programs while keeping tight control on costs", stated Amar Doman, Chairman of CanWel.

The Fund will also be holding a conference call to discuss the second quarter financial results and respond to analyst questions today, August 9, 2006 at 4:00 p.m. EST. Participants should dial 416-695-7848 or 1-888-280-8771 at least 10 minutes prior to the conference time of 4:00 p.m. EST. For those unable to attend the call, a replay will be available after 6:00 p.m. at 416-695-5275 or 1-888-509-0081 pass code 628282 until midnight, August 18, 2006.

The full text version of the unaudited interim financial statements is included in CanWel's second quarter report, which is available on or at

CanWel continues to emphasize its commitment to be a value-based organization. CanWel's values of being customer and supplier centric are being driven throughout the organization using an in-house marketing program. Through these internal initiatives, CanWel ensures that sales and purchasing actions each day are focused on developing value added products and services for its customers and suppliers, thereby focusing on creating value for our unitholders.

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, with 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 with the securities regulatory authorities, available at

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 scale 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 Fund's AIF dated March 31, 2006, periodic and other reports filed by the Fund with Canadian Securities Commissions and available on Sedar (that can be found at 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) References to the Fund or CanWel include references to CanWel Building Materials Ltd. as the context may require.

(2) Please refer to our Q2, 2006 MD&A for further information.

(3) Reference is also made to Distributable Cash of the Fund. This is a non-GAAP measure generally used by Canadian open ended income funds as an indicator of financial performance. Management believes that this measure provides investors with an indication of the cash available for distribution to unitholders. We define distributable cash as net earnings before depreciation, amortization, gain or loss on sale of fixed assets, provision for future income taxes and stock-based compensation and after maintenance of business capital expenditure and contributions to any reserves the Board of Trustees deem to be reasonable and necessary for the operations of the Fund.

(4) EBITDA is defined to mean Earnings before Interest expense, Income Taxes, Depreciation and Amortization and stock based compensation expense.

EBITDA is a key measure used by management to evaluate the Fund's profitability. EBITDA is not considered a measure of financial performance under generally accepted accounting principles. Items excluded from EBITDA are significant to understanding and assessing financial performance. 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 is not a measurement determined in accordance with generally accepted accounting principles, as presented, it may not be comparable to other similarly titled measures of other companies.

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