CanWel Building Materials Group Ltd.
TSX : CWX.UN

CanWel Building Materials Group Ltd.

May 08, 2008 16:00 ET

CanWel Building Materials Income Fund Reports Results for the Three Months Ended March 31, 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 8, 2008) -

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES.

CanWel Building Materials Income Fund ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) announced today its first quarter fiscal 2008 financial results for the period ended March 31, 2008.

During the three-month period ended March 31, 2008(2), CanWel reported sales of $174 million compared to $190 million for the comparable period in 2007. For the quarter, the Fund reported gross margin of $20.8 million or 12.0 percent of sales versus $22 million or 11.6 percent of sales in 2007. Sales were slightly lower during the quarter, on a year-over-year basis, primarily due to industry wide downward price pressure in lumber and panel products and weather issues. However, gross margin as a percentage of sales increased due to increased margins on specialty and hardware products, which represented 60 percent of the Fund's sales in the quarter. Net earnings amounted to $675,000 compared to $166,000 during the same period in 2007. For the quarter, EBITDA(3) amounted to $3.4 million compared to $3.5 million for the comparable period last year. On an earnings per unit basis, net earnings for the first quarter were $0.02 per unit(4) compared to $0.00 for same period last year.

"With lumber prices down 21 percent and panel products prices also decreasing by 9 to 12 percent on a year-over-year basis, revenues were softer on a year-over-year basis, however we managed to increase gross margin to 12 percent on lower sales," noted Tom Donaldson, President and CEO of CanWel. "Hardware and specialty product margins continued to be strong and represent 60 percent of our total quarterly sales."

"I am pleased with the Fund's focus on profit margins with gross margin improving to 12.0 percent, up from 11.6 percent a year ago," stated Amar Doman, Chairman of CanWel. "The economic environment remains regionally weak and Canada experienced difficult winter weather impacting much of the country this year. However the Fund's positive performance during these challenging times is a result of management's focus on monitoring costs and maximizing margins."

The full text version of the unaudited interim financial statements is included in CanWel's first quarter report, which is available on www.sedar.com or at www.canwel.com.

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, 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 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" 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 performance of, and distributable cash3 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 include (i) the risk that the integration of the acquisition of the business of five pressure treating plants (the "Plants") announced on January 2, 2007 (the "Acquisition") may result in significant challenges, and management of CanWel may be unable to accomplish the integration of the Acquisition smoothly or successfully or without spending significant amounts of money; any inability of management to successfully integrate the operations of the combined business, including, but not limited to, information technology and financial reporting systems, any of which could have a material adverse effect on the business, financial condition and results of operations of CanWel; (ii) the risk that Plant revenues, profits and margins may not remain consistent with historical levels, (iii) the risk that competing firms which manufacture or distribute competitive product lines will aggressively defend or seek market share, or that existing customers of the Plants (some of whom are competitors of CanWel) cease doing business with the Plants or CanWel, in each case reducing, eliminating or reversing any potential positive economic impact on the Fund of the Acquisition; (iv) the risk that any increased sales, margin, profit or distributable cash resulting from the Acquisition may not be fully realized, realized at all or may take longer to realize than expected; (v) the risk of disruption from the introduction and implementation of the Acquisition making it more difficult to maintain relationships with customers, employees or suppliers, (vi) risks related to the operation of pressure treatment facilities, including but not limited to environmental risks, labour risks, risks related to maintenance capital expenditures for manufacturing facilities and risks related to capital expenditures for environmental risks, and (vii) the risk that the Acquisition is not completed or completed on terms that are different than as indicated herein.
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, product selling prices, product performance, design and liability risk, software and software design risk, commodity price fluctuations, information systems risk, interest rate changes, operating costs, and competitive conditions. A further description of these additional 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.

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(1) References to the Fund or CanWel include references to CanWel Building Materials Ltd. as the context may require.

(2) Please refer to our Q1 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) Earnings 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.

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