CanWel Building Materials Group Ltd.

CanWel Building Materials Group Ltd.

May 14, 2009 16:00 ET

CanWel Building Materials Income Fund Reports Results for the Three Months Ended March 31, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2009) -


CanWel Building Materials Income Fund ("CanWel" or the "Fund"(1)) (TSX:CWX.UN) announced today its financial results for the three months ended March 31, 2009.

During the three-month period ended March 31, 2009 (2) CanWel reported sales of $136 million compared to $174 million for the comparable period in 2008. For the quarter, the Fund reported gross margin of $16 million or 11.9 percent of sales versus $21 million or 12.0 percent of sales in 2008. Sales were lower during the quarter, on a year-over-year basis, primarily due to the overall weakness in the global economic environment, continued industry wide downward price pressure in lumber and panel products and regional severe winter weather. However, gross margin as a percentage of sales, while virtually unchanged, remained strong due to increased margins on specialty and hardware products, which represented 60 percent of the Fund's sales in the quarter.

For the quarter, EBITDA (3) amounted to $373,000 compared to $3.4 million for the comparable period last year. Excluding the negative impact of a $493,000 non-recurring restructuring charge reflecting severance costs related to actions taken in the quarter to adjust our business for the current economic environment, normalized EBITDA was $866,000 during the first quarter of 2009. Net loss amounted to $448,000 compared to net income of $166,000 during the same period in 2008.

Reconciliation of Net Income to EBITDA:

Three months ended March 31
(in thousands of dollars) 2009 2008

Net Earnings $ (448) $ 675
Income tax (recovery) (1,939) (1,461)
Cash interest expense 795 1,590
Depreciation of property plant and equipment 1,318 1,701
Amortization of intangible and other assets 398 401
Amortization of deferred gain (18) (18)
Amortization of financing costs 64 64
Amortization of discount on long-term debt 32 32
Loss/(gain) on disposal of fixed assets - 20
Unit-based compensation 171 373

EBITDA $ 373 $ 3,377


While the trend of year-over-year deflation still continued within the quarter in regard to the overall construction material product family, our focus on margins from our specialty and hardware products and cost control initiatives helped our financial performance," noted Tom Donaldson, President and CEO of CanWel. "Given the weak condition of the current economic environment, we are continually reviewing our operations in an effort to maintain a sustainable level of distributions while enduring the global economic climate."

"The Canadian economy encountered difficult challenges in the first quarter and we are experiencing continued downward price pressures on lumber and plywood and a reduction in home construction activity. We continue to focus on cost control to mitigate these effects, and note that the Fund's workforce has been reduced by approximately 20 percent on a year-over-year basis, as we made adjustments to right size the Fund during the quarter, and closed one distribution facility and one treating facility during 2008. As we move through 2009, we will continue to monitor the strength of the Canadian economy and continue to adjust our business model to match economic activity," stated Amar Doman, Chairman of the Board of CanWel.

The full text version of the unaudited interim financial statements is included in CanWel's first 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, 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

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, 2009 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 ( 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 Q1 2009 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).

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