The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund

February 21, 2007 18:30 ET

The Consumers' Waterheater Income Fund Reports Solid Growth in 2006 Fiscal Year Results and Increases Monthly Distributions by 4.9%

TORONTO, ONTARIO--(CCNMatthews - Feb. 21, 2007) - The Consumers' Waterheater Income Fund (TSX:CWI.UN) (the "Fund") today reported financial results for the fourth quarter and year ended December 31, 2006.


- Monthly unitholder distributions increase to $0.1075 per unit effective April

- 2006 Revenue increased 4.9% over 2005

- Net earnings increased to $45.2 million compared to $21.9 million last year

- On December 29, 2006 the Fund acquired approximately 4,100 water-heaters located in Markham, Ontario

- Subsequent to year-end the Fund added 85,000 water heaters to its portfolio with the acquisition of Toronto Hydro Energy Services Inc. water heater rental business

The Fund announced a 4.9% increase in its monthly cash distribution to unitholders to $0.1075 from $0.1025 per unit, effective April 2007 in respect of unitholders as at March 30, 2007. The new distribution rate increases the Fund's annual distribution to $1.29 per unit from $1.23 per unit.

"This is the sixth time since the Fund's inception that we have increased monthly distributions and this demonstrates our ability to generate increasing cash flows," said John Macdonald, President and CEO. "Our results for the year are proof of our strong business fundamentals and solid customer base."

During the fourth quarter, the Fund completed the acquisition of the rental water heater business of PowerStream Inc. of Markham, Ontario. This acquisition added approximately 4,100 customer water heater accounts to the Fund's existing customer base. Subsequent to year-end, the Fund acquired the water heater rental business of Toronto Hydro Energy Services Inc. ("TH Energy"). The TH Energy portfolio acquisition added approximately 85,000 water heaters, bringing the Fund's total rental portfolio to over 1.4 million units.

"Our recent acquisitions show that we have the ability to grow our business and enhance long-term value for our unitholders," said Mr. Macdonald. "Together, they enhance our operations in our core market in the Greater Toronto Area and give us an expanded platform from which to pursue further growth in 2007."

Revenue for the fourth quarter increased 5.2% to $39.5 million, from $37.6 million in the fourth quarter of 2005. Revenue for fiscal 2006 increased 4.9% to $156.7 million compared to $149.4 million in fiscal 2005. These increases were mainly due to a 3.5% increase in rental rates commencing at the beginning of 2006.

EBITDA for the year increased to $137.5 million, representing a 4.7% improvement compared to last year.

During fiscal 2006, the Fund generated net earnings of $45.2 million, an increase of $23.3 million in 2005. The impact of increased revenues combined with a higher recovery of future income taxes in 2006 resulted in higher net earnings in 2006 compared to last year.

Selected Financial and Operating Highlights (1)

(in thousands of dollars, except Fiscal Fiscal Fiscal
unit and per unit amounts) 2006 2005 2004

Financial Highlights

Total revenue $ 156,697 $ 149,389 $ 142,886
Net earnings 45,249 21,862 15,656
Earnings before interest, depreciation,
taxes and amortization (EBITDA)(2) 137,519 131,315 124,200
Cash flow from operating activities 119,864 112,451 103,711
Capital expenditures (net)(3) 53,132 48,853 45,238
Unitholder distributions declared 59,003 55,625 52,842
Total assets 1,044,059 1,088,824 1,135,265
Total debt 500,000 500,000 500,000
Unitholders' equity 301,333 315,003 348,698
Average Fund units outstanding 49,524,092 49,524,092 49,524,092

Per Unit Analysis

Net earnings $ 0.914 $ 0.441 $ 0.316
Cash flow from operating activities 2.420 2.271 2.094
Capital expenditures 1.073 0.986 0.913
Unitholder distributions declared 1.191 1.123 1.067

Operating Highlights

Unit replacements 59,330 56,976 55,419
Additions 23,603 25,662 31,232
Removals 21,718 17,521 16,613
Acquisition of PowerStream assets 4,092 - -
Units in Service 1,332,933 1,326,956 1,318,815
(1) Financial results have been prepared in accordance with Canadian
Generally Accepted Accounting Principles (GAAP). Specific accounting
policies are disclosed in the Fund's Audited Annual Financial Statements,
which are available on SEDAR at

(2) EBITDA is a non-GAAP financial measure, and therefore has no
standardized meaning prescribed by GAAP and may not be comparable to
similar terms and measures by other similar issuers. EBITDA is intended to
provide additional information on the Trust's performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. More specific details can be found in the
Operating Margins section of the MD&A.

(3) Net of proceeds realized from the disposition of assets. Capital
expenditures include the acquistion of PowerStream assets (see note 3
to the Consolidated Financial Statements).

The Fund's annual financial statements and management discussion and analysis are available at or at the Fund's investor relations website at

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss CWIF's performance for the 2006 fiscal year and fourth quarter on Thursday, February 22, 2007 at 10 a.m. ET. The call can be accessed by dialing 416-644-3420 or 1-800-731-5319. The audio webcast will be archived at A taped rebroadcast will be available until 12 a.m. ET on March 1, 2007. The rebroadcast can be accessed by dialing 1-877-289-8525 or 416-640-1917 and entering the passcode 21218270#.

About The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund indirectly owns a portfolio of approximately 1.4 million installed water heaters and other assets, rented primarily to residential customers in Ontario.

The Fund is an unincorporated open-ended trust established with an unlimited number of trust units under the laws of the Province of Ontario pursuant to a Declaration of Trust dated October 28, 2002.

The Fund commenced operations on December 17, 2002, when it completed its initial public offering of Fund units, the proceeds of which were used to fund the purchase of the rental portfolio from Direct Energy Marketing Limited ("Direct Energy").

Direct Energy continues to provide service support to the rental portfolio and subject to certain exceptions, receives 35% of aggregate rental revenues for its co-ownership interest in certain water heater related assets (with the Fund owning and receiving the remaining 65%). As a result, the Fund's exposure to operating risk is significantly reduced. The Fund has no investment interest in Direct Energy's services business or operations.

Additional information regarding the Fund, including its current Annual Information Form ("AIF") is available on SEDAR at

Certain statements in this News Release are forward-looking statements, which reflect management's expectation regarding the Fund's growth, results of operations and business prospects. Such forward-looking statements reflect management's current beliefs and are based on information available to them. Many factors could cause results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements are based on what management believes to be reasonable assumptions, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. Management is under no obligation (and expressly disclaims any such obligation) to update or revise the forward-looking information, whether as a result of new information, future events or otherwise.

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