Drive Products Income Fund

Drive Products Income Fund

March 27, 2007 15:13 ET

Drive Products Income Fund Announces 2006 Annual Financial Results

TORONTO, ONTARIO--(CCNMatthews - March 27, 2007) -

HIGHLIGHTS compared to 2005:
- Revenue up 24%;
- EBITDA up 46.5%;
- Net earnings up 12.5%;
- Payout ratio of 89.6%;

Drive Products Income Fund (TSX:DPI.UN) today announced its financial results for the period ended December 31, 2006. The Fund commenced operations on August 25, 2006 when it completed its initial public offering ("IPO"). Therefore, the Fund's results of operations included in the financial statements cover the 129 day period from August 25, 2006 to December 31, 2006. For comparative purposes, the pre-IPO results of Drive Products for the period from January 1, 2006 to August 24, 2006 have been combined with the results of the Fund for the subsequent 129 day period to December 31, 2006.

Revenue for the combined twelve month period ended December 31, 2006 was $102.2 million, compared to $83.0 million for the twelve month period ended December 31, 2005, representing an increase of $19.2 million or 23.1% . Net earnings for the combined twelve month period ended December 31, 2006 were $12.3 million compared to $10.9 million for the comparable period in 2005, representing and increase of $1.4 million or 12.5%. The increase in revenues and earnings were primarily driven by the increased economic activity in Western Canada, acquisitions and increased sales to the defence industry.

"We are pleased with the performance of the Fund since inception", said Greg Edmonds, Chief Executive Officer. "EBITDA and distributable cash were in line with the expectations noted in the prospectus. The payout ratio for the initial 129 day period was 89.6% compared to the forecast of 90% provided in the prospectus. The Fund continues to operate without any long-term bank debt and management is actively pursuing strategic acquisitions that will increase unitholder value and be accretive to the Fund. Two such acquisitions are expected to close early in the second quarter of 2007. Unitholders can take comfort in the fact that senior management has retained a 45.5% interest in the Fund, thereby aligning our economic interests with those of the public unitholders".

EBITDA(1) was $18.9 million for the combined twelve month period ended December 31, 2006, compared to $12.9 million in the comparable period in 2005, representing an increase of $6.0 million or 46.5% . Strong earnings accounted for the increase. Distributable cash(1) for the initial period from August 25, 2006 to December 31, 2006 was $6.0 million or $0.4323 per unit compared to distributions declared of $5.4 million or $0.3874. The Fund's distributions in 2006 comprised 78.8% income and 21.2% return of capital.

Summary of results:

Drive (1) (1) (1)
Products Drive Drive Drive
($ thousands except per Income Fund Products Products Products
unit figures) Aug 25 Jan 1 Jan 1 Oct 1
to Dec 31 to Dec 31 to Dec 31 to Dec 31
2006 2006 2005 2005
$ $ $ $

Sales 39,737 102,165 83,009 25,767

Cost of Sales and General and
Administrative 33,417 83,220 70,107 21,090

EBITDA (2) 6,320 18,945 12,902 4,677

Amortization 5,469 6,165 1,259 246

Interest expense (income) 26 461 697 184

Net earnings (3) 825 12,319 10,946 4,247

Average number of units
outstanding (4) 13,982 - - -

Basic and diluted earnings per
unit .059 - - -

(1) Results for all periods prior to August 25, 2006 are based on unaudited
results as presented in internally prepared financial statements.

(2) EBITDA and distributable cash are non-GAAP measure.
See "Non-GAAP Measures" for definitions.

(3) The Fund's taxable earnings are allocated to its unitholders and taxed
in their hands. Therefore, no amount is shown for income tax expense.

(4) For purposes of calculating the average number of units outstanding,
Fund units and Class B units of Drive Products Limited Partnership,
exchangeable for Fund units on a one-for-one basis, have been included.

Annual Report

The Fund's Annual Report is available on the Fund's website at and at

Drive Products will hold a conference call to discuss these financial results on March 28, 2007 at 10:00 am (Eastern).

Available on the call to answer questions will be Greg Edmonds, Chief Executive Officer and Chris Boudreau, Chief Financial Officer.

To participate in the conference call, please dial 416-695-9701 or 1-888-789-0089.

An archived recording of the call will be available at 416-695-5275 or 1-888-509-0081 (Passcode ID 641537) from two hours after the completion of the call to midnight April 11, 2006.

(1) Non-GAAP Measures

EBITDA and distributable cash are not earnings measures recognized by GAAP and do not have standardized meanings prescribed by GAAP. Therefore, EBITDA and distributable cash may not be comparable to similarly titled measures presented by other issuers. Investors are cautioned that EBITDA and distributable cash should not be construed as an alternative to net income or loss determined in accordance with GAAP as indicators of the Fund's performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows. References to EBITDA are to net earnings adjusted to exclude income taxes, gains or losses on disposal of capital assets, amortization of capital assets and intangible assets, and interest expense. References to distributable cash are to EBITDA, adjusted for maintenance capital expenditures and other adjustments listed in the reconciliation provided.

About Drive Products Income Fund

Drive Products Income Fund holds a 54.5% indirect interest in Drive Products. Founded in 1983, Drive Products is a Canadian leader in the design and installation of systems solutions that transform a conventional new truck chassis into a specialized vehicle that meets a customer's technical and performance requirements. To achieve this, Drive Products offers a wide variety of products such as power take-offs, hydraulic pumps, motors and coolers, winches, cables and controls, drivelines, blowers and compressors, hoses and fittings, custom consoles, snowplows, spreaders and electronic spreader controls, from leading international manufacturers, in many instances as the sole distributor in Canada.

Forward-Looking Statements

This press release contains forward-looking statements relating to expected future events and financial and operating results of the Fund. These statements involve known and unknown risks and uncertainties. Actual results may differ materially from those anticipated by such forward-looking statements for a variety of reasons, including without limitation, market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's continuous disclosure documents filed with the Canadian securities regulatory authorities. The Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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