Foremost Income Fund

Foremost Income Fund

May 09, 2013 15:38 ET

Foremost Income Fund Reports Q1 Results and Increase in Redemption Price

CALGARY, ALBERTA--(Marketwired - May 9, 2013) - Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three months ended March 31, 2013.

OVERVIEW

The Fund is an unincorporated open end mutual fund trust conducting its business through Foremost Universal LP ("Universal") and Foremost Industries LP ("Foremost"). The Fund derives its operational income from both Universal and Foremost. Universal's overall business is focused on the oil and gas industry and contains the business units located at:

  • Lloydminster, Alberta - manufacturer of oil treating systems, shop and field storage tanks;
  • Bonnyville, Alberta - shop tank manufacturer
  • Calgary, Alberta - one manufacturing facility of medium- to large-scale oil and gas process treating equipment and another location which manufacturers sub-200 horsepower compressors
  • Stettler, Alberta - gas separator and hydrovac manufacturer;
  • Hythe, Alberta - shop tank manufacturer

Foremost is comprised of the Calgary, Alberta based business unit of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries.

At year end, and subsequent to, Foremost Universal LP completed an internal re-organization. This change was effected in order to bring clarification and consistency to the legal structure, resulting in fewer wholly owned subsidiaries and a corresponding increase in operating divisions. This restructuring transaction also resulted in simplified and streamlined processes for both external, including customers and vendors, and internal users.

FINANCIAL RESULTS:

The key elements from Q1 2013 are:

  • Revenues have dropped when comparing Q1 2013 and 2012, with a decrease of 9.6%. Consolidated revenues were $64.0 million versus $70.8 million for 2012.
  • Revenues outside of Canada have increased slightly from 23.4% to 23.8% of total revenues.
  • Operating activities generated a gross profit percentage of 15.9% as compared with 21.7% in 2012. Gross profits were $10.1 million as compared with $15.4 million for 2012.
  • Administrative expenses remained stable at 8.6% of revenue in both 2013 and 2012. Administrative expenses were $5.5 million in 2013 and $6.0 million for 2012.
  • Fluctuations in the exchange rates between the Canadian dollar against the U.S. dollar resulted in a $48,000 exchange loss compared to a $32,000 loss in 2012.
  • Income from operations decreased 61.2% to $3.4 million versus $8.9 million for 2012.
  • Comprehensive income was $2.8 million compared to a $7.6 million in 2012; comprehensive income includes a $1.2 million income tax expense for 2012 and $522,000 for 2013.
  • The Fund redeemed 8,560 Trust Units during the quarter through its normal redemption program resulting in payments of $72,000.
  • Basic and diluted earnings per Trust Unit were $0.15 per Trust Unit as compared with $0.41 per Trust Unit in 2012.
  • Quarter to date cash flow used in operations for 2013, calculated as comprehensive income adjusted for items not involving cash such as amortization, gains on disposals of property, plant and equipment, Trust Units based compensation and changes in non-cash working capital totaled $4.5 million versus cash generated of $12.5 million in 2012.
  • Cash has decreased $6.5 million since December 31, 2012. This decrease was the result of $4.5 million of funds used in operations, $2.0 million of net capital expenditures and $72,000 of Trust Unit redemptions. Working capital, defined as current assets less current liabilities increased $2.4 million to $75.8 million.
  • Property, plant and equipment at December 31, 2013 amounted to $60.7 million. The $0.9 million increase relative to 2012 reflects $2.0 million in acquisitions and $1.1 million decrease from amortization.
  • Short-term indebtedness increased to $20.7 million at March 31, 2013, compared to $14.1 million at December 31, 2012.
  • Unitholders' equity increased from $163.2 million at December 31, 2012 to $165.9 million at March 31, 2013.

SUMMARY OF QUARTERLY INFORMATION (unaudited)

(000's, except per trust unit amounts)

2013 Q1 Q2 Q3 Q4 Total
Revenue $ 64,001 $ 64,001
Income from operations $ 3,475 $ 3,475
Comprehensive Income $ 2,810 $ 2,810
Net income
Per trust unit, basic & diluted $ 0.15 $ 0.15
2012 Q1 Q2 Q3 Q4 Total
Revenue $ 70,822 $ 62,499 $ 64,746 $ 63,363 $ 261,430
Income from operations $ 8,952 $ 6,102 $ 7,386 $ 1,869 $ 24,309
Comprehensive Income $ 7,653 $ 5,078 $ 5,625 $ 1,371 $ 19,727
Net income (loss)
Per trust unit, basic and diluted $ 0.41 $ 0.27 $ 0.30 $ 0.07 $ 1.05

TRUST UNIT REDEMPTIONS AND DISTRIBUTIONS

For the three month period ending March 31, 2013 the Fund redeemed 8,560 Trust Units at an average price of $8.20 through its normal redemption program resulting in cash payments of $72,000. The Trustees have determined that, as of the date of May 9, 2013 the Fund will redeem tendered Trust Units at tangible book value + 10% or $8.20 per unit.

On behalf of the Trustees

Foremost Income Fund

Bevan May, Trustee

FORWARD-LOOKING STATEMENT

Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements include statements the Fund's intention to proceed with a Unitholders' meeting and information regarding the Trustees' views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund's expectations regarding the future availability of cash to meet redemption requests and the Trustee's expectations for redemption prices in December 2011 and January 2012. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange, and interest rates and stock market volatility.

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