Foremost Income Fund

Foremost Income Fund

November 12, 2015 17:19 ET

Foremost Income Fund Reports Q3 2015 Results

CALGARY, ALBERTA--(Marketwired - Nov. 12, 2015) - Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three and nine months ended September 30, 2015.

OVERVIEW

The Fund is an unincorporated open end mutual fund trust conducting its business through two operating segments, Foremost Energy Equipment ("FEE") and Foremost Mobile Equipment ("FME"). FEE's overall business is focused on the oil and gas industry and includes activity from six manufacturing sites throughout Alberta. FME manufactures off‐highway large wheeled and tracked vehicles, hydrovac and vacuum trucks, equipment for custom drilling, construction, water wells, and mining sectors. FME has three manufacturing facilities located in Alberta.

Highlights from Q3 2015:

  • Revenue decreased by 27%, or $16.1 million, compared quarter over quarter. This decrease continues to be felt by both operating segments, Energy Equipment and Mobile Equipment, and is discussed further in the segmented results of operations section of the MD&A.
  • Gross profit increased to 17% in 2015, compared with 15% in the third quarter of 2014. This slight increase reflects higher margins in the Mobile Equipment segment and are discussed further in the segmented results section of the MD&A.
  • Administration costs decreased by $0.5 million, from $4.4 million in Q3 2014 to $3.9 million in Q3 2015. Reduced costs in this area come from reduced workforce, work hours and pay for staff at certain locations, as well as decreased discretionary spending, and continued discipline about costs.
  • During the third quarter of 2015, the Fund entered into a Russian Ruble foreign exchange contract linked to a specific foreign order. This, along with an outstanding US exchange contract, has resulted in an unrecognized loss of $122,000 (2014 ‐ $711,000 gain). All exchange hedging activity at Foremost is non‐speculative and used to eliminate exchange fluctuation risks associated with these contracts. In all cases, hedging contracts are linked to customer contracts or pools of customer contracts.
  • In September the Board of Trustees announced that effective January 1, 2016, Kevin Johnson, VP Foremost Mobile Equipment will become President and Bevan May, Interim CEO will return to his role as Chairman of the Board.

Highlights for Year‐to‐Date 2015:

  • Revenue decreased by $25.8 million, or 15%, due to ongoing weak demand for certain product lines, most notably shop tanks, vehicles, trucks, compression and parts. More information can be found in the segmented results of operations section of the MD&A.
  • Margins dropped by $4.4 million, or 19%. This is a direct result of reduced sales volumes in most product lines. Margin as a percentage remains consistent year over year at 13%. This reflects continuous competitive pressures on quoted margin.
  • Administration costs decreased by $1.4 million. The Fund focuses on continuing to reduce these expenses.
  • A $1.1 million foreign exchange gain was recognized during 2015.
  • At the start of the fourth quarter the Fund announced the consolidation of the code vacuum truck fabrication to the Stettler facility. This will result in the closure of the Edmonton fabrication shop by the end of the year.
SUMMARY OF QUARTERLY INFORMATION
(000's, except per Trust Unit amount)
2015 Q1 Q2 Q3 Q4 Total
Revenue $ 56,672 $ 48,358 $ 43,538 $ 148,568
Gross profit ($) $ 8,021 $ 3,342 $ 7,290 $ 18,653
Gross profit (%) 14 % 7 % 17 % 13 %
Admin. expenses ($) $ 4,428 $ 4,310 $ 3,916 $ 12,654
Admin. expenses (% of total revenue) 8 % 9 % 9 % 9 %
Exchange rate gain/(loss) $ 1,254 $ (168 ) $ 289 $ 1,375
EBITDA $ 4,769 $ (1,126 ) $ 3,696 $ 7,339
Income/(loss) from operations $ 2,362 $ (2,177 ) $ 2,136 $ 2,321
Comprehensive income/(loss) $ 2,775 $ (1,874 ) $ 2,567 $ 3,468
Trust units redeemed 77,350 1,379 267 78,996
Redemptions $ 484 $ 8 $ 1 $ 493
Basic and diluted earnings per trust unit $ 0.15 $ 0.14 0.14 $ 0.43
2014 Q1 Q2 Q3 Q4 Total
Revenue $ 46,439 $ 68,314 $ 59,654 $ 61,617 $ 236,024
Gross profit ($) $ 5,029 $ 9,336 $ 8,735 $ 7,809 $ 30,909
Gross profit (%) 11 % 14 % 15 % 13 % 13 %
Admin. expenses ($) $ 4,886 $ 4,828 $ 4,400 $ 5,646 $ 19,760
Admin. expenses (% of total revenue) 11 % 7 % 7 % 9 % 8 %
Exchange rate gain/(loss) $ (133 ) $ 231 $ 418 $ 123 $ 639
EBITDA $ 9 $ 4,162 $ 5,459 $ 1,737 $ 11,367
Income/(loss) from operations $ (1,140 ) $ 3,207 $ 3,039 $ 491 $ 5,597
Comprehensive income/(loss) $ (1,541 ) $ 1,950 $ 3,513 $ (15,223 ) $ (11,301 )
Trust units redeemed 21,123 66,527 37,353 125,003
Redemptions $ 151 $ 474 $ 246 $ 871
Basic and diluted (loss)/earnings per trust unit $ (0.08 ) $ 0.10 $ 0.19 $ (0.82 ) $ (0.61 )
2013 Q1 Q2 Q3 Q4 Total
Revenue $ 64,001 $ 56,602 $ 50,232 $ 59,094 $ 229,929
Gross profit ($) $ 10,149 $ 4,770 $ 7,169 $ 7,763 $ 29,851
Gross profit (%) 16 % 8 % 14 % 13 % 13 %
Admin. expenses ($) $ 5,517 $ 5,920 $ 5,519 $ 5,171 $ 22,127
Admin. expenses (% of total revenue) 9 % 10 % 11 % 9 % 10 %
Exchange rate gain/(loss) $ (48 ) $ 225 $ 54 $ (38 ) $ 193
EBITDA $ 4,632 $ (1,150 ) $ 1,649 $ 2,592 $ 7,723
Income/(loss) from operations $ 3,484 $ (2,334 ) $ 423 $ 1,325 $ 2,898
Comprehensive income/(loss) $ 2,810 $ (1,504 ) $ (2,890 ) $ 1,031 $ (553 )
Trust units redeemed 8,560 13,326 76,451 30,394 128,731
Redemptions $ 70 $ 107 $ 627 $ 229 $ 1,033
Basic and diluted earnings/(loss) per trust unit $ 0.15 $ (0.08 ) $ (0.15 ) $ 0.05 $ (0.03 )

TRUST UNIT REDEMPTIONS AND DISTRIBUTIONS

The Fund redeemed 78,996 Trust Units during the nine months ended September 30, 2015 through its normal redemption program resulting in cash payments of $400,000 and promissory notes payable equal to $92,737. During 2014 the Fund redeemed 87,650 Trust Units for $200,103 and promissory notes of $424,589.

The Trustees have determined that, as of November 12, 2015, the Fund will redeem tendered Trust Units at a price of $5.80 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.

Contact Information