Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

November 14, 2006 10:03 ET

Foremost Income Fund Reports Record Third Quarter Revenues and Earnings

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2006) - Foremost Income Fund (TSX:FMO.UN) announces the financial results for the three and nine months ended September 30, 2006.



(000's, except per Trust for the THREE months for the NINE months
Unit amounts) ended September 30, ended September 30,
2006 2005 2006 2005
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Revenue $ 72,207 $ 51,816 $ 203,501 $ 139,906
Cost of sales 50,472 40,296 146,132 108,954
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21,735 11,520 57,369 30,952
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Selling, general and
administrative 7,887 3,484 19,588 10,099
Interest 297 242 611 968
Amortization 1,126 748 2,815 2,013
Foreign exchange loss
(gain) (144) 233 (306) 175
Gain on disposal of
property, plant and
equipment (125) - (125) (29)
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9,041 4,707 22,583 13,226
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Income before income taxes 12,694 6,813 34,786 17,726
Future income tax recovery (63) - (146) -
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Net income $ 12,757 $ 6,813 $ 34,932 $ 17,726
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Earnings per Trust Unit
Basic $ 0.66 $ 0.36 $ 1.82 $ 0.95
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Diluted $ 0.64 $ 0.35 $ 1.77 $ 0.92
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TRUST UNIT DISTRIBUTIONS
TO NET INCOME RATIO
---------------------------------------------------------------------------
Net income $ 12,757 $ 6,813 $ 34,932 $ 17,726
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Trust Unit distributions $ 7,803 $ 2,837 $ 20,326 $ 7,975
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Trust Unit distributions
per Trust Unit $ 0.40 $ 0.15 $ 1.05 $ 0.43
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Trust Unit distributions
to Net Income Ratio 61% 42% 58% 45%
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The Fund's growth strategy has generated record third quarter and nine month financial results.

Consolidated revenues for Q3-2006 were $72.2 million, an increase of $20.4 million (39.4%) over the Q3-2005 $51.8 million. Q3-2006 revenues also increased $4.2 million (6.1%) over Q2-2006. The gross margin for Q3-2006 was $21.7 million (30.1%) compared to $19.0 million (27.9%) for Q2-2006 and $11.5 million (22.2%) for Q3-2005. Net income for Q3-2006 was $12.8 million compared to $6.8 million in Q3-2005, an increase of 88.2%. Q3-2006 net income also increased $0.9 million (7.6%) over Q2-2006. Q3-2006 net income per Trust Unit was $0.66, as compared to $0.61 for Q2-2006 and an 83.3% increase over the $0.36 for Q3-2005. Q3-2006 funds flow from operations was $13.9 million as compared to $12.8 million for Q2-2006 and $7.6 million for Q3-2005.

Revenues for YTD-2006 were $203.5 million as compared to $139.9 million for YTD-2005, an increase of $63.6 million or 45.5% over the same period. YTD-2006 gross margin was $57.4 million (28.2%) as compared to YTD-2005 $30.9 million (22.1%). YTD-2006 net income of $34.9 million reflects a $17.2 million increase, nearly double the YTD-2005 net income of $17.7 million. YTD-2006 net income per Trust Unit was $1.82, increasing $0.87 (91.5%) over the $0.95 per Trust Unit for YTD-2005. YTD-2006 funds flow from operations was $38.1 million as compared to $19.7 million for YTD-2005.

Capacity expansions at Universal Industries (40,000 ft2), Peace Land (30,000 ft2) and Foremost Industries (30,000 ft2) are now expected to be available for use by the end of Q4-2006 and fully operational in Q1-2007.

Demand for the Fund's product lines remains strong. The business units of the Fund continue to operate near capacity and have orders with various 2007 delivery dates. The Fund anticipates that with the continuation of current levels of customer demand, the completion of the capacity expansions and full integration of the Maloney operations, revenues and net income should increase marginally in the fourth quarter and for fiscal 2007. Given the current plant utilization levels and no accretive acquisitions, these increases are expected to be similar to those between the second and third quarters.

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 of: Universal Industries, a manufacturer of oil treating systems, shop and field storage tanks; Maloney Industries, a manufacturer of medium to large scale oil and gas process treating equipment; Stettler Oil and Gas Equipment, a gas separator manufacturer; Wilco Industries; Corlac Industries; Peace Land Fabricating and Supply Ltd. and De-In Industries Ltd., all shop tank manufacturers. Foremost is comprised of the business units of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries; and Mobile Drilling, a U.S. based business which manufactures and sells rigs and parts for the geotechnical industry.



On behalf of the Trustees
Foremost Income Fund

(Signed: J.T. Grenon)

James T. Grenon, Trustee


FORWARD-LOOKING STATEMENT

Certain statements in this release may constitute forward-looking statements involving known and unknown risks, uncertainties and other factors that 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 release, such statements use words such as "may", "will", "expect", "believe" and "plan". These statements reflect management's current expectations regarding future events and operating performance and are valid only up to the date of this 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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