The Consumers' Waterheater Income Fund
TSX : CWI.UN

The Consumers' Waterheater Income Fund

February 20, 2009 06:39 ET

The Consumers' Waterheater Income Fund Reports Strong Revenue Growth in 2008

2008 Revenues, EBITDA(1) and Net Earnings Increase 7.4%, 3.4% and 6.9%, Respectively

TORONTO, ONTARIO--(Marketwire - Feb. 20, 2009) - The Consumers' Waterheater Income Fund ("Fund") (TSX:CWI.UN) today reported increases in total revenues, EBITDA(1), net earnings and Distributable Cash(1) in 2008 compared to 2007. The increases were reported in conjunction with the Fund's fourth quarter and full year 2008 financial results.

"In 2008 we achieved positive results on most of our key financial metrics. Further, we increased our growth potential by entering the Sub-metering business through the purchase of Stratacon," said John Macdonald, President and CEO. "The Fund's ability to grow during a very turbulent period for the economy and capital markets speaks to the overall strength and stability of our business. We are also very pleased with our successful $330 million debt refinancing that closed on February 13, 2009. We believe it significantly reduces our financial risk, and is further indication of debt investor confidence in the Fund's strong business fundamentals."

2008 Highlights

- Achieved a 7.4% or $12.4 million revenue increase to $180.5 million compared with 2007

- Grew EBITDA(1) during 2008 by 3.4% or $4.8 million to $146.5 million over the same period last year

- Increased net earnings for the year by 6.9% or $1.3 million to $19.5 million

- The attrition rate for the Fund's assets increased from 2.1% to 3.2% in 2008

- Reduced the Payout Ratio(1) to 92.2% in 2008 from 98.9%

- In February 2009, completed a $330 million long-term debt refinancing and repaid a bridge facility and related interest rate hedge instruments with the proceeds



----------------------------------------------------------------------------
Financial Highlights Three months ended Dec. 31, 12 months ended Dec. 31,
(in thousands of 2008 2007 2008 2007
dollars)
----------------------------------------------------------------------------
Total revenues $ 46,517 $ 42,503 $ 180,523 $ 168,128
Earnings before
interest,
taxes and
amortization
("EBITDA")(1) 35,560 35,322 146,484 141,674
Earnings before tax 2,179 3,043 17,413 14,482
Net earnings 4,079 26,383 19,514 18,252
----------------------------------------------------------------------------
Operating cash
flow(1) 33,128 31,244 134,473 125,611
Cash from operating
activities 35,183 37,417 128,708 126,498
----------------------------------------------------------------------------
Distributable
Cash(1) 15,328 15,116 69,255 64,103
Payout Ratio(1) 104.2% 105.7% 92.2% 98.9%
----------------------------------------------------------------------------


Fourth Quarter 2008 Financial Results

Total revenues for the fourth quarter of 2008 were $46.5 million, an increase of 9.4% or $4.0 million from the same quarter in 2007. This was due to the increase in rental rates implemented January 1, 2008 as well as a $2.3 million revenue contribution in the 2008 period following the acquisition of the Sub-metering business in August 2008.

EBITDA(1) for the fourth quarter 2008 increased slightly to $35.6 million from $35.3 million in the same quarter last year. The small fluctuation in EBITDA on a quarterly basis was due mainly to the timing of cost of sales and general and administrative ("G&A") expenses, customer claims and recognition of losses on the disposal of water heaters as well as an expected negative EBITDA(1) impact from Sub-metering business.

Net earnings for the three months ended December 31, 2008 were $4.1 million compared to $26.4 million for the same period last year. In the fourth quarter of 2007, the Fund reported a $23.3 million future income tax recovery due to a reduction in the income tax rates applicable to 2011 and beyond.

Full Year 2008 Financial Results

Total revenues for the year ended December 31, 2008, were $180.5 million, an increase of 7.4% from $168.1 million in the same period last year. This was due to the average rental rate increases of 3.9% effective January 2008, Sub-metering services of approximately $3.5 million, asset mix changes and other acquisitions.

EBITDA(1) for 2008 improved by 3.4% or $4.8 million to $146.5 million over 2007. This increase reflects stronger earnings offset partially by higher cost of sales and G&A expenses.

Net earnings for the year were $19.5 million, an improvement of $1.3 million, or 6.9% over the same period last year. The increase was due to higher earnings before tax offset by lower income tax recoveries for 2008.

Operating cash flow(1) for the year rose by $8.9 million, or 7.1%, to $134.5 million in 2008. The revenue improvement was enhanced by lower cash interest expenses offset by higher net losses on disposals, cost of sales and G&A expenses.

Distributable Cash(1) increased $5.2 million to $69.3 million from $64.1 million in the comparable period last year. The Fund declared $63.9 million in distributions to Unitholders, corresponding to a Payout Ratio(1) of 92.2%, compared to $63.4 million and a Payout Ratio(1) of 98.9% for the 2007 year.

Recent Developments

Effective January 1, 2009, the Fund increased its monthly rental rates on its portfolio of residential rental water heaters. The increase averaged approximately 3.9%.

Subsequent to year-end, the Fund's wholly-owned subsidiary, The Consumers' Waterheater Operating Trust ("Trust") issued publicly on February 13, 2009 $60 million aggregate principal amount of 6.20% Series 2009-1 Senior Notes due April 30, 2012 and $270 million aggregate principal amount of 6.75% Series 2009-2 Senior Notes due April 30, 2014. The Trust used the proceeds to repay the bridge credit facility and interest rate hedge instruments.

Financial Statements and MD&A

The Fund's financial statements and management's discussion and analysis for the fourth quarter and year end of 2008 are available at www.sedar.com or the investor relations section of the Fund's website at www.consumerswaterheaters.com.

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss the Fund's performance for the fourth quarter and year end of 2008 on Friday, February 20, 2009 at 10:00 a.m. (ET). Messrs. Macdonald and Bower will be on the call.



The call can be accessed as follows:
Toll free: +1 800.732.6179
Local area: +1 416.644.3415
By webcast: www.consumerswaterheaters.com


The audio webcast will be archived at www.consumerswaterheaters.com. A taped rebroadcast will be available until midnight on February 27, 2009. The rebroadcast can be accessed by dialing 1-877-289-8525 or 416-640-1917 and entering the pass code 21296569#.

About The Consumers' Waterheater Income Fund

The Fund owns a portfolio of approximately 1.4 million installed water heaters and other assets, rented primarily to residential customers in Ontario. The Fund also owns Stratacon Inc., a leading "smart" sub-metering company, with metering contracts for approximately 44,000 condominium and apartment suites in Alberta, Ontario and elsewhere in Canada.

Additional information regarding the Fund and the Trust, including their current Annual Information Forms is available on SEDAR at www.sedar.com.

(1) EBITDA and operating cash flow are non-GAAP measures, do not have standardized meanings prescribed by GAAP and may not be comparable to similar terms and measures presented by other issuers. EBITDA comprises net earnings plus income taxes, interest expenses and amortization expense, less interest income. Operating cash flow comprises net earnings adjusted for non-cash credits and charges, and is equal to cash flow from operating activities excluding changes in non-cash working capital.

Distributable Cash and Payout Ratio are non-GAAP measures, do not have standardized meanings prescribed by GAAP and may not be comparable to similar terms and measures presented by other issuers. These measures are described and reconciled in the Fund's MD&A. The Fund believes that Distributable Cash and Payout Ratio as cash flow measures are useful supplemental measures that help readers evaluate the ability of the Fund to generate cash that could be, and is, used for distributions and provides an indication of the amount of cash available for distribution and paid to the Fund's Unitholders. Investors are cautioned, however, that Distributable Cash is not meant to be an alternative to using cash flows from operating, investing and financing activities measures of the Fund's liquidity and cash flows.

Contact Information