NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES
CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX)
announced today its third quarter fiscal 2010 financial results for the period
ended September 30, 2010. A significant factor when comparing the results for
the quarter ended September 30, 2010 to those for the quarter ended September
30, 2009, is that this year's quarter includes the results of the operations of
the Broadleaf Logistics division ("BLC") for the full quarter.
During the three-month period ended September 30, 2010, CanWel reported record
third quarter sales of $348 million compared to $188 million for the comparable
period in 2009, an increase of 85.0 percent. For the quarter, the Company
reported gross margin of $35.8 million or 10.3 percent of sales versus $24.5
million or 13.7 percent of sales in 2009. The change in margin percentage is due
both to the increase in construction materials in the Company's sales mix,
flowing from the BLC operations, as well as the effect of the substantial
declines in commodity prices in the third quarter compared to the second quarter
of 2010. Net income amounted to $5.2 million compared to net income of $7.0
million during the same period in 2009.
For the quarter, EBITDA increased by 6.9 percent to $10.8 million compared to
$10.1 million for the comparable period last year. Excluding the impact of
one-time costs, EBITDA amounted to $11.2 million during the third quarter.
"We are pleased to announce that we attained record sales for our third quarter,
while lumber and panel pricing, which represent a significant portion of our
business, remained at depressed levels due to the continued weak US housing
market," stated Amar Doman, Chairman and CEO of CanWel. "Our business
fundamentals remain solid with our record year to date sales of $1.02 billion(1)
and EBITDA of $36.3 million, and we are on track to significantly reduce costs
with the continued integration of the BLC operations."
Reconciliation of Net Earnings to EBITDA:
----------------------------------------------------------------------------
Three months ended Nine months ended
(in thousands September 30 September 30
of dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net Earnings $ 5,208 $ 6,996 $ 19,408 $ 13,964
Income tax provision
(recovery) 2,417 690 7,726 (1,056)
Cash interest expense 1,488 564 4,302 2,068
Depreciation of
property plant and
equipment 864 1,312 2,577 3,953
Amortization of
intangible and other
assets 455 400 1,320 1,192
Amortization of
deferred gain (18) (19) (55) (55)
Amortization of
financing costs 315 64 783 192
Amortization of
promissory notes - 32 11 96
Stock-based
compensation 24 66 223 343
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EBITDA $ 10,753 $ 10,105 $ 36,295 $ 20,697
Acquisition and
conversion costs 146 - 742 -
Reorganization costs 252 - 252 -
Realized foreign
exchange gain - - (1,102) -
----------------------------------------------------------------------------
Adjusted EBITDA
before one time
items $ 11,151 $ 10,105 $ 36,187 $ 20,697
----------------------------------------------------------------------------
About CanWel Building Materials
CanWel Building Materials trades on the Toronto Stock Exchange under the symbol
CWX and is Canada's largest national distributor in the building materials and
related products sector, operating distribution centres coast to coast in all
major cities and strategic locations across Canada. CanWel Building Materials
distributes a wide range of hardware, building materials, lumber, and renovation
products. Further information can be found in the disclosure documents filed by
CanWel Building Materials (and its predecessor, CanWel Building Materials Income
Fund) with the securities regulatory authorities, available at www.sedar.com.
Certain statements in this press release may constitute "forward-looking"
statements. When used in this press release, such statements use words,
including but not limited to, "may", "will", "expect", "believe", "plan",
"intend", "anticipate", "future" and other similar terminology. These
forward-looking statements reflect the current expectations of CanWel's
management regarding future events and operating performance, but involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of CanWel, including the free cash flow(2),
dividends or EBITDA(2) generated by CanWel, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Actual events could
differ materially from those projected herein and depend on a number of factors.
These factors would include (i) the risk that the integration of the acquisition
of Broadleaf Logistics Company completed on February 1, 2010 (the "Acquisition")
may result in significant challenges, and management of CanWel may be unable to
accomplish the integration of the Acquisition smoothly or successfully or
without spending significant amounts of time, money or other resources thereon;
any inability of management to successfully integrate the operations of the
combined business, including, but not limited to, information technology and
financial reporting systems, any of which could have a material adverse effect
on the business, financial condition and results of operations of CanWel; (ii)
the risk that revenues, profits and margins of Broadleaf Logistics Company may
not remain consistent with historical levels, (iii) the risk that competing
firms which manufacture or distribute competitive product lines will
aggressively defend or seek market share, or that existing customers or
suppliers of Broadleaf Logistics Company (some of whom are competitors of
CanWel) will cease doing business with the Broadleaf Logistics Company or
CanWel, in each case reducing, eliminating or reversing any potential positive
economic impact on CanWel of the Acquisition; (iv) the risk that any increased
sales, margin, profit or distributable cash resulting from the Acquisition may
not be fully realized, realized at all or may take longer to realize than
expected; (v) the risk of disruption from the integration of the Acquisition
making it more difficult to maintain relationships with customers, employees or
suppliers.
Factors also include, but are not limited to, dependence on market and economic
conditions, sales and margin risk, competition, information system risks,
availability of supply of products, risks associated with the introduction of
new product lines, product design risk, environmental risks, volatility of
commodity prices, inventory risks, customer and vendor risks, acquisition and
integration risks, availability of credit, credit risks, litigation risks and
interest rate risks. In addition, there are numerous risks associated with an
investment in units/shares, as well as other risks and factors, which are also
further described in the "Risk Factors" section of our annual information form
dated March 30, 2010, our management information circulars dated December 17,
2009 and March 31, 2010, and our other public filings on SEDAR. Additional risks
and uncertainties affecting CanWel, which could cause results to differ
materially from those described in these forward-looking statements, include,
among others: increased debt and interest costs, general economic and business
conditions, pension funding risk, product selling prices, product performance,
design and liability risk, software and software design risk, information
systems risk, interest rate changes, operating costs, legislative changes,
accounting pronouncements and competitive conditions. A further description of
these and other factors can be found in the periodic and other reports filed by
CanWel with Canadian securities commissions and available on SEDAR
(http://www.sedar.com). These forward-looking statements speak only as of the
date of this press release. CanWel does not undertake, and specifically
disclaims, any obligation to update or revise any forward looking information,
whether as a result of new information, future developments or otherwise, except
as required by applicable law.
(1) Please refer to our Q3 2010 MD&A for further information.
(2) Reference is made above to EBITDA. We define EBITDA as earnings before
interest expense, provision for income taxes, gain or loss on sale of fixed
assets, depreciation and amortization, goodwill impairment and stock-based
compensation expense. We also consider free cash flow in our financial planning,
which we define as operating earnings before changes in non-cash working capital
and after maintenance of business capital expenditure and contributions to any
reserves the Board of Directors of the Company deem to be reasonable and
necessary for the operations of the Company. Please refer to our Q3 2010 MD&A
for further information.
EBITDA is a measure used by management of CanWel to evaluate financial
performance. EBITDA is not a measure of earnings or financial performance
recognized by Canadian generally accepted accounting principles ("GAAP") and
does not have standardized meanings prescribed by GAAP. Items excluded from
EBITDA are significant to understanding and assessing financial performance.
EBITDA should not be considered in isolation or as alternatives to net income,
cash flows generated by operations or other financial statement data presented
in the consolidated financial statements of the Company, as indicators of
financial performance or liquidity under GAAP. Because EBITDA is not a measure
determined in accordance with GAAP, as presented, investors are cautioned that
EBITDA may not be comparable to similarly-titled measures presented by other
issuers.
(3) Basic and Diluted weighted average number of shares outstanding used for Q3
2010 per share calculations were 60,701,599, and 60,929,599, respectively.
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