NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES
CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX)
announced today its fourth quarter and 2011 year-end financial results for the
period ended December 31, 2011. Due to the sale of the Company's hardware
division on November 15, 2010, the prior period results of this division have
been reclassified as discontinued operations.
For the year ended December 31, 2011, revenues amounted to $692.9 million
compared to $1,032.3 million in 2010. The 33 percent decrease in revenue relates
to a significant reduction in volume of construction materials sold compared to
the corresponding period in 2010, as well as the temporary weather related
closure of one of CanWel's wood treatment facilities in western Canada. Other
factors having a meaningful impact on the Company's volume of sales included the
challenging building conditions in the early part of 2011, which were largely
weather related, resulting from an unusually severe winter generally experienced
across Canada which caused delays and cancellations of renovations and new
projects that would normally be initiated in the spring and completed over the
summer. Gross margin percentage increased to 11.0 percent or $76.5 million
versus 10.3 percent or $106.4 million when compared on a year-over-year basis.
The year-over-year increase in gross margin percentage is mainly due to the
decrease in construction materials in the Company's sales mix.
Excluding the impact of one-time items incurred during the year related to the
Company's acquisition of Broadleaf Logistics Company ("BLC") and reorganization
costs as well as foreign exchange and insurance proceeds, Adjusted EBITDA(4) and
net earnings from continuing operations for the year ended December 31, 2011
were $13.0 million and a loss of $0.7 million, respectively. Including such
one-time items, EBITDA(3) for the year amounted to $9.8 million.
For the three month period ended December 31, 2011(1), CanWel reported revenues
of $138.3 million compared to $177.8 million for the same period in 2010. Gross
margin during the fourth quarter of 2011 amounted to 9.8 percent or $13.5
million versus 10.7 percent or $19.1 million in 2010. This decrease in margin
percentage is mainly due to the slight increase in construction materials in the
Company's sales mix in the fourth quarter of 2011 compared to fourth quarter of
2010. Excluding the impact of one-time charges, Adjusted EBITDA(4) and net
earnings from continuing operations for the three-month period ended December
31, 2011 amounted to a loss of $46 thousand and a loss of $1.7 million
respectively. Including such one-time costs, EBITDA(3) for the fourth quarter
amounted to $0.8 million.
"2011 was our integration year, and it also proved to be an economically
challenging year, starting with a very slow first quarter which set the tone for
the remainder of the year," noted Amar S. Doman, Chairman and CEO of the
Company. "However, we remained focused on our priorities and successfully
completed the integration of BLC and took advantage of any pockets of
opportunity from an overall business and operating perspective, and believe
CanWel is well positioned to benefit from demand returning to historical and
more normalized levels. So far, we are encouraged with the strength of sales
activity and overall demand in our markets in 2012."
Reconciliation of Net Income to EBITDA:
Three months ended Year ended
December 31 December 31
(in thousands of dollars) 2011 2010 2011 2010
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Net Earnings (loss) from continuing
operations $ (1,733) $ (2,638) $ (685) $ 16,197
Income tax provision (recovery) 211 (71) 1,221 7,405
Cash interest expense 991 708 4,364 3,419
Depreciation of property plant and
equipment 736 568 2,177 2,283
Amortization of intangible and other
assets 250 985 1,000 930
Amortization of financing costs 332 313 1,309 1,096
Accretion of promissory notes - - - 11
Stock-based compensation 34 24 440 247
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EBITDA $ 821 $ (111) $ 9,826 $ 31,588
Acquisition and Conversion costs - - - 993
Integration costs 1,000 2,268 5,020 2,268
Insurance proceeds (1,867) - (1,867) -
Realized foreign exchange gain - - - (1,102)
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Adjusted EBITDA $ (46) $ 2,157 $ 12,979 $ 33,747
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About CanWel Building Materials
CanWel Building Materials trades on the Toronto Stock Exchange under the symbol
CWX and is one of Canada's largest national distributors in the building
materials and related products sector, operating distribution centres coast to
coast in all major cities and strategic locations across Canada. CanWel
distributes a wide range of building materials, lumber, hardware and renovation
products. Further information can be found in the disclosure documents filed by
CanWel 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 cash flow from
operations, dividends or EBITDA(3) generated or paid 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 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. A further description of these and
other risks which could cause results to differ materially from those described
in these forward-looking statements can be found in the periodic and other
reports filed by CanWel with Canadian securities commissions and available on
SEDAR (http://www.sedar.com).
In addition, a number of material factors or assumptions were utilized or
applied in making the forward-looking statements, and may include, but are not
limited to, assumptions regarding the performance of the Canadian economy,
relatively stable interest rates, volatility of commodity prices, more limited
availability of access to equity and debt capital markets to fund, at acceptable
costs, the Company's future growth plans, the implementation and success of the
integration of the Acquisition, and to enable the Company to refinance its debts
as they mature, the Canadian housing and building materials market; the amount
of the Company's cash flow from operations; tax laws; and the extent of the
Company's future acquisitions and capital spending requirements or planning as
well as the general level of economic activity, in Canada, and abroad,
discretionary spending and unemployment levels.
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 Q4 and Full Year 2011 MD&A for further information.
(2) Please refer to our Q4 2011 Financial Statements for further information.
(3) In the discussion, reference is made to EBITDA, which represents earnings
from continuing operations before interest, provision for income taxes, gain or
loss on sale of fixed assets, depreciation and amortization, goodwill impairment
loss and stock-based compensation. This is not a generally accepted earnings
measure under International Financial Reporting Standards ("IFRS") and does not
have a standardized meaning under IFRS, the measure as calculated by the Company
may not be comparable to similarly-titled measures reported by other companies.
EBITDA is presented as we believe it is a useful indicator of relative operating
performance. EBITDA should not be considered by an investor as an alternative to
net income or cash flows as determined in accordance with IFRS.
(4) In the discussion, reference is made to Adjusted EBITDA, which is EBITDA as
defined in (3) above, before certain one time or unusual items. This is a
non-IFRS measure, and does not have a standardized meaning under IFRS, the
measure as calculated by the Company may not comparable to similarly-titled
measures reported by other companies. Adjusted EBITDA is presented as we believe
it is a useful indicator of the Company's ability to meet debt service and
capital expenditure requirements from its regular business, before non-recurring
items. Adjusted EBITDA should not be considered by an investor as an alternative
to net income or cash flows as determined in accordance with IFRS.
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