CanWel Building Materials Announces Third Quarter 2012 Financial Results
07 November 2012 - 1:00PM
Marketwired Canada
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 financial results for the three-month period
ended September 30, 2012.
For the three-month period ended September 30, 2012, revenues amounted to $198
million compared to $196 million in the same period in 2011. The slight increase
in revenue relates primarily to improved market conditions for construction
materials together with additional treated wood sales volumes. Gross margin
amounted to $21.9 million, or 11.1 percent of revenues, versus $22.9 million or
11.3 percent of revenues during the third quarter of 2011. The year-over-year
decrease in gross margin percentage is mainly due to a higher mix of
construction materials in CanWel's overall sales during the third quarter of
2012. However, net earnings(2) for the third quarter of 2012 nearly doubled to
$4.2 million when compared to net earnings in the same period in 2011, when net
earnings amounted to $2.2 million.
EBITDA(3) for the three months ended September 30, 2012 increased by 46 percent
to $7.9 million compared to $5.4 million in the same quarter of 2011. The EBITDA
in the third quarter of 2011 was impacted by one-time costs of $1.2 million
related to the integration of BLC. Adjusted EBITDA(4) for the third quarter of
2012 also equaled $7.9 million given the Company had no one-time costs during
the period, representing an 18 percent increase when compared to Adjusted EBITDA
of $6.7 million during the third quarter of 2011.
"The third quarter results were in line with our expectations. We continue to
demonstrate the fundamental strength and resilience of our business model,"
noted Amar S. Doman, Chairman and CEO of CanWel. "We continue to work at gaining
market share despite a volatile end market environment. Once sales volumes pick
up with our customer base, we believe CanWel is well positioned to lever its low
cost distribution model. Our continued efforts on strict cost control and margin
enhancement will be key drivers, during a period of mixed sentiments concerning
the outlook for the Canadian economy."
Reconciliation of Net Earnings (Loss) to Earnings before Interest, Tax,
Depreciation and Amortization (EBITDA):
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Three months ended Sept. 30 Nine months ended Sept. 30
(in thousands of 2012 2011 2012 2011
dollars)
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Net Earnings (Loss) $ 4,176 $ 2,199 $ 9,485 $ 1,033
Income tax expense 1,542 990 3,408 1,010
Cash interest expense 1,236 1,157 3,680 3,374
Depreciation of
property, plant and
equipment 379 480 1,797 1,441
Amortization of
intangible assets 250 250 750 750
Amortization of
financing costs 260 332 779 977
Share-based
compensation 34 34 103 406
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EBITDA $ 7,877 $ 5,442 $ 20,002 $ 8,991
Integration costs - 1,228 - 4,018
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Adjusted EBITDA $ 7,877 $ 6,670 $ 20,002 $ 13,009
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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 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 the assets of Northwest Wood Preservers ("NWP") completed in
quarter 1, 2012 or Broadleaf Logistics Company ("BLC") completed on February 1,
2010 (collectively 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 the 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 NWP or BLC (some of whom are competitors of CanWel)
will cease doing business with the Company, 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, the
relative stability of 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, the ability of 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, uptake of the Company's NCIB program(5) 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.
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(1) Please refer to our Q3 2012 MD&A and Financial Statements for further
information. Our 2012 filings are reported under International
Financial Reporting Standards ("IFRS").
(2) Before accounting for "Other Comprehensive Income"; please refer to
our Q3 2012 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 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.
(5) Please also refer to the forward looking statement information in our
November 17, 2011 news release for additional forward looking
statement information and cautions pertaining to the Company's Normal
Course Issuer Bid ("NCIB"), which are hereby incorporated by
reference, and as may also be applicable to the Plan or NCIB as the
case may be. Although CanWel intends to purchase common shares for
cancellation under its NCIB and / or the Plan, there can be no
assurances that any such purchases will be completed. Please refer to
our quarterly information for the latest information on the NCIB.
FOR FURTHER INFORMATION PLEASE CONTACT:
CanWel Building Materials Group Ltd.
Ali Mahdavi
Investor Relations
416-962-3300 or +1(866) 430-6247
ali.mahdavi@canwel.com
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