NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES
CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX)
announced today its second quarter financial results for the three-month period
ended June 30, 2013.
For the three-month period ended June 30, 2013, revenues increased to $210
million compared to $207 million in the same period in 2012. The increase in
revenue relates primarily to higher sales of specialty and allied products and
contribution from the acquisition of North American Wood Preservers LP ("NAWP").
The Company's sales in the quarter were made up of 57 percent of construction
materials compared to 58 percent in the same period in 2012, with the balance
resulting from specialty and allied products. Quarter over quarter, Canada
Mortgage and Housing Corporation ("CMHC") noted a 19% decrease in housing starts
in 2013. The decline in housing starts along with fluctuations in construction
materials pricing experienced within the quarter, combined to impact the
Company's results. During the period, gross margin amounted to $22 million, or
10.3 percent of revenues, versus $24 million or 11.8 percent of revenues during
the second quarter of 2012. This decrease in margin percentage is mainly due to
weaker market conditions for construction material products during the second
quarter of 2013, resulting in lower margins on certain construction materials.
The average benchmark price declined by 30% for lumber(3), 19% for plywood(4)
and 17% for OSB(5), versus the average benchmark price in the first quarter of
2013. These construction material price declines were the most significant
factor in this quarter's reduced gross margins compared to those of the second
quarter of 2012. As a result, net earnings(6) in the second quarter of 2013
amounted to $3.6 million compared to $5.2 million in 2012.
EBITDA for the three months ended June 30, 2013 amounted to $7.4 million
compared to $9.7 million in the same quarter of 2012. EBITDA for the six months
ended June 30, 2013 was $11 million compared to $12 million in the same period
in 2012.
"I am pleased with our ability to achieve revenue growth and maintain a steady
level of EBITDA during a period of lower housing starts and volatility in
construction materials pricing when compared to the first half of 2012," noted
Amar S. Doman, Chairman and CEO of the Company. "While margins were modestly
lower than the same period last year, given the strength of our operating
platform, we remain optimistic with our ability to maximize profitability even
in challenging times while continuously keeping an eye out for strategic growth
opportunities. The extraordinary drop of lumber, plywood and OSB pricing was
difficult to manage, but we did a good job weathering the storm."
Reconciliation of Net Earnings (Loss) to Earnings before Interest, Tax,
Depreciation and Amortization (EBITDA):
----------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
(in thousands of dollars) 2013 2012(1) 2013 2012(1)
----------------------------------------------------------------------------
Net Earnings (Loss) $ 3,609 $ 5,184 $ 4,704 $ 5,093
Provision for income taxes 1,139 1,820 1,544 1,788
Finance costs 1,738 1,727 3,247 3,205
Depreciation of property, plant and
equipment 562 733 948 1,418
Amortization of intangible assets 250 250 500 500
Share-based compensation 53 35 63 69
----------------------------------------------------------------------------
EBITDA $ 7,351 $ 9,749 $ 11,006 $ 12,073
1. On January 1, 2013 the Company retrospectively adopted the amendments for
IAS 19 - Employee Benefits. The comparative amounts for 2012 have been
restated. See "Changes in Accounting Policies" for further discussion.
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
Pastway Planing Limited ("Pastway")in quarter 3, 2013, the assets of North
American Wood Preservers ("NAWP"), completed in quarter 2, 2013, 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 Pastway, NAWP, 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(7) 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 Q2 2013 MD&A and Financial Statements for further
information. Our 2013 filings are reported under International
Financial Reporting Standards ("IFRS").
(2) 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.
(3) Average benchmark price is based on weekly average mill price in
Canadian funds for the quarter, 2x4 WSPF per thousand FBM, FOB
Toronto, Ontario, as reported by Random Lengths
(4) Average benchmark price is based on weekly average mill price in
Canadian funds for the quarter, per msf 3/8-inch basis, FOB Toronto,
Ontario, as reported by Random Lengths
(5) Average benchmark price is based on weekly average mill price in
Canadian funds for the quarter, per msf 7/16-inch basis, FOB Toronto,
Ontario, as reported by Random Lengths
(6) Before accounting for "Other Comprehensive Income"; please refer to
our Q2 2013 Financial Statements for further information.
(7) Please also refer to the forward looking statement information in our
November 19, 2012 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 and or
convertible debentures 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 public disclosure filings 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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