NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES
CanWel Holdings Corporation ("CanWel" or "the Company") (TSX:CWX) announced
today its first quarter fiscal 2010 financial results for the period ended March
31, 2010.
During the three-month period ended March 31, 2010(1) CanWel reported sales of
$272 million compared to $136 million for the comparable period in 2009. For the
quarter, the Company reported gross margin of $29 million or 10.7 percent of
sales versus $16 million or 11.9 percent of sales in 2009. Sales were doubled
due to the inclusion of the operations of Broadleaf Logistics Company ("BLC")
for the months of February and March, 2010, and an overall increase in the
selling prices lumber and panel products. Further, sales volume increased
reflecting a rebound in the Canadian economy compared to a very weak first
quarter in 2009. However, while gross profit increased by 80 percent, gross
margin as a percentage of sales, decreased due to the increase in construction
materials in the Company's sales mix, flowing from the BLC operations. Net
income amounted to $4.2 compared to a net loss of $448,000 during the same
period in 2009. Net income excluding the impact of one-time items was $3.6
million.
For the quarter, EBITDA(2) amounted to $8.1 million compared to $373,000 for the
comparable period last year. Excluding the impact of one-time items related to
the BLC acquisition and conversion costs of $504,000, and a realized foreign
exchange gain of $1.1 million, adjusted EBITDA was $7.5 million during the first
quarter of 2009.
"The first quarter results are a reflection of the strength of the economic
recovery and it's impact on CanWel's business, as well as having only two months
of Broadleaf's results now included," noted Amar S. Doman, Chairman and CEO of
the Company. "We are progressing on our integration plan, and these efforts will
unfold later in the year. We are well underway with the Canadian building season
now, and we enjoyed an early start to spring in almost all areas of Canada. I am
very pleased to report this was a record for our first quarter results."
Reconciliation of Net Income to EBITDA:
Three months ended
March 31
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(in thousands of dollars) 2010 2009
Net Earnings $ 4,177 $ (448)
Income tax provision (recovery) 1,191 (1,939)
Cash interest expense 1,262 795
Depreciation of property plant and equipment 901 1,318
Amortization of intangible and other assets 365 398
Amortization of deferred gain (18) (18)
Amortization of financing costs 175 64
Amortization of promissory notes 11 32
Loss on disposal and write down of fixed assets - 20
Stock-based compensation 47 171
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EBITDA $ 8,111 $ 373
Acquisition and conversion costs 504 -
Realized foreign exchange gain (1,102) -
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Adjusted EBITDA before one time items $ 7,513 $ 373
During the first quarter of 2010, The Company announced its pro-rated first
quarter dividend payout of $0.0667 cents per common share. The dividend was paid
on April 15, 2010 to shareholders of record at the close of business on March
31, 2010.
Subsequent to quarter-end, on April 22, 2010, pursuant to a bought deal
prospectus offering, the Company issued $45.0 million of unsecured convertible
debentures denominated in principal amounts of $1,000 each, resulting in net
proceeds of approximately $42.6 million to CanWel. The debentures bear interest
at an annual rate of 5.85 percent payable semi-annually in arrears on October 31
and April 30 in each year commencing on October 31, 2010, and have a maturity
date of April 30, 2017. Each debenture is convertible into Common Shares at the
option of the holder at any time prior to the close of business on the earlier
of the maturity date and the business day immediately preceding the date
specified by the Company for redemption of the Debentures at a conversion price
of $6.40 per common share (the "Conversion Price"), being a conversion rate of
approximately 156.25 Common Shares per $1,000 principal amount of Debentures,
subject to adjustment in accordance with the trust indenture governing the terms
of the Debentures.
The Company intends to change its name to "CanWel Building Materials Group Ltd."
following its annual shareholders meeting on May 11, 2010.
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, the 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 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, litigation risk, 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 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 circular dated December 17, 2009, 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 Q1 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 Q1 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 Q1
2010 per share calculations were 51,861,703, and 52,052,669, respectively.
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