NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES
CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX)
announced today its 2013 fourth quarter and year-end financial results for the
period ended December 31, 2013.
For the year ended December 31, 2013, revenues amounted to $726 million compared
to $711 million in 2012. The increase in revenue relates primarily to the impact
of our recent acquisitions and improved market conditions for construction
materials. Other factors having a meaningful impact on the Company's volume of
sales included the Company's ongoing focus on its customers and the continued
development of its product portfolio. CanWel's sales in the year were made up of
56 percent of construction materials, unchanged when compared to the same period
in 2012, with the balance of sales resulting from specialty and allied products.
Gross margin dollars increased to $80.2 million in the year compared to $76.6
million in 2012, outpacing the growth in sales. Gross margin percentage was 11.1
percent in the year, representing a modest increase compared to the 10.8 percent
achieved in 2012. This change in margin percentage is mainly due to positive
contribution from the Company's acquisitions, and ongoing focus on effective
cost management. As a result, net earnings(3) for the year increased by 20
percent to $9.1 million versus $7.6 million during 2012.
EBITDA for the year ended December 31, 2013 was $22.5 million compared to $19.9
million in 2012, an increase of 13 percent.
In the year ended December 31, 2013, the Company repurchased and cancelled a
total of 1.3 million convertible debentures pursuant to its 2012 Normal Course
Issuer Bid(5) at a discount to face value.
For the three month period ended December 31, 2013(1), CanWel reported revenues
of $148 million compared to $150 million for the same period in 2012. Gross
margin dollars increased by 18% to $17.6 million during the quarter, versus
$14.9 million during the same period last year. Also, gross margin percentage
increased significantly to 11.8 percent, when compared to 9.9 percent during the
same period in 2012. EBITDA for the three months ended December 31, 2013 totaled
$2.3 million compared to $36,000.
"Despite the cautious macroeconomic environment, I am very pleased with CanWel's
ability to once again demonstrate resilience in its business platform and
deliver revenue, gross margin, EBITDA and net earnings growth on a
year-over-year basis," noted Amar S. Doman, Chairman and CEO of the Company. "In
recent months, we saw pricing for construction and building materials stabilize,
which combined with continued contribution from our recent strategic
acquisitions and improved market conditions should bode very well for CanWel in
2014."
Reconciliation of Net Income to EBITDA:
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Three months ended Year ended
December 31 December 31
(in thousands of dollars) 2013 2012(1) 2013 2012(1)
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Net (loss) earnings (318) $ (1,592) 9,105 $ 7,566
(Recovery of) provision for
income taxes (329) (536) 2,924 2,755
Finance costs 1,594 1,558 6,590 6,378
Depreciation of property, plant
and equipment 1,043 413 2,629 2,210
Amortization of intangible
assets 283 250 1,077 1,000
Amortization of leasehold
inducements 39 (57) 63 (120)
Share-based compensation - - 63 103
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EBITDA $ 2,312 $ 36 $ 22,451 $ 19,892
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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.
Advance Notice By-Law
The Company today also announced the approval and adoption by its board of
directors (the "Board") of amendments to its by-laws to include advance notice
provisions (the "Advance Notice Provisions"), the purpose of which is to require
advance notice to be provided to the Company in circumstances where nominations
of persons for election to the Board are made by shareholders of the Company
other than pursuant to: (i) a requisition of a meeting of shareholders made
pursuant to the provisions of the Canada Business Corporations Act; or (ii) a
shareholder proposal made pursuant to the provisions of that Act.
The purpose of the Advance Notice Provision is to provide shareholders,
directors and management of the Company with a clear framework for nominating
directors. Among other things, the Advance Notice Provision fixes a deadline by
which shareholders of the Company must submit nominations to the Company prior
to any annual or special meeting of the shareholders and sets forth the minimum
information that a shareholder must include in the notice to the Company for the
notice to be in proper written form.
In the case of an annual meeting of the shareholders of the Company, notice to
the Company must be made not less than 30 days and no more than 65 days prior to
the date of the annual meeting; provided, however, in the event that the annual
meeting is to be held on a date that is less than 50 days after the date on
which the first public announcement of the date of the annual meeting was made,
notice may be made not later than the close of business on the 10th day
following such public announcement.
In the case of a special meeting of shareholders (which is not also an annual
meeting), notice to the Company must be made not later than the close of
business on the 15th day following the day on which the first public
announcement of the date of the special meeting was made.
The Advance Notice Provision is effective immediately and will be placed before
shareholders for ratification at the upcoming annual general and special meeting
of shareholders of the Company scheduled for May 8, 2014. A copy of the by-law
amendment can be viewed by going to the Company's profile at www.sedar.com.
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(2) 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, regulatory risk,
differing law or regulations across jurisdictions, 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(4) 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 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) Before accounting for "Other Comprehensive Income"; please refer to our Q4
and Full Year 2013 Financial Statements for further information.
(4) Please also refer to the forward looking statement information in our
November 19, 2013 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
ali.mahdavi@canwel.com
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