CanWel Building Materials Announces Fourth Quarter and Full Year 2017 Financial Results
March 08, 2018 --
Full Year 2017 Financial Highlights(1):
- Revenues increased by 16.1% to $1.14 billion
- Gross Margin increased to 13.4% versus 12.7% in 2016
- Adjusted EBITDA(3) increased by 24.8% to a record $63.7 million
- Net Earnings(4) increased by 45.0% to $31.6 million, excluding non-recurring costs
Q4 2017 Financial Highlights(1):
- Revenues increased by 28.9% to a record $276.2 million
- Gross Margin increased to 15.6% versus 12.3% in Q4 2016
- Adjusted EBITDA(3) increased by 43.0% to $13.4 million
- Net Earnings(4) increased to $7.1 million versus $3.7 million in Q4 2016, excluding non-recurring costs
VANCOUVER, British Columbia, March 08, 2018 (GLOBE NEWSWIRE) --
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 full year 2017 financial results(1) for the period ended December 31, 2017.
For the year ended December 31, 2017(1), consolidated revenues increased by 16.1% to $1.14 billion when compared to $978.3 million in the same period in 2016. Sales for the Building Materials Distribution segment increased by $142.4 million or 15.2%, largely due to the Company’s continuing focus on its product mix strategies and target customer base, continued strengthening of US housing markets, the results from the Honsador and TFI Acquisitions, as well as an upward trend in construction material pricing. Sales for the Forestry segment increased by $15.2 million or 37.7%. The Forestry segment commenced operations on May 13, 2016 and therefore accounted for only seven and a half months of activity in the comparative prior year versus the full year in 2017.
For 2017, gross margin increased by 22.2% to $152.2 million, compared to $124.5 million during the corresponding period in 2016. Gross margin percentage also increased to 13.4% of revenues versus 12.7% during the same period in 2016. The increase in margin dollars and percentage is mainly due to the results from acquisitions, the aforementioned upward trend in construction material pricing, and a change in the Company’s sales mix within general categories of construction materials and specialty and allied products.
Adjusted EBITDA(3) for the full year increased by 24.8% to a record $63.7 million, compared to $51.0 million in 2016. EBITDA(2) was impacted by one-time acquisition costs, restructuring costs and gain on bargain purchase which was realized in 2016, resulting in EBITDA amounting to $59.9 million in 2017, versus $72.7 million in 2016. As a result of the foregoing factors, net earnings before the aforementioned non-recurring items increased by 45.0% to $31.6 million in 2017, when compared $21.8 million in 2016.
For the three-month period ended December 31, 2017(1), the Company generated EBITDA and Adjusted EBITDA of $11.5 million and $13.4 million, respectively, on revenues of $276.2 million. Net earnings during the quarter, before the aforementioned non-recurring items, increased by 91.9% to $7.1 million.
This represents a 43.0% increase to Q4 2016 Adjusted EBITDA of $9.3 million on revenues of $214.4 million. Gross margin and gross margin percentage during the same period amounted to $43.1 million, and 15.6%, respectively, compared to prior period gross margin and gross margin percentage of $26.4 million and 12.3%, respectively. This increase in margin percentage is mainly due to positive contributions from the Honsador acquisition, as well as the aforementioned upward trend in construction material pricing.
“We are very encouraged with our financial performance and strong finish in 2017, with substantially all key metrics reaching record levels," commented Amar S. Doman, Chairman of the Board. "With a strong core distribution and pressure treating business, which has been complemented with strong acquisitions over the course of the past couple of years, we are very excited about the prospects of 2018 and beyond for CanWel, as we continue to grow the business.”
Reconciliation of Net Earnings to Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) and Adjusted EBITDA:
|Three months ended Dec. 31,||Year ended Dec. 31,|
|(in thousands of dollars)||2017||2016||2017||2016|
|(Recovery of) Provision for income taxes||(2,248||)||429||6,977||7,707|
|Depreciation of property, plant and equipment||3,010||2,605||10,909||9,435|
|Amortization of intangible assets||1,633||748||3,849||2,980|
|Impairment loss on property, plant and equipment||1,039||-||1,039||-|
|Gain on bargain purchase||-||(2,060||)||-||(24,249||)|
Founded in 1989, CanWel is headquartered in Vancouver, British Columbia and trades on the Toronto Stock Exchange under the symbol CWX and is Canada’s only fully integrated national distributor in the building materials and related products sector. CanWel operates: multiple treating plant and planing facilities in Canada and the United States; distribution centres coast-to-coast in all major cities and strategic locations across Canada; in the United States near San Francisco and Los Angeles, California and in 14 locations in the State of Hawaii through its wholly owned Honsador Building Products Group. CanWel distributes a wide range of building materials, lumber, renovation and electrical products. In addition, through its CanWel Fibre division, CanWel operates a vertically integrated forest products company based in Western Canada, operating from British Columbia to Saskatchewan, also servicing the US Pacific Northwest. CanWel owns approximately 136,000 acres of private timberlands, strategic Crown licenses and tenures, log harvesting and trucking operations, several post and pole peeling facilities and two pressure-treated specialty wood production plants and a specialty saw mill.
For further information regarding CanWel please contact:
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”, “would”, “should”, “expect”, “believe”, “plan”, “intend”, “anticipate”, “predict”, “remain”, “estimate”, “potential”, “continue”, “could”, “might”, “project”, “targeting’, "future" and other similar terminology or the negative or inverse of such words or 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 Honsador Acquisition Corp (“Honsador”), the assets of Total Forest Industries Ltd. (“TFI”) in quarter 3, 2016, Jemi Fibre Corp. (“Jemi”) in quarter 2, 2016, or the assets of California Cascade Industries (“CCI”) in quarter 3, 2015, (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, financial reporting systems or environmental matters, 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 Honsador, TFI, Jemi or CCI(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, product liability risks, environmental risks, regulatory risk, trade and tariff risks, differing law or regulations across jurisdictions, volatility of commodity prices, inventory risks, resource industry risks, resource extraction risks, risks relating to remote operations, forestry management and silviculture risks, fire, flood and natural disaster risks, customer and vendor risks, contract performance risks, acquisition and integration risks, availability of credit, credit risks, performance bond 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 and US economies, the relative stability of or level of interest rates, exchange rates, volatility of commodity prices, availability or 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 and United States housing and building materials markets; international trade and tariff risks, political risks, 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 the US, and abroad, discretionary spending, and unemployment levels. There is a risk that some or all of these assumptions may prove to be incorrect. These and other factors could cause or contribute to actual results differing materially from those contemplated by forward-looking statements. Accordingly, readers should not place undue reliance on any forward-looking statements or information. There are numerous risks associated with an investment in the Company’s common shares, which are also further described in the “Risk Factors” sections of the Company’s annual information form dated March 30, 2017 and final short form prospectus dated April 10, 2017, as well as its other public filings on SEDAR. These forward-looking statements speak only as of the date of this press release. We caution that the foregoing factors that may affect future results are not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by applicable securities laws, the Company 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 Annual and Q4 2017 MD&A and Financial Statements for further information. Our Annual and Q4 2017 Financial Statements 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, including amortization of deferred financing costs, provision for income taxes, depreciation and amortization, asset impairment losses (if applicable) and share-based compensation. This is not a generally accepted earnings measure under IFRS and does not have a standardized meaning under IFRS, and therefore 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 a Company’s ability to meet debt service and capital expenditure requirements and because we interpret trends in EBITDA as an indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net earnings or cash flows as determined in accordance with IFRS. For a reconciliation of EBITDA to the most directly comparable measures calculated in accordance with IFRS refer to “Reconciliation of Net Earnings to Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) and Adjusted EBITDA”.|
|(3)||In the discussion, reference is made to Adjusted EBITDA, which is EBITDA as defined above, before certain non-recurring or unusual items. 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. 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 earnings or cash flows as determined in accordance with IFRS. For a reconciliation from Adjusted EBITDA to the most directly comparable measures calculated in accordance with IFRS refer to “Reconciliation of Net Earnings to Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) and Adjusted EBITDA”.|
|(4)||Not including non-recurring items and before accounting for “Other Comprehensive Income”; please refer to our Annual and Q4 2017 Financial Statements for further information.|