Vicwest Inc. Reports Second Quarter 2013 Results

OAKVILLE, ON, Aug. 7, 2013 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB) today reported a  profit for the three months ended June 30, 2013, with year-over-year improvement in performance at its building products division offset by lower results in domestic agricultural storage.

Consolidated Performance Summary¹

	Three months ended       June 30,		Six months ended       June 30,
($ millions except per share)	2013	2012	2013	2012
	$	$	$	$
Revenue	97.1	107.7	170.0	195.2
Gross profit	15.8	19.1	23.5	35.6
Gross profit margin	16.3%	17.7%	13.8%	18.2%
EBITDA^2	4.8	9.5	1.0	14.5
EBITDA Margin^2	4.9%	8.8%	0.6%	7.4%
Net  income (loss)	0.7	6.6	(4.9)	4.7
Net income (loss) per share (basic)	0.02	0.37	(0.28)	0.26
Net income (loss) excluding change in fair value of embedded derivative^3	0.2	3.9	(5.6)	4.5
Dividend per share	0.15	0.15	0.15	0.15

"Despite lower results compared to the prior period, we are pleased that both businesses returned to more normal levels of financial performance towards the end of the quarter," said Colin Osborne, President and CEO.  "While Westeel's revenue and divisional profit were well below last year, the factors impacting Westeel first half performance were largely resolved in the current period. Westeel finished the quarter strongly, and entered the third quarter with backlogs 40% above last year.  In our Vicwest BP division, despite the Quebec construction strike and Alberta flooding, revenues were slightly ahead of 2012, driven by a 29% increase in North American insulated metal panel (IMP) sales. In this context, we're very pleased to note a 50% year-over-year increase in Vicwest BP net income. Across both divisions, we entered the third quarter with positive momentum and look forward to a significant improvement in earnings through the second half of 2013."

Divisional Results

	Three months ended   June 30,		Six months ended   June 30,
($ millions)	2013	2012	2013	2012
	$	$	$	$
Revenue
Vicwest Building Products	64.2	63.7	107.2	109.0
Westeel	32.9	44.0	62.8	86.2
Net income (loss)^4
Vicwest Building Products	1.3	0.9	(5.8)	(4.7)
Westeel	0.7	6.3	1.4	14.5

In the second quarter, Vicwest BP's revenue increased 0.7% compared to the same period of 2012. The increase was due to a 29% increase in North American IMP sales, including IMP sales from a newly commercialized production facility in Little Rock, Arkansas.  IMP sales growth was largely offset by decreased volumes in both light gauge and non-IMP ICI market segments as a result of lower cyclical demand, a construction work stoppage in Quebec and flooding in Western Canada. Vicwest BP's 50% increase in divisional net income compared to a year ago reflected lower raw material input prices and production efficiencies resulting from asset optimization projects in each of the division's three Canadian regions.

For the second quarter of 2013, the 25% decrease in Westeel revenue reflected a temporary shift in pre-buying activities in Canada resulting in lower domestic retail sales, as well as harsh weather conditions throughout much of North America's agricultural markets. Westeel remained profitable although at a much reduced level due to lower volume, unfavourable product mix, lower fixed-cost absorption and additional sales expenses incurred to develop international markets.

Dividend
The Board of Directors declared a third quarter dividend of $0.15 per share, payable on October 15, 2013 for shareholders of record on September 30, 2013. This is consistent with the quarterly dividends declared and paid in 2012.

Financial Position
With $42.2 million of unused availability under the senior revolving credit facility at June 30, 2013, the Company continues to have adequate resources to fund its growth strategies. As a result of seasonality, the temporary events that impacted earnings in the past two quarters and cash used to fund dividends, capital and intangible expenditures and working capital, the Company had net debt of $101.3 million compared to $90.1 million at June 30, 2012 ($61.4 million at December 31, 2012). Senior net-debt-to-EBITDA¹ was 2.2 to 1 at June 30, 2013 compared to 1.4 to 1 at June 30, 2012 (0.3 to 1 at December 31, 2012).

Outlook
Management believes that the trends driving long-term demand for the Company's products are positive and that the business will benefit from these trends because of its competitive advantages including strong customer relationships, extensive distribution networks, well recognized brands, and efficient operations.  These trends include: i) the growing global need for grain storage to increase crop yields in support of population growth, ii) higher and more volatile crop pricing, which improves the return on investment for grain storage, iii) a construction sector in North America which is in the early stages of recovery, and iv) increasing demand for energy efficient building materials such as insulated metal panels that can be installed at low cost.  The combination of the Company's inherent strengths, unique product offering and exposure to these markets provide good fundamentals to support long-term growth.

In the near term, management believes the third quarter of 2013 will show significant improvement over the first and second quarters of 2013 and demonstrate a return to more normal earnings levels.  This expectation is based on a number of factors including: i) a significant increase in activity level and backlog at Westeel which occurred at the end of the second quarter which has carried into the third quarter, ii) continued momentum in North American IMP sales supported by the additional capacity of the new Little Rock plant, iii) the inclusion of the PTM Technology product line which increases Westeel's potential opportunity in overseas markets and opens new channels for grain storage and handling systems, and iv) the normal seasonal increase in construction activity.

"For Vicwest BP, the late arrival of spring put the construction industry behind schedule and affected the timing of orders," said Mr. Osborne. "As a result, we expect to see some volumes pulled into the second half of 2013, however, the forecast for domestic construction activity in the second half is lower compared to the prior year.  On an overall basis, modest domestic market activity is anticipated to be more than offset by continued momentum in our North American insulated metal panel business, which is up 39% on a year-to-date basis.  The exposure we've gained in the U.S. from our IMP plant investments in California and Arkansas should also provide advantages given the signs of economic recovery in the world's largest building products market."

"Market and weather disruptions that affected our Westeel operations in the first half of 2013 are largely behind us and we are seeing a return to more normal revenue and earnings generation in the third quarter," said Mr. Osborne. "In fact Westeel's backlog is 40% higher than prior year.  Internationally, we believe we are gaining traction with the development of our U.S. Westeel dealer network as well as with sales efforts in Europe and India, the latter reinforced through our second quarter acquisition of PTM Technology in Italy. This acquisition provides us with our first overseas manufacturing presence and enhanced competitiveness in bidding on full turn-key storage and handling projects. We also have now successfully completed Westeel's ERP implementation and can now focus on leveraging the new system to further improve operating performance."

Second Quarter Conference Call and Webcast
Vicwest Inc. will host its second quarter 2013 conference call and webcast on August 8, 2013 at 12 Noon (ET). To participate in the teleconference, the numbers are 1-416-644-3416 or 1-800-814-4860. Callers are advised to call in five minutes in advance. To participate in the webcast, please visit www.vicwestinc.com.

About Vicwest Inc.
Vicwest Inc. is a leading manufacturer and distributor of engineered storage and handling systems for grain, fertilizer and liquid storage as well as building construction products for agriculture, commercial, industrial and residential markets.  We operate through two strategically aligned divisions: Vicwest Building Products and Westeel.  With approximately 7,000 customers, 1,200 dedicated employees and 34 business partners, we are positioned for growth in domestic and international markets.  Vicwest Inc. is a member of the S&P/TSX SmallCap Index. For more information, visit www.vicwestinc.com.

Forward-Looking Statements

Certain statements in this news release constitute forward-looking statements within the meaning of applicable securities laws.  Forward-looking statements include, but are not limited to, management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events.  Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements.  Readers are encouraged to review the most recently filed Management's Discussion and Analysis and other disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. Readers are cautioned not to place undue reliance on the Company's forward-looking statements.  The forward-looking statements contained herein are made as of the date of this press release and except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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¹Prior period numbers have been re-stated due to the retrospective application of the IFRS pronouncements adopted in the first quarter of 2013.
²EBITDA is calculated as earnings before finance expense, income taxes, depreciation, amortization and change in fair value of embedded derivative.  EBITDA and EBITDA margin are non-IFRS measures.
³ Net income (loss) excluding change in fair value of the embedded derivative is a non-IFRS measure.
⁴ Net income (loss) before finance expense, income taxes and change in fair value of embedded derivative.

 

 

 

 

SOURCE: Vicwest Inc.

Colin Osborne
President & Chief Executive Officer
Vicwest Inc.
Tel:  [phone]
[email protected]