Vicwest Inc. Reports Third Quarter 2014 Results

OAKVILLE, ON, Nov. 11, 2014 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB and VIC.DB.A) today reported its financial results for the three and nine months ended September 30, 2014.

Consolidated Performance Summary
	Three months ended		Nine months ended
($ millions except per share)	September 30,		September 30,
	2014	2013	2014	2013
	$	$	$	$
Revenue	136.0	119.8	334.1	289.8
Gross profit	24.4	22.5	49.9	46.0
Gross profit margin	18.0%	18.8%	14.9%	15.9%
Adjusted EBITDA^1	12.9	12.1	16.5	16.9
Adjusted EBITDA Margin^1	9. 5%	10.1%	4.9%	5.8%
Net  income (loss)	6.1	3.5	0.5	(1.4)
Net income (loss) per share (basic and diluted)	0.31	0.19	(0.02)	(0.10)
Net income (loss) attributable to shareholders excluding change in fair value of embedded derivatives, unrealized gain on forward contracts and other expense^1	4.3	3.9	(2.5)	(1.7)
Net income (loss)  per share excluding change in fair value of embedded derivatives, unrealized gain on forward contracts and other expense^1	0.24	0.22	(0.15)	(0.10)
Dividend per share	0.15	0.15	0.15	0.15
Backlog^1	78.6	55.4	78.6	55.4

The third quarter was highlighted by continued improving trends across both divisions driven by better operating performance and reductions in operating costs and SG&A expenses. Revenues were $136.0 million, 13.5% ahead of the third quarter of 2013 and the Company realized Adjusted EBITDA of $12.9 million which was 7.5% above prior year.  Improved performance in the core Westeel and Building Products businesses was further enhanced by our IMP business returning to double-digit margins on continuing strong volume, and PTM volumes increasing significantly. These positives more than offset increased steel costs.

Divisional Results
	Three months ended		Nine months ended
	September 30,		September 30,
($ millions)	2014	2013	2014	2013
	$	$	$	$
Revenue
Vicwest Building Products	86.1	78.7	194.1	185.9
Westeel	49.9	41.1	139.9	103.9
Adjusted EBITDA^1
Vicwest Building Products	8.1	7.6	5.4	7.3
Westeel	4.8	4.5	11.1	9.5

Westeel's 22% revenue growth in the quarter reflected strong sales volume in grain storage products and a significant increase in PTM volumes, reflecting high backlog carried into the quarter, steady order intake through the quarter and record operating output from our key manufacturing facilities.

Westeel's adjusted EBITDA for the third quarter increased to $4.8 million in 2014 from $4.5 million in 2013, primarily as a result of increased agricultural sales volumes and higher PTM volumes, partially offset by steel costs which have not yet been fully recovered.

Vicwest Building Products revenue in the third quarter increased by 9.4% compared to the third quarter of 2013, reflecting higher conventional single skin volumes in Canada and higher U.S IMP sales, both up approximately 10% over prior year.

Vicwest Building Products' adjusted EBITDA for the third quarter of 2014 increased $0.5 million, reflecting higher sales volumes and lower SG&A expenses, partially offset by unrecovered steel prices.

Dividend
The Board of Directors declared a third quarter dividend of $0.15 per share, payable on January 15, 2015 for shareholders of record on December 31, 2014. This is consistent with the quarterly dividends declared and paid in 2013.

Financial Position
The Company continues to have adequate resources to fund its growth and margin improvement strategies. The Asset Based Lending ("ABL") credit facility has provided the Company with the financial flexibility needed to more effectively manage commodity price risk and implement hedging strategies to help mitigate input cost volatility. Total net debt decreased during the third quarter by $9.7 million and at September 30, 2014, the Company was well within the excess availability thresholds of the ABL.

Outlook
Management is optimistic about the remainder of 2014. It is expected that for the last quarter of 2014 and into 2015, the Company will continue to benefit from: i) a significant increase in backlog at Westeel which, by the end of the third quarter, was 66% higher than prior year, ii) continued growth in North American IMP sales and backlog, which is up 96% over prior year, iii) continued recovery in IMP margins which have now returned to historical levels, iv) Westeel's continued expansion into international markets, and v) the Company's continued focus on cost reductions and increasing operating efficiencies. These positive trends are somewhat tempered by management's expectations that Canadian non-residential construction will remain weak through the remainder of 2014.

At Westeel, the Company expects continued strong grain storage and handling sales through the rest of 2014 and well into 2015.   Westeel's backlog was 66% above prior year at quarter-end and order intake since quarter end through the fall buying programs has been very strong and in line with last year's record high intake.   As well, the division has been able to set prices within these programs that fully recover raw material price increases and allow it to return to more normalized historic margins.  Although the Canadian agricultural output was lower than the record yield seen in 2013, the projected crop production is still in line with 2012 production levels. The Company continues to benefit from healthy investment in storage due to volatility in Canadian crop prices and the growing momentum in Canadian commercial storage investment.

At Vicwest BP, the overall construction market outlook for the balance of 2014 is relatively muted. However, with the full integration of the Roll Form Group Building Products Division, strong light gauge agricultural sales, and continued momentum in IMP, the Company continues to generate modest sales growth in a challenging market, and it expects that trend to continue into Q4.   As well, on the margin side, the business is seeing the benefits of its plant optimization efforts and the reductions made in overhead expense.   In terms of its markets, the current analyst forecast for 2015 is for a 16% improvement in Canadian non-residential activity and for an 8.1% increase in the U.S.   Off of a lower cost base, and with ongoing focus on improving margins through continued price management, improving operating efficiency and introducing new value-added products to the market, the Company expects to drive positive momentum in sales and margins in 2015.    For IMP, backlog currently sits at a level 96% above prior year, and margins have returned to much stronger historic levels which are expected to continue through Q4 and into 2015.

As the Company works through continuing strong backlog levels and manages capital expenditure programs cautiously, it expects to meaningfully reduce the outstanding ABL balance during the fourth quarter.

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.  The Company operates through two strategically aligned divisions: Vicwest Building Products and Westeel.  With approximately 7,000 customers, 1,200 dedicated employees and 34 business partners, it is 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.

Non-IFRS Measures

The information included in this press release contains certain measures that do not have standardized meanings prescribed by IFRS are and therefore, unlikely to be comparable to similar measures presented by other entities.

"Adjusted EBITDA" represents EBITDA adjusted to exclude changes in the fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense, restructuring and optimization costs, pension settlement/recovery costs and non-recurring income and expense items. The Company believes that in addition to net earnings or loss, Adjusted EBITDA is a useful supplemental measure of cash available for distribution prior to debt service, changes in working capital, capital expenditures and income taxes for the Company. It is believed that Adjusted EBITDA is useful to investors for the purpose of assessing the Company's performance and the presentation has been made to exclude items not considered representative of normal operations. Investors are cautioned that Adjusted EBITDA does not have a standardized meaning under IFRS and should not be construed as an alternative to net earnings or loss determined in accordance with IFRS. The Company's method of calculating Adjusted EBITDA may differ from the method used by other issuers and accordingly the Company's adjusted EBITDA calculation may not be comparable to similarly titled measures used by other issuers. A reconciliation of net income to Adjusted EBITDA is provided in the Company's publicly disclosed Management Discussion and Analysis.

"Backlog" means the total value of work that has not yet been completed that: (a) has a high certainty of being performed as a result of the existence of an executed contract or work order specifying job scope, value and timing; or (b) has been awarded to the Company, as evidenced by an executed binding letter of intent, project plan or agreement, describing the general project scope, value and timing of work. Backlog is monitored by management as an indicator of future sales volumes and backlog is used to forecast production levels for the Company. It is believed that backlog is a useful metric for investors to forecast future revenue levels for the Company. Investors are cautioned that backlog provides no assurance about the timing of when that recorded revenue will be recognized. Investors are cautioned that backlog does not have a standardized meaning under IFRS and as a result the Company's method of calculating backlog may differ from the method used by other issuers and accordingly the Company's backlog calculation may not be comparable to similarly titled measures used by other issuers. Backlog does not have any equivalent financial measures and therefore cannot be reconciled to measures defined by IFRS.

"Net income attributable to shareholders excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense" is an additional supplemental measure that the Company's management uses as it better reflects the operational results of the Company and is used for the purposes of assessment and measurement of earnings per share.  However, net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense is not a recognized measure under IFRS. It is believed that net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense is a useful measure to investors for the purpose of assessing the Company's performance and the presentation has been made to exclude items not considered representative of normal operations. Investors are cautioned that net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense should not be construed as an alternative to net earnings or loss determined in accordance with IFRS or as an indicator of the Company's performance as an alternative to cash flows from operating, investing and financing activities which measure the Company's liquidity and cash flows. The Company's method of calculating net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense may differ from the method used by other issuers and, accordingly, the Company's calculation may not be comparable to similarly titled measures used by other issuers. A reconciliation from net income attributable to shareholders to net income attributable to shareholders excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts and other expense is provided in the Company's publicly disclosed Management Discussion and Analysis.

¹ See disclosure on non-IFRS measures detailed at the end of this press release. Refer to "Non-IFRS measures" for more details around these measures as provided in the Company's publicly disclosed Management Discussion and Analysis (MD&A). The MD&A and all required disclosure and reconciliations for these non-IFRS measures can be found on http://www.vicwestinc.com/pages/financial-reports-public-findings.

SOURCE: Vicwest Inc.

Colin Osborne, President & Chief Executive Officer, Vicwest Inc., Tel: [phone], [email protected]; Rod Crawford, Chief Financial Officer, Vicwest Inc., Tel: [phone], [email protected]