Vicwest Inc. Reports Fourth Quarter, Annual 2013 Results
OAKVILLE, ON, March 24, 2014 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB and VIC.DB.A) today reported its financial results for the three and twelve months ended December 31, 2013, including a substantial increase in year-end backlog.
Consolidated Performance Summary1
Three months ended
|($ millions except per share)||2013||2012||2013||2012|
|Gross profit margin||12.9%||18.5%||15.1%||18.5%|
|Adjusted EBITDA Margin3||1.6%||7.8%||4.7%||8.1%|
|Net income (loss)||(3.6)||2.8||(5.1)||11.5|
|Net income(loss) per share (basic)||(0.21)||0.15||(0.31)||0.61|
Net income (loss) excluding change in fair value of
embedded derivative and other expenses4
Net income (loss) per share excluding change in fair
value of embedded derivative and other expenses4
"This was a challenging end to a year that was disrupted by a number of market-related factors including extreme weather that shortened the construction season, disrupted critical steel supply, and temporary delays in releasing order specifications that affected fourth quarter product mix and shipments," said Colin Osborne, President and CEO. "While we maintained our top line sales, and remained profitable on an EBITDA and Adjusted EBITDA basis in Q4, these factors substantially reduced efficiencies in some of our key plants, compressed margins and masked substantial progress - including a 29% year-over-year increase in North American IMP sales and a 113% increase in Westeel's backlog. By remaining focused on our core strategies and taking action to optimize our Canadian Building Products workforce and footprint during 2013, we mitigated the full impact of the these events and improved our responsiveness to market opportunities going forward."
Three months ended
|Vicwest Building Products||67.8||66.7||253.8||256.3|
|Net income (loss)6|
|Vicwest Building Products||(1.9)||2.4||(3.1)||5.3|
Vicwest BP's revenue for the fourth quarter increased 1.7% year over year, reflecting 41% growth in North American IMP sales. This growth was offset by reduced sales volumes in Canadian non-residential construction, where market activity was down 25% compared to the prior year on a dollar basis, reflecting depressed building starts and disruptive winter weather. Vicwest BP's divisional net loss for the fourth quarter reflected changes in product mix, infrastructure expenses related to the new plant in Little Rock, Arkansas, marketing initiatives and new product development costs.
Westeel's fourth quarter revenue increased 1.4% year over year as a result of increased sales of liquid storage products driven by new arrangements with U.S. distributors. Revenue growth would have been higher but for the late receipt of customer order specifications in agricultural grain storage markets, which delayed production and deferred delivery into 2014. This deferral contributed to Westeel's record backlog at December 31, 2013. Westeel's net loss for the fourth quarter reflected the impact of steel supply shortages, a less favourable product mix, and costs related to the development of international markets.
Dividend and Dividend Reinvestment Plan
The Board of Directors declared a fourth quarter dividend of $0.15 per share, payable on April 15, 2014 for shareholders of record on March 31, 2014. This is consistent with the quarterly dividends declared and paid in 2013.
As a result of introducing its Dividend Reinvestment Plan ("DRIP") to allow eligible shareholders to reinvest their dividends in common shares of the Company on an efficient and cost-effective basis, the Company issued 12,705 common shares from treasury on January 15, 2014. As at March 24, 2014, the Company had 17,591,046 common shares issued and outstanding.
The Company continues to have the necessary resources to fund its growth strategies. On March 12, 2014, the Company took advantage of its larger asset base to enter into a $120 million Revolving Asset Based Lending Facility ("ABL") with a syndicate of banks. Management believes this ABL is better aligned with the business than the $100 million revolving senior credit facility it replaced as it is responsive to the seasonal nature of both its agriculture and building products markets. In particular, the ABL provides greater flexibility to purchase raw materials and thereby better manage commodity risk.
At December 31, 2013, the Company had a senior net debt to EBITDA ratio of 0.6 to 1 (0.3 to 1 in 2012).
While 2013 and the start to 2014 have been challenging, management believes there are a number of fundamental trends which continue to drive demand for the Company's products including strong and growing global demand for grain storage systems, and a non-residential construction sector that is nearing the end of a long downturn. These fundamentals are supported by the Company's strong customer relationships, extensive distribution networks, well recognized and respected brands and efficient operations.
Management's 2014 outlook includes: i) benefitting from a significant increase in backlog at Westeel which, by the end of the fourth quarter, reached record levels, ii) continued momentum in North American IMP sales and backlog supported by new building regulations and standards that align with Vicwest's product specifications and iii) the acquisition of PTM in May 2013 which has allowed Westeel to expand its product reach internationally, capture more margin on international projects, open new sales channels, and provides the Company with a manufacturing presence in Europe.
These points of positive outlook are tempered by the fact that management expects Canadian non-residential construction to experience only modest growth through 2014 after a very weak 2013. As well, due to the strengthening U.S dollar, input costs, notably steel prices, have increased rapidly which is expected to pressure product margins across both divisions in the first two quarters of 2014. Management expects that product price increases implemented across most major product groups will partially offset the margin loss but only once current backlogs are cleared.
At Westeel, the year-ending backlog was $45.3 million, 113% over the prior year. Low retail inventory and high carry-over stocks through the end of the year resulted in customer demand for agricultural storage products through the first quarter to be double that of last year. Consequently, the backlog at the end of February 2014 reached a record $73.8 million, an increase of $28.5 million from year-end. Outside of North America, management expects to see increased traction in the overseas business, as it takes advantage of enhanced sales and application engineering capabilities in Europe and India and the ability to deliver cost effective, turnkey grain storage systems as a result of the acquisition and integration of PTM.
At Vicwest BP, the first few months of 2014 have been impacted by severe weather across almost all geographies, with construction activity significantly lower than the prior year. This has resulted in the deferral of some work and consequently backlogs are above the prior year's level. Overall, expectations are for a modest improvement in the volume of domestic construction activity combined with continued double digit growth in insulated metal panel sales, which were up 29% on a year-over-year basis. The presence gained in the U.S. from its IMP plant investments in both California and Arkansas provides the Company with a strong platform to attract new customers and better serve existing customers through all major construction segments. Finally, the facility rationalization to optimize and restructure Canadian operations has been completed and is expected to improve operating margins at current production levels.
Subsequent to year-end, the Company further strengthened its platform by acquiring the steel deck and exterior metal cladding business of the Roll Form Group, consolidating the Canadian market and broadening the Company's product catalogue. As well, the new five year, $120 million ABL arrangement enhances financial flexibility and increases the Company's ability to manage commodity risk.
Fourth Quarter Conference Call and Webcast
Vicwest Inc. will host its fourth quarter 2013 conference call and webcast on March 25, 2014, at 11am (EST). To participate in the teleconference, the numbers are 416-644-3414 or 800-814-4859. 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.
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.
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, change in fair value of embedded derivative and other expense. EBITDA and EBITDA margin are non-IFRS measures.
3Adjusted EBITDA and Adjusted EBITDA Margin represent EBITDA adjusted to exclude non-recurring income and expenses in 2013 and 2012 and are generally considered more indicative non-IFRS measures of underlying business performance than EBITDA. See MD&A for reconciliation to EBITDA.
4 Net income (loss) excluding change in fair value of embedded derivative and other expense and net income (loss) per share excluding change in fair value of the embedded derivative and other expense are non-IFRS measures.
5 Backlog represents 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 a non-IFRS measure.
6Net income (loss) before finance expense (net), income taxes and change in fair value of embedded derivative. This is a non-IFRS measure.
SOURCE Vicwest Inc.For further information:
President & Chief Executive Officer
Tel: (905) 469-5700
Chief Financial Officer
Tel: (905) 469-5706