TRADING SYMBOL: Toronto Stock Exchange - HWD
LANGLEY, BC, Sept. 12, 2011 /CNW/ - Hardwoods Distribution Inc.
("Hardwoods") announced today it has entered into an agreement to
purchase the business operations (the "Transaction") of the Frank
Paxton Lumber Company LLC ("Paxton"). Paxton is a leading
remanufacturer and distributor of premium hardwood lumber, millwork and
architectural sheet goods. The Frank Paxton Lumber Company name is
synonymous with quality, service and value and is recognized as a long
term industry leader with roots going back to 1914. Today, Paxton
serves its customers from five branches located in Chicago, Illinois,
Cincinnati, Ohio, Denver, Colorado, Kansas City, Missouri, and San
The Transaction is structured as a purchase of assets. The acquired
assets will consist principally of trade accounts receivable,
inventory, and equipment. Hardwoods will not acquire any real estate
as part of the Transaction, but will enter into lease agreements
covering Paxton's five operating locations.
The purchase price of the acquired assets is estimated to be
approximately US$13 million, but will be finalized based upon the value
of the acquired assets on the closing date.
Hardwoods existing credit facilities will be utilized to finance the
purchase price. After financing the Transaction, Hardwoods expects it
will still have sufficient unused borrowing availability under the
credit facilities to continue to grow its' business.
Closing of the Transaction is anticipated to occur on or about September
19, 2011, subject to satisfaction of final closing conditions by
Hardwoods and Paxton.
"In the latter part of 2010 Hardwoods introduced an updated business
strategy," said Lance Blanco, President and CEO of Hardwoods. "Our
board of directors and management team identified that while expense
reduction had played a vital role in seeing us safely through the
recent economic downturn, the time was now right to make a shift to
strengthen our emphasis on market expansion."
"We identified three specific areas to focus our market expansion
strategy. First was end-market diversification, in particular doing
more business in commercial and institutional construction markets, to
help offset the slow recovery anticipated for the residential
construction market. Second was leveraging our import products, to
build upon the success of our strong import product offering by seeking
out additional products and introducing our import lines to a broader
range of customers. Third was focusing on expansion in high-potential
geographic markets where demand for hardwood products is significant,
but Hardwoods currently holds relatively small or no market share."
"The acquisition of the Frank Paxton Lumber Company is an excellent fit
with our market expansion strategies, and will add some $45 million
annually in profitable sales to our business," said Mr. Blanco.
"Paxton's expertise in architectural millwork provides it with a strong
base of customers in commercial and institutional markets, a segment
where Hardwoods intends to grow. We believe the expertise that
Hardwoods brings in import products can also offer positive benefits to
Paxton's customer base. In addition, Paxton branches located in
Chicago, Cincinnati, and Kansas City represent an attractive entry
point into three high-potential markets where Hardwoods does not
currently have a significant presence."
"We remain cautious in our overall outlook for the economy, and will
continue to focus on executing our strategy while tightly managing our
business," added Mr. Blanco. "However with this accretive acquisition,
the improving performance of our existing business, completion of our
conversion to a corporation earlier in the year, and commencement of a
quarterly dividend of $0.02 per share starting in October, we believe
we are on track to increase the value of Hardwoods for our
About Hardwoods Distribution Inc.
Hardwoods Distribution Inc. ("Hardwoods") (TSX: HWD) is a publicly
traded company that holds, indirectly, a 100% ownership interest in
Hardwoods Specialty Products LP and Hardwoods Specialty Products US LP
(collectively, the "Business"). The Business is one of North America's
largest distributors of high-grade hardwood lumber and sheet goods to
the cabinet, moulding, millwork, furniture and specialty wood products
industries. The Company currently operates a network of 26 distribution
centers in the U.S. and Canada.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes forward-looking statements. These involve
known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements or industry results to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
These forward-looking statements are identified by the use of terms and
phrases such as "anticipate", "believe", "estimate", "expect", "may",
"plan", "will", and similar terms and phrases, including references to
assumptions. Such statements may involve, but are not limited to: the
purchase price of the acquired assets is estimated to be approximately
US$13 million, but will be finalized based upon the value of the
acquired assets on the closing date; Hardwoods existing credit
facilities will be utilized to finance the purchase price; after
financing the Transaction, Hardwoods expects it will still have
sufficient unused borrowing availability under the credit facilities to
continue to grow its' business; that closing of the Transaction is
anticipated to occur on or about September 19, 2011, subject to
satisfaction of final closing conditions by Hardwoods and Paxton; that
the Frank Paxton Lumber Company is an excellent fit with Hardwood's
market expansion strategies, and will add some $45 million annually in
profitable sales to Hardwood's business; Hardwoods belief that the
expertise Hardwoods brings in import products can also offer positive
benefits to Paxton's customer base; that Hardwoods remains cautious in
its overall outlook for the economy, and will continue to focus on
executing our strategy while tightly manage its business; and that
Hardwoods expects the acquisition to be accretive.
These forward-looking statements reflect current expectations of
management regarding future events and operating performance as of the
date of this news release. Forward-looking statements involve
significant risks and uncertainties, should not be read as guarantees
of future performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A number
of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements, including, but not
limited to: national and local business conditions; political or
economic instability in local markets; competition; consumer
preferences; spending patterns and demographic trends; legislation or
Although the forward-looking statements contained in this news release
are based upon what management believes to be reasonable assumptions,
management cannot assure investors that actual results will be
consistent with these forward-looking statements. The forward-looking
statements reflect management's current beliefs and are based on
information currently available.
All forward-looking information in this news release is qualified in its
entirety by this cautionary statement and, except as may be required by
law, Hardwoods undertakes no obligation to revise or update any forward
looking information as a result of new information, future events or
otherwise after the date hereof.
SOURCE Hardwoods Distribution Inc.
For further information:
Chief Financial Officer
Phone: (604) 881-1990
Fax: (604) 881-1995