Taiga Building Products Ltd. Announces Steady Third Quarter Performance

BURNABY, BC, Feb. 10 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") today reported its quarterly results for the three months ended December 31, 2010.

Earnings Results - Three Months Ended December 31, 2010

The Company's consolidated net sales for the quarter ended December 31, 2010 decreased slightly to $198.4 million compared to $201.1 million over the same period last year. Demand for building products as well as the new housing starts remained at moderate levels. Gross margin for the quarter ended December 31, 2010 decreased to $18.4 million from $20.8 million over the same period last year. Gross margin percentage for the quarter declined to 9.3% compared to 10.3% for the same period last year.

Product mix shifted towards commodity products, as lumber pricing firmed from seasonal lows, and competition increased in allied products. Net earnings for the quarter ended December 31, 2010 was a loss of $1.1 million, a decrease of $2.0 million compared to earnings of $0.9 million over the same period last year. EBITDA for the quarter ended December 31, 2010 was $5.3 million, a decrease of $2.1 million, compared to $7.4 million over the same period last year. These decreases were primarily due to lower gross margin dollars.

Earnings Results - Nine Months Ended December 31, 2010

Sales were increased by 6.4% to $753.5 million for the nine months ended December 31, 2010 compared to $708.4 million for the nine months ended December 31, 2009. The Company benefited from stronger sales in the first quarter supported by higher commodity prices and a very weak comparable sales performance period as a result of the international credit crisis. The Company recorded steady sales during the second and third quarter despite volatile commodity prices. Gross margin dollars decreased to $71.1 million from $76.2 million for the nine months ended December 31, 2010 from the same period last year. Gross margin percentage for the period decreased to 9.4% from 10.8% in the same period of the prior fiscal year. After peaking in May, commodity prices continued to decline during the second quarter, however, the prices have bottomed and have been trending higher during the current quarter. This volatility in lumber prices combined with recovery of industry supply chain inventories against demand put pressures on gross margin during the last half of calendar year 2010.

Net earnings were $6.5 million or $0.20 per share compared to $10.9 million or $0.34 per share for the comparative period. EBITDA for the nine months ended December 31, 2010 was $28.1 million compared to $33.3 million in the same period of the prior year. These decreases were primarily due to lower gross margin dollars and lower positive foreign exchange fluctuation during the period.

Selected Consolidated Statement of Earnings

For the Three Months Ended December 31
(in thousands of dollars, except for per share amounts)
     
      2010
$
    2009
$
Sales     198,415     201,119
Gross margin     18,440     20,765
Distribution     4,170     4,497
Selling and administration     10,084     9,968
Interest     1,154     745
Subordinated debt interest expense     4,016     4,281
Non-operating income     (218)     (235)
Earnings before income taxes     (766)     1,509
Provision for income taxes     322     568
Net earnings     (1,088)     941
Net earnings per share(1)     (0.03)     0.03
EBITDA(2)     5,274     7,373

The following is the reconciliation of net earnings to EBITDA:

    Three Months Ended
December 31,
(in thousands of dollars)   2010
$
2009
$
Net earnings   (1,088) 941
Income taxes   322 568
Interest   5,170 5,026
Amortization   870 838
EBITDA   5,274 7,373

Selected Consolidated Statement of Earnings
For the Nine Months Ended December 31
(in thousands of dollars, except for per share amounts)
(Unaudited)
                
        2010
  $
      2009
$
Sales     753,547     708,420
Gross margin     71,089     76,215
Distribution     13,183     14,535
Selling and administration     33,678     31,497
Interest     3,415     2,797
Subordinated debt interest expense     12,048     12,460
Non-operating expense (income)     (1,340)     (642)
Earnings before income taxes     10,105     15,568
Provision for income taxes     3,636     4,672
Net earnings     6,469     10,896
Net earnings per share(1)     0.20     0.34
EBITDA(2)     28,109     33,336

The following is the reconciliation of net earnings to EBITDA:

    Nine Months Ended
December 31, 
(in thousands of dollars)   2010
$
2009
$
Net Earnings   6,469 10,896
Income Tax Expense   3,636 4,672
Interest Expense   15,463 15,257
Amortization   2,541 2,511
EBITDA   28,109 33,336

Notes:

(1) EPS is earnings per share calculated using the weighted average number of shares.
(2) Reference is made above to EBITDA, which represents earnings before interest, taxes, and amortization. As there is no generally accepted method of calculating EBITDA, the measure as calculated by Taiga might not be comparable to similarly titled measures reported by other issuers. EBITDA is presented as management believes it is a useful indicator of a company's ability to meet debt service and capital expenditure requirements and because management interprets trends in EBITDA as an indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flows as determined in accordance with Canadian generally accepted accounting principles.

The foregoing selected financial information is qualified in its entirety by and should be read in conjunction with, our unaudited interim consolidated financial statements for the quarter ended December 31, 2010 and accompanying notes and management's discussion and analysis which will be available shortly on Sedar at www.sedar.com.

Forward-Looking Statements:

This press release contains certain forward-looking information and statements relating, but not limited, to future events or performance and strategies and expectations of Taiga. Forward-looking information typically contains statements with words such as "consider", "anticipate", "believe", "expect", "plan", "intend", "likely", "may", "will", "should", "predict", "potential", "continue" or similar words suggesting future outcomes or statements regarding expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Examples of such forward looking statements within this press release include statements relating to: our anticipated results of operations, including cost reduction savings; our expectations regarding market conditions; the sufficiency of our cash requirements and our ability to remain in compliance with our debt covenants. Readers should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements.

These forward-looking statements reflect management's current expectations or beliefs and are based on information currently available to Taiga and although Taiga believes it has a reasonable basis for making the forward-looking statements included in this document, readers are cautioned not to place undue reliance on such forward-looking information. By its nature, the forward-looking information of Taiga involves numerous assumptions and inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. These risks include, but are not limited to, changes in business strategies; the effects of litigation, competition and pricing pressures; changes in operational costs; changes in laws and regulations, including tax, environmental, employment, competition, anti-terrorism and trade laws; and Taiga's anticipation of and success in managing the risks associated with the foregoing. A further description of these additional factors can be found in the periodic and other reports filed by Taiga with Canadian securities commissions and available on Sedar (http://www.sedar.com).These forward-looking statements speak only as of the date of this press release. Taiga 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.

SOURCE Taiga Building Products Ltd.

For further information:

For further information regarding Taiga please contact:

Tom Stefan
CFO & Vice President, Finance and Administration
Phone:604-438-1471
Fax: 604-439-4242

Mark Schneidereit
Manager, Corporate Planning
Phone: 604-438-1471
Fax: 604-439-4242


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