Exchange Industrial Income Fund reports record quarterly profits and revenues



    WINNIPEG, Aug. 14 /CNW/ - Exchange Industrial Income Fund today reported
its financial results for the quarter ended June 30, 2008.

    
    Highlights for the Quarter Ended June 30, 2008

    Strong Financial Performance
    ----------------------------
    Revenues reach quarterly record of $41.0 million, up 46% over the
    previous year
    Profits reach quarterly record of $3.1 million up 54% over the previous
    year
    Distributable cash reaches quarterly record of $4.4 million up 34% over
    the previous year

    Distributions Growth
    --------------------
    Monthly distributions per unit increased to $0.375 in 2008 from $0.36 in
    2007, an increase of 4%

    Conservative Payout Ratio
    -------------------------
    The distribution payout ratio strengthened to 49% or 56% fully diluted

    Fund Growth
    -----------
    Subsequent to quarter end announced the acquisition of the assets of
    Kistigan Air and related real estate assets
    

    Adam Terwin, the CFO of the Fund stated, "Management is pleased with the
second quarter results. In spite of challenging conditions in some of our
manufacturing subsidiaries we were able to hit new quarterly milestones in a
number of areas, but most importantly in profit and distributable cash. Our
Aviation segment showed strong organic growth, and the completion of the
rationalization of the fleet of aircraft is evident in the results. Fully
diluted distributable cash per unit grew by 8% over the preceding year to
$0.67 per unit. This is particularly impressive when you take into account
that the second quarter of 2007 was a strong period for the Fund, and that we
faced very high fuel prices and a weakening economy in 2008."
    "The benefits of a diversified portfolio are evident in our quarterly
results," stated Mike Pyle the CEO of the Fund. "While we are happy with the
overall results, we still see opportunities for improvement. Our manufacturing
segment has room to improve as the weaker economy, as well as internal issues
at Jasper Tank, have resulted in the manufacturing segment falling short of
its potential. In the second quarter our aviation investments performed very
well, and enabled us to reach record profit levels, in spite of the challenges
we faced in manufacturing. We believe more strongly than ever that
diversification can be a valuable tool in achieving dependable growing
distributions for our unitholders. The key to our success is discipline, and
being willing to say no, if a transaction is not accretive to our
unitholders."

    Results for the Three Months ended June 30, 2008

    For the quarter ended June 30, 2008 the Fund reported revenue of
$41.0 million, up 46% from the $28.1 million reported in the same period in
2007. EBITDA and earnings grew by 24% and 54% to $5.7 million and $3.1 million
respectively.
    Earnings per unit were $0.53 and $0.50 fully diluted up from $0.45 and
$0.42 respectively in the same period in 2007. Distributable cash per unit
increased to $0.76 or $0.67 fully diluted which represented a payout ratio of
49% and 56% respectively which was an improvement from the $0.74 and $0.62
generated in the same period of 2007 (which resulted in a payout ratio of 49%
and 58% respectively). Actual distributions per unit in the quarter increased
by 4% to $0.375 from $0.36 in the previous year.

    Results for the Six Months ended June 30, 2008

    For the six months ended June 30, 2008 the Fund reported revenue of
$75.4 million, up 51% from the $50.0 million reported in the same period in
2007. EBITDA and earnings grew by 36% and 50% to $9.5 million and $4.5 million
respectively.
    Earnings per unit were $0.77 and $0.75 fully diluted up from $0.75 and
$0.72 respectively in the same period in 2007. Distributable cash per unit
increased to $1.16 or $1.05 fully diluted which represented a payout ratio of
65% and 71% respectively which was an improvement from the $1.15 and $0.97
generated in the same period of 2007 (which resulted in a payout ratio of 63%
and 74% respectively). Actual distributions per unit in the six months
increased by 4% to $0.75 from $0.72 in the previous year.
    Further information about these results can be found in disclosure
documents filed by the Fund with the securities regulatory authorities
available at www.sedar.com.

    Company Profile

    The Fund is a diversified, acquisition-oriented income trust, focused on
opportunities in the industrial products and transportation sectors which are
ideally suited for public markets except for their size. The strategy of the
Fund is to invest in profitable, well-established companies with strong cash
flows operating in niche markets in Canada and/or the United States. The
objectives of the Fund are: (i) to provide Unitholders with stable and growing
cash distributions; (ii) to maximize Unit value through on-going active
monitoring of its subsidiaries; and (iii) the continuing acquisition of
additional companies or businesses or interests therein in order to expand and
diversify the Fund's investments.
    It is currently operating in two niche business segments: aviation and
specialty manufacturing. The aviation segment consists of Perimeter Aviation
Ltd. and Keewatin Air Limited and the specialty manufacturing segment consists
of Jasper Tank Ltd., Overlanders Manufacturing LP, Water Blast Manufacturing
LP, and Stainless Fabrication, Inc.

    Non-GAAP measures references to "EBITDA" are to earnings before interest,
income taxes, foreign exchange gains or losses, depreciation, and amortization
and to "distributable cash" which is a performance measure used to summarize
the funds available to unitholders of an income fund. Management believes
that, in addition to net income or loss, EBITDA and distributable cash are
useful supplemental measures in evaluating its performance. Specifically,
management believes that EBITDA is the appropriate measure from which to make
adjustments to determine the Fund's distributable cash. EBITDA and
distributable cash are not measures recognized by Canadian generally accepted
accounting principles ("GAAP") and do not have a standardized meaning
prescribed by GAAP. Management cautions investors that EBITDA and
distributable cash should not replace net income or loss as an indicator of
performance, or cash flows from operating, investing, and financing activities
as a measure of the Fund's liquidity and cash flows. The Fund's method of
calculating EBITDA and cash distributions may differ from the methods used by
other issuers. A reconciliation of these non-GAAP measures to earnings before
income tax for the three month period ended March 31, 2008 and March 31, 2007
is summarized in the chart below.

    
    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                       June 30   June 30   June 30   June 30
    $000's (except per unit data)         2008      2007      2008      2007
    -------------------------------------------------------------------------
    Earnings before income tax         $ 3,236   $ 2,449   $ 4,341   $ 3,026
    Interest expense                     1,216       994     2,479     1,870
    Depreciation & amortization          1,357     1,105     2,668     2,060
    Unrealized foreign exchange
     (gains) losses                       (152)        -         -         -
    -------------------------------------------------------------------------
    EBITDA                               5,657     4,548     9,488     6,956
    Interest on bank debt                  734       516     1,525       854
    Interest on debentures                 289       321       577       666
    Maintenance capital expenditures       208       473       560       844
    Cash taxes                              14       (43)       79        55
    -------------------------------------------------------------------------
    Distributable cash                 $ 4,412   $ 3,281   $ 6,747   $ 4,537

    Distributable cash per unit
      Basic                            $  0.76   $  0.74   $  1.16   $  1.15
      Diluted                          $  0.67   $  0.62   $  1.05   $  0.97

    Distributions declared per unit    $ 0.375   $  0.36   $  0.75   $  0.72
    -------------------------------------------------------------------------
    

    Forward-Looking Statements

    The statements contained in this news release that are forward-looking
are based on current expectations, and are subject to a number of
uncertainties and risks, and actual results may differ materially. These
uncertainties and risks include, but are not limited to, the dependence of
Exchange Industrial Income Fund on the operations and assets currently owned
by it, the degree to which its subsidiaries are leveraged, the fact that cash
distributions are not guaranteed and will fluctuate with the Fund's financial
performance, dilution, restrictions on potential future growth, the risk of
unitholder liability, competitive pressures (including price competition),
changes in market activity, the cyclicality of the industries, seasonality of
the businesses, poor weather conditions, and foreign currency fluctuations,
legal proceedings, commodity prices and raw material exposure, dependence on
key personnel, and environmental, health and safety and other regulatory
requirements. Further information about these and other risks and
uncertainties can be found in the disclosure documents filed by Exchange
Industrial Income Fund with the securities regulatory authorities, available
at www.sedar.com.

    Visit us at: www.eiif.ca.





For further information:

For further information: Mike Pyle, President and CEO, Exchange
Industrial Income Fund, 1067 Sherwin Road, Winnipeg, MB, R3H 0T8, Phone: (204)
982-1850, Fax: (204) 982-1855, E-mail: mpyle@eig.ca


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