OFI Income Fund Reports 2007 Third-Quarter Results



    
    -   Canadian and overseas sales increase with the addition of new
        customers
    -   U.S. market remains weak
    -   Credit facility increased and extended
    -   Conference call Friday, November 9 at 8:30 a.m. Eastern
    

    OTTAWA, Nov. 8 /CNW/ - OFI Income Fund (TSX: OFB.UN), a producer of
fibreglass insulation products, today announced its 2007 third-quarter
financial results for the period ended September 30, 2007.
    "Through our 2007 third quarter, OFI continued to experience the adverse
effect of the marked slowdown that has taken place in the construction
industry in the United States, particularly in the residential sector," said
Joseph Skarzenski, President and Chief Executive Officer. "On the other hand,
demand in Canada continues to be stable. OFI's 2007 third-quarter sales in
Canada were more than 11 percent ahead of the level in the 2006 period and
were slightly up through the first nine months compared with a year ago. We
continue to focus our efforts on growing our market share in Canada and
overseas while maintaining our customer base in the United States. We are
beginning to see the benefits of these efforts and are hopeful that we can
continue to build on that success into 2008," he added.

    
    Third-Quarter Financial Highlights

    -   Third-quarter 2007 sales were $17.2 million, down 23.8 percent from
        $22.6 million in the 2006 period mainly attributable to the slowdown
        in demand for insulation products in the U.S. market and the loss of
        a major customer (that was acquired by a competitor of OFI) in
        December 2006.
    -   Gross profit declined in the 2007 third quarter to 23.3 percent of
        sales ($4.0 million), compared with 33.4 percent of sales
        ($7.5 million) in the prior-year period, due to the effect of the
        decline in sales, reduced selling prices, the effects of a stronger
        Canadian dollar compared with the U.S. dollar and the effect of
        reduced production levels.
    -   Selling, general, and administrative (SG&A) expenses were
        $3.0 million in the 2007 third quarter, down 9.5 percent from
        $3.3 million in the 2006 quarter.
    -   Net income was $0.7 million in the 2007 third quarter, down from
        $1.9 million in the 2006 quarter.
    -   Earnings before interest, taxes, depreciation, and amortization
        (EBITDA(*)) were $3.8 million in the 2007 third quarter, a
        47.2 percent decrease from $7.2 million in the 2006 period.

    Nine-Month Financial Highlights

    -   Sales for the first nine months of 2007 decreased 23.0 percent to
        $55.1 million, compared with $71.6 million in the 2006 period.
    -   Gross profit in the 2007 nine-month period was 25.7 percent of sales
        ($14.2 million), down from 34.5 percent of sales ($24.7 million) in
        the 2006 period reflecting the factors that affected the Fund's
        results in this year's third quarter.
    -   Selling, general, and administrative (SG&A) expenses were
        $9.5 million in the 2007 nine months, down from $10.2 million in the
        first nine months of 2006.
    -   Net income amounted to $2.6 million, compared with $8.2 million in
        the 2006 nine-month period.
    -   Normalized EBITDA were $12.2 million in the 2007 period (including a
        normalizing entry of $0.1 million for restructuring costs), down
        46.1 percent from $22.7 million in the first nine months of 2006.
    

    Distributable Cash((*)) and Liquidity

    OFI generated $4.4 million and $11.3 million in distributable cash in the
2007 third quarter and first nine-months, respectively. The Fund declared
payouts on its publicly traded units of $2.6 million and $10.1 million for
those respective 2007 periods, representing payout ratios of 57.0 percent and
89.7 percent. No distributions were declared to the holders of the Class B
Subordinated Exchangeable units.
    On September 25, 2007, the Fund announced that it had signed an agreement
with its current banking syndicate extending and increasing its total credit
facility. The agreement increases the Fund's existing facility of $40 million
to $45 million and extends the loan maturity from the previous expiry of
September 1, 2008 to September 1, 2009. The agreement also includes changes to
the covenants that are favorable to the Fund.

    Outlook

    "It remains uncertain how long the downturn in the U.S. construction
industry will last and how it will affect the Fund in future periods," said
Mr. Skarzenski. "We are encouraged, however, by the success in adding new
customers as the result of concentrating our sales efforts on increasing
market share in Canada and overseas. In the meanwhile, we are continuing to
tightly manage our costs," Mr. Skarzenski said.

    Consolidated Financial Statements

    The Fund's 2007 third-quarter and nine-month Financial Statements and
Management's Discussion and Analysis have been filed with SEDAR and are also
available at the Fund's website at www.ofigroup.com.


    
                            Three month period ended  Nine month period ended
                            ------------------------  -----------------------
                                   September 30            September 30
                                   ------------            ------------
                                2007         2006         2007         2006
                                ----         ----         ----         ----
                                              (in thousands)
                                                (unaudited)


    Sales                     $17,232      $22,628      $55,129      $71,589
    Cost of sales              13,213       15,069       40,939       46,907
                            -------------------------------------------------
    Gross profit                4,019        7,559       14,190       24,682

    Selling, general and
     administrative expenses    2,963        3,273        9,490       10,215
    Income before taxes and
     non-controlling
     interest                   1,454        3,424        7,639       14,691
                            -------------------------------------------------
    Net income                   $681       $1,913       $2,582       $8,208
                            -------------------------------------------------
    Normalized EBITDA(*)       $3,828       $7,234      $12,243      $22,694
                            -------------------------------------------------

    Distributable Cash(*)      $4,435                   $11,283

    Distributions declared
     on Fund Units              2,528                    10,122
    Distributions declared
     on Class B Subordinated
     Exchangeable LP Units
     of OFI LP                      -                         -
                            ----------                ----------
    Total Distributions
     declared                  $2,528                   $10,122
                            ----------                ----------
    Payout Ratio                57.0%                     89.7%
                            ----------                ----------
    

    The calculation of Distributable Cash was modified on a retroactive basis
this quarter based on the regulatory change provided in National Policy 41-201
issued by The Canadian Securities Administrators.

    Conference Call

    OFI will hold a conference call for analysts and investors to discuss its
financial results on Friday, November 9, 2007 at 8:30 a.m. (Eastern).
    Joseph Skarzenski, President and Chief Executive Officer, and Catherine
Skarzenski, Executive Vice President and Chief Financial Officer, will be
available to answer questions during the call.
    To participate in the conference call, please dial 613-688-0197 or
416-644-3431 or 1-800-587-1893 about five minutes prior to the start of the
call.
    A live audio webcast of the conference call will be available at
www.newswire.ca.
    An archived recording of the call will be available at 416-640-1917 or
1-877-289-8525 (Passcode 21252299 followed by the number sign) from 10:30 a.m.
on November 9 to midnight on November 16. An archived recording of the webcast
will also be available at OFI's website.

    ((*)) Non-GAAP Measures

    References to EBITDA are to earnings before interest, taxes,
depreciation, amortization, unrealized gain/loss on derivative instruments,
non-controlling interest and unrealized foreign exchange (gain)/loss on cash
and cash equivalents. Because the Fund will distribute all of its cash on an
ongoing basis (after providing for certain amounts), management believes that
in addition to net income or loss, EBITDA is a useful supplemental measure of
cash available for distribution prior to debt service, changes in working
capital and capital expenditures. However, EBITDA is not a recognized measure
and does not have a standardized meaning under generally accepted accounting
principles (GAAP). Investors are cautioned that EBITDA should not be construed
as an alternative to net income (as determined in accordance with GAAP) as an
indicator of the Fund's performance, or as an alternative to 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 may differ
from the methods used by other issuers and, accordingly, the Fund's EBITDA may
not be comparable to similar measures used by other issuers.
    Management views distributable cash as a cash flow measure. It is a
non-GAAP measure generally used by Canadian income funds as an indicator of
their ability to generate cash that could be used for distributions to
unitholders and the Fund will distribute its available cash to the maximum
extent possible on an on-going basis (after providing for certain amounts).
Consequently, management believes that distributable cash is a useful
supplemental measure that may assist prospective investors in assessing an
investment in Fund units. Investors are cautioned that Distributable Cash
should not be construed as an alternative to net income or loss determined in
accordance with GAAP as an indicator of the Fund's performance or to cash
flows from operating, investing and financing activities as a measure of
liquidity and cash flows. The method of calculating the Fund's Distributable
Cash may differ from similar computations, as reported by other issuers and,
accordingly, may not be comparable to Distributable Cash as reported by other
issuers.

    Forward-Looking Statements

    Certain statements contained in this news release constitute forward-
looking information within the meaning of securities laws. Forward-looking
information may relate to the Fund's future outlook and anticipated events,
the Fund's business, its operations, its financial performance, its financial
condition or its results. Particularly, statements regarding the Fund's future
operating results and economic performance, the Fund's objectives and
strategies to achieve those objectives, are forward-looking statements. While
these statements are based on certain factors and assumptions that management
considers to be reasonable based on information currently available to it,
they may prove to be incorrect. Forward looking-information is also subject to
certain factors, including risks and uncertainties described in our Annual
Information Form, many of which are beyond management's control, that could
cause actual results to differ materially from what management currently
expects. Therefore, future events and results may vary significantly from what
management currently foresees. You should not place undue importance on
forward-looking information and should not rely upon this information as of
any other date. While the Fund may elect to, it is under no obligation (and
expressly disclaims any such obligation) and does not undertake to update or
alter this information at any particular time except as required under
applicable securities legislation.

    About OFI Income Fund

    Since 1980, OFI has been manufacturing and distributing a broad range of
fibreglass insulation products, including fibreglass ceiling tiles, designed
for thermal and acoustical applications and destined for the Canadian, U.S.,
and international residential and non-residential/industrial markets. OFI
operates under a low-cost structure and has been profitable for the past
23 years. Additional information is available at www.sedar.com or the
company's website at www.ofigroup.com.


    
    OFI Income Fund

                     CONSOLIDATED INTERIM BALANCE SHEETS
                     (in thousands of Canadian dollars)
                                 (unaudited)

                                                September 30,    December 31,
                                                        2007            2006
                                                           $               $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                          4,404           9,188
    Restricted cash                                        -              82
    Accounts receivable                                8,713           9,769
    Inventories                                        8,782           7,975
    Prepaid expenses                                     459             425
    Other assets                                       2,151               -
    -------------------------------------------------------------------------
    Total current assets                              24,509          27,439
    -------------------------------------------------------------------------
    Long-term
    Property, plant and equipment                     58,683          54,748
    Intangible assets                                 57,720          62,944
    Goodwill                                          96,580          96,580
    -------------------------------------------------------------------------
    Total long-term assets                           212,983         214,272
    -------------------------------------------------------------------------
    Total assets                                     237,492         241,711
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY
    Current
    Accounts payable                                   3,526           3,548
    Accrued liabilities                                3,872           5,464
    Distributions payable to Fund unitholders            843           1,350
    Distributions payable to Class B unitholders           -           3,200
    Other accrued liabilities                              -           1,502
    -------------------------------------------------------------------------
    Total current liabilities                          8,241          15,064
    -------------------------------------------------------------------------

    Long-term debt                                    39,530          34,443
    Future income taxes                                1,686               -
    -------------------------------------------------------------------------
    Total long-term liabilities                       41,216          34,443
    -------------------------------------------------------------------------

    Non-controlling interest                          80,706          77,335
    -------------------------------------------------------------------------

    Commitments and contingencies

    UNITHOLDERS' EQUITY
    Fund units                                       123,370         123,370
    Deficit                                          (16,041)         (8,501)
    -------------------------------------------------------------------------
    Total unitholders' equity                        107,329         114,869
    -------------------------------------------------------------------------
    Total liabilities and unitholders' equity        237,492         241,711
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    OFI Income Fund

     CONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (in thousands of Canadian dollars and units, except per unit amounts)
                                 (unaudited)

                              For the three months       For the nine months
                                     ended                      ended
                                   September 30              September 30
                                 2007         2006         2007         2006
                                    $            $            $            $
    -------------------------------------------------------------------------

    Sales                      17,232       22,628       55,129       71,589
    Cost of sales              13,213       15,069       40,939       46,907
    -------------------------------------------------------------------------
    Gross profit                4,019        7,559       14,190       24,682
    -------------------------------------------------------------------------

    OTHER INCOME & EXPENSES
    Selling, general and
     administrative             2,963        3,273        9,490       10,215
    Research and development       17           26           64          122
    Foreign exchange (gain)
     loss                        (318)        (327)          25         (403)
    Amortization of deferred
     financing charges             38           43          125          130
    Interest on long-term debt    242          174          689          513
    Unrealized (gain) loss on
     derivative financial
     instruments                 (341)       1,090       (3,653)        (249)
    Interest income               (36)        (144)        (189)        (337)
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest   1,454        3,424        7,639       14,691
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Future income taxes           131            -        1,686            -
    -------------------------------------------------------------------------
    Income before
     non-controlling interest   1,323        3,424        5,953       14,691
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Non-controlling interest      642        1,511        3,371        6,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income and
     comprehensive income
     for the period               681        1,913        2,582        8,208
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income per unit
    Basic                       0.053        0.148        0.199        0.633
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Diluted                     0.053        0.148        0.199        0.633
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of units outstanding
    Basic                      12,963       12,963       12,963       12,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Diluted                    23,202       23,202       23,202       23,202
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    OFI Income Fund

                CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
                             UNITHOLDERS' EQUITY
                (in thousands of Canadian dollars and units)
                                 (unaudited)

                                Units       Amount      Deficit        Total
                                   No.           $            $            $
    -------------------------------------------------------------------------

    Unitholders' Equity
     December 31, 2005         12,963      123,370       (2,402)     120,968
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income attributable
     to Fund units                                        9,726        9,726
    Distributions declared
     on Fund units                                      (15,825)     (15,825)
    -------------------------------------------------------------------------
    Unitholders' Equity
     December 31, 2006         12,963      123,370       (8,501)     114,869
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income
     attributable to Fund
     units                                                2,582        2,582
    Distributions declared
     on Fund units                                      (10,122)     (10,122)
    -------------------------------------------------------------------------
    Unitholders' Equity
     September 30, 2007        12,963      123,370      (16,041)     107,329
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    OFI Income Fund

                CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
                     (in thousands of Canadian dollars)
                                 (unaudited)

                              For the three months       For the nine months
                                     ended                      ended
                                   September 30              September 30
                                 2007         2006         2007         2006
                                    $            $            $            $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net income for the period     681        1,913        2,582        8,208
    Add (deduct) items not
     involving cash:
    Non-controlling interest
     share of income              642        1,511        3,371        6,483
    Amortization of property,
     plant and equipment          700          905        2,338        2,621
    Amortization of deferred
     financing costs               38           43          125          130
    Amortization of intangible
     assets                     1,741        1,741        5,224        5,224
    Loss on disposal of asset       -            -          166            -
    Future income taxes           131            -        1,686            -
    Unrealized (gain) loss on
     derivative financial
     instruments                 (341)       1,090       (3,653)        (249)
    Unrealized foreign exchange
     loss (gain) on cash and
     cash equivalents              29            1          (21)         101
    -------------------------------------------------------------------------
                                3,621        7,204       11,818       22,518
    Net change in non-cash
     working capital balances
     related to operations        831          (28)         609       (1,399)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                 4,452        7,176       12,427       21,119
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property,
     plant and equipment         (579)      (6,227)      (8,444)     (14,098)
    Change in cash restricted
     for payment on interest
     on non-revolving
     construction loan              -          210           82          541
    Cash used in investing
     activities                  (579)      (6,017)      (8,362)     (13,557)

    FINANCING ACTIVITIES
    Issuance of debt                -        4,675        5,010       12,066
    Debt amendment cost           (51)           -          (51)           -
    Cash distributions paid
     to Fund and Class B
     units                     (2,528)      (4,916)     (13,829)     (14,639)
    -------------------------------------------------------------------------
    Cash used in financing
     activities                (2,579)        (241)      (8,870)      (2,573)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Unrealized foreign
     exchange loss on cash
     and cash equivalents         (29)          (1)          21         (101)

    Net increase (decrease)
     in cash and cash
     equivalents                1,265          917       (4,784)       4,888
    Cash and cash equivalents,
     beginning of period        3,139       10,739        9,188        6,768
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period              4,404       11,656        4,404       11,656
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental disclosures
     of cash flow information:
      Interest paid               602          407        1,768        1,054
      Interest received            36          144          189          337
    -------------------------------------------------------------------------
    

    %SEDAR: 00022462E




For further information:

For further information: Catherine Skarzenski, Executive Vice President
and Chief Financial Officer, Tel. (613) 247-7116, Fax (613) 736-7281, e-mail
investors@ofiincomefund.com

Organization Profile

OFI INCOME FUND

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890