Vicwest Inc. Reports First Quarter 2015 Results

OAKVILLE, ON, April 29, 2015 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB and VIC.DB.A) today reported its financial results for the three months ended March 31, 2015.

Consolidated Performance Summary







Three months ended



March 31,

($ millions except per share and margin)


2015


2014



$


$






Revenue


100.5


84.9

Gross profit


15.4


8.2

Gross profit margin


15.3%


9.6%






Adjusted EBITDA1


3.6


(2.6)

Adjusted EBITDA Margin1


3.6%


(3.0)%






Net  loss


(0.6)


(3.1)

Net loss per share (basic and diluted)


(0.10)


(0.18)






Net loss excluding change in fair value of embedded derivatives, unrealized gain on forward
contracts, other expense and Plan of Arrangement transaction costs1


(2.0)


(6.0)






Net loss  per share excluding change in fair value of embedded derivatives, unrealized gain on
forward contracts, other expense and Plan of Arrangement transaction costs1


(0.18)


(0.35)






Backlog1


86.1


121.0

Results for the first quarter were strong across both divisions driven by increased sales volumes, improved recovery of early 2014 steel cost increases, and improved operating performance. "We are very pleased with the positive momentum of the overall business through the last three quarters as we continue to benefit from our IMP and overseas growth strategies and continue to see improvements fall to the bottom line from our reductions in overhead and improved operating efficiencies" said Colin Osborne, President and CEO.

Revenues were $100.5 million, 18.4% ahead of the first quarter of 2014. The Company realized Adjusted EBITDA of $3.6 million which was $6.2 million higher than the same period last year. Improved performance in the core Westeel and Building Products businesses was further enhanced by continued growth in our international grain storage and IMP markets.

1 See disclosure on non-IFRS measures detailed at the end of this press release. Refer to "Non-IFRS measures" for more details around these measures as provided in the Company's publicly disclosed Management Discussion and Analysis (MD&A). The MD&A and all required disclosure and reconciliations for these non-IFRS measures can be found on http://www.vicwestinc.com/pages/financial-reports-public-findings.

Divisional Results









Three months ended

March 31,

($ millions)




2015


2014





$


$

Revenue







Vicwest Building Products




55.9


44.4

Westeel




44.6


40.6








Net income (loss)1







Vicwest Building Products




(2.6)


(6.3)

Westeel




2.4


0.1

Westeel's 10% revenue growth in the quarter reflected strong international sales and steel cost pass-throughs implemented in the latter part of 2014. The division had healthy order intake through the quarter resulting in a 19% increase in backlog from the prior quarter. Though the year over year backlog is down, 2014 had a very unusual order pattern and backlog is now in line with historical norms.

Westeel's adjusted EBITDA for the first quarter more than doubled to $3.9 million in 2015 from $1.8 million in 2014, primarily as a result of higher international sales volumes, increased steel cost pass-throughs and improved production efficiencies.

Vicwest Building Products revenue in the first quarter increased by 26% compared to the first quarter of 2014. The increase was primarily the result of higher North American IMP sales volumes and steel cost pass-throughs implemented in the latter part of 2014.

Vicwest Building Products' adjusted EBITDA for the first quarter of 2015 increased by $4.0 million or 93%  reflecting higher sales volumes, lower SG&A expenses and the recovery of prior steel price increases.

Financial Position
The Company continues to have adequate resources to fund its growth and efficiency improvement strategies. As planned, the newly implemented Asset Based Lending ("ABL") credit facility has provided the Company with the financial flexibility needed to more effectively manage commodity price risk and implement hedging strategies to help mitigate input cost volatility. At March 31, 2015, the Company was well within the excess availability thresholds of the ABL.

As a result of the normal seasonal increase in working capital, the Company had net debt of $117.2 million at March 31, 2015 compared to $101.2 million at December 31, 2014. On a year-over-year basis, net debt decreased by $2.0 million due to improved cash flow from operating activities.

Outlook
Management continues to be optimistic about the remainder of 2015. It is expected that the Company will continue to benefit from: i) Westeel's expansion into international markets, ii) continued growth in North American IMP sales due to continued market penetration and product development, iii) maintaining recent margin improvements across all product lines as 2014 steel cost pass-throughs have held and steel costs have begun to retract and iv) the Company's continued focus on cost reductions and increasing operating efficiencies. These positive trends are somewhat tempered by management's expectations that Canadian non-residential construction will have flat to modest single digit growth through the remainder of 2015.

Westeel, as expected, was able to return to normalized margins through the first quarter of 2015 on its fall booking program. The outlook for the 2015-2016 crop years is for a more than 5% increase in crop production based on increased planted acreage and less summer fallow. Consequently, the Company expects this will be reflected in steady domestic agricultural volumes through the remainder of 2015. The Company also continues to be pleased with the growth it is realizing within international markets, which contributed an additional $6.4 million to first quarter revenue compared to a year ago. Although international project revenue can be inconsistent quarter-to-quarter the Company is encouraged by the high level of quoting activity and the presence that has been established. It is believed that there will be continued international growth through the remainder of 2015.

At Vicwest BP, the Company continues to see increasing momentum within its IMP business. Through the first quarter of 2015, North American IMP order intake was up 89.1% compared to the same period in the prior year.  Backlog continues to stay at record levels, providing positive momentum through for the rest of 2015.  As well, with 2014 steel cost pass-throughs being accepted in the marketplace and the benefit of leveraging increased volumes, the Company expects to continue to work through this backlog with improved margins. In its conventional building products business, the Company continues to see the benefits of its plant optimization efforts and the reductions made in overhead expenses. In terms of the single skin market, Canadata has forecasted non-residential starts for the remainder of 2015 to increase by 10.2%, including a 7.4% increase in industrial and commercial starts. Management believes this projection may be tempered to modest single digit growth as a result of recent changes to the U.S to Canadian dollar exchange rate and lower oil prices. However, with a lower cost base, an ongoing focus on improving margins through price management, the Company expects to continue to drive positive momentum in margins through the remainder of 2015.

As the Company works through its seasonal increases in working capital and manages capital expenditure programs cautiously, it expects to reduce the outstanding ABL balance on a seasonal year-over-year basis through 2015.

The previously announced Plan of Arrangement between the Company, Kingspan Group plc ("Kingspan") and Ag Growth International Inc. ("AGI"), which provides for the acquisition of all outstanding Vicwest Inc. common shares for $12.70/share, is proceeding well.  Shareholders have approved the Plan of Arrangement, whereupon Kingspan will become the owner of Vicwest Building Products and AGI will acquire all of the assets of the Company's Westeel division.

The only remaining approvals required before closing are from the Competition Bureau of Canada, which is completing separate reviews on both transactions.  All three parties have submitted the requested information and are awaiting approval from Competition Canada which is now expected to be received during May.  

Good progress has been made with both buyers in developing transition plans in contemplation of closing the transaction in May and the Company anticipates a very smooth handover for both businesses and for customers, employees and suppliers with no loss of momentum.

First Quarter Conference Call and Webcast
Vicwest Inc. will host its first quarter 2015 conference call and webcast on April 30, 2015 at 10:00 a.m. (ET).  To participate in the teleconference, the numbers are 1-416-204-9524 or 1-800-505-9587.  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 divisions: Vicwest Building Products and Westeel.  With approximately 7,000 customers, 1,100 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.

Forward-Looking Statements
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.

Non-IFRS Measures

The information included in this press release contains certain measures that do not have standardized meanings prescribed by IFRS are and therefore, unlikely to be comparable to similar measures presented by other entities.

"Adjusted EBITDA" represents EBITDA adjusted to exclude changes in the fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense, restructuring and optimization costs, pension settlement/recovery costs, Plan of Arrangement transaction costs and non-recurring income and expense items. The Company believes that in addition to net earnings or loss, Adjusted EBITDA is a useful supplemental measure of cash available for distribution prior to debt service, changes in working capital, capital expenditures and income taxes for the Company. It is believed that Adjusted EBITDA is useful to investors for the purpose of assessing the Company's performance and the presentation has been made to exclude items not considered representative of normal operations. Investors are cautioned that Adjusted EBITDA does not have a standardized meaning under IFRS and should not be construed as an alternative to net earnings or loss determined in accordance with IFRS. The Company's method of calculating Adjusted EBITDA may differ from the method used by other issuers and accordingly the Company's adjusted EBITDA calculation may not be comparable to similarly titled measures used by other issuers. A reconciliation of net income to Adjusted EBITDA is provided in the Company's publicly disclosed Management Discussion and Analysis.

"Backlog" means 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 monitored by management as an indicator of future sales volumes and backlog is used to forecast production levels for the Company. It is believed that backlog is a useful metric for investors to forecast future revenue levels for the Company. Investors are cautioned that backlog provides no assurance about the timing of when that recorded revenue will be recognized. Investors are cautioned that backlog does not have a standardized meaning under IFRS and as a result the Company's method of calculating backlog may differ from the method used by other issuers and accordingly the Company's backlog calculation may not be comparable to similarly titled measures used by other issuers. Backlog does not have any equivalent financial measures and therefore cannot be reconciled to measures defined by IFRS.

"Net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs" is an additional supplemental measure that the Company's management uses as it better reflects the operational results of the Company and is used for the purposes of assessment and measurement of earnings per share.  However, net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs is not a recognized measure under IFRS. It is believed that net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs is a useful measure to investors for the purpose of assessing the Company's performance and the presentation has been made to exclude items not considered representative of normal operations. Investors are cautioned that net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs should not be construed as an alternative to net earnings or loss determined in accordance with IFRS or as an indicator of the Company's performance as an alternative to cash flows from operating, investing and financing activities which measure the Company's liquidity and cash flows. The Company's method of calculating net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs may differ from the method used by other issuers and, accordingly, the Company's calculation may not be comparable to similarly titled measures used by other issuers. A reconciliation from net income to net income excluding change in fair value of embedded derivatives, unrealized gain or loss on forward contracts, other expense and Plan of Arrangement transaction costs is provided in the Company's publicly disclosed Management Discussion and Analysis.

SOURCE Vicwest Inc.

For further information: Colin Osborne, President & Chief Executive Officer, Vicwest Inc., Tel: (905) 469-5700, ir@vicwestinc.com; Rod Crawford, Chief Financial Officer, Vicwest Inc., Tel: (905) 469-5706, ir@vicwestinc.com

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http://www.vicwest.com

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