Vicwest Inc. Reports Fourth Quarter, Annual 2014 Results

OAKVILLE, ON, March 30, 2015 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB and VIC.DB.A) today reported its financial results for the three and twelve months ended December 31, 2014.

Consolidated Performance Summary





 Three months ended

      December 31,

   Twelve months ended

      December 31,

($ millions except per share)

2014

2013

2014

2013


$

$

$

$






Revenue

138.4

104.9

472.5

394.7

Gross profit

24.7

13.5

74.7

59.5

Gross profit margin

17.9%

12.9%

15.8%

15.1%






Adjusted EBITDA[1]

12.3

1.7

28.8

18.6

Adjusted EBITDA Margin1

8.9%

1.6%

6.1%

4.7%






Net  income (loss)

-

(3.6)

0.5

(5.1)

Net loss per share (basic and diluted)

(0.05)

(0.21)

(0.07)

(0.31)






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

5.9

(3.0)

4.3

 

(4.4)






Net income (loss) attributable to shareholders excluding change in fair value of embedded derivatives, unrealized gain on forward contracts, other expense and Plan of Arrangement transaction costs1

5.0

(3.1)

2.5

(4.9)

 

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

0.27

(0.18)

0.12

(0.28)






Dividend per share

0.15

0.15

0.60

0.60

Backlog1

77.7

76.4

77.7

76.4

Results for the fourth quarter were strong across both divisions driven by increased sales volumes, improved operating performance and reductions in SG&A expenses. Revenues were $138.4 million, 32.0% ahead of the fourth quarter of 2013. The Company realized Adjusted EBITDA of $12.3 million which was $10.6 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 IMP and PTM businesses.

Divisional Results





Three months ended

 December 31,

Twelve months ended

  December 31,

($ millions)

2014

2013

2014

2013


$

$

$

$

Revenue





Vicwest Building Products

81.8

67.8

275.9

253.8

Westeel

56.7

37.0

196.6

140.9






Adjusted EBITDA1





Vicwest Building Products

6.0

0.6

11.4

8.0

Westeel

6.3

1.1

17.4

10.6

Westeel's 53% revenue growth in the quarter reflected strong sales volume in grain storage products as a result of its successful fall booking program, price adjustments implemented in the quarter and a significant increase in PTM volumes. The division had healthy order intake through the quarter and record operating output from key manufacturing facilities.

Westeel's adjusted EBITDA for the fourth quarter increased to $6.3 million in 2014 from $1.1 million in 2013, primarily as a result of increased sales volumes, improved production efficiencies and improved product mix.

Vicwest Building Products revenue in the fourth quarter increased by 21% compared to the fourth quarter of 2013. The increase was primarily the result of higher North American IMP sales volumes and price adjustments implemented to offset earlier steel cost increases.

Vicwest Building Products' adjusted EBITDA for the fourth quarter of 2014 increased to $6.0 million from $0.6 million a year ago, reflecting higher sales volumes, lower SG&A expenses and the implementation of price adjustments in the quarter.

Financial Position
The Company continues to have adequate resources to fund its growth and margin improvement strategies. The 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. Total net debt decreased during the fourth quarter by $7.6 million and at December 31, 2014, the Company was well within the excess availability thresholds of the ABL.

Outlook
Management is optimistic about 2015. It is expected that the Company will benefit from: i) a strong Westeel fall booking program at improved margins which has provided the division with healthy backlog at year-end ii) Westeel's continued expansion into international markets, iii) maintaining recent margin improvements across all product lines as the steel cost increases in early 2014 are now reflected in pricing, iv) continued growth in North American IMP sales and backlog, which is up 74.3% over prior year at December 31, 2014, and v) 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 in 2015.

Westeel had a very successful 2014 fall booking program. As expected, the division was able to return to normalized margins through the booking program and it expects those improved margins to be maintained as backlog is delivered in the first quarter of 2015. Although the 2014 Canadian agricultural output was lower than the record yield seen in 2013, the outlook for the 2015-2016 crop year 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 solid domestic agricultural volumes in 2015. The Company is pleased with the progress PTM made in 2014, which is reflected in $10.4 million of revenue growth 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 believes this is an indicator of growth in 2015.

At Vicwest BP, the Company has continued to see growing momentum in IMP. Through the second half of 2014, North American IMP order intake was up 50% compared to the same period in prior year. This strong order intake has continued through the first two months of 2015 resulting in $27.1 million of backlog at the end of February 2015, 100.7% higher than the prior year. With 2014 price adjustments being accepted in the marketplace and the benefit of leveraging increased volumes, the Company expects to work through this backlog with improved margins. In its conventional building products business, the Company is seeing 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 in 2015 to increase by 10.2%, including a 7.4% increase in industrial and commercial starts. Management believes this projection may be tempered down to modest single digit growth by recent changes in 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 and new value-added products introduced to the market, the Company expects to drive positive momentum in margins in 2015.

As the Company works through healthy backlog levels and manages capital expenditure programs cautiously, it expects to reduce the outstanding ABL balances 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 now awaiting approval from Competition Canada which is expected to be received in April.  

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

Corporate Conference Call on March 31, 2015 at 10:00 am (ET)

Vicwest Inc. will host an analyst conference call and webcast to discuss its fourth quarter results tomorrow morning at 10:00 am (ET). Callers are asked to dial in 5 minutes prior to 416-849-1847 or 866-530-1554. The live audio-only webcast will be available at www.vicwest.com. A replay will be available two hours after the live call has ended and can be accessed by dialing 888-203-1112 or 647-436-0148 and use the passcode 1812812. The taped rebroadcast will be available following the call until April 6, 2015.

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.  The Company operates through two divisions: Vicwest Building Products and Westeel.  With approximately 7,000 customers, 1,200 dedicated employees and 34 business partners, it is 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.

________________________________________
[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.

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

RELATED LINKS
http://www.vicwest.com

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