Vicwest Income Fund Reports Third Quarter Results



    Quarterly Sales Reach Record Levels

    OAKVILLE, ON, Nov. 7 /CNW/ - Vicwest Income Fund ("Vicwest" or the
"Fund") (TSX: VIC.UN) announced today its financial results for the third
quarter ended September 30, 2007.

    
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                           Third Quarter Highlights

    -   Sales for the quarter were $101.0 million, a record high for the Fund
        and a 6.2% increase over 2006.

    -   Gross profit was $21.7 million or 21.4% of sales in 2007, a 13.9%
        increase over the 2006 level of $19.0 million.

    -   EBITDA (non-GAAP Measure)(1) was $13.5 million representing 13.3% of
        sales compared to $11.9 million and 12.5% in 2006.

    -   The Fund generated distributable cash (non-GAAP Measure)(1) per unit
        of $0.635, a 32.6% increase over the 2006 level of $0.479.

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    Bryan Held, Vicwest's Executive Chairman, said, "We are pleased to report
that overall sales and operating results in the third quarter 2007 exceeded
those in same period last year. The Board of Trustees is also delighted with
the addition to our management team of Colin Osborne as President and Chief
Executive Officer. Colin has a solid background in manufacturing operations
and strategic planning, as well as invaluable experience and knowledge of the
metals industry in North America. I am very confident that the significant
experience and skill sets of both Colin and our recently appointed Executive
Vice President & Chief Financial Officer, John Slattery, will complement those
of our other Vicwest executives and enable the Fund to accelerate its
strategic plan for creating significant value for unitholders over the next
several years."
    President and CEO Colin Osborne, added, "During the third quarter 2007,
our sales reached a record level with gains in building construction products
and agricultural storage products sales. Sales of insulated metal panels are
increasing and we are also benefiting from increased distribution of
non-manufactured complementary products. Although the fund continues to face
strong pricing pressure in certain business segments, we have managed to
increase margins and distributable cash. We remain focused on cost
containment, and on the active search for acquisitions of established and
complementary operations or new product lines that will provide operating
synergies and accretive growth for our unitholders."

    RESULTS OF OPERATIONS

    Sales in the third quarter of 2007 were $101.0 million, up $5.9 million
or 6.2% from $95.1 million in the third quarter of 2006. The increase in
revenues reflects additional sales of the Fund's insulated metal panels,
incremental revenues from the Fund's Valley Truss & Metal acquisition and
improving market conditions from agriculture storage markets. These
improvements have been offset somewhat by the continued slowdown in the market
for petroleum storage products. Third quarter margins improved compared to the
prior year due to higher volumes and a more favourable product mix. Selling,
general and administrative expenses increased due to the prior year's business
acquisitions and growth initiatives, as well as additional costs associated
with an increase in management resources required to execute the Fund's growth
plans.

    
    Comparative Statements of Income
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    (Unaudited)                   Three months ended       Nine months ended
    (Thousands of              September   September   September   September
     Canadian Dollars)          30, 2007    30, 2006    30, 2007    30, 2006
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    Sales                     $  101,046  $   95,102  $  257,451  $  245,038
    Cost of sales                 79,380      76,074     206,339     193,558
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    Gross profit                  21,666      19,028      51,112      51,480
      As a % of Sales              21.4%       20.0%       19.9%       21.0%
    Selling, general and
     administrative                8,241       7,131      24,988      21,312
    Foreign exchange
     (gain) loss                     (60)         19        (180)        (32)
    Non-hedge derivative gain          -           -           -         (29)
    Amortization of
     capital assets                1,028         892       3,070       2,419
    Amortization of
     intangible assets               256         205         814         473
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                                  12,201      10,781      22,420      27,337
    Interest expense, net            542         271       1,515         425
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    Earnings before
     income taxes                 11,659      10,510      20,905      26,912
    Provision for
     income taxes                    656          24         462           9
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    Net earnings for
     the period               $   11,003  $   10,486  $   20,937  $   26,903
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    EBITDA(1)                 $   13,485  $   11,878  $   26,304  $   30,229
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      As a % of Sales              13.3%       12.5%       10.2%       12.3%
      Earnings per unit       $    0.580  $    0.536  $    1.066  $    1.376
    


    Third Quarter Results

    The Fund's sales and earnings fluctuate with the seasonality and
cyclicality of the construction and energy industries and crop-growing seasons
in Canada. Sales generally are lowest in the first quarter, improve in the
second quarter as construction activity increases and reach a peak toward the
end of the third quarter. The fourth quarter generally remains strong through
October and November but drops off in December due to colder weather.

    Sales

    The sales increase was primarily in the agricultural storage products
segment where the Fund experienced higher domestic commodity prices, improved
grower confidence and stronger demand. Sales in the building construction
market were consistent with third quarter levels in 2006 and benefited from
sales of the Fund's insulated metal panels and the additional revenues of the
Valley Truss & Metal acquisition. Sales from petroleum storage products
decreased due to the continuing slowdown in oil and gas demand, drilling and
natural gas well servicing activity.

    Gross Profit

    In 2007, third quarter gross profit was $21.7 million or 21.4% of sales
compared to 2006 gross profit of $19.0 million or 20.0% of sales. The increase
was primarily in Agricultural Storage where higher volumes and stronger
margins contributed to the incremental gross profit. Building construction
products also recorded improvements on a more favourable product mix.

    EBITDA(1)

    EBITDA for the three months ended September 30, 2007 was $13.5 million
compared to $11.9 million in 2006. The improvement was primarily due to the
higher sales volume and better margins offset partially by an increase in
sales, general and administrative costs.

    
     DISTRIBUTABLE CASH(1)

    (Thousands of Canadian
     Dollars except per unit         3rd         3rd     Year to     Year to
     amounts)                    Quarter     Quarter        Date        Date
                                    2007        2006        2007        2006
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    Net earnings              $   11,003  $   10,486  $   20,443  $   26,903
    Amortization                   1,284       1,097       3,884       2,892
    Net interest expense             542         271       1,515         425
    Income tax provision             656          24         462           9
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    EBITDA                        13,485      11,878      26,304      30,229

    Net cash interest expense       (708)       (257)     (1,613)       (385)
    Cash income tax paid             (65)        (24)        (83)         (9)
    Maintenance capital             (553)     (1,173)     (2,000)     (3,077)
    Capital for growth
     initiatives                    (129)     (1,048)     (1,387)     (4,207)
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    Distributable cash        $   12,030  $    9,376  $   21,221  $   22,551
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    Cash distributions
     declared                 $    7,367  $   10,560  $   22,425  $   25,032
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    Average units
     outstanding              18,955,231  19,555,935  19,179,783  19,555,935
    Net earnings per unit     $    0.580  $    0.536  $    1.066  $    1.376
    Distributable cash
     per unit                 $    0.635  $    0.479  $    1.106  $    1.153
    Cash distributions
     declared per unit        $    0.390  $    0.540  $    1.170  $    1.280
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    Distributable cash for the three month period ended September 30, 2007
was $12.0 million. During the same period, the Fund declared cash
distributions of $7.4 million. The Fund's business is subject to seasonality,
and consequently the third quarter 2007 results should not be considered
indicative of what might occur over a twelve-month period. Regular monthly
distributions are generally made evenly throughout the year.
    Although the Fund intends to make distributions of its available cash,
these distributions are not assured. Actual distributions will depend on
numerous factors, including the financial performance for the period, business
cyclicality, debt covenants and obligations, seasonality, working capital
requirements, future capital requirements and other factors. The Fund may make
additional distributions in excess of the monthly distributions during the
year. The distribution declared with respect to the month ending December 31
in each year may include non-cash allocations necessary to ensure that the
Fund will not be liable for income taxes and, in such case, the income
allocated to unitholders may exceed the cash distributed.

    
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    (1) For more information, refer to the Non-GAAP Measures section of this
        press release
    


    OUTLOOK

    The Fund's sales and earnings fluctuate with the seasonality and
cyclicality of the construction, agricultural and energy industries in Canada.
Sales generally are lowest in the first quarter, improve in the second quarter
as construction activity increases, and reach a peak toward the end of the
third quarter. The fourth quarter generally remains strong through October and
November but drops off in December due to colder weather. The Fund expects its
level of business activity in the fourth quarter 2007 to follow historical
patterns with sales experiencing a seasonal decrease from the third quarter as
construction activity decreases. Recently, the steel industry has seen steel
prices soften and further reductions are expected in the fourth quarter. While
the Fund diligently monitors steel costs and adjusts selling prices and
inventory levels to mitigate the effect of volatility in steel prices and
maintain its competitive position, margins may compress with changes in steel
prices.
    For the balance of 2007 the Fund anticipates positive activity in the
agricultural storage sector with improved farm economics contributing to a
strong domestic demand for storage products. The outlook for export
agricultural sector sales is also positive. Both domestic and export order
backlogs for the Fund's agricultural storage products are favourable compared
to 2006 levels.
    Fourth quarter demand in the building construction sector is expected to
remain steady, subject to seasonality, with growth found in the western
regions of Canada; however, US competition may become more of a factor as a
result of the recent rapid rise in the value of the Canadian dollar.
Competitive price pressures are not expected to subside in the near term.
Although the sales growth of the insulated metal panel product has been slower
than expected and volume levels have been insufficient to recover fixed costs,
we remain optimistic about the longer term prospects of this new product line.
    For most of 2007, petroleum storage sales have been hampered by a general
slowdown in well drilling which has reduced demand for on-site storage tanks
at the well-head. The Fund expects such well-head demand to remain softer in
the near-term with improvements linked to the overall economics of the oil and
gas industry, which in the longer term are expected to be positive. Petroleum
tank sales to markets outside the oil and gas sector are expected to remain
consistent with the comparable period in 2006.
    On expiry of its current NCIB, the Fund intends to initiate a further
NCIB in accordance with the by-laws, rules and policies of Toronto Stock
Exchange. If the purchase of units is in the best interests of the Fund,
purchases will be made as appropriate opportunities arise out of the Fund's
available cash and credit facility.

    About the Fund

    The Fund, headquartered in Oakville, Ontario, is one of Canada's leading
manufacturers and distributors of construction building products including
metal roofing, siding and other metal building products. The Fund fabricates
and markets these products under the Vicwest, Mercury Metals and Valley Truss
& Metal trade names. Under the Westeel trade name, the Fund is Canada's
foremost manufacturer of steel containment products for agricultural storage
of grain and fertilizer. The Fund's petroleum storage tanks and accessories
are manufactured and distributed under the trade names Westeel, Northern Steel
Industries and NSI. The Fund has 15 manufacturing facilities strategically
located throughout Canada with approximately 1,000 dedicated employees
committed to providing quality products and excellent service to customers in
domestic and international markets.
    The Fund's Interim Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the period ended
September 30, 2007 will be filed with applicable securities regulatory
authorities and will be available through the SEDAR website (www.sedar.com)
under the Fund's publicly filed documents and on the Fund's website
(www.vicwestfund.com).

    Non-GAAP Measures

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    "Distributable Cash" is not a defined term under Canadian Generally
    Accepted Accounting Principles ("GAAP") but is determined by the Fund as
    net income for the period adjusted to remove non-cash items, including
    amortization and is reduced by capital expenditures supporting both
    maintenance and growth initiatives, cash taxes and interest. The Fund's
    management believes that distributable cash is a useful measure of
    performance as it provides investors with an indication of the cash
    available for distribution to unitholders. Investors are cautioned,
    however, that distributable cash should not be construed as an alternate
    to using net earnings or the statement of cash flows as measures of
    profitability and cash usage respectively. The Fund's business is subject
    to seasonality; consequently, the results for the third quarter and
    period ended September 30, 2007 should not be considered representative
    of what might occur over a full twelve-month period. Furthermore, the
    Fund's definition of distributable cash may differ from that of other
    issuers.

    References to "EBITDA" are to earnings before interest, taxes (other than
    capital taxes), depreciation and amortization. The Fund's management
    believes that in addition to net earnings or loss, EBITDA is a useful
    supplemental measure of cash available for distribution prior to debt
    service, changes in working capital, capital expenditures and taxes.
    However EBITDA is not a recognized measure under Canadian GAAP. Investors
    are cautioned that EBITDA should not be construed as an alternative to
    net earnings or loss determined in accordance with GAAP or as an
    indicator of the Fund's performance or as an alternative to cash flows
    from operating, investing and financing activities which measure the
    Fund's liquidity and cash flows. The Fund's method of calculating EBITDA
    may differ from the method used by other issuers and, accordingly, the
    Fund's EBITDA calculation may not be comparable to similarly titled
    measures used by other issuers.
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    Forward-looking Statements

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    This press release includes certain "forward-looking statements" within
    the meaning of Canadian securities regulations. Such forward-looking
    statements involve known and unknown risks, uncertainties, and other
    factors which may cause the actual results, performance or achievements
    of the Fund to be materially different from any future results,
    performance, or achievements expressed or implied by such forward-looking
    statements. Forward-looking statements include without limitation,
    statements regarding future results, future plans and objectives of
    Vicwest. Forward-looking statements generally can be identified by the
    use of forward-looking terminology such as "may," "will," "expect,"
    "intend," "estimate," "anticipate," "believe," or "continue" or the
    negative thereof or variations thereon or similar terminology. There can
    be no assurance that such statements will prove to be accurate and actual
    results and future events could differ materially from those anticipated
    in such statements. Important factors that could cause actual results to
    differ materially from Vicwest's expectations are disclosed in the
    Vicwest Income Fund Annual Information Form for the year ended
    December 31, 2006 dated March 8, 2007.
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For further information:

For further information: Mr. Colin Osborne, President and CEO, (905)
469-5700; Mr. John Slattery, Executive Vice President and CFO, (905) 469-5706

Organization Profile

Vicwest Inc.

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