Armtec Infrastructure Income Fund Reports Financial Results for First Quarter

    Toronto Stock Exchange: ARF.UN

    GUELPH, ON, May 13, 2009 /CNW/ - Armtec Infrastructure Income Fund (the
"Fund") (TSX: ARF.UN) today reported financial results for the first quarter
ended March 31, 2009.


    -   Revenues of $63.7 million, an increase of $17.3 million, over the
        same period in 2008, reflecting the results of the 2008 acquisitions.
    -   EBITDA(1) of $0.9 million as compared to $1.8 million in the first
        quarter of 2008 reflecting the seasonal pattern of the standard
        products business.
    -   Declared distributions were $10.4 million, or $0.54 per unit, in the
        first quarter of 2009 up from $6.8 million, or $0.45 per unit, in the
        same period of the prior year.
    -   Issuance of 3,100,000 additional units of the Fund, representing
        gross proceeds of $55.0 million used, net of expenses, to repay the
        Fund's $50.0 million bridge term loan on April 1, 2009.
    -   Subsequent to quarter-end, acquired the assets of Group Tremca Inc.
        ("Groupe Tremca"), a leading manufacturer of precast concrete and
        infrastructure products in Saint-Jean-Sur Richelieu, Quebec for
        approximately $45.0 million.

    "In the first quarter of 2009, the Fund achieved sound financial
performance with increased revenues from the acquisitions made during 2008.
These results are in line with management expectations in light of our efforts
to add greater strength to the balance sheet and manage our working capital
more productively and efficiently. With this solid foundation in place, the
Fund is fully focused on developing a more resilient organization that is
nimble, entrepreneurial and responsive to changing conditions in the current
markets we serve," said Charles Phillips, President and Chief Executive
Officer. "The new equity issue raised during the quarter together with the
amended Credit Facilities provides the Fund greater financial flexibility to
further expand the geographic scope of our business should an opportunity
present itself. Our acquisition of Groupe Tremca significantly strengthens our
competitive position in the Quebec marketplace. A leading manufacturer of
precast concrete and infrastructure products in Quebec, the acquisition will
significantly enhance the Con-Force division's product offering nationally and
expand our customer base in the region."

    Results of Operations

    (in thousands of Canadian dollars                     Three Months Ended
     unless otherwise noted)                           March 31,    March 31,
    (unaudited)                                            2009         2008
    Revenue                                           $  63,747    $  46,427
    Cost of sales                                        49,049       34,224
    Amortization of property, plant and equipment         2,794        1,454

    Gross margin                                         11,904       10,749
    As a % of revenue                                     18.7%        23.2%
    Distribution and warehousing                          2,844        1,229
    Selling, general and administrative                  11,510        9,173
    Amortization of intangible assets                     2,480        2,779

    Loss from operations                                 (4,930)      (2,432)
    Interest and financing expenses                      (2,882)      (1,076)

    Loss before taxes                                    (7,812)      (3,508)
    Interest and financing expenses                       2,882        1,076
    Total amortization                                    5,274        4,233
    Non-recurring restructuring expenses                    521            -
    Fair value increments of acquired inventory              41            -

    EBITDA                                            $     906    $   1,801
    As a % of revenue                                      1.4%         3.9%

    (1) For more information, refer to the Non-GAAP measures described below.

    First Quarter Results


    During the first quarter of 2009, the Fund achieved revenues of $63.7
million, an increase of $17.3 million over the same period of 2008, and
reflected the results of the acquisitions completed in 2008. Revenue from
these acquisitions offset a slight decline in revenue related to Con-Force's
large structural precast projects. The Armtec division's revenues were
consistent with the prior year and reflected the normal seasonal nature of the
division's revenue pattern. Durisol, which contributed $7.2 million of revenue
in the first quarter of 2009, was acquired in June of 2008. Geographically,
increases in revenues were experienced across all regions served by the Fund.
    Increased revenues in the infrastructure, agricultural, residential and
commercial end-use markets offset declines in natural resources. Con-Force
realized revenues from the continuing large structural businesses and the
business acquisitions completed in 2008 (the "2008 Con-Force Acquisitions")
which expanded the standard products offering of the division serving the
infrastructure, residential and commercial marketplaces. The Armtec division
earned revenues on highway improvement projects for municipalities and
provinces, particularly in Central and Eastern Canada. The Durisol division
continued work on the significant sound barrier project on the Queen Elizabeth
Way in St. Catharines, Ontario and various projects in the Midwestern United
States ("U.S.").
    The revenues derived from the agricultural drainage market increased
slightly when compared to the first quarter of 2008 due to the geographic and
customer base expansion associated with the 2008 acquisitions of Bruce Tile
and Oxford.
    The expected softness in the residential and commercial end-use markets
was mitigated by new revenues from the businesses acquired in the second part
of 2008. The natural resource market continues to experience softness,
particularly in the forestry sector, due to the reduction in pulp and paper
prices, mill closures and the downturn in the U.S. housing market.

    Loss from Operations

    Loss from operations for the three months ended March 31, 2009, was $4.9
million compared to $2.4 million in the same period of 2008. Gross margin for
the first quarter of 2009 was $11.9 million, an increase of $1.2 million, over
the same period of 2008. As a percentage of revenues, gross margin decreased
to 18.7% as compared to 23.2% in 2008.
    The Armtec division experienced lower gross margins during the first
quarter of 2009 as compared to prior years due to the planned reduction in
production levels and the impact and timing of volatile raw material prices
throughout 2008 which impacted 2009. The mix of products within the Con-Force
division changed, due the introduction of a wider selection of standard
products through the 2008 Con-Force Acquisitions. Standard products are more
influenced by seasonal installation conditions, contributing lower gross
margins in the winter months. The structural projects maintained gross margins
as a percent of revenues at the 2008 levels; however, due to the timing of
these large projects, slightly lower revenues in the quarter resulted in lower
gross margin dollars over 2008 levels.
    Distribution and warehousing costs increased in 2009 by $1.6 million over
the first quarter of 2008 to $2.8 million or 4.5% of revenues. These costs
vary with the sales mix and volume of products sold. As a percentage of
revenues, the costs in the first quarter were consistent with the fourth
quarter of 2008.
    Selling, general and administrative expenses for the first quarter of
2009 were $11.5 million or 18.1% of revenues compared to $9.2 million or 19.8%
of revenues for 2008. The dollar increase primarily relates to the 2008


    After significant declines in economic activity in Canada in the fourth
quarter of 2008 and the first quarter of 2009, there is little consensus
amongst economists about the timing of a recovery and a return of confidence
amongst consumers and businesses. These challenging economic conditions have a
disproportionate impact on the private construction markets served by the
Fund. The period of economic contraction coincided with the seasonally slow
winter months. It remains difficult to get a clear sense of the level of
activity particularly in Western Canada where natural resource markets have
slowed dramatically.
    Various levels of government have committed to stimulus programs that
include increased infrastructure spending however the incremental impact of
these initiatives and the timing of new spending is not clear. Support for
infrastructure spending across the country also continues to be maintained
through the use of public-private partnerships, though these are dependent on
securing financing. As such, it is difficult to determine which projects will
move forward in 2009 and accordingly, when these initiatives will impact the
    As anticipated, activity in commercial and residential markets has
decreased and the Fund expects this to continue throughout 2009. The Fund aims
to mitigate the downturn in these markets by expanding, geographically, its
product lines.. The Federal government support for residential renovation and
repair is also expected to have a modest beneficial impact in 2009.
    The agriculture market continues to be influenced by the improved
financial strength of its end use customers. Management believes that this has
and will continue to translate into stable demand for yield enhancing drainage
products though success in this market is heavily dependent on weather
conditions during the limited installation periods. No improvements are
anticipated in the natural resources markets in the near term.
    In May 2009, the Fund completed the acquisition of the assets of Groupe
Tremca Inc. ("Groupe Tremca") for approximately $45.0 million. Based in
Saint-Jean-Sur-Richelieu, Quebec, Groupe Tremca is a manufacturer of precast
concrete and infrastructure products. Groupe Tremca's product specialties
include concrete pipe, architectural and structural elements, highway noise
barriers, retaining walls, precast amenities and steps. The transaction was
funded in part by an increase in the Fund's committed Credit Facilities. The
renegotiations of the Fund's Credit Facilities and the recently completed
equity offering have provided additional balance sheet flexibility.
    The Groupe Tremca acquisition supports the Fund's growth strategy by
significantly strengthening its competitive position in the Quebec
marketplace. The current year impact of the Fund's acquisition of Groupe
Tremca in addition to the 2008 Acquisitions will result in increased revenues
over 2008 levels. Key to the revenue enhancing opportunities are the continued
development of a consistent, coast to coast product line and realizing on
synergies associated with the Fund's larger scale of operations. The ongoing
growth in the Fund contributes to the strength realized through diversity
across regional markets, product lines and end-use markets.
    Management's emphasis remains on revenue growth, productivity enhancing
activities, cost control and the management of working capital levels. The
long term outlook for the Fund remains positive due to the inherent strength
of the infrastructure market in conjunction with the boost expected from
government stimulus measures later this year and into 2010.


    Management will host a conference call at 10:00 a.m. (ET) on Thursday,
May 14, 2009 to discuss the results. Investors who wish to participate can
access the call using the following numbers: 416-644-3430 or 1-800-587-1893.
The call will be webcast live and archived on the Fund's website at
    A taped rebroadcast will be available to listeners following the call
until 12:00 a.m. on May 21, 2009. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and quote the passcode 21305224 followed by the
number sign.
    The Fund's full interim consolidated financial statements, notes to the
interim consolidated financial statements and management's discussion and
analysis are available at or at


    The Fund is a leading manufacturer and marketer of a comprehensive range
of infrastructure products and engineered construction solutions for customers
in a diverse cross-section of industries that are located in every region of
Canada, as well as in selected markets in North America and worldwide. These
markets include Canada's national and regional public infrastructure markets
and private sector markets in agricultural drainage, commercial building,
residential construction and natural resources. Operating through its three
divisions and with a network of offices and production facilities across the
country, the Fund is Canada's only national multi-material manufacturer. The
Armtec division specializes in high density polyethylene and corrugated steel
pipe products for drainage, bridge applications and water management systems.
The Con-Force division offers a wide variety of precast and pre-stressed
concrete products, that includes advanced construction components and
high-value engineered solutions to large project customers. The Durisol
division provides a full suite of highway noise barriers and related
infrastructure products to the transportation sector.


    Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")
    References to EBITDA are to earnings before interest, taxes (other than
capital taxes), depreciation and amortization, certain non-recurring expenses
and certain non-cash impacts resulting from purchase accounting. Management
believes that in addition to net earnings, EBITDA is a useful supplemental
measure of cash available for distributions prior to debt service, changes in
working capital, capital expenditures and income 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 and comprehensive earnings
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 similarly named
measures used by other issuers.


    This news release may contain "forward-looking" statements within the
meaning of applicable securities legislation which involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Fund or industry results, to be materially
different from any future results, events, expectations, performance or
achievements expressed or implied by such forward-looking statements. All such
forward-looking statements are made pursuant to the "safe harbour" provisions
of applicable Canadian securities legislation. Forward-looking statements may
include comments with respect to the Fund's objectives, strategies to achieve
those objectives, expected financial results, and the outlook for the Fund's
business. Forward-looking statements typically contain such words or phrases
such as "may", "outlook", "objective", "intend", "estimate", "anticipate",
"should", "could", "would", "will", "expect", "believe", "plan" and other
similar terminology suggesting future outcomes or events. These statements
reflect current expectations regarding future events and operating performance
and are based on information currently available to the Fund's management.
    Forward-looking statements involve numerous assumptions and should not be
read as guarantees of future performance or results. Such statements will not
necessarily be accurate indications of whether or not such future performance
or results will be achieved. You should not unduly rely on forward-looking
statements as a number of factors, many of which are beyond the control of the
Fund, could cause actual results to differ materially from the results
discussed in the forward-looking statements, including, but not limited to the
factors listed below and those discussed in the Fund's materials filed with
the Canadian securities regulatory authorities from time to time including the
Annual Information Form. These uncertainties and risks include, but are not
limited to: industry cyclicality; competition; acquisition and expansion risk;
capital and liquidity risk; current global financial conditions; reduction in
demand for products; information management; credit risk; relationships with
suppliers; lack of long-term agreements; expiration of rights under license
and distribution arrangements; availability and price volatility of raw
materials; product liability; intellectual property; reliance on key
personnel; labour markets; environmental; collective bargaining; currency
fluctuations; interest rates; uninsured and underinsured losses; operating
hazards; risk of future legal proceedings; securities laws compliance and
corporate governance standards; geographical risk; seasonality and adverse
weather; geopolitical; and certain risks related to the structure of the Fund
including dependence on the Fund's subsidiaries; income tax matters;
unitholder limited liability; leverage and restrictive covenants; credit
facilities; nature of units; distribution of securities on redemption or
termination of the Fund; restrictions on potential growth; effect of market
interest rates on price of units; undiversified and illiquid holdings in
Armtec Operating Trust; potential dilution. These and other factors may cause
the Fund's performance to differ materially from that contemplated by
forward-looking statements.
    There have been no material changes to the Fund's business or other
events or circumstances from January 1, 2009 to May 13, 2009, that require an
update to the discussion of the applicable risks or forward-looking
statements. Although the forward-looking statements contained in this release
are based upon what management of the Fund believes are reasonable
assumptions, the Fund cannot assure investors that actual results will be
consistent with these forward-looking statements. All forward-looking
statements in this news release are qualified by these cautionary statements.
These forward-looking statements and outlook are made as of the date of this
news release and, except as required by applicable law, the Fund assumes no
obligation to update or revise them to reflect new events or circumstances.

For further information:

For further information: Charles M. Phillips, President & Chief
Executive Officer, Armtec Limited Partnership, Tel: (519) 822-0210, Fax: (519)
822-8894; James R. Newell, Chief Financial Officer, Armtec Limited
Partnership, Tel: (519) 822-0210, Fax: (519) 822-8894; Carrie Boutcher, Vice
President, Finance, Armtec Limited Partnership, Tel: (519) 822-0210, Fax:
(519) 822-8894

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