Armtec Infrastructure Income Fund Reports Financial Results for the Fourth
Quarter and Full Year 2009

Toronto Stock Exchange: ARF.UN

GUELPH, ON, March 18 /CNW/ - Armtec Infrastructure Income Fund (the "Fund" or "Armtec") (TSX: ARF.UN) today reported financial results for the year and the fourth quarter ended December 31, 2009.


    -   Revenues of $463.8 million, an increase of 18.3% or $71.7 million
        over 2008, due to the incremental impact of 2008 business
        acquisitions and the acquisitions in 2009 of Groupe Tremca and
        Pre-Con, offset by a decline in base business resulting from the
        economic slowdown. For the fourth quarter, revenues were
        $117.0 million in line with the prior year.
    -   Earnings from operations were $48.4 million compared to $40.6 million
        in the prior year. In the fourth quarter, earnings from operations
        were $6.0 million, after a $4.6 million non-recurring charge in
        connection with the Fund's reorganization, compared to $11.7 million
        in the same period in 2008.
    -   EBITDA(1) increased to $80.3 million compared to $62.4 million in
        2008 and declined to $17.6 million for the fourth quarter, compared
        to $18.9 million for the same period in the prior year.
    -   Distributable cash(1) increased to $55.9 million in 2009 from
        $47.2 million in 2008 and to $12.6 million for the fourth quarter
        2009 from $11.5 million in 2008.
    -   Declared distributions were $44.1 million in 2009 up from
        $33.4 million in 2008, and $11.9 million for the fourth quarter of
        2009, up from $10.1 million in the same period in 2008.

"In 2009, Armtec made progress expanding our precast business coverage to all of Canada's regional markets, while building greater resiliency into our operations to increase productivity and enhance customer service. Financial results met management's expectations while the Groupe Tremca and Pre-Con acquisitions made during the year significantly advanced our goal of strengthening our competitive presence in Quebec and Ontario," said Charles M. Phillips, President and Chief Executive Officer. "With the Fund's corporate reorganization completed, a single, unified operating company is now in place, and we are well positioned, despite the current economic conditions, to capitalize on our greater operational scale, product diversity and market depth to deliver the full range of innovative products and quality services to infrastructure customers across North America."

Results of Operations

    For the periods ended             Fourth Quarter              Year Ended
     December 31                    2009        2008        2009        2008
    (in thousands of Canadian
     dollars except per unit
     amounts)                 (unaudited) (unaudited)
    Revenue                    $ 116,969   $ 117,084   $ 463,829   $ 392,063
    Cost of sales                 80,556      80,604     311,836     269,980
    Amortization of property,
     plant and equipment           3,676       2,736      13,128       8,345

    Gross margin                  32,737      33,744     138,865     113,738
    As a % of revenue              28.0%       28.8%       29.9%       29.0%
    Distribution and warehousing   5,597       6,107      21,037      18,667
    Selling, general and
     administrative               13,283      12,317      51,160      42,243
    Reorganization expenses        4,640           -       6,496           -
    Amortization of intangible
     assets                        3,241       3,616      11,762      12,206

    Earnings from operations       5,976      11,704      48,410      40,622
    Interest and financing
     expenses                     (3,978)     (4,241)    (13,557)     (9,197)

    Earnings before taxes          1,998       7,463      34,853      31,425
    Interest and financing
     expenses                      3,978       4,241      13,557       9,197
    Total amortization             6,917       6,352      24,890      20,551
    Reorganization expenses        4,640           -       6,496           -
    Fair value increments of
     acquired inventory              105         881         507       1,214

    EBITDA                     $  17,638   $  18,937   $  80,303   $  62,387
    As a % of revenue              15.1%       16.2%       17.3%       15.9%

    Basic and diluted
     earnings per unit         $    0.40   $    0.36   $    2.20   $    2.07
    Basic distributable
     cash per unit             $    0.62   $    0.67   $    3.16   $    2.93
    Diluted distributable
     cash per unit             $    0.62   $    0.67   $    3.15   $    2.93
    1.  Please refer to the Liquidity, Distributable Cash and Distributions
        section of this MD&A for the reconciliation of this non-GAAP measure.
        Distributable cash per unit for 2009 excludes the impact of
        Reorganization expenses incurred during the year.

Full Year Results


For the year ended December 31, 2009, revenue was $463.8 million, an increase of $71.7 million or 18.3% over $392.1 million reported in 2008. Of this increase, $116.8 million was attributable to the incremental impact of the business acquisitions completed during 2008 and the acquisitions of Groupe Tremca and Pre-Con in 2009. The $45.1 million or 11.5% decline in base business, as compared to 2008, was principally attributable challenging economic conditions and low levels of activity across the Con-Force division's structural precast business in British Columbia ("B.C.") and a decrease in the Armtec division's Western Canadian markets.

In the Armtec division, revenue was $181.5 million for the year ended December 31, 2009, a $9.0 million or 4.7% decline from $190.5 million in 2008. Benefits from the increased stimulus spending in Central and Eastern Canada on highways and transportation, combined with success in international sales of structural steel plate products, were more than offset by continued weakness in the residential, commercial and forestry sectors in Western Canada.

Revenue in the Con-Force division increased $71.5 million or 41.6% from $171.4 million in 2008. Of this increase, $101.2 million was attributable to the incremental impact of the 2008 and 2009 acquisitions. Base business revenue declined by $29.8 million or 17.4% relative to last year. In comparison, 2008 was a strong year for the Con-Force structural precast business where large contracts such as the Golden Ears Bridge and the Tecumseh parkade contributed significant revenue. In 2009, revenue from significant projects, including the Calgary airport parkade, did not offset revenue levels from the 2008 projects. Demand in 2009 for precast products for commercial and residential applications was reduced across the country, reflecting current economic conditions. In addition, the tender process for many large structural projects was delayed.

The Durisol division's revenue was $39.5 million for the year ended December 31, 2009, a $9.4 million or 31.0% increase from $30.1 million in 2008. The 2008 results include operations of Durisol from June 5, 2008 onwards. Durisol continued to benefit from a number of highway improvement projects in the Midwestern and Eastern United States ("US") as well as Ontario and most recently, Alberta.

Earnings from Operations

Earnings from operations for the year ended December 31, 2009 were $48.4 million compared to $40.6 million in the prior year, representing an increase of $7.8 million or 19.2% over 2008. Earnings from operations include a charge of $6.5 million in 2009 in connection with the Reorganization and other cost containment initiatives. There was no such charge in 2008. Excluding the impact of the Reorganization, earnings from operations would have been $54.9 million or 35.2% over prior year levels.

Gross margin for 2009 was $138.9 million, an increase of $25.2 million over $113.7 million in 2008. As a percentage of revenue, gross margin improved to 29.9% as compared to 29.0% in 2008. Both the Durisol and Armtec divisions achieved higher gross margins, reflecting moderating raw material markets and cost containment initiatives arising from the Fund's lean manufacturing program. Structural precast projects maintained consistent gross margin levels based on pre-recession bookings. The current environment is significantly more competitive. In addition, earnings from operations have increased as a result of the acquisitions completed during 2008 and 2009.

Distribution and warehousing was $21.0 million compared to $18.7 million in 2008. The additional costs reflect the incremental impact of the construction and infrastructure product lines introduced through the recent acquisitions. As a percentage of revenue, these costs were comparable with the same period last year.

Selling, general and administrative expenses were $51.2 million or 11.0% of revenue as compared to $42.2 million or 10.8% of revenue in 2008. The additional costs reflect the incremental impact of acquisitions completed in 2008 and 2009, offset in part by cost savings achieved later in the year arising from the Reorganization initiatives.

Amortization of intangible assets was $11.8 million compared to $12.2 million in 2008. These changes principally reflect the completed amortization of customer contract intangibles net of the amortization on intangible assets acquired during the year.

Fourth Quarter Results


Revenue of $117.0 million for the fourth quarter of 2009 was in line with $117.1 million earned in 2008 and met management's expectations. Revenue of $16.3 million was recognized by the newly acquired Pre-Con and Tremca, offsetting the decline in base business. The Armtec division recognized revenue of $50.1 million in the quarter, an increase of $3.1 million compared to the same period in 2008. This result represented a record fourth quarter for the division and was the first quarter of 2009 that revenue exceeded prior year levels. The division experienced increased activity in the infrastructure and natural resources markets, offset in part by continuing weakness in residential and commercial markets. The most significant improvements were experienced in Eastern Canada, with the Western region continuing to lag behind prior year levels. The division also benefited from significant international shipments of engineered products, including the early phases of a large project in the Caucasus region.

Despite the incremental revenue of the Groupe Tremca and Pre-Con acquisitions, fourth quarter revenue of $55.9 million in the Con-Force division was $1.1 million lower than for the same period in 2008. The most significant downside in the base business relative to last year arose in the precast structures business. In the fourth quarter of 2008, the Fund commenced the significant Calgary airport project. There were no similar projects during the fourth quarter of 2009. The reduced volume of order activity was particularly evident in the B.C. infrastructure market, along with general weakness in commercial and residential markets across the country.

The Fund's Durisol division generated revenue of $11.0 million during the fourth quarter of 2009, a decrease of $2.1 million compared to the same period in 2008. During 2008, the division subcontracted additional volume for production in the US. Business for the division remained robust, with significant highway barrier projects produced for the Midwestern US and Alberta.

Earnings from Operations

Earnings from operations for the three months ended December 31, 2009 was $6.0 million inclusive of a non-recurring charge of $4.6 million in connection with the Fund's Reorganization initiatives, announced on October 1, 2009. In 2008, the comparable earnings from operations were $11.7 million.

Gross margin for the three months ended December 31, 2009 was $32.7 million, a decrease of $1.0 million from the same period last year. As a percentage of revenues, gross margin decreased to 28.0% as compared to 28.8% in 2008. Gross margin percentages increased in both the Armtec and Durisol divisions, reflecting an improved product margin mix, stable raw material costs and the benefits of ongoing lean manufacturing initiatives. These improvements were offset by lower gross margins in the Con-Force division reflecting lower activity levels in the structural businesses and the impact of more competitive pricing in newer precast structures projects relative to 2008.

The Fund's amortization of property, plant and equipment increased $1.0 million during the fourth quarter of 2009 over the same period of 2008, reflecting the depreciation of the capital of the 2009 acquired businesses.

Distribution and warehousing costs were $5.6 million or 4.8% of revenue in 2009 comparable to 5.2% in 2008. Selling, general and administrative expenses in the fourth quarter of 2009 were $13.3 million or 11.4% of revenue compared to $12.3 million or 10.5% of revenue in 2008. The overall increase in costs reflects the impact of 2009 business acquisitions, offset in part by initial savings as anticipated through the Reorganization program. The Fund anticipates selling, general and administration costs to approximate 10% of revenue once the Reorganization is completed.

The Fund's amortization of intangible assets was $3.2 million in the fourth quarter of 2009, consistent with $3.6 million in 2008.


The outlook for the infrastructure market is growing increasingly positive with various levels of government having committed to stimulus programs that augment their pre-recession commitments to increase infrastructure spending. While the incremental impact of these initiatives was delayed, funds have now been allocated to the fast turnaround projects which tend to disproportionally benefit the drainage and sound barrier products offered by the Fund. In 2009, the delay in the allocation of government funds created a delay in the timing of revenue being recognized on these projects. These timing issues are not expected to repeat in 2010. Longer term, many pre-recession project commitments are anticipated to commence subcontracting and production throughout 2010. The Fund is focused on maintaining its market share in 2010, although Fund management anticipates an increasingly intensive competitive environment which will result in gross margins as a percentage of revenue, being lower than experienced in 2009.

The acquisitions of Groupe Tremca and Pre-Con did not change the seasonal pattern of the Fund's business in 2009 in a material way. Construction activity in the Fund's markets taper off with the onset of winter weather conditions and remains at a very low level through the first quarter. It is not uncommon for the Fund to experience losses in the first quarter of the year as a result. In 2010, this will be further exacerbated by the timing of production in the engineered solutions business of the Fund. Management anticipates production of engineered solutions to reach peak levels much later in the year than normal. As a result, the Fund will have unutilized capacity early in the year, translating to lower margins.

Fund management anticipates markets will still be impacted by the recession in 2010. Residential end-use markets improved in the second half of 2009 and this trend is expected to continue despite the end of the Canadian federal government's home renovation tax incentive. The agriculture market continues to be influenced by the improved financial strength of its end-use customers, although continued success in this market remains heavily dependent on weather conditions during the limited installation season. Demand from commercial construction projects improved marginally near the end of 2009 while the forestry market remains well off the levels of previous years with no sign of improvement in sight.

As an income trust, the Fund will be subject to tax commencing in 2011. Management and the trustees do not anticipate effecting any changes to the structure of the Fund prior to January 1, 2011. The management team is engaged in the process of evaluating the alternatives available to the Fund post 2010.

Working capital levels and the Fund's capital structure are continually monitored by both management and the Board of Trustees, especially in light of the March 2011 maturity of the $40.0 million Bridge facility. Management does not anticipate any difficulties with the repayment or refinancing of this component of its capital structure.

Given the competitive markets the Fund operates in and the early stages of a fragile economic recovery, management remains focused on reducing the cost base of the business. A key component to the Fund's strategy is the successful execution of the Reorganization and the cost reduction initiatives announced in 2009, while capitalizing on revenue growth opportunities afforded by the expanded customer and product base and productivity enhancing activities.


Management will host a conference call at 10:00 a.m. (ET) on Friday, March 19, 2010 to discuss the results. Investors who wish to participate can access the call using the following numbers: 416-644-3414 or 1-800-814-4859. 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 Friday, March 26, 2010. To access the rebroadcast, please dial 416-644-3414 or 1-877-289-8525 and quote the passcode 4221506 followed by the number sign.

The Fund's full consolidated financial statements, notes to financial statements and management's discussion and analysis are available at or at


Armtec Infrastructure Income 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 globally. 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 network of regional offices and production facilities across the country, Armtec's broad range of engineered solutions include products for drainage, bridge applications, soil retention, rehabilitation and water management systems including corrugated high-density polyethylene, corrugated steel and concrete pipe; an array of architectural and structural precast and pre-stressed concrete products from steps, paving stones, slabs and wall panels to highly engineered structural components designed and installed for projects such as bridges, sports venues and parking garages; and, a full suite of noise barriers, acoustic enclosure and wall systems along with associated retaining and traffic barrier systems. Armtec Infrastructure Income Fund is listed on the TSX under the ARF.UN symbol. For more information, please visit


Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")

References to EBITDA are to earnings before interest, taxes (other than capital taxes), depreciation and amortization 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.

Distributable Cash

Distributable cash is not a defined term under Canadian GAAP but is determined by the Fund as cash flows provided by or used in operating activities adjusted for items not affecting cash, expenditures required to sustain the current state of operations, and the change in non-cash working capital. Management believes that distributable cash is a useful supplemental measure of performance as it provides investors with an indication of the amount of cash available for distribution to unitholders of the Fund by adjusting for the seasonality of the business via changes in non-cash working capital, adjusting for sustaining capital purchases and other items not affecting cash. Investors are cautioned, however, that distributable cash should not be construed as an alternative to using net earnings and comprehensive earnings as a measure of profitability or the statement of cash flows. Furthermore, the Fund's method of calculating distributable cash may not be comparable to other similarly named calculations from other issuers.


The Fund is subject to certain risks and uncertainties that could have a material adverse effect on the Fund's results of operations, business prospects, financial condition, cash distributions to unitholders and the trading price of the Fund's units. 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. Cash distributions are not guaranteed. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by Armtec Infrastructure Income Fund with the securities regulatory authorities, available at


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 significant and inherent risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such 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 discussed under "Risks and Uncertainties" and in the Fund's materials filed with the Canadian securities regulatory authorities from time to time including the Annual Information Form. 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, Investor Relations & Treasurer, Armtec Limited Partnership, Tel: (519) 822-0210, Fax: (519) 822-8894

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