Vicwest Inc. Reports Third Quarter 2011 Growth, Announces Dividend Adjustment

OAKVILLE, ON, Nov. 9, 2011 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB) today reported its results for the three and nine months ended September 30, 2011 and declared a dividend of $0.15 per common share for the fourth quarter, representing a yield to investors of over 7.0%. The dividend will be paid on January 13, 2012 to shareholders of record December 30, 2011.

While lower than the third quarter amount of $0.27 per share, the new dividend reaffirms the Company's commitment to provide sustainable income to shareholders over the business cycle, while balancing the opportunity to reinvest for growth and the commitment to maintain prudent leverage during current uncertain economic times. The Company's yield (as a percentage of current share price) will remain among the best in Canada among TSX-listed companies.

"We continue to generate positive earnings from both business segments, are well in compliance with all banking covenants, have no immediate debt repayment needs, and have substantial room on our credit lines," said Colin Osborne, President and CEO, "so the reduction in our dividend was not driven by structural need. Instead, our Board has chosen to make this change proactively, recognizing that until we see a more sustained recovery in key markets like construction, paying out a lower proportion of cash generated will allow us to manage with conservative leverage and aggressively pursue the many growth opportunities available to us."

The Board will continue to review the dividend regularly taking into account improving market conditions, growth opportunities and the Company's financial condition.

Third Quarter Consolidated Results Summary

  • Revenue increased 18.9% to $117.9 million from $99.2 million a year ago.
  • Gross profit was $17.7 million (15.0% gross margin) compared to $15.9 million (16.0% gross margin) a year ago.
  • EBITDA1 was $8.6 million excluding a non-recurring one time business development expense, 30% above the prior year's EBITDA1 of $6.6 million.  Including the one-time expense, EBITDA1 was $7.1 million.
  • Net income was $4.5 million ($0.24 per share basic, $0.13 per share diluted) compared to $3.8 million ($0.22 per share basic and diluted) a year ago due to higher gross profit and a fair value adjustment gain on embedded derivatives, partially offset by higher business development expenses and a higher number of diluted shares outstanding. Excluding business development and the impact of accounting for derivatives, net income was $3.5 million.

"In light of challenging conditions, our performance in the quarter was relatively strong as we made the most of available growth opportunities in each of our operating businesses," said Mr. Osborne.  "For Vicwest Building Products, we are delighted with our recent growth in insulated metal panel markets. These product lines hold tremendous promise for us and continue to grow at high double digit rates, even in the current market. At Westeel, sales momentum increased in the Canadian oil and gas industry and this was complemented by higher shipments of grain storage solutions in Canada and internationally. Profitability also increased on improved efficiencies and lower normal course operating expenses but, as expected, gross margin did not keep pace with revenue growth due to the impact of higher steel costs."

Third Quarter Divisional Results

  • Vicwest Building Products revenue was a third quarter record of $85.1 million, 22.1% higher than a year ago primarily due to the contribution of All Weather Insulated Panels ("All Weather"). Net income before interest expense, income taxes and change in fair value of embedded derivatives was $4.0 million compared to $4.2 million in the prior year primarily due to the impact of higher steel costs on margins and less favourable product mix.
  • Westeel Storage Solutions revenue increased 11.2% to $32.8 million from $29.5 million in the third quarter of 2010 primarily due to higher sales of liquid storage tanks to the Canadian oil and gas industry. Net income before interest expense, income taxes and change in fair value of embedded derivatives doubled to $1.2 million from $0.6 million a year on improved efficiencies and favourable foreign exchange rates.

Financial Position
As a result of normal seasonal working capital requirements, which peak in the third quarter, the Company had net debt of $85.9 million at September 30, 2011 compared to $85.8 million at June 30, 2011.  At the end of the quarter, the ratio of senior debt to EBITDA stood at 1.5 and there was $38.5 million available under the revolving credit facility.

Nine Month Consolidated Results

  • Revenue increased 14.6% to a record $308.5 million from $269.3 million a year ago.
  • Gross profit was $50.7 million (16.4% gross margin) compared to $46.1 million (17.1% gross margin) a year ago.
  • EBITDA1 was $22.0 million excluding business development and restructuring expenses (7.0% EBITDA1 margin), compared to $17.5 million (6.5% EBITDA1 margin) a year ago. EBITDA1 , as reported in Management's Discussion and Analysis was 18.5 million (6.0% EBITDA1 margin).
  • Net income was $10.7 million ($0.58 per share basic, $0.42 per share diluted) or $13.4 million excluding business development and restructuring expenses, compared to $10.1 million ($0.58 per share basic and diluted) a year ago.


1 Earnings before interest, taxes (other than capital taxes), depreciation and amortization and fair value adjustments to financial instruments. EBITDA and EBITDA margin are non-IFRS measures.

While the economic recovery in its markets has yet to fully materialize, Vicwest BP is on track to generate record revenues in 2011, based upon the contribution of All Weather acquired in November 2011 and healthy backlogs in Canada.  Opening backlogs in the fourth quarter are 37% higher than at the same time a year ago.  Despite a positive sales outlook, and somewhat lower priced steel in inventory, divisional profit margin will remain under pressure for the remainder of 2011 due to high steel costs compared to a year ago, and the current market's resistance to steel price pass through; a situation that is expected to improve as construction market activity improves.  Management expects to gain pricing leverage and return to more normal margins, but not until there are further signs of market recovery, which are currently forecast to occur no earlier than mid to late 2012.

Westeel backlogs entering Q4 are in line with the prior year, despite flooding in Western Canada and parts of the northern U.S. Westeel's outlook for Q4 is positive as a result of low inventory in the retail chain, and order intake from fall buying events which is above the prior year.  Westeel's outlook for 2012 is also positive, supported by expectations of growth in sales through the division's Buhler Industries partnership, and increased activity in the EMEA resulting from the recent creation of a sales and application engineering presence in Europe.

"We continue to manage our business assuming the market recovery will be modest in the near term," said Mr. Osborne, "And knowing that our activities today will position us to lead the most promising segments in 2012 and beyond. Recent examples include Westeel's first overseas office in Spain which will coordinate our growth in Europe and the Middle East, the announcement of Vicwest BP's third IMP plant in Arkansas, which will be operational by Q4 of 2012, as well as a substantial automation investment in Westeel's Winnipeg facility. Through deliberate steps, including day-to-day expense controls and active steel procurement strategies, we will continue to overcome economic hurdles and add to our competitive advantages."

Third Quarter Conference Call and Webcast
Vicwest Inc. will host its third quarter 2011 conference call and webcast on November 10, 2011 beginning at 11 am ET. To participate in the teleconference, the numbers are 416-644-3417 or 1-877-974-0447.  To participate in the webcast, please visit Vicwest's website at (News & Events section).

Vicwest Inc. is a leading manufacturer and distributor of building construction products, and steel containment products for agricultural grain, fertilizer and liquid storage. Through its Vicwest Building Products division, the Company fabricates and markets metal roofing, siding and other metal building products under the trade names Vicwest, Mercury Metals, Valley Truss & Metal, RCA Metal and AWIP-Vicwest USA. The Company's Westeel Storage Solutions division manufactures storage solutions for agricultural grain and fertilizer, as well as liquid storage tanks and accessories. These products are manufactured and distributed under the trade names Westeel, Northern Steel Industries and NSI. Through a global alliance, Westeel distributes Buhler Industries-manufactured grain handling equipment in Canada under the Westeel brand while Buhler Industries markets and sells Westeel-manufactured products through its US distribution network. In Canada, Westeel also represents Skandia, Europe's most advanced elevator and conveyor grain handling systems. With approximately 1,100 dedicated employees and strategically located manufacturing facilities, the Company delivers superior quality products and excellent service to customers in chosen markets. Vicwest Inc. is a member of the S&P/TSX SmallCap Index. For more information, visit

Certain statements in this press 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.

SOURCE Vicwest Inc.

For further information:

Colin Osborne
President & Chief Executive Officer
Vicwest Inc.
Tel:  (905) 469-5700
Fax: (905) 825-1090
        Edward (Ted) A. Mahood, CA
Chief Financial Officer
Vicwest Inc.
Tel: (905) 469-5706
Fax: (905) 825-1090


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