OAKVILLE, ON, Nov. 6, 2013 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB) today reported its financial results for the three and nine months ended September 30, 2013, including a strong recovery in performance following market and weather-related disruptions earlier in 2013.
Consolidated Year over Year Performance Summary1
| Three months ended
| Nine months ended
|($ millions except per share)||2013||2012||2013||2012|
|Gross profit margin||18.8%||18.9%||15.9%||18.5%|
|Net income (loss)||3.5||4.1||(1.4)||8.7|
|Net income (loss) per share (basic)||0.19||0.20||(0.10)||0.46|
| Net income (loss) excluding change in fair value of
embedded derivative and other expenses3
| Net income (loss) per share excluding change in fair
value of embedded derivative and other expenses3
"We regained substantial momentum in the third quarter as demand and earnings returned to more normal levels," said Colin Osborne, President and CEO. "The main beneficiary was Westeel, which achieved record third quarter sales driven by a 70% year-over-year increase in sales of its grain storage and handling systems. This performance reflects receipt of some domestic sales that were deferred from earlier this year and continued momentum in our U.S and overseas sales. We are also pleased to note that in the quarter, Vicwest Building Products achieved a 7.7% year-over-year increase in North American sales of Insulated Metal Panels ("IMP"), which continued to offset a sluggish domestic construction market and, in particular historically low project business in the resource sector. Our building products' business remained profitable, even as it completed its regional restructuring plan, and absorbed $1.1 million of facility restructuring costs to optimize Canadian operations."
Normalized market conditions are also reflected in improved performance between the second and third quarters of 2013. Third quarter revenue grew 23.4% and EBITDA2 increased 125% compared to the second quarter of 2013. This reflected sequential revenue growth of 22.6% at Vicwest Building Products ("Vicwest BP") and 24.9% at Westeel.
| Three months ended
| Nine months ended
|Vicwest Building Products||78.7||80.7||185.9||189.6|
|Net income (loss)4|
|Vicwest Building Products||4.5||7.3||(1.2)||2.5|
In spite of higher year-over-year IMP sales from its three dedicated IMP plants, Vicwest BP's revenue for the third quarter was 2.5% lower than a year ago, reflecting reduced sales volumes in Canadian non-residential construction, where market activity was down 20% year to date on both a dollar and volume basis. Vicwest BP's divisional net income for the third quarter declined year over year by 38.4% due to the absorption of restructuring costs, lower domestic sales volume, and higher SG&A expenses associated with its U.S IMP. expansion.
Westeel's third quarter revenue increased 25.7% year over year on the back of record grain storage and handling system shipments. Shipment levels reflected the receipt of some deferred domestic orders from earlier in the year, higher U.S. and international sales, and the backdrop of projected record crop yields in Western Canada and the U.S.. Westeel's net income for the third quarter increased 115.4% year-over-year due primarily to higher activity levels and lower input costs.
Dividend and Dividend Reinvestment Plan
The Board of Directors declared a third quarter dividend of $0.15 per share, payable on January 15, 2014 for shareholders of record on December 31, 2013. This is consistent with the quarterly dividends declared and paid in 2012.
The Company also announced today, by way of a separate news release, that it has introduced a Dividend Reinvestment Plan ("DRIP") to allow eligible shareholders to reinvest their dividends in common shares of the Company on an efficient and cost-effective basis. Additional information on the DRIP is available at www.vicwestinc.com.
The Company continues to have the necessary resources to fund its growth strategies as unused availability under its senior revolving credit facility at September 30, 2013 amounted to $52.5 million versus $42.2 million at June 30, 2013. The Company had net debt of $88.5 million at September 30, 2013 compared to $101.3 million at June 30, 2013 as a result of operational performance improvements during the most recent three-month period. Senior net-debt-to-EBITDA2 was also improved to 1.6 to 1 at September 30, 2013 from 2.2 to 1 at June 30, 2013.
Management believes that the trends driving long-term demand for the Company's products are positive and that the business will benefit from these trends because of its competitive advantages including strong customer relationships, extensive distribution networks, well recognized brands, and efficient operations. These trends include: i) the growing global need for grain storage due to increased crop yields, changes in diet and population growth, ii) higher and more volatile crop pricing, which improves the return on investment for grain storage, iii) a construction sector in North America which is in the early stages of recovery, and iv) increasing demand for energy efficient building materials such as insulated metal panels that can be installed at low cost. The combination of the Company's inherent strengths, unique product offerings and exposure to global markets provide positive fundamentals to support long-term growth.
Management expects the fourth quarter to show continued positive momentum as the Company takes advantage of a more normalized market environment, recent product expansions and efficiency gains. This expectation is based on a number of factors including: i) a significant increase in activity level and backlog at Westeel which occurred at the end of the third quarter and has carried into the fourth quarter, ii) record crop yields in both Western Canada and the U.S. which have increased demand for grain storage products, iii) continued momentum in North American IMP sales supported by the additional capacity of the new Little Rock, Arkansas manufacturing facility and iv) the inclusion of PTM Technology, acquired on May 23, 2013, which extends Westeel's product reach into grain handling systems, enhancing Westeel's market opportunities and providing it with a manufacturing presence in Europe.
"Vicwest Building Products expects to see a continuation of the trends of the last few quarters," said Mr. Osborne. "The forecast for domestic construction in the last quarter of 2013 is lower compared to prior year however this will continue to offset by IMP momentum and a positive outlook for U.S. non-residential construction activity. As well, the rationalization of our operations in Canada is now complete, which significantly reduces the negative drag of restructuring costs going forward, and gives us better operational leverage as volume increases"
"At Westeel, even with record shipments in the quarter, the period ending backlog was 20.3% above the prior year and booking momentum has continued into the fourth quarter at well above last year's pace." said Mr. Osborne. "In addition, the division continues to develop its U.S. Westeel dealer network and is beginning to realize the benefits of recent investments in dedicated sales and application engineering capabilities in Europe and India. The acquisition of PTM in the second quarter of 2013 has enhanced our competitiveness in bidding on full turn-key storage and handling projects. The successful completion of Westeel's ERP implementation earlier this year is also providing improved analytics that we are using to enhance operational effectiveness."
Third Quarter Conference Call and Webcast
Vicwest Inc. will host its third quarter 2013 conference call and webcast on November 7, 2013 at 11 am (EST). To participate in the teleconference, the numbers are 416-644-3416 or 800-814-4860. Callers are advised to call in five minutes in advance. To participate in the webcast, please visit www.vicwestinc.com.
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. We operate through two strategically aligned divisions: Vicwest Building Products and Westeel. With approximately 7,000 customers, 1,200 dedicated employees and 34 business partners, we are 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.
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.
1Prior period numbers have been re-stated due to the retrospective application of the IFRS pronouncements adopted in the first quarter of 2013.
2EBITDA is calculated as earnings before finance expense, income taxes, depreciation, amortization, change in fair value of embedded derivative and other expenses. EBITDA and EBITDA margin are non-IFRS measures.
3 Net income (loss) excluding change in fair value of embedded derivative and other expenses and net income (loss) per share excluding change in fair value of the embedded derivative and other expenses are non-IFRS measures.
4 Net income (loss) before finance expense (net), income taxes and change in fair value of embedded derivative. This is a non-IFRS measure.
SOURCE: Vicwest Inc.
For further information:
President & Chief Executive Officer
Tel: (905) 469-5700