Vicwest Income Fund Reports Record First Quarter Results

    Toronto Stock Exchange: VIC.UN

    Strong Demand in Agricultural End-Use Markets Drives Improved Results

    OAKVILLE, ON, May 6, 2009 /CNW/ - Vicwest Income Fund (the "Fund") (TSX:
VIC.UN) today reported financial results for the three months ended March 31,


    -   Record first quarter revenue of $84.3 million, up $14.3 million or
        20.4% from the same period in 2008.
    -   EBITDA(1) for the quarter was a record $6.3 million, compared to $2.8
        million in 2008, an increase of $3.5 million.
    -   Gross profit for the quarter was $16.6 million or 19.7% of revenues
        compared to $11.5 million or 16.4% of revenues in the same period of
        the prior year.
    -   Distributable cash1 for the quarter increased to $5.4 million or
        $0.31 per unit, compared to $1.8 million or $0.10 per unit in the
        first quarter of 2008.
    -   Net income for the quarter was $4.0 million or $0.23 per unit,
        compared to $1.2 million or $0.07 per unit in the first quarter of

    "In the first quarter, the Fund delivered strong operational performance
and achieved record financial results as we continued to leverage our product
and market diversity and focus resources on markets with the greatest
potential for growth," said Colin Osborne, President and Chief Executive
Officer. "Our Westeel Storage Solutions business grew revenues by 60.2% to
$43.9 million as a result of continuing strong demand for agricultural storage
products and ongoing facility capacity expansion projects. The Vicwest
Building Products segment continued to respond to the current low demand
environment by effectively managing working capital and ensuring discipline in
supply chain and price management. In addition, this business segment has
begun facility rationalization initiatives to better balance capacity with
regional demand, including opening an enhanced customer service facility in
Saskatoon as well as consolidating its facilities in British Columbia."
    "At the same time, the Fund continues to work aggressively to drive
operating efficiencies and to position us for sustainable growth into the
future. As part of this strategic initiative the Fund has combined its Westeel
Agricultural Storage and Westeel Liquid Storage divisions into one unified
Westeel Storage Solutions business. This new streamlined business will be able
to leverage five manufacturing facilities and deploy enhanced marketing, lean
manufacturing and product development resources to deliver superior storage
solutions to customers and be more responsive to market demand."

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

    Comparative Statements of Income (unaudited)
    For the periods ended March 31, 2009 and 2008
    (Thousands of Canadian dollars)
                                                          Three months ended
                                                                    March 31,
                                                           2009         2008
                                                              $            $

    Revenue                                              84,300       70,028
    Cost of goods sold                                   67,724       58,552
    Gross profit                                         16,576       11,476
    Gross profit percentage                               19.7%        16.4%

    Selling, general and administrative                  10,465        8,649
    Foreign exchange gain                                  (182)          (4)
    Amortization of property, plant and equipment         1,070        1,003
    Amortization of intangible assets                       440          257
    Net interest and financing                              604          655
    Income before income taxes                            4,179          916
    Provision for (recovery of) income taxes                165         (306)
    Net income                                            4,014        1,222

    EBITDA (see Non-GAAP Measures)                        6,293        2,831
    As a percentage of revenue                             7.5%         4.0%


    The Fund's first quarter 2009 revenue was a record $84.3 million and
reflects revenue growth in the Westeel Storage Solutions division ("Westeel"),
offset by a marginal decline in revenue from the Vicwest Building Products
division ("Vicwest BP"). Westeel revenue of $43.9 million represented an
increase of 60.2% from the first quarter of 2008 and is due to continuing
improvement in domestic sales of agricultural storage products offset by a
small reduction in exports and a decrease in the sales of liquid storage
    Gross profit for the quarter was $16.6 million or 19.7% of revenue,
compared to $11.5 million of 16.4% of revenue in the same period of the prior
year. Westeel's gross profit and gross margin improved from the first quarter
of last year due to a combination of higher volumes, favourable product mix
and operating efficiencies associated with the Fund's lean and flexible
manufacturing programs, while Vicwest BP's gross profit and margin were
negatively affected by lower volumes and sales price reductions necessitated
by competitive pricing.
    In the quarter, selling, general and administrative expenses ("SG&A")
increased to $10.5 million or 12.5% of revenue from $8.6 million or 12.3% of
revenue in the first quarter of the prior year. Increased operating expenses
were primarily due to increased selling costs and marketing costs. The Fund
also incurred restructuring costs associated with the combination of the
Westeel agricultural storage and liquid storage divisions as well as
additional provisions for credit and collection risk.
    EBITDA(1) for the three months ended March 31, 2009 increased to $6.3
million, compared to $2.8 million in the first quarter of 2008 as a result of
an increase in revenue and improved gross margins over the prior year,
partially offset by higher SG&A expenses.
    Net income for the quarter improved to $4.0 million compared to $1.2
million for the same period in 2008, an increase of $2.8 million. The
improvement was due to increased sales and gross profit offset by higher SG&A

    DISTRIBUTABLE CASH (see Non-GAAP Measures)
    Statement of Distributable Cash
    For the periods ended March 31, 2009 and 2008
    (Thousands of Canadian dollars except unit and per unit amounts)

                                                          Three months ended
                                                                    March 31,
                                                           2009         2008
                                                              $            $

    Net income                                            4,014        1,222
    Amortization of property, plant and equipment         1,070        1,003
    Amortization of intangible assets                       440          257
    Net interest and financing                              604          655
    Provision for (recovery of) income taxes                165         (306)
    EBITDA (see Non-GAAP Measures)                        6,293        2,831
    Net interest expense                                   (544)        (604)
    Cash income tax expense                                  29           36
    Maintenance capital additions
     (see Non-GAAP Measures)                               (402)        (432)
    Distributable cash (see Non-GAAP Measures)            5,376        1,831
    Cash distributions declared                           6,794        7,283
    Average units outstanding                        17,419,468   18,687,530
    Net income per unit                                    0.23         0.07
    Distributable cash per unit                            0.31         0.10
    Cash distributions declared per unit                   0.39         0.39

    Distributable cash for the threemonth period ending March 31, 2009
increased to $5.4 million compared to $1.8 million in 2008 primarily due to an
increase in net income. During the first quarter of 2009, the Fund declared
regular cash distributions of $6.8 million compared to $7.3 million in 2008.
While regular monthly cash distributions were maintained, the decrease in
total distributions was due to the lower number of units outstanding resulting
from unit buybacks.


    The Fund's revenue and income fluctuate with the seasonal and cyclical
factors in the construction, agricultural and energy industries in Canada.
Revenue is generally lowest in the first quarter, improves in the second
quarter as construction activity increases, and reaches a peak towards 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 sees continuing momentum in its Westeel Storage Solutions
division, due to continuing strong demand for agricultural storage products
domestically. Management also expects increased revenue from overseas markets
as the developing world increases its investment in agricultural
infrastructure, although this could be impacted by the availability of
financing on larger projects. Westeel's tank sales will continue to be
negatively affected by reduced capital investment in the energy sector and
thus the Fund does not anticipate any recovery in this area in the near term.
    The Fund anticipates that Vicwest BP's markets will continue to be
affected by a slowing economy. The reduced starts and permits in the
nonresidential construction industry are expected to impact results through
the year, and the Fund anticipates continued pressure on margins as a result
of reduced overall volume and declining steel prices. To offset potential
softening in traditional product lines, the Fund continues to focus on growing
its presence into new product lines, including insulated metal panel and
aluminum composite panel; however, these activities will not be sufficient to
offset a significant slowdown of our traditional industrial, commercial and
institutional products. Similarly, the Fund's sales and margins in the light
commercial and agricultural markets will also likely be affected by a slowdown
as competitors respond to softening markets with competitive pricing.
    Steel costs have softened through the first part of 2009 and the Fund
does not anticipate a rapid recovery in steel pricing. Further declines would
continue to put pressure on margins and prevent the Fund from procuring steel
ahead of price increases, an activity that the Fund benefited from through
much of 2008.


    Management will hold a conference call and live audio webcast on
Thursday, May 7, 2009, at 11:00 a.m. (EDT) to discuss the Fund's first quarter
results. The call will be hosted by Colin Osborne, President and Chief
Executive Officer and John Slattery, Executive Vice President and Chief
Financial Officer. Following management's presentation, there will be a
question and answer session for analysts and investors.
    To participate in the teleconference, please call 416-644-3429 or
1-800-587-1893. To access the audio replay, please dial 416-640-1917 or
1-877-289-8525 and quote the passcode 21304470 followed by the number sign.
The replay will be available until midnight on May 16, 2009.
    To access the live audio webcast please go to: or, visit
Vicwest's website at (under Presentations & Calls).
    Both CNW and Vicwest will archive the webcast.


    The Fund is one of Canada's leading manufacturers and distributors of
building construction products, and steel containment products for
agricultural grain, fertilizer and liquid storage. Headquartered in Oakville,
Ontario, the Vicwest Building Products division fabricates and markets metal
roofing, siding and other building products under the Vicwest, Mercury Metals,
Valley Truss & Metal and RCA Metal trade names. Through the Westeel Storage
Solutions division, headquartered in Winnipeg, Manitoba, the Fund designs and
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.
The Fund has 16 manufacturing facilities strategically located across Canada
with more than 1,000 dedicated employees committed to providing superior
quality products and delivering excellent service to customers in domestic and
international markets.
    The Fund's Consolidated Financial Statements and Management Discussion
and Analysis of Financial Condition and Results of Operations for the periods
ended March 31, 2009 and 2008 will be filed with applicable regulatory
authorities and will be available on and on


    "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 noncash items, including
amortization, and is reduced by capital expenditures for the maintenance of
productive capacity, 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 income or the statement of cash
flows as measures of profitability and cash usage respectively. Furthermore,
the Fund's definition of distributable cash may differ from that of other
    "EBITDA" is 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.


    The Fund is subject to various risks and uncertainties including:
cyclicality, steel supply and pricing, reduction in demand, capital and
liquidity risk, seasonality and weather, competition, foreign exchange,
labour, pension funding, growth challenges, product liability, customer
concentration, collections from customers, lack of long term agreements,
uninsured risks, interest rates, distribution agreements, environmental,
climate change, supply and install contracts, operating hazards, risk of
future legal proceedings and income tax matters. These business risks are
described in detail in the Fund's Annual Information Form and the Fund's
Annual Report for the year ended December 31, 2008. All of these factors
remain substantially unchanged since the December 31, 2008 year end.


    Certain statements in this MD&A constitute forwardlooking statements
within the meaning of applicable securities laws. Forwardlooking statements
include, but are not limited to, statements made under the heading "Outlook"
and other statements concerning the Fund's 2009 objectives, strategies to
achieve those objectives, as well as statements with respect 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. Forwardlooking statements generally can be
identified by the use of forwardlooking 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 forwardlooking statements reflect management's
current beliefs and are based on information currently available to
management. Forwardlooking statements involve risks and uncertainties that
could cause actual results to differ materially from those contemplated by
such statements. Factors that could cause such differences include the
cyclical nature of the construction industry, changes in interest rates and
general economic conditions, adverse weather, cost and availability of
materials used to manufacture the Fund's products, competitive developments
affecting the building products industry, and the risk factors described from
time to time in the reports and disclosure documents filed by the Fund with
Canadian securities regulatory agencies and commissions. This list is not
exhaustive of the factors that may impact the Fund's forwardlooking
statements. These and other factors should be considered carefully and readers
should not place undue reliance on the Fund's forwardlooking statements. As a
result of the foregoing and other factors, no assurance can be given as to any
such future results, levels of activity or achievements and neither the Fund
nor any other person assumes responsibility for the accuracy and completeness
of these forward looking statements. The factors underlying current
expectations are dynamic and subject to change. Although the forwardlooking
information contained in this MD&A is based upon what management believes are
reasonable assumptions, there can be no assurance that actual results will be
consistent with these forwardlooking statements. Certain statements included
in this MD&A may be considered "financial outlook" for purposes of applicable
securities laws, and such financial outlook may not be appropriate for
purposes other than this MD&A. All forwardlooking statements in this MD&A are
qualified by these cautionary statements. Except as required by applicable
law, the Fund undertakes no obligation to publicly update or revise any
forwardlooking statement, whether as a result of new information, future
events or otherwise.

For further information:

For further information: Colin Osborne, President & Chief Executive
Officer, Vicwest Income Fund, Tel: (905) 469-5700, Fax: (905) 825-1090; John
Slattery, Executive Vice President & Chief Financial Officer, Vicwest Income
Fund, Tel: (905) 469-5706, Fax: (905) 825-1090

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