Vicwest Income Fund Reports Second Quarter Results



    OAKVILLE, ON, Aug. 9 /CNW/ - Vicwest Income Fund ("Vicwest" or the
"Fund") (TSX: VIC.UN) announced today its financial results for the second
quarter ended June 30, 2007.

    
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                          Second Quarter Highlights

       -   Net sales of $93.2 million in 2007 which were 7.5% higher than
           in 2006.

       -   Gross profit was $19.2 million, representing a gross margin of
           20.6% of net sales in 2007 compared to $19.8 million or 22.8%
           last year.

       -   EBITDA (non-GAAP Measure)(1) was $11.1 million representing
           11.9% of net sales compared to $12.3 million or 14.2% in 2006.

       -   The Fund generated distributable cash (non-GAAP Measure)(1) of
           $8.6 million ($9.8 million before expenditures for growth
           initiatives), and declared cash distributions of $7.5 million
           or $0.39 per unit during the second quarter 2007.

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    Bryan Held, Executive Chairman and Interim CEO, commented, "While the
Fund's second quarter results were in line with management's expectations, we
remain unsatisfied with the declines from the second quarter last year when
robust demand in almost all of our sectors and a favorable product mix
positively affected margins. Sales have been increasing this year with
contributions from acquisitions in 2006 and with initial shipments from our
insulated metal panel plant, and we continue to pursue productivity
improvements with our lean manufacturing program. We will be pursuing
accretive acquisition opportunities, and our outlook is positive for
maintaining distributions to Unitholders. The Fund has a strong balance sheet
and financial condition to serve as a solid platform for additional growth
initiatives."

    RESULTS OF OPERATIONS

    Sales in the second quarter of 2007 were $93.2 million, up $6.5 million
or approximately 7.5% from $86.8 million in the second quarter of 2006. The
increase in revenues reflects positive demand for construction building
products, encouraging signs from agriculture storage markets and a continued
slowdown in the market for petroleum storage products. Margins have shown a
seasonal improvement over the first quarter but are less than the results of
the second quarter 2006. Selling, general and administrative expenses
increased due to the prior year's business acquisitions and growth
initiatives, as well as additional costs associated with an increase in
management resources required to execute the Fund's growth plans.

    
    Comparative Statements of Income
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    (Unaudited)                   Three months ended       Six months ended
    (Thousands of                June 30,    June 30,    June 30,    June 30,
    Canadian Dollars)               2007        2006        2007        2006
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    Sales                      $  93,236   $  86,769   $ 156,405   $ 149,936
    Cost of sales                 74,031      66,991     126,959     117,484
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    Gross profit                  19,205      19,778      29,446      32,452
      As a % of Sales               20.6%       22.8%       18.8%       21.6%
    Selling, general and
     administrative                8,283       7,446      16,747      14,181
    Foreign exchange gain           (152)        (27)       (120)        (51)
    Non-hedge derivative
     loss (gain)                       -          14           -         (29)
    Amortization of
     capital assets                1,046         817       2,042       1,527
    Amortization of
     intangible assets               257         236         558         268
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                                   9,771      11,292      10,219      16,556
    Interest expense, net            595         159         973         154
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    Earnings before
     income taxes                  9,176      11,133       9,246      16,402
    (Recovery of) provision
     for income taxes               (166)         35        (194)        (15)
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    Net earnings for
     the period                $   9,342   $  11,098   $   9,440   $  16,417
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    EBITDA(1)                  $  11,074   $  12,345   $  12,819   $  18,351
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      As a % of Sales               11.9%       14.2%        8.2%       12.2%
      Earnings per unit        $   0.490   $   0.568   $   0.495   $   0.840
    

    Second Quarter Results

    The Fund's sales and earnings fluctuate with the seasonality and
cyclicality of the construction and energy industries and crop-growing seasons
in Canada. Sales generally are lowest in the first quarter, improve in the
second quarter as construction activity increases and reach a peak toward 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.

    Sales
    The sales increase was primarily in the building construction products
segment where the Fund experienced higher volumes in both the industrial,
commercial and institutional construction markets as well as the agricultural,
light commercial and residential renovation markets. Sales in the agricultural
storage market were consistent with second quarter 2006 levels and continue to
be supported by a growing demand for on-site storage. Revenues from petroleum
storage products decreased due to a combination of unfavorable weather
conditions and a slowdown in oil and gas demand and drilling activity.

    Gross Profit
    In 2007, second quarter gross profit was $19.2 million or 20.6% of sales
compared to 2006 gross profit of $19.8 million or 22.8% of sales. Gross
profits and margins were compressed relative to the prior year largely due to
the reduced volumes of products shipped in the petroleum sector, and
competitive pricing in a number of the Fund's markets.

    EBITDA(1)
    EBITDA for the three months ended June 30, 2007 was $11.1 million
compared to $12.3 million in 2006. The decline was primarily due to the
reduction in gross profit and an increase in selling, general and
administrative expenses from acquired businesses and the insulated metal panel
operations.

    
    DISTRIBUTABLE CASH(1)

    (Thousands of Canadian Dollars
    except per unit amounts)         2nd         2nd     Year to     Year to
                                 Quarter     Quarter        Date        Date
                                    2007        2006        2007        2006
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    Net earnings               $   9,342   $  11,098   $   9,440   $  16,417
    Amortization                   1,303       1,053       2,600       1,795
    Net interest expense             595         159         973         154
    Income tax (recovery)
     provision                     (166)          35        (194)        (15)
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    EBITDA                       11,074       12,345      12,819      18,351

    Net cash interest expense      (561)        (146)       (905)       (128)
    Cash Income tax
     (provision)/recovery           (45)         (35)        (17)         15
    Maintenance capital            (627)        (993)     (1,445)     (1,903)
    Capital for growth
     initiatives                 (1,225)      (1,097)     (1,258)     (3,160)
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    Distributable cash        $   8,616    $  10,074   $   9,194   $  13,175
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    Cash distributions
     declared                 $   7,474    $   7,431   $  15,058   $  14,471
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    Net earnings per unit     $   0.490    $   0.568   $   0.495   $   0.840
    Distributable cash
     per unit                 $   0.450    $   0.515   $   0.477   $   0.674
    Cash distributions
     declared per unit        $   0.390    $   0.380   $   0.780   $   0.740
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    -----------------------------------
    (1) For more information, refer to the Non-GAAP Measures section of this
        press release
    

    Distributable cash for the three month period ending June 30, 2007 was
$8.6 million. During the same period, the Fund declared cash distributions of
$7.5 million. The Fund's business is subject to seasonality, and consequently
the second quarter 2007 results should not be considered indicative of what
might occur over a twelve-month period. Regular monthly distributions are
generally made evenly throughout the year.
    Although the Fund intends to make distributions of its available cash,
these distributions are not assured. Actual distributions will depend on
numerous factors, including the financial performance for the period, business
cyclicality, debt covenants and obligations, seasonality, working capital
requirements, future capital requirements and other factors. The Fund may make
additional distributions in excess of the monthly distributions during the
year. The distribution declared with respect to the month ending December 31
in each year may include non-cash allocations necessary to ensure that the
Fund will not be liable for income taxes and, in such case, the income
allocated to unitholders may exceed the cash distributed.

    OUTLOOK

    The Fund's sales and earnings fluctuate with the seasonality and
cyclicality of the construction, agricultural and energy industries in Canada.
Sales generally are lowest in the first quarter, improve in the second quarter
as construction activity increases and reach a peak toward 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 expects its level of business activity in the third quarter 2007
to follow historical patterns with sales experiencing a seasonal increase from
the second quarter as construction activity increases and agricultural storage
demand rises. For the balance of 2007 the Fund anticipates a continuation of
positive demand for construction building products in most regions of Canada,
with results tempered by the competitive pricing environment. The outlook for
agricultural sector sales is positive with improving crop growing conditions
and good crop yield resulting in strong demand for storage products. Both
domestic and export order backlogs for the Fund's agricultural storage
products are favourable compared to 2006 levels. In the first half of 2007,
petroleum storage sales were hampered by both reduced well drilling and order
delays from customers due to weather conditions. The Fund expects this
sector's softer market conditions to continue in the near-term with
improvements linked to the overall economics of the oil and gas industry,
which in the longer term are expected to be positive. Although the sales
growth of the insulated metal panel product has been slower than expected and
volume levels have been insufficient to recover fixed costs, we remain
optimistic about the longer term prospects of this new product line.
    Overall, the Fund expects 2007 to follow normal seasonal patterns with
sales growth related to additional revenues from building construction and
agricultural storage markets, augmented by additional sales from the Fund's
new product lines and acquisitions, moderated by softer demand from the oil
and gas sector. The Fund has added additional management resources to execute
its strategic growth plans and has increased its credit facility to provide
additional borrowing capacity to pursue growth opportunities.

    About the Fund

    The Fund, headquartered in Oakville, Ontario is Canada's leading
manufacturer and distributor of construction building products including metal
roofing, siding and other metal building products. The Fund fabricates and
markets these products under the Vicwest, Mercury Metals and Valley Truss &
Metal trade names. Under the Westeel trade name, the Fund is Canada's foremost
manufacturer of steel containment products for agricultural storage of grain
and fertilizer. The Fund's petroleum storage tanks and accessories are
manufactured and distributed under the trade names Westeel, Northern Steel
Industries and NSI. The Fund has 15 manufacturing plants strategically located
throughout Canada with approximately 1,000 dedicated employees committed to
providing quality products and excellent service to customers in domestic and
international markets.
    The Fund's Interim Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the period ended
June 30, 2007 will be filed with applicable securities regulatory authorities
and will be available through the SEDAR website (www.sedar.com) under the
Fund's publicly filed documents and on the Fund's website
(www.vicwestfund.com).

    Non-GAAP Measures
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    "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 non-cash items, including
    amortization and is reduced by capital expenditures supporting both
    maintenance and growth initiatives, 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 earnings or the statement of cash flows as measures of
    profitability and cash usage respectively. The Fund's business is subject
    to seasonality; consequently, the results for the second quarter and
    period ended June 30, 2007 should not be considered representative of
    what might occur over a full twelve-month period. Furthermore, the Fund's
    definition of distributable cash may differ from that of other issuers.

    References to "EBITDA" are to 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.
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    Forward-looking Statements
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    This press release includes certain "forward-looking statements" within
    the meaning of Canadian securities regulations. Such forward-looking
    statements involve known and unknown risks, uncertainties, and other
    factors which may cause the actual results, performance or achievements
    of the Fund to be materially different from any future results,
    performance, or achievements expressed or implied by such forward-looking
    statements. Forward-looking statements include without limitation,
    statements regarding future results, future plans and objectives of
    Vicwest. Forward-looking statements generally can be identified by the
    use of forward-looking terminology such as "may," "will," "expect,"
    "intend," "estimate," "anticipate," "believe," or "continue" or the
    negative thereof or variations thereon or similar terminology. There can
    be no assurance that such statements will prove to be accurate and actual
    results and future events could differ materially from those anticipated
    in such statements. Important factors that could cause actual results to
    differ materially from Vicwest's expectations are disclosed in Vicwest's
    Management's Discussion and Analysis of Financial Condition and Results
    of Operations for the periods ended December 31, 2006.
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For further information:

For further information: Mr. Bryan H. Held, Executive Chairman and
Interim CEO, (905) 825-2252 ext 4252; Mr. John Slattery, Executive Vice
President and CFO, (905) 469-5706

Organization Profile

Vicwest Inc.

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