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Press release from CNW Group

Vicwest Inc. Reports Fourth Quarter, Full Year 2010 Results And Dividend Declaration

Thursday, March 03, 2011

Vicwest Inc. Reports Fourth Quarter, Full Year 2010 Results And Dividend Declaration23:29 EST Thursday, March 03, 2011Toronto Stock Exchange: VIC, VIC.DBOAKVILLE, ON, March 3 /CNW/ - Vicwest Inc. (the "Company") today reported the financial results of its predecessor, Vicwest Income Fund (the "Fund") for the three and twelve months ended December 31, 2010. The Fund converted to a corporate structure on January 1, 2011.In both fiscal periods, the Company reported positive contributions from both Westeel Storage Solutions ("Westeel") and Vicwest Building Products ("Vicwest BP") divisions. This performance was achieved despite a combination of factors that compressed revenue, operating margins and profitability, including i) a rapid rise in steel costs that could not be fully absorbed by end markets within normal timeframes; ii) flooding in western Canada and depressed construction markets; and iii) a strong Canadian dollar. Management responded to these challenges by reducing expenses, advancing its growth strategy through product development, acquiring a majority interest in All Weather Insulated Panels ("All Weather") of Vacaville, California and forming a global marketing and distribution alliance with Buhler Industries Inc. to better serve agricultural markets.Results for the Three Months Ended December 31, 2010Revenue for the fourth quarter was $87.7 million compared to $94.7 million a year ago.Gross profit was $15.8 million (18.1% gross margin) compared to $20.8 million (22.0% gross margin) in 2009.EBITDA1 was $4.6 million (5.3% EBITDA1 margin) compared to $8.2 million (8.7% EBITDA1 margin) a year ago.Net income per unit was $0.20 compared to $0.34 a year ago.The ratio of the last twelve months' EBITDA1 to senior net debt (excluding convertible debt) was 0.3 to 1.Declared cash distributions were $0.39 per unit compared to $0.59 a year ago.Fourth quarter revenue at Vicwest BP increased 2.1% to $63.0 million from $61.7 million in the same period of 2009 due to the first-time contribution of All Weather and higher shipments of insulated metal panels from Canada. Net income for Vicwest BP increased 28.6% to $1.8 million in the quarter from $1.4 million a year ago due to higher revenue and cost reductions. Fourth quarter revenue at Westeel was $24.7 million, 25.2% or $8.3 million lower than a year ago, reflecting lower domestic volumes, as international grain storage sales were largely consistent with 2009. Net income at Westeel for the quarter was $0.8 million compared to $5.1 million in 2009's fourth quarter due to reduced volumes and margin compression as a result of higher average steel costs.Results for the Twelve Months Ended December 31, 2010Revenue was $357.0 million compared to $391.8 million a year ago.Gross profit was $61.4 million (17.2% gross margin) compared to $86.6 million (22.1% gross margin) in 2009.EBITDA1 was $21.4 million (6.0% EBITDA1 margin) compared to $43.8 million (11.2% EBITDA1 margin) a year ago.Net income per unit was $0.79 compared to $1.98 a year ago.Declared cash distributions were $1.56 per unit compared to $1.76 in 2009.1 For more information, refer to Non-GAAP Measures described below.Management Commentary"This was a very challenging year due to weak demand in domestic markets that was both weather related and reflective of cyclical factors," said Colin Osborne, President and Chief Executive Officer. "A rapid rise in both steel input costs and the relative value of the Canadian dollar had a compounding effect; but by remaining focused on our long term strategy, our businesses were able to advance their leadership positions, add strategic product lines and facilities, and enhance our ability to access US and overseas markets."In 2010, the Company invested $3.6 million of growth capital and $5.2 million for maintenance capital. Generative purchases included the acquisition of embossing machinery for Vicwest BP's insulated metal panel line in Hamilton, Ontario, funds for the start-up of Trim Express, the expansion of the Prestige line at the Vicwest BP Victoriaville plant and the consolidation of manufacturing in British Columbia into a new state-of-the-art plant. In 2011, the Company plans to continue to invest in new product initiatives, both for Vicwest BP and Westeel, in addition to actively seeking international opportunities that will extend the reach of the Company's agricultural product line."We are well positioned to support growth and ongoing investments as a result of improvements made to our financial flexibility in 2010," said John Slattery, Executive Vice President and Chief Financial Officer. "The $50 million subordinated debenture issuance in September and the conversion to a corporation were important highlights of the year. While the conversion did not change our strategy, it does offer us significant benefits including a more liquid trading market for our shares and enhanced access to capital markets."Outlook"On balance, our outlook for 2011 is cautiously optimistic," said Mr. Osborne. "Revenue should benefit from slow to moderate improvements in the general economy and backlogs in both divisions are higher than at this time last year. The domestic and international agricultural markets for our products, as well as the industrial and commercial segments of the Canadian construction markets, are all anticipated to be stronger than last year. Tempering a more positive outlook is an expectation that US markets will continue to be challenging, retail inventories in domestic agriculture markets are high and steel prices have significantly increased since year end. Given the seasonality of sales (first quarter revenues are typically the lowest during a fiscal year), we will have a better indication of short-term market potential next quarter."Dividend Declaration The Board of Directors today declared a dividend for the first quarter 2011. The quarterly dividend, in the amount of $0.27 per share, is payable April 15, 2011 to all Vicwest Inc. shareholders of record March 31, 2011. This amount is consistent with the Company's intention to pay quarterly dividends in the amount of $0.27 per share or $1.08 annualized.CONFERENCE CALL AND WEBCAST Management will hold a conference call and live audio webcast on Friday March 4, 2011, at 11:00 a.m. (ET) to discuss fourth quarter and year end 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.The teleconference can be accessed at 416-644-3418 or 1-877-974-0446. A recording of the call will be available to listeners until midnight on March 11, 2011. To access the recording, please dial 416-640-1917 or 1-877-289-8525 and quote the pass code 4412004 followed by the number sign.To participate in the live audio webcast, please visit the Company's website at www.vicwestinc.com. Both the Company and CNW will archive the webcast.ABOUT VICWEST INC. 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. 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 www.vicwestinc.com.The Company's Consolidated Financial Statements and Management's Discussion and Analysis for the years ended December 31, 2010 and 2009 will be filed with applicable regulatory authorities and will be available on www.sedar.com and on the Company's website at www.vicwestinc.com.NON-GAAP MEASURES "EBITDA" is earnings before interest, taxes (other than capital taxes), depreciation and amortization. The Company'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 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 Company's performance or as an alternative to cash flows from operating, investing and financing activities which measure the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from the method used by other issuers and, accordingly, the Company's EBITDA calculation may not be comparable to similarly titled measures used by other issuers.RISKS AND UNCERTAINTIES Vicwest Inc. is subject to certain risks and uncertainties that could have a material adverse effect on the results of operations, business prospects, financial condition, cash dividends and the trading price of the Company's common shares. These uncertainties and risks include, but are not limited to: industry cyclicality, steel supply and pricing, reductions in demand for the Company's products, seasonality and weather, competition, management of the Company's information, foreign exchange, labour availability and collective bargaining agreements, income tax matters, customer concentration, relationship with suppliers, product liability, capital and liquidity, collections from customers, operating hazards, uninsured risks, supply and install contracts, interest rates, distribution arrangements, lack of long-term agreements, pension funding, future legal proceedings, dependence on key personnel, limitations on growth, environment, climate change, securities laws compliance and corporate governance changes, tax law changes. In addition, there are certain risks associated with the structure of the Company including: leverage and restrictive covenants, credit facility, effect of market interest rates on the price of common shares, restrictions on potential growth, and cash distributions not being guaranteed and fluctuating with the performance of the business. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by the Company with the securities regulatory authorities, available at www.sedar.com.FORWARD-LOOKING STATEMENTS 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, statements made under the heading "Outlook and Capital Structure" and other statements concerning the Company's 2010 and 2011 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. 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. Factors that could cause such differences include the cyclical nature of the construction and agriculture industries, changes in general economic conditions and interest rates, adverse weather, cost and availability of materials used to manufacture the Company's products, competitive developments, as well as other risk factors included in the most recently filed Management's Discussion and Analysis under the heading "Risks and Uncertainties" and as described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. This list is not exhaustive of the factors that may impact the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking 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 Company 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 forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this press release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this press release. All forward-looking statements in this press release are qualified by these cautionary 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.For further information: Colin Osborne President & Chief Executive OfficerVicwest Inc. Tel: (905) 469-5700 Fax: (905) 825-1090     John Slattery Executive Vice President & Chief Financial OfficerVicwest Inc. Tel: (905) 469-5706 ir@vicwestinc.com