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Press release from CNW Group

Vicwest Inc. Reports Second Quarter 2011 Results

Wednesday, August 10, 2011

Vicwest Inc. Reports Second Quarter 2011 Results17:07 EDT Wednesday, August 10, 2011OAKVILLE, ON, Aug. 10, 2011 /CNW/ - Vicwest Inc. (the "Company") (TSX: VIC, VIC.DB) today reported its results for the three and six months ended June 30, 2011.Second Quarter Consolidated Results SummaryRevenue increased 15.5% to $108.5 million from $94.0 million a year ago.Gross profit was $17.2 million (15.8% gross margin) compared to $15.9 million (16.9% gross margin) a year ago.EBITDA1was $6.1 million (5.6% EBITDA1 margin) from $6.4 million (6.8% EBITDA1 margin) a year ago due to a 1.1 million management restructuring expenses.Net income was $3.5 million ($0.19 per share diluted) compared to $3.9 million ($0.22 per share diluted) a year ago due to management restructuring expenses, higher interest expense offset by fair value adjustment on embedded derivatives."Second quarter and year to date revenue performance illustrates that we are executing well on our growth strategies, even in challenging market conditions," said Colin Osborne, President and Chief Executive Officer. "We're especially pleased with the increasing contribution from our recent US investment and the continued strong customer affinity to our value-added products in Canada. At the bottom line, results unfolded as expected as steel costs consumed gross margin. We believe margin pressure is temporary but the impact has been significant."Second Quarter Divisional ResultsVicwest Building Products revenue stood at a second quarter record of $70.0 million, 21.1% higher than a year ago due to a solid contribution from All Weather Insulated Panels ("All Weather") of Vacaville, California, acquired in November 2010 and higher shipments of insulated metal panels in Canada. Net income before interest expense, income taxes and change in fair value of embedded derivatives was $2.2 million compared to $1.5 million in the prior year.Westeel Storage Solutions revenue increased 6.5% to $38.5 million from $36.2 million in the second quarter of 2010 on higher liquid storage tank sales for the Canadian oil and gas industry. Net income before interest expense, income taxes and change in fair value of embedded derivatives was $2.0 million compared to $3.1 million a year ago due to the compression associated with steel price increases.Financial Position and DividendsAs a result of seasonality, additional working capital requirements to support revenue growth and the dividend payment made in July 2011 aggregating $4.7 million ($0.27 per common share), the Company had net debt of $85.8 million at June 30, 2011 and a net debt to equity ratio of 2.0. It also had $39 million available under its revolving credit facility.The Board of Directors determines future dividend amounts (if any) paid from period to period, taking into account, among other things, business performance including profit margins, financial condition, growth plans, and expected capital requirements. There can be no assurance that the dividend amount will remain at second quarter levels in the future.Consistent with the Company's reporting schedule, an announcement regarding third quarter dividends will be made in mid-September.OutlookThe Company's revenue and income fluctuate with seasonal and cyclical factors in the construction, agricultural and energy industries in Canada and internationally. While the Company's performance pattern is generally predictable (lowest in the first quarter), there has been more volatility in recent years due to effects of the economic recession and more recently, rapid changes in the costs of steel, a major raw material used across the Company's product lines.In the near term, Vicwest BP is on track to generate record revenues in 2011, based upon the contribution of All Weather and healthy backlogs in Canada.  Backlog at the end of the second quarter was 45% higher than at the same time a year ago.  Despite a positive sales outlook, divisional profit margin will remain under pressure in the second half of 2011 due to high steel prices, the market's unwillingness to absorb higher product prices and a strong Canadian dollar.  These factors and a domestic focus on market share have so far prevented recovery of early 2011 steel price increases.Westeel backlogs at the end of the second quarter were 23% above last year, but have now begun to decline as bookings reflect the impact of flooding in some of the division's primary markets in Western Canada. Due to seasonality, Westeel sales are traditionally the lowest in the third quarter and this trend is expected to continue with the additional impact of flooding.  Now that Westeel has worked through its substantial backlog, new product sales are expected to better reflect steel price increases incurred in the second quarter, with a correspondingly positive impact on margins."We expect a challenging third quarter due to the typical seasonal low in the Westeel business, and continued challenging market conditions in the construction segment," said Mr. Osborne. "In the meantime, we will continue to focus on growing in a cost-effective manner, and positioning the business to take full advantage as markets begin to recover."Mr. Osborne added that the ongoing roll out of product partner strategies with Buhler Industries and Skandia is proceeding and "this progress adds to our stronger 2012 business prospects."Over the long term, management's outlook remains bullish due to growing demand for its solutions in domestic and emerging international agriculture markets, the anticipated recovery in construction markets,  and its competitive advantages including strong customer relationships, recognized brands, extensive distribution networks, and efficient operations.Second Quarter Conference Call and WebcastVicwest Inc. will host its second quarter 2011 conference call and webcast on August 11, 2011 beginning at 11 am ET. To participate in the teleconference, the numbers are 416-644-3414 or 1-800-814-4859. To participate in the webcast, please visit Vicwest's website at (News & Events section).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.  In Canada, Westeel also represents Skandia, Europe's most advanced elevator and conveyer grain handling systems manufacturers. 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 STATEMENTSCertain 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.___________________________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. For further information: Colin Osborne Edward (Ted) A. Mahood, CA President & Chief Executive Officer Chief Financial Officer Vicwest Inc.Vicwest Inc. Tel:  (905) 469-5700 Tel: (905) 469-5706 Fax: (905) 825-1090 Fax: (905) 825-1090