HDI Provides Business Update Regarding COVID-19
Hardwoods Distribution Inc. ("HDI" or the "Company") (TSX:HDI.TO) provided an update today on business conditions and the Company's response to the COVID-19 pandemic.
In recent weeks the impacts of COVID-19 have grown both domestically and abroad, and accordingly the Company has taken actions to protect its employees, operations, and financial position.
"The health and safety of our employees is our primary concern and we have instituted a number of policies and procedures to ensure a safe work environment," said Rob Brown, President and CEO. Actions taken include detailed cleaning and disinfecting procedures, social distancing protocols, suspension of air travel, continuing education for employees designed to minimize the chances of infection and spread of the virus, increased work-from-home procedures, and contingency plans in the event a COVID-19 diagnosis is found in one of our facilities. "We took action early on to protect our over 1,350 employees and I am proud of the work we have done in this area," commented Mr. Brown.
From an operations perspective, the Company meets the U.S. federal definition of an essential business and as a result the Company, and most of its suppliers and customers, have generally remained open during the COVID-19 pandemic. "We provide services that are essential to the support and maintenance of critical infrastructure, and take seriously our responsibility in these times to continue to operate," said Mr. Brown. "A majority of our suppliers and customers continue to operate as well, and demand in March was strong," commented Mr. Brown.
As this pandemic continues it is possible that even essential businesses may see a disruption in their operations. "We maintain a North American wide footprint of 66 locations, have no significant supplier or customer concentration, and our products are used in diverse end markets including residential, repair and remodel, and commercial end-use applications. The diversification in our business helps to mitigate the potential impact of downward shifts that certain regions, suppliers, or customers may face as a result of the COVID-19 pandemic."
Mr. Brown continued, "As it relates to our financial position, we have a strong balance sheet and business model that positions us well during this time of uncertainty." The Company converts a significant portion of EBITDA to operating cash flow, has no term debt, and maintains revolver loans secured against high quality working capital.
Given the pace at which the COVID-19 pandemic is affecting the economy, HDI will continue to carefully manage liquidity and utilize its revolver facility to increase cash on hand, limit non-essential operating expenses, and defer capital expenditures.
The COVID-19 pandemic has resulted in an unprecedented global crises impacting economies around the world, and this may impact the Company going forward. "We are closely monitoring the impact of this pandemic on our business. We are confident that our people, diversification, discipline, and financial position will put us in a position to succeed over the long term," commented Mr. Brown.
HDI is North America's largest distributor of architectural grade building products to the residential and commercial construction markets. The Company operates a North American network of 66 distribution centres utilizing three industry leading distribution brands: Hardwoods Specialty Products; the Frank Paxton Lumber Company; and Rugby Architectural Building Products. HDI also operates one sawmill and kiln drying operation, Hardwoods of Michigan.
Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws in Canada. The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions. Forward-looking information in this news release includes, without limitation, statements with respect to: the anticipated impact of the COVID-19 pandemic on our business; the diversification in our business helping to mitigate the potential impact of downward shifts that certain regions, suppliers, or customers may face as a result of the COVID-19 pandemic; we have a strong balance sheet and business model that positions us well during this time of uncertainty; and, we are confident that our people, diversification, discipline, and financial position will put us in a position to succeed over the long term.
The forecasts and projections that make up the forward-looking information in this news release are based on assumptions which include, but are not limited to: there are no material exchange rate fluctuations between the Canadian and US dollar that affect the Company's performance; the general state of the economy does not worsen; the Company does not lose any key personnel; there are no decreases in the supply of, demand for, or market values of hardwood lumber or sheet goods that harm the Company's business; the Company does not incur material losses related to credit provided to its customers; the Company's products are not subjected to negative trade outcomes; the Company is able to sustain its level of sales and earnings margins; the Company is able to grow its business long term and to manage its growth; the Company is able to integrate acquired businesses; there is no new competition in the markets in which the Company operates that lead to reduced sales and profitability; the Company can comply with existing regulations and will not become subject to more stringent regulations; no material product liability claims; importation of products manufactured with hardwood lumber or sheet goods does not increase and replace products manufactured in North America; the Company's management information systems upon which it is dependent are not impaired; and, the Company's insurance is sufficient to cover losses that may occur as a result of its operations.
The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, but are not limited to: escalation of the COVID-19 pandemic; the COVID-19 pandemic decreasing the willingness of customers to purchase products from the Company, causing labour shortages for the Company, interrupting supplies from third parties upon which the Company relies, or resulting in governmental regulation adversely impacting the Company's business; exchange rate fluctuations between the Canadian and US dollar could affect the Company's performance; the Company's results are dependent upon the general state of the economy; the Company depends on key personnel, the loss of which could harm its business; decreases in the supply of, demand for, or market values of hardwood lumber or sheet goods could harm the Company's business; the Company may incur losses related to credit provided to the Company's customers; the Company's products may be subject to negative trade outcomes; the Company may not be able to sustain its current level of sales or earnings margins; the Company may be unable to grow its business long term or to manage any growth; the Company may be unable to integrate acquired businesses; competition in the Company's markets may lead to reduced sales and profitability; the Company may fail to comply with existing regulations or become subject to more stringent regulations; product liability claims could affect the Company's sales, profitability and reputation; importation of products manufactured with hardwood lumber or sheet goods may increase, and replace products manufactured in North America; the Company is dependent upon its management information systems; the Company's insurance may be insufficient to cover losses that may occur as a result of the Company's operations; the Company's credit facilities affect its liquidity, contain restrictions on the Company's ability to borrow funds, and impose restrictions on distributions that can be made by certain subsidiaries of the Company; the market price of the Company's common shares will fluctuate; and there is a possibility of dilution of the Company's existing shareholders. More information about the risks and uncertainties affecting Hardwoods' business can be found in the "Risk Factors" section of its Annual Information Form dated March 19, 2020 ,which is available under the Hardwoods' profile on SEDAR at www.sedar.com.
All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as may be required by law, the Company undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
SOURCE Hardwoods Distribution Inc.
View original content: http://www.newswire.ca/en/releases/archive/April2020/02/c8020.html
SOURCE: Hardwoods Distribution Inc.
Faiz Karmally, Chief Financial Officer, Phone: (604) 881-1982; email: email@example.com; Website: http://www.hdidist.com