Stock Name: HWD
Amount: CAD 0.02
Announcement Date: 09/03/2012
Record Date: 18/04/2012
Dividend Detail:
TRADING SYMBOL: Toronto Stock Exchange - HWD
LANGLEY, BC, March 9, 2012 /CNW/ - This press release discusses
financial results for Hardwoods Distribution Inc. ("Hardwoods" or the
"Company") for the three and twelve months ended December 31, 2011.
Hardwoods is one of North America's largest wholesale distributors of
hardwood lumber and related sheet good products, operating a network of
30 distribution centres in the US and Canada.
Highlights
(For the three and twelve months ended December 31, 2011)
Revenue increased 37.7% in the fourth quarter and 16.4% for the full
year, compared to the same periods in 2010.
The Company increased gross profit margin to 17.7% in the fourth quarter
and 17.7% in the 12-month period, up from 16.6% and 17.4% respectively
during the same periods in 2010.
Fourth quarter EBITDA increased to $0.9 million, from an EBITDA loss of
$0.3 million last year. Full-year EBITDA increased 27.4% to $6.0
million, compared to $4.7 million in 2010.
Fourth quarter loss was $0.4 million, compared to a loss of $1.0 million
in the same period in 2010. Full-year profit increased to $6.1 million
which included a $3.8 million deferred income tax recovery that arose
from various restructuring activities that occurred during the year,
compared to profit of $0.9 million in 2010.
The Company paid quarterly dividends of $0.02 per share in October 2011
and January 2012, and today announced a third quarterly dividend of
$0.02 per share to be paid on April 30, 2012, to shareholders of record
on April 20, 2012.
"We achieved profitable growth in 2011 as we pursued our business
strategy, investing in high-performing new operations, products and
sales personnel, and strengthening results from our existing
distribution centres," said Lance Blanco, President and CEO of
Hardwoods.
"Our acquisition of Frank Paxton Lumber Company on September 19, 2011
was one of the highlights of the year and is already proving accretive
to our results. Paxton is a respected remanufacturer and distributor of
premium hardwood lumber, millwork and architectural sheet goods, with
five branches located in Chicago, Cincinnati, Denver, Kansas City and
San Antonio. These branches also provide custom architectural millwork
predominantly to commercial and institutional customers. During the 15
weeks we operated this business in 2011, Paxton contributed revenues of
$13.6 million and a net positive EBITDA contribution of $0.2 million,
even after accounting for $0.2 million of transaction costs we incurred
to acquire the business."
"Importantly, our existing operations also boosted performance in 2011,
with organic sales growth of $18.8 million, or 9.5%, and organic EBITDA
growth of $1.1 million, or 23.1%, compared to last year," said Mr.
Blanco. "These are significant gains given the challenging market
conditions and flat hardwood lumber prices we experienced in 2011. In
the US market, home building, remodeling and commercial construction
activity all fell short of forecaster's expectations, resulting in
continued closures and production cutbacks among secondary
manufacturers, including some of the largest component and cabinet
manufacturers in the US. In Canada, market demand remained relatively
flat, with modest growth in residential housing starts partially offset
by weak demand from secondary manufacturers."
"Our strong financial performance in the midst of these challenges
reflects the success of our business strategy and the three broad
initiatives we are implementing," added Mr. Blanco. "Firstly, our
efforts to diversify into the commercial and institutional construction
end-markets have begun to bear fruit. During 2011 we continued to
fine-tune our product offering and selectively targeted customers in
these sectors. The majority of the new accounts we opened in 2011 were
in the commercial construction sector as a result of our efforts."
"Our sales of import products also continued to expand as we pursued our
strategy of sourcing and supporting high-quality, proprietary products.
We continued to refine this program in 2011 with the addition of new
vendors and improved freight routes."
"Thirdly, we were successful in making our move into three large North
American urban centres where we previously had little or no
representation. Thanks to the Paxton acquisition we have gained a
strong presence in Kansas City, Cincinnati and Chicago, all of which
hold significant potential for us, and we expanded our presence in San
Antonio and Denver. Our success in attracting industry experienced
sales staff within other high potential geographic markets is also
helping us build market share."
"We are encouraged by the improvements in our performance and very
pleased to be sharing our gains with shareholders through quarterly
dividend payments. While we do not anticipate any significant
improvement in market conditions in the near term, our emphasis on
profitable market expansion is expected to continue delivering results
in 2012. We will also continue to seek out acquisition opportunities
that further increase shareholder value," said Mr. Blanco.
Summary of Results | �� | �� | �� | �� | ||||||
Selected Unaudited Consolidated Financial Information�� (in thousands of Canadian dollars except where noted) | �� | �� | ||||||||
�� | �� | �� | �� | �� | �� | �� | �� | �� | �� | �� |
�� | �� | �� | �� | �� | �� | �� | �� | �� | ||
�� | �� | �� | 12 months ended | 12 months ended | 3 months ended | 3 months ended | ||||
�� | �� | �� | December 31, | December 31, | December 31, | December 31, | ||||
�� | �� | �� | �� | 2011 | �� | 2010 | �� | 2011 | �� | 2010 |
Total sales | �� | $�� | 230,019 | $�� | 197,655 | $�� | 63,899 | $�� | 46,392 | |
�� | Sales in the US (US$) | �� | 148,365 | �� | 114,532 | �� | 43,888 | �� | 27,230 | |
�� | Sales in Canada | �� | 83,271 | �� | 79,653 | �� | 19,350 | �� | 18,826 | |
Gross profit�� | �� | 40,620 | �� | 34,357 | �� | 11,315 | �� | 7,689 | ||
�� | Gross profit % | �� | 17.7% | �� | 17.4% | �� | 17.7% | �� | 16.6% | |
Operating expenses | �� | (35,653) | �� | (30,808) | �� | (10,707) | �� | (8,265) | ||
Profit from operating activities | �� | 4,967 | �� | 3,549 | �� | 608 | �� | (576) | ||
Add:�� Depreciation | �� | 1,002 | �� | 1,138 | �� | 333 | �� | 237 | ||
Earnings before interest, taxes, depreciation and�� | �� | �� | �� | �� | �� | �� | �� | �� | ||
�� | amortization and non-controlling interest ("EBITDA") | 5,969 | �� | 4,687 | $�� | 941 | $�� | (339) | ||
�� | Add (deduct): | �� | �� | �� | �� | �� | �� | �� | �� | |
�� | �� | Depreciation | �� | (1,002) | �� | (1,138) | �� | (333) | �� | (237) |
�� | �� | Net finance income (cost) | �� | (569) | �� | (1,028) | �� | (512) | �� | (442) |
�� | �� | Income tax recovery (expense) | �� | 1,667 | �� | (1,584) | �� | (446) | �� | 38 |
Profit (loss) for the period | $�� | 6,065 | $�� | 937 | $�� | (350) | $�� | (980) | ||
Basic profit (loss) per share/unit | $�� | 0.40 | $�� | 0.07 | $�� | (0.02) | ��$ | (0.07) | ||
Fully diluted profit (loss) per share/unit | �� | 0.39 | �� | 0.06 | �� | (0.02) | �� | (0.07) | ||
Average Canadian dollar exchange rate for one US dollar | 0.989 | �� | 1.030 | �� | 0.981 | �� | 1.0395 | |||
��
Results from Operations - Three Months Ended December 31, 2011
For the three months ended December 31, 2011, total sales increased by
37.7% to $63.9 million, from $46.4 million in the same period in 2010.
The year-over-year sales growth reflects a 40.0% increase in underlying
sales activity, partially offset by a 2.3% decrease in sales due to the
negative effect of a stronger Canadian dollar on US sales. Sales in the
United States, as measured in US dollars, increased by $16.7 million,
or 61.2%, to $43.9 million. Included in this increase is $11.6 million
of revenue generated by the new Paxton branches. The remaining $5.1
million of US sales growth was generated by Hardwoods' existing US
branch network. Sales in Canada, a market which experienced more stable
ongoing demand for hardwoods through the recent economic downturn,
increased by a more modest $0.5 million, or 2.8%, to $19.4 million.
Fourth quarter gross profit increased to $11.3 million, up 47.2% from
$7.7 million during the same period last year. The significant
improvement in gross profit reflects the higher sales revenue, combined
with a higher gross profit margin. As a percentage of sales, gross
profit increased to 17.7% in the fourth quarter of 2011, from 16.6% in
the same period last year. The lower gross profit margin realized in
the fourth quarter of 2010 included certain valuation writedowns and
other adjustments made to year-end inventory which were not repeated in
the current-year period. Management views 17% to 18% gross margins as
appropriate given competitive conditions at this point in the business
cycle.
Operating expenses for the three-month period increased to $10.7
million, from $8.3 million during the same period in 2010. The increase
in expenses primarily reflects incremental expenses from the acquired
Paxton operations.
Fourth quarter EBITDA of $0.9 million increased $1.3 million from an
EBITDA loss of $0.3 million during the same period in 2010. This
increase reflects higher gross profit, partially offset by increased
expenses.
Loss for the period also improved, with a loss of $0.4 million in the
three months ended December 31, 2011 compared to a loss of $1.0 million
in the same period in the prior year. This improvement primarily
reflects the higher EBITDA, partially offset by a $0.1 million increase
in depreciation expense, a $0.1 million increase in net finance
expense, and a $0.5 million increase in income tax expense.
Results from Operations - Year Ended December 31, 2011
For the year ended December 31, 2011, total sales increased by 16.4% to
$230.0 million, from $197.7 million in 2010. The increase in sales
reflects a 19.4% increase in underlying sales activity, partially
offset by a 3.0% decrease in sales due to the negative effect of a
stronger Canadian dollar. The improvement in underlying sales reflects
$18.8 million in organic sales growth from Hardwoods' existing
operations, together with $13.6 million of new sales generated by the
acquired Paxton operations. Excluding the impact of the Paxton
acquisition, sales in the United States, as measured in US dollars,
increased by 17.5%. Sales in Canada, as measured in Canadian dollars,
increased by 4.5%.
Full-year gross profit increased 18.2% to $40.6 million, from $34.4
million in 2010. This gain reflects the higher sales revenue, as well
as a higher gross profit margin during 2011. Gross profit as a
percentage of sales was 17.7% in 2011, compared to 17.4% in 2010.
Operating expenses increased to $35.7 million in 2011, compared to $30.8
million in 2010. This increase was anticipated and reflects $2.6
million in operating costs related to the new Paxton operations, an
added $1.9 million in personnel and other costs incurred to support the
Company's market expansion strategies, and $0.8 million in
non-recurring transaction costs related to Hardwoods' conversion to a
corporation and the acquisition of Paxton. The year-over-year change in
operating expenses also reflects a $0.3 million litigation expense
recovery that lowered 2010 operating expenses, but was not repeated in
2011. Partially offsetting the increase in 2011 operating expenses was
the $0.8 million positive impact of a stronger Canadian dollar on
conversion of expenses at Hardwoods' US operations.
EBITDA for the full year increased 27.4% to $6.0 million, from the $4.7
million generated during 2010.�� This increase reflects higher gross
profits, partially offset by higher operating expense.�� Paxton
contributed $0.2 million of EBITDA (net of $0.2 million of one-time
transactions costs incurred to complete the acquisition) to our 2011
results.�� In addition to the incremental EBITDA provided by Paxton,
comparison of our year-over-year EBITDA results is also impacted by
one-time costs related to our conversion to a corporation in 2011, and
the absence of a recovery from a lawsuit in the prior year period.��
Excluding these three items, the underlying improvement in Hardwoods
business performance measured on an adjusted EBITDA basis is an
increase of 46.3% year-over-year as outlined below:
�� | �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | |
Selected Unaudited Consolidated Financial Information | �� | Year ended | �� | �� | Year ended | �� | �� | �� | �� | �� | �� | |
(in thousands of dollars) | �� | December 31, | �� | �� | December 31, | �� | �� | $ Increase | �� | �� | % Increase | |
�� | �� | 2011 | �� | �� | 2011 | �� | �� | (Decrease) | �� | �� | (Decrease) | |
EBITDA as reported | ��$ | 5,969 | �� | ��$ | 4,687 | �� | ��$ | 1,282 | �� | �� | 27.4% | |
Add (deduct): | �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | |
�� | Corporate conversion expenses | �� | 571 | �� | �� | - | �� | �� | �� | �� | �� | �� |
�� | Proceeds received from litigation settlement | �� | - | �� | �� | (320) | �� | �� | �� | �� | �� | �� |
�� | Paxton EBITDA, net of one-time acquisition transaction costs | �� | (151) | �� | �� | - | �� | �� | �� | �� | �� | �� |
Adjusted EBITDA | ��$ | 6,389 | �� | ��$ | 4,367 | �� | ��$ | 2,022 | �� | �� | 46.3% | |
��
Profit for the 2011 year increased 547.3% to $6.1 million, from $0.9
million in 2010. This significant improvement reflects the $1.3 million
increase in EBITDA, a $0.1 million decrease in depreciation, a $0.5
million decrease in net finance cost and a $3.3 million increase in
income tax recovery.
Outlook
Hardwoods anticipates that the North American economy will continue to
experience a slow recovery with very gradual improvement in the US
residential construction markets and moderately stronger gains in
non-residential construction markets. In Canada, growth in the domestic
economy shows signs of slowing as global economic events reduce
consumer confidence and the stronger Canadian dollar negatively impacts
secondary manufacturers.�� Accordingly, the Company anticipates only
modest improvement from this market in 2012.
Given the expectation of continuing weak market conditions, Hardwoods
will continue to rely on its market expansion strategy to achieve
growth and enhance profits. Specifically it will seek to:
Further strengthen its presence in the commercial and institutional
construction markets, including leveraging Paxton's products and
capabilities to make a broader range of products available to customers
in these sectors.
Leverage its successful import program by continuing to seek out
attractive new products and introducing the Company's branded lines of
import products to Paxton's base of customers.
Solidify and further expand its presence in the large and promising new
geographic markets the Company has entered via the Paxton acquisition,
and target growth in additional existing markets which the Company has
identified.
The Company anticipates that operating expenses will increase further in
2012 as it implements its market expansion strategies, supports
increased sales activity and integrates the Paxton business. Key
priorities for 2012 will be to complete the integration of the Paxton
operations and to continue executing the Company's strategy, while
tightly managing the business. The Company�� will also continue to seek
out acquisition opportunities that further increase shareholder value.
A more detailed discussion of the Company's financial performance can be
found in its Management's Discussion and Analysis (MD&A) for the three
and twelve months ended December 31, 2011. The MD&A will be posted,
along with the Company's audited consolidated financial statements and
accompanying notes on SEDAR (www.sedar.com) and on the Fund's website http://www.hardwoods-inc.com.
About Hardwoods Distribution Inc.
Hardwoods Distribution Inc. ("HDI" or the "Company") is a publicly
traded company that holds, indirectly, a 100% ownership interest in
Hardwoods Specialty Products LP and Hardwoods Specialty Products US LP
(collectively, "Hardwoods" or the "Business").�� Formerly the Hardwoods
Distribution Income Fund (the "Fund"), HDI was formed by the Fund in
order to convert from an income trust structure to a corporation.�� The
Fund was converted to a corporation by way of a plan of arrangement
effective July 1, 2011.
Pursuant to the conversion, all outstanding units of the Fund held by
unitholders were exchanged for common shares of Hardwoods Distribution
Inc. on a one-for-one basis.�� All of the Class B limited partner units
in the Fund's operating subsidiaries, which represented a 20% equity
interest in Hardwoods and were held by the former owners of the
Business, were exchanged for common shares of Hardwoods Distribution
Inc. on the basis of 0.3793 common shares per Class B limited partner
unit.�� As a result of these arrangements, Hardwoods Distribution Inc.
owns 100% of Hardwoods, whereas previously the Fund owned 80% of the
Business, and the Fund has been wound up into HDI.�� Hardwoods
Distribution Inc. is listed on the Toronto Stock Exchange and trades
under the symbol HWD.
HDI's results are based upon the performance of Hardwoods.
About Hardwoods
Hardwoods is one of North America's largest distributors of high-grade
hardwood lumber, sheet goods and architectural millwork to the cabinet,
moulding, millwork, furniture and specialty wood products industries.
The Company currently operates a network of 30 distribution centers in
the U.S. and Canada.
Non-GAAP Measures - EBITDA
References to "EBITDA" are to earnings before interest, income taxes,
depreciation and amortization, where interest is defined as net finance
costs as per the consolidated statement of comprehensive income.�� In
addition to profit or loss, the Company considers EBITDA to be a useful
supplemental measure of a company's ability to meet debt service and
capital expenditure requirements, and the Company interprets trends in
EBITDA as an indicator of relative operating performance.
EBITDA is not an earnings measure recognized by International Financial
Reporting Standards ("IFRS") and does not have a standardized meaning
prescribed by IFRS.�� Investors are cautioned that EBITDA should not
replace profit or loss or cash flows (as determined in accordance with
IFRS) as an indicator of our performance.�� The Company's method of
calculating EBITDA may differ from the methods used by other issuers.
Therefore, the Company's EBITDA may not be comparable to similar
measures presented by other issuers. For a reconciliation between
EBITDA and profit or loss as determined in accordance with IFRS, please
refer to the discussion of Results of Operations described in section
3.0 of Management's Discussion and Analysis (MD&A) for the three and
twelve months ended December 31, 2011. ��
Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes forward-looking statements. These involve
known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements or industry results to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
These forward-looking statements are identified by the use of terms and
phrases such as "anticipate", "believe", "estimate", "expect", "may",
"plan", "will", and similar terms and phrases, including references to
assumptions. Such statements may involve, but are not limited to:�� our
expectation the North American economy will continue to experience a
slow recovery with very gradual improvement in the US residential
construction markets and moderately stronger gains in non-residential
construction markets; our belief that in Canada growth in the domestic
economy shows signs of slowing as global economic events reduce
consumer confidence and the stronger Canadian dollar negatively impacts
secondary manufacturers, that that we anticipate only modest
improvement from this market in 2012; given our expectation of
continuing weak market conditions, the Company's intention to continue
to rely on its market expansion strategy to achieve growth and enhance
profits;�� that we anticipate that operating expenses will increase
further in 2012 as the Company implements its market expansion
strategies, supports increased sales activity and integrates the Paxton
business;�� that our key priorities for 2012 will be to complete the
integration of the Paxton operations and to continue executing the
Company's strategy, while tightly managing the business; and our
expectation that the Company�� will continue to seek out acquisition
opportunities that further increase shareholder value.
These forward-looking statements reflect current expectations of
management regarding future events and operating performance as of the
date of this news release. Forward-looking statements involve
significant risks and uncertainties, should not be read as guarantees
of future performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A number
of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements, including, but not
limited to: national and local business conditions; political or
economic instability in local markets; competition; consumer
preferences; spending patterns and demographic trends; legislation or
governmental regulation; acquisition and integration risks.
Although the forward-looking statements contained in this news release
are based upon what management believes to be reasonable assumptions,
management cannot assure investors that actual results will be
consistent with these forward-looking statements. The forward-looking
statements reflect management's current beliefs and are based on
information currently available.
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, HDI 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.
For further information:
Rob Brown
Chief Financial Officer
Phone: (604) 881-1990
Fax: (604) 881-1995
Email:��robbrown@hardwoods-inc.com
Website:��http://www.hardwoods-inc.com
No comments:
Post a Comment