Stock Name: HWD
Amount: CAD 0.03
Announcement Date: 07/05/2012
Record Date: 18/07/2012
Dividend Detail:
TRADING SYMBOL: Toronto Stock Exchange - HWD
LANGLEY, B.C., May 7, 2012 /CNW/ - Hardwoods Distribution Inc.
("Hardwoods" or the "Company") today announced strong financial results
for the three months ended March 31, 2012, with revenues, gross profit,
EBITDA and profit all up significantly over 2011 levels. 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 months ended March 31, 2012)
First quarter consolidated sales increased $20.9 million, or 40.2%,
compared to the first quarter of 2011, reflecting acquisition-related
growth of $14.1 million and organic growth of $6.8 million.
Gross profit increased by 44.1%, with gross profit margin increasing to
18.0% from 17.5% in the same period last year.
EBITDA increased to $2.6 million, compared to $0.6 million in the first
quarter of 2011.
Profit increased to $1.2 million, from a loss of $0.7 million in the
first quarter last year.
In recognition of improvements to the Company's financial performance,
the Board of Directors announced an increase in the quarterly dividend
to $0.03 per share, from $0.02 previously. The next quarterly dividend
will be paid on July 31, 2012 to shareholders of record on July 20,
2012.
"Our 2012 year is off to an excellent start with strong operating
results and significant improvement in our profitability," said Lance
Blanco, President and CEO of Hardwoods. "Our acquisition of the Frank
Paxton Lumber Company, which we completed last September, has
strengthened our presence in five key US geographic markets.�� Meanwhile
our strategy of diversifying into non-residential construction markets
and leveraging our import program helped us achieve solid organic
growth across our existing operations."
"On a consolidated basis, we grew first quarter revenue by 40.2%, gross
profit by 44.1% and EBITDA by 359.1%, compared to the same period last
year. We also achieved a gross profit margin of 18.0% compared to 17.5%
last year, reflecting the addition of higher value products to our
sales mix," said Mr. Blanco.
The Company's gains were achieved against a backdrop of challenging
market conditions. While the US Census Bureau reported a 10.3%
year-over-year increase in new housing starts at the end of March 2012,
the annualized rate of housing starts remains at about half of what is
generally considered to be a healthy market. The broader US economy
also remains challenged by high government debt and unemployment
levels. Average product prices remained comparable to the same period a
year ago, but started to strengthen towards the end of the first
quarter.
"As we anticipated, our growth continues to be primarily driven by our
strategic initiatives," said Mr. Blanco. "We're having good success
entering the markets we've identified as growth opportunities, and
we've achieved a rapid integration of the Paxton business. Overall we
are encouraged by our progress and very pleased to be sharing our gains
with shareholders through an increased quarterly dividend. Going
forward, we will continue to pursue opportunities that help to
strengthen our financial results, including evaluating promising
acquisition opportunities that could further increase shareholder
value."
Summary of Results
�� | ||||||||||||
Selected Unaudited Consolidated Financial Information�� (in thousands of Canadian dollars) �� | ||||||||||||
�� �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | |||
�� | �� | For the three months | For the three months | �� | �� | �� | �� | |||||
�� �� | �� | Ended March 31, | Ended March 31, | �� | $ Increase | �� | % Increase | |||||
�� �� | �� | �� | 2012 | �� | 2011 | �� | ( Decrease) | �� | (Decrease) | |||
Total sales �� | �� | ��$ | 72,939 | ��$ | 52,030 | �� | $ | 20,909 | �� | 40.2% | ||
�� Sales in the US (US$) | �� | �� | 51,100 | �� | 31,840 | �� | 19,260 | �� | 60.5% | |||
�� Sales in Canada | �� | �� | 21,788 | �� | 20,642 | �� | 1,146 | �� | 5.6% | |||
Gross profit �� | �� | �� | 13,110 | �� | 9,099 | �� | 4,011 | �� | 44.1% | |||
�� Gross profit % | �� | �� | 18.0% | �� | 17.5% | �� | �� | �� | �� | |||
Operating expenses �� | �� | �� | (10,850) | �� | (8,772) | �� | 2,078 | �� | 23.7% | |||
Profit from operating activities �� | �� | �� | 2,260 | �� | 327 | �� | 1,933 | �� | 591.1% | |||
Add:�� Depreciation and amortization �� | �� | �� | 302 | �� | 231 | �� | 71 | �� | 30.7% | |||
Earnings before interest, taxes,depreciation and ����amortization and non-controlling interest ("EBITDA") �� | �� | $ | 2,562 | ��$ | 558 | �� | $ | 2,004 | �� | 359.1% | ||
�� | �� | �� | �� | �� | �� | �� | �� | �� | �� | |||
Add (deduct): �� | �� | �� | �� | �� | �� | �� | �� | �� | �� | |||
�� �� Depreciation and amortization | �� | �� | (302) | �� | (231) | �� | 71 | �� | 30.7% | |||
�� �� Net finance expense | �� | �� | (340) | �� | (735) | �� | (395) | �� | -53.7% | |||
�� �� Income tax expense | �� | �� | (695) | �� | (293) | �� | 402 | �� | 137.2% | |||
Profit for the period �� | �� | ��$ | 1,225 | ��$ | (701) | �� | $ | 1,926 | �� | 274.8% | ||
Basic profit per share/unit �� | �� | ��$ | 0.08 | ��$ | (0.05) | �� | �� | �� | �� | |||
Fully diluted profit per share/unit �� | �� | �� | 0.07 | �� | (0.05) | �� | �� | �� | �� | |||
Average Canadian dollar exchange rate for one US dollar | �� | �� | 1.001 | �� | 0.986 | �� | �� | �� | �� | |||
��
Results from Operations - Three Months Ended March 31, 2012
For the three months ended March 31, 2012, total sales increased by
40.2% to $72.9 million, from $52.0 million in the same period in 2011.
Incremental sales from the Paxton operations, acquired in September
2011, contributed $14.1 million, or approximately two-thirds of the
increase, while organic growth from existing operations accounted for
$6.8 million, or approximately one-third of the sales increase. Results
for the first quarter of 2012 included one extra business day compared
to the same period last year.
Sales in the United States, as measured in US dollars, increased by
$19.3 million, or 60.5%, to $51.1 million. Included in this increase is
$14.1 million of revenue generated by the Paxton branches. The
remaining $5.2 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 and is not affected by the Paxton acquisition, increased by a
more modest $1.1 million, or 5.6%, to $21.8 million.
First quarter gross profit increased to $13.1 million, up 44.1% from
$9.1 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 18.0% in the first quarter of 2012, from 17.5% in
the same period last year. The improved margin reflects Paxton's
in-house remanufacturing capability, which adds value to the products
it sells. As a result, Paxton's product mix generates a higher average
gross profit margin than Hardwoods' other product lines.
Operating expenses for the three-month period increased to $10.9
million, from $8.8 million in the first quarter of 2011. This increase
primarily reflects incremental expenses from the acquired Paxton
operations, partially offset by the absence of $0.3 million in
corporate conversion costs that were incurred in the first quarter of
2011, but were not repeated in the 2012 period. As a percentage of
sales, first quarter 2012 operating expenses were 14.9% of sales,
compared to 16.9% in 2011.
First quarter EBITDA increased $2.6 million, from $0.6 million during
the same period in 2011. This reflects the $4.0 million increase in
gross profit, partially offset by $2.1 million in increased expenses.
Profit for the period also strengthened, increasing to $1.2 million
from a loss of $0.7 million in the first quarter of 2011. The $1.9
million year-over-year improvement reflects the higher EBITDA and the
$0.4 million decrease in net finance cost, partially offset by the $0.4
million increase in income tax expense.
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, steady demand in Canadian housing
markets and moderately stronger gains in non-residential construction
markets.
Given the modest expectations for market demand, Hardwoods will continue
to rely on its market share 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 new geographic markets the
Company has entered as a result of the Paxton acquisition, while
targeting additional growth in selected existing markets.
Key priorities for 2012 will be to build on the business platform from
the acquired Paxton operations and to continue executing the Company's
growth and operating strategies, while tightly managing the business.��
Hardwoods will also continue to evaluate 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
months ended March 31, 2012. The MD&A will be posted, along with the
Company's condensed consolidated interim financial statements on SEDAR
(www.sedar.com) and on the Company's website http://www.hardwoods-inc.com.
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 months
ended March 31, 2012 and 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:�� that
Hardwoods anticipates the North American economy will continue to
experience a slow recovery, with very gradual improvement in the US
residential construction markets, steady demand in Canadian housing
markets and moderately stronger gains in non-residential construction
markets; that given the Company's modest expectations for market
demand, Hardwoods will continue to rely on its market share strategy to
achieve growth and enhance profits; that the Company intends 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; that Hardwoods intends to 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; that the Company intends to solidify and further
expand its presence in new geographic markets the Company has entered
as a result of the Paxton acquisition, while targeting additional
growth in selected existing markets; that key priorities for 2012 will
be to build on the business platform from the acquired Paxton
operations and to continue executing the Company's growth and operating
strategies, while tightly managing the business; and that Hardwoods
will also continue to evaluate 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, 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.��
��
��
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
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