The Fund's quarterly results demonstrated year over year improvements in certain key areas such as sales, gross margins and distributable cash.
Arriscraft International Income Fund ('Arriscraft' or the 'Fund') (TSX:AIN.UN) announced its financial results for the quarter ended March 31, 2006. The Fund's quarterly results demonstrated year over year improvements in certain key areas such as sales, gross margins and distributable cash. Although the improved results began to demonstrate the impact of the strategic growth initiatives currently being undertaken by the Fund, it will take time for the full benefit of these initiatives to be clearly reflected in the Fund's financial results.
The first quarter of the year is usually the Fund's weakest quarter due to the seasonal nature of its business. Compared to the first quarter of 2005, the first quarter of 2006 was characterized by higher sales and gross profits, largely offset by increased operating costs incurred in support of the execution of the Fund's strategic initiatives and increased foreign exchange losses due to the appreciating Canadian dollar. Distributable cash for the quarter increased to $0.132 per Unit from $0.079 per Unit for the same period last year.
First quarter financial highlights (in $ thousands, except per Unit amounts):
|3 MONTHS ENDED
||31st March 2006
||31st March 2005
|Net Income (Loss)
|Net Income (Loss)
per Unit (a)
per Unit (a)
- For purpose of calculating Distributable Loss per Unit and Distributable Cash per Unit, the aggregate number of Units issued and outstanding assumes conversion of all Management Units into Units. No distributions were paid on Management Units during the quarter.
- As announced on July 27, 2005, the Fund elected to suspend the August 15, 2005 distribution to Unit holders and subsequently suspended further cash distributions.
First quarter sales in the United States increased to $8.5 million from $6.1 million in the same period last year. This was primarily the result of higher sales of the Fund's Renaissance® (non-residential) product line for which sales grew to $6.5 million from $4.6 million last year. The Fund also began to demonstrate the benefit of its U.S. residential growth initiative during the quarter, recording residential sales of $1.6 million for the quarter compared to $1.1 million in last year's first quarter. Further growth in U.S. residential sales is expected in future quarters as the Fund's growth initiatives are implemented and take effect.
Total first quarter Canadian sales declined by $0.3 million to $8.9 million from $9.2 million in last year's first quarter, reflecting the impact of the intentional de-emphasis of the Fund's winter booking program which reduced such sales by $1.4 million compared to last year's first quarter. Residential sales were $0.8 million lower than last year's first quarter as a result of reduced winter booking sales while non-residential sales increased by $0.3 million.
Adjusted EBITDA, which removes from EBITDA the non-controlling interest in the Fund's results and all unrealized foreign exchange gains and losses, was virtually unchanged from last year's first quarter at $1.8 million. Distributable cash improved to $1.1 million from $0.7 million last year as a result of lower interest costs due to last year's term debt refinancing and lower maintenance capital expenditures in the current quarter. No cash distributions were declared in the quarter. It is the intention of the trustees of the Fund to reinstitute cash distributions at a prudent and sustainable level in the current year. In this regard, the progress being made by Arriscraft on its strategic initiatives, particularly in the U.S. residential sales area, will be important.
David Boles, President & Chief Executive Officer, commented, "While we were encouraged with the increase in sales during the quarter, further sales increases will be necessary for the Fund to generate the sustainable levels of free cash flow that are necessary to reinstate distributions. We are optimistic that the current initiatives being pursued will result in improved operating results over the balance of 2006."
Arriscraft International Income Fund
The Fund owns the Arriscraft International manufactured stone, brick and natural stone masonry products business conducted through Arriscraft International Limited Partnership, Arriscraft International LLC and certain affiliates in Canada and the United States. Arriscraft produces manufactured stone masonry products in Canada and the United States using its proprietary The Natural Edge® manufacturing process. These products offer the aesthetic and physical benefits of natural stone combined with the strength, simplicity of construction and cost-effectiveness of traditional masonry. Arriscraft also produces brick and natural stone masonry products and distributes its masonry products across Canada and most of the United States.
The Fund's Consolidated Financial Statements for the quarter ended March 31, 2006 and Management's Discussion and Analysis are available on the Fund's web site at www.arriscraft.com and on SEDAR at www.sedar.com.
Arriscraft International Limited Partnership,
President and CEO.