CanWel Building Materials Provides Business Update
CanWel Building Materials Group Ltd. (“CanWel” or “the Company”) provided an update on business conditions and the Company’s financial position, as well as an update on its dividend.
Subsequent to reporting Q1 2020 financial results, CanWel has experienced continued resilience across its business segments with steady end-market demand resulting in an 8% increase in year-to-date sales when compared to the same period in 2019. The Company is also benefitting as the economy starts to re-open in certain jurisdictions that had previously restricted activity. The Company’s treated wood business has particularly shown strong performance during the period due to the positive impact from increased demand and volumes coming from consumers spending more time and efforts on home renovation and repair projects. This “stay at home” and “do it yourself” renovation and repair market has been extremely robust during the second quarter and we continue to see this trend in early June.
“While we are encouraged with our year-to-date results, we have taken measured and decisive actions so far in the second quarter towards overall cost management and balance sheet optimization to ensure we are well positioned to work through the current business environment. We have done so while also protecting our employees, business, suppliers and customers from the impacts of COVID-19,” commented Amar S. Doman, Chief Executive Officer of CanWel. “Building on decisive steps taken in the first quarter, through our responsive and focused efforts on operational efficiencies, cost savings, capital expenditure focus and working capital optimization, we have successfully achieved a reduction in loans and borrowings of approximately $80 million when compared to the same period in 2019.”
The ultimate impact of the COVID-19 pandemic on the Company’s second quarter and full-year 2020 results is difficult to quantify as it will depend on the duration of the pandemic, the impact of government policies, and the pace of economic recovery. The Company remains confident that its business model, cash flow profile, and liquidity will be more than sufficient to address a varied range of COVID-19 scenarios that may occur in 2020. The Company will continue to firmly manage the business in the short term and make continued progress with respect to its long-term growth strategies.
There is no change to the second quarter 2020 dividend. CanWel is pleased to announce that its Board of Directors has declared a quarterly dividend of $0.14 per common share, for the 33rd consecutive quarter, which will be paid on July 15, 2020, to shareholders of record on June 30, 2020.
While the business continues to perform well, the Board is sensitive to the current environment, and accordingly, the Board of Directors has adjusted the Company’s quarterly common share dividend from $0.14 to $0.12 per share, effective for the dividend declared in the third quarter of 2020, which is expected to be paid on October 15, 2020, to shareholders of record on September 30, 2020.
“We believe the future adjustment to the dividend in the third quarter is a prudent measure to enhance our capital and financial flexibility given the general uncertainty surrounding COVID-19, which we believe is for the benefit and in the long term interests of all our shareholders and other stakeholders,” added Mr. Doman.
On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a global pandemic (the “Pandemic”), resulting in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, government and business closures, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally and significant economic uncertainty.
At this time, as part of a supply chain for the construction industry, CanWel has been classified as an essential service for the majority of its operations in Canada and the U.S., and therefore has not been required to shut down. However, the Company has taken specific health and safety measures in response to COVID-19, including limiting the number of employees, customers and others on its premises, mandatory self-imposed quarantine periods for employees, team separation and staggered work hours, temporary suspension of all non-essential business travel, heightened hygienic and disinfecting practices, technology enabled remote work initiatives, following government and other safety protocols. The Company is pleased to advise that it is not aware that any of its employees have caught COVID-19.
Additionally, the Company has taken steps to mitigate the Pandemic’s impact on its customers, operations and cash flows by optimizing its working capital, implementing salary and working hours reductions, initiating employee layoffs, deferring or eliminating certain non-essential operating expenditures, minimizing capital expenditures, evaluating ongoing cost savings opportunities and assessing financial assistance options available under COVID-19-related government programs. Management is actively monitoring the Pandemic, economic and regulatory developments, and their impact on the Company’s operations, continually adapting to the changing operating environment.
Founded in 1989, CanWel is headquartered in Vancouver, British Columbia and trades on the Toronto Stock Exchange under the symbol CWX and is Canada’s only fully integrated national distributor in the building materials and related products sector. CanWel operates: multiple treating plant and planing facilities in Canada and the United States; distribution centres coast-to-coast in all major cities and strategic locations across Canada; in the United States near Portland, Oregon, San Francisco and Los Angeles, California and in 14 locations in the State of Hawaii through its wholly owned Honsador Building Products Group. CanWel distributes a wide range of building materials, lumber, renovation and electrical products. In addition, through its CanWel Fibre division, CanWel operates a vertically integrated forest products company based in Western Canada, operating from British Columbia to Saskatchewan, also servicing the US Pacific Northwest. CanWel owns approximately 117,000 acres of private timberlands, strategic Crown licenses and tenures, log harvesting and trucking operations, several post and pole peeling facilities and two pressure-treated specialty wood production plants and a specialty saw mill.
Ali Mahdavi – Investor Relations – firstname.lastname@example.org – (416) 962-3300
Source: CanWel Building Materials Group Ltd.