CanWel Reports 2020 Financial Results

March 15, 2021

By: The Working Forest Staff

VANCOUVER, BC, GLOBE NEWSWIRE — CanWel Building Materials Group Ltd. has announced its fourth-quarter and full-year 2020 financial results for the period ended December 31, 2020.

For the year ended December 31, 2020, consolidated revenues increased by 21.0% to $1.61 billion, compared to $1.33 billion in 2019. The increase in sales is attributable to improvements in both sales volumes and pricing. Quarantine-related home improvement activities along with strong housing starts on both sides of the border resulted in increased demand from consumers spending more time and efforts on home renovation and repair projects. Additionally, construction materials pricing increased during the second half of 2020. Company sales by product group in the year were made up of 65% construction materials, compared to 58% in 2019, with the remaining balance resulting from specialty and allied products of 29%, and forestry and other of 6%.

For 2020, gross margin dollars increased by 33.5% to $256.2 million, compared to $191.9 million in 2019. Gross margin percentage amounted to 15.9% of revenues versus 14.4% in 2019. The increase in gross margin dollars and margin percentage is primarily due to the improvements in construction materials pricing during the year.

Adjusted EBITDA for the full year increased by 66.0% to $143.1 million, compared to $86.2 million in 2019. EBITDA was slightly impacted by one-time acquisition costs in both 2020 and 2019, resulting in EBITDA amounting to $142.5 million in 2020, versus $85.8 million in 2019.
  
For the three-month period ended December 31, 2020, revenues increased 37.0% to $402.0 million when compared to $293.4 million in the same period in 2019, largely due to strong home improvement activity and strong housing starts, which continued into the fourth quarter of 2020. The Company’s sales by product group in the quarter were made up of 67% construction materials, with the remaining balance of sales resulting from specialty and allied products of 27%, and forestry and other of 6%.

Lumber, plywood and OSB prices experienced unprecedented increases in the second half of 2020, impacted by a combination of limited supply and elevated demand. Production curtailments by major producers earlier in the year contributed to low levels of supply chain inventory, while home construction activity and the repair and remodel market remained strong. We continue to manage our risk prudently in this pricing environment.

Gross margin dollars increased by 51.6% to $67.0 million, compared to $44.2 million during the corresponding period in 2019. Gross margin percentage increased to 16.7% of revenues versus 15.1% during the same period in 2019. This increase in margin dollars and margin percentage is mainly attributable to the previously mentioned improvements in construction materials pricing.

Adjusted EBITDA for the three-month period ended December 31, 2020, amounted to $36.7 million, compared to $18.4 million in 2019. EBITDA was impacted by one-time acquisition costs in 2020, resulting in EBITDA amounting to $36.1 million in 2020, versus $18.4 million in 2019.

CanWel paid a total of $0.54 per share in dividends in 2020, versus $0.56 per share in 2019.

On a year-over-year basis, as of December 31, 2020, through continued disciplined balance sheet optimization, and working capital management strategies, CanWel reduced its total loans and borrowings by $87.5 million, to $281.3 million.

“I am extremely proud of our ability to react and respond positively with robust financial and operational discipline to the unprecedented and unfortunate global pandemic, which negatively impacted many parts of the global economy,” commented Amar S. Doman, Chairman of the Board. “As an essential service, we successfully managed to keep our employees safe across our operations in Canada and the U.S., delivered on our customers’ needs, while remaining focused on cost efficiencies, tight inventory management and capturing robust sales across our business platforms, which has resulted in strong financial results in 2020.”

 

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