Welcome!

News Feed Item

Foremost Income Fund Reports Q1 2014 Results

CALGARY, ALBERTA -- (Marketwired) -- 05/16/14 -- Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three months ended March 31, 2014.

OVERVIEW

The Fund is an unincorporated open end mutual fund trust conducting its business through Foremost Universal LP ("Universal") and Foremost Industries LP ("Foremost"). The Fund derives its operational income from both Universal and Foremost. Universal's overall business is focused on the oil and gas industry and includes activity from eight manufacturing sites throughout Alberta. Foremost manufactures off-highway large wheeled and tracked vehicles, and equipment for custom drilling, construction, water wells, and mining sectors. Foremost also maintains a focus on custom built vehicles for its clientele and is located in Calgary, Alberta.

Q1 FINANCIAL RESULTS:

The key elements from Q1 2014 are:

--  Revenue decrease of 27% when comparing quarter over quarter. The Fund
    experienced the results of a general slowdown in oilfield equipment
    demand. Ongoing market and political concerns regarding transportation
    of product to foreign markets, and market price discrepancies led to
    depressed outlooks and product demand by key oilfield producers. Further
    information on the decrease in revenue by segment, and product line, can
    be found in the segmented information section of the MD&A. 
--  Q1 2014 gross profit dropped to 11% from 16% in Q1 2013. This is a
    result of lower customer demand driving lower quoted margins and margin
    adjustments made to specific long lead jobs, including field projects
    discussed in previous MD&A's. Further information by product can be
    found in the segmented information section of the MD&A. 
--  Administrative expenses have decreased 11%, from $5.5 million in Q1 2013
    to $4.9 million in Q1 2014. This is a result of an increased focus on
    lowering discretionary spending. 
--  Included in the foreign exchange loss of $133,000, and net against the
    exchange gains, are unrealized losses on forward contracts for $457,000.
--  EBITDA for Q1 2014 dropped to $10,000, from $4.6 million in 2013. This
    is a reflection of lower gross profit, due to industry conditions and
    adjustments made to margins on field work.   

SUMMARY OF QUARTERLY INFORMATION                                            
(000's, except per Trust Unit amount)                                       
2014                         Q1          Q2         Q3         Q4     Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue               $  46,439                                   $  46,439 
                                                                            
Gross profit ($)      $   5,029                                   $   5,029 
Gross profit (%)             11%                                         11%
                                                                            
Admin. expenses ($)   $   4,886                                   $   4,886 
Admin. expenses (%                                                          
 of total revenue)           11%                                         11%
Exchange rate (loss)  $    (133)                                  $    (133)
EBITDA                $      10                                   $      10 
Income from                                                                 
 operations           $  (1,141)                                  $  (1,141)
Comprehensive (loss)  $  (1,541)                                  $  (1,541)
                                                                            
Trust units redeemed     21,123                                      21,123 
Redemption payouts    $     160                                   $     160 
Basic and diluted                                                           
 (loss) per trust                                                           
 unit                 $   (0.08)                                  $   (0.08)
                                                                            
                                                                            
2013                         Q1         Q2         Q3         Q4      Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue               $  64,001  $  56,602  $  50,232  $  59,094  $ 229,929 
                                                                            
Gross profit ($)      $  10,149  $   4,770  $   7,169  $   7,763  $  29,850 
Gross profit (%)             16%         8%        14%        13%        13%
                                                                            
Admin. expenses ($)   $   5,517  $   5,920  $   5,519  $   5,171  $  22,127 
Admin. expenses (%                                                          
 of total revenue)            9%        10%        11%         9%        10%
Exchange rate                                                               
 gain/(loss)          $     (48) $     225  $      54  $     (38) $     193 
EBITDA                $   4,679  $  (1,375) $   1,595  $   2,630  $   7,530 
Income from                                                                 
 operations           $   3,484  $  (2,334) $     423  $   1,325  $   2,898 
Comprehensive                                                               
 income/(loss)        $   2,810  $  (1,504) $  (2,890) $   1,031  $    (553)
                                                                            
Trust units redeemed      8,560     13,326     76,451     30,394    128,731 
Redemption payouts    $      70  $     107  $     627  $     229  $   1,033 
Basic and diluted                                                           
 gain/(loss) per                                                            
 trust unit           $    0.15  $   (0.08) $   (0.15) $    0.05  $   (0.03)
                                                                            
                                                                            
2012                          Q1         Q2         Q3        Q4      Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue                $  70,822  $  62,499  $  64,746  $ 63,363  $ 261,430 
                                                                            
Gross profit ($)       $  15,393  $  13,081  $  14,236  $  9,389  $  52,099 
Gross profit (%)              22%        21%        22%       15%        20%
                                                                            
Admin. expenses ($)    $   6,080  $   5,977  $   5,823  $  6,222  $  24,102 
Admin. expenses (% of                                                       
 total revenue)                9%        10%         9%       10%         9%
Exchange rate                                                               
 (loss)/gain           $     (32) $      41  $    (273) $     34  $    (230)
EBITDA                 $   9,345  $   7,063  $   8,686  $  3,132  $  27,996 
Income from operations $   8,328  $   6,096  $   7,384  $  2,092  $  23,900 
Comprehensive income   $   7,653  $   5,078  $   5,625  $  1,371  $  19,727 
                                                                            
Trust units redeemed       8,486      7,709      2,500    10,090     28,785 
Redemption payouts     $      62  $      60  $      19  $     84  $     225 
Basic and diluted gain                                                      
 per trust unit        $    0.41  $    0.27  $    0.30  $   0.07  $    1.05 

MANAGEMENT ACTION IN RESPONSE TO PERFORMANCE WEAKNESS

The financial results of the first quarter have been disappointing and continue to reflect a slowdown in demand in a number of our major product lines. Management has embarked on an aggressive plan designed to return the Fund to overall profitability in 2014. Further, we have already engaged in a significant strategic review of the business and established the following areas of focus:

a.  Connection with the Customer 

We are reviewing the business to ensure we and our product offerings align with customer needs. This will ensure product lines carry features and costs that our customers value, delivering improved and more predictable margins.

b.  Cost Discipline 

We are driving renewed cost disciplines across every department and function. We are reducing the amount of money tied up in working capital and are reviewing all supply arrangements. A broad workforce reduction has already been implemented affecting approximately 12% of overhead positions. These initial steps combined will contribute to an estimated $4 million in annual savings. Additional savings will follow. Cost discipline will not be a one-time project, but rather will form the basis of a new strategic priority to define Foremost as a quality, low-cost producer.

c.  Engaging the Intelligence and Commitment of our People 

Senior management is leading a process whereby we create the environment where our people volunteer their full engagement, capabilities, and intelligence that results in Foremost achieving results in excess of the sum of our parts. We are creating a clear vision and direction for the business and are clearly communicating our objectives. We are also looking at ways to realign compensation packages to be more results orientated.

Clearly the Fund is at a point where change is important. Changes will be implemented in a manner that minimizes disruption and leverages our strengths. We have an established, quality brand with long-term and stable relationships with our customers. We also have an outstanding team of intelligent, capable, committed, and loyal employees. We have worked through challenging business environments in the past, and will continue to do so in 2014. Further, we have a general sense of optimism with respect to the team's response to these early changes and general market conditions which show healthy signs of improvement in many of our markets. We look forward with confidence to reporting more favorable results to Unitholders in future periods.

TRUST UNIT REDEMPTIONS AND DISTRIBUTIONS

The Fund redeemed 21,123 Trust Units during the quarter through its normal redemption program resulting in cash payments of $159,367. During Q1 2013 the Fund redeemed 8,560 Trust Units for $72,000. No options were exercised during the first quarter.

The Trustees have determined that, as of the date of May 15, 2014 the Fund will redeem tendered Trust Units at a value of $6.50 per unit.

TEMPORARY REDUCTION OF MONTHLY LIMIT FOR FUND UNIT REDEMPTIONS PURSUANT TO SECTION 6.4(ii)(B) OF THE DEED OF TRUST

Pursuant to section 6.4(ii)(B) of the Deed of Trust of the Fund dated November 12, 2005 as amended (the "Deed of Trust"), the Trustees of the Fund have discretion, in any calendar month, to reduce the monthly limit for cash redemptions of Trust Units of the Fund due to concerns as to the current working capital or debt of the Fund. The exercise of such discretion may result in all or a portion (on a pro rata basis, depending on notices of redemption received) of the amount payable for Trust Units redeemed being paid by unsecured promissory notes in accordance with section 6.5 of the Deed of Trust.

Effective May 1, 2014 and applying to all notices of redemption received and/or payable in the month of May 2014, the Trustees of the Fund have exercised their discretion pursuant to section 6.4(ii)(B) to reduce the monthly limit for cash redemptions from $1,500,000.00 to $0.00. The Trustees will review the revised monthly limit in respect of the month of June 2014 no later than June 13, 2014.

In accordance with the Deed of Trust, Unitholders that submit or have submitted notices of redemption on or after May 1, 2014 or in respect of whose Trust Units the Fund is obligated pay the redemption price on or before May 31, 2014, will be contacted individually and provided with the opportunity to elect to withdraw all or any part of such notices of redemption. Any Unitholders not electing to withdraw their redemption notices, in whole or in part will be paid the redemption price in respect of their redeemed Trust Units by unsecured promissory notes.

This discussion is intended for summary purposes only and is subject in all respects to the Deed of Trust. The income and other tax consequences of holding, redeeming or disposing of Trust Units and acquiring promissory notes will vary depending on the unitholder's particular circumstances, including the jurisdiction(s) in which the Unitholder resides or carries on business, and whether the Unitholder is an RRSP, RESP, RRIF, PPSP or TFSA. Accordingly, this summary is of a general nature only and is not intended to be legal or tax advice to any prospective purchaser or any Unitholder. All Unitholders should consult their own legal and tax advisors prior to redeeming units of the Fund.

On behalf of the Trustees, Foremost Income Fund

Bevan May, Interim President/CEO and Trustee

FORWARD-LOOKING STATEMENT

Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements include statements the Fund's intention to proceed with a Unitholders' meeting and information regarding the Trustees' views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund's expectations regarding the future availability of cash to meet redemption requests and the Trustee's expectations for redemption prices in December 2011 and January 2012. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange, and interest rates and stock market volatility.

Contacts:
Foremost Income Fund
Jackie Schenn, CA
Investor Relations
(403) 295-5800 or toll free 1-800-661-9190 (Canada/US)
(403) 295-5832 (FAX)
[email protected]
www.foremost.ca

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He has been a regular contributor to both InformationWeek and CIO Insight...
One of the biggest challenges with adopting a DevOps mentality is: new applications are easily adapted to cloud-native, microservice-based, or containerized architectures - they can be built for them - but old applications need complex refactoring. On the other hand, these new technologies can require relearning or adapting new, oftentimes more complex, methodologies and tools to be ready for production. In his general session at @DevOpsSummit at 20th Cloud Expo, Chris Brown, Solutions Marketi...
At the keynote this morning we spoke about the value proposition of Nutanix, of having a DevOps culture and a mindset, and the business outcomes of achieving agility and scale, which everybody here is trying to accomplish," noted Mark Lavi, DevOps Solution Architect at Nutanix, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
HyperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let's say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
In this presentation, you will learn first hand what works and what doesn't while architecting and deploying OpenStack. Some of the topics will include:- best practices for creating repeatable deployments of OpenStack- multi-site considerations- how to customize OpenStack to integrate with your existing systems and security best practices.
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
The “Digital Era” is forcing us to engage with new methods to build, operate and maintain applications. This transformation also implies an evolution to more and more intelligent applications to better engage with the customers, while creating significant market differentiators. In both cases, the cloud has become a key enabler to embrace this digital revolution. So, moving to the cloud is no longer the question; the new questions are HOW and WHEN. To make this equation even more complex, most ...
As you move to the cloud, your network should be efficient, secure, and easy to manage. An enterprise adopting a hybrid or public cloud needs systems and tools that provide: Agility: ability to deliver applications and services faster, even in complex hybrid environments Easier manageability: enable reliable connectivity with complete oversight as the data center network evolves Greater efficiency: eliminate wasted effort while reducing errors and optimize asset utilization Security: implemen...
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
DXWorldEXPO LLC announced today that Kevin Jackson joined the faculty of CloudEXPO's "10-Year Anniversary Event" which will take place on November 11-13, 2018 in New York City. Kevin L. Jackson is a globally recognized cloud computing expert and Founder/Author of the award winning "Cloud Musings" blog. Mr. Jackson has also been recognized as a "Top 100 Cybersecurity Influencer and Brand" by Onalytica (2015), a Huffington Post "Top 100 Cloud Computing Experts on Twitter" (2013) and a "Top 50 C...
Evan Kirstel is an internationally recognized thought leader and social media influencer in IoT (#1 in 2017), Cloud, Data Security (2016), Health Tech (#9 in 2017), Digital Health (#6 in 2016), B2B Marketing (#5 in 2015), AI, Smart Home, Digital (2017), IIoT (#1 in 2017) and Telecom/Wireless/5G. His connections are a "Who's Who" in these technologies, He is in the top 10 most mentioned/re-tweeted by CMOs and CIOs (2016) and have been recently named 5th most influential B2B marketeer in the US. H...
In a world where the internet rules all, where 94% of business buyers conduct online research, and where e-commerce sales are poised to fall between $427 billion and $443 billion by the end of this year, we think it's safe to say that your website is a vital part of your business strategy. Whether you're a B2B company, a local business, or an e-commerce site, digital presence is key to maintain in your drive towards success. Digital Performance will take priority in 2018 for the following reason...
Your homes and cars can be automated and self-serviced. Why can't your storage? From simply asking questions to analyze and troubleshoot your infrastructure, to provisioning storage with snapshots, recovery and replication, your wildest sci-fi dream has come true. In his session at @DevOpsSummit at 20th Cloud Expo, Dan Florea, Director of Product Management at Tintri, provided a ChatOps demo where you can talk to your storage and manage it from anywhere, through Slack and similar services with...
"This week we're really focusing on scalability, asset preservation and how do you back up to the cloud and in the cloud with object storage, which is really a new way of attacking dealing with your file, your blocked data, where you put it and how you access it," stated Jeff Greenwald, Senior Director of Market Development at HGST, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.