LANGLEY, BC, June 10, 2020 /CNW/ - Hardwoods Distribution Inc.
("HDI" or the "Company") (TSX: HDI) provided an update today on
business conditions and the Company's financial position.
The Company's average daily organic sales were up 16% in May as
compared to April. "In May we saw increased activity across our
distribution network as the pace of construction in many regions
increased," said Rob Brown,
President and CEO. "I am also pleased to report that our policies
and procedures related to ensuring a safe environment for employees
are working, and the productive capacity of our business has not
been impacted by the COVID-19 pandemic".
In April the Company took a number of actions to reduce costs,
including a reduction in the workforce, lowering of variable
compensation, and curtailing non-essential operating expenditures.
These measures assisted the Company in generating positive cash
flow before changes in working capital in the months of April and
May.
Consistent with the Company's expectations, additional cash was
also generated by reducing working capital in the months of April
and May. The Company's net debt position was reduced in in
the last two months, in line with the Company's focus on generating
cash flow. "The accounts receivable collection cycle in May was
excellent, and inventory balances that typically increase this time
of year are being managed to reflect our current sales pace," said
Mr. Brown.
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 contagion, 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 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.
As it relates to the the Company's long-term growth strategy,
and specifically its digital strategy, in May the Company launched
DesignOneSource ("DOS"), the specification division of HDI. DOS
provides architects and designers seamless specification support
for decorative surfaces through an interactive online platform.
"DesignOneSource distinguishes us from the competition," commented
Mr. Brown. "It supports our specification sales channel, provides
real value to architects and designers, and increases the prospect
of having our products specified in more construction projects
going forward."
DesignOneSource website: https://designonesource.com/
About HDI
HDI is North America's largest
distributor of architectural grade building products to the
residential and commercial construction markets. The Company
operates a North American network of 66 distribution centres
utilizing three industry leading distribution brands:
Hardwoods Specialty Products; the Frank Paxton Lumber Company; and
Rugby Architectural Building Products. HDI also operates one
sawmill and kiln drying operation, Hardwoods of Michigan.
Forward-Looking Statements
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws in Canada. The
words "anticipates", "believes", "budgets", "could", "estimates",
"expects", "forecasts", "intends", "may", "might", "plans",
"projects", "schedule", "should", "will", "would" and similar
expressions are often intended to identify forward-looking
information, although not all forward-looking information contains
these identifying words. Such information may involve, but is
not limited to, comments with respect to strategies, expectations,
planned operations or future actions. Forward-looking information
in this news release includes, without limitation, statements with
respect to: The ultimate impact of the COVID-19 pandemic on the
Company's second quarter and full-year 2020 results is difficult to
quanity as it will depend on the duration of the contagion, 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 sufficient to address a varied range
of COVID-19 scenarios that may occur in 2020; and DesignOneSource
increases the prospect of having our products specified in more
construction projects going forward.
The forecasts and projections that make up the forward-looking
information in this news release are based on assumptions which
include, but are not limited to: there are no material exchange
rate fluctuations between the Canadian and US dollar that affect
the Company's performance; the general state of the economy does
not worsen; the Company does not lose any key personnel; there are
no decreases in the supply of, demand for, or market values of
hardwood lumber or sheet goods that harm the Company's business;
the Company does not incur material losses related to credit
provided to its customers; the Company's products are not subjected
to negative trade outcomes; the Company is able to sustain its
level of sales and earnings margins; the Company is able to grow
its business long term and to manage its growth; the Company is
able to integrate acquired businesses; there is no new competition
in the markets in which the Company operates that lead to reduced
sales and profitability; the Company can comply with existing
regulations and will not become subject to more stringent
regulations; no material product liability claims; importation of
products manufactured with hardwood lumber or sheet goods does not
increase and replace products manufactured in North America; the Company's management
information systems upon which it is dependent are not impaired;
and, the Company's insurance is sufficient to cover losses that may
occur as a result of its operations.
The forward-looking information in this news release is subject
to risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors which
could cause results to differ from current expectations include,
but are not limited to: escalation of the COVID-19 pandemic; the
COVID-19 pandemic decreasing the willingness of customers to
purchase products from the Company, causing labour shortages for
the Company, interrupting supplies from third parties upon which
the Company relies, or resulting in governmental regulation
adversely impacting the Company's business; exchange rate
fluctuations between the Canadian and US dollar could affect the
Company's performance; the Company's results are dependent upon the
general state of the economy; the Company depends on key personnel,
the loss of which could harm its business; decreases in the supply
of, demand for, or market values of hardwood lumber or sheet goods
could harm the Company's business; the Company may incur losses
related to credit provided to the Company's customers; the
Company's products may be subject to negative trade outcomes; the
Company may not be able to sustain its current level of sales or
earnings margins; the Company may be unable to grow its business
long term or to manage any growth; the Company may be unable to
integrate acquired businesses; competition in the Company's markets
may lead to reduced sales and profitability; the Company may fail
to comply with existing regulations or become subject to more
stringent regulations; product liability claims could affect the
Company's sales, profitability and reputation; importation of
products manufactured with hardwood lumber or sheet goods may
increase, and replace products manufactured in North America; the Company is dependent upon
its management information systems; the Company's insurance may be
insufficient to cover losses that may occur as a result of the
Company's operations; the Company's credit facilities affect its
liquidity, contain restrictions on the Company's ability to borrow
funds, and impose restrictions on distributions that can be made by
certain subsidiaries of the Company; the market price of the
Company's common shares will fluctuate; and there is a possibility
of dilution of the Company's existing shareholders. More
information about the risks and uncertainties affecting Hardwoods'
business can be found in the "Risk Factors" section of its Annual
Information Form dated March 19, 2020
,which is available under the Hardwoods' profile on SEDAR at
www.sedar.com.
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.
SOURCE Hardwoods Distribution Inc.
