CanWel Building Materials Announces Second Quarter 2012 Financial Results

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES

CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX)
announced today its second quarter financial results for the three-month period
ended June 30, 2012.


For the three-month period ended June 30, 2012, revenues amounted to $207
million compared to $205 million in the same period in 2011. The increase in
revenue relates primarily to improved market conditions for construction
materials together with additional treated wood sales volumes. The additional
treated wood sales volumes were supported by the establishment of the Northwest
Wood Treaters' operations which asset acquisition closed in the first quarter of
2012. Gross margin amounted to $24.4 million, or a 2.1 percent increase versus
$23.9 million during the second quarter of 2011. Gross margin as a percentage of
revenues was 11.8 percent in the quarter, an improvement compared to the 11.7
percent achieved in the same quarter of 2011. The increase in margin percentage
is mainly due to higher prices for construction materials and ongoing cost
management. Net earnings(2) for the second quarter of 2012 doubled to $5.3
million when compared to the same period in 2011, when net earnings amounted to
$2.6 million.


EBITDA(3) for the three months ended June 30, 2012 was $9.8 million compared to
$6.3 million in the same quarter of 2011. The EBITDA in the second quarter of
2011 was impacted by the one-time costs of $776,000 related to the
re-organization of BLC. Adjusted EBITDA(4) equaled EBITDA of $9.8 million given
the Company had no one-time costs during the second quarter of 2012,
representing a 37 percent increase when compared to Adjusted EBITDA of $7.1
million during the second quarter of 2011.


"Despite the continued choppy macroeconomic environment, CanWel's financial
performance in the second quarter is a testament to the strength and quality of
our underlying business foundation," noted Amar S. Doman, Chairman and CEO of
CanWel. "I am especially pleased with our continued focus and success in growth
of higher margin products and construction materials, which represented
approximately 58 percent of our revenue mix in the second quarter. Together with
our ongoing focus on cost management, our second quarter results demonstrate
strength in gross margin and EBITDA."


Reconciliation of Net Earnings (Loss) to Earnings before Interest, Tax,
Depreciation and Amortization (EBITDA):




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                                   Three months ended      Six months ended 
                                              June 30               June 30 
(in thousands of dollars)              2012      2011        2012      2011 
                                                                            
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Net Earnings (Loss)                 $ 5,292   $ 2,637     $ 5,309   $(1,166)
Income tax expense                    1,859     1,346       1,866        20 
Cash interest expense                 1,350     1,248       2,444     2,217 
Depreciation of property, plant                                             
 and equipment                          733       479       1,418       960 
Amortization of intangible assets       250       250         500       500 
Amortization of financing costs         260       332         519       645 
Share-based compensation                 35        57          69       371 
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EBITDA                              $ 9,779   $ 6,349     $12,125   $ 3,547 
                                                                            
Integration costs                         -       776           -     2,790 
                                                                            
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Adjusted EBITDA                     $ 9,779   $ 7,125     $12,125   $ 6,337 
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The Company also announced approval from the TSX for an Automatic Share Purchase
Plan ("Plan")(5) commencing on August 8, 2012, which will enable the Company to
continue purchasing shares under its Normal Course Issuer Bid ("NCIB") during
its company-imposed blackout periods. The Plan will co-terminate with the expiry
of the NCIB at the close of business on November 20, 2012, and, subject to
pre-determined pricing and volume restrictions imposed by the Company, to the
rules and policies of the TSX and to the specific terms of the NCIB, all trades
under the Plan are entirely at the broker's discretion. The NCIB was approved by
the TSX to commence on November 21, 2011 and enables CanWel to purchase and
cancel up to 3,475,000 of its shares. As at August 1, 2012, the Company had
purchased and cancelled 2,180,500 shares under the NCIB.


About CanWel Building Materials 

CanWel Building Materials trades on the Toronto Stock Exchange under the symbol
CWX and is one of Canada's largest national distributors in the building
materials and related products sector, operating distribution centres coast to
coast in all major cities and strategic locations across Canada. CanWel
distributes a wide range of building materials, lumber, and renovation products.
Further information can be found in the disclosure documents filed by CanWel
with the securities regulatory authorities, available at www.sedar.com.  


Certain statements in this press release may constitute "forward-looking"
statements. When used in this press release, such statements use words,
including but not limited to, "may", "will", "expect", "believe", "plan",
"intend", "anticipate", "future" and other similar terminology. These
forward-looking statements reflect the current expectations of CanWel's
management regarding future events and operating performance, but involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of CanWel, including the cash flow from
operations, dividends or EBITDA(3) generated or paid by CanWel, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Actual
events could differ materially from those projected herein and depend on a
number of factors. These factors include (i) the risk that the integration of
the acquisition of the assets of Northwest Wood Preservers ("NWP") completed in
quarter 1, 2012 or Broadleaf Logistics Company ("BLC") completed on February 1,
2010 (collectively the "Acquisition") may result in significant challenges, and
management of CanWel may be unable to accomplish the integration of the
Acquisition smoothly or successfully or without spending significant amounts of
time, money or other resources thereon; any inability of management to
successfully integrate the operations of the combined business, including, but
not limited to, information technology and financial reporting systems, any of
which could have a material adverse effect on the business, financial condition
and results of operations of CanWel; (ii) the risk that revenues, profits and
margins of the Company may not remain consistent with historical levels, (iii)
the risk that competing firms which manufacture or distribute competitive
product lines will aggressively defend or seek market share, or that existing
customers or suppliers of NWP or BLC (some of whom are competitors of CanWel)
will cease doing business with the Company, in each case reducing, eliminating
or reversing any potential positive economic impact on CanWel of the
Acquisition; (iv) the risk that any increased sales, margin, profit or
distributable cash resulting from the Acquisition may not be fully realized,
realized at all or may take longer to realize than expected; (v) the risk of
disruption from the integration of the Acquisition making it more difficult to
maintain relationships with customers, employees or suppliers. 

Factors also include, but are not limited to, dependence on market and economic
conditions, sales and margin risk, competition, information system risks,
availability of supply of products, risks associated with the introduction of
new product lines, product design risk, environmental risks, volatility of
commodity prices, inventory risks, customer and vendor risks, acquisition and
integration risks, availability of credit, credit risks, litigation risks and
interest rate risks. A further description of these and other risks which could
cause results to differ materially from those described in these forward-looking
statements can be found in the periodic and other reports filed by CanWel with
Canadian securities commissions and available on SEDAR (http://www.sedar.com).
In addition, a number of material factors or assumptions were utilized or
applied in making the forward-looking statements, and may include, but are not
limited to, assumptions regarding the performance of the Canadian economy,
relatively stable interest rates, volatility of commodity prices, more limited
availability of access to equity and debt capital markets to fund, at acceptable
costs, the Company's future growth plans, the implementation and success of the
integration of the Acquisition, and to enable the Company to refinance its debts
as they mature, the Canadian housing and building materials market; the amount
of the Company's cash flow from operations; tax laws; and the extent of the
Company's future acquisitions and capital spending requirements or planning as
well as the general level of economic activity, in Canada, and abroad,
discretionary spending and unemployment levels.


These forward-looking statements speak only as of the date of this press
release. CanWel does not undertake, and specifically disclaims, any obligation
to update or revise any forward looking information, whether as a result of new
information, future developments or otherwise, except as required by applicable
law. 


(1) Please refer to our Q2 2012 MD&A and Financial Statements for further
information. Our 2012 filings are reported under International Financial
Reporting Standards ("IFRS").


(2) Before accounting for "Other Comprehensive Income"; please refer to our Q2
2012 Financial Statements for further information.


(3) In the discussion, reference is made to EBITDA, which represents earnings
from continuing operations before interest, provision for income taxes, gain or
loss on sale of fixed assets, depreciation and amortization, goodwill impairment
loss and stock-based compensation. This is not a generally accepted earnings
measure under IFRS and does not have a standardized meaning under IFRS, the
measure as calculated by the Company may not be comparable to similarly-titled
measures reported by other companies. EBITDA is presented as we believe it is a
useful indicator of relative operating performance. EBITDA should not be
considered by an investor as an alternative to net income or cash flows as
determined in accordance with IFRS.


(4) In the discussion, reference is made to Adjusted EBITDA, which is EBITDA as
defined in (3) above, before certain one time or unusual items. This is a
non-IFRS measure, and does not have a standardized meaning under IFRS, the
measure as calculated by the Company may not comparable to similarly-titled
measures reported by other companies. Adjusted EBITDA is presented as we believe
it is a useful indicator of the Company's ability to meet debt service and
capital expenditure requirements from its regular business, before non-recurring
items. Adjusted EBITDA should not be considered by an investor as an alternative
to net income or cash flows as determined in accordance with IFRS.


(5) Please also refer to the forward looking statement information in our
November 17, 2011 news release for additional forward looking statement
information and cautions pertaining to the NCIB, which are hereby incorporated
by reference, and as may also be applicable to the Plan or NCIB as the case may
be. Although CanWel intends to purchase common shares for cancellation under its
NCIB and / or the Plan, there can be no assurances that any such purchases will
be completed.