CanWel Building Materials Announces Record Second Quarter 2010 Financial Results

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CanWel Building Materials Group Ltd. ("CanWel" or "the Company") (TSX:CWX) announced today its second quarter fiscal 2010 financial results for the period ended June 30, 2010.

During the three-month period ended June 30, 2010(1) CanWel reported sales of $404 million compared to $185 million for the comparable period in 2009. For the quarter, the Company reported gross margin of $43.7 million or 10.8 percent of sales versus $25.4 million or 13.7 percent of sales in 2009. These results represent the first full quarter of operations from the Broadleaf Logistics Company ("BLC") acquisition, and increased pricing and volume for construction materials experienced compared to the second quarter of 2009. The Company's sales mix was 48% construction materials for the quarter, and the gross margin percentage reflects this change compared to the second quarter of 2009. Net income amounted to $10.0 million compared to net income of $7.4 million during the same period in 2009.

For the quarter, EBITDA(2) increased by 71 percent to a record $17.4 million compared to $10.2 million for the comparable period last year. The second quarter results represent record sales, EBITDA and net income levels in the Company's operating history.

"I am very proud and pleased to report record revenues and earnings generated by the combination of CanWel and Broadleaf Logistics during our first full quarter as one company," noted Amar S. Doman, Chairman and CEO of the Company. "While our record sales and earnings in the second quarter are due to strong operational efficiencies, higher pricing on certain building materials, and robust demand in most regions of the country, we continue to work on our integration efforts which are expected to further strengthen the foundation of our earnings profile."

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

---------------------------------------------------- ---------------------- 
                                  Three months ended      Six months ended  
                                        June 30                June 30      
(in thousands of dollars)             2010      2009         2010      2009 
                                                                            
------------------------------------------  -------- ------------  -------- 
------------------------------------------  -------- ------------  -------- 
Net Earnings                      $ 10,026  $  7,416     $ 14,203  $  6,968 
Income tax provision (recovery)      4,118       193        5.309    (1,746)
Cash interest expense                1,551       709        2,813     1,504 
Depreciation of property plant                                              
 and equipment                         812     1,323        1,713     2,641 
Amortization of intangible and                                              
 other assets                          501       395          865       793 
Amortization of deferred gain         (18)       (19)        (36)       (37)
Amortization of financing costs        293        64          468       128 
Amortization of promissory notes         -        32           11        64 
Stock-based compensation               152       106          199       277 
                                                                            
------------------------------------------  -------- ------------  -------- 
EBITDA                            $ 17,435  $ 10,219     $ 25,545  $ 10,592 
                                                                            
Acquisition and conversion costs        91         -          595         - 
Realized foreign exchange gain           -         -       (1,102)        - 
                                                                            
------------------------------------------  -------- ------------  -------- 
Adjusted EBITDA before one time                                             
 items                            $ 17,526  $ 10,219     $ 25,048  $ 10,592 

About CanWel Building Materials

CanWel Building Materials trades on the Toronto Stock Exchange under the symbol CWX and is Canada's largest national distributor in the building materials and related products sector, operating distribution centres coast to coast in all major cities and strategic locations across Canada. CanWel Building Materials distributes a wide range of hardware, building materials, lumber, and renovation products. Further information can be found in the disclosure documents filed by CanWel Building Materials (and its predecessor, CanWel Building Materials Income Fund) 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 free cash flow(2), dividends or EBITDA(2) generated 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 would include (i) the risk that the integration of the acquisition of Broadleaf Logistics Company completed on February 1, 2010 (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 Broadleaf Logistics 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 of Broadleaf Logistics Company (some of whom are competitors of CanWel) will cease doing business with the Broadleaf Logistics Company or CanWel, 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 and interest rate risks. In addition, there are numerous risks associated with an investment in units/shares, as well as other risks and factors, which are also further described in the "Risk Factors" section of our annual information form dated March 30, 2010, our management information circulars dated December 17, 2009 and March 31, 2010, and our other public filings on SEDAR. Additional risks and uncertainties affecting CanWel, which could cause results to differ materially from those described in these forward-looking statements, include, among others: increased debt and interest costs, general economic and business conditions, pension funding risk, product selling prices, product performance, design and liability risk, software and software design risk, information systems risk, interest rate changes, operating costs, legislative changes, accounting pronouncements and competitive conditions. A further description of these and other factors can be found in the periodic and other reports filed by CanWel with Canadian securities commissions and available on SEDAR (http://www.sedar.com). 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 2010 MD&A for further information.

(2) Reference is made above to EBITDA. We define EBITDA as earnings before interest expense, provision for income taxes, gain or loss on sale of fixed assets, depreciation and amortization, goodwill impairment and stock-based compensation expense. We also consider free cash flow in our financial planning, which we define as operating earnings before changes in non-cash working capital and after maintenance of business capital expenditure and contributions to any reserves the Board of Directors of the Company deem to be reasonable and necessary for the operations of the Company. Please refer to our Q2 2010 MD&A for further information.

EBITDA is a measure used by management of CanWel to evaluate financial performance. EBITDA is not a measure of earnings or financial performance recognized by Canadian generally accepted accounting principles (''GAAP'') and does not have standardized meanings prescribed by GAAP. Items excluded from EBITDA are significant to understanding and assessing financial performance. EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operations or other financial statement data presented in the consolidated financial statements of the Company, as indicators of financial performance or liquidity under GAAP. Because EBITDA is not a measure determined in accordance with GAAP, as presented, investors are cautioned that EBITDA may not be comparable to similarly-titled measures presented by other issuers.

(3) Basic and Diluted weighted average number of shares outstanding used for Q2 2010 per share calculations were 60,665,538, and 60,815,538, respectively.

am@spinnakercmi.com