Taiga Swings to a Profit in Fourth Quarter but Cancels Dividend Payment

Taiga Swings to a Profit in Fourth Quarter but Cancels Dividend Payment

By: Tomas Ronolski - AllPennyStocks.com News

Friday, June 21, 2013

Homebuilders and suppliers in North America are taking a beating this week as part of a widespread market sell-off after the U.S. Federal Reserve said it plans to taper its policy of buying Treasuries and mortgage-backed securities. XHB, the SPDR S&P Homebuilders Index ETF has plunged about 8 percent this week, halfway through Friday’s trading session. The housing market in Canada has been very strong in recent years and housing in the U.S. turned the corner in 2012 to provide a positive influence on the economy, but investors are afraid that taking away monetary easing and eventually raising interest rates will hurt the housing markets in North America in the future.


Shares of Burnaby, British Columbia-based Taiga Building Products Ltd. (TSX:TBL) have fallen this week as well; extending a slide that began in March that has seen the stock price drop 40 percent. Thursday evening, the building products distributor reported a strong rise in profits for the fourth quarter and fiscal year ended March 31 as higher commodity prices and strong demand from the United States helped lift sales.

Taiga distributes building products, such as dimensional lumber, panel products, treated wood, insulation, roofing materials and more, through 15 Canadian centers and two in California.

For the fourth quarter, Taiga reported revenue of $259.6 million, up 14.4 percent from $227.0 million in the year prior quarter. Net profit for the quarter was $365,000, or 1 cent per share, versus a net loss of $1.49 million, or 5 cents per share, in last year’s quarter.

For the full year, revenue climbed to $1.13 billion, compared to $971.6 million in the last year. Net profits for the year totaled $10.4 million, or 32 cents per share, a 180-percent increase from $3.7 million, or 11 cents per share, a year earlier.

Gross margin percentage, however, dropped for both the quarter and year, registering 8.4 percent (compared to 9.9%) and 9.1 percent (compared to 9.9%), respectively. “Lower margin commodity products made up a larger percentage of the product mix in Q4 2013, compared with the same quarter of the prior year,” the company said in a statement.

Despite rising profits, Taiga decided to cancel its first installment payment of its semi-annual dividend with respect to fiscal 2013 earnings, citing a need to support higher working capital levels due to higher commodity prices. Regarding the second installment, the company said it will make an announcement in January 2014.

Shares of TBL have fallen in six of the past seven weeks, including being down more than 9 percent this week with shares at 70 cents in Friday action. This is the lowest dollar value of a share since the third week of August 2012. At 70 cents, the stock is trading at an incredibly low 2.2-times earnings.

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