Foremost Income Fund Reports Q1 2022 Results

May 19, 2022 4:42 PM EDT | Source: Foremost Income Fund

Calgary, Alberta--(Newsfile Corp. - May 19, 2022) - Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the period ended March 31, 2022.


The Fund is an unincorporated open end mutual fund trust conducting its business through three operating segments, Foremost Energy Equipment (FEE), Foremost Mobile Equipment (FME), and Corporate. FEE, with its focus on the oil and gas industry in Western Canada, consists of three active manufacturing and service locations across Alberta. The locations manufacture oil-treating systems, shop tanks, field tanks, agriculture equipment, oil and gas process-treating equipment, and gas separators. FME manufactures and services hydrovac and vacuum trucks and equipment; off-highway, large-wheeled and tracked vehicles; and equipment for the custom drilling, construction, water well, and mining sectors. FME focuses on custom-built vehicles for its global clientele whom it serves through two manufacturing and service locations across Alberta.

Message to Unitholders

Foremost improved revenue and EBIDTA compared to Q1 2021, but these metrics were weaker compared to Q4 2021. While sales volume and backlogs for all product lines were strong, challenges in operations execution, primarily due to supply chain shortages, caused a significant drag on revenues and gross margins.

FME produced revenues of $23.3 million versus $23.8 million, and a gross margin of $3.9 million versus $4.4 million in Q1 2021. Demand for Hydrovacs remained strong in Q1 2022 but significant challenges in the supply of heavy truck chassis reduced production volumes and negatively affected gross margins. Revenue from Drills and Parts sales exceeded Q1 2021 results and all FME product lines have strong backlogs into the next few quarters.

FEE produced revenues of $12.1 million versus $5.3 million, and a gross margin of $0.4 million versus negative $1.0 million in Q1 2021. Sales of Shop Tanks and Ag Bins were the main contributors in the first quarter. While higher commodity prices helped drive increased sales activity in the Energy product lines, gross margin growth remained subdued.

Foremost is facing broad supply chain challenges related to factors outside its control including COVID shutdowns and the Ukraine War. Management, operations and supply chain teams are engaged in proactive initiatives to reduce the impact of these supply issues. Rising input costs and a tight labour market are also expected to persist in 2022, tempering the forecasted outlook for the year.

The safety of everyone who works at Foremost remains the highest priority for management. Foremost remains fully compliant with all provincial and municipal mandates and laws related to workplace and public safety instituted due to the COVID-19 pandemic.

The overview: key measurements

Revenue is $35.3 million, a decrease of 7% from the Q4 2021 revenue of $38.0 million.
Gross margin
is $4.4 million, which represents 12% of revenue, down from the previous quarter of $4.8 million and 13%.
SG&A expenses
are 10% of revenue, consistent with last year. Total spend in Q1 2022 is $3.7 million compared to $3.4 million in Q4 2021.
is $1.8 million, a decrease from the last quarter of $2.4 million.

2022 outlook

Markets remain unpredictable, as the response to the novel COVID-19 virus and the global effects from the war in Ukraine continue to evolve. Foremost is actively monitoring the latest developments and assessing the effect these situations are having on global economic activity. Significant uncertainty remains around the spread of the COVID-19 virus and the fallout of the War and the impact they will have on the Fund's operations, the demand for the Fund's products, global supply chains, and economic activity in general.

Kevin Johnson, President

Q1 2022 VS Q1 2021 Highlights

  • Revenue for the first three months of 2022 was $35.3 million, compared to $29.0 million for the same period in 2021. More information is in the Segmented Results of Operations section of the MD&A.

  • Gross profit for the first quarter of 2022 was $4.4 million and 12% of revenue, compared to $3.4 million and 12% of revenue in Q1 2021. More information is in the Segmented Results of Operations section of the MD&A.

  • Administration costs increased to $3.7 million and 10% of revenue in 2022, up from $3.0 million recognized in the first quarter of 2021. The majority of spend in this category is related to personnel costs.

  • Adjusted EBITDA (defined on page 13 of the MD&A) was $1.8 million for Q1 2022 compared to $1.4 million in Q1 2021.

  • The stated redemption price at May 19, 2022, has been increased to $6.40.


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 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.

For further Investor Relations information please contact:

Jackie Schenn, CA
Tel: (403) 295-5800 or toll free 1-800-661-9190 (Canada/US) - Fax: (403) 295-5832 E-mail: - Website:

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