Calgary, Alberta--(Newsfile Corp. - May 7, 2020) - Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three-months ended March 31, 2020.

Overview

The Fund is an unincorporated open end mutual fund trust conducting its business through two operating segments, Foremost Energy Equipment (FEE) and Foremost Mobile Equipment (FME). 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

The Foremost Income Fund delivered positive EBIDTA and increased revenues compared to the previous quarter and Q1 2019. This was despite significant headwinds in the world economy and an accelerating slowdown in Western Canadian energy markets.

Foremost Mobile Equipment (FME) had a good quarter, with improvements over Q1 2019 resulting from increased sales in vacuum trucks and dual rotary drills. Strong sales in the United States construction market and sales into the strengthening mining sectors contributed to revenue growth and increased gross margins for the FME product lines.

Foremost Energy Equipment (FEE) had a soft quarter with weak commodity pricing, oil production cuts and an increasingly negative outlook resulting in the cancelling or slowing down of major customer projects. Production tanks and pressure vessel sales provided positive gross margin improvement, while ULC fuel tanks gained sales volume due to increased fuel storage demand. The agriculture product line expanded its market presence with more signed dealer agreements and ongoing preparation for the summer and harvest season of 2020.

The overview: key measurements

Revenue was $37.7 million, an increase of 3.2% from the previous quarter of $36.5 million, and a 3% increase over Q1 2019

Gross margin increased 47.6% to $5.1 million, up from $3.5 million in Q4 2019, and a 36.5% increase over Q1 2019

SG&A expenses remained consistent at 9% of revenue or $3.4 million, compared to $3.2 million in Q4 2019, remaining the
same compared to Q1 2019

Adjusted EBIDTA is $1.8 million, an increase from the Q4 2019 value of $0.5 million, and an increase of 5.3% over Q1 2019

2020 outlook
Markets have seen severe instability caused by the latest headlines around the COVID-19 novel coronavirus. Foremost continues to monitor the latest developments in assessing the impact of the outbreak as it spreads across the globe, as well as the unprecedented and abrupt hit to global economic activity. There is uncertainty about the spread of COVID-19 and the impact it 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
Check out Foremost's new Agriculture product lines
http://foremost.ca/agriculture/

Q1 2020 Highlights

• Revenue increased by $1.1 million when comparing Q1 2020 to Q1 2019. The FME segment recognized $3.9 million more revenue in 2020 over 2019, which was offset by the $2.8 million decrease in revenue recognized by the FEE segment. More information is in the Segmented Results of Operations section of the MD&A.
• Gross profit for Q1 2020 was $5.1 million and 14% of revenue. More information is in the Segmented Results of Operations section of the MD&A.
• Administration costs increased slightly to $3.4 million or 9% of revenue. The majority of spend in this category is related to personnel costs.
• Adjusted EBITDA (defined on page 12 of the MD&A) was $1.8 million for Q1 2020 compared to $0.4 million in Q1 2019.
• The Board of Trustees reviews the stated redemption price quarterly; the stated redemption price was $5.95 at March 31, 2020. Effective May 7, 2020, the redemption price remained at $5.95.

On behalf of the Trustees
Foremost Income Fund

Bevan May, Trustee

FORWARD-LOOKING STATEMENT
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 include statements the Fund's intention to proceed with a Unitholders' meeting and information regarding the Trustees' views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund's expectations regarding the future availability of cash to meet redemption requests and the Trustee's expectations for redemption prices in December 2011 and January 2012. 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: investorrelations@foremost.ca - Website: www.foremost.ca

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/55547