/EINPresswire.com/ -- CALGARY, ALBERTA -- (Marketwired) -- 08/11/16 -- Foremost Income Fund ("Foremost" or the "Fund") announces the financial results for the three and six months ended June 30, 2016.

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's overall business is focused on the oil and gas industry and includes activity from six manufacturing sites throughout Alberta. FME manufactures off-highway large wheeled and tracked vehicles, hydrovac and vacuum trucks, equipment for custom drilling, construction, water wells, and mining sectors. FME has three manufacturing facilities located in Alberta.

MESSAGE TO UNITHOLDERS

Foremost Income Fund continues to soldier through a challenging 2016. Operating in tight Albertan and North American markets for capital equipment sales, Foremost is still maintaining fair financial performance and remains cash positive. For the second quarter of 2016, Foremost recorded a $0.3 million net income loss on $30.6 million of revenue and EBITDA was $0.6 million. Foremost's biggest strength continues to be its Balance Sheet, with a cash balance of $29.8 million.

The focus on cost-cutting and efficiency continues in Q2. Heavy cost-cutting activities over the past 18 months have allowed Foremost to bid on and deliver products at lower prices while still generating margins. An important cost-control step was announced: a tiered cut in wages across the organization (except for one union contract still under negotiation). Effective in Q3 of 2016, this cut to direct and indirect wages allows Foremost to respond to the severe downward pricing pressure that exists across all product lines. The sacrifice Foremost employees are making reflects the challenges facing the company in these tough times.

Product line revenue continues to underperform compared to historical averages, and margins remain poor. As a standout, field- erected storage tanks for oil and process fluids are delivering good operating margins due to operational efficiencies. Product lines with exposure to the US market, including vacuum trucks and mining tooling products, remain muted but steady.

Foremost continues to analyze and prepare for a smaller resource industry in North America over the next few years.

Kevin Johnson, President

Q2 2016 Highlights:

--  Revenue decreased by $17.7 million, or 37%, quarter over quarter. This
    decrease is a result of continued downward pressure on sale prices and
    volumes as a result of the severe economic downturn in the energy
    sector. Field tank revenue increased compared to 2015, as the current
    projects were near completion by the end of the second quarter; all
    other product lines had lower revenue. You can find more information in
    the Segmented Results of Operations section of the MD&A.
--  Gross profit increased to 13% in 2016, compared with 7% in the second
    quarter of 2015. Gross profit includes valuation allowances on
    inventory, which amounted to $0.4 million for 2016 and $4.9 million for
    2015.
--  Administration costs decreased $0.8 million, from $4.3 million in the
    second quarter of 2015 to $3.5 million in 2016. This is a result of cost
    savings initiatives and a reduction of personnel costs as headcount
    continues to drop.
--  During the three months ended June 30, 2016, the Fund recognized a $0.1
    million foreign exchange gain compared to a $0.1 million loss for the
    same period in 2015. The foreign exchange gain or loss reflects changes
    in the value of U.S. dollar- denominated net monetary assets and
    liabilities. The Fund's monetary assets consist of cash and accounts
    receivable, offset by U.S. dollar accounts payable.

SUMMARY OF QUARTERLY INFORMATION
(000's, except per Trust Unit amount)
2016                             Q1        Q2        Q3        Q4     Total
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Revenue                    $ 35,847  $ 30,621                      $ 66,468

Gross profit ($)           $  3,657  $  3,965                      $  7,622
Gross profit (%)                 10%       13%                           11%

Admin. expenses ($)        $  3,198  $  3,476                      $  6,674
Admin. expenses (% of
 total revenue)                   9%       11%                           10%
Exchange rate (loss) gain  $   (454) $    117                      $   (337)
EBITDA                     $     16  $    606                      $    622
Loss from operations       $   (659) $   (604)                     $ (1,263)
Comprehensive loss         $ (1,146) $   (259)                     $ (1,405)

Trust units redeemed          5,000     4,652                         9,652
Redemptions                $     29  $     29                      $     58
Basic and diluted loss per
 trust unit                $  (0.07) $  (0.01)                     $  (0.08)

2015                             Q1        Q2        Q3        Q4     Total
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Revenue                    $ 56,672  $ 48,358  $ 43,538  $ 43,639  $192,207

Gross profit ($)           $  8,021  $  3,342  $  7,290  $  9,549  $ 28,202
Gross profit (%)                 14%        7%       17%       22%       15%

Admin. expenses ($)        $  4,428  $  4,310  $  3,916  $  4,062  $ 16,716
Admin. expenses (% of
 total revenue)                   8%        9%        9%        9%        9%
Exchange rate gain/(loss)  $  1,254  $   (168) $    289  $      4  $  1,379
                                            $
EBITDA                     $  4,769    (1,126) $  3,696  $  5,470  $ 12,809
Income/(loss) from                          $
 operations                $  2,362    (2,177) $  2,136  $  4,275  $  6,596
Comprehensive                               $
 income/(loss)             $  2,775    (1,874) $  2,567  $  6,436  $  9,904

Trust units redeemed         77,350     1,379       267         -    78,996
Redemptions                $    484  $      8  $      1  $      -  $    493
Basic and diluted earnings
 per trust unit            $   0.15  $  (0.10)     0.14      0.34  $   0.53
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TRUST UNIT REDEMPTIONS AND DISTRIBUTIONS

The Fund redeemed 9,652 Trust Units during the six months ended June 30, 2016, through its normal redemption program resulting in promissory notes payable of $58,395. During 2015 the Fund redeemed 78,729 Trust Units for cash payments of $400,000 and promissory notes payable equal to $91,229.

The Trustees have determined that, as of August 11, 2016, the Fund will redeem tendered Trust Units at tangible book value of $6.05 per unit.

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.

Contacts:
For further Investor Relations information please contact:
Foremost Income Fund
Jackie Schenn, CA
(403) 295-5800 or toll free 1-800-661-9190 (Canada/US)
(403) 295-5832 (FAX)
investorrelations@foremost.ca
www.foremost.ca

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