Saskatchewan Wheat Pool Inc. today announced its third quarter financial results for the period ending April 30, 2006. The Pool’s Grain Handling and Marketing segment had a strong quarter reflecting increased grain handling volumes, enhanced port terminal efficiencies and improved margins.

President and CEO Mayo Schmidt said, “The Pool’s third quarter results illustrate our ability to deliver strong performance through the grain pipeline especially when solid industry fundamentals exist. We increased shipments, improved margins, and maximized our export and logistics expertise; all key business drivers in this highly competitive industry.”

HIGHLIGHTS
 
· The Pool’s earnings from continuing operations for the quarter (prior to one-time items and the effect of the tax rate change on future taxes) rebounded to $0.8 million versus a loss of $2.1 million in the third quarter last year.

· The Pool’s grain and oilseed shipments for the quarter were 2.0 million tonnes, up approximately 23% over the third quarter of 2005, bringing the nine-month total to 5.9 million tonnes. This compares to shipments of 4.9
million tonnes a year earlier.

· On a year-to-date basis, the Pool outperformed the industry with its non-Board shipments rising 48% versus the industry, which was up 22%. The Pool’s CWB shipments were on par with the industry, up 3% for the first nine-months.

· The Pool’s Grain Handling and Marketing segment realized a 9% increase in its gross margin per tonne on a year-to-date basis. Gross margins for the first nine months of fiscal 2006 (excluding one-time items) were $19.36 versus $17.75 for the same period last year.

· The Vancouver port terminal, which is managed through a joint venture operation with James Richardson International Ltd. (JRI), continues to perform extremely well. The joint venture has created an additional 1.0 million tonnes of export capacity annually providing substantial benefits to the entire industry and to this important strategic Canadian port.

· EBITDA contributions from the Grain Handling and Marketing segment were $19.8 million, up 89% from $10.4 million earned in the previous year’s third quarter. On a year-to-date basis, EBITDA was up 86% to $37.2 million from $20.0 million.

· During the third quarter, the Pool divested of its 50% joint venture interest in a grain and agri-product facility at Lloydminster, Saskatchewan. The transaction closed on February 22, 2006, and a pre-tax gain on sale of $2.4
million was recorded, with $2.0 million in the Grain Handling and Marketing segment and the balance in the Agri-products segment.

· The Pool’s wholly owned Can-Oat Milling had a solid performance resulting in a 19% increase in EBITDA on a year-to-date basis.

· Can-Oat Milling’s expansion project announced in December 2005 is on schedule. The oat miller has awarded tenders and construction is underway to expand the capacity of its Portage la Prairie plant by 50,000 tonnes. The
project, expected to be operational in the spring of 2007, will allow Can-Oat to meet the growing needs of its North American customer base.

· During the quarter, the company successfully raised $50.25 million in gross proceeds ($47.9 million in net proceeds) through an equity offering and $100 million in gross proceeds ($97.1 million in net proceeds) through an 8% Senior Unsecured Notes offering. This cash, together with working capital was used to redeem $150 million of 12% Senior Subordinated Notes on May 5, 2006, over two years in advance of the original maturity date. As a result, the Pool’s long-term debt has declined by $50 million and its future annual interest costs cut by approximately $10 million. Subsequent to the quarter-end, an over-allotment option related to the equity offering was exercised by the syndicate of underwriters for $5.3 million in gross proceeds ($4.8 million in net proceeds).

· The Pool’s debt-to-equity ratio improved to 26:74 from 60:40, last year. This improvement is based on the assumption that the $150 million of Senior Subordinated Notes were repaid at April 30, 2006, rather than May 5. Likewise, the long-term debt-to-equity ratio improved to 21:79 from 56:44, last year.

· On May 19, 2006, the Pool issued 1,046,627 common shares pursuant to a private placement with Tokyo-based Mitsui & Co., Ltd at a five-day volume weighted average price of $7.6436 for $8.0 million. In addition, the Pool
entered into a multi-year supply agreement and will become one of Mitsui’s primary suppliers of oilseeds into Japan, a premier international canola market.

Looking forward, President and CEO Schmidt commented, “The Pool’s new platform for growth is based on the strength of our balance sheet and our ability to optimize our strategic footprint across Western Canada. We have seen some positive recognition federally to important agricultural issues. We certainly look forward to opportunities that promote sustainability, investment and long-term economic prosperity for all industry stakeholders.”

Full report: www.swp.com