Emco Limited Reports Significant Improvement in Quarterly Earnings.

LONDON, Ontario--(BUSINESS WIRE)--Oct. 23, 1996--(TSE EML., NASDAQ EMLTF. ) Emco Limited today reported a significant improvement in net earnings and increased sales for the third quarter ended September 30, 1996.

Third quarter net earnings rose to $11.6 million ($0.50 per share) compared with a net loss of $9.0 million ($0.39 per share), in the prior year. Third quarter 1995 included a $10 million provision for losses from discontinued operations. Sales increased approximately 9 percent to $328.5 million. Total manufacturing sales jumped 23 percent due to a significant increase in the domestic demand for roofing products and escalating export sales into U.S. and international markets. The Distribution Group enjoyed a 2.3 percent increase in sales in the quarter over the prior year. Operating earnings more than doubled due to the increase in the overall sales mix of manufactured goods and improved manufacturing efficiencies. Third quarter selling and administrative expenses were unchanged in dollar terms but as a percentage of sales declined 1.3 percent. Emco is focussed on continuously improving underlying business processes to further improve profitability.

Lower borrowing rates and levels are beginning to have a significant impact on interest expense, which was down about $1.4 million in the quarter to $4.8 million. Cash generated by operations was $21 million in the quarter compared with $1 million in the same period in 1995. The Company also completed the divestiture of the Walker Steel and Waltec Plastics divisions for combined proceeds of about $25 million resulting in a gain of $7.2 million. Total debt is now $58.9 million lower than at the same time last year.

Sales for the nine months ended September 30, 1996 increased 3.5 percent to $856.7 million. Manufacturing sales were up 12.5 percent. Despite increases in sales in the Distribution Group in the third quarter, they were down slightly from last year for the period. Net earnings were $14.2 million ($0.61 per share) compared with a net loss of $12.1 million ($0.52 per share). Operating earnings improved substantially due to higher margins and lower expenses compared with the prior period. Interest expense was down $3 million to $15.7 million. In addition, $3.7 million of interest expense was included in losses from discontinued operations in the first nine months of 1995. Pre-tax earnings were $26.5 million in the period versus $0.8 million in 1995.

Frank M. Hennessey, Chairman and Chief Executive Officer said, "I am pleased with the earnings improvement and with the significant debt reduction achieved, which is consistent with our intent to strengthen Emco's financial position. The economic environment is expected to become more favourable for our chosen market segments. The improving trend in our numbers is expected to continue".

Emco Limited is a leading Canadian distributor and manufacturer of building materials for the home improvement and building construction markets. Emco also produces custom components, including brass and aluminum forgings. -0-

EMCO LIMITED
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)


                   Three months ended       Nine months ended
                     September 30             September 30
                    1996       1995         1996      1995
                   ---------    --------   ---------   -------
Sales           $  328,473   $ 302,228   $ 856,669   $ 827,882
                   ---------    --------   ---------   -------
Cost of sales      251,811     237,414     653,864     639,421
Selling and
  administrative
  expenses          53,874      53,516     156,156     158,288
Depreciation and
  amortization       3,744       3,595      11,041      10,475
                   ---------    --------   ---------   -------
                   309,429     294,525     821,061     808,184
                   ---------    --------   ---------   -------


Operating earnings   19,044      7,703       35,608     19,698

Interest              4,827      6,245       15,718     18,742
Amortization of debt
  financing costs       207        146          590        568
Loss (gain) on
  disposals         (7,249)          5       (7,242)      (415)
                    ---------    --------   ---------   -------
                    (2,215)      6,396        9,066     18,895
                    ---------    --------   ---------   -------

Earnings before
  taxes            21,259        1,307      26,542         803

Taxes - current       210          337         540         603
      - deferred    9,468            -      11,760           -
                    ---------    --------   ---------   -------
Earnings from
  continuing
  operations       11,581         970       14,242        200

Loss from
  discontinued
  operations            -     (10,000)           -     (12,350)
                    ---------    --------   ---------   -------
Net earnings
  (loss)         $ 11,581    $ (9,030)      $ 14,242  $(12,150)
                    ---------    --------   ---------   -------
                    ---------    --------   ---------   -------


Earnings (loss)
  per share:

 Basic
  - continuing
  operations     $   0.50  $     0.04       $   0.61    $ 0.01
  - discontinued
  operations            -       (0.43)             -     (0.53)
  - net earnings
  (loss)             0.50       (0.39)          0.61     (0.52)

 Fully diluted       0.45       (0.39)          0.60     (0.52)

Average shares
  outstanding
  (000)            23,310      23,223         23,277    23,199


"CDN dollars in thousands, except for earnings (loss) per share"

CONTACT: Emco Limited

Richard B. Grogan, 519/ 645-3926