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Lassonde Industries Inc. announces its Q2 2018 results

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Transmitted by PR Newswire for Journalists on August 10, 2018 06:29 PM CEST
         
 

Lassonde Industries Inc. announces its Q2 2018 results

 
 

ROUGEMONT, QC, Aug. 10, 2018 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) (“Lassonde”) posted sales of $390.9 million in the second quarter of 2018, of which $12.4 million came from the recently acquired Old Orchard Brands, LLC (“OOB”). Excluding OOB’s sales and a $9.5 million unfavourable foreign exchange impact, adjusted sales were up 1.2% year over year. Second-quarter profit attributable to the Company’s shareholders totalled $18.1 million. Excluding a $1.2 million impact from the OOB acquisition and an after-tax $0.6 million gain on capital assets recognized in 2017, the 2018 second-quarter profit attributable to the Company’s shareholders was up $0.3 million year over year.

 

 

                           






































Financial highlights
(in thousands of dollars)

Second quarters
ended


June 30,
2018

July 1,
2017

Sales

$

390,854

$

383,335

Operating profit


28,042


33,437

Profit before income taxes


24,754


30,417

Profit attributable to the Company’s shareholders


18,087


19,606

Basic and diluted earnings per share (in $)

$

2.59

$

2.81


 


Note: These are financial highlights only. Management’s Discussion and Analysis, the unaudited interim condensed consolidated financial statements and notes thereto for the quarter ended June 30, 2018 are available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.


“Our second-quarter sales met expectations while operating profit was affected by inflationary pressures on the input and transportation costs of our U.S. operations. The Company responded with certain price adjustments but their effectiveness has been delayed as advance notice is normally given to customers. We are also facing a difficult competitive environment in the United States. I would like to thank all the employees and builders of years past, who knew how to hold fast to their values, and those of today, who ensure those values live on. If the vegetable canning business founded in Rougemont a hundred years ago by my grandparents has become a North American leader, it’s because we have been able to look to the future while staying true to our roots,” said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.


Financial results


On May 31, 2018, the Company completed the acquisition of OOB for a total cash consideration of US$148.9 million, which was paid at the close of the transaction. This amount includes US$2.9 million in preliminary working capital adjustments and is subject to potential additional working capital and other adjustments. A contingent consideration of up to US$10.0 million may be payable over the next two years subject to specified financial milestones based on adjusted EBITDA. In addition, Lassonde will finalize the purchase of the plant and land for US$4.0 million subject to satisfaction of certain regulatory conditions. At the close of the transaction, an amount of US$152.1 million was paid to settle the OOB acquisition cost and related charges.. The Company recognized this business combination using the acquisition method in accordance with the provisions of IFRS 3. Therefore, the unaudited interim condensed consolidated financial statements for the second quarter of 2018 include the results of OOB from May 31, 2018 to June 30, 2018 and certain transaction fees related to the acquisition. Note 6 to the unaudited interim condensed consolidated financial statements for the second quarter of 2018 contains additional information about the acquisition, including information on the acquisition financing and related costs.


For the second quarter of 2018, the Company’s sales totalled $390.9 million, up $7.6 million or 2.0% from $383.3 million in the second quarter of 2017. Sales from OOB added $12.4 million to the Company’s second-quarter sales. Excluding OOB’s sales and a $9.5 million unfavourable foreign exchange impact, the Company’s second-quarter sales increased by $4.7 million (1.2%) year over year, largely due to sales price fluctuations that had a favourable impact on national brand sales. For the first six months of 2018, sales totalled $748.6 million, down 0.7% from $754.1 million in the first six months of 2017.


The Company’s operating profit for the second quarter of 2018 totalled $28.0 million, down $5.4 million from $33.4 million in the same quarter last year. During the second quarter of 2018, the Company incurred $1.5 million in expenses related to the OOB acquisition. As for OOB, it posted $0.2 million in operating profit despite a $0.8 million expense as inventory was stepped up as part of the allocation of the acquisition purchase price. Excluding the impacts of the OOB acquisition and of a $0.6 million gain on capital assets recognized in 2017, the Company’s second-quarter operating profit was down $3.5 million year over year. This decrease came mainly from a lower contribution margin realized by U.S. operations resulting from higher input costs and from transportation costs exceeding the price adjustments made during the quarter, partly offset by lower performance-related salary expenses. Operating profit for the first six months of 2018 totalled $50.4 million, down $6.7 million from $57.1 million in the first six months of 2017.


The Company’s financial expenses went from $3.1 million in the second quarter of 2017 to $3.3 million in the second quarter of 2018. Excluding $0.6 million in interest expense related to the financing of the OOB acquisition, financial expenses were down $0.4 million. This decrease came mainly from a $0.3 million decrease in the amortization of transaction costs. For the six-month periods, financial expenses went from $6.4 million in 2017 to $5.5 million in 2018.


“Other (gains) losses” went from a $0..1 million gain in the second quarter of 2017 to a less than $0.1 million gain in the second quarter of 2018.. These gains were essentially due to foreign exchange gains. For the six-month periods, the “Other (gains) losses” item was a less than $0.1 million gain in 2018 compared to a less than $0.1 million loss in 2017.


Profit before income taxes stood at $24.8 million in the second quarter of 2018, down $5.6 million from $30.4 million in the second quarter of 2017. For the first six months of 2018, profit before income taxes stood at $44.9 million, down $5.8 million from $50.7 million in the first six months of 2017.


Income tax expense went from $9.7 million in the second quarter of 2017 to $6.0 million in the second quarter of 2018. At 24.1%, the 2018 second-quarter effective income tax rate was lower than the 32.0% rate in the same quarter of 2017. This lower effective income tax rate mainly reflects the impact of a reduced tax rate following the U.S. tax reform adopted in December 2017. Income tax expense for the first six months of 2018 stood at $11.2 million, down $4.8 million from $16.0 million in the first six months of 2017.


The 2018 second-quarter profit totalled $18.8 million, down $1.9 million from $20.7 million in the second quarter of 2017. It should be noted that the current quarter’s results include $1.1 million, net of tax, in OOB acquisition-related costs, $0.4 million, net of tax, in additional financial expenses related to the financing of the acquisition, and a profit of $0.1 million from OOB. For the first six months of 2018, profit totalled $33.6 million versus profit of $34.6 million in the first six months of 2017.


The 2018 second-quarter profit attributable to the Company’s shareholders was $18.1 million, resulting in basic and diluted earnings per share of $2.59. In the second quarter of 2017, profit attributable to the Company’s shareholders had totalled $19.6 million, resulting in basic and diluted earnings per share of $2.81. Excluding the impacts of the OOB acquisition and of the gain on capital assets recognized in 2017, the 2018 second-quarter profit attributable to the Company’s shareholders was up $0.3 million year over year. For the first six months of 2018, profit attributable to the Company’s shareholders totalled $32.6 million, resulting in basic and diluted earnings per share of $4.67 and, in the same six-month period of 2017, profit had totalled $32.7 million, resulting in basic and diluted earnings per share of $4.68.


The Company’s operating activities generated $12.0 million in cash during the second quarter of 2018, while they had generated $62.0 million in cash during the same quarter last year. As for OOB’s operating activities, they generated $2.3 million in cash during the second quarter of 2018. Financing activities generated $175.4 million in cash during the second quarter of 2018, while they had used $43.2 million in the same quarter of 2017. During the second quarter of 2018, the OOB acquisition generated $193.6 million in cash, leaving a difference of $25.0 million on a comparable basis. Investing activities used $199.3 million in cash during the second quarter of 2018 compared to $5.0 million used in the same quarter of 2017. Excluding the $191.7 million in cash flows related to the OOB acquisition, investing activities used $2.6 million more cash. At the end of the second quarter of fiscal 2018, the Company reported a cash and cash equivalents balance of $0.3 million and a bank overdraft of $15.3 million, whereas, at the end of the second quarter of 2017, the cash and cash equivalents balance was $6.1 million and the bank overdraft balance was $1.7 million.


Outlook


The Company noted that industry volumes for the U.S. fruit juice and drinks market were stable for the twelve-month period ended June 30, 2018. In the Canadian market, the situation is different, as industry sales were down slightly when compared to the same period of last year. The Company is seeking to limit the impact of the relative weakness in demand through national brand product innovation and continued private label customer development.


The Company’s sales were up 2.0% in the second quarter of 2018 when compared to the same quarter of 2017. Excluding the foreign exchange impacts and the impact of the OOB acquisition, the adjusted increase was 1.2%. Barring any significant external shocks (and excluding foreign exchange impacts and the impact of the OOB acquisition to maintain a comparable basis), the Company expects that, for 2018, its consolidated annual sales growth rate will be slightly below that of 2017. It remains concerned, however, by tariff-related uncertainties and by an instability in raw materials and transportation costs in a competitive landscape that has become more difficult following an ownership change affecting its largest U.S. competitor. The Company is also paying close attention to the revision of Canada’s Food Guide and its potential impacts.


About Lassonde


Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of a wide range of ready-to-drink fruit and vegetable juices and drinks marketed under brands such as Apple & Eve, Everfresh, Fairlee, Fruité, Graves, Oasis and Rougemont.


Lassonde is also one of the two largest producers of store brand shelf-stable fruit juices and drinks in the United States and a major producer of cranberry sauces.


Lassonde recently acquired Old Orchard Brands, LLC, a fruit juice and beverage manufacturing company based in Sparta, Michigan. OOB’s product portfolio consists of nearly 100 different varieties, including 100% juice, 100% juice blends, reduced-sugar juice cocktails, seasonal lemonades and flavoured teas. Moreover, OOB is a leader in ready-to-drink fruit juices and drinks in the Central United States. Old Orchard is also the second largest frozen juice concentrates brand in the United States.


Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company imports and markets selected wines from various countries and manufactures apple ciders and cider-based beverages.


The Company produces superior quality products through the expertise of approximately 2,200 people working in 15 plants across Canada and the United States. To learn more, visit www.lassonde.com.


SEDAR registration number: 00002099


Caution Concerning Forward-Looking Statements


This press release contains forward-looking statements that are based on certain assumptions. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Additional factors are discussed in materials filed from time to time with the securities regulatory authorities in Canada. Lassonde Industries Inc. disclaims any intention or obligation to update or revise any forward-looking statements except as required by law.


 

 

SOURCE Lassonde Industries Inc.


  CONTACT: Investor contact: Guy Blanchette, FCPA, FCA, Executive Vice-President and Chief Financial Officer, Lassonde Industries Inc., 450-469-4926, extension 10782; Media contact: Stefano Bertolli, Vice-President Communications, Lassonde Industries Inc.., 450-469-4926, extension 10265

Web Site: http://www.lassonde.com

 
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Posted on Aug 10, 2018 - 06:35 PM • Print