TSX: MFI
www.mapleleaffoods.com
TORONTO, Oct. 31, 2012 /PRNewswire/ – Maple Leaf Foods Inc. (TSX: MFI) today
reported its financial results for the third quarter ended September
30, 2012.
-
Adjusted Operating Earnings(1) for the third quarter were $76.3 million compared to $73.3 million last
year -
Net earnings for the third quarter were $32.6 million, compared to $43.0
million in the third quarter last year -
Adjusted Earnings per Share(2) were $0.29 compared to $0.34 last year ($0.27 excluding a $9.8 million
tax adjustment associated with a prior acquisition)
“Our third quarter marked a return to operating profit growth in 2012 as
we continue to enhance performance in our base business and execute our
value creation strategies,” said Michael H. McCain, President and CEO.
“We are achieving earnings growth in our consumer facing prepared meats
and bakery businesses, and managing higher input costs through
responsible pricing. While the challenges of consumer bread demand and
pork market conditions continue, we are seeing signs of improvement in
both.”
(1): Adjusted Operating Earnings, a non-IFRS measure, is defined as
earnings from operations before restructuring and other related costs
and associated gains, other income (expense) and the impact of the
change in fair value of non-designated interest rate swaps, unrealized
(gains) losses on commodity futures contracts and the change in fair
value of biological assets.
(2): Adjusted Earnings per Share (“Adjusted EPS”), a non-IFRS measure,
is defined as basic earnings per share adjusted for the impact of
restructuring and other related costs and associated gains, the impact
of the change in fair value of non-designated interest rate swaps,
hedge ineffectiveness recognized in earnings, unrealized (gains) losses
on commodity futures contracts, and the change in fair value of
biological assets, net of tax and non-controlling interest.
Please refer to the section entitled Reconciliation of Non-IFRS
Financial Measures at the end of this news release.
Financial Overview
Business Segment Review
Following is a summary of sales by business segment:
| (Unaudited) | Third Quarter | Year-to-Date | |||||||||||||||
| ($ thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Meat Products Group | $ | 761,172 | $ | 777,194 | $ | 2,262,680 | $ | 2,257,647 | |||||||||
| Agribusiness Group | 76,463 | 67,934 | 221,303 | 196,145 | |||||||||||||
| Protein Group | $ | 837,635 | $ | 845,128 | $ | 2,483,983 | $ | 2,453,792 | |||||||||
| Bakery Products Group | 401,294 | 417,025 | 1,176,019 | 1,194,504 | |||||||||||||
| Sales | $ | 1,238,929 | $ | 1,262,153 | $ | 3,660,002 | $ | 3,648,296 | |||||||||
The following table summarizes Adjusted Operating Earnings by business
segment:
| (Unaudited) | Third Quarter | Year-to-Date | |||||||||||||||||
| ($ thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Meat Products Group | $ | 28,837 | $ | 20,766 | $ | 73,139 | $ | 68,515 | |||||||||||
| Agribusiness Group | 17,620 | 25,440 | 55,776 | 67,151 | |||||||||||||||
| Protein Group | $ | 46,457 | $ | 46,206 | $ | 128,915 | $ | 135,666 | |||||||||||
| Bakery Products Group | 30,808 | 28,094 | 66,224 | 70,165 | |||||||||||||||
|
Non-allocated costs in Adjusted Operating Earnings(i) |
(934) | (953) | (6,404) | (4,261) | |||||||||||||||
| Adjusted Operating Earnings | $ | 76,331 | $ | 73,347 | $ | 188,735 | $ | 201,570 | |||||||||||
| (i) |
Non-allocated costs comprise expenses not separately identifiable to business segment groups, and do not form part of the measures used by the Company when assessing the segments’ operating results. |
Protein Group
Sales for the Protein Group, which includes the Company’s Meat Products
Group and Agribusiness Group, declined 0.9% to $837.6 million in the
third quarter of 2012, from $845.1 million for the prior year period.
Adjusted Operating Earnings were $46.5 million compared to $46.2
million for the third quarter last year. Results for the Company’s Meat
Products Group and Agribusiness Group should be viewed in combination
due to intercompany transactions and correlated factors within these
operations.
Meat Products Group
Includes value-added prepared meats, lunch kits; and fresh pork, poultry
and turkey products sold to retail, foodservice, industrial and
convenience channels. Includes leading Canadian brands such as Maple
Leaf ®, Schneiders ® and many leading sub-brands.
Meat Products Group sales for the third quarter declined 2.1% to $761.2
million from $777.2 million for the third quarter last year. After
adjusting for the impact of a weaker Canadian dollar, which increased
the sales value of pork exports, sales declined 2.9%, primarily due to
lower foodservice sales in the prepared meats business.
Adjusted Operating Earnings for the third quarter increased 38.9% to
$28.8 million compared to $20.8 million last year, driven by strong
earnings growth in the prepared meats and fresh poultry businesses.
Branded sales growth and innovation, as well as operating cost
reductions drove margin expansion in the prepared meats business. The
Company’s network transformation initiatives also contributed to
results, although earnings growth was partly offset by lower sales
volumes. The Company continues to manage cost inflation through price
increases as required.
Sales of higher value products under the Maple Leaf Prime chicken brand and improvements in industry poultry processor margins
drove higher earnings in the fresh poultry operations.
Earnings in primary pork processing were consistent with last year as
higher pricing and margins in international exports were offset by
weaker industry margins in North America.
Agribusiness Group
Consists of Canadian hog production, animal by-product recycling
operations including bio-diesel manufacturing and distribution.
Sales in the Agribusiness Group increased 12.6% to $76.5 million for the
third quarter compared to $67.9 million last year, reflecting higher
toll feed sales.
Adjusted Operating Earnings for the third quarter of 2012 decreased
30.7% to $17.6 million compared to $25.4 million last year. Hog
production earnings were lower due to a combination of higher feed
costs and lower market prices for hogs. Lower earnings in the
by-products recycling operations compared to historically strong levels
last year as prices paid for raw materials and operating costs
increased.
Bakery Products Group
Includes fresh and frozen bakery products, including breads, rolls,
bagels, specialty and artisan breads, sweet goods, and fresh pasta and
sauces sold to retail, foodservice and convenience channels. It
includes national brands such as Dempster’s®, Tenderflake®, Olivieri® and New York Bakery CoTM, and many leading regional brands.
Bakery Products Group sales for the third quarter decreased 3.8% to
$401.3 million, compared to $417.0 million last year. After adjusting
for the closure of a bakery in the U.K. and currency translation on
sales in the U.S. and U.K., sales declined 2.3%, primarily related to
lower volume in the fresh bakery business.
Adjusted Operating Earnings for the third quarter of 2012 increased 9.7%
to $30.8 million compared to $28.1 million last year, driven by higher
earnings in the fresh bakery and North American frozen bakery
operations, partly offset by lower earnings in the fresh pasta
business. Earnings in the U.K. bakery business were consistent with
last year. Results benefited from positive hedging activities for raw
materials during the quarter, although the Company continues to
experience inflationary costs and projected increases in flour and
dairy costs that will require offsetting price increases. Fresh bakery
volumes were consistent with the second quarter of 2012, but lower than
last year, reflecting industry volume declines. Despite the lower
volumes, margins expanded in the fresh bakery business, principally
through cost management. The North American frozen bakery business
benefited from higher pricing and increased sales volumes compared to
last year. In the U.K., improvements from cost reduction strategies,
including the closure of a bakery in the first quarter, were offset by
lower volumes and costs of commissioning new croissant capacity.
Other Matters
On October 30, 2012, the Company declared a dividend of $0.04 per share
payable December 31, 2012 to shareholders of record at the close of
business on December 7, 2012. Unless indicated otherwise by the Company
in writing on or before the time the dividend is paid, the dividend
will be considered an Eligible Dividend for the purposes of the
“Enhanced Dividend Tax Credit System”.
An investor presentation related to the Company’s third quarter
financial results is available at www.mapleleaffoods.com and can be found under Investor Relations on the Quarterly Results
page. A conference call will be held at 2:30 p.m. EDT on October 31,
2012 to review Maple Leaf Foods’ third quarter financial results. To
participate in the call, please dial 416-340-8018 or 866-223-7781. For
those unable to participate, playback will be made available an hour
after the event at 905-694-9451 / 800-408-3053 (Passcode 9670637).
A webcast presentation of the third quarter financial results will also
be available at http://www.media-server.com/m/p/joy9ce24
The Company’s full financial statements and related Management’s
Discussion and Analysis are available for download on the Company’s
website.
Reconciliation of Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted Operating
Earnings and Adjusted EPS. Management believes that these non-IFRS
measures provide useful information to both Management and investors in
measuring the financial performance of the Company for the reasons
outlined below. These measures do not have a standardized meaning
prescribed by IFRS and therefore they may not be comparable to
similarly titled measures presented by other publicly traded companies
and should not be construed as an alternative to other financial
measures determined in accordance with IFRS.
Adjusted Operating Earnings
The following tables reconcile earnings from operations before
restructuring and other related costs and associated gains, other
income (expense) and the impact of the change in fair value of
non-designated interest rate swaps, unrealized (gains) losses on
commodity futures contracts and the change in fair value of biological
assets to net earnings as reported under IFRS in the unaudited earnings
for the three and nine months ended, as indicated below. Management
believes that this basis is the most appropriate on which to evaluate
operating results, as restructuring and other related costs, other
income (expense) and the change in fair value of non-designated
interest rate swaps, unrealized (gains) losses on commodity futures
contracts and the change in fair value of biological assets are not
representative of operational results during the period.
| Three months ended September 30, 2012 | ||||||||||||||||||||
| Meat | Bakery | |||||||||||||||||||
| (Unaudited) | Products | Agribusiness | Products | Unallocated | ||||||||||||||||
| ($ thousands) | Group | Group | Group | costs | Consolidated | |||||||||||||||
| Net earnings | $ | 32,581 | ||||||||||||||||||
| Income taxes | 12,806 | |||||||||||||||||||
| Earnings from operations before income taxes | $ | 45,387 | ||||||||||||||||||
| Interest expense | 18,442 | |||||||||||||||||||
| Change in the fair value of non-designated | ||||||||||||||||||||
| interest rate swaps | (2,247) | |||||||||||||||||||
| Other income | (829) | (66) | 13 | (667) | (1,549) | |||||||||||||||
| Restructuring and other related costs | 4,414 | – | 170 | – | 4,584 | |||||||||||||||
| Earnings from Operations | $ | 28,837 | $ | 17,620 | $ | 30,808 | $ | (12,648) | $ | 64,617 | ||||||||||
| Decrease in fair value of biological assets | – | – | – | 13,038 | 13,038 | |||||||||||||||
| Unrealized gains on commodity futures contracts | – | – | – | (1,324) | (1,324) | |||||||||||||||
| Adjusted Operating Earnings | $ | 28,837 | $ | 17,620 | $ | 30,808 | $ | (934) | $ | 76,331 | ||||||||||
| Three months ended September 30, 2011 | ||||||||||||||||||||
| Meat | Bakery | |||||||||||||||||||
| (Unaudited) | Products | Agribusiness | Products | Unallocated | ||||||||||||||||
| ($ thousands) | Group | Group | Group | costs | Consolidated | |||||||||||||||
| Net earnings | $ | 43,007 | ||||||||||||||||||
| Income taxes | 4,192 | |||||||||||||||||||
| Earnings from operations before income taxes | $ | 47,199 | ||||||||||||||||||
| Interest expense | 17,927 | |||||||||||||||||||
| Change in the fair value of non-designated | ||||||||||||||||||||
| interest rate swaps | 10,423 | |||||||||||||||||||
| Other income | (4,059) | (680) | (286) | (123) | (5,148) | |||||||||||||||
| Restructuring and other related costs | 2,966 | – | 1,598 | 318 | 4,882 | |||||||||||||||
| Earnings from Operations | $ | 20,766 | $ | 25,440 | $ | 28,094 | $ | 983 | $ | 75,283 | ||||||||||
| Increase in fair value of biological assets | – | – | – | (3,227) | (3,227) | |||||||||||||||
| Unrealized losses on commodity futures contracts | – | – | – | 1,291 | 1,291 | |||||||||||||||
| Adjusted Operating Earnings | $ | 20,766 | $ | 25,440 | $ | 28,094 | $ | (953) | $ | 73,347 | ||||||||||
| Nine months ended September 30, 2012 | ||||||||||||||||||||
| Meat | Bakery | |||||||||||||||||||
| (Unaudited) | Products | Agribusiness | Products | Unallocated | ||||||||||||||||
| ($ thousands) | Group | Group | Group | costs | Consolidated | |||||||||||||||
| Net earnings | $ | 65,870 | ||||||||||||||||||
| Income taxes | 27,809 | |||||||||||||||||||
| Earnings from operations before income taxes | $ | 93,679 | ||||||||||||||||||
| Interest expense | 54,498 | |||||||||||||||||||
| Change in the fair value of non-designated | ||||||||||||||||||||
| interest rate swaps | (7,180) | |||||||||||||||||||
| Other income | (2,996) | (589) | (1,358) | 93 | (4,850) | |||||||||||||||
| Restructuring and other related costs | 27,456 | – | 7,259 | – | 34,715 | |||||||||||||||
| Earnings from Operations | $ | 73,139 | $ | 55,776 | $ | 66,224 | $ | (24,277) | $ | 170,862 | ||||||||||
| Decrease in fair value of biological assets | – | – | – | 14,139 | 14,139 | |||||||||||||||
| Unrealized losses on commodity futures contracts | – | – | – | 3,734 | 3,734 | |||||||||||||||
| Adjusted Operating Earnings | $ | 73,139 | $ | 55,776 | $ | 66,224 | $ | (6,404) | $ | 188,735 | ||||||||||
| Nine months ended September 30, 2011 | ||||||||||||||||||||
| Meat | Bakery | |||||||||||||||||||
| (Unaudited) | Products | Agribusiness | Products | Unallocated | ||||||||||||||||
| ($ thousands) | Group | Group | Group | costs | Consolidated | |||||||||||||||
| Net earnings | $ | 78,136 | ||||||||||||||||||
| Income taxes | 17,059 | |||||||||||||||||||
| Earnings from operations before income taxes | $ | 95,195 | ||||||||||||||||||
| Interest expense | 52,952 | |||||||||||||||||||
| Change in the fair value of non-designated | ||||||||||||||||||||
| interest rate swaps | 11,382 | |||||||||||||||||||
| Other income | (4,088) | (743) | (364) | (32) | (5,227) | |||||||||||||||
| Restructuring and other related costs | 12,296 | – | 34,195 | 1,111 | 47,602 | |||||||||||||||
| Earnings from Operations | $ | 68,515 | $ | 67,151 | $ | 70,165 | $ | (3,927) | $ | 201,904 | ||||||||||
| Decrease in fair value of biological assets | – | – | – | 1,094 | 1,094 | |||||||||||||||
| Unrealized gains on commodity futures contracts | – | – | – | (1,428) | (1,428) | |||||||||||||||
| Adjusted Operating Earnings | $ | 68,515 | $ | 67,151 | $ | 70,165 | $ | (4,261) | $ | 201,570 | ||||||||||
Adjusted Earnings per Share
The following table reconciles Adjusted Earnings per Share to basic
earnings per share as reported under IFRS as indicated below.
Management believes this basis is the most appropriate on which to
evaluate financial results as restructuring and other related costs and
associated gains, the changes in the fair value of non-designated
interest rate swaps, hedge ineffectiveness recognized in earnings,
unrealized (gains) losses on commodity futures contracts and the change
in fair value of biological assets net of tax and non-controlling
interests are not representative of operational results.
| Three months ended | Nine months ended | |||||||||||||||||||
| (Unaudited) | September 30, | September 30, | ||||||||||||||||||
| ($ per share) | 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
| Basic earnings per share | $ | 0.22 | $ | 0.29 | $ | 0.44 | $ | 0.53 | ||||||||||||
| Restructuring and other related costs(i) | 0.02 | 0.03 | 0.19 | 0.24 | ||||||||||||||||
| Gains associated with restructuring and other related activities(i) | – | (0.02) | – | (0.02) | ||||||||||||||||
| Change in the fair value of non-designated interest rate swaps(ii) | (0.01) | 0.05 | (0.04) | 0.06 | ||||||||||||||||
| Change in the fair value of unrealized (gains) losses on commodity | ||||||||||||||||||||
| futures contracts(ii) | (0.01) | 0.01 | 0.02 | (0.01) | ||||||||||||||||
| Change in the fair value of biological assets(ii) | 0.07 | (0.02) | 0.07 | 0.01 | ||||||||||||||||
| Adjusted Earnings per Share(iii) | $ | 0.29 | $ | 0.34 | $ | 0.67 | $ | 0.81 | ||||||||||||
| (i) |
Includes per share impact of restructuring and other related costs and associated gains, net of tax and non-controlling interest. |
| (ii) |
Includes per share impact of the change in fair value of non-designated interest rate swaps, hedge ineffectiveness recognized in earnings, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets, net of tax. |
| (iii) | May not add due to rounding. |
Forward-Looking Statements
This document contains, and the Company’s oral and written public
communications often contain, “forward-looking information” within the
meaning of applicable securities law. These statements are based on
current expectations, estimates, forecasts and projections about the
industries in which the Company operates and beliefs and assumptions
made by the Management of the Company. Such statements include, but are
not limited to, statements with respect to objectives and goals, as
well as statements with respect to beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. Specific
forward-looking information in this document includes, but is not
limited to, statements with respect to the anticipated benefits,
timing, actions, costs and investments associated with the Company’s
Value Creation Plan, expectations regarding improving business trends,
expectations regarding actions to reduce costs, restore and/or promote
volumes and/or increase prices, improve efficiencies, expected
duplicative overhead costs incurred due to the concurrent operation of
the new Hamilton fresh bakery and existing bakeries, the expected use
of cash balances, source of funds for ongoing business requirements,
capital investments and debt repayment, and expectations regarding
sufficiency of the allowance for uncollectible accounts. Words such as
“expect”, “anticipate”, “intend”, “attempt”, “may”, “will”, “plan”,
“believe”, “seek”, “estimate”, and variations of such words and similar
expressions are intended to identify such forward-looking information.
These statements are not guarantees of future performance and involve
assumptions and risks and uncertainties that are difficult to predict.
In addition, these statements and expectations concerning the
performance of the Company’s business in general are based on a number
of factors and assumptions including, but not limited to: the condition
of the Canadian, U.S., U.K. and Japanese economies; the rate of
exchange of the Canadian dollar to the U.S. dollar, U.K. British pound
and the Japanese yen; the availability and prices of raw materials,
energy and supplies; product pricing; the availability of insurance;
the competitive environment and related market conditions; improvement
of operating efficiencies whether as a result of the Value Creation
Plan or otherwise; continued access to capital; the cost of compliance
with environmental and health standards; no adverse results from
ongoing litigation; no unexpected actions of domestic and foreign
governments; and the general assumption that none of the risks
identified below or elsewhere in this document will materialize. All
of these assumptions have been derived from information currently
available to the Company including information obtained by the Company
from third-party sources. These assumptions may prove to be incorrect
in whole or in part. In addition, actual results may differ materially
from those expressed, implied or forecasted in such forward-looking
information, which reflect the Company’s expectations only as of the
date hereof.
Factors that could cause actual results or outcomes to differ materially
from the results expressed, implied or forecasted by forward-looking
information is discussed more fully in the Company’s Annual
Management’s Discussion and Analysis for the period ended December 31,
2011 including the section entitled “Risk Factors”, that are updated
each quarter in the Management’s Discussion and Analysis, and are
available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any
obligation to, update any forward-looking information, whether written
or oral, or whether as a result of new information, future events or
otherwise except as required by law.
Maple Leaf Foods Inc. (“Maple Leaf” or the “Company”) is a leading
Canadian value-added meat, meals and bakery company committed to
delivering quality food products to consumers around the world.
Headquartered in Toronto, Canada, the Company employs approximately
19,500 people at its operations across Canada and in the United States,
Europe and Asia.
Condensed Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
MAPLE LEAF FOODS INC.
Three and nine months ended September 30, 2012 and 2011
Consolidated Balance Sheets
| As at September 30, | As at September 30, | As at December 31, | ||||||||||||||
| (In thousands of Canadian dollars) | 2012 | 2011 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | 87,300 | $ | – | $ | – | ||||||||||
| Accounts receivable | 85,508 | 99,375 | 133,504 | |||||||||||||
| Notes receivable | 138,742 | 147,322 | 98,545 | |||||||||||||
| Inventories | 313,485 | 302,864 | 293,231 | |||||||||||||
| Biological assets | 40,123 | 49,154 | 49,265 | |||||||||||||
| Income and other taxes recoverable | 43,039 | 47,530 | 43,789 | |||||||||||||
| Prepaid expenses and other assets | 19,419 | 16,855 | 24,688 | |||||||||||||
| Assets held for sale | 23,259 | – | – | |||||||||||||
| $ | 750,875 | $ | 663,100 | $ | 643,022 | |||||||||||
| Property and equipment | 1,122,881 | 1,059,553 | 1,067,246 | |||||||||||||
| Investment property | 13,740 | 11,584 | 11,232 | |||||||||||||
| Employee benefits | 101,840 | 128,613 | 133,942 | |||||||||||||
| Other long-term assets | 11,930 | 12,751 | 11,926 | |||||||||||||
| Deferred tax asset | 146,484 | 138,204 | 127,456 | |||||||||||||
| Goodwill | 752,590 | 754,935 | 753,739 | |||||||||||||
| Intangible assets | 207,264 | 186,070 | 191,896 | |||||||||||||
| Total assets | $ | 3,107,604 | $ | 2,954,810 | $ | 2,940,459 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Bank indebtedness | $ | 31,279 | $ | 17,729 | $ | 36,404 | ||||||||||
| Accounts payable and accruals | 459,491 | 488,399 | 482,059 | |||||||||||||
| Provisions | 27,382 | 43,065 | 44,255 | |||||||||||||
| Current portion of long-term debt | 6,068 | 221,792 | 5,618 | |||||||||||||
| Other current liabilities | 17,624 | 73,153 | 20,409 | |||||||||||||
| $ | 541,844 | $ | 844,138 | $ | 588,745 | |||||||||||
| Long-term debt | 1,119,045 | 715,986 | 941,956 | |||||||||||||
| Employee benefits | 429,568 | 364,555 | 350,853 | |||||||||||||
| Provisions | 28,714 | 25,388 | 28,936 | |||||||||||||
| Other long-term liabilities | 81,784 | 77,504 | 88,153 | |||||||||||||
| Deferred tax liability | 8,617 | 26,444 | 11,703 | |||||||||||||
| Total liabilities | $ | 2,209,572 | $ | 2,054,015 | $ | 2,010,346 | ||||||||||
| Shareholders’ equity | ||||||||||||||||
| Share capital | $ | 902,810 | $ | 902,810 | $ | 902,810 | ||||||||||
| Retained deficit | (122,156) | (82,034) | (78,674) | |||||||||||||
| Contributed surplus | 80,956 | 71,820 | 64,327 | |||||||||||||
| Accumulated other comprehensive loss | (13,942) | (18,332) | (17,042) | |||||||||||||
| Treasury stock | (15,370) | (38,915) | (6,347) | |||||||||||||
| Total shareholders’ equity | $ | 832,298 | $ | 835,349 | $ | 865,074 | ||||||||||
| Non-controlling interest | 65,734 | 65,446 | 65,039 | |||||||||||||
| Total equity | $ | 898,032 | $ | 900,795 | $ | 930,113 | ||||||||||
| Total liabilities and equity | $ | 3,107,604 | $ | 2,954,810 | $ | 2,940,459 | ||||||||||
Consolidated Statements of Earnings
| (In thousands of Canadian dollars, except share amounts) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (Unaudited) | 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Sales | $ | 1,238,929 | $ | 1,262,153 | $ | 3,660,002 | $ | 3,648,296 | |||||||||
| Cost of goods sold | 1,052,334 | 1,062,392 | 3,102,720 | 3,067,773 | |||||||||||||
| Gross margin | $ | 186,595 | $ | 199,761 | $ | 557,282 | $ | 580,523 | |||||||||
| Selling, general and administrative expenses | 121,978 | 124,478 | 386,420 | 378,619 | |||||||||||||
| Earnings before the following: | $ | 64,617 | $ | 75,283 | $ | 170,862 | $ | 201,904 | |||||||||
| Restructuring and other related costs | (4,584) | (4,882) | (34,715) | (47,602) | |||||||||||||
| Change in fair value of non-designated | |||||||||||||||||
| interest rate swaps | 2,247 | (10,423) | 7,180 | (11,382) | |||||||||||||
| Other income | 1,549 | 5,148 | 4,850 | 5,227 | |||||||||||||
| Earnings before interest and income taxes | $ | 63,829 | $ | 65,126 | $ | 148,177 | $ | 148,147 | |||||||||
| Interest expense | 18,442 | 17,927 | 54,498 | 52,952 | |||||||||||||
| Earnings before income taxes | $ | 45,387 | $ | 47,199 | $ | 93,679 | $ | 95,195 | |||||||||
| Income taxes | 12,806 | 4,192 | 27,809 | 17,059 | |||||||||||||
| Net earnings | $ | 32,581 | $ | 43,007 | $ | 65,870 | $ | 78,136 | |||||||||
| Attributed to: | |||||||||||||||||
| Common shareholders | $ | 30,159 | $ | 39,943 | $ | 60,687 | $ | 73,708 | |||||||||
| Non-controlling interest | 2,422 | 3,064 | 5,183 | 4,428 | |||||||||||||
| $ | 32,581 | $ | 43,007 | $ | 65,870 | $ | 78,136 | ||||||||||
| Earnings per share attributable to | |||||||||||||||||
| common shareholders | |||||||||||||||||
| Basic earnings per share | $ | 0.22 | $ | 0.29 | $ | 0.44 | $ | 0.53 | |||||||||
| Diluted earnings per share | $ | 0.21 | $ | 0.28 | $ | 0.42 | $ | 0.52 | |||||||||
| Weighted average number of shares (millions) | 139.5 | 138.0 | 139.5 | 138.8 | |||||||||||||
Consolidated Statements of Comprehensive Loss
| (In thousands of Canadian dollars) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
| (Unaudited) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| Net earnings | $ | 32,581 | $ | 43,007 | $ | 65,870 | $ | 78,136 | |||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||||||
| Change in accumulated foreign currency | |||||||||||||||||||||
| translation adjustment | (3,985) | 10,991 | (3,702) | 10,085 | |||||||||||||||||
| Change in unrealized gains and losses | |||||||||||||||||||||
| on cash flow hedges | 2,069 | (7,056) | 6,312 | (4,872) | |||||||||||||||||
| Change in actuarial gains and losses | (50,301) | (134,959) | (88,466) | (134,959) | |||||||||||||||||
| $ | (52,217) | $ | (131,024) | $ | (85,856) | $ | (129,746) | ||||||||||||||
| Comprehensive loss | $ | (19,636) | $ | (88,017) | $ | (19,986) | $ | (51,610) | |||||||||||||
| Attributed to: | |||||||||||||||||||||
| Common shareholders | $ | (21,079) | $ | (91,276) | $ | (23,792) | $ | (55,598) | |||||||||||||
| Non-controlling interest | 1,443 | 3,259 | 3,806 | 3,988 | |||||||||||||||||
Consolidated Statements of Changes in Total Equity
| Attributable to Common Shareholders | ||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
| accumulated | ||||||||||||||||||||||||||||||||
| other | Non- | |||||||||||||||||||||||||||||||
| (In thousands of Canadian dollars) | Share | Retained | Contributed | comprehensive | Treasury | controlling | Total | |||||||||||||||||||||||||
| (Unaudited) | capital | deficit | surplus | loss | stock | interest | equity | |||||||||||||||||||||||||
| Balance at | ||||||||||||||||||||||||||||||||
| December 31, 2011 | $ | 902,810 | $ | (78,674) | $ | 64,327 | $ | (17,042) | $ | (6,347) | $ | 65,039 | $ | 930,113 | ||||||||||||||||||
| Net earnings | – | 60,687 | – | – | – | 5,183 | 65,870 | |||||||||||||||||||||||||
| Other comprehensive | ||||||||||||||||||||||||||||||||
| (loss) income | – | (87,579) | – | 3,100 | – | (1,377) | (85,856) | |||||||||||||||||||||||||
| Dividends declared | ||||||||||||||||||||||||||||||||
| ($0.12 per share) | – | (16,590) | – | – | – | (3,202) | (19,792) | |||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||
| expense | – | – | 16,229 | – | – | – | 16,229 | |||||||||||||||||||||||||
| Other | – | – | 400 | – | – | 91 | 491 | |||||||||||||||||||||||||
| Re-purchase of treasury stock | – | – | – | – | (9,023) | – | (9,023) | |||||||||||||||||||||||||
| Balance at September 30, 2012 | $ | 902,810 | $ | (122,156) | $ | 80,956 | $ | (13,942) | $ | (15,370) | $ | 65,734 | $ | 898,032 | ||||||||||||||||||
| Attributable to Common Shareholders | ||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
| accumulated | ||||||||||||||||||||||||||||||||
| other | Non- | |||||||||||||||||||||||||||||||
| (In thousands of Canadian dollars) | Share | Retained | Contributed | comprehensive | Treasury | controlling | Total | |||||||||||||||||||||||||
| (Unaudited) | capital | deficit | surplus | loss | stock | interest | equity | |||||||||||||||||||||||||
| Balance at | ||||||||||||||||||||||||||||||||
| December 31, 2010 | $ | 902,810 | $ | (5,267) | $ | 59,002 | $ | (22,585) | $ | (10,078) | $ | 62,890 | $ | 986,772 | ||||||||||||||||||
| Net earnings | – | 73,708 | – | – | – | 4,428 | 78,136 | |||||||||||||||||||||||||
| Other comprehensive | ||||||||||||||||||||||||||||||||
| income (loss) | – | (133,559) | – | 4,253 | – | (440) | (129,746) | |||||||||||||||||||||||||
| Dividends declared | ||||||||||||||||||||||||||||||||
| ($0.12 per share) | – | (16,916) | – | – | – | (1,322) | (18,238) | |||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||
| expense | – | – | 12,818 | – | – | – | 12,818 | |||||||||||||||||||||||||
| Decrease in non-controlling interest | – | – | – | – | – | (110) | (110) | |||||||||||||||||||||||||
| Re-purchase of treasury stock | – | – | – | – | (28,837) | – | (28,837) | |||||||||||||||||||||||||
| Balance at September 30, 2011 | $ | 902,810 | $ | (82,034) | $ | 71,820 | $ | (18,332) | $ | (38,915) | $ | 65,446 | $ | 900,795 | ||||||||||||||||||
Consolidated Statements of Cash Flows
| (In thousands of Canadian dollars) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
| (Unaudited) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||||||||||
| Operating activities | |||||||||||||||||||||
| Net earnings | $ | 32,581 | $ | 43,007 | $ | 65,870 | $ | 78,136 | |||||||||||||
| Add (deduct) items not affecting cash: | |||||||||||||||||||||
| Change in fair value of biological assets | 13,038 | (3,227) | 14,139 | 1,094 | |||||||||||||||||
| Depreciation and amortization | 33,077 | 32,356 | 97,646 | 97,622 | |||||||||||||||||
| Stock-based compensation | 5,490 | 4,270 | 16,229 | 12,818 | |||||||||||||||||
| Deferred income taxes | 2,158 | 8,677 | 6,022 | 11,946 | |||||||||||||||||
| Income tax current | 10,648 | (4,485) | 21,787 | 5,113 | |||||||||||||||||
| Interest expense | 18,442 | 17,927 | 54,498 | 52,952 | |||||||||||||||||
| Gain on sale of property and equipment | (8) | (3,884) | (421) | (3,766) | |||||||||||||||||
| Gain on disposal of assets held for sale | (139) | – | (459) | – | |||||||||||||||||
| Change in fair value of non-designated | |||||||||||||||||||||
| interest rate swaps | (2,247) | 10,423 | (7,180) | 11,382 | |||||||||||||||||
| Change in fair value of | |||||||||||||||||||||
| derivative financial instruments | (2,320) | 4,754 | 3,303 | 2,832 | |||||||||||||||||
| (Increase) decrease in pension asset | (3,806) | 2,011 | (8,281) | 3,819 | |||||||||||||||||
| Net income taxes paid | (6,993) | (505) | (16,512) | (18,799) | |||||||||||||||||
| Interest paid | (18,045) | (12,740) | (53,423) | (36,588) | |||||||||||||||||
| Change in provision for restructuring and | |||||||||||||||||||||
| other related costs | (525) | (7,429) | 6,059 | 20,638 | |||||||||||||||||
| Other | (5,567) | (1,890) | (7,389) | (3,714) | |||||||||||||||||
| Change in non-cash operating working capital | (4,661) | 39,844 | (40,233) | (69,530) | |||||||||||||||||
| Cash provided by operating activities | $ | 71,123 | $ | 129,109 | $ | 151,655 | $ | 165,955 | |||||||||||||
| Financing activities | |||||||||||||||||||||
| Dividends paid | $ | (5,617) | $ | (5,600) | $ | (16,590) | $ | (16,916) | |||||||||||||
| Dividends paid to non-controlling interest | (1,271) | (564) | (2,440) | (1,322) | |||||||||||||||||
| Net increase (decrease) in long-term debt | 9,136 | (55,724) | 189,136 | 32,041 | |||||||||||||||||
| Increase in financing costs | – | (272) | – | (6,396) | |||||||||||||||||
| Purchase of treasury stock | (9,023) | (28,837) | (9,023) | (28,837) | |||||||||||||||||
| Other | (484) | (396) | (1,267) | (1,145) | |||||||||||||||||
| Cash provided by (used in) financing activities | $ | (7,259) | $ | (91,393) | $ | 159,816 | $ | (22,575) | |||||||||||||
| Investing activities | |||||||||||||||||||||
| Additions to long term-assets | $ | (78,172) | $ | (52,328) | $ | (197,611) | $ | (160,583) | |||||||||||||
| Capitalization of interest expense | (1,609) | (1,154) | (4,130) | (4,491) | |||||||||||||||||
| Acquisition of business | – | – | (31,130) | – | |||||||||||||||||
| Proceeds from sale of long-term assets | 1,102 | 11,068 | 5,851 | 18,743 | |||||||||||||||||
| Proceeds from disposal of assets held for sale | 2,417 | – | 7,974 | – | |||||||||||||||||
| Other | (3) | 1,032 | – | 1,080 | |||||||||||||||||
| Cash used in investing activities | $ | (76,265) | $ | (41,382) | $ | (219,046) | $ | (145,251) | |||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | (12,401) | $ | (3,666) | $ | 92,425 | $ | (1,871) | |||||||||||||
| Net cash and cash equivalents, beginning of period | 68,422 | (14,063) | (36,404) | (15,858) | |||||||||||||||||
| Net cash and cash equivalents, end of period | $ | 56,021 | $ | (17,729) | $ | 56,021 | $ | (17,729) | |||||||||||||
| Net cash and cash equivalents is comprised of: | |||||||||||||||||||||
| Cash and cash equivalents | $ | 87,300 | $ | – | $ | 87,300 | $ | – | |||||||||||||
| Bank indebtedness | (31,279) | (17,729) | (31,279) | (17,729) | |||||||||||||||||
| Net cash and cash equivalents, end of period | $ | 56,021 | $ | (17,729) | $ | 56,021 | $ | (17,729) | |||||||||||||
Segmented Financial Info
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| Sales | ||||||||||||||||||||
| Meat Products Group | $ | 761,172 | $ | 777,194 | $ | 2,262,680 | $ | 2,257,647 | ||||||||||||
| Agribusiness Group | 76,463 | 67,934 | 221,303 | 196,145 | ||||||||||||||||
| Bakery Products Group | 401,294 | 417,025 | 1,176,019 | 1,194,504 | ||||||||||||||||
| $ | 1,238,929 | $ | 1,262,153 | $ | 3,660,002 | $ | 3,648,296 | |||||||||||||
| Earnings before restructuring and other | ||||||||||||||||||||
| related costs and other income | ||||||||||||||||||||
| Meat Products Group | $ | 28,837 | $ | 20,766 | $ | 73,139 | $ | 68,515 | ||||||||||||
| Agribusiness Group | 17,620 | 25,440 | 55,776 | 67,151 | ||||||||||||||||
| Bakery Products Group | 30,808 | 28,094 | 66,224 | 70,165 | ||||||||||||||||
| Non-allocated costs | (12,648) | 983 | (24,277) | (3,927) | ||||||||||||||||
| $ | 64,617 | $ | 75,283 | $ | 170,862 | $ | 201,904 | |||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Meat Products Group | $ | 63,582 | $ | 19,296 | $ | 148,712 | $ | 51,946 | ||||||||||||
| Agribusiness Group | 3,242 | 3,546 | 8,937 | 8,708 | ||||||||||||||||
| Bakery Products Group | 11,348 | 29,486 | 39,962 | 99,929 | ||||||||||||||||
| $ | 78,172 | $ | 52,328 | $ | 197,611 | $ | 160,583 | |||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Meat Products Group | $ | 14,912 | $ | 15,784 | $ | 44,829 | $ | 47,416 | ||||||||||||
| Agribusiness Group | 4,023 | 3,805 | 11,949 | 11,653 | ||||||||||||||||
| Bakery Products Group | 14,142 | 12,767 | 40,868 | 38,553 | ||||||||||||||||
| $ | 33,077 | $ | 32,356 | $ | 97,646 | $ | 97,622 | |||||||||||||
| As at September 30, | As at September 30, | As at December 31, | ||||||||||||||||
| 2012 | 2011 | 2011 | ||||||||||||||||
| Total assets | ||||||||||||||||||
| Meat Products Group | $ | 1,554,470 | $ | 1,468,653 | $ | 1,465,576 | ||||||||||||
| Agribusiness Group | 213,808 | 215,731 | 223,013 | |||||||||||||||
| Bakery Products Group | 999,391 | 953,572 | 937,292 | |||||||||||||||
| Non-allocated assets | 339,935 | 316,854 | 314,578 | |||||||||||||||
| $ | 3,107,604 | $ | 2,954,810 | $ | 2,940,459 | |||||||||||||
| Goodwill | ||||||||||||||||||
| Meat Products Group | $ | 442,692 | $ | 442,336 | $ | 442,336 | ||||||||||||
| Agribusiness Group | 13,845 | 13,845 | 13,845 | |||||||||||||||
| Bakery Products Group | 296,053 | 298,754 | 297,558 | |||||||||||||||
| $ | 752,590 | $ | 754,935 | $ | 753,739 | |||||||||||||
SOURCE Maple Leaf Foods Inc.
Investor Contact: Nick Boland,
VP Investor Relations: 416-926-2005
Media Contact: 416-926-2020