ROUGEMONT, QC, Aug. 7, 2020 /CNW Telbec/ - Lassonde
Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of
$498.2 million in the second
quarter of 2020, up 18.7% year over year. Excluding the
$35.8 million in sales from
Sun-Rype, an entity acquired on January 3,
2020, and an $11.1 million favourable foreign exchange
impact, adjusted sales were up 7.5% year over year. The Company's
operating profit for the second quarter of 2020 totalled
$42.7 million, up $15.2 million from $27.5 million in operating profit in the
same quarter last year. The 2020 second–quarter profit
attributable to the Company's shareholders totalled $26.0 million, up $10.4 million year over year.
Financial
highlights
(in thousands of
$)
|
Second
quarters
ended
|
|
June
27,
2020
|
June 29,
2019
|
Sales
|
$
|
498,207
|
$
|
419,746
|
Operating
profit
|
42,658
|
27,549
|
Profit before income
taxes
|
37,096
|
21,164
|
Profit attributable
to the Company's shareholders
|
25,998
|
15,600
|
Basic and diluted
earnings per share (in $)
|
$
|
3.75
|
$
|
2.25
|
|
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 27, 2020
are available on the SEDAR website at www.sedar.com and on the
website of Lassonde Industries Inc.
|
"In the current pandemic environment, demand for our products
rose significantly during the second quarter of 2020, which had a
favourable impact on our results. A 7.5% increase in adjusted sales
has helped raise the utilization rate of our U.S. assets. We are
working diligently to meet product demand while maintaining a safe
environment based on the recommendations of the public health
authorities for all our employees. We are seeing that industry
volumes remain high, but it is too early to determine whether this
phenomenon is sustainable. We would again like to draw very special
attention to the dedication shown by our employees during this
difficult period," said the Chief Executive Officer of
Lassonde Industries Inc., Nathalie Lassonde.
Financial results
On January 3, 2020, the Company
completed the acquisition of Sun-Rype for a cash consideration of
$89.3 million that was paid at the
close of the transaction. This amount included preliminary
adjustments related to cash, working capital, and property, plant
and equipment. During the second quarter of 2020, an amount of
$2.2 million was received from the
seller following the final settlement of adjustments related to
working capital and other items. As part of the transaction, the
Company assumed liabilities of $23.0 million related to lease liabilities
for the Sun-Rype facilities. The acquisition was financed by the
Company's existing Canadian credit facility. The transaction costs,
incurred mainly in the fourth quarter of 2019, were $1.5 million. The Company has recognized this
business combination using the acquisition method in accordance
with the provisions of IFRS 3. Therefore, the interim consolidated
financial statements for the second quarter of 2020 include the
results of Sun-Rype from January 3,
2020 to June 27, 2020.
For the second quarter of 2020, the Company's sales totalled
$498.2 million, up $78.5 million or 18.7% from $419.7 million in the same quarter of 2019. Sales
from Sun-Rype added $35.8 million to
the Company's second-quarter sales. Excluding Sun-Rype's sales and
an $11.1 million favourable foreign
exchange impact, the Company's second-quarter sales were up
$31.6 million or 7.5% year over year.
This increase was largely due to an increase in sales of private
label products, mainly in the United
States. The Company believes that a significant portion of
this increase could be due to changes in food habits related to
COVID-19 impacts as industry sales volumes have benefited from a
notable increase. For the first six months of 2020, sales totalled
$970.7 million, up 17.9% from
$823.3 million in the first six
months of 2019.
The Company's operating profit for the second quarter of 2020
totalled $42.7 million, up
$15.2 million from $27.5 million in the same quarter last year. As
for Sun-Rype, it posted $3.3 million
in operating profit. Excluding the impact of the Sun-Rype
acquisition, the Company's second-quarter operating profit was up
$11.9 million year over year. This
increase was explained by a higher gross margin from the Company's
U.S. and Canadian operations mainly due to an increase in U.S.
sales volume and to a decrease in the cost of certain raw
materials, partly offset by additional production costs related to
the pandemic. The operating profit was also affected by higher
performance-related salary expenses partly offset by lower selling
and marketing expenses. Operating profit for the first six months
of 2020 totalled $73.0 million,
up $22.1 million from
$50.9 million in the first six
months of 2019.
The Company's financial expenses went from $4.9 million in the second quarter of 2019 to
$4.5 million in the second quarter of
2020. Excluding $0.6 million in
interest expense related to the Sun-Rype acquisition, financial
expenses were down $1.0 million.
This decrease was essentially due to a decrease in the interest
expense on long-term debt. For the six-month periods, financial
expenses went from $9.8 million in
2019 to $9.6 million in 2020.
"Other (gains) losses" went from a $1.5
million loss in the second quarter of 2019 to a $0.7 million loss in the second quarter of 2020.
This 2020 second-quarter loss was mainly due to $0.8 million in foreign exchange losses, whereas
the 2019 second-quarter loss was mainly due to a $1.5 million loss resulting from a change in the
fair value of financial instruments held by Old Orchard Brands, LLC
("OOB") to cover frozen concentrated orange juice price
fluctuations. For the six–month periods, the "Other (gains) losses"
item was a $2.7 million gain in 2020
compared to a $2.6 million loss in
2019.
Profit before income taxes stood at $37.1
million in the second quarter of 2020, up $15.9 million from $21.2
million in the second quarter of 2019. For the first six
months of 2020, profit before income taxes stood at $65.6 million, up $27.1
million from $38.5 million in
the first six months of 2019.
Income tax expense went from $5.0
million in the second quarter of 2019 to $9.6 million in the second quarter of 2020.
At 25.8%, the 2020 second-quarter effective income tax rate was
higher than the 23.5% rate in the same quarter of 2019. This higher
2020 effective tax rate mainly reflects a decrease in the
deductible amounts on the Company's interest expense. Income tax
expense for the first six months of 2020 stood at $14.3 million, up $4.7
million from $9.6 million in
the first six months of 2019.
The 2020 second-quarter profit totalled $27.5 million, up $11.3
million from $16.2 million in the second quarter of 2019.
It should be noted that the current quarter's results include a
profit of $2.0 million from Sun-Rype
and an amount of $0.3 million, net of
tax, in additional financial expenses related to the financing of
the acquisition. For the first six months of 2020, profit totalled
$51.3 million versus profit of
$29.0 million in the first six months
of 2019.
Profit attributable to the Company's shareholders was
$26.0 million, resulting in basic and
diluted earnings per share of $3.75
for the second quarter of 2020. In the second quarter of 2019,
profit attributable to the Company's shareholders had totalled
$15.6 million, resulting in basic and
diluted earnings per share of $2.25.
Excluding the impacts of the Sun-Rype acquisition, the 2020
second-quarter profit attributable to the Company's shareholders
was up $8.8 million year over year.
For the first six months of 2020, profit attributable to the
Company's shareholders totalled $48.9
million, resulting in basic and diluted earnings per share
of $7.06 and, in the same six-month
period of 2019, profit had totalled $28.2
million, resulting in basic and diluted earnings per share
of $4.05.
The Company's operating activities generated $78.1 million in cash during the second quarter
of 2020, while they had generated $11.3
million in cash during the same quarter last year. As for
Sun-Rype's operating activities, they used $1.5 million in cash during the second
quarter of 2020. Financing activities used $98.7 million in cash during the second quarter
of 2020, while they had generated $1.3
million in the same quarter of 2019. Investing activities
used $5.7 million in cash during the
second quarter of 2020 compared to $18.2
million used in the same quarter of 2019. At the end of the
second quarter of fiscal 2020, the Company reported a cash and cash
equivalents balance of $5.3 million
and the bank overdraft balance was $Nil, whereas, at the end of the
second quarter of 2019, the cash and cash equivalents balance was
$1.0 million and the bank overdraft
balance was $8.6 million.
Outlook
For the twelve–month period ended June
27, 2020, the Company saw a slight growth in industry sales
volumes in the U.S. and Canadian fruit juice and drinks markets.
Moreover, industry sales volumes have increased significantly over
the twelve-week period ended June 27,
2020, in both Canada and
the United States. Excluding
Sun-Rype's sales and foreign exchange impacts, the Company's sales
were up 7.5% in the second quarter of 2020 compared to the same
quarter in 2019. It believes that a non-negligible portion of this
increase could be due to the direct and indirect effects of the
pandemic on consumer behaviour. There is no reliable way to
determine whether these changes in purchasing habits are permanent
or will fade when COVID-19 is a thing of the past. Barring any
significant external shocks, including the impacts of COVID-19's
evolution (and excluding foreign exchange impacts and the impact of
the Sun-Rype acquisition to maintain a comparable basis), the
Company expects that, for 2020, it will be able to achieve a
consolidated annual sales growth rate above that of 2019 without a
marked decrease in its current growth rate for the remainder of the
fiscal year. However, the uncertainty surrounding such a forecast
is higher than it is under normal circumstances, as the impact in
2020 of the lockdown and physical distancing measures on demand for
the Company's products is hard to measure and the strength of the
economic recovery that will follow cannot be determined from
historical data. The Company remains concerned about how the crisis
will affect sales to the food service segment.
During the second quarter of 2020, the Company observed improved
profitability at its U.S. operations due to strong demand for its
products during the quarter. In Canada, there was improvement in the
production rate at one of its specialty food products plants, which
was significantly affected by investment-related activities in
2019.
About Lassonde
Lassonde Industries Inc. is a North American leader in the
development, manufacture and sale of ready-to-drink juices and
drinks marketed under brands such as Apple & Eve, Everfresh,
Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde is the
largest producer of fruit and vegetable juices and drinks in
Canada and one of the two largest
producers of store brand shelf-stable fruit juices and drinks in
the United States. It is also a
major producer of cranberry sauces. The Company also produces
fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food
products under brands such as Antico and Canton. The Company also
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 2,600 people working in 18 plants across
Canada and the United States. To learn more, visit
www.lassonde.com.
Caution Concerning Forward-Looking
Statements
In this document and in other documents filed with Canadian
regulatory authorities or in other communications, the Company may
from time to time make written or oral forward-looking statements
within the meaning of applicable securities
legislation. Forward-looking statements notably include
estimates, expectations, forecasts, and projections of future
investment spending, revenues, expenses, earnings, profit,
indebtedness, financial position, losses, upcoming projects,
business and management strategies, and business growth and
expansion. In the context of this document, forward-looking
statements are particularly used to discuss preliminary results,
the rate of sales growth, and profit attributable to shareholders.
The forward-looking statements contained herein are used to help
readers better understand Lassonde's financial position and the
results of its operations as at the dates presented and may not be
appropriate for other purposes. Forward-looking statements can be
recognized by such words as "may," "should," "believes,"
"predicts," "plans," "expects," "intends," "anticipates,"
"estimates," "projects," "objective," "continues," "proposes,"
"targets," or "aims" as well as words and expressions of a similar
nature and whether they are used in the affirmative or negative or
used in the conditional or future tense. Forward-looking statements
also include any statements that do not refer to historical
facts.
By their very nature, forward-looking statements are based on
assumptions and involve inherent risks and uncertainties, both
general and specific in nature. It is therefore possible that the
forecasts, projections and other statements will not be achieved or
will differ significantly from those expressed or implied in such
forward-looking statements or could affect the extent to which a
particular forecast, projection or other statement materializes.
Although Lassonde believes that the expectations reflected in these
forward-looking statements are reasonable, it can give no
assurances that these expectations will prove to be correct.
Readers are cautioned against placing undue reliance on
forward-looking statements when making decisions, as the actual
results could differ considerably from the opinions, plans,
objectives, expectations, forecasts, estimates and intentions
expressed in such forward-looking statements due to various
significant factors. Such factors include, among others, the
economic, industrial, competitive and regulatory environment in
which Lassonde operates or factors that are likely to have an
impact on its operations, its ability to attract and retain
customers, consumers, and qualified staff, the availability and
cost of raw materials and transportation, its operating costs, and
the price of its finished products in the various markets where it
operates.
The Company cautions that the foregoing list of factors is not
exhaustive. For additional information about the risks,
uncertainties, and assumptions that could cause Lassonde's
actual results to differ from its stated expectations, readers may
also consult the "Uncertainties and Principal Risk Factors" section
of the Company's most recent annual MD&A and the other
documents it files from time to time with securities regulators in
Canada and available on
www.sedar.com. The forward-looking statements contained in this
press release reflect the Company's expectations on this date and
are subject to change after this date. Lassonde does not undertake
to update publicly or to revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable legislation or regulation.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.