ROUGEMONT, QC, Nov. 10,
2023 /CNW/ - Lassonde Industries Inc.
(TSX: LAS.A) ("Lassonde" or the "Corporation") today announced
its financial results for the third quarter of 2023.
Financial Highlights:
|
Third quarters
ended
|
Sept. 30,
2023
|
Oct. 1,
2022
|
∆
|
(in millions of
dollars, unless otherwise indicated)
|
$
|
$
|
$
|
Sales
|
583.4
|
556.4
|
27.0
|
Gross profit
|
146.3
|
125.4
|
20.8
|
Operating
profit
|
35.7
|
19.9
|
15.9
|
Profit
|
24.3
|
14.2
|
10.1
|
Attributable to:
|
Corporation's
shareholders
|
24.3
|
14.5
|
9.8
|
Non-controlling
interest
|
0.0
|
(0.3)
|
0.3
|
EPS (in
$)
|
3.56
|
2.11
|
1.45
|
Weighted average
number of shares outstanding (in thousands)
|
6,822
|
6,870
|
(48)
|
Adjusted
EBITDA1
|
52.9
|
38.9
|
14.0
|
Adjusted
EPS1 (in $)
|
3.67
|
2.54
|
1.13
|
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 September 30, 2023 are
available on the SEDAR website at www.sedarplus.ca and on the
website of Lassonde Industries Inc.
|
"Lassonde Industries delivered solid third-quarter results,
driven by improved execution throughout our operations," said
Nathalie Lassonde, Chief Executive
Officer and Vice-Chair of the Board of Directors of Lassonde
Industries Inc. "During the quarter, we also held our first
Investor Day, highlighting the depth and quality of our management
team and reinforcing our confidence for the future."
"Reflecting our ability to execute against strategic priorities,
all divisions once again improved their profitability in the third
quarter when compared to last year. We benefited from ongoing share
growth in our Canadian beverage division and from improvements in
our U.S. operations, bolstered by the portfolio optimization
process and the deployment of new technology, which more than
offset lower sales volume," said Vince Timpano, President and COO,
Lassonde Industries Inc. "To achieve our long-term objectives, we
remain focused on building back U.S. volumes, fortifying our
leading position in Canada, and
accelerating the growth of our specialty food business through a
combination of organic and investment-driven growth."
Third Quarter Highlights:
- Sales of $583.4 million.
Excluding an $8.1 million favourable
foreign exchange impact, sales were up $18.9
million (3.4%) from the same quarter last year, mainly due
to the favourable impact of selling price adjustments, partly
offset by a decrease in sales volume, essentially in the U.S.;
- Gross profit of $146.3 million
(25.1% of sales), up $20.8 million
from the same quarter in 2022. Excluding a $3.3 million unfavourable foreign exchange
impact, gross profit was up $24.1
million from the same quarter last year;
- Higher gross profit for all of the Corporation's
divisions;
- Favourable impact of selling price adjustments to offset cost
increases;
- Higher cost for certain inputs, especially apple and orange
concentrates; and
- Gross profit loss of $1.5 million
in 2022 following a production interruption on the cranberry sauce
line at the Corporation's New
Jersey plant.
- Operating profit of $35.7
million, up $15.9 million from
the same quarter last year;
- Higher gross profit;
- $14.3 million increase in
performance-related salary expenses; and
- $11.1 million decrease in
transportation costs incurred to deliver products to clients,
resulting (i) from decreases in fuel surcharges and in base
transportation rates, (ii) from savings related to the use of new
processes and the transportation management system in the U.S. and
(iii) from a decrease in sales volume.
- Excluding items impacting comparability, adjusted
EBITDA1 was $52.9 million
(9.1% of sales), up $14.0 million
from the same quarter last year.
- Profit attributable to the Corporation's shareholders of
$24.3 million, resulting in basic and
diluted earnings per share ("EPS") of $3.56, up $9.8
million and $1.45,
respectively, from the same quarter in 2022. Excluding items
impacting comparability, adjusted EPS1 was $3.67 compared to $2.54 in the same quarter last year.
- As at September 30, 2023,
long-term debt, including the current portion, stood at
$208.5 million, representing a net
debt to adjusted EBITDA ratio1 of 0.98:1. This is down
$40.8 million from December 31, 2022.
- Dividend of $0.50 per share, paid
on September 15, 2023.
Multi-Year Strategy
To provide clarity and orientation on the opportunities to
pursue and to optimize capital allocation decisions, in early 2022,
the Corporation developed a multi-year strategy (the "Strategy").
This Strategy aims to accelerate revenue growth, improve overall
profitability, and drive long-term value by focusing on three
strategic pillars.
- Building a growth-oriented portfolio;
- Driving sustainable performance; and
- Improving capacity to act.
Associated Incremental Operating Expenses
During the first nine months of 2023, the Corporation has mainly
continued its implementation of new cloud-based management systems
and made additional investments to optimize its production network.
For this purpose, the Corporation reported expenses of $1.2 million and $4.3 million, respectively, in the third
quarter and first nine months of 2023.
Associated Capital Expenditures
The Corporation is dedicating capital expenditures aligned with
its Strategy to support growth, enhance productivity, and invest in
innovation and sustainable development. These investments include
(i) three projects to improve production efficiency and capacity in
Canada, (ii) further upgrades to
the enterprise resource planning ("ERP") software in Canada along with (iii) investments in the
U.S. to improve production efficiency and to deploy a new single
serve line in the Corporation's plant based in North Carolina.
Project Eagle
Project Eagle is a component of the Strategy aimed at
revitalizing underperforming U.S. operations, with the objective to
capture growth, improve margins, and drive long-term sustainable
performance. In addition to reviewing the products and customers
portfolio, Project Eagle also seeks to identify and address key
issues impacting performance within the supply chain and
manufacturing facilities, including product simplification, process
realignment, employee training, and capital deployment.
The Corporation took important steps to reduce its stock keeping
units ("SKU") complexity, harmonize packaging formats, consolidate
formulas, and rationalize low-margin products and/or customers. The
portfolio simplification reduces execution complexity by limiting
downtime related to production changeovers, which should increase
throughput. The Corporation also completed the implementation of a
cloud-based transportation management system, and more recently,
implemented a demand planning system and deployed a new supply
planning and production scheduling tool. Some of these initiatives
will ultimately benefit the rest of the organization; for instance,
the transportation management and demand planning systems are first
rolled out in the U.S. and then throughout the Corporation.
Benefits from those initiatives began materializing in the
performance of the first nine months of 2023 and the Corporation
expects further benefits as it gradually builds back volume
following the portfolio simplification.
Outlook
The Corporation is making the following forward-looking
statements for fiscal 2023:
Sales growth rate
- During the first nine months of 2023, the Corporation has taken
additional pricing action on its branded and private label product
offerings, including adjusting contracts with certain private label
customers to recover as much as possible the cost increases it
incurred. It expects the run rate effects of such pricing action to
continue to be felt during the fourth quarter. The Corporation is
also taking further pricing action during the fourth quarter mainly
due to the higher cost of orange concentrate.
- For 2023, barring any significant external shocks and excluding
foreign exchange impacts, Lassonde expects that its sales growth
rate should be in the mid-single-digit range, mainly driven by
selling price adjustments partly offset by lower volumes. The
Corporation keeps monitoring the evolution of consumer food habits
and demand elasticity in a context of price increases.
Productivity and service level
- Labour and operational initiatives, together with fewer supply
chain constraints, have thus far helped, and should continue to
help during the fourth quarter, to improve the Corporation's
ability to meet demand and return to historical order fill rate
levels, particularly in the U.S.
Key commodity and input costs
- So far in 2023, the Corporation has noticed some stabilization
in the inflation trend of most of its input costs and is expecting
this trend to continue until the end of the year. However, the
Corporation is closely monitoring the price of orange concentrate,
a key commodity for the Corporation, which has been trading at
historically high levels for the last 12 months, even reaching a
new peak of US$4.32/lbs sol. in
October 2023. The information
currently available indicates that this trend will continue to
persist for a foreseeable future. The Corporation is also
monitoring the price of cranberries and sweeteners.
- Given that a large portion of the raw material and packaging
purchases made by Lassonde's Canadian operations are in U.S.
dollars, a strengthening of this currency against the Canadian
dollar could result in a higher cost for products sold in the
Canadian market. Furthermore, the Corporation is expecting an
unfavourable foreign exchange impact for 2023 when considering its
hedged positions.
Expenses, including expenses related to the Strategy
- In 2022, the Corporation had experienced a $13.9 million decrease in performance-related
salary expenses, whereas in 2023, all other things being equal,
these expenses should return to the upper range of the levels seen
in the past.
- During 2023, Lassonde plans to continue deploying its Strategy,
revitalizing its U.S. operations, and upgrading its technology
infrastructures. It also plans to continue implementing new
cloud-based demand planning and transportation management systems,
the aim being to improve customer service and lower overall
distribution costs. It also intends to upgrade its U.S. ERP.
Spending in support of its Strategy is expected to reach
approximately $7.5 million in
2023.
- The interest expense for the fourth quarter of 2023 will be
higher than that of fourth-quarter 2022 given higher rates on
floating rate debt.
Effective tax rate
- Effective tax rate should be about 26.5% for fiscal 2023.
Working capital
- As supply chain challenges appear to be dissipating, the
Corporation has revised its inventory accumulation strategy and
expects to progressively reduce its inventory levels. As a result,
its Days Operating Working Capital1 should trend towards
the upper end of its historical levels (pre-COVID-19) during 2023
and within its historical range by the end of fiscal 2024. However,
this strategy might be impacted by (i) opportunistic decisions to
secure inventory cost ahead of potential price increases from
suppliers, (ii) the objective of ensuring an adequate service
level, or (iii) the identification of new potential supply chain
disruptions.
Capital expenditures
- The Corporation's overall capital expenditures program for 2023
is estimated to reach up to 4.5% of its sales as it continues to
deploy capital in support of its Strategy. This estimate depends on
the timing of disbursements for certain large capital projects and
on the evolution of the macroeconomic environment. The Corporation
expects this ratio to return to a range of 2.0% to 3.0% of its
sales (including a maintenance component and a certain growth
component) by 2025. The new capital assets will be financed, to the
extent possible, using the Corporation's operating cash flows,
although the Corporation may also turn to borrowing if interest
rates and conditions prove advantageous.
The above forward-looking statements were prepared using the
following key assumptions: the currently observed geopolitical
situation and macroeconomic trends, including employment,
inflation, and interest rates; the strength of the U.S. dollar
(compared to the Canadian dollar); the continuity of recently
observed consumer behaviours and market trends for the
Corporation's products; no material disruption to the Corporation's
operations (including workforce availability) or to its supply
chain; the effectiveness of the Corporation's selling price
adjustment initiatives; the limited impact of the Corporation's
selling price adjustment initiatives on product demand; the
continuity of observed trends in the competitive environment and
the effectiveness of the Corporation's strategy to position itself
competitively in the markets in which it competes; limited
additional cost increases from suppliers; adequate availability of
key inputs; the continuity of recently observed normalized trends
in the throughput capacity of key U.S. plants; expected lead time
for new manufacturing equipment; and adequate contractor or
consultant availability to progress the Corporation's capital
expenditures. The Corporation cautions readers that the foregoing
list of factors is not exhaustive. It should be noted that some of
these key assumptions, including those related to the geopolitical
situation and macroeconomic trends, are volatile and rapidly
evolving. In preparing its outlook, the Corporation made
assumptions that do not consider any other extraordinary events or
circumstances beyond its control. The Corporation believes the
expectations reflected in the forward-looking statements are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements should
not be unduly relied upon. For additional information, refer to the
Caution Concerning Forward-Looking Statements section at the end of
this press release and to Section 2 – " Forward-Looking
Statements" of the Corporation's MD&A for the third quarter
of 2023.
Dividend
In accordance with the Corporation's dividend policy, the Board
of Directors declared today a quarterly dividend of $0.50 per share, payable on December 15, 2023 to all registered holders of
Class A and Class B shares on November 23,
2023. This dividend is an eligible dividend.
Conference Call to Discuss Third Quarter 2023 Financial
Results
OPEN
TO:
|
Investors, analysts,
and all interested parties
|
DATE:
|
Friday, November 10,
2023
|
TIME:
|
1:30 PM ET
|
CALL:
|
604-638-5340 (for
international participants)
|
|
1-800-319-4610 (for
North American participants)
|
A live audio broadcast of the conference call will be available
on the Corporation's website, on the Investors page or here:
https://www.gowebcasting.com/12690. A replay of the webcast will
remain available at the same link until midnight, November 17, 2023.
Financial Measures Not in Accordance With IFRS
The financial measures or ratios, further described below, do
not constitute standardized financial measures or ratios in
accordance with the financial reporting framework used to prepare
the Corporation's financial statements. These non-IFRS measures
should not be considered in isolation or as a substitute for
financial measures prepared in accordance with IFRS. Comparing them
to similar financial measures or ratios presented by other issuers
may not be possible.
Items impacting the comparability between periods
The following table contains a list, description and
quantification of items impacting the comparability of the
financial performance between the periods:
|
Third quarters
ended
|
Sept. 30,
2023
|
Oct. 1,
2022
|
(in millions of
dollars)
|
$
|
$
|
Costs related to the
Strategy
|
0.7
|
1.5
|
Implementation costs of
new cloud-based systems
|
0.5
|
1.3
|
Production interruption
of a line in New Jersey
|
-
|
1.5
|
Adjustment related to
non-recoverable sales taxes
|
0.3
|
-
|
Sum of items impacting
comparability on operating profit and EBITDA:
|
1.5
|
4.3
|
Item impacting
comparability on "Other (gains) losses":
|
|
|
Gain related to the
preliminary settlement of an insurance claim
|
(0.5)
|
-
|
Tax impact of previous
items
|
(0.3)
|
(1.1)
|
Impact on
profit
|
0.7
|
3.2
|
Attributable to:
|
Corporation's
shareholders
|
0.7
|
2.9
|
Non-controlling
interest
|
0.0
|
0.3
|
EBITDA and Adjusted EBITDA
EBITDA is a financial measure used by the Corporation and
investors to assess the Corporation's capacity to generate future
cash flows from operating activities and pay financial expenses.
Adjusted EBITDA is a financial measure used by the Corporation to
compare EBITDA between periods by excluding items impacting
comparability. EBITDA consists of the sum of operating profit and
the "depreciation of property, plant and equipment and amortization
of intangible assets" item shown in the Consolidated Statement of
Cash Flows. Adjusted EBITDA is calculated by adjusting the EBITDA
with items considered by management as impacting the comparability
between periods.
|
Third quarters
ended
|
Sept. 30,
2023
|
Oct. 1,
2022
|
(in millions of
dollars)
|
$
|
$
|
Operating
profit
|
35.7
|
19.9
|
Depreciation of
property, plant and equipment and amortization of intangible
assets
|
15.7
|
14.7
|
EBITDA
|
51.4
|
34.5
|
Sum of items impacting
comparability
|
1.5
|
4.3
|
Adjusted
EBITDA
|
52.9
|
38.9
|
Adjusted Profit Attributable to the Corporation's
Shareholders and Adjusted EPS
Adjusted profit attributable to the Corporation's shareholders
and adjusted EPS are financial measures used by the Corporation to
compare profit attributable to the Corporation's shareholders and
EPS between periods by excluding items impacting comparability.
They are calculated by adjusting them with items considered by
management as impacting the comparability between periods.
|
Third quarters
ended
|
Sept. 30,
2023
|
Oct. 1,
2022
|
(in millions of
dollars, unless otherwise indicated)
|
$
|
$
|
Profit attributable to
the Corporation's shareholders
|
24.3
|
14.5
|
Sum of items impacting
comparability
|
0.7
|
2.9
|
Adjusted profit
attributable to the Corporation's shareholders
|
25.0
|
17.4
|
Weighted average number
of shares outstanding (in thousands)
|
6,822
|
6,870
|
Adjusted EPS (in
$)
|
3.67
|
2.54
|
Net Debt to Adjusted EBITDA
Net debt to adjusted EBITDA is a financial measure used by the
Corporation to assess its ability to pay off existing debt and
define available borrowing capacity. To calculate the net debt to
adjusted EBITDA ratio, net debt is divided by the sum of adjusted
EBITDA from the last four quarters. Net debt represents long-term
debt, including the current portion, less the "Cash and cash
equivalents" item, as they are presented in the Corporation's
Consolidated Statement of Financial Position.
|
As at
Sept. 30,
2023
|
As at
Dec. 31,
2022
|
(in millions of
dollars, except the net debt to adjusted EBITDA
ratio)
|
$
|
$
|
Current portion of
long-term debt
|
7.1
|
100.8
|
Long-term
debt
|
201.5
|
148.6
|
Less: Cash and cash
equivalents
|
(20.2)
|
(2.7)
|
Net debt
|
188.4
|
246.7
|
Sum of adjusted EBITDA
from the last four quarters
|
192.8
|
157.1
|
Net debt to adjusted
EBITDA ratio
|
0.98:1
|
1.57:1
|
Days Operating Working Capital
Days operating working capital is a financial efficiency measure
used by the Corporation to represent the amount of sales tied up as
operating working capital. To calculate this financial measure,
operating working capital is divided by the last quarter's sales,
as they are presented in this press release, and multiplied by 91
days. Operating working capital is the sum of accounts receivable
and inventories, less accounts payable and accrued liabilities, as
they are presented in the Corporation's Consolidated Statement of
Financial Position.
About Lassonde
Lassonde Industries Inc. is a leader in the food and beverage
industry in North America. The
Corporation develops, manufactures, and markets a wide range of
private label and national brand products, including ready-to-drink
beverages, fruit-based snacks as well as frozen juice concentrates.
It is also a leading producer of cranberry sauces and specialty
food products such as pasta sauces, soups and fondue broths and
sauces. The Corporation also imports and markets selected wines
from several countries of origin and produces apple cider and
cider-based drinks.
The Corporation operates 16 plants located in Canada and the
United States and produces its superior quality products
through the expertise of over 2,700 full-time equivalent employees.
To learn more, visit www.lassonde.com
The Corporation is active in two market segments:
- Retail sales consist of (i) sales to food retailers and
wholesalers such as supermarket chains, independent grocers,
superstores, warehouse clubs, major pharmacy chains and (ii) online
sales; and
- Food service sales consist of sales to restaurants, hotels,
hospitals, schools, and wholesalers serving these
institutions.
Caution Concerning Forward-Looking Statements
This document contains "forward-looking information" and the
Corporation's oral and written public communications that do not
constitute historical fact may be deemed to be "forward-looking
information" within the meaning of applicable securities law. These
forward-looking statements, which include, but are not limited to,
statements on objectives and goals of the Corporation, are based on
current expectations, projections, beliefs, judgments, and
assumptions based on information available at the time the
applicable forward‑looking statement was made and considering the
Corporation's experience combined with its perception of historical
trends.
Forward-looking statements are typically identified by words
such as "anticipate", "continue", "estimate", "expect", "may",
"will", "project", "should", "could", "would", "believe", "plan",
"intend", "design", "target", "objective", "strategy", "likely",
"potential", "outlook", "aim", "goal", and similar expressions
suggesting future events or future performance in addition to the
negative forms of these terms or any variations thereof. All
statements other than statements of historical fact included in
this document may constitute a forward-looking statement.
In this document, forward-looking statements include, but are
not limited to, those set forth in the above "Outlook"
section, which also presents some (but not all) of the key
assumptions used in determining the forward-looking statements.
Some of the forward-looking statements in this document, such as
statements concerning sales growth rate, productivity and service
level, key commodity and input costs, expenses (including expenses
related to the Strategy (defined in the above "Multi-Year
Strategy" section)), effective tax rate, working capital, and
capital expenditures, may be considered to be financial outlooks
for the purposes of applicable securities legislation. These
financial outlooks are presented to evaluate potential future
earnings and anticipated future uses of cash flows and may not be
appropriate for other purposes.
Various factors or assumptions are typically applied by the
Corporation in elaborating the forward‑looking statements. These
factors and assumptions are based on information currently
available to the Corporation, including information obtained by the
Corporation from third-party sources. Readers are cautioned that
the assumptions considered by the Corporation to support these
forward-looking statements may prove to be incorrect in whole or in
part.
The significant factors that could cause actual results to
differ materially from the conclusions, forecasts or projections
contained in the forward-looking statements contained herein
include, among other things, risks associated with the following:
the availability of raw materials and related price variations
(including the price of orange concentrate, a key commodity for the
Corporation, which has continued to trade above historical highs
for the past several months and shows no sign of abating);
fluctuations in the prices of inbound and outbound freight, the
impact of oil prices (and derivatives thereof) on the Corporation's
direct and indirect costs along with the Corporation's ability to
transfer those increases through higher prices or other means, if
any, to its clients in competitive market conditions and
considering demand elasticity; the ability to maintain strong
sourcing and manufacturing platforms and efficient distribution
channels; disruptions in or failures of the Corporation's
information technology systems as well as the development and
performance of technology; cyber threats and other
information-technology-related risks relating to business
disruptions, confidentiality, data integrity, and business email
compromise-related fraud; the scarcity of labour and
the related impact on the hiring, training, developing, retaining
and reliance of personnel together with their productivity,
employment matters, compliance with employment laws across multiple
jurisdictions, and the potential for work stoppages due to
non-renewal of collective bargaining agreements or other reasons;
the successful deployment of the Corporation's health and safety
programs in compliance with applicable laws and regulations;
serious injuries or fatalities, which could have a material impact
on the Corporation's business continuity and reputation and lead to
compliance-related costs; the successful deployment of the
Corporation's Strategy, including components such as Project Eagle;
climate change and disasters causing higher operating costs and
capital expenditures and reduced production output, and impacting
the availability, quality or price volatility of key commodities
sourced by the Corporation; the increasing concentration of
customers in the food industry, providing them with significant
bargaining power; the implementation, cost and impact of
environmental sustainability initiatives, as well as the cost of
remediating environmental liabilities; changes made to laws that
affect the Corporation's activities as well as the interpretation
thereof, and new positions adopted by relevant authorities; the
ability to adapt to changes and developments affecting the
Corporation's industry, including customer preferences, tastes, and
buying patterns, market conditions and the activities of
competitors and clients; failure to maintain the quality and safety
of the Corporation's products, which could result in product
recalls and product liability claims for misbranded, adulterated,
contaminated, or spoiled food products, along with reputational
damage; risks related to fluctuations in interest rates, currency
exchange rates, liquidity and credit, stock price and pension
obligations; deterioration of general macroeconomic conditions,
including international conflicts, which can lead to negative
impacts on the Corporation's suppliers, customers and operating
costs; the incurrence of restructuring, disposal, or other related
charges together with the recognition of impairment charges on
goodwill or long-lived assets; the sufficiency of insurance
coverage; and the implications and outcome of potential legal
actions, litigation and regulatory proceedings to which the
Corporation may be a party. The Corporation cautions readers that
the foregoing list of factors is not exhaustive.
The Corporation's ability to achieve its environmental targets
and goals is further subject to, among other factors, its ability
to access and implement all technology necessary to achieve them as
well as the development and performance of technology, innovation
and the future use and deployment of technology and associated
expected future results, and environmental regulation. The
Corporation's ability to achieve its ESG commitments is further
subject to, among other factors, its ability to leverage its
supplier relationships.
Assumptions, expectations, and estimates made in the preparation
of forward-looking statements and risks and uncertainties that
could cause actual results to differ materially from
forward-looking statements are discussed in the Corporation's
materials filed with the Canadian securities regulatory authorities
from time to time, including information about risk factors that
can be found in Section 19 - "Uncertainties and Principal Risk
Factors" of the Corporation's MD&A for the year ended
December 31, 2022. Readers should
review this section in detail.
All forward-looking statements included herein speak only as of
the date hereof. Unless required by law, the Corporation does not
undertake any obligation to publicly update or revise
forward-looking statements, whether as a result of new information,
future events or otherwise. All forward-looking statements
contained herein are expressly qualified by this cautionary
statement.
_______________________________________
|
1 This
measure does not constitute a standardized financial measure in
accordance with the financial reporting framework used to prepare
the Corporation's financial statements. Comparing it to a similar
financial measure presented by other issuers may not be possible.
Refer to Section "Financial Measures Not in Accordance with
IFRS" of this press release for more information, including the
definition and composition of the measure or ratio as well as the
reconciliation to the most comparable measure in the financial
statements, as applicable.
|
SOURCE Lassonde Industries Inc.