Clarke Inc. Reports 2013 Year End Results, Quarterly Dividend Declaration and a 62% Increase in Book Value per Share
HALIFAX, March 6, 2014 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB.A) today announced its results for the year ended December 31, 2013.
RESULTS OF OPERATIONS
Highlights of the consolidated financial statements for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 are as follows:
|(in millions, except per share amounts)||
|Revenue and other income||39.5||9.6||115.1||55.7|
|Net income (loss) attributable to equity holders of the Company||20.9||(4.5)||52.7||(0.9)|
|Other comprehensive income||2.4||0.6||6.2||3.3|
|Comprehensive income (loss) attributable to equity holders of the Company||23.3||(3.9)||58.9||2.4|
|Basic EPS - continuing operations||1.06||(0.47)||2.50||(0.73)|
|Diluted EPS - continuing operations||0.73||(0.47)||1.78||(0.73)|
|Basic EPS - net income (loss)||1.25||(0.27)||3.17||(0.05)|
|Diluted EPS - net income (loss)||0.87||(0.27)||2.23||(0.05)|
|Cash dividends paid per share (in dollars)||0.10||0.06||0.34||0.12|
|Book value per share (in dollars)||8.32||5.15||8.32||5.15|
Net income attributable to equity holders of the Company for the year ended December 31, 2013 was $52.7 million compared with net loss of $0.9 million in 2012. During the year ended December 31, 2013, the Company had realized gains on its marketable securities of $8.4 million compared to realized losses of $2.8 million in 2012. The Company had unrealized gains on its marketable securities of $25.2 million for the year ended December 31, 2013, compared to unrealized losses of $4.8 million in 2012.
The Commercial Tanks & Home Heating segment generated EBITDA of $10.4 million in 2013 compared to $8.5 million in 2012. This increase was due in part to the acquisition of 90% of Pro-Par Group ("Pro-Par") that was completed during the third quarter of 2013. Subsequent to year end, the Company sold its Commercial Tanks & Home Heating segment ("Jerico") to TerraVest Capital Inc. The transaction valued Jerico at an enterprise value of $54.0 million. The Company received $24.9 million for its 75% interest in Jerico in the form of a 6.50% promissory note with a three year term.
On October 31, 2013, Clarke announced that it had entered into an agreement to sell its truckload, less-than-truckload and freight logistics businesses (the "Freight Transport Business"), which was included in the Company's former Freight Transportation segment at the time. The transaction was completed on January 1, 2014 and the Company received proceeds of $100.5 million on the sale including an estimated net working capital adjustment of $12.5 million. The Company had net income from discontinued operations of $11.2 million for the year ended December 31, 2013 compared to $11.0 million for the year ended December 31, 2012 which represents the results of the Freight Transport Business.
Basic earnings per share for the year ended December 31, 2013 was $3.17, compared to a basic loss per share of $0.05 for the year ended December 31, 2012, an increase of $3.22 per share. Book value per share at December 31, 2013 was $8.32 compared to $5.15 on December 31, 2012 after deducting the payment of $0.34 per share of dividends in 2013. Adjusting solely for the estimated gain on sale of the Freight Transport Business (to be recognized in the first quarter of 2014) and reflecting the Common Shares outstanding as at March 6, 2014, the Company estimates that its pro forma book value per share is $11.72 of which 75% is held in cash and marketable securities. The Company's current trading price represents a 34% discount to this pro forma book value per share as at March 6, 2014.
Clarke's Board of Directors also announced a quarterly dividend of $0.10 per Common Share payable on April 15, 2014 to shareholders of record at the end of business on March 31, 2014.
Also subsequent to the end of the year, the Company redeemed $12.0 million principal amount of its 6.00% convertible unsecured subordinated debentures due December 31, 2018 (the "Debentures") using cash on hand. The Company presently has $34.5 million principal amount of Debentures outstanding.
QUARTER ENDED DECEMBER 31, 2013
Fourth quarter revenue and other income increased as a result of an increase in the value of the Company's portfolio of publicly-traded securities. Realized and unrealized gains on marketable securities for the fourth quarter of 2013 were $10.8 million compared to losses of $7.8 million for the same period in 2012. This increase was also attributable to increased revenue generated in the Commercial Tanks & Home Heating segment. Higher revenues in the Commercial Tanks & Home Heating segment are due to incremental sales associated with Pro-Par. The Company had income from continuing operations of $18.4 million in the fourth quarter of 2013 compared to a loss of $7.3 million in the same period in 2012. This again was largely driven by the increase in the value of the Company's portfolio of publicly-traded securities and the acquisition in the Commercial Tanks & Home Heating segment. Net income from discontinued operations of $3.3 million for both years consists primarily of the results of the Freight Transport Business, which was sold on January 1, 2014.
For the three months ended December 31, 2013, Clarke's basic EPS was $1.25, compared to a basic loss per share of $0.27 for the same period in 2012.
Throughout 2013 and into 2014 Clarke exited several investments with a view to realize the value that exists in the Company's assets, including several marketable securities, two subsidiaries and several real estate holdings. These transactions provided the Company with considerable value, allowed the Company to eliminate substantially all of its non-convertible debenture debt and started to unlock the significant shareholder value that exists at Clarke but is not sufficiently recognized by the capital markets.
The Company believes that its marketable securities continue to be undervalued by the public markets, despite the appreciation in some of the trading prices of these securities during the fourth quarter of 2013. Clarke believes there is meaningful additional value in each of its current investee companies and Clarke intends to work to realize such additional value in 2014 and beyond, including working with the management and boards of investee companies to further improve their operations and help them achieve their growth potential.
The Company has significant financial resources available to pursue investment opportunities and/or return capital to shareholders. We will continue to evaluate new investment opportunities, with the intention of allocating capital only to those opportunities that meet our return criteria and display significant margins of safety. We will continue to repurchase our shares and convertible debentures depending on market prices.
Clarke has today released a corporate presentation which can be found on its website at www.clarkeinc.com.
Further information about Clarke, including Clarke's Consolidated Financial Statements and Management's Discussion & Analysis for the year ended December 31, 2013, is available at www.sedar.com and www.clarkeinc.com.
Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance the performance of such businesses and increase its return. Clarke's securities trade on the Toronto Stock Exchange (CKI; CKI.DB.A); for more information about Clarke Inc., please visit our website at www.clarkeinc.com.
Note on Forward-Looking Statements and Risks
This press release may contain or refer to certain forward-looking statements relating, but not limited to, the Company's expectations, intentions, plans and beliefs with respect to the Company. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements include, without limitation, those with respect to the future price and value of securities held by the Company, changes in these securities holdings, changes to the Company's hedging practices, currency fluctuations, requirements for additional capital, changes to government regulations, the timing and possible outcome of pending litigation and the estimated gain from, and pro forma book value as a result of, the sale of the Freight Transport Business. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.
With respect to the Company's Investment segment, such risks and uncertainties include, among others, the Company's investment strategy, legal and regulatory risks, general market risk, potential lack of diversification in the Company's investments, interest rates and foreign currency fluctuations and other factors. With respect to the Company's Transportation segment (formerly the Freight Transportation segment), such risks and uncertainties include, among others, competition, seasonality and weather conditions, safety, claims and insurance, government regulation of the transportation industry, reliance on major customers, labour relations, and other factors. Other general risks and uncertainties include, among others, the sale of Company investments and subsidiaries, dividends are not guaranteed, share liquidity, reliance on key executives, environmental considerations, use of information technology and information systems, commodity market risk, risks associated with investment in derivative instruments and other factors.
Although the Company has attempted to identify important factors that could cause actions, events or results not to be as estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.
SOURCE Clarke Inc.For further information:
Chief Financial Officer
Telephone: (902) 442-3987