Lassonde Industries Inc. announces its 2011 Q3 results

ROUGEMONT, QC, Nov. 15, 2011 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) (Lassonde) posted third quarter sales of $210.8 million, up 54.2% from the same quarter of 2010. Compared to 2010, profit attributable to the Company's shareholders decreased $0.6 million to $8.2 million. It should be noted that various costs related to the acquisition of Clement Pappas and Company, Inc. (CPC) had an unfavourable after-tax impact of approximately $2.9 million on profit for the third quarter of 2011.

These results are presented in accordance with International Financial Reporting Standards (IFRS). The results of the same quarter last year have been restated accordingly. An explanatory note concerning the transition is presented in Note 21 to the interim condensed consolidated financial statements dated October 1, 2011.

Financial highlights
(in thousands of Canadian dollars)
Third quarters ended
  October 1,
2011

  October 2,
2010
 
Sales $ 210,822   $ 136,678  
Operating profit 13,758   13,678  
Profit before income taxes 10,631   12,344  
Profit attributable to the Company's shareholders 8,173   8,774  
Basic and diluted earnings per share (in $) $ 1.20   $ 1.33  

Note: These are financial highlights only. Management's Discussion and Analysis, the unaudited interim condensed consolidated financial statements and notes thereto for the third quarter ended October 1, 2011 will be available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.

"We are satisfied with the progress made regarding the integration of CPC. Although the results of our new subsidiary reflect only seven weeks of operations, they have met our expectations," said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.

Financial results
It should first be noted that, on August 12, 2011, the Company along with members of the Pappas and Lassonde families, completed the acquisition of CPC for a total cash consideration of US$400.9 million. Pursuant to this transaction, the Company holds 70.7% of the shares in CPC. Of the remaining 29.3%, 19.3% is held by members of the Pappas family and 10.0% by members of the Lassonde family.

The Company's sales stood at $210.8 million in the third quarter of 2011, up $74.1 million or 54.2% from sales of $136.7 million for the same period of 2010. Sales from CPC added $63.6 million to the sales of third quarter 2011. Excluding CPC's sales, the Company's third quarter sales posted a year-over-year increase of $10.5 million (7.7%), mainly due to price increases and higher sales of private label products. The increase in sales was mitigated by the unfavourable impact of exchange rates on sales in U.S. dollars. For the first nine months of 2011, total sales stood at $490.7 million, up 24.0% from sales of $395.6 million for the first nine months of 2010.

The Company's operating profit for the third quarter of 2011 stood at $13.8 million, up $0.1 million or 0.6% from operating profit of $13.7 million in the same quarter last year. Excluding the impact of the CPC acquisition, operating profit was down $0.9 million (7.0%) from last year's third quarter. This decrease is mostly explained by the fact that price increases were not sufficient to offset the unfavourable impact of sharp rises in apple and orange concentrate costs. The Company's cost of sales was also affected by substantially higher costs for PET, a plastic material used in manufacturing bottles. As for CPC, its third quarter operating profit stood at $1.0 million, but it should be noted that this amount includes $6.8 million in acquisition-related costs. Operating profit for the first nine months of 2011 stood at $35.4 million, up 8.7% from $32.6 million recorded at the end of the first nine months of 2010.

The Company's financial expenses net of financial revenues rose from $1.2 million in the third quarter of 2010 to $3.8 million in this third quarter. The higher financial expenses were mainly due to the financing of the CPC acquisition and the related $2.6 million increase in interest expense. Other (gains) losses went from a $0.2 million loss in the third quarter of 2010 to a $0.7 million gain in the third quarter of 2011. The 2011 gain comes from the combined impact of a $1.6 million exchange gain on a bank balance of approximately US$70 million held to carry out the CPC acquisition and a $0.9 million loss from the change in fair value of financial instruments. For the first nine months, financial revenues went from $0.3 million in 2010 to $0.4 million in 2011; financial expenses went from $3.8 million in 2010 to $6.4 million in 2011, and other (gains) losses remained stable with a loss of $0.2 million for both 2010 and 2011.

Profit before income taxes stood at $10.6 million for the third quarter of 2011, down $1.7 million from $12.3 million in the same quarter last year. Profit before income taxes for the first nine months of 2011 stood at $29.1 million, up 0.9% from $28.9 million in the first nine months of 2010.

An income tax expense at an effective rate of 25.2% (compared to 28.9% in 2010) brought the 2011 third quarter profit to $8.0 million, down 9.3% from $8.8 million in the same quarter of 2010. It should be noted that the total unfavourable impact of all acquisition-related transactions (including the exchange gain on U.S. cash and cash equivalents) was approximately $2.9 million. Profit attributable to the Company's shareholders was $8.2 million, resulting in basic and diluted earnings per share of $1.20 for the third quarter of 2011. This amount reflects the allocation of a portion of CPC's loss to a non-controlling interest. For the same period of 2010, profit attributable to the Company's shareholders stood at $8.8 million, resulting in basic and diluted earnings per share of $1.33. For the first nine months of 2011, profit attributable to the Company's shareholders stood at $21.3 million for basic and diluted earnings per share of $3.21, while it had reached $20.5 million for basic and diluted earnings per share of $3.11 in 2010.

The condensed consolidated statement of cash flows shows that operating activities generated $23.4 million in cash in the third quarter of 2011, while the same activities had generated $13.2 million in cash in the same period last year. Financing activities generated $307.4 million in the third quarter of 2011, while these activities had used $2.4 million in the same quarter of 2010. During the third quarter of 2011, financing through CPC generated $260.9 million in cash flows, leaving $48.9 million for comparative balances. The $48.9 million variance was mainly due to a $2.7 million increase in bank indebtedness, $30.2 million in net proceeds from the offering of 420,000 Class A shares, and the addition of a $15.9 million non-controlling interest. Investing activities used $398.9 million in the third quarter of 2011 compared to $8.7 million for the same quarter of 2010. Excluding the $393.4 million related to CPC, the resulting change in investing cash flows was $3.2 million. At the end of the third quarter of 2011, the Company reported a bank overdraft of $9.2 million, compared to cash and cash equivalents of $57.2 million at the end of the third quarter of 2010.

Outlook
The CPC acquisition has a significant impact on the Company's results. To better understand the impact of this acquisition, it is important to note that CPC recorded, for the 12 months ended October 1, 2011, sales of approximately US$400 million and EBITDA of approximately US$58 million. It is also worth noting that CPC's sales for the last three months of the year have been slightly higher than other months of the year.

The North American market for fruit juice and drinks is impacted by higher raw material costs. As food processors adjust their prices to respond to the situation, the consumption volume is exposed to downward pressure in the retail sector. The costs of apple and orange concentrates are still rising steeply despite expectations of good crops. The Company adjusts its selling prices to minimize the effect of these significant fluctuations on its profitability but believes that these adjustments might not be sufficient to offset raw material increases. In addition, the Company has observed that its price adjustments have had some negative effects on sales volume.

Barring any major external shocks and excluding the sales of CPC, the Company remains confident about its ability to maintain 2011 sales growth at a level slightly higher than in fiscal 2010.

About Lassonde Industries Inc.
Lassonde Industries is a North American leader in the development, manufacture and sale of innovative and distinctive lines of fruit and vegetable juices and drinks marketed under recognized brands such as Everfresh, Fairlee, Flavür, Fruité, Graves, Oasis and Rougemont.

Subsidiaries include Clement Pappas and Company, Inc., the second-largest producer of store brand ready-to-drink fruit juices and drinks in the Unites States, and a major producer of cranberry juices, drinks and sauces. Headquartered in New Jersey, Clement Pappas operates five production facilities and a cranberry receiving station that enable it to provide its U.S. customers with coast-to-coast service.

Lassonde also markets specialty food products such as fondue broths and sauces, cheese and chocolate fondues, soups, gravies, and sauces for pasta and pizza under recognized trademarks such as Antico and Canton. The Company imports and markets selected wines from various countries of origin, and manufactures apple ciders and wine-based beverages.

Lassonde strives to maintain high standards of quality and to promote active and healthy living. More than 2,000 employees contribute to the Company's growth. To learn more, visit www.lassonde.com.

SEDAR registration number: 00002099

Caution Concerning Forward-Looking Statements

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

 

SOURCE LASSONDE INDUSTRIES INC.

For further information:

Investor contact
Guy Blanchette, CA, FCMA
Vice-President and Chief Financial Officer
Lassonde Industries Inc.
450-469-4926, extension 10782
 
Media contact
Stefano Bertolli
Vice-President Communications
Lassonde Industries Inc.
450-469-4926, extension 10265

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LASSONDE INDUSTRIES INC.

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