Legumex Walker Reports Third Quarter 2011 Financial Results

- Quarter Highlighted by Significant Progress on Integration of Merged Companies -

WINNIPEG, Nov. 14, 2011 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the quarter ended September 30, 2011. As the Company completed the acquisitions of the Roy Legumex Group of Companies and Walker Seeds Ltd. on July 14, 2011, its financial results for the third quarter of 2011 reflect 79 days of operations for the Special Crops Division beginning July 14, 2011 and ending September 30, 2011.

Financial and Operational Highlights for the Third Quarter of 2011 included:

  • Sales, generated entirely by the Company's Special Crops Division, of $41.4 million;
  • EBITDA1 for the Special Crops Division of $2.5 million;
  • EBITDA1 of $1.9 million;
  • Net loss of $2.4 million, or $0.22 per share;
  • Adjusted net earnings1 of $0.9 million, or $0.08 per share (excludes impact of certain one-time charges related to the acquisition and transaction costs and non-cash foreign exchange);
  • Consolidated cash flow provided by operations1 of $1.5 million;
  • Incorporated under the laws of Canada and acquired a 100% interest in the Roy Legumex Group of Companies, a 100% interest in Walker Seeds Ltd., and an 85% interest in Pacific Coast Canola, LLC;
  • Completed an initial public offering of common shares generating gross proceeds of $70.0 million and commenced trading on the Toronto Stock Exchange;
  • Made substantial progress on the integration of the Roy Legumex Group of Companies and Walker Seeds Ltd., which comprise the Special Crops Division of the Company;
  • Broke ground on the Company's newest processing plant and its first located outside of Canada; a new canola oilseed processing plant in Warden, Washington, the construction of which is proceeding on schedule and on budget.

"'Stronger together' is the notion that brought our companies together.  Our first quarter showed us the truth of that phrase as we executed on the strategic initiatives that will drive growth for our Company," said Joel Horn, president and chief executive officer, Legumex Walker Inc.  "The first phase of our integration, which is substantially complete, represents important strategic investments that are the basis for a platform that supports both organic and acquisitive growth.  We believe that the fundamentals of the special crops industry remain favourable and that we have excellent opportunities in front of us.  Our plan is to continue with the productive combination of our businesses, to consider possible strategic acquisitions and to bring our canola plant on line in 2013, the construction of which remains on schedule and on budget.  We've inherited proud and successful traditions from our predecessor companies and we look forward to building upon that foundation.  We are indeed stronger together."

Financial Results

As the Company was not in existence during the three-month period ended September 30, 2010 and the merger of the predecessor companies does not constitute a continuation of the business for accounting purposes, the Company's financial results for the three-month period ended September 30, 2011 are presented without comparative results for the same period in the prior year.  However, if the combination had taken place as at April 1, 2011, sales would have increased by $80.2 million and earnings before other items and income taxes would have increased by $3.95 million.

Selected Financial Information

Summary of Quarterly Results
(in thousands of Cdn $ except as indicated - unaudited)
Sales 41,399
Cost of sales 36,984
Gross margin 4,415
Less: Loss from investment in associates 8
Less: Selling, general and administrative costs 2,555
EBITDA1 1,852
Less: Amortization 1,332
EBIT1 520
Less: Financing costs 441
Less: Provision for (recovery of) income taxes (800)
Adjusted net earnings1 879
Less: non cash foreign exchange 2,270
Less: write down of investment 1,000
Less: (Gain) loss on disposal of property, plant, equipment  1
Add: finance income 12
Net loss per financial statements (2,380)
Attributable to:  
Non-controlling interests (7)
Shareholders of the Company (2,373)
Total net loss (2,380)
 
Basic weighted average number of shares (000s) 10,945
Net earnings (loss) per share (0.22)
Adjusted net earnings per share1 0.08
 
Total assets  $206,348
Non-current portion of long-term debt $16,349

Consolidated Results

Sales for the third quarter of 2011 were $41.4 million and were generated entirely by the Special Crops Division.  Earnings before interest, taxes, depreciation and amortization (EBITDA)1 was $1.9 million.  Net loss was $2.4 million, or $0.22 per share, and includes the impact of certain charges related to the acquisition and transaction costs and non-cash foreign exchange.  Excluding these items, adjusted net earnings1 for the third quarter of 2011 were $0.9 million, or $0.08 per share.

Segment Results

Summary of Segment Quarterly Results
(in thousands of Cdn $ - unaudited)
  Special Crops  Oilseed Processing  Corporate Total
Sales 41,399      41,399
Cost of sales 36,984     36,984
Gross margin 4,415     4,415
Less: Loss from investment in associates 8     8
Less: Selling, general and administrative costs  1,870 46 639 2,555
EBITDA1 2,537 (46) (639) 1,852
Less: Amortization 1,332     1,332
EBIT1 1,205 (46) (639) 520

Special Crops Division

Sales for the Special Crops Division, generated through the sale of pulse and other special crops, for the third quarter of 2011 were $41.4 million.  Economic turmoil in Europe and its impact on the world financial and currency markets appears to be having a negative short-term impact on the global pulse industry as growers and buyers postpone their selling and buying activities amidst volatile and uncertain market conditions.

Cost of sales, which includes the cost of special crops, internal processing costs, third-party processing costs and freight, for the third quarter of 2011 was $37.0 million, resulting in a gross margin of $4.4 million (10.6% of sales). Gross margin percentage will vary from year to year and quarter to quarter based on the strength of demand, product mix, as well as the timing and location of purchases by LWI of pulses and other special crops.

Selling, general, and administrative expenses for the Special Crops Division for the third quarter of 2011 were $1.9 million (4.5% of sales).  The Company believes that a portion of its selling, general and administrative costs during the quarter were attributable to events and factors related to the commencement of business as a going concern, the start of the Pacific Coast Canola plant construction project and integration activities.

EBITDA for the Special Crops Division for the third quarter of 2011 was $2.5 million.

Oilseed Processing Division

Construction on the Pacific Coast Canola ("PCC") plant commenced during the reporting period.  Plant operations are expected to commence in early 2013.  PCC incurred approximately $46,000 in operating expenses during the reporting period.  The majority of costs incurred by PCC are capitalized as PCC Plant costs.  The Company acquired an 85% interest in PCC during the reporting period and, as such, operating results have been consolidated in the Company's third quarter results from the date of acquisition (July 14, 2011).

Construction on the PCC Plant is progressing on schedule and on budget.  67% of construction costs had been contracted as of September 30, 2011 and approximately 72% of construction costs had been contracted to date.  Demolition and site preparation work is completed and foundation work is scheduled to begin mid-November.

1Non-GAAP Measures

This press release contains references to "EBIT" "EBITDA," "cash flow from operations" and "Adjusted Net Earnings". EBIT is defined for the purposes of this press release as earnings from operations before interest and taxes.  EBITDA is defined for the purposes of this press release as earnings from operations before other income (expenses), amortization financings costs and income taxes. Cash flow from operations is the cash from (or used in) operating activities excluding non cash working capital changes.  Adjusted Net Earnings is EBIT less financing costs and income taxes.

Management believes that EBIT, EBITDA cash flow from operations and Adjusted Net Earnings are useful supplemental measures of cash flow prior to debt service, capital expenditures, income taxes and other non-cash items included in earnings. Management uses cash flow from operations as a financial measure of liquidity. Management believes excluding the seasonal swings of non cash working capital assists in evaluation of long term liquidity. EBIT, EBITDA, cash flow from operations and Adjusted Net Earnings are not recognized earnings measures under Canadian Generally Accepted Accounting Principles or IFRS (collectively referred to herein as "Canadian GAAP") and do not have standardized meanings prescribed by Canadian GAAP. Therefore, EBIT, EBITDA, cash flow from operations and Adjusted Net Earnings may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBIT, EBITDA, cash flow from operations and Adjusted Net Earnings should not be construed as an alternative to net income or loss (which are determined in accordance with Canadian GAAP) as an indicator of the performance of the Company or as a measure of liquidity and cash flows.

The Company's method of calculating EBIT, EBITDA, cash flow from operations and Adjusted Net Earnings may differ materially from the methods used by other public companies and, accordingly, may not be comparable to similarly titled measures used by other public companies.

For a reconciliation of net earnings determined in accordance with IFRS, see the table in Section 12 of the Management's Discussion and Analysis for the quarter ended September 30, 2011, which is available on SEDAR (www.sedar.com).

Conference Call

Legumex Walker will host a conference call on Tuesday, November 15, 2011 at 1:00 p.m. ET to discuss its third quarter 2011 financial results. The Company expects to report its financial results on Monday, November 14, 2011 after market close.  To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191.  Please connect approximately 10 minutes prior to the start of the call to ensure access.  A recording of the conference call will be archived for replay by telephone until Tuesday, November 22, 2011 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 22511920.  A live audio webcast of the conference call will be available http://www.legumexwalker.com/investors-presentations.php. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About Legumex Walker Inc.

Legumex Walker is a growth‐oriented processor and merchandiser of pulses (lentils, peas, beans and chickpeas), other special crops and canola products. As a result of the combination of the Roy Legumex Group of Companies and Walker Seeds Ltd., the Company is expected to be one of the largest processors of pulses and other special crops in Canada, with nine processing facilities strategically located in key growing regions throughout Saskatchewan and Manitoba, a global sales, logistics and distribution platform and access to multimodal transportation capabilities. In addition the Company has an 85 percent interest in Pacific Coast Canola, LLC, a company that is constructing a canola oil seed processing facility in Washington State.

Cautionary Note on Forward Looking Statements

This press release contains certain forward-looking statements. Forward-looking statements include, but are not limited to, those with respect to the cost of production, currency fluctuations, the growth of LWI's business, strategic initiatives, planned capital expenditures, plans and reference to future operations and results, and expectations regarding future capital resources and liquidity of the Company.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of LWI (including its operating subsidiaries) to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such risks and uncertainties include, among others, timing and cost overrun risks associated with the construction of the PCC Plant (as defined herein), risks related to the operation of the PCC Plant, product liabilities, environmental risks, regulations related to agricultural commodities, weather related risks, the demand for and availability of rail, port and other transportation services, the actual results of harvests, fluctuations in the price of pulses and other crops, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, risks relating to the integration of acquisitions, as well as those factors referred to in the section entitled "Risk Factors" in LWI's Prospectus dated June 30, 2011 which is available on SEDAR at www.sedar.com and which should be reviewed in conjunction with this document. Although LWI has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, 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. Accordingly, readers should not place undue reliance on forward-looking statements.

Although LWI believes the assumptions inherent in forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this press release.

LWI expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

SOURCE Legumex Walker Inc.

For further information:

MEDIA:

Jon Austin
jon@jaustingroup.com
(612) 839-5172

INVESTOR RELATIONS:

Marin Landis
Director of Investor Relations - Legumex Walker Inc.
marinl@legumexwalker.com
(206) 547-1078

Lawrence Chamberlain
TMX Equicom
lchamberlain@equicomgroup.com
(416) 815-0700 ext. 257

Profil de l'entreprise

Legumex Walker Inc.

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