TORONTO, July 31, 2012 /CNW/ - Richards Packaging Income Fund
(TSX: RPI.UN) (the "Fund") announced today results for the quarter ended June 30, 2012.
Second quarter performance mirrored the first quarter results, returning
to 2008 pre-financial crisis levels, with total revenue up 9.6% mainly
from organic revenue growth at Richards Packaging US. EBITDA1 was up $0.7 million, or 14.4%, due to higher sales. Gross profit and
EBITDA as a percent of sales strengthened to 16.2% and 11.5%
respectively. Net income was up $1.6 million, or 6¢ per Unit, mainly
due to the mark-to-market gain on the exchangeable shares.
First half results reflect growth that began in the fourth quarter of
2011. Total revenue was up 8.7% with organic revenue growth of 7.1% in
addition to incremental revenue with a U.S./Cdn. 3¢ weakening of the
dollar. EBITDA1 was up $1.4 million, or 13.8%, on revenue growth. Net income was down
$0.5 million, or 4¢ per Unit, due to higher income taxes and the
mark-to-mark loss on exchangeable shares.
The $1.7 million of free cash flow2 generated in the second quarter was utilized to pay down $0.5 million
of debt and to cover working capital needs. In June, we began to
purchase Units under our normal course issuer bid. Over the next six
months we expect to lower our investment in inventories and make
further payments on our debt4.
With the distributions no longer eligible for interest deductibility we
continue to utilize loss carry forwards to fully shield Canadian taxes
and to pay out distributions as a full return of capital. Loss carry
forwards should fully shield Canadian taxes until approximately the
fourth quarter of 2012.
The Fund paid monthly distributions of 6.55¢ per Unit during the first
quarter, which represented an annualized yield of 9.0% on the June 30th closing price of $8.77 per Unit. The payout ratio3 for the second quarter was 58%, down from 61% for 2011.
Details of the Fund's results are currently available on Richards
Packaging's website at www.richardspackaging.com and on August 1st on SEDAR at www.sedar.com.
About Richards Packaging Income Fund
The Fund owns Richards Packaging Inc. ("Richards Packaging"), the
leading packaging distributor in Canada, and third largest in North
America. Richards Packaging is a full-service packaging distributor
targeting small- and medium-sized North American businesses. Richards
Packaging has operated since 1912 and currently serves over 11,000
regional food, wine and spirits, cosmetic, specialty chemical,
pharmaceutical and other companies from 18 locations throughout North
Management defines EBITDA as earnings before amortization, financial
expenses, patent defense costs, unrealized losses (gains) and dividends
on exchangeable shares, share of loss (income) - Vision and taxes.
EBITDA is the same as profit from operations as outlined in the interim
financial statements after adding back amortization and patent defense
costs. Management believes that in addition to net income, EBITDA is a
useful supplemental measure for investors of earnings available for
distribution prior to debt service, capital expenditures and taxes.
Management uses this measure as a starting point in the determination
of earnings available for distribution to unitholders and exchangeable
shareholders. In addition, EBITDA is intended to provide additional
information on the operating performance. This earnings measure
should not be construed as an alternative to net income or as an
alternative to cash flows from operating, investing and financing
activities as a measure of liquidity and cash flows. EBITDA does not
have a standardized meaning prescribed by GAAP and therefore method of
calculating EBITDA may not be comparable to similar measures presented
by other companies or income trusts.
Management defines distributable cash flow, in accordance with Richards
Packaging's credit agreement, as EBITDA less interest, cash income tax expense, maintenance capital expenditures and loan
payments. Free cash flow is distributable cash flow less
distributions. The objective of presenting these measures is to
calculate the amount which is available for distribution to unitholders
or exchangeable shareholders and to determine the amount available to
fund increases in working capital or expansion capital. Investors are
cautioned that distributable cash flow should not be construed as an
alternative to cash flow from operating, investing and financing
activities as a measure of the liquidity and cash flows. Distributable
cash flow does not have a standardized meaning prescribed by GAAP and
therefore the method of calculating distributable cash flow may not be
comparable to similar measures presented by other income trusts.
Management defines payout ratio as distributions and dividends declared
over distributable cash flow2. The objective of presenting this measure is to calculate the
percentage of actual distributions in comparison to the amount
available for distribution. Payout ratio does not have a standardized
meaning prescribed by GAAP. The Fund's method of calculating the payout
ratio may not be comparable to similar measures presented by other
This release contains certain forward looking information and statements
within the meaning of applicable securities laws (collectively
"Statements") regarding future growth potential, results of operations,
performance and business prospects and opportunities of the Fund. The
Statements are frequently identified by the use of such words as
"will", "may", "could", "expect", "plan", "anticipate", "believe" and
other similar terminology. Specifically this release contains
Statements with respect to compliance with certain financial covenants
and the recommencement of distributions. These Statements reflect
management's current beliefs and are based on information currently
available to the management of Richards Packaging. A number of factors
could cause actual events or results to differ materially from those
predicted, expressed or implied in the Statements. Factors that could
cause such differences include, among other things, changes in customer
and supplier relationships, the extent and duration of the worldwide recession and the impact on
order volumes and pricing, competition in the industry, inventory
obsolescence, trade risks in respect to foreign suppliers and
fluctuations in foreign exchange and interest rates. Although the
Statements contained in this release are based upon what management
believes to be reasonable assumptions, there can be no assurance that
actual results will be consistent with these Statements. These
Statements are made as of the date of this release and the Fund assumes
no obligation to update or revise them to reflect new events or
SOURCE: Richards Packaging Income Fund
For further information:
Chief Executive Officer
Richards Packaging Inc.
Enzio Di Gennaro
Chief Financial Officer
Richards Packaging Inc.