Lassonde Industries Inc. announces its Q3 2015 results

ROUGEMONT, QC, Nov. 6, 2015 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $363.3 million in the third quarter of 2015, a 15.4% increase year over year. Profit attributable to the Company's shareholders for this period totalled $14.8 million, up $4.2 million from the third quarter of 2014.

 



Financial highlights

(in thousands of dollars)

Third quarters

ended


September 26,

2015


September 27,

2014

Sales

$

363,337


$

314,978

Operating profit

28,806


19,980

Profit before income taxes

22,539


14,855

Profit attributable to the Company's shareholders

14,837


10,615

Basic and diluted earnings per share (in $)

$

2.12


$

1.52

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 26, 2015 will be available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.

 

"For the third quarter and first nine months of 2015, we're pleased to be reporting solid sales and profit growth despite the adverse effects of a low Canadian dollar. And while this unfavourable foreign exchange impact is expected to intensify in the fourth quarter of 2015, we remain optimistic about our financial results growth for fiscal 2015 as a whole," said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.

Financial results

The Company's sales totalled $363.3 million in the third quarter of 2015, up $48.3 million or 15.4% from $315.0 million in sales in the same period of 2014. Sales from Apple & Eve, LLC ("A&E") stood at $63.1 million in the third quarter of 2015. A&E's sales had reached $38.8 million for the period of July 26, 2014 (the date when A&E began operating under the Company's control) to September 27, 2014. Excluding A&E's sales, the Company's third-quarter sales posted a year-over-year increase of $24.0 million (8.7%). This increase was primarily driven by a favourable foreign exchange impact. For the first nine months of 2015, sales totalled $1,047.8 million, up 26.0% from $831.6 million in the first nine months of 2014.

The Company's operating profit for the third quarter of 2015 totalled $28.8 million, up $8.8 million from operating profit of $20.0 million in the same quarter last year. A&E's operating profit was $2.9 million during the quarter ended September 26, 2015. For the period of July 26, 2014 to September 27, 2014, A&E had posted a $0.6 million operating loss due, in part, to a $1.0 million increase in cost of sales attributable to an inventory step-up resulting from the acquisition. Moreover, the Company incurred, during the third quarter of 2014, $3.5 million in expenses related to the A&E acquisition. Excluding the impact of the A&E acquisition, operating profit was up $1.8 million from last year's third quarter. This increase came mainly from improved profitability within the Canadian operations partly offset by an unfavourable impact of a low Canadian dollar on U.S.-dollar purchases and by a charge related to customs duties that could be required by the U.S. authorities for the years 2009 to 2013. Operating profit also benefited from the favourable impact of foreign exchange movements on the conversion into Canadian dollars of the results of Clement Pappas and Company, Inc. ("CPC"). Operating profit for the first nine months of 2015 stood at $75.1 million, up $19.0 million from $56.1 million at the end of the first nine months of 2014.

The Company's financial expenses went from $6.0 million in the third quarter of 2014 to $7.6 million this quarter. This $1.6 million increase was largely due to a higher change in the fair value of participating loans explained by a low Canadian dollar. For the first nine months, financial expenses went from $15.3 million in 2014 to $21.0 million this fiscal year.

"Other (gains) losses" went from a $0.8 million gain in the third quarter of 2014 to a $1.3 million gain in 2015. The 2014 third-quarter gain was essentially due to foreign exchange gains. The $1.3 million gain in the third quarter of 2015 was mainly due to $1.8 million in foreign exchange gains partly offset by $0.7 million in losses resulting from a change in the fair value of interest rate swaps related to CPC's debt. For the first nine months, the "Other (gains) losses" item was a $1.9 million gain in 2015 compared to a $1.2 million gain in 2014.   

Profit before income taxes totalled $22.5 million for the third quarter of 2015, up $7.6 million from $14.9 million in the same quarter of 2014. For the first nine months of 2015, profit before income taxes stood at $55.9 million, up $13.9 million from $42.0 million in the first nine months of 2014.

Income tax expense went from $3.9 million in the third quarter of 2014 to $6.9 million in the third quarter of 2015. At 30.5%, the 2015 third-quarter effective income tax rate is higher than the 26.4% rate in the same quarter of 2014. This higher tax rate reflects an unfavourable change in the geographic mix of the Company's taxable income. Income tax expense for the first nine months of 2015 stood at $17.1 million, up $5.5 million from $11.6 million in the first nine months of 2014.

The 2015 third-quarter profit was $15.7 million, up $4.8 million from $10.9 million in the third quarter last year. It should be noted that this quarter's result includes a profit of $2.1 million from A&E while last year's third-quarter result included a net loss of $0.4 million from A&E and $2.3 million, net of tax, in acquisition-related costs. For the first nine months of 2015, profit totalled $38.9 million versus profit of $30.4 million in the first nine months of 2014.

Profit attributable to the Company's shareholders was $14.8 million, resulting in basic and diluted earnings per share of $2.12 for the third quarter of 2015. In the third quarter of 2014, profit attributable to the Company's shareholders had totalled $10.6 million, resulting in basic and diluted earnings per share of $1.52. For the first nine months of 2015, profit attributable to the Company's shareholders totalled $36.8 million, resulting in basic and diluted earnings per share of $5.26 and, in the same nine-month period of 2014, profit had totalled $28.9 million, resulting in basic and diluted earnings per share of $4.14.

Cash flows from operating activities generated $27.9 million in cash during the third quarter of 2015, while they had generated $11.0 million in cash during the same period last year. Financing activities used $22.7 million in the third quarter of 2015, while these activities had generated $141.4 million in the same quarter of 2014. During the third quarter of 2014, cash flows generated for the A&E acquisition had totalled $140.7 million, leaving a difference of $23.4 million on a comparative basis. Investing activities used $4.2 million in the third quarter of 2015 compared to $168.3 million for the same quarter of 2014. Excluding the $156.9 million in cash flows related to the A&E acquisition in 2014, investing cash flows decreased $7.2 million year over year. At the end of the third quarter of 2015, the Company reported a cash and cash equivalents balance of $0.5 million and a bank overdraft of $14.3 million compared to a cash and cash equivalents balance of $0.2 million and a bank overdraft of $11.3 million at the end of the third quarter of 2014.

Outlook

A lack of sustained growth in the fruit juice and drink market continues to affect the sales volumes of North American producers in the sector. The Company is seeing signs of weakness in the Canadian market that is affecting demand in a challenging competitive environment. The Company does not see any signs of competitive activity diminishing in the fourth quarter of 2015. The Company is seeking to limit the impact of increased competition through national brand product innovation and continued private label customer development.

Fiscal 2015 will include an entire year of A&E's financial results. To better measure the impact of the acquisition, it is important to note that the closing date of the A&E acquisition was July 25, 2014 and that A&E had recorded, for the 12-month period ended May 31, 2014, sales of approximately US$180 million and adjusted EBITDA of approximately US$15 million. The annual amortization of other intangible assets resulting from the A&E acquisition depends on the purchase price allocation that the Company completed in 2014. The Company believes that the annual amortization expense on these other intangible assets will be approximately US$5.7 million.

The Company is adjusting its product marketing strategy to minimize the unfavourable impact of the relative weakness of the Canadian dollar on its profitability. It should be noted, however, that this adjustment could have some negative effects on sales volume. Barring any major external shocks (and excluding sales from A&E to maintain a comparable basis), the Company remains optimistic about its ability to slightly increase its consolidated sales in 2015 compared to those of 2014.

About Lassonde

Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of a wide range of ready-to-drink fruit and vegetable juices and drinks marketed under brands such as Everfresh, Fairlee, Fruité, Graves, Oasis and Rougemont.

Lassonde is also the second largest producer of store brand shelf-stable fruit juices and drinks in the United States and a major producer of cranberry sauces.

In 2014, Lassonde completed the acquisition of Apple & Eve, LLC of Port Washington, New York, a leading national brand juice company in the United States. This company offers more than 100 different products sold under its flagship brand, Apple & Eve, and also under the Northland, Seneca and The Switch brands.

Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company imports and markets selected wines from various countries and manufactures apple ciders and cider-based beverages.

The Company produces superior quality products through the expertise of approximately 2,100 people working in 14 plants across Canada and the United States. 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, FCPA, CA, Executive 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

RELATED LINKS
http://www.lassonde.com

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