WINNIPEG, Aug. 14, 2015 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the three months ended June 30, 2015. All figures are in Canadian dollars unless otherwise stated.
As a part of the ongoing process to identify and consider strategic and financial alternatives, in the second quarter of 2015, the Board of Directors determined that it was appropriate to consider a sale of its Special Crops and Oilseeds businesses. Consequently, in its financial statements for the period ending June 30, 2015, the results of the Special Crops and Oilseeds segments have been presented as discontinued operations in the consolidated statements of comprehensive loss. There can be no assurance that the Company will be successful in its efforts to sell its Special Crops and Oilseeds businesses.
Highlights for Second Quarter Ended June 30, 2015 (all comparative metrics are relative to the second quarter of 2014, unless otherwise stated):
Special Crops Segment
- Revenue was $81.6 million compared with $97.6 million based on a 30% decrease in tonnes sold (83,900 tonnes from 119,200 tonnes);
- Adjusted gross profit1 was $ 7.8 million compared with $9.4 million;
- Commodity margin of $157 per tonne compared with $130; and,
- Adjusted EBITDA1 of $3.3 million (after increasing its allowance for doubtful accounts by $2.0 million) compared with $6.6 million.
Oilseed Processing (Canola) Segment
- Tonnes crushed increased 17% to 59,300 from 50,600;
- Adjusted gross loss1 was $1.7 million compared with adjusted gross profit1 of $2.9 million, reflecting historically low board crush margins; and,
- Adjusted EBITDA1 was negative $2.8 million compared with positive $1.9 million.
- Consolidated revenues were $83.5 million compared with $131.8 million;
- Adjusted gross profit1 was $6.1 million compared with $12.3 million;
- Adjusted EBITDA1 was negative $1.0 million compared with $6.6 million; and,
- Net loss attributable to shareholders was $ 37 million compared with net earnings of $1.9 million and includes an impairment loss of $33.7 million recognized on Oilseed Segment assets.
Developments Subsequent to End of Second Quarter:
- As discussed in the press release dated July 31, 2015, Pacific Coast Canola, LLC ("PCC"), of which Legumex Walker owns 84%, received notice making a demand for repayment of all amounts due under its senior credit facility ("the Facility"). The lender has since provided PCC with a forbearance in respect of the Facility and PCC continues to operate. The forbearance from AgCountry is subject to a number of conditions, including PCC being in compliance with the covenants under the credit agreement (other than the covenants in respect of which AgCountry has provided a forbearance) and PCC being able to refinance the facility in accordance with the terms of the forbearance.
- Legumex Walker has received forbearances with respect to its other credit facilities that are subject to "cross default" provisions.
"Our Special Crops business continued to perform well in the second quarter with commodity margins up year-over year and in line with our strong first quarter as we continued to see significantly improved performance over the fourth quarter last year," said Joel Horn, President and Chief Executive Officer, Legumex Walker Inc. "The strong commodity margins would have resulted in Adjusted EBITDA of $5.3 million, however, to account for ongoing global economic uncertainties the Company increased its allowance for doubtful accounts by $2 million which resulted in a reported Adjusted EBITDA of $3.3 million."
"At PCC, a confluence of many macro-economic factors, including historic lows for the price of vegetable oils, a bad canola crop, a ten year low in the CAD/USD exchange rate and a massive drop in crude oil prices, created a historically low crush margin environment that had a significant impact on performance and, ultimately, led to the demand for repayment of PCC's senior credit facility. Although PCC has received a forbearance and is working to address the matter, it is not expected that Legumex Walker would recapture any equity value from the sale of PCC assets. Importantly, this matter is isolated to PCC and has no impact on the operations of Legumex Walker's Special Crops operations."
Strategic Review Update
The Company's previously announced strategic review process, initiated in March of this year, is ongoing. As announced in its news release of March 16, 2015, the Company established a Special Committee composed of independent directors to oversee the strategic review, which is intended to identify and consider strategic and financial alternatives available to the Company with the ultimate goal of maximizing shareholder value. Such strategic and financial alternatives may include a transaction, as well as the continued execution of its business plan.
The Special Committee expects to provide an update in the coming weeks as the process nears its completion.
Although the Company has initiated a strategic review process, there is no certainty that any transaction or alternative will be undertaken. The Company has not set a definitive schedule to complete its evaluation and, notwithstanding the above-mentioned alternatives, no decision on any particular alternative has been reached at this time. The Company does not intend to make further announcements or disclose developments with respect to this process unless the evaluation has been completed and the Board has approved a definitive transaction and the Company has entered into a definitive agreement or unless otherwise required by law or regulation or disclosure of which is deemed appropriate.
1 Non-GAAP Measures
This news release contains references to "Adjusted Gross Profit" and "Adjusted EBITDA". Adjusted Gross Profit is defined for the purposes of this news release as gross profit before depreciation and amortization. Adjusted EBITDA is defined for the purposes of this news release as earnings (loss) from operations before other income and expenses, depreciation and amortization, financing costs, and income taxes. Management believes that Adjusted Gross Profit, and Adjusted EBITDA are useful supplemental measures of cash flow prior to finance costs, capital expenditures, income taxes and other non-cash items included in earnings. Management uses Adjusted Gross Profit or Loss as financial measures of liquidity. Adjusted EBITDA, Adjusted Gross Profit or Loss 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, Adjusted Gross Profit, and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted Gross Profit and Adjusted EBITDA should not be construed as an alternative to net earnings 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 believes that Adjusted Gross Profit and Adjusted EBITDA are useful supplemental measures of cash flow prior to debt service, investing and financing activities and income taxes. The Company's method of calculating Adjusted Gross Profit and Adjusted EBITDA 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. A reconciliation of Adjusted EBITDA to Net Earnings (loss) is set out in section 12 of the MD&A (as defined below).
Financial Statements and MD&A
Legumex Walker's Financial Statements and Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2015 are available on the Company's website at www.legumexwalker.com in the "Investors" section.
Legumex Walker will host a conference call on Friday, August 14, 2015 at 10:00 a.m. ET to discuss its second quarter 2015 financial results. 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 Friday, August 21, 2015 at midnight. To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 86398623.
A live audio webcast of the conference call will be available at 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.
LWI is a growth-oriented processor and merchandiser of pulses and other special crops, and with the completion of the PCC canola seed processing facility in Washington State, canola products. The Company derives its revenue from sourcing, processing, marketing and distributing special crops, canola products and associated healthy, specialty food ingredients to a global customer base. The Company operates processing facilities in the Canadian Prairies, American Midwest, the Pacific Northwest, and China. LWI has an 84 percent interest in Pacific Coast Canola LLC ("PCC"), a canola oilseed processing facility in the State of Washington, the largest commercial-scale canola oilseed processing facility west of the Rocky Mountains.
Cautionary Note on Forward-looking Statements
This press release contains "forward-looking information" within the meaning of Canadian securities laws which may include, but is not limited to, statements relating to the Company's strategic review process and PCC's continued operations. Such forward-looking information reflects the Company's views with respect to future events and is subject to risks, uncertainties and assumptions, including the risk that the PCC plant will not continue to operate, the risk that PCC will be unable to continue to be in compliance with the terms of the forbearance, the risk that PCC will be unable to refinance its operations, the risk that no strategic transaction will be undertaken by the Company and the risk that LWI will not complete a transfer of its interest in PCC, as well as those factors referred to in the section entitled "Risk Factors" in the Company's Management's Discussion and Analysis for the period ended June 30, 2015 and in the Annual Information Form dated March 31, 2015 which are available on SEDAR at www.sedar.com and should be reviewed in conjunction with this press release. The statements relating to PCC continuing to operate assume that PCC will continue to be in compliance with the terms of the forbearance from PCC's senior lenders. Although the Company 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 the Company 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. The Company 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.
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