Legumex Walker Reports Significant Improvement in Financial Performance in 2014

Special Crops Delivers Record Fiscal Year Adjusted EBITDA1 of $17.8 million
Pacific Coast Canola (PCC) improves negative adjusted EBITDA1 by $8 million
Consolidated Adjusted EBITDA1 improves from negative $1.8 million to positive $8.8 million
 

WINNIPEG, March 26, 2015 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for FY2014 and three months ended December 31, 2014.  All figures are in Canadian dollars unless otherwise stated.

Highlights for the Year ended December 31, 2014 (all comparative metrics are relative to 2013, unless otherwise stated):

Special Crops Segment

  • Tonnes sold of 412,500 were comparable year over year
  • Commodity margin increased 7.6% from $48.3 million to $52 million
  • Adjusted gross profit1 increased 4.1% from $27.1 million to $28.2 million
  • Adjusted EBITDA1 increased 14.1% from $15.6 million to $17.8 million

Oilseed Processing (Canola) Segment

  • Tonnes crushed increased 83% from 132,600 to 242,300
  • Non-GMO tonnes crushed increased to 7% for the year (12% for Q4, see below)
  • Adjusted gross profit improved from negative $6.6 million to positive $2.1 million
  • Adjusted EBITDA1 improved from negative $10.2 million to negative $2.2 million

Consolidated

  • Consolidated revenues increased 7.9% from $433.6 million to $468 million
  • Adjusted gross profit1 increased 47.6% from $20.5 million to $30.3 million
  • Adjusted EBITDA1 improved from negative $1.8 million to positive $8.8 million
  • Net loss attributable to shareholders improved from $25.4 million to $22.5 million

Highlights for Quarter ended December 31, 2014 (all comparative metrics are relative to the fourth quarter of 2013, unless otherwise stated):

Special Crops Segment

  • Revenue decreased 17.9% from $101.5 million to $83.3 million based on a 22.7% decrease in volumes shipped  (from 126,300 to 97,600 tonnes) related to the logistics challenges of a late Canadian harvest
  • Adjusted gross profit1 decreased 34.9% from $6.9 million to $4.5 million reflective of the lower sales volumes (discussed above)
  • Adjusted EBITDA1 decreased 66.1% from $4.2 million to $1.4 million also reflecting the lower sales volumes (discussed above)
  • Achieved CGC HACCP food safety certification at 4 facilities
  • Completed sunflower storage and processing line expansion at Winkler facility
  • Completed implementation of a new position management system as part of an integrated companywide ERP system

Oilseed Processing (Canola) Segment

  • Tonnes crushed increased 25% from 51,900 (or 54.7% of capacity) to 64,700 (or 68.2% of capacity)
  • Non-GMO tonnes crushed was 12% of total tonnes crushed compared to 6% in 2013
  • Entered into long-term strategic alliance with The Scoular Company ("Scoular")
  • Monetized net working capital position in connection with Scoular agreement; Scoular now finances all seed purchases and sales collections, significantly reducing PCC's working capital requirements
  • Extinguished working capital credit facilities with Macquarie Bank
  • Adjusted gross profit1 increased from $210,000 to $936,000
  • Adjusted EBITDA1 improved from negative $825,000 to negative $147,000

Consolidated

  • Consolidated revenues decreased 26.7% from $135.3 million to $99.2 million reflecting the lower sales volumes in the Special Crops division (discussed above) and the recognition of revenue earned by the Oilseed segment on a net basis under the Scoular Processing Agreement for the months of November and December
  • Adjusted gross profit1 decreased from $7.1 million to $5.4 million reflecting the lower sales volumes in Special Crops discussed above
  • Adjusted EBITDA1 decreased from $1.5 million to negative $31,000
  • Issued five-year $16.5 million subordinated convertible debenture to Scoular
  • Completed implementation of a companywide ERP system, bringing conclusion to three-year project

Highlights Subsequent to the End of 2014:

  • Completed transition from CHS to Scoular
  • Appointed new Chief Financial Officer
  • On February 5, 2015, the Company secured additional financing of US$1.3 million from its PCC equity partner
  • On March 12, 2015, HSBC Bank Canada approved a provisional $10 million increase in the Company's operating facility, increasing it to $64 million from $54 million, for the period starting March 12, 2015 and ending May 31, 2015. The Company often increases its operating facility in Q1 due to a larger borrowing base at this time in the crop cycle.
  • On March 16, 2015 the Company announced the formation of a special committee of the Board to identify and consider strategic and financial alternatives available to the Company, which may include, but are not limited to a strategic financing, merger or other business combination, sale of the Company or a portion of the Company's business or assets or any combination thereof, as well as the continued execution of its business plan

"Our Special Crops business delivered its best fiscal year Adjusted EBITDA1 of $17.8 million and Pacific Coast Canola was able to improve its Adjusted EBITDA1 by over $8 million despite facing several, non-recurring market challenges," said Joel Horn, President and Chief Executive Officer, Legumex Walker Inc.  "Our consolidated Adjusted EBITDA1 was $8.8 million, considerably less than what we believe we can achieve, however represents several positive changes in both of our divisions and provides a solid base on which to grow. PCC completed a major transition to The Scoular Company in Q1 of this year and is working to significantly improve its financial performance when additional non-GMO and local canola seed should be available with the new crop in September."

Mr. Horn added, "With the formation of a special committee of the Board to identify and consider strategic and financial alternatives available to the Company we hope to unlock the value of the platform we have built over the last three years."

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.

The Company also announced the resignation of Ivan Sabourin from its Board of Directors, and thanks him for his diligent service to the Company and its shareholders. Ivan will continue to serve the Company in his current management position with the Special Crops Division.

1Non-GAAP Measures
This news release contains references to "Adjusted Gross Profit or Loss" and "Adjusted EBITDA".  Adjusted Gross Profit or Loss is defined for the purposes of this news release as gross profit or loss 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 or Loss, 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 or Loss, and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted Gross Profit or Loss 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 or Loss 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 or Loss 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 FY 2014 and the period ended December 31, 2014 are available on the Company's website at www.legumexwalker.com in the "Investors" section. The Company has also posted its most recent Investor Presentation on its website at http://www.legumexwalker.com/presentations/2015_03_LWI_Investor_Presentation.pdf

Conference Call

Legumex Walker will host a conference call on Friday, March 27, 2015 at 10:00 a.m. ET to discuss its fourth quarter and fiscal year 2014 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, April 3, 2015 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 85662136.

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.

Legumex Walker is a growth-oriented processor and merchandiser of food and feed ingredients composed and derived from special crops (sunflower seeds and kernels, flax and canary seed), pulses (split and whole lentils and peas, beans and chickpeas) and expeller-press canola products. The Company is one of the largest processors of special crops and pulses in Canada. Legumex Walker has 14 processing facilities strategically located in key growing regions in the Canadian Prairie Provinces, the American Midwest and China; a global sales, logistics and distribution platform; and access to multimodal transportation capabilities. In addition, the Company has an 84 percent interest in Pacific Coast Canola, LLC, which operates 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 are not limited to, statements relating to the Company's strategic review process, growth of the Company and the expected availability of non GMO and local new canola seed in September 2015. 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 at current levels of production, the risk that the volume of non GMO and local new canola seed available in September 2015 will not reach anticipated levels, the risk that no strategic transaction will be undertaken by the Company and that even if it does that the Company will be unable to realize any increase in value,  and the risk that the Special Crops and Oilseeds Divisions will not grow in 2015 as a result of various factors, including as a result of crush margins (being the difference between the sale price of oil and meal and the cost of canola seed) decreasing in future periods, problems related to the operation of the PCC Plant, weather related risks, availability of feedstock, 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 and canola oil prices, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, 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 December 31, 2014 which are available on SEDAR at www.sedar.com and should be reviewed in conjunction with this document. The statements relating to the non GMO and local new crop assume that the crop will indeed be available in increased quantities as compared to 2014. The statements with respect to growth of the Company assume increased revenue and/or margins in 2015 for the Special Crops and Oilseeds Divisions. 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.

For further information: Lauren Moran, Manager, Investor Relations, investors@legumexwalker.com, (425) 250-1498; Lawrence Chamberlain, TMX Equicom, lchamberlain@tmxequicom.com, (416) 815-0700 ext. 257

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