Maple Leaf Foods Reports Results for the Second Quarter 2015

TORONTO, July 30, 2015 /CNW/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the second quarter, June 30, 2015.

  • Adjusted Operating Earnings(1)(2) for the second quarter increased by $33.8 million compared to last year
  • Adjusted EBITDA(2)(3) margin increased to 6.0% from 0.7% in the second quarter last year and 4.7% in the first quarter of 2015
  • Adjusted Earnings per Share(2)(4) for the quarter was $0.13 compared to a loss of $0.12 last year
  • Net loss from continuing operations for the second quarter was $7.5 million compared to a loss of $39.5 million last year
  • The Company closed its eighth and final legacy facility as part of its prepared meats network strategy

"We are very pleased with the progress we made in the second quarter," said Michael H. McCain, President and CEO. "We delivered improved volumes with strong commercial performance. We marked a major milestone with the closing of the last of our remaining legacy facilities, which brought an end to our duplicative supply chain, and continued to improve the operational efficiency of our new start-up plants. All of these factors contributed to a significant improvement in earnings, consecutive quarter-over-quarter growth in EBITDA margin, and positive free cash flow. Over the balance of the year, we have aggressive plans to build on our commercial momentum and a clear line of sight on how to capture the additional benefits from our new plants and deliver our 10% EBITDA margin target."

Financial Overview

Maple Leaf Foods Inc. ("the Company") recorded sales from continuing operations of $820.8 million for the second quarter of 2015, a decrease of 1.3% from last year, or 2.6% after adjusting for the impact of foreign exchange. The decrease was primarily a result of lower selling prices due to lower market values within the Meat Products Group, partially offset by improved volume. Sales from continuing operations for the first six months was $1,601.0 million,  an increase of 3.8%, or 2.5% after adjusting for the impact of foreign exchange, due to improved volume and a favourable sales mix, partially offset by lower selling prices due to lower market values within the Meat Products Group.

Adjusted Operating Earnings for the second quarter increased to $21.8 million compared to a loss of $12.1 million last year. The Meat Products Group benefited from improved margins and reduced duplicative overhead in prepared meats and improved margins in fresh poultry, partially offset by lower margins in fresh pork. For the first six months, Adjusted Operating Earnings improved to $32.2 million compared to a loss of $42.0 million last year, due to factors similar to those noted above for the quarter and improved earnings in fresh pork.

Adjusted Earnings per Share was $0.13 for the second quarter of 2015 compared to a loss of $0.12 last year. For the first six months, Adjusted Earnings per Share was $0.18 compared to a loss of $0.36 last year.

Net loss from continuing operations for the second quarter was $7.5 million (loss of $0.05 per share(5)) compared to a loss of $39.5 million (loss of $0.28 per share) last year. This included $7.3 million ($0.04 per share) of restructuring and other related costs (2014: $20.0 million, or $0.11 per share). The improvement in the quarter was due primarily to similar factors as noted above, lower restructuring and other related costs and interest expenses. For the first six months, net loss from continuing operations was $10.3 million (loss of $0.07 per share) compared to a loss of $164.2 million (loss of $1.17 per share) last year. This included $18.1 million ($0.10 per share) of restructuring and other related costs (2014: $41.8 million, or $0.22 per share). The year-to-date decrease was primarily due to non-recurring financing costs that were incurred last year in relation to the repayment of the Company's outstanding debt, lower selling, general and administrative costs, and similar factors discussed above.

Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of non-IFRS financial measures.

Business Segment Review

Following is a summary of sales by business segment:

     
(Unaudited) Second Quarter
  Year-to-Date
($ thousands) 2015   2014
  2015   2014  
Meat Products Group $ 817,223   $ 825,553   $ 1,593,632   $ 1,530,952  
Agribusiness Group   3,553   6,237     7,392   12,185  
Total Sales(2) $ 820,776   $ 831,790   $ 1,601,024   $ 1,543,137  

The following table summarizes Adjusted Operating Earnings by business segment:

                 
(Unaudited) Second Quarter
  Year-to-Date 
($ thousands) 2015
2014
  2015   2014  
Meat Products Group $ 17,680   $ (15,644)   $ 25,558   $ (43,091)  
Agribusiness Group   4,109     5,208     6,641     4,862  
Protein Group $ 21,789   $ (10,436)   $ 32,199   $ (38,229)  
Non-Allocated Costs in Adjusted Operating Earnings(6)       (1,614)         (3,749)  
Adjusted Operating Earnings(2) $ 21,789   $ (12,050)   $ 32,199   $ (41,978)  

Meat Products Group

Includes value-added prepared meats, lunch kits and snacks, and fresh pork and poultry products sold under leading Canadian brands such as Maple Leaf®, Schneiders® and many leading regional brands. 

Sales in the Meat Products Group for the second quarter decreased 1.0% to $817.2 million, or 2.3% after adjusting for the weaker Canadian dollar. The decrease was a result of lower market prices in fresh pork partially offset by a favourable sales mix in fresh poultry, primarily driven by growth in branded poultry, and improved volume in prepared meats. The volume decline experienced in response to a price increase that was implemented in the second quarter of 2014 has now been largely restored.

For the first six months, sales increased 4.1% to $1,593.6 million, or 2.8% after adjusting for the weaker Canadian dollar, due primarily to a price increase implemented in prepared meats in the second quarter of 2014, increased volume in fresh pork and a favourable sales mix in fresh poultry.

Adjusted Operating Earnings for the second quarter increased to $17.7 million compared to a loss of $15.6 million last year, as a result of improved earnings in prepared meats, which benefited from normalized market conditions and lower operating costs compared to last year. This included a reduction in duplicative overhead, as the Company closed its eighth and final legacy plant, eliminating the last component of its duplicative supply chain. Earnings in fresh poultry increased as a result of improvements in margins driven by a favourable sales mix and operating efficiencies, which was partially offset by lower earnings in fresh pork as a result of reduced margins.

For the first six months, Adjusted Operating Earnings increased to $25.6 million compared to a loss of $43.1 million last year, due to similar factors noted above and improved earnings in the fresh pork business year-to-date, as a result of increased margins.

Agribusiness Group

Includes Canadian hog production operations that primarily supply the Meat Products Group with livestock as well as toll feed sales. 

Sales in the Agribusiness Group for the second quarter declined to $3.6 million compared to $6.2 million last year, due to lower external sales volume for feed. Sales in the first six months declined to $7.4 million compared to $12.2 million last year due to the same reason.

Adjusted Operating Earnings in the second quarter decreased to $4.1 million compared to $5.2 million last year as increased operating overhead relating to the conversion of existing farms to loose sow housing was partially offset by the benefit of hog prices, net of hedging activities. For the first six months, Adjusted Operating Earnings increased to $6.6 million compared to $4.9 million last year, as the benefit from hog prices, net of hedging activities, more than offset increased operating overhead.

Other Matters

On July 30, 2015, the Company declared a dividend of $0.08 per share payable September 30, 2015, to shareholders of record at the close of business on September 4, 2015. Unless indicated otherwise by the Company in writing on or before the time the dividend is paid, the dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".

Conference Call

An investor presentation related to the Company's second quarter financial results is available at www.mapleleaffoods.com and can be found under Investor Material on the Investors page. A conference call will be held at 10:30 a.m. EDT on July 31, 2015, to review Maple Leaf Foods' second quarter financial results. To participate in the call, please dial 416-340-2219 or 866-225-0198. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 / 800-408-3053 (Passcode 2541434).

A webcast presentation of the second quarter financial results will also be available at:

http://edge.media-server.com/m/p/jr5vz2tb/lan/en

The Company's full financial statements and related Management's Discussion and Analysis are available on the Company's website.

Reconciliation of Non-IFRS Financial Measures

The Company uses, among others, the following non-IFRS measures: Adjusted Operating Earnings and Adjusted Earnings per Share. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.

Adjusted Operating Earnings

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as net earnings (loss) before income taxes from continuing operations adjusted for items that are not considered representative of ongoing operational activities of the business and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of net earnings (loss) from continuing operations as reported under IFRS in the unaudited consolidated interim statements of earnings (loss) to Adjusted Operating Earnings for the three and six months ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating results, as they are representative of the ongoing operations of the Company.

  Three months ended June 30, 2015
($ thousands)
(Unaudited)
Meat
Products
 Group 
Agribusiness
Group
    Non-allocated
costs
    Consolidated  
Net earnings (loss) from continuing operations                 $ (7,519)  
Income taxes                   (6,410)  
Earnings (loss) before income taxes from continuing operations                 $ (13,929)  
Interest expense and other financing costs                   1,062  
Other (income) expense   170     (66)     744     848  
Restructuring and other related costs   5,623         1,666     7,289  
Earnings (loss) from continuing operations $ 17,680   $ 4,109   $ (26,519)   $ (4,730)  
Decrease (increase) in fair value of biological assets(7)           24,160     24,160  
Unrealized (gains) loss on futures contracts(7)           2,359     2,359  
Adjusted Operating Earnings $ 17,680   $ 4,109   $   $ 21,789  

  Three months ended June 30, 2014
 
($ thousands)
(Unaudited)

Meat Products
 Group 
  Agribusiness
Group
  Non-allocated
costs
    Consolidated  
Net earnings (loss) from continuing operations                 $ (39,544)  
Income taxes                   (13,863)  
Earnings (loss) before income taxes from continuing operations                 $ (53,407)  
Interest expense and other financing costs                   9,652  
Change in the fair value of non-designated interest rate swaps                   (1,382)  
Other (income) expense   1,053     (163)     3,810     4,700  
Restructuring and other related costs   11,074         8,922     19,996  
Earnings (loss) from continuing operations $ (15,644)   $ 5,208   $ (10,005)   $ (20,441)  
Decrease (increase) in fair value of biological assets(7)           18,884     18,884  
Realized (gains) loss on futures contracts(7)           16,100     16,100  
Unrealized (gains) loss on futures contracts(7)           (26,727)     (26,727)  
Modification of long-term incentive plan(8)           134     134  
Adjusted Operating Earnings(2) $ (15,644)   $ 5,208   $ (1,614)   $ (12,050)  

  Six months ended June 30, 2015
($ thousands)
(Unaudited)
Meat
Products
Group
  Agribusiness
Group
  Non-allocated
costs
    Consolidated  
Net earnings (loss) from continuing operations                 $ (10,321)  
Income taxes                   (7,341)  
Earnings (loss) before income taxes from continuing operations                 $ (17,662)  
Interest expense and other financing costs                   2,286  
Other (income) expense   363     (63)     6,385     6,685  
Restructuring and other related costs   14,153         3,981     18,134  
Earnings (loss) from continuing operations $ 25,558   $ 6,641   $ (22,756)   $ 9,443  
Decrease (increase) in fair value of biological assets(7)           31,443     31,443  
Unrealized (gains) loss on futures contracts(7)           (8,687)     (8,687)  
Adjusted Operating Earnings $ 25,558   $ 6,641   $   $ 32,199  

  Six months ended June 30, 2014
 
($ thousands)
(Unaudited)
Meat Products
 Group 
  Agribusiness
Group  
  Non-allocated
costs
  Consolidated  
Net earnings (loss) from continuing operations                 $ (164,150)  
Income taxes                   (58,056)  
Earnings (loss) before income taxes from continuing operations                 $ (222,206)  
Interest expense and other financing costs                   124,363  
Change in the fair value of non-designated interest rate swaps                   (2,492)  
Other (income) expense   527     (454)     3,334     3,407  
Restructuring and other related costs   22,546         19,216     41,762  
Earnings (loss) from continuing operations $ (43,091)   $ 4,862   $ (16,937)   $ (55,166)  
Decrease (increase) in fair value of biological assets(7)           (21,422)     (21,422)  
Realized (gains) loss on futures contracts(7)           16,100     16,100  
Unrealized (gains) loss on futures contracts(7)           9,776     9,776  
Modification of long-term incentive plan(8)           8,734     8,734  
Adjusted Operating Earnings(2) $ (43,091)   $ 4,862   $ (3,749)   $ (41,978)  

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate ongoing financial operating results. It is defined as basic earnings (loss) per share from continuing operations attributable to common shareholders, and is adjusted on the same basis as Adjusted Operating Earnings. The table below provides a reconciliation of basic earnings (loss) per share from continuing operations as reported under IFRS in the unaudited consolidated interim statements of earnings (loss) to Adjusted Earnings per Share for the three and six months ended, as indicated below. Management believes this basis is the most appropriate on which to evaluate financial results as they are representative of the ongoing operations of the Company.

($ per Share)
(Unaudited)
Three months ended June 30, Six months ended June 30,   

2015 
  2014(13)     2015     2014(13)
Basic earnings (loss) per share from continuing operations $ (0.05)   $ (0.28)   $ (0.07)   $ (1.17)
Restructuring and other related costs(9)   0.04     0.11     0.10     0.22
Items included in other income not considered representative of ongoing operations(10)       0.02     0.03     0.02
Change in the fair value of non-designated interest rate swaps(11)               (0.01)
Change in the fair value of unrealized (gain) loss on futures contracts(11)   0.01     (0.14)     (0.05)     0.05
Change in the fair value of realized (gain) loss on futures contracts(11)       0.08         0.09
Change in the fair value of biological assets(11)   0.13     0.10     0.17     (0.11)
Other financing costs(12)       (0.01)         0.51
Modification impact to long-term incentive plan(8)               0.05
Adjusted Earnings per Share(14) $ 0.13   $ (0.12)   $ 0.18   $ (0.36)

Forward-Looking Statements

This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates, as well as beliefs and assumptions made by the Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, in addition to statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates, and intentions. Specific forward-looking information in this document includes, but is not limited to, statements with respect to: the anticipated benefits, timing, actions, costs, and investments associated with the Value Creation Plan; expectations regarding the use of derivatives, futures and options; expectations regarding improving efficiencies; the expected use of cash balances; source of funds for ongoing business requirements; capital investments; expectations regarding acquisitions and divestitures; LEED certification; expectations regarding the adoption of new accounting standards and the impact of such adoption on financial position; expectations regarding sufficiency of the allowance for uncollectible accounts; and expectations regarding pension plan performance and future pension plan liabilities and contributions. Words such as "expect", "anticipate", "intend", "may", "will", "plan", "believe", "seek", "estimate", and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.

In addition, these statements and expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., and Japanese economies; the rate of exchange of the Canadian dollar to the U.S. dollar, and the Japanese yen; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies whether as a result of the Value Creation Plan or otherwise; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments; and the general assumption that none of the risks identified below or elsewhere in this document will materialize. All of these assumptions have been derived from information currently available to the Company, including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied, or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.

Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or forecasted by forward-looking information include, among other things:

  • risks associated with the Company focusing solely on the protein business;
  • risks related to the Company's decisions regarding any potential return of capital to shareholders;
  • risks associated with implementing and executing the Value Creation Plan;
  • risks associated with the availability of capital;
  • risks associated with changes in the Company's information systems and processes;
  • risks posed by food contamination, consumer liability, and product recalls;
  • risks associated with acquisitions, divestitures, and capital expansion projects;
  • impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity securities and changes in interest rates;
  • cyclical nature of the cost and supply of hogs and the competitive nature of the pork market generally;
  • risks related to the health status of livestock;
  • impact of a pandemic on the Company's operations;
  • the Company's exposure to currency exchange risks;
  • ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and options;
  • impact of changes in the market value of the biological assets and hedging instruments;
  • impact of international events on commodity prices and the free flow of goods;
  • risks posed by compliance with extensive government regulation;
  • risks posed by litigation;
  • impact of changes in consumer tastes and buying patterns;
  • impact of extensive environmental regulation and potential environmental liabilities;
  • risks associated with a consolidating retail environment;
  • risks posed by competition;
  • risks associated with complying with differing employment laws and practices, the potential for work stoppages due to non-renewal of collective agreements, and recruiting and retaining qualified personnel;
  • risks associated with pricing the Company's products;
  • risks associated with managing the Company's supply chain; and
  • risks associated with failing to identify and manage the strategic risks facing the Company.

The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more detail under the heading "Risk Factors" in the Company's Management Discussion and Analysis for the fiscal year ended December 31, 2014, which is available on SEDAR at www.sedar.com. The reader should review such section in detail. Some of the forward-looking information may be considered to be financial outlooks for purposes of applicable securities legislation including, but not limited to, statements concerning future Adjusted EBITDA margins; capital expenditures; cash costs; and non-cash restructuring charges. These financial outlooks are presented to allow the Company to benchmark the results of the Value Creation Plan. These financial outlooks may not be appropriate for other purposes and readers should not assume they will be achieved. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by law. Additional information concerning the Company, including the Company's Annual Information Form and Management's Discussion and Analysis for the fiscal year ended December 31, 2014 is available on SEDAR at www.sedar.com. Maple Leaf Foods Inc. is a leading Canadian consumer protein company. Headquartered in Mississauga, Canada, the Company employs approximately 12,000 people at its operations in Canada and Asia.

Footnote Legend

  1. Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results.  It is defined as earnings from continuing operations adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release.
  2. 2014 figures exclude the results of the Bakery Products Group. The Bakery Products Group results are reported as discontinued operations as disclosed in Note 22 of the Company's 2015 second quarter unaudited condensed consolidated interim financial statements.
  3. Adjusted EBITDA is calculated as earnings from continuing operations before interest and income taxes plus depreciation and intangible asset amortization, adjusted for items that are not considered representative of ongoing operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Non-IFRS Financial Measures in the Company's Management Discussion and Analysis for the second quarter of 2015.
  4. Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate ongoing financial operating results. It is defined as basic earnings per share from continuing operations attributable to common shareholders, and is adjusted on the same basis as Adjusted Operating Earnings. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release.
  5. Unless otherwise stated, all per share amounts are presented as per basic share attributable to common shareholders.
  6. Non-allocated costs are comprised of expenses not separately identifiable to business segment groups, and do not form part of the measures used by the Company when assessing the segments' operating results.
  7. Regarding biological assets, please refer to Note 7 of the Company's 2015 second quarter unaudited condensed consolidated interim financial statements. Unrealized and realized gains/losses on futures contracts and settlement of long-term incentive plan are reported within cost of sales and selling, general and administrative expenses respectively in the Company's 2015 second quarter unaudited condensed consolidated interim financial statements.
  8. Relates to an $8.7 million modification of long-term incentive compensation plan as a result of the costs being fixed and payments accelerated, which was a decision made conditional on the sale of Canada Bread, and is therefore not considered representative of ongoing operational activities of the business.
  9. Includes per share impact of restructuring and other related costs, net of tax.   
  10. Includes gains/losses associated with non-operational activities, including gains/losses related to discontinued operations, assets held for sale, and hedge ineffectiveness recognized in earnings, all net of tax. 
  11. Includes per share impact of the change in fair value of non-designated interest rate swaps, unrealized and realized (gains) losses on futures contracts and the change in fair value of biological assets, net of tax. 
  12. Includes a $76.3 million early repayment premium to lenders, $12.7 million in financing costs, and a $9.6 million loss transferred from accumulated other comprehensive income into earnings related to the settlement of interest rate swaps that are no longer designated as hedging instruments.  
  13. 2014 figures reflect the reclassification of the change in fair value of non-designated interest rate swaps to other income. Refer to Note 20 of the Company's 2015 second quarter unaudited condensed consolidated interim financial statements for further details.  
  14. May not add due to rounding.

 


 

Condensed Consolidated Interim Financial Statements
MAPLE LEAF FOODS INC.
 
Six months ended June 30, 2015 and 2014
 
Consolidated Balance Sheets                  
(In thousands of Canadian dollars)            
As at June 30, As at June 30, As at December 31,
 2015  2014  2014
  (Unaudited)   (Unaudited)      
ASSETS      
Current assets      
  Cash and cash equivalents $ 409,923   $ 539,610   $ 496,328  
  Accounts receivable 55,419   51,981   60,396  
  Notes receivable 109,862   119,963   110,209  
  Inventories 280,082   275,101   270,401  
  Biological assets 79,912   126,096   105,743  
  Income and other taxes recoverable   36,273    
  Prepaid expenses and other assets 23,359   27,769   20,157  
  Assets held for sale 484   634   1,107  
  $ 959,041   $ 1,177,427   $ 1,064,341  
  Property and equipment 1,057,526   1,031,767   1,042,506  
  Investment property 7,493   3,204   3,312  
  Employee benefits 73,744   110,872   88,162  
  Other long-term assets 11,740   9,061   9,881  
  Deferred tax asset 76,738   700   74,986  
  Goodwill 428,236   428,236   428,236  
  Intangible assets 147,145   182,335   165,066  
  Total assets $ 2,761,663   $ 2,943,602   $ 2,876,490  
       
LIABILITIES AND EQUITY      
Current liabilities      
  Accounts payable and accruals $ 277,806   $ 278,907   $ 275,249  
  Provisions 36,037   52,576   60,443  
  Current portion of long-term debt 729   407   472  
  Income taxes payable 17,319     26,614  
  Other current liabilities 38,737   35,992   24,383  
  $ 370,628   $ 367,882   $ 387,161  
  Long-term debt 9,990   9,911   10,017  
  Employee benefits 170,670   142,622   196,482  
  Provisions 16,370   27,499   17,435  
  Other long-term liabilities 21,849   23,193   20,899  
  Deferred tax liability   19,393    
  Total liabilities $ 589,507   $ 590,500   $ 631,994  
       
Shareholders' equity      
Share capital $ 921,438   $ 922,888   $ 936,479  
Retained earnings 1,214,585   1,344,343   1,228,815  
Contributed surplus 36,300   82,994   79,652  
Accumulated other comprehensive income (loss) associated with continuing operations 105   4,227   (226)  
Treasury stock (272)   (1,350)   (224)  
Total shareholders' equity $ 2,172,156   $ 2,353,102   $ 2,244,496  
Total liabilities and equity $ 2,761,663   $ 2,943,602   $ 2,876,490  

 


Consolidated Statements of Net Earnings (Loss)                
                         
(In thousands of Canadian dollars, except share amounts) Three months ended June 30,   Six months ended June 30,  
(Unaudited) 2015   2014   2015   2014  
         
Sales $ 820,776   $ 831,790   $ 1,601,024   $ 1,543,137  
Cost of goods sold 745,038   772,466   1,436,064   1,435,878  
Gross margin $ 75,738   $ 59,324   $ 164,960   $ 107,259  
Selling, general and administrative expenses 80,468   79,765   155,517   162,425  
Earnings (loss) from continuing operations before the following: $ (4,730)   $ (20,441)   $ 9,443   $ (55,166)  
Restructuring and other related costs (7,289)   (19,996)   (18,134)   (41,762)  
Change in fair value of non-designated interest rate swaps   1,382     2,492  
Other income (expense) (848)   (4,700)   (6,685)   (3,407)  
Earnings (loss) before interest and income taxes from continuing operations $ (12,867)   $ (43,755)   $ (15,376)   $ (97,843)  
Interest expense and other financing costs 1,062   9,652   2,286   124,363  
Earnings (loss) before income taxes from continuing operations $ (13,929)   $ (53,407)   $ (17,662)   $ (222,206)  
Income taxes (6,410)   (13,863)   (7,341)   (58,056)  
Earnings (loss) from continuing operations $ (7,519)   $ (39,544)   $ (10,321)   $ (164,150)  
Earnings (loss) from discontinued operations (5)   938,399   (64)   931,011  
Net earnings (loss) $ (7,524)   $ 898,855   $ (10,385)   $ 766,861  
Attributed to:        
Common shareholders $ (7,524)   $ 897,797   $ (10,385)   $ 764,886  
Non-controlling interest   1,058     1,975  
  $ (7,524)   $ 898,855   $ (10,385)   $ 766,861  
Earnings (loss) per share attributable to common shareholders:        
  Basic and diluted earnings (loss) per share $ (0.05)   $ 6.38   $ (0.07)   $ 5.45  
  Basic and diluted earnings (loss) per share from continuing operations $ (0.05)   $ (0.28)   $ (0.07)   $ (1.17)  
Weighted average number of shares (millions) 142.6   140.7   142.7   140.4  

 


Consolidated Statements of Other Comprehensive Income (Loss)            
                         
(In thousands of Canadian dollars) Three months ended June 30,   Six months ended June 30,  
(Unaudited) 2015   2014   2015   2014  
         
Net earnings (loss) $ (7,524)   $ 898,855   $ (10,385)   $ 766,861  
Other comprehensive income (loss)        
Items that will not be reclassified to profit or loss:        
  Actuarial gains and losses        
    (Net of tax of $1.5 million and $6.6 million; 2014: $1.2 million and $1.0 million) $ 4,252   $ (3,545)   $ 18,959   $ (2,831)  
Total items that will not be reclassified to profit or loss $ 4,252   $ (3,545)   $ 18,959   $ (2,831)  
Items that are or may be reclassified subsequently to profit or loss:        
  Change in accumulated foreign currency translation adjustment                        
    (Net of tax of $0.0 million; 2014: $0.0 million) $ (515)   $ (560)   $ 567   $ (215)  
  Change in unrealized gains and losses on cash flow hedges                        
    (Net of tax of $1.6 million and $0.1 million; 2014: $2.2 million and $3.0 million)   4,666     6,017     (236)     8,236  
Total items that are or may be reclassified subsequently to profit or loss $ 4,151   $ 5,457   $ 331   $ 8,021  
Other comprehensive income (loss) from continuing operations $ 8,403   $ 1,912   $ 19,290   $ 5,190  
  Other comprehensive income (loss) from discontinued operations(i)                        
    (Net of tax of $0.0 million; 2014: $1.2 million and $1.3 million)       (5,429)         (569)  
Total other comprehensive income (loss) $ 8,403   $ (3,517)   $ 19,290   $ 4,621  
Comprehensive income (loss) $ 879   $ 895,338   $ 8,905   $ 771,482  
Attributed to:        
Common shareholders $ 879   $ 895,187   $ 8,905   $ 769,751  
Non-controlling interest $   $ 151   $   $ 1,731  

 

(i)  The above amount includes $0.0 million for the three and six months ended June 30, 2015 (2014: $3.6 million and $4.4 million) relating to actuarial gains and losses that will not subsequently be re-classified to profit or loss. 

 


Consolidated Statements of Changes in Total Equity                                      
                                                 
  Attributable to Common Shareholders    
        Total   Total        
        accumulated   accumulated        
        other   other        
        comprehensive   comprehensive        
        income (loss)   income (loss)        
        associated with   associated with     Non-  
(In thousands of Canadian dollars) Share   Retained   Contributed   continuing   assets   Treasury   controlling   Total  
(Unaudited) capital   earnings   surplus   operations   held for sale   stock   interest   equity  
Balance at December 31, 2014 $ 936,479   $ 1,228,815   $ 79,652   $ (226)   $   $ (224)     $ 2,244,496  
  Net earnings (loss)   (10,385)             (10,385)  
  Other comprehensive income (loss)   18,959     331         19,290  
  Dividends declared ($0.16 per share)   (22,804)             (22,804)  
  Stock-based compensation expense     4,215           4,215  
  Obligation for repurchase of shares (5,510)     (15,070)           (20,580)  
  Repurchase of shares (11,719)     (30,191)           (41,910)  
  Issuance of treasury stock     (2,306)       1,140     (1,166)  
  Exercise of stock options 2,188               2,188  
  Shares purchased by RSU trust           (1,188)     (1,188)  
Balance at June 30, 2015 $ 921,438   $ 1,214,585   $ 36,300   $ 105   $   $ (272)   $   $ 2,172,156  
       
  Attributable to Common Shareholders    
                 
        Total   Total        
        accumulated   accumulated        
        other   other        
        comprehensive   comprehensive        
        income (loss)   income (loss)        
        associated with   associated with     Non-  
(In thousands of Canadian dollars) Share   Retained    Contributed   continuing    assets    Treasury    controlling    Total  
(Unaudited) capital    earnings    surplus   operations   held for sale    stock    interest    equity  
Balance at December 31, 2013 $ 905,216   $ 602,717   $ 79,139   $ (4,593)   $   $ (1,350)   $ 60,863   $ 1,641,992  
  Net earnings (loss)   764,886           1,975   766,861  
  Transfer to held for sale       799   (799)        
  Other comprehensive income (loss)   (6,045)     8,021   2,889     (244)   4,621  
  Dividends declared ($0.08 per share)   (11,271)           (3,017)   (14,288)  
  Stock-based compensation expense     19,867           19,867  
  Disposal of business         (2,090)     (59,577)   (61,667)  
  Exercise of stock options 17,672               17,672  
  Modification of stock compensation plan   (5,944)   (16,012)           (21,956)  
Balance at June 30, 2014 $ 922,888   $ 1,344,343   $ 82,994   $ 4,227   $   $ (1,350)   $   $ 2,353,102  

 

Consolidated Statements of Cash Flow                  
                         
(In thousands of Canadian dollars) Three months ended June 30,   Six months ended June 30,  
(Unaudited) 2015   2014   2015   2014  
CASH PROVIDED BY (USED IN):        
Operating activities        
  Net earnings (loss) $ (7,524)   $ 898,855   $ (10,385)   $ 766,861  
  Add (deduct) items not affecting cash:        
    Change in fair value of biological assets 24,160   18,884   31,443   (21,422)  
    Depreciation and amortization 32,449   23,650   64,215   50,293  
    Stock-based compensation 2,535   11,175   4,215   19,867  
    Deferred income taxes (7,305)   84,453   (8,284)   40,439  
    Income tax current 895   7,512   943   9,943  
    Interest expense and other financing costs 1,062   10,264   2,286   125,149  
    Loss (gain) on sale of long-term assets 656   398   63   162  
    Loss (gain) on sale of business   (1,008,044)     (1,007,576)  
    Loss (gain) on sale of assets held for sale (5,262)     (5,262)   (1,736)  
    Change in fair value of non-designated interest rate swaps (1,214)   (1,994)   (2,783)   (3,104)  
    Change in fair value of derivative financial instruments 1,853   (26,025)   (9,518)   10,609  
    Impairment of assets (net of reversals)   785   979   785  
  Increase in pension liability 6,731   2,988   13,371   6,381  
  Net income taxes paid (54)   (1,762)   (10,895)   (8,615)  
  Net settlement of financial instruments   (23,631)     (23,631)  
  Early repayment premium   (76,311)     (76,311)  
  Interest paid (816)   (19,258)   (1,671)   (37,583)  
  Change in provision for restructuring and other related costs (10,286)   16,597   (15,589)   30,257  
  Settlement of cash-settled restricted share units (5,332)     (5,332)    
  Other 12,597   (33,520)   12,784   (27,970)  
  Change in non-cash operating working capital 29,393   (225,927)   (20,598)   (262,010)  
Cash provided by (used in) operating activities $ 74,538   $ (340,911)   $ 39,982   $ (409,212)  
Financing activities        
  Dividends paid $ (11,365)   $ (5,658)   $ (22,804)   $ (11,271)  
  Dividends paid to non-controlling interest   (3,017)     (24,621)  
  Net increase (decrease) in long-term debt   (698,664)     (699,014)  
  Net drawings (payments) on the credit facility   (555,000)     (255,000)  
  Exercise of stock options 784   16,722   2,188   17,672  
  Repurchase of shares (41,910)     (41,910)    
  Payment of financing fees (50)   (3,769)   (277)   (3,769)  
Cash provided by (used in) financing activities $ (52,541)   $ (1,249,386)   $ (62,803)   $ (976,003)  
Investing activities        
  Additions to long-term assets $ (44,019)   $ (78,259)   $ (70,452)   $ (175,931)  
  Capitalization of interest expense   (2,721)     (5,504)  
  Adjustment to sale of business       (468)  
  Proceeds from sale of business   1,647,015     1,647,015  
  Transaction costs   (28,901)     (28,901)  
  Cash associated with divested business   (23,011)     (23,011)  
  Proceeds from sale of long-term assets 137   905   2,160   3,255  
  Proceeds from sale of assets held for sale 5,896     5,896   6,108  
  Purchase of treasury stock (1,188)     (1,188)    
Cash provided by (used in) investing activities $ (39,174)   $ 1,515,028   $ (63,584)   $ 1,422,563  
Increase (decrease) in cash and cash equivalents $ (17,177)   $ (75,269)   $ (86,405)   $ 37,348  
Net cash and cash equivalents, beginning of period 427,100   470,783   496,328   502,262  
Net cash and cash equivalent in held for sale, beginning of period   144,096      
Net cash and cash equivalents, end of period $ 409,923   $ 539,610   $ 409,923   $ 539,610  

Segmented Financial Information                  
                         
  Three months ended June 30,   Six months ended June 30,  
  2015   2014   2015   2014  
         
Sales        
  Meat Products Group $ 817,223   $ 825,553   $ 1,593,632   $ 1,530,952  
  Agribusiness Group 3,553   6,237   7,392   12,185  
  Bakery Products Group(i)   225,024     567,861  
Total sales $ 820,776   $ 1,056,814   $ 1,601,024   $ 2,110,998  
Sales from discontinued operations   (225,024)     (567,861)  
Sales from continuing operations $ 820,776   $ 831,790   $ 1,601,024   $ 1,543,137  
Earnings (loss) before restructuring and other related costs
and other income
       
  Meat Products Group $ 17,680   $ (15,644)   $ 25,558   $ (43,091)  
  Agribusiness Group 4,109   5,208   6,641   4,862  
  Bakery Products Group(i)   20,957     47,829  
  Non-allocated costs (26,519)   (10,005)   (22,756)   (16,937)  
Total earnings (loss) before restructuring and other related costs
and other income
$ (4,730)   $ 516   $ 9,443   $ (7,337)  
Earnings (loss) before restructuring and other related costs and
other income from discontinued operations
  (20,957)     (47,829)  
Earnings (loss) before restructuring and other related costs
and other income from continuing operations
$ (4,730)   $ (20,441)   $ 9,443   $ (55,166)  
Capital expenditures        
  Meat Products Group $ 36,635   $ 72,809   $ 60,508   $ 140,623  
  Agribusiness Group 6,642   1,146   8,636   1,969  
  Bakery Products Group(i)   7,589     17,789  
  $ 43,277   $ 81,544   $ 69,144   $ 160,381  
Depreciation and amortization        
  Meat Products Group $ 25,665   $ 18,206   $ 50,854   $ 38,187  
  Agribusiness Group 1,645   904   3,097   2,424  
  Non-allocated costs(ii) 5,139   4,540   10,264   4,540  
  Bakery Products Group(i)       5,142  
  $ 32,449   $ 23,650   $ 64,215   $ 50,293  
(i)  The prior year results of Canada Bread were included in the comparative results of the Bakery Products Group.
(ii)  Includes depreciation on assets used to service divested business.

  As at June 30, 2015   As at June 30, 2014   As at December 31, 2014  
Total assets      
  Meat Products Group $ 1,862,511   $ 1,989,717   $ 1,965,280  
  Agribusiness Group 172,191   219,558   211,516  
  Non-allocated assets 726,961   734,327   699,694  
  $ 2,761,663   $ 2,943,602   $ 2,876,490  
Goodwill      
  Meat Products Group $ 428,236   $ 428,236   $ 428,236  
  $ 428,236   $ 428,236   $ 428,236  

 

 

 

 

SOURCE Maple Leaf Foods Inc.

For further information:

Investor Contact: Nick Boland
VP Investor Relations: 905-285-5898
Media Contact: 888-995-5030


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