Richards Packaging Income Fund announces 2011 First Quarter Results

TORONTO, May 4 /CNW/ - Richards Packaging Income Fund (TSX: RPI.UN) (the "Fund") announced today results for the quarter ended March 31, 2011.

First quarter performance continued to reflect the weakness that began during the fourth quarter of 2010. Total revenue was down 0.9% with organic revenue growth at 1.6% being fully offset by the U.S./Cdn. 5¢ appreciation of the dollar. EBITDA(1) was down $0.8 million, or 13.4%, due to price erosion in selected larger accounts and higher freight costs. Gross profit and EBITDA as a percent of sales continued to run at weaker levels of 16.4% and 11.1% respectively. We expect that this trend will continue into the second quarter. Net income was down $1.1 million, or 11¢ per Unit, reflecting lower EBITDA and higher deferred income taxes.

Richards Packaging deployed the $1.1 million of cash on hand at year end to pay 2010 bonuses and invest in working capital, mainly in receivables (flat on a days' sales basis). The $1.4 million of free cash flow generated in the first quarter was utilized to pay down $0.5 million of debt and to top up working capital. Over the next six months we expect to lower our investment in inventories and make further payments on our debt.

With the distributions no longer eligible for interest deductibility the Fund utilized loss carry forwards to fully shield Canadian taxes and paid out distributions as a full return of capital. Loss carry forwards should fully shield Canadian taxes until approximately the second quarter of 2012.

The Fund paid monthly distributions of 6.55¢ per Unit during the first quarter, which represented an annualized yield of 8.5% on the March 31st closing price of $9.20 per Unit. The payout ratio(3) for the first quarter was 62%, up from 60% for 2010.

Details of the Fund's results are currently available on Richards Packaging's website at www.richardspackaging.com and on May 5th on SEDAR at www.sedar.com.

About Richards Packaging Income Fund

The Fund owns 91% of 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 for over 99 years and currently serves over 11,000 regional food, wine and spirits, cosmetic, specialty chemical, pharmaceutical and other companies from 20 locations throughout North America.

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    1   Management defines EBITDA as earnings before amortization, interest,
        losses (gains) on financial instruments and taxes. EBITDA is the same
        as profit from operations as outlined in the annual 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.

    2   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.

    3   Management defines payout ratio as distributions and dividends
        declared over distributable cash flow(2). 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 income trusts.

    4   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 circumstances.
    >>

SOURCE Richards Packaging Income Fund

For further information: Gerry Glynn, Chief Executive Officer, Richards Packaging Inc., (905) 670-7760, gglynn@richardspackaging.com; Enzio Di Gennaro, Chief Financial Officer, Richards Packaging Inc., (905) 670-7760, edigennaro@richardspackaging.com


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