Maple Leaf Foods Reports Results for the Fourth Quarter 2014
MISSISSAUGA, ON, Feb. 26, 2015 /CNW/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the fourth quarter and full year ended December 31, 2014.
- Adjusted Operating Earnings(1)(3) improved 75.5% in the fourth quarter and 44.7% on the year compared to last year. Adjusted Operating Earnings for the fourth quarter was a loss of $13.7 million (loss of $56.0 million last year) and a loss of $75.5 million for the year (loss of $136.5 million last year)
- Adjusted Earnings per Share(3)(4) for the fourth quarter was a loss of $0.08 (loss of $0.41 last year) and a loss of $0.58 for the year (loss of $1.08 last year)
- Net loss from continuing operations for the fourth quarter was $23.0 million (loss of $47.9 million last year) and $213.8 million for the year (loss of $141.4 million last year)
- The Company successfully transitioned production and subsequently closed its Panet Road plant in Winnipeg during the fourth quarter of 2014, leaving two remaining legacy plants to close
"2014 was a pivotal year for Maple Leaf Foods. Our seven year journey of investment and development, headlined by the rebuilding of our supply network, is nearing its end," said Michael H. McCain, President and CEO. "We have completed what we set out to accomplish in 2007 and finished the year with new momentum. We will be closing our largest legacy plant in Kitchener this week, leaving only one remaining facility in Toronto to close. Our margins have been structurally reset over the year, and while volume continued to be weak in the fourth quarter, we expect it to recover in 2015 as the fundamental environment continues to improve. We are confident that we will deliver our strategic targets in 2015."
Financial Overview
Maple Leaf Foods Inc. ("the Company") sales from continuing operations of $794.0 million for the fourth quarter was an increase of 6.1% from last year, or 5.1% after adjusting for the impact of foreign exchange, due to higher pricing across the Meat Products Group, partially offset by lower volumes in the prepared meats business. Sales from continuing operations of $3,157.2 million for the year increased 6.9%, or 5.8% after adjusting for foreign exchange, due to the same factors.
Adjusted Operating Earnings for the fourth quarter was a loss of $13.7 million compared to a loss of $56.0 million last year. The Meat Products Group benefited from higher pricing, which was partially offset by network transitional costs and lower volumes. In addition the Agribusiness Group benefited from higher market prices for hogs and lower feed costs. For the full year, Adjusted Operating Earnings was a loss of $75.5 million compared to a loss of $136.5 million last year, due to similar factors.
Adjusted Earnings per Share was a loss of $0.08 in the fourth quarter compared to a loss of $0.41 last year. For the full year, Adjusted Earnings per Share was a loss of $0.58 compared to a loss of $1.08 last year.
Net loss from continuing operations for the fourth quarter was $23.0 million (loss of $0.16 per basic share attributable to common shareholders(5)) compared to a loss of $47.9 million (loss of $0.34 per share) last year. This included $11.5 million ($0.06 per share) of pre-tax expenses related to restructuring and other related costs (2013: $12.5 million, or $0.07 per share).
Net loss from continuing operations for the year was $213.8 million (loss of $1.51 per share). Excluding one-time financing costs of $98.6 million ($71.2 million after tax) related to the repayment of the Company's long-term notes payable during the second quarter of 2014, net loss from continuing operations after restructuring was $142.6 million compared to a net loss of $141.4 million (loss of $1.01 per share) last year. This amount included $67.6 million ($0.36 per share) of pre-tax expenses related to restructuring and other related costs (2013: $75.2 million or $0.40 per share).
Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of all non-IFRS financial measures.
Business Segment Review
Following is a summary of sales by business segment:
|
Fourth Quarter |
Year-to-Date | ||||||||||
|
($ thousands) |
2014 |
2013 |
2014 |
2013 | |||||||
|
Meat Products Group |
$ |
789,725 |
$ |
743,726 |
$ |
3,135,376 |
$ |
2,925,772 | |||
|
Agribusiness Group |
4,282 |
4,585 |
21,865 |
29,005 | |||||||
|
Total Sales(3) |
$ |
794,007 |
$ |
748,311 |
$ |
3,157,241 |
$ |
2,954,777 | |||
The following table summarizes Adjusted Operating Earnings by business segment:
|
Fourth Quarter |
Year-to-Date | ||||||||||
|
($ thousands) |
2014 |
2013 |
2014 |
2013 | |||||||
|
Meat Products Group |
$ |
(19,069) |
$ |
(42,624) |
$ |
(80,381) |
$ |
(86,192) | |||
|
Agribusiness Group |
5,390 |
(10,003) |
8,642 |
(38,258) | |||||||
|
Protein Group |
$ |
(13,679) |
$ |
(52,627) |
$ |
(71,739) |
$ |
(124,450) | |||
|
Non-Allocated Costs in Adjusted Operating Earnings(6) |
— |
(3,406) |
(3,748) |
(12,010) | |||||||
|
Adjusted Operating Earnings(3) |
$ |
(13,679) |
$ |
(56,033) |
$ |
(75,487) |
$ |
(136,460) | |||
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 fourth quarter increased 6.2% to $789.7 million from $743.7 million last year, or 5.2% after adjusting for the weaker Canadian dollar that benefited pork exports. The increase was driven by higher values for fresh pork as well as price increases implemented in the prepared meats business during the second quarter of 2014. As anticipated, the business is experiencing a period of lower demand in response to this pricing action.
During the second quarter of 2014, the Company implemented a significant price increase in its prepared meats business in response to rising raw material costs. The Company was able to manage margins through a very turbulent raw material market, however the size of the price increase and its impact on specific sensitive categories has caused the related volume response and recovery to take longer than expected. The Company believes its patient and tactical response, coupled with recently improving fundamentals in currency and commodity prices, will contribute to improvements in near-term volume performance.
For the full year, sales increased 7.2% to $3,135.4 million from $2,925.8 million last year, or 6.1% after adjusting for the impact of foreign exchange, largely due to the same factors noted above, partially offset by lower volume in the fresh pork business due to lower hog supplies in Western Canada.
Adjusted Operating Earnings for the fourth quarter improved to a loss of $19.1 million compared to a loss of $42.6 million last year. The pricing action in the second quarter successfully addressed an increase in input costs, however volumes in the quarter continued to be negatively impacted, as noted above.
The fresh pork business experienced higher earnings as the benefit from declining hog input prices more than offset the impact of lower hog supplies in Western Canada. Earnings in the fresh poultry business slightly improved over the fourth quarter last year, as improved poultry processing margins more than offset operational variances.
During 2014, the Company made significant progress on its network transition strategy, designed to establish a low cost supply chain and achieve structural margin expansion. Since beginning the process in 2010, the Company has closed six of the eight planned plant closures, completed the expansion of three plants, the consolidation of 17 distribution centres into two and built a 400,000 square foot state-of the-art processing facility in Hamilton. During the fourth quarter of 2014, the prepared meats business incurred transitional costs of approximately $24.3 million, in line with the third quarter of 2014 and an increase from $15.3 million in the fourth quarter last year. These costs primarily relate to duplicative overhead costs from legacy plants scheduled to be closed and commissioning activities at the new prepared meats facility in Hamilton.
For the full year, Adjusted Operating Earnings was a loss of $80.4 million compared to a loss of $86.2 million last year. The Meat Products Group benefited from price increases and improved processing margins, which were partially offset by transitional costs and lower volumes.
Agribusiness Group
Includes Canadian hog production operations that primarily supply the Meat Products Group with livestock as well as toll feed sales.
Agribusiness Group sales for the fourth quarter and full year were $4.3 million and $21.9 million, respectively, compared to $4.6 million and $29.0 million last year. Feed sales were impacted by lower pricing in the North American market.
Adjusted Operating Earnings in the fourth quarter increased to $5.4 million compared to a loss of $10.0 million last year, as the Agribusiness Group benefited from higher market prices for hogs and lower feed costs. For the full year, Adjusted Operating Earnings increased to $8.6 million from a loss of $38.3 million last year, primarily due to the same factors noted above in the fourth quarter, partially offset by additional costs which were incurred for PED virus prevention.
Other Matters
The Board of Directors is meeting this morning to consider the Company's quarterly dividend policy. The dividend for the first quarter of 2015 will be announced later today.
An investor presentation related to the Company's fourth 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 2:30 p.m. EDT on February 26, 2015, to review Maple Leaf Foods' fourth quarter financial results. To participate in the call, please dial 416-340-2261 or 800-355-4959. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 / 800-408-3053 (Passcode 8845443).
A webcast presentation of the fourth quarter financial results will also be available at: http://edge.media-server.com/m/p/idwi24mi/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 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 earnings 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 loss from continuing operations as reported under IFRS to Adjusted Operating Earnings for the three months ended, as indicated below, and a reconciliation of net loss from continuing operations as reported under IFRS in the audited consolidated statements of net earnings to Adjusted Operating Earnings for the years then 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 December 31, 2014 | ||||||||
|
($ thousands) |
Meat |
Agribusiness |
Unallocated |
Consolidated | ||||
|
Loss from continuing operations |
$ |
(22,992) | ||||||
|
Income taxes |
(8,489) | |||||||
|
Loss before income taxes from continuing operations |
$ |
(31,481) | ||||||
|
Interest expense and other financing costs |
2,601 | |||||||
|
Change in the fair value of non-designated interest rate swaps |
(1,550) | |||||||
|
Other (income) expense |
3,477 |
(238) |
5,271 |
8,510 | ||||
|
Restructuring and other related costs |
7,675 |
— |
3,868 |
11,543 | ||||
|
Earnings (loss) from Continuing Operations |
$ |
(19,069) |
$ |
5,390 |
$ |
3,302 |
$ |
(10,377) |
|
Decrease (increase) in fair value of biological assets(2) |
— |
— |
5,529 |
5,529 | ||||
|
Unrealized (gain) loss on commodity futures contracts(2) |
— |
— |
(8,831) |
(8,831) | ||||
|
Adjusted Operating Earnings(3) |
$ |
(19,069) |
$ |
5,390 |
$ |
— |
$ |
(13,679) |
|
Three months ended December 31, 2013 | ||||||||
|
($ thousands) |
Meat |
Agribusiness |
Unallocated |
Consolidated | ||||
|
Loss from continuing operations |
$ |
(47,942) | ||||||
|
Income taxes |
(12,632) | |||||||
|
Loss before income taxes |
$ |
(60,574) | ||||||
|
Interest expense and other financing costs |
17,478 | |||||||
|
Change in the fair value of non-designated interest rate swaps |
(92) | |||||||
|
Other (income) expense |
(832) |
(327) |
(2,009) |
(3,168) | ||||
|
Restructuring and other related costs |
12,490 |
— |
— |
12,490 | ||||
|
Earnings (loss) from Continuing Operations |
$ |
(42,624) |
$ |
(10,003) |
$ |
18,761 |
$ |
(33,866) |
|
Decrease (increase) in fair value of biological assets (2) |
— |
— |
(18,109) |
(18,109) | ||||
|
Unrealized (gains) loss on commodity futures contracts (2) |
— |
— |
(4,058) |
(4,058) | ||||
|
Adjusted Operating Earnings (3) |
$ |
(42,624) |
$ |
(10,003) |
$ |
(3,406) |
$ |
(56,033) |
|
Twelve months ended December 31, 2014 | ||||||||
|
($ thousands) |
Meat |
Agribusiness |
Unallocated |
Consolidated | ||||
|
Loss from continuing operations |
$ |
(213,813) | ||||||
|
Income taxes |
(74,556) | |||||||
|
Loss before income taxes |
$ |
(288,369) | ||||||
|
Interest expense and other financing costs |
130,844 | |||||||
|
Change in the fair value of non-designated interest rate swaps |
(6,275) | |||||||
|
Other (income) expense |
4,462 |
(1,313) |
13,455 |
16,604 | ||||
|
Restructuring and other related costs |
37,237 |
— |
30,355 |
67,592 | ||||
|
Earnings (loss) from Continuing Operations |
$ |
(80,381) |
$ |
8,642 |
$ |
(7,865) |
$ |
(79,604) |
|
Decrease (increase) in fair value of biological assets(2) |
— |
— |
(530) |
(530) | ||||
|
Unrealized (gain) loss on commodity futures contracts(2) |
— |
— |
(4,087) |
(4,087) | ||||
|
Modification impact to long-term incentive plan(11) |
— |
— |
8,734 |
8,734 | ||||
|
Adjusted Operating Earnings(3) |
$ |
(80,381) |
$ |
8,642 |
$ |
(3,748) |
$ |
(75,487) |
|
Twelve months ended December 31, 2013 | ||||||||
|
($ thousands) |
Meat |
Agribusiness |
Unallocated |
Consolidated | ||||
|
Loss from continuing operations |
$ |
(141,425) | ||||||
|
Income taxes |
(51,500) | |||||||
|
Loss before income taxes |
$ |
(192,925) | ||||||
|
Interest expense and other financing costs |
68,872 | |||||||
|
Change in the fair value of non-designated interest rate swaps |
(2,022) | |||||||
|
Other (income) expense |
(47,745) |
(1,036) |
(22,960) |
(71,741) | ||||
|
Restructuring and other related costs |
73,466 |
— |
1,745 |
75,211 | ||||
|
Earnings (loss) from Continuing Operations |
$ |
(86,192) |
$ |
(38,258) |
$ |
1,845 |
$ |
(122,605) |
|
Decrease (increase) in fair value of biological assets(2) |
— |
— |
(13,540) |
(13,540) | ||||
|
Unrealized (gain) loss on commodity futures contracts(2) |
— |
— |
(315) |
(315) | ||||
|
Adjusted Operating Earnings(3) |
$ |
(86,192) |
$ |
(38,258) |
$ |
(12,010) |
$ |
(136,460) |
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 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 per share from continuing operations as reported under IFRS to Adjusted Earnings per Share for the three months ended, as indicated below, and a reconciliation of basic earnings per share from continuing operations as reported under IFRS in the audited consolidated statements of net earnings to Adjusted Earnings per Share for the years then 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.
|
Three months ended |
Twelve months ended | |||||||
|
($ per Share) |
2014 |
2013(3) |
2014 |
2013(3) | ||||
|
Basic earnings (loss) per share from continuing operations |
$ |
(0.16) |
$ |
(0.34) |
$ |
(1.51) |
$ |
(1.01) |
|
Restructuring and other related costs(7) |
0.06 |
0.07 |
0.36 |
0.40 | ||||
|
Items included in other income not considered representative of on-going operations(8) |
0.04 |
(0.04) |
0.08 |
(0.39) | ||||
|
Change in the fair value of non-designated interest rate swaps(9) |
(0.01) |
— |
(0.03) |
(0.01) | ||||
|
Change in the fair value of unrealized (gains) losses on commodity futures contracts(9) |
(0.04) |
(0.02) |
(0.02) |
— | ||||
|
Change in the fair value of biological assets(9) |
0.03 |
(0.09) |
— |
(0.07) | ||||
|
Other financing costs(10) |
— |
— |
0.50 |
— | ||||
|
Modification impact to long-term incentive plan(11) |
— |
— |
0.05 |
— | ||||
|
Adjusted Earnings per Share(12) |
$ |
(0.08) |
$ |
(0.41) |
$ |
(0.58) |
$ |
(1.08) |
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 and debt repayment; expectations regarding acquisitions and divestitures; the timing of old plant closures and job losses; 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 Annual Management's Discussion and Analysis for the period ended December 31, 2014, that 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 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, is available on SEDAR at www.sedar.com.
Maple Leaf Foods Inc. is a leading Canadian consumer protein company, making high quality, innovative products under national brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders Country Naturals® and Mina™. The Company employs approximately 12,000 people across Canada and exports to global markets, including the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI).
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. |
Regarding biological assets, please refer to Note 7 of the Company's 2014 annual audited consolidated financial statements. Realized and unrealized gains/losses on commodity 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 2014 annual audited consolidated financial statements. |
|
3. |
Figures exclude the results of the Bakery Products Group, which are reported as discontinued operations. Refer to Note 25 of the Company's 2014 annual audited consolidated financial statements. |
|
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. Non-allocated costs for 2013 have been re-stated on a comparable basis. |
|
7. |
Includes per share impact of restructuring and other related costs, net of tax and non-controlling interest. |
|
8. |
Includes gains/losses associated with non-operational activities, including gains/losses related to restructuring activities, business combinations, discontinued operations, assets held for sale, and hedge ineffectiveness recognized in earnings, all net of tax. |
|
9. |
Includes per share impact of the change in fair value of non-designated interest rate swaps, unrealized and realized (gains) losses on commodity futures contracts and the change in fair value of biological assets, net of tax. |
|
10. |
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. |
|
11. |
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. |
|
12. |
May not add due to rounding. |
|
Consolidated Financial Statements MAPLE LEAF FOODS INC. Twelve months ended December 31, 2014 and 2013 | ||||||
|
Consolidated Balance Sheets |
||||||
|
As at December 31, |
As at December 31, | |||||
|
(In thousands of Canadian dollars) |
2014 |
2013 | ||||
|
ASSETS |
||||||
|
Current assets |
||||||
|
Cash and cash equivalents |
$ |
496,328 |
$ |
506,670 | ||
|
Accounts receivable |
60,396 |
111,034 | ||||
|
Notes receivable |
110,209 |
115,514 | ||||
|
Inventories |
270,401 |
287,786 | ||||
|
Biological assets |
105,743 |
95,740 | ||||
|
Income and other taxes recoverable |
— |
43,300 | ||||
|
Prepaid expenses and other assets |
20,157 |
17,921 | ||||
|
Assets held for sale |
1,107 |
5,206 | ||||
|
$ |
1,064,341 |
$ |
1,183,171 | |||
|
Property and equipment |
1,042,506 |
1,323,318 | ||||
|
Investment property |
3,312 |
12,865 | ||||
|
Employee benefits |
88,162 |
117,615 | ||||
|
Other long-term assets |
9,881 |
16,628 | ||||
|
Deferred tax asset |
74,986 |
26,119 | ||||
|
Goodwill |
428,236 |
720,798 | ||||
|
Intangible assets |
165,066 |
198,578 | ||||
|
Total assets |
$ |
2,876,490 |
$ |
3,599,092 | ||
|
LIABILITIES AND EQUITY |
||||||
|
Current liabilities |
||||||
|
Bank indebtedness |
$ |
— |
$ |
4,408 | ||
|
Accounts payable and accruals |
275,249 |
649,554 | ||||
|
Provisions |
60,443 |
54,853 | ||||
|
Current portion of long-term debt |
472 |
209,780 | ||||
|
Income taxes payable |
26,614 |
— | ||||
|
Other current liabilities |
24,383 |
47,927 | ||||
|
$ |
387,161 |
$ |
966,522 | |||
|
Long-term debt |
10,017 |
744,212 | ||||
|
Employee benefits |
196,482 |
174,503 | ||||
|
Provisions |
17,435 |
19,603 | ||||
|
Other long-term liabilities |
20,899 |
28,744 | ||||
|
Deferred tax liability |
— |
23,516 | ||||
|
Total liabilities |
$ |
631,994 |
$ |
1,957,100 | ||
|
Shareholders' equity |
||||||
|
Share capital |
$ |
936,479 |
$ |
905,216 | ||
|
Retained earnings |
1,228,815 |
602,717 | ||||
|
Contributed surplus |
79,652 |
79,139 | ||||
|
Accumulated other comprehensive loss |
(226) |
(4,593) | ||||
|
Treasury stock |
(224) |
(1,350) | ||||
|
Total shareholders' equity |
$ |
2,244,496 |
$ |
1,581,129 | ||
|
Non-controlling interest |
— |
60,863 | ||||
|
Total equity |
$ |
2,244,496 |
$ |
1,641,992 | ||
|
Total liabilities and equity |
$ |
2,876,490 |
$ |
3,599,092 | ||
|
Consolidated Statements of Net Earnings (Loss) |
||||||||||||
|
Years ended December 31, |
Three months ended December 31, |
Twelve months ended December 31, | ||||||||||
|
(In thousands of Canadian dollars, except share amounts) |
2014 |
2013 |
2014 |
2013 | ||||||||
|
(Unaudited) |
(Unaudited) (Restated) |
(Restated) | ||||||||||
|
Sales |
$ |
794,007 |
$ |
748,311 |
$ |
3,157,241 |
$ |
2,954,777 | ||||
|
Cost of goods sold |
743,114 |
706,024 |
2,938,964 |
2,773,934 | ||||||||
|
Gross margin |
$ |
50,893 |
$ |
42,287 |
$ |
218,277 |
$ |
180,843 | ||||
|
Selling, general and administrative expenses |
61,270 |
76,153 |
297,881 |
303,448 | ||||||||
|
Loss from continuing operations before the following: |
$ |
(10,377) |
$ |
(33,866) |
$ |
(79,604) |
$ |
(122,605) | ||||
|
Restructuring and other related costs |
(11,543) |
(12,490) |
(67,592) |
(75,211) | ||||||||
|
Change in fair value of non-designated interest rate swaps |
1,550 |
92 |
6,275 |
2,022 | ||||||||
|
Other income (expense) |
(8,510) |
3,168 |
(16,604) |
71,741 | ||||||||
|
(Loss) before interest and income taxes from continuing operations |
$ |
(28,880) |
$ |
(43,096) |
$ |
(157,525) |
$ |
(124,053) | ||||
|
Interest expense and other financing costs |
2,601 |
17,478 |
130,844 |
68,872 | ||||||||
|
Loss before income taxes from continuing operations |
$ |
(31,481) |
$ |
(60,574) |
$ |
(288,369) |
$ |
(192,925) | ||||
|
Income taxes |
(8,489) |
(12,632) |
(74,556) |
(51,500) | ||||||||
|
Loss from continuing operations |
$ |
(22,992) |
$ |
(47,942) |
$ |
(213,813) |
$ |
(141,425) | ||||
|
Earnings (loss) from discontinued operations |
(5,196) |
559,316 |
925,719 |
653,588 | ||||||||
|
Net earnings (loss) |
$ |
(28,188) |
$ |
511,374 |
$ |
711,906 |
$ |
512,163 | ||||
|
Attributed to: |
||||||||||||
|
Common shareholders |
$ |
(28,188) |
$ |
500,746 |
$ |
709,931 |
$ |
496,310 | ||||
|
Non-controlling interest |
— |
10,628 |
1,975 |
15,853 | ||||||||
|
$ |
(28,188) |
$ |
511,374 |
$ |
711,906 |
$ |
512,163 | |||||
|
(Loss) earnings per share attributable to common shareholders: |
||||||||||||
|
Basic and diluted earnings (loss) per share |
$ |
(0.20) |
$ |
3.58 |
$ |
5.03 |
$ |
3.55 | ||||
|
Basic and diluted loss per share from continuing operations |
$ |
(0.16) |
$ |
(0.34) |
$ |
(1.51) |
$ |
(1.01) | ||||
|
Weighted average number of shares (millions) |
141.7 |
140.0 |
141.2 |
139.9 | ||||||||
|
Consolidated Statements of Other Comprehensive Income (Loss) |
|||||||||||||
|
Years ended December 31, |
Three months ended December 31, |
Twelve months ended December 31, | |||||||||||
|
2014 |
2013 |
2014 |
2013 | ||||||||||
|
(Unaudited) |
(Unaudited) |
(Restated) | |||||||||||
|
Net earnings (loss) |
$ |
(28,188) |
$ |
511,374 |
$ |
711,906 |
$ |
512,163 | |||||
|
Other comprehensive income (loss) |
|||||||||||||
|
Items that will not be reclassified to profit or loss: |
|||||||||||||
|
Actuarial gains and losses |
$ |
(43,595) |
$ |
56,367 |
$ |
(50,869) |
$ |
185,073 | |||||
|
(Net of tax of $14.4 million and $17.0 million; 2013: $19.6 million | |||||||||||||
|
Total items that will not be reclassified to profit or loss |
$ |
(43,595) |
$ |
56,367 |
$ |
(50,869) |
$ |
185,073 | |||||
|
Items that are or may be reclassified subsequently to profit or loss: |
|||||||||||||
|
Change in accumulated foreign currency translation adjustment |
$ |
(305) |
$ |
16 |
$ |
(557) |
$ |
(138) | |||||
|
Change in unrealized gains and losses on cash flow hedges |
(62) |
287 |
4,125 |
(840) | |||||||||
|
Total items that are or may be reclassified subsequently to profit or loss |
$ |
(367) |
$ |
303 |
$ |
3,568 |
$ |
(978) | |||||
|
Other comprehensive income (loss) from continuing operations |
$ |
(43,962) |
$ |
56,670 |
$ |
(47,301) |
$ |
184,095 | |||||
|
Other comprehensive income from discontinued operations(i) |
— |
10,976 |
(569) |
29,452 | |||||||||
|
Total other comprehensive income (loss) |
$ |
(43,962) |
$ |
67,646 |
$ |
(47,870) |
$ |
213,547 | |||||
|
Comprehensive income (loss) |
$ |
(72,150) |
$ |
579,020 |
$ |
664,036 |
$ |
725,710 | |||||
|
Attributed to: |
|||||||||||||
|
Common shareholders |
$ |
(72,150) |
$ |
567,061 |
$ |
662,305 |
$ |
706,515 | |||||
|
Non-controlling interest |
$ |
— |
$ |
11,959 |
$ |
1,731 |
$ |
19,195 | |||||
|
(i) |
The above amount does not include a gain or loss for the three months ended December 31, 2014 (2013: $4.5 million, net of tax of $1.6 million) and a loss of $3.6 million, net of tax of $1.2 million for the year ended December 31, 2014 (2013: gain of $18.3 million, net of tax of$6.4 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 |
|||||||||||||||||||||||||||
|
(In thousands of Canadian dollars) |
Share capital |
Retained |
Contributed |
Total associated with |
Total |
Treasury |
Non- |
Total equity |
|||||||||||||||||||
|
Balance at December 31, 2013 |
$ |
905,216 |
$ |
602,717 |
$ |
79,139 |
$ |
(4,593) |
$ |
— |
$ |
(1,350) |
$ |
60,863 |
$ |
1,641,992 |
|||||||||||
|
Net earnings |
709,931 |
— |
— |
— |
— |
1,975 |
711,906 |
||||||||||||||||||||
|
Reclassification to assets held for sale |
— |
— |
— |
799 |
(799) |
— |
— |
— |
|||||||||||||||||||
|
Other comprehensive income (loss) |
— |
(54,083) |
— |
3,568 |
2,889 |
— |
(244) |
(47,870) |
|||||||||||||||||||
|
Dividends declared ($0.16 per share) |
— |
(22,656) |
— |
— |
— |
— |
(3,017) |
(25,673) |
|||||||||||||||||||
|
Stock-based compensation expense |
— |
— |
27,501 |
— |
— |
— |
— |
27,501 |
|||||||||||||||||||
|
Disposal of business |
— |
— |
— |
— |
(2,090) |
— |
(59,577) |
(61,667) |
|||||||||||||||||||
|
Exercise of stock options |
31,263 |
— |
— |
— |
— |
— |
— |
31,263 |
|||||||||||||||||||
|
Shares purchased by RSU trust |
— |
— |
— |
— |
— |
(11,000) |
— |
(11,000) |
|||||||||||||||||||
|
Issuance of treasury stock |
— |
(1,150) |
(10,976) |
— |
— |
12,126 |
— |
— |
|||||||||||||||||||
|
Modification of stock compensation plan |
— |
(5,944) |
(16,012) |
— |
— |
— |
— |
(21,956) |
|||||||||||||||||||
|
Balance at December 31, 2014 |
$ |
936,479 |
$ |
1,228,815 |
$ |
79,652 |
$ |
(226) |
$ |
— |
$ |
(224) |
$ |
— |
$ |
2,244,496 |
|||||||||||
|
Attributable to Common Shareholders |
|||||||||||||||||||||||||||
|
(In thousands of Canadian dollars) |
Share capital |
Retained |
Contributed |
Total |
Total |
Treasury |
Non- |
Total equity | |||||||||||||||||||
|
Balance at December 31, 2012 |
$ |
902,810 |
$ |
(72,701) |
$ |
75,913 |
$ |
(13,263) |
$ |
— |
$ |
(1,845) |
$ |
67,085 |
$ |
957,999 |
|||||||||||
|
Net earnings |
— |
496,310 |
— |
— |
— |
— |
15,853 |
512,163 |
|||||||||||||||||||
|
Other comprehensive income (loss) |
— |
201,535 |
— |
8,670 |
— |
— |
3,342 |
213,547 |
|||||||||||||||||||
|
Dividends declared ($0.16 per share) |
— |
(22,427) |
— |
— |
— |
— |
(25,417) |
(47,844) |
|||||||||||||||||||
|
Stock-based compensation expense |
— |
— |
12,604 |
— |
— |
— |
— |
12,604 |
|||||||||||||||||||
|
Exercise of stock options |
2,406 |
— |
— |
— |
— |
— |
— |
2,406 |
|||||||||||||||||||
|
Issuance of treasury stock |
— |
— |
(495) |
— |
— |
495 |
— |
— |
|||||||||||||||||||
|
Cash settlement of stock compensation |
— |
— |
(14,391) |
— |
— |
— |
— |
(14,391) |
|||||||||||||||||||
|
Modification of stock compensation plan |
— |
— |
3,508 |
— |
— |
— |
— |
3,508 |
|||||||||||||||||||
|
Other |
— |
— |
2,000 |
— |
— |
— |
— |
2,000 |
|||||||||||||||||||
|
Balance at December 31, 2013 |
$ |
905,216 |
$ |
602,717 |
$ |
79,139 |
$ |
(4,593) |
$ |
— |
$ |
(1,350) |
$ |
60,863 |
$ |
1,641,992 |
|||||||||||
|
Consolidated Statements of Cash Flow |
|||||||||||
|
Years ended December 31, |
Three months ended December 31, |
Twelve months ended December 31, | |||||||||
|
2014 |
2013 |
2014 |
2013 | ||||||||
|
CASH (USED IN) PROVIDED BY: |
(Unaudited) |
(Unaudited) |
|||||||||
|
Operating activities |
|||||||||||
|
Net earnings (loss) |
$ |
(28,188) |
$ |
511,374 |
$ |
711,906 |
$ |
512,163 | |||
|
Add (deduct) items not affecting cash: |
|||||||||||
|
Change in fair value of biological assets |
5,529 |
(18,109) |
(530) |
(13,540) | |||||||
|
Depreciation and amortization |
31,306 |
36,682 |
111,375 |
141,818 | |||||||
|
Stock-based compensation |
1,384 |
2,358 |
27,501 |
12,604 | |||||||
|
Deferred income taxes |
(57,820) |
76,304 |
(26,533) |
52,847 | |||||||
|
Income tax current |
48,031 |
3,747 |
59,100 |
23,443 | |||||||
|
Interest expense and other financing costs |
2,601 |
16,445 |
131,630 |
68,496 | |||||||
|
Loss (gain) on sale of long-term assets |
634 |
613 |
1,018 |
(2,643) | |||||||
|
Loss (gain) on sale of business |
6,497 |
(605,901) |
(1,000,968) |
(605,901) | |||||||
|
Gain on sale of assets held for sale |
— |
(10,564) |
(1,736) |
(67,640) | |||||||
|
Change in fair value of non-designated interest rate swaps |
(1,550) |
(92) |
(6,275) |
(2,022) | |||||||
|
Change in fair value of derivative financial instruments |
(7,364) |
(3,746) |
(4,708) |
117 | |||||||
|
Impairment of assets (net of reversals) |
792 |
(87) |
2,466 |
5,837 | |||||||
|
Increase in pension liability |
6,148 |
1,079 |
18,794 |
15,789 | |||||||
|
Net income taxes paid |
7,285 |
(7,559) |
(1,442) |
(28,537) | |||||||
|
Net settlement of financial instruments |
— |
— |
(23,631) |
— | |||||||
|
Early repayment premium |
— |
— |
(76,311) |
— | |||||||
|
Interest paid |
(2,505) |
(13,479) |
(43,867) |
(62,949) | |||||||
|
Change in provision for restructuring and other related costs |
(860) |
7,591 |
30,409 |
55,497 | |||||||
|
Settlement of restricted share units |
— |
— |
(21,640) |
— | |||||||
|
Other |
5,429 |
7,182 |
(5,741) |
(12,209) | |||||||
|
Change in non-cash operating working capital |
(1,784) |
43,236 |
(243,035) |
166,955 | |||||||
|
Cash (used in) provided by operating activities |
$ |
15,565 |
$ |
47,074 |
$ |
(362,218) |
$ |
260,125 | |||
|
Financing activities |
|||||||||||
|
Dividends paid |
$ |
(5,705) |
$ |
(5,613) |
$ |
(22,656) |
$ |
(22,427) | |||
|
Dividends paid to non-controlling interest |
— |
(1,271) |
(24,621) |
(5,084) | |||||||
|
Net increase (decrease) in long-term debt |
250 |
(25,088) |
(698,889) |
(24,178) | |||||||
|
Net payments on the credit facility |
— |
(567,000) |
(255,000) |
(255,000) | |||||||
|
Exercise of stock options |
9,467 |
2,230 |
31,263 |
2,406 | |||||||
|
Cash settlement of stock options |
— |
(14,391) |
— |
(14,391) | |||||||
|
Payment of financing fees |
— |
(1,388) |
(3,769) |
(1,388) | |||||||
|
Cash used in financing activities |
$ |
4,012 |
$ |
(612,521) |
$ |
(973,672) |
$ |
(320,062) | |||
|
Investing activities |
|||||||||||
|
Additions to long-term assets |
$ |
(35,235) |
$ |
(87,647) |
$ |
(259,181) |
$ |
(361,155) | |||
|
Acquisition of business |
— |
— |
— |
(922) | |||||||
|
Capitalization of interest expense |
— |
(4,854) |
(5,504) |
(15,980) | |||||||
|
Adjustment to sale of business |
— |
— |
(468) |
— | |||||||
|
Proceeds from sale of business |
— |
744,811 |
1,647,015 |
744,811 | |||||||
|
Transaction costs on sale of business |
785 |
— |
(28,227) |
— | |||||||
|
Cash associated with divested business |
— |
— |
(23,011) |
— | |||||||
|
Proceeds from sale of long-term assets |
963 |
3,598 |
4,224 |
12,094 | |||||||
|
Proceeds from sale of assets held for sale |
— |
11,495 |
6,108 |
141,180 | |||||||
|
Purchase of treasury stock |
— |
— |
(11,000) |
— | |||||||
|
Cash provided by investing activities |
$ |
(33,487) |
$ |
667,403 |
$ |
1,329,956 |
$ |
520,028 | |||
|
Increase (decrease) in cash and cash equivalents |
$ |
(13,910) |
$ |
101,956 |
$ |
(5,934) |
$ |
460,091 | |||
|
Net cash and cash equivalents, beginning of period |
510,238 |
400,306 |
502,262 |
42,171 | |||||||
|
Net cash and cash equivalents, end of period |
$ |
496,328 |
$ |
502,262 |
$ |
496,328 |
$ |
502,262 | |||
|
Net cash and cash equivalents in comprised of: |
|||||||||||
|
Cash and cash equivalents |
$ |
496,328 |
$ |
506,670 |
$ |
496,328 |
$ |
506,670 | |||
|
Bank indebtedness |
— |
(4,408) |
— |
(4,408) | |||||||
|
Net cash and cash equivalents |
$ |
496,328 |
$ |
502,262 |
$ |
496,328 |
$ |
502,262 | |||
|
Segmented Financial Information |
|||||||||||||
|
Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||
|
2014 |
2013 |
2014 |
2013 |
||||||||||
|
(Unaudited) |
(Unaudited) |
(Restated) |
|||||||||||
|
Sales |
|||||||||||||
|
Meat Products Group |
$ |
789,725 |
$ |
743,726 |
$ |
3,135,376 |
$ |
2,925,772 |
|||||
|
Agribusiness Group(i) |
4,282 |
22,303 |
21,865 |
235,199 |
|||||||||
|
Bakery Products Group(i) |
— |
372,805 |
567,861 |
1,531,993 |
|||||||||
|
Total sales |
$ |
794,007 |
$ |
1,138,834 |
$ |
3,725,102 |
$ |
4,692,964 |
|||||
|
Sales from discontinued operations |
— |
(390,523) |
(567,861) |
(1,738,187) |
|||||||||
|
Sales from continuing operations |
$ |
794,007 |
$ |
748,311 |
$ |
3,157,241 |
$ |
2,954,777 |
|||||
|
Earnings (loss) before restructuring and other related costs and other income |
|||||||||||||
|
Meat Products Group |
$ |
(19,069) |
$ |
(42,624) |
$ |
(80,381) |
$ |
(86,192) |
|||||
|
Agribusiness Group(i) |
5,390 |
(6,365) |
8,642 |
23,303 |
|||||||||
|
Bakery Products Group(i) |
— |
34,080 |
47,829 |
126,540 |
|||||||||
|
Non-allocated costs |
3,302 |
18,761 |
(7,865) |
1,845 |
|||||||||
|
Total earnings (loss) before restructuring and other related costs and other income |
$ |
(10,377) |
$ |
3,852 |
$ |
(31,775) |
$ |
65,496 |
|||||
|
Earnings (loss) before restructuring and other related costs and other income from discontinued operations |
— |
(37,718) |
(47,829) |
(188,101) |
|||||||||
|
Earnings (loss) before restructuring and other related costs and other income from continuing operations |
$ |
(10,377) |
$ |
(33,866) |
$ |
(79,604) |
$ |
(122,605) |
|||||
|
Capital expenditures |
|||||||||||||
|
Meat Products Group |
$ |
27,470 |
$ |
87,532 |
$ |
206,958 |
$ |
318,995 |
|||||
|
Agribusiness Group(i) |
4,281 |
6,481 |
9,063 |
17,917 |
|||||||||
|
Bakery Products Group(i) |
— |
17,864 |
17,789 |
48,473 |
|||||||||
|
$ |
31,751 |
$ |
111,877 |
$ |
233,810 |
$ |
385,385 |
||||||
|
Depreciation and amortization |
|||||||||||||
|
Meat Products Group |
$ |
25,066 |
$ |
19,264 |
$ |
86,027 |
$ |
69,111 |
|||||
|
Agribusiness Group(i) |
1,811 |
2,453 |
5,928 |
14,748 |
|||||||||
|
Unallocated(ii) |
4,429 |
— |
14,278 |
— |
|||||||||
|
Bakery Products Group(i) |
— |
14,965 |
5,142 |
57,959 |
|||||||||
|
$ |
31,306 |
$ |
36,682 |
$ |
111,375 |
$ |
141,818 |
||||||
|
(i) |
The prior year results of the animal by-product recycling operations, Fresh Pasta and Sauces businesses and Canada Bread are included in the comparative results of the Agribusiness Group and Bakery Products Group respectively. |
|
(ii) |
Includes depreciation on assets used to service divested business. |
|
As at December 31, 2014 |
As at December 31, 2013 |
||||||
|
Total assets |
|||||||
|
Meat Products Group |
$ |
1,965,280 |
$ |
1,823,866 |
|||
|
Agribusiness Group(i) |
211,516 |
195,537 |
|||||
|
Bakery Products Group(i) |
— |
1,169,669 |
|||||
|
Non-allocated assets |
699,694 |
410,020 |
|||||
|
$ |
2,876,490 |
$ |
3,599,092 |
||||
|
Goodwill |
|||||||
|
Meat Products Group |
$ |
428,236 |
$ |
428,236 |
|||
|
Bakery Products Group(i) |
— |
292,562 |
|||||
|
$ |
428,236 |
$ |
720,798 |
||||
|
(i) |
The prior year results as at December 31, 2013 of the Agribusiness Group and Bakery Products Group include assets and goodwill from the animal by-product recycling operations, Fresh Pasta and Sauces, and Canada Bread businesses, respectively. |
SOURCE Maple Leaf Foods Inc.
Investor Contact: Nick Boland; VP Investor Relations: 905-285-5898; Media Contact: 888-995-5030
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