- Company Generates EBITDA of $5.9 Million and First Quarter of Positive Operating Cash Flow since Commissioning PCC Facility -
WINNIPEG, May 15, 2014 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the three months ended March 31, 2014. All figures are in Canadian dollars unless otherwise stated.
Highlights for the Three Months Ended March 31, 2014 (all comparative metrics are relative to the first quarter of 2013, unless otherwise stated):
Special Crops Segment
- Revenue of $94.4 million (105,500 tonnes shipped) compared with $82.7 million (97,500 tonnes sold) in 2013;
- Adjusted gross profit1 of $8.9 million compared with $9.2 million;
- EBITDA1 of $6.4 million, slightly higher than first quarter 2013, on the strength of lower selling and administrative expenses;
- Cash flow provided by operations1 of $6.1 million, after excluding cash outlays to extend foreign exchange contracts due to shipping delays, compared with $4.3 million;
- Increased the HSBC Credit Facility from $51 million to $54 million; and
- Days in receivable improved to 48 days from 60 days at March 31, 2013 and days in inventory improved to 80 days from 93 days.
Oilseed Processing Segment (Pacific Coast Canola (PCC))
- Revenue of $34.2 million from 52,700 tonnes sold and 56,400 tonnes crushed (about 61% of operating capacity);
- Adjusted gross profit1 of $2.5 million, after excluding $2.1 million of unrealized losses on open commodity hedging contracts, compared with an adjusted gross loss1 of $3.6 million;
- EBITDA1 of $1 million, after excluding unrealized losses on open commodity hedging contracts, compared with a loss before interest, taxes, depreciation and amortization1 of $4.7 million;
- Cash flow used in operations1 of $827,000 improved $4.9 million from the $5.8 million cash flow used in operations1; and
- On January 8, 2014, entered into agreement with Macquarie Bank Limited that provides additional liquidity of up to US$45 million through 1) a three-year, US$10 million working capital borrowing facility; 2) a US$15 million hedging line; and 3) up to US$20 million for feed stock purchase transactions.
- Consolidated revenues increased 47% to $128.5 million from $87.3 million;
- Adjusted gross profit1 increased 66% to $9.3 million from $5.6 million. Excluding unrealized gains and losses on open commodity hedging contracts, adjusted gross profit1 increased 107% to $11.4 million from $5.5 million;
- EBITDA1 increased to $5.9 million, after excluding PCC's unrealized losses on open commodity hedging contracts, compared to EBITDA1 of $12,000;
- Cash flow provided by operations1 of $4.4 million, after excluding cash outlays to extend foreign exchange contracts due to shipping delays, improved $6.6 million compared with cash flow used in operations1 of $2.2 million last year; and
- After deducting non-cash items such as depreciation and amortization and non-cash losses on derivative financial instruments, the net loss attributable to shareholders for the three months ended March 31, 2014 was $6.1 million, or a $0.37 loss per share compared to a loss attributable to shareholders of $5.8 million, or a $0.36 loss per share. The loss in the current quarter includes a loss of $3.8 million associated with the operation of the PCC Plant or a $0.23 loss per share.
Highlights Subsequent to Quarter End
- The Company sold about 43,000 tonnes of special crops in April 2014.
- PCC crushed about 22,600 tonnes in April 2014 or about 74% of operating capacity.
- Pacific Coast Canola entered into an agreement with Dow AgroSciences Canada Inc. under which it has been granted a license to process NexeraTM canola and produce and sell Omega-9 Quality Canola Oil at its facility in Warden, Washington.
Rail congestion issues in North America increased LWC's in-transit finished goods and resulted in shipping and invoicing delays during the quarter affecting the Company's current liabilities as did an increase in customer prepayments for future sales. A discussion of such factors is included in our MD&A available on sedar.com.
"The first quarter of 2014 was a milestone for our Company as positive EBITDA1 contributions from both Special Crops and Pacific Coast Canola resulted in our most profitable quarter by far since our IPO at nearly $6 million in consolidated EBITDA1," said Joel Horn, President and Chief Executive Officer, Legumex Walker, Inc. "Importantly, cash flow from operations1, after excluding outlays to extend foreign exchange contracts, was $4.4 million, which is an improvement of $6.6 million."
"Utilization at PCC improved from the previous quarter to more than 60%, held back only by the continued limited availability of feedstock due to North American rail congestion, which has already started to abate. Combined with our expanded truck delivery program and the receipt of additional unit trains, feedstock availability improved in the first part of the second quarter such that we were able to run the facility at almost 75% capacity in April. Increased availability of local seed in the third and fourth quarters with the harvests of the local winter and spring planted canola should enable us to ramp to full production in the second half of the year."
"Even with PCC operating just above breakeven production levels, we are already seeing the power of our platform to generate significant earnings growth and value for shareholders. I am excited that we are starting to show what we can do in 2014. As new crop approaches, PCC is poised to reach full production. With the current high Canola crush margins PCC has the potential to contribute as much, or more than, our Special Crops segment in terms of EBITDA1 contribution."
This news release contains references to "Adjusted Gross Profit", "EBITDA" and "Cash Flow Provided by Operations". Adjusted Gross Profit is defined for the purposes of this news release as gross profit before depreciation and amortization. EBITDA is defined for the purposes of this news release as earnings from operations before other income and expenses, depreciation and amortization, financing costs, and income taxes. Cash Flow from Operations and Cash Flow Provided by Operations is defined for the purposes of this news release as the cash provided by or used in operating activities excluding non-cash working capital changes. Management believes excluding the seasonal swings of non-cash working capital assists in evaluation of long-term liquidity. Management believes that Adjusted Gross Profit, EBITDA and Cash Flow from Operations are useful supplemental measures of cash flow prior to finance costs, capital expenditures, income taxes and other non-cash items included in earnings. Management uses Adjusted Gross Profit, Cash Flow from Operations as a financial measure of liquidity. EBITDA and Cash Flow from Operations are not recognized earnings measures under Canadian Generally Accepted Accounting Principles or IFRS (collectively referred to herein as "Canadian GAAP") and do not have standardized meanings prescribed by Canadian GAAP. Therefore, Adjusted Gross Profit, EBITDA and Cash Flow from Operations may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted Gross Profit, EBITDA and Cash Flow from Operations should not be construed as an alternative to net earnings or loss (which are determined in accordance with Canadian GAAP) as an indicator of the performance of the Company or as a measure of liquidity and cash flows. The Company believes that Adjusted Gross Profit, EBITDA and Cash Flow from Operations are useful supplemental measures of cash flow prior to debt service, investing and financing activities and income taxes. The Company's method of calculating Adjusted Gross Profit, EBITDA and Cash Flow from Operations may differ materially from the methods used by other public companies and, accordingly, may not be comparable to similarly titled measures used by other public companies. A reconciliation of Adjusted Gross Profit and EBITDA to Net Earnings (loss) and a reconciliation of Cash Flow from Operations to Cash Flow provided by Operating Activities are set out in section 12 of the MD&A (as defined below).
Financial Statements and MD&A
Legumex Walker's Financial Statements and Management's Discussion and Analysis ("MD&A") for the period ended March 31, 2014 are available on the Company's website at www.legumexwalker.com in the "Investors" section.
Legumex Walker will host a conference call on Friday, May 16, 2014 at 12:00 p.m. ET to discuss its first quarter 2014 financial results. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. Please connect approximately 10 minutes prior to the start of the call to ensure access.
A recording of the conference call will be archived for replay by telephone until Friday, May 23, 2014 at midnight. To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 30818641.
A live audio webcast of the conference call will be available at http://www.legumexwalker.com/investors-presentations.php. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
About Legumex Walker Inc.
Legumex Walker is a growth-oriented processor and merchandiser of special crops (sunflower seeds, flax and canary seed), pulses (lentils, peas, beans and chickpeas) and canola products. The Company is one of the largest processors of special crops and pulses in Canada. Legumex Walker has 15 processing facilities strategically located in key growing regions in the Canadian Prairie Provinces, the American Midwest and China; a global sales, logistics and distribution platform; and access to multimodal transportation capabilities. In addition, the Company has an 84 percent interest in Pacific Coast Canola, LLC, which operates the first and only commercial-scale canola oilseed processing facility west of the Rocky Mountains.
Cautionary Note on Forward-looking Statements
This press release contains "forward-looking information" within the meaning of Canadian securities laws which may include, but are not limited to, statements relating to the PCC plant reaching full production in the second half of 2014 and PCC's potential to contribute as much, or more than, the Special Crops segment in terms of EBITDA1. Such forward-looking information reflects the Company's views with respect to future events and is subject to risks, uncertainties and assumptions, including the risk that the PCC plant will not reach full production in the second half of 2014 and the risk that PCC's contribution to consolidated EBITDA will not exceed that of the Special Crop Segment as a result of various factors, including as a result of crush margins (being the difference between the sale price of oil and meal and the cost of canola seed) decreasing in future periods, problems related to the operation of the PCC Plant, weather related risks, availability of feedstock, the demand for and availability of rail, port and other transportation services, the actual results of harvests, fluctuations in the price of pulses and other crops and canola oil prices, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, as well as those factors referred to in the section entitled "Risk Factors" in the Company's Management's Discussion and Analysis for the period ended December 31, 2013 and the Company's 2014 Annual Information Form, which are available on SEDAR at www.sedar.com and which should be reviewed in conjunction with this document. The statements relating to the PCC plant reaching full production in the second half of 2014 assume that sufficient feedstock will be available for delivery to PCC by rail and truck, including locally grown seed. The statements relating to PCC's contribution to EBITDA assume that PCC will operate at full capacity and that PCC will continue to realize crush margins consistent with those realized in the first quarter of 2014. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Although the Company believes the assumptions inherent in forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this press release. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
SOURCE: Legumex Walker Inc.
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