MEGA Brands Reports Fourth Quarter and 2012 Results

• Consolidated net sales up 18% in Q4 and 12% full year
• Toys net sales up 21% in Q4 and 12% full year
• EBITDA up 33% in Q4 and 25% full year

MONTREAL, March 1, 2013 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2012. (All figures are expressed in US dollars.)

Fourth quarter 2012 consolidated net sales increased 18% to $127.5 million compared to $108.5 million in the corresponding 2011 period.

• Sales were up 21% in Toys product lines and 1% in Stationery & Activities.
• On a geographic segment basis, North American sales rose 22 % and International sales were up 7%.

Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased 33% to $13.9 million compared to $10.4 million in the fourth quarter of 2011. EBITDA is a supplementary financial measure.

Net earnings were $4.0 million or $0.24 per basic share ($0.01 per diluted share), compared to $0.2 million or $0.01 per basic share (loss of $0.21 per diluted share) in the same 2011 period.

Full year 2012
For 2012, consolidated net sales increased 12% to $420.3 million compared to $376.8 million in 2011.

• Sales increased 12% in Toys product lines and 9% for Stationery & Activities.
• On a geographic segment basis, sales were up 20% in North America and down 4% in international markets.

EBITDA increased 25% to $49.2 million compared to $39.2 million in 2011. Net earnings were $16.6 million or $1.01 per basic share ($0.84 per diluted share), compared to $8.3 million or $0.51 per basic share ($0.46 per diluted share) in 2011.

Management's comments
''MEGA Brands achieved a solid fourth quarter in 2012, with higher sales, gross margin, profitability and cash flow compared to the same period in 2011,'' said Marc Bertrand, President and Chief Executive Officer. ''Our brands and our financial position continue to strengthen, and we will continue to invest in product development and to increase efficiency and manufacturing capacity at our Montreal facility.''

''Looking ahead, we expect continued sales growth based on our momentum in the marketplace and positive feedback on our product lines at recent toy fairs in Asia, Europe and North America,'' concluded Marc Bertrand.

Conference Call
A conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing [phone] or 1 [phone]. For those unable to participate, a replay will be available until March 8, 2013. The replay phone number is [phone] or 1 [phone], access code 87704752.

About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.

The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.

MD&A Filing
This press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the audited consolidated financial statements and notes for the years ended December 31, 2012 and 2011. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.

Use of Supplementary Financial Measures
The Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the year ended December 31, 2012, which is available at www.sedar.com and on the Corporation's Web site.

Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2012, which are available at www.sedar.com and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.

MEGA Brands Inc.
Consolidated Income Statements
(in thousands of US dollars, except per share amounts)
		Three-month periods ended December 31,				Twelve-month periods ended December 31,
		2012		2011		2012		2011
		(Unaudited)		(Unaudited)		(Audited)		(Audited)
		$		$		$		$
Net sales		127,538		108,495		420,271		376,827
Cost of sales		79,396		68,575		262,452		235,649
Gross profit		48,142		39,920		157,819		141,178
Marketing and advertising expenses		7,703		7,808		16,937		17,027
Research and development expenses		4,405		4,491		16,218		14,456
Other selling, distribution and administrative expenses		25,184		21,596		87,830		82,540
Contingent consideration on business acquisition		96		110		383		994
Loss on foreign currency translation		473		801		576		1,421
Earnings from operations		10,281		5,114		35,875		24,740
Financial expenses		4,516		4,604		17,647		18,666
Loss on settlement of debt		-		-		-		2,984
		4,516		4,604		17,647		21,650
Earnings before income taxes		5,765		510		18,228		3,090
Income taxes
	Current	1,755		(7,369)		1,642		(12,337)
	Government loans	-		7,645		-		7,097
		1,755		276		1,642		(5,240)
Net earnings		4,010		234		16,586		8,330
Earnings per share
	Basic	0.24		0.01		1.01		0.51
	Diluted	0.01		(0.21)		0.84		0.46

MEGA Brands Inc.
Consolidated Statements of Comprehensive Income
(in thousands of US dollars, except per share amounts)
		Three-month periods ended December 31,				Twelve-month periods ended December 31,
		2012		2011		2012		2011
		(Unaudited)		(Unaudited)		(Audited)		(Audited)
		$		$		$		$
Net earnings		4,010		234		16,586		8,330
Other comprehensive income (loss):
	Cumulative translation adjustment	(258)		479		1,099		(1,584)
Other comprehensive income (loss)		(258)		479		1,099		(1,584)
Comprehensive income		3,752		713		17,685		6,746

MEGA Brands Inc.
Consolidated Statements of Financial Position
(in thousands of US dollars)
	December 31,		December 31,
	2012		2011
	(Audited)		(Audited)
	$		$
Assets
Current assets
Cash and cash equivalents	8,018		6,745
Trade and other receivables	130,541		126,359
Inventories	45,779		69,560
Derivative financial instruments	113		904
Prepaid expenses	9,370		13,760
Total current assets	193,821		217,328
Non-current assets
Property, plant and equipment	39,817		32,172
Intangible assets	22,771		23,193
Goodwill	30,000		30,000
Derivative financial instruments	-		231
Total assets	286,409		302,924
Liabilities
Current liabilities
Government loans	-		37,279
Trade and other payables	62,638		71,762
Income taxes	5,631		5,832
Current portion of long-term debt	8,023		7,013
	76,292		121,886
Non-current liabilities
Long-term debt	112,992		105,275
Derivative financial instruments	206		-
	113,198		105,275
Equity
Share capital	431,893		429,007
Warrants	24,029		24,430
Contributed surplus	4,478		3,492
Deficit	(357,736)		(374,322)
Accumulated other comprehensive loss	(5,745)		(6,844)
Total equity	96,919		75,763
Total liabilities and equity	286,409		302,924

MEGA Brands Inc.
Consolidated Statement of Changes in Equity
(in thousands of US dollars)
		Share capital	Warrants	Contributed surplus	Deficit	Accumulated other comprehensive loss	Total equity
(Audited)		$	$	$	$	$	$
Balance - December 31, 2010		429,007	24,430	1,982	(382,652)	(5,260)	67,507
Net earnings		-	-	-	8,330	-	8,330
Other comprehensive loss		-	-	-	-	(1,584)	(1,584)
Stock-based compensation		-	-	1,510	-	-	1,510
Balance - December 31, 2011		429,007	24,430	3,492	(374,322)	(6,844)	75,763
Net earnings		-	-	-	16,586	-	16,586
Other comprehensive income		-	-	-	-	1,099	1,099
Options exercised		472	-	(148)			324
Warrants exercised		2,414	(401)	-	-	-	2,013
Stock-based compensation		-	-	1,134	-	-	1,134
Balance - December 31, 2012		431,893	24,029	4,478	(357,736)	(5,745)	96,919

MEGA Brands Inc.
Consolidated Statements of Cash Flows
(in thousands of US dollars)
		Twelve-month periods, ended December 31
		2012		2011
		(Audited)		(Audited)
		$		$
Operating activities
Net earnings		16,586		8,330
Adjustments for:
	Depreciation of property, plant and equipment	12,476		13,074
	Amortization of intangible assets	422		422
	Loss on settlement of debt	-		1,236
	Stock-based compensation	1,134		1,511
	Financial expenses	17,647		18,666
	Writeoff deferred financing costs	-		1,748
	Income taxes	1,642		(5,240)
	Loss (gain) on foreign currency	2,316		(374)
		52,223		39,373
	Net change in non-cash working capital balances	14,406		(24,011)
	Income taxes paid (recovered)	(1,473)		1,312
	Interest paid	(13,158)		(13,755)
Cash flows provided by operating activities		51,998		2,919
Financing activities
Repayment of debentures		(7,411)		(20,678)
Change in asset-based credit facility		(37,279)		37,279
Government loans		6,591		5,065
Issuance of long-term debt		4,524		32
Repayment of long-term debt		(220)		-
Issuance of capital stock		2,337		-
Cash flows provided by (used in) financing activities		(31,458)		21,698
Investing activities
Acquisition of property, plant and equipment		(19,234)		(23,248)
Cash flows used in investing activities		(19,234)		(23,248)
Effect of changes in foreign exchange rates on cash and cash equivalents		(33)		99
Increase in cash and cash equivalents		1,273		1,468
Cash and cash equivalents — Beginning of year		6,745		5,277
Cash and cash equivalents — End of year		8,018		6,745

 

 

 

SOURCE: MEGA BRANDS INC.

Investor Contact:

Peter Ferrante
Chief Financial Officer
Tel: [phone] ext. 2283