TORONTO, Oct. 30 /CNW/ - Richards Packaging Income Fund (TSX: RPI.UN) (the "Fund") announced today results for the quarter ended September 30, 2009 and the resumption of Unit distributions.
"Third quarter results were a mirror image of last year with EBITDA(1) increasing $0.2 million, ignoring the 2008 reorganization costs, primarily through stronger gross profit margins. Net income was $5.4 million or 53.4cents per Unit, up $4.9 million over the same period in 2008, due primarily to gains on financial instruments ($5.7 million)" commented Gerry Glynn, Chief Executive Officer.
Richards Packaging made six U.S. $1.0 million payments during the second and third quarters on the term debt with the funds diverted from distributions. We also repaid the $2.0 million borrowed on the revolving credit facility during the first quarter to invest in working capital. As at July 31, 2009 the U.S. denominated term loan was converted to a Canadian dollar debt at U.S./Cdn.$0.92 resulting in a realized gain of $0.1 million. Our leverage ratio improved during the last two quarters from 3.0:1 to 2.2:1, reflecting the repayments and the revaluation of the term debt upon conversion ($8.9 million) as a result of a 13 cents increase in the Canadian dollar from U.S./Cdn.$0.79. The Fund's distributable cash flow(2) sensitivity to foreign currency fluctuations is now $0.1 million for every U.S./Cdn 1 cents.
As a result, the Trustees of the Fund are pleased to announce today a return to the Fund's monthly cash distributions beginning for the month ended October 31, 2009 of Cdn$0.0655 per Unit to unitholders of record at the close of November 10, 2009, and will be payable on November 17, 2009. Unitholders who are non-residents of Canada may be required to pay all withholding taxes payable in respect of any distributions of income by the Fund, whether such distributions are in the form of cash or additional Units. Factors considered when setting this level included the Income Trust tax beginning in 2011, the current low interest rates and the cash needs of operations. Surplus distributable cash will be deployed to continue reducing the debt levels and to buyback Units.
Details of the Fund's results are currently available on Richards Packaging's website at www.richardspackaging.com and on SEDAR at www.sedar.com on October 31, 2009.
About Richards Packaging Income Fund
The Fund owns 85% of Richards Packaging Inc. 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 95 years and currently serves over 9,000 regional food, wine and spirits, cosmetic, specialty chemical, pharmaceutical and other companies from 19 locations throughout North America.
(1) Management defines EBITDA as earnings before amortization, interest,
unrealized gain/loss on financial instruments and taxes. EBITDA is
the same as income before under noted items, income taxes and non-
controlling interests as outlined in the interim consolidated
financial statements. 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 Fund's operating
performance. This earnings measure should not be construed as an
alternative to net income or as an alternative to cash flow from
operating, investing and financing activities as a measure of the
Fund's liquidity and cash flows. EBITDA does not have a standardized
meaning prescribed by GAAP and therefore the Fund's 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 the
Richards Packaging's credit agreement, as EBITDA less interest, cash
income tax expense, maintenance capital expenditures and loan
payments. The objective of presenting this measure is to calculate
the amount which is available for distribution to unitholders and
exchangeable shareholders. 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
Fund's liquidity and cash flows. Distributable cash flow does not
have a standardized meaning prescribed by GAAP and therefore the
Fund's 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. 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
SOURCE Richards Packaging Income Fund
For further information: For further information: Gerry Glynn, Chief Executive Officer, Richards Packaging Inc., (905) 670-7760, firstname.lastname@example.org; Enzio Di Gennaro, Chief Financial Officer, Richards Packaging Inc., (905) 670-7760, email@example.com