ROUGEMONT, QC, Nov. 6, 2020
/CNW Telbec/ - Lassonde Industries Inc.
(TSX: LAS.A) ("Lassonde") posted sales of $495.2 million in the third quarter of 2020,
up 17.1% year over year. Excluding the $47.3 million in sales from Sun–Rype, an
entity acquired on January 3, 2020,
and a $2.6 million favourable
foreign exchange impact, adjusted sales were up 5.3% year over
year. The Company's operating profit for the third quarter of 2020
totalled $40.0 million, up
$15.0 million from $25.0 million in operating profit in the
same quarter last year. The 2020 third–quarter profit
attributable to the Company's shareholders totalled $25.3 million, up $10.0 million year over year.
|
|
Financial
highlights
(in thousands of
$)
|
Third
quarters
ended
|
|
September
26,
2020
|
September
28,
2019
|
Sales
|
$
|
495,207
|
$
|
422,882
|
Operating
profit
|
40,018
|
24,952
|
Profit before income
taxes
|
35,205
|
21,246
|
Profit attributable
to the Company's shareholders
|
25,333
|
15,345
|
Basic and diluted
earnings per share (in $)
|
$
|
3.65
|
$
|
2.21
|
Note: These are financial highlights only.
Management's Discussion and Analysis, the unaudited interim
condensed consolidated financial statements and notes thereto for
the quarter ended September 26, 2020
are available on the SEDAR website at www.sedar.com and on the
website of Lassonde Industries Inc.
"Growth in industry volumes continued in the third quarter of
2020, but it is too early to determine whether this phenomenon is
sustainable. Strong demand for our products throughout the quarter
had a favourable impact on our results with a 5.3% increase in
adjusted sales driving more efficient asset utilization on both
sides of the Canada/U.S. border.
We are striving to meet product demand, but labour availability is
affected by the need to maintain a safe environment for all our
employees amid a second wave of COVID-19. On a separate note, I
would like to thank our employees for their exceptional work during
this difficult time," said the Chief Executive Officer of
Lassonde Industries Inc., Nathalie Lassonde.
Financial results
On January 3, 2020, the Company
completed the acquisition of Sun-Rype for a cash consideration of
$89.3 million that was paid at the
close of the transaction. This amount included preliminary
adjustments related to cash, working capital, and property, plant
and equipment. During the second quarter of 2020, an amount of
$2.2 million was received from the
seller following the final settlement of adjustments related to
working capital and other items. As part of the transaction, the
Company assumed liabilities of $23.0
million related to lease liabilities for the Sun-Rype
facilities. The acquisition was financed by the Company's existing
Canadian credit facility. The transaction costs, incurred mainly in
the fourth quarter of 2019, were $1.5
million. The Company has recognized this business
combination using the acquisition method in accordance with the
provisions of IFRS 3. Therefore, the interim consolidated financial
statements for the third quarter of 2020 include the results of
Sun-Rype from January 3, 2020.
For the third quarter of 2020, the Company's sales totalled
$495.2 million, up $72.3 million or 17.1% from $422.9 million in the same quarter of 2019. Sales
from Sun-Rype added $47.3 million to
the Company's third-quarter sales. Excluding Sun-Rype's sales and a
$2.6 million favourable foreign
exchange impact, the Company's third-quarter sales were up
$22.4 million or 5.3% year over year.
This increase was largely due to an increase in sales of private
label products. The Company believes that a significant portion of
this increase could be due to changes in food habits related to the
impacts of COVID-19, as industry sales volumes have also benefited
from a notable increase. For the first nine months of 2020, sales
totalled $1,465.9 million, up 17.6%
from $1,246.2 million in the first
nine months of 2019.
The Company's operating profit for the third quarter of 2020
totalled $40.0 million, up
$15.0 million from $25.0 million in the same quarter last year. As
for Sun-Rype, it posted $2.5 million
in operating profit. Excluding the impact of the Sun-Rype
acquisition, the Company's third-quarter operating profit was up
$12.5 million year over year. This
increase was explained by higher gross margins from the Company's
U.S. and Canadian operations, mainly due to an increase in sales
volume, to a decrease in the cost of certain raw materials, and to
an improvement in the production rate at one of the Company's
plants, which had been slowed in 2019 by investment–related
activities. The operating profit was also affected by higher
performance related salary expenses. Operating profit for the first
nine months of 2020 totalled $113.0 million, up $37.1 million from $75.9 million in the first nine months of
2019.
The Company's financial expenses went from $4.6 million in the third quarter of 2019 to
$4.0 million in the third quarter of
2020. Excluding $0.7 million in
interest expense related to the Sun-Rype acquisition, financial
expenses were down $1.3 million.
This decrease was essentially due to a decrease in the interest
expense on long-term debt. For the nine-month periods, financial
expenses went from $14.4 million in
2019 to $13.6 million in 2020.
"Other (gains) losses" went from a $0.9
million gain in the third quarter of 2019 to a $0.7 million loss in the third quarter of 2020.
This 2020 third-quarter loss was due to $0.5
million in foreign exchange losses and to a $0.2 million loss resulting from a change in the
fair value of financial instruments, whereas the 2019 third-quarter
gain was mainly due to a $0.8 million
gain resulting from a decrease in the fair value of a contingent
consideration payable. For the nine-month periods, the "Other
(gains) losses" item was a $2.1
million gain in 2020 compared to a $1.7 million loss in 2019.
Profit before income taxes stood at $35.2
million in the third quarter of 2020, up $14.0 million from $21.2
million in the third quarter of 2019. For the first nine
months of 2020, profit before income taxes stood at $100.8 million, up $41.0
million from $59.8 million in
the first nine months of 2019.
Income tax expense went from $5.6
million in the third quarter of 2019 to $8.8 million in the third quarter of 2020.
At 25.1%, the 2020 third-quarter effective income tax rate was
lower than the 26.5% rate in the same quarter of 2019. The 2019
third-quarter effective income tax rate reflected an unfavourable
impact of a revised estimate affecting the deductibility of certain
expenses incurred in 2019. Excluding this item, the 2020
third-quarter effective income tax rate was higher than the
adjusted rate in the same quarter of 2019 and mainly reflects a
decrease in the deductible amounts on the Company's interest
expense. Income tax expense for the first nine months of 2020 stood
at $23.2 million, up
$8.0 million from $15.2 million in the first nine months of
2019.
The 2020 third-quarter profit totalled $26.4 million, up $10.8
million from $15.6 million in the third quarter of 2019.
The current quarter's results include a profit of $1.8 million from Sun-Rype and an amount of
$0.3 million, net of tax, in
additional financial expenses related to the financing of the
acquisition. For the first nine months of 2020, profit totalled
$77.6 million versus profit of
$44.6 million in the first nine
months of 2019.
Profit attributable to the Company's shareholders was
$25.3 million, resulting in basic and
diluted earnings per share of $3.65
for the third quarter of 2020. In the third quarter of 2019, profit
attributable to the Company's shareholders had totalled
$15.3 million, resulting in basic and
diluted earnings per share of $2.21.
Excluding the impacts of the Sun-Rype acquisition, the 2020
third-quarter profit attributable to the Company's shareholders was
up $8.5 million year over year. For
the first nine months of 2020, profit attributable to the Company's
shareholders totalled $74.3 million,
resulting in basic and diluted earnings per share of $10.71 and, in the same nine-month period of
2019, profit had totalled $43.5
million, resulting in basic and diluted earnings per share
of $6.27.
The Company's operating activities generated $65.9 million in cash during the third quarter of
2020, while they had generated $34.1
million in cash during the same quarter last year. As for
Sun-Rype's operating activities, they generated $3.5 million in cash during the third
quarter of 2020. Financing activities used $53.9 million in cash during the third
quarter of 2020, while they had used $9.5 million in the same quarter of 2019.
Investing activities used $11.1
million in cash during the third quarter of 2020 compared to
$17.7 million used in the same
quarter of 2019. At the end of the third quarter of fiscal 2020,
the Company reported a cash and cash equivalents balance of
$6.4 million and the bank overdraft
balance was $0.1 million, whereas, at
the end of the third quarter of 2019, the cash and cash equivalents
balance was $1.1 million and the bank
overdraft balance was $1.8
million.
Outlook
Both for the twelve-month period ended September 26, 2020 and for the twelve–week period
ended September 26, 2020, the Company
noted a marked increase in industry sales volumes in the U.S. and
Canadian fruit juice and drinks markets. Excluding Sun-Rype's sales
and foreign exchange impacts, the Company's sales were up 5.3% in
the third quarter of 2020 compared to the same quarter in 2019. It
believes that a non-negligible portion of this increase could be
due to the direct and indirect effects of the pandemic on consumer
behaviour. There is no reliable way to determine whether these
changes in purchasing habits are permanent or will fade when
COVID–19 is a thing of the past. Barring any significant external
shocks, including the impacts of COVID-19's evolution (and
excluding foreign exchange impacts and the impact of the Sun-Rype
acquisition to maintain a comparable basis), the Company expects
that, for 2020, it will be able to achieve a consolidated annual
sales growth rate above that of 2019, but with a slight decrease
from its current growth rate for the fourth quarter of 2020.
However, the uncertainty surrounding such a forecast is higher than
it is under normal circumstances, as the impact in 2020 of the
lockdown and physical distancing measures on demand for the
Company's products is hard to measure. The Company remains
concerned about how the crisis will affect sales to the food
service segment, especially as several regions of North America are returning to partial
lockdown.
During the third quarter of 2020, the Company observed improved
profitability at its U.S. operations due to strong demand for its
products during the quarter, but it notes some uncertainties about
the availability of labour related to the impacts of COVID-19. In
Canada, there was improvement in
the production rate at one of its specialty food products plants,
which was significantly affected by investment–related activities
in 2019.
About Lassonde
Lassonde Industries Inc. is a North American leader in the
development, manufacture and sale of ready-to-drink juices and
drinks marketed under brands such as Apple & Eve, Everfresh,
Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde is the
largest producer of fruit and vegetable juices and drinks in
Canada and one of the two largest
producers of store brand shelf-stable fruit juices and drinks in
the United States. It is also a
major producer of cranberry sauces. The Company also produces
fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food
products under brands such as Antico and Canton. The Company also
imports and markets selected wines from various countries and
manufactures apple ciders and cider–based beverages.
The Company produces superior quality products through the
expertise of approximately 2,600 people working in 18 plants across
Canada and the United States. To learn more, visit
www.lassonde.com.
Caution Concerning Forward-Looking
Statements
In this document and in other documents filed with Canadian
regulatory authorities or in other communications, the Company may
from time to time make written or oral forward-looking statements
within the meaning of applicable securities
legislation. Forward-looking statements notably include
estimates, expectations, forecasts, and projections of future
investment spending, revenues, expenses, earnings, profit,
indebtedness, financial position, losses, upcoming projects,
business and management strategies, and business growth and
expansion. In the context of this document, forward-looking
statements are particularly used to discuss preliminary results,
the rate of sales growth, and profit attributable to shareholders.
The forward-looking statements contained herein are used to help
readers better understand Lassonde's financial position and the
results of its operations as at the dates presented and may not be
appropriate for other purposes. Forward-looking statements can be
recognized by such words as "may," "should," "believes,"
"predicts," "plans," "expects," "intends," "anticipates,"
"estimates," "projects," "objective," "continues," "proposes,"
"targets," or "aims" as well as words and expressions of a similar
nature and whether they are used in the affirmative or negative or
used in the conditional or future tense. Forward-looking statements
also include any statements that do not refer to historical
facts.
By their very nature, forward-looking statements are based on
assumptions and involve inherent risks and uncertainties, both
general and specific in nature. It is therefore possible that the
forecasts, projections and other statements will not be achieved or
will differ significantly from those expressed or implied in such
forward-looking statements or could affect the extent to which a
particular forecast, projection or other statement materializes.
Although Lassonde believes that the expectations reflected in these
forward-looking statements are reasonable, it can give no
assurances that these expectations will prove to be correct.
Readers are cautioned against placing undue reliance on
forward-looking statements when making decisions, as the actual
results could differ considerably from the opinions, plans,
objectives, expectations, forecasts, estimates and intentions
expressed in such forward-looking statements due to various
significant factors. Such factors include, among others, the
economic, industrial, competitive and regulatory environment in
which Lassonde operates or factors that are likely to have an
impact on its operations, its ability to attract and retain
customers, consumers, and qualified staff, the availability and
cost of raw materials and transportation, its operating costs, and
the price of its finished products in the various markets where it
operates.
The Company cautions that the foregoing list of factors is not
exhaustive. For additional information about the risks,
uncertainties, and assumptions that could cause Lassonde's
actual results to differ from its stated expectations, readers may
also consult the "Uncertainties and Principal Risk Factors" section
of the Company's most recent annual MD&A and the other
documents it files from time to time with securities regulators in
Canada and available on
www.sedar.com. The forward-looking statements contained in this
press release reflect the Company's expectations on this date and
are subject to change after this date. Lassonde does not undertake
to update publicly or to revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable legislation or regulation.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.