ROUGEMONT, QC, Nov. 11,
2022 /CNW Telbec/ - Lassonde Industries Inc.
(TSX: LAS.A) ("Lassonde" or the "Corporation") posted sales of
$556.4 million in the third
quarter of 2022, up 18.6% year over year. The Corporation's
operating profit for the third quarter of 2022 totalled
$19.9 million, down from
$25.4 million in the same
quarter last year. Excluding $2.8 million in expenses related to the
multi-year strategy discussed below, operating profit was down
$2.7 million. The
2022 third‑quarter profit attributable to the Corporation's
shareholders totalled $14.5 million, down $2.3 million year over year.
Financial
highlights
(in millions of $,
unless otherwise indicated)
|
Third
quarters
ended
|
|
October
1,
2022
|
October 2,
2021
|
Sales
|
$
556.4
|
|
$ 469.3
|
|
Operating
profit
|
19.9
|
|
25.4
|
|
Profit before income
taxes
|
19.3
|
|
23.3
|
|
Profit attributable to
the Corporation's shareholders
|
14.5
|
|
16.8
|
|
Basic and diluted
earnings per share (in $)
|
$
2.11
|
|
$
2.43
|
|
|
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 October 1, 2022
are available on the SEDAR website at www.sedar.com and on the
website of Lassonde Industries Inc.
|
"In spite of the difficult current environment for manufacturers
such as Lassonde, we have been able to deliver an 18.6%
year-over-year sales increase this quarter," said Nathalie Lassonde, Chief Executive Officer and
Vice-Chair of the Board of Directors of Lassonde Industries Inc.
"From a profitability standpoint, the steps taken to address
short-term challenges including labour shortages and supply chain
disruptions are beginning to have a positive impact on production
volume. In parallel, our team is focused on strengthening our
leadership position in North
America and building a foundation for sustainable growth
over the long term."
"We are encouraged by the progress of our multi-year strategy to
strengthen our manufacturing operations in the U.S. and increase
the capacity of our plants across North
America to meet future demand," said Vince Timpano,
President and Chief Operating Officer, Lassonde Industries Inc.
"While we expect to accelerate the deployment of our CAPEX
investments over the next six months, some work planned under the
Project Eagle component of our multi-year strategy has been delayed
as a result of labour shortages as well as limited parts and
equipment availability," he added. "In terms of production
capacity, we are pleased with the successful launch of our new line
in Toronto. As part of our
multi-year strategy, the addition of new production capacity at our
locations across North America
remains on track."
Multi-Year Strategy
To provide clarity and orientation on the opportunities to
pursue and to optimize capital allocation decisions, in early 2022,
the Corporation developed a multi-year strategy (the "Strategy").
This Strategy aims to accelerate revenue growth, improve overall
profitability, and drive long-term value by focussing on three
strategic pillars:
- Building a growth-oriented portfolio;
- Driving sustainable performance; and
- Improving capacity to act.
Project Eagle
While the Corporation is actively pursuing all the aspects of
its Strategy, the initial focus is primarily on improving the
performance of its U.S. operations through Project Eagle as well as
the implementation of new management systems and the upgrading of
technology infrastructures, first in the U.S. and then throughout
the Corporation. Project Eagle is the component of the
Corporation's Strategy specifically aimed at revitalizing its
underperforming U.S. operations, with the objective to capture
growth, improve margins, and drive long-term sustainable
performance.
In addition to reviewing the U.S. operations' products and
customers portfolio, Project Eagle also seeks to identify and
address key issues hampering performance within its supply chain
and manufacturing facilities from process realignment, employees
training to specific capital deployments, improving plant
performance and supply chain execution. The capital designated in
support of Project Eagle will be deployed in three areas: (i)
updating existing equipment to limit unscheduled downtime, (ii)
increasing throughput on existing capacity by securing new
equipment, and (iii) investing in new equipment in support of
increased capacity in on-trend formats. Although this extensive
transformation process is creating short-term disruptions, the
Corporation expects these will be significantly outweighed by the
medium‑ to long-term benefits anticipated as a result of the
transformation.
After completing the diagnostics phase of Project Eagle, the
Corporation recently took important steps to reduce its stock
keeping units ("SKU") complexity; harmonize packaging formats,
consolidate formulas, and rationalize low-margin products and/or
customers. The portfolio simplification should allow the
Corporation to reduce execution complexity, which would limit
downtime related to production changeovers and ultimately increase
throughput. The Corporation also completed the first phase of the
implementation of an improved cloud-based transportation management
system.
Financial Results
- Sales of $556.4 million.
Excluding a $10.9 million favourable
foreign exchange impact, sales were up $76.2
million (16.3%) from the same quarter last year, mainly due
to a favourable impact of selling price adjustments and to an
increase in the sales volume of private label products in
Canada.
- Gross profit of $125.4 million
(22.5% of sales), down $0.7 million
from the same quarter in 2021.
- Operating profit of $19.9
million, down $5.5 million
from the same quarter last year;
-
- $8.5 million increase in
transportation costs, resulting from higher fuel surcharges and
base transportation rates, incurred to deliver products to
clients;
- $7.6 million decrease in
performance-related salary expenses;
- $2.8 million in expenses related
to the multi-year strategy; and
- Lower gross profit.
- Profit attributable to the Corporation's shareholders of
$14.5 million, resulting in basic and
diluted earnings per share of $2.11,
down $2.3 million and $0.32, respectively, from the same quarter in
2021.
- Operating activities used $0.7
million in cash compared to $23.9
million generated in the same quarter last year. This
increase in cash outflows was essentially due to a change in
non-cash operating working capital items, which used $20.8 million more than in the same quarter of
2021, mainly attributable to higher inventory levels.
- As at October 1, 2022, long-term
debt, including the current portion, stood at $259.6 million, up $84.2
million from December 31,
2021.
Outlook
According to industry data, sales volume in the Canadian and
U.S. fruit juice and drink markets decreased during the third
quarter of 2022 compared to the same period last year. During the
first nine months of 2022 and intensifying in the summer months,
the private-label product value proposition is increasingly
becoming the alternative of choice for consumers as inflation is
being reflected in higher retail prices. The Corporation has
noticed stronger demand for its private label products in the third
quarter and early into the fourth quarter, while demand for its
branded products has remained relatively stable.
Excluding the foreign exchange impact, Lassonde's sales were up
12.0% in the first nine months of 2022 compared to the same period
of 2021, mainly due to selling price adjustments. However, the
Corporation's U.S. operations have continued to endure labour and
equipment-related challenges in addition to those related to the
supply of certain raw materials and finished products affecting all
its business units. While the overall demand is tapering, these
challenges are impacting the Corporation's ability to fully meet
client demand in certain regions.
Lassonde's profitability decreased in the first nine months of
2022, mainly due to manufacturing challenges and to inflationary
pressures that are strongly affecting its key commodities as well
as warehousing and transportation costs. To counter inflationary
pressures and improve its profitability, the Corporation has
implemented pricing actions on its branded and private label
product offerings, as well as adjusted contracts with some clients
to recover costs and it expects these pricing actions should
continue to take effect throughout the remainder of 2022 and into
early 2023.
As previously mentioned, Lassonde developed, in the first
quarter of 2022, a multi-year strategy designed to drive long-term
value, accelerate growth, as well as improve overall margins and
profitability. During the last quarter of 2022, Lassonde plans to
continue deploying its strategic review, revitalizing its U.S.
operations, and upgrading its technology infrastructures. It also
plans to continue implementing new demand planning and
transportation management systems in the U.S., the aim being to
improve customer service and lower overall distribution costs.
For the last quarter of 2022, barring any significant external
shocks and excluding foreign exchange impacts, Lassonde expects
that its sales growth rate should be slightly higher than that
observed in the first nine months of the year, mainly driven by
selling price adjustments. The Corporation is, however, closely
monitoring the evolution of consumer food habits in the context of
a contraction of the economy. The Corporation continues to address
supply chain, labour and production challenges (in part due to a
tight labour market) and continued inflationary pressures, which
are particularly affecting packaging, apple and orange
concentrates, and transportation costs. The U.S. dollar has been
strengthening compared to most foreign currencies. Given a large
part of purchases of Lassonde's Canadian operations are in U.S.
dollars, a strengthening of this currency against the Canadian
dollar could result in a higher cost for those purchases that are
integrated in products sold mainly in the Canadian market. Although
the foreign exchange risk management mechanism protects the
Corporation's exposure to rapid and temporary fluctuations in
currencies, it does not offset the entirety of the exposure nor its
coverage beyond the protected window. However, despite the current
volatile environment, the impact of early initiatives to revitalize
U.S. operations and the run-rate effect of selling price
adjustments, including for its private label contracts, should
deliver increasing benefits. As supply challenges appear to be
slowly fading, the Corporation has revised its inventory
accumulation strategy and expects to reduce its inventory levels in
quantities to levels that should progressively converge towards
historical averages. However, that strategy might be impacted by
opportunistic decisions to secure inventory ahead of potential
additional price increases from suppliers.
Earlier in the year, the Corporation's overall capital
expenditures program for 2022 was estimated to reach $100 million. Although maintaining its initial
intent in terms of investments, the Corporation now anticipates
capital expenditures for 2022 of approximately $55 million given the uncertain market
environment and given supply-chain challenges that are resulting in
longer lead times from equipment manufacturers and contractors.
However, it should be noted that commitments made by the
Corporation over the last few months toward its capital
expenditures program far exceed the amount of capital expenditures
currently recorded in the financial statements.
Dividend
In accordance with the Corporation's dividend policy, the Board
of Directors today declared a quarterly dividend of $0.70 per share, payable on December 15, 2022 to all registered holders of
Class A and Class B shares on November 23,
2022. On an annualized basis, this dividend represents
approximately 25% of the 2021 profit attributable to the
Corporation's shareholders. This dividend is an eligible
dividend.
About Lassonde
Lassonde Industries Inc. is a leader in the food and beverages
industry across North America. The
Corporation develops, manufactures, and markets a wide range of
products, including ready-to-drink juices and drinks, fruit-based
snacks in the form of bars and bites as well as frozen juice
concentrates. It is also a key producer of cranberry sauces as well
as specialty food products such as pasta sauces, soups as well as
fondue broths and sauces. Lassonde is committed to delivering great
tasting products to more hands, serving more needs, across more
occasions, every day by crafting quality food and beverages that
consumers love, clients value, employees are proud of, and that
demonstrate care for our planet.
The Corporation is the largest producer of fruit 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
("U.S."). Its products are sold under several brands such as
Allen's, Apple & Eve, Kiju, Oasis, Old Orchard, Rougemont and Sun-Rype. It also manufactures
private label products for the vast majority of major retailers and
wholesalers in North America.
Lassonde produces superior quality products through the
expertise of more than 2,700 people working in 17 plants across
Canada and the U.S. To learn more,
visit www.lassonde.com
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking information" and
the Corporation's oral and written public communications that do
not constitute historical fact may be deemed to be "forward-looking
information" within the meaning of applicable securities law. These
statements are based on current expectations, estimates,
projections, beliefs, judgments, and assumptions on the basis of
information available at the time the applicable forward-looking
statement was made and considering the Corporation's experience
combined with its perception of historical trends. Such statements
include, but are not limited to, statements with respect to
objectives and goals, in addition to statements with respect to
beliefs, plans, targets, goals, objectives, expectations,
anticipations, estimates, and intentions. Forward-looking
statements are typically identified by words such as "anticipate",
"continue", "estimate", "endeavor", "expect", "may", "will",
"project", "should", "could", "would", "believe", "plan", "intend",
"design", "target", "undertake", "view", "indicate", "maintain",
"explore", "entail", "schedule", "objective", "strategy", "likely",
"potential", "outlook", "aim", "propose", "goal", and similar
expressions suggesting future events or future performance in
addition to the negative forms of these terms or any variations
thereof. These statements are not guarantees of future performance
and involve assumptions, risks and uncertainties that are difficult
to predict.
By their nature, forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. Various factors or
assumptions are typically applied by the Corporation in drawing
conclusions or making the forecasts, projections, predictions, or
estimations set out in the forward-looking statements. These
factors and assumptions are based on information currently
available to the Corporation, including information obtained by the
Corporation from third-party sources. In this press release,
forward-looking statements include, but are not limited to, those
set forth in the table below, which also presents some (but not
all) of the key assumptions used in determining the forward-looking
statements:
|
|
FORWARD-LOOKING
STATEMENTS
|
KEY
ASSUMPTIONS
|
Sales
growth rate
|
Capital
expenditures
|
Initiatives to
revitalize
U.S. operations
|
Inventory
levels
|
Expenses
associated
with the
Strategy
|
No material disruption
of the Corporation's
operations (including workforce availability)
or of its supply chain
|
√
|
√
|
√
|
√
|
√
|
Effectiveness of the
Corporation's selling
price adjustment initiatives
|
√
|
|
|
|
|
Limited impact of the
Corporation's selling
price adjustment initiatives on demand for
its products
|
√
|
|
|
|
|
Limited additional
price (costs)
increases from suppliers
|
√
|
|
|
√
|
|
Continuity of recently
observed normalized
trends in key U.S. plants throughput level
|
√
|
|
√
|
|
|
Continuity of recently
observed market
trends for the Corporation's products
|
√
|
|
|
|
|
Continuity of observed
trends in the
competitive environment and the
effectiveness of the Corporation's strategy
to position itself competitively in the
markets in which it competes.
|
√
|
|
|
|
|
Adequate availability
of key commodities
|
√
|
|
|
√
|
|
Expected lead time for
new manufacturing
material
|
|
√
|
|
|
|
Adequate contractors'
or consultants'
availability
|
|
√
|
|
|
√
|
Conclusion of
contractual agreements
within the usual timeframes
|
|
√
|
|
|
|
These assumptions are based on currently observed macroeconomic
trends including employment, inflation and interest rates; strength
of the U.S. dollar (compared to the Canadian dollar); and risk of
economic slowdown or recession. These assumptions are also based on
currently observed geopolitical and competitive environments as
well as consumer behaviours. It should be noted that some of these
macroeconomic trends are currently highly volatile and rapidly
evolving. In preparing its outlook, the Corporation made
assumptions that do not consider extraordinary events or
circumstances beyond its control. The Corporation believes the
expectations reflected in the forward-looking statements are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements should
not be unduly relied upon.
Such forward-looking statements relate to future events, are by
their very nature subject to many important factors that could
cause actual results to differ materially from those contemplated.
Readers are cautioned that the assumptions considered by the
Corporation to support these statements may prove to be incorrect
in whole or in part. Factors that could cause actual results to
differ materially from the results expressed, implied, or projected
in the forward-looking statements contained in this document
include, among other things, risks associated with the following:
the scarcity of labour in North
America and the related impact on the hiring, training,
developing, retaining and reliance of qualified and/or key
personnel together with their productivity, employment matters
(including compensation), compliance with employment laws across
multiple jurisdictions, and the potential for work stoppages due to
non-renewal of collective bargaining agreements; the availability
of raw materials (including as a result of climate change, extreme
weather, global or local supply chain disruptions, loss of key
suppliers or supplier concentration, impact of pandemics,
geopolitical developments, military conflicts, and trade sanctions)
and related price variations, fluctuations in inbound and outbound
freight costs, impact of oil (and its derivatives) prices on the
Corporation's direct and indirect costs, along with the
Corporation's ability to transfer those increases through price
increases or other means, if any, to its clients in competitive
market conditions; the availability and reliability of co-packers;
the successful deployment of the Corporation's Strategy, including
significant components such as Project Eagle; cyber threats and
other information technology-related risks relating to business
disruptions, confidentiality, data integrity, and business email
compromise-related fraud; changes and developments affecting
our industry, including customer preferences, tastes and buying
patterns, market conditions and the activities of competitors and
clients; major events, such as systems and equipment failure,
pandemics and natural disasters, or increased frequency or
intensity of extreme weather conditions (including as a result of
climate change), could lead to unanticipated business disruptions
at any of the Corporation's facilities or at certain suppliers;
crisis management and the execution of the business continuity
plan; changes made to laws (including tax and tariffs),
regulations, rules and policies that affect the Corporation's
activities as well as the interpretation thereof, and new positions
adopted by relevant authorities; disruptions in or failures of the
Corporation's information technology systems, including the ability
to access and implement all technology necessary to achieve the
Corporation's targets, commitments, and goals, as well as the
development and performance of technology, innovation and the
future use and deployment of technology and associated expected
future outcome; the increasing concentration of clients in the food
industry, giving clients significant bargaining power that could
limit the Corporation's ability to raise its prices to offset
inflationary pressures; failure to adapt to ever evolving consumer
habits, tastes and preferences, including the increased demand for
low-sugar products; the implementation, cost and impact of
environmental sustainability initiatives, as well as the cost of
remediating environmental liabilities; failure to maintain the
safety and integrity of the Corporation's products, which could
result in product recalls and product liability claims for
misbranded, adulterated, contaminated, or spoiled food products,
along with reputational damage; the successful deployment of the
Corporation's health and safety programs, laws and regulations;
serious injuries to an employee or the death of an employee, which
could have a serious impact on the Corporation's business
continuity and reputation and lead to compliance-related costs; the
implications and outcome of potential legal actions, litigations
and regulatory proceedings to which the Corporation may be a party;
the sufficiency of insurance coverage; threats to the reputation of
the Corporation and its brands; the incurrence of restructuring,
disposal, or other related charges together with the recognition of
impairment charges on goodwill or long-lived assets, particularly
in a context of challenging performance and rising cost of capital;
fluctuations in interest rates and currency exchange rates; the
effectiveness of commodity and interest rate hedging strategies;
pension plan performance, including the adequacy of pension
contributions, assets, and potential pension liabilities; and
expected future cash flows and the sufficiency thereof, sources of
capital at attractive rates, future contractual obligations, future
financing options, renewal of credit facilities, and availability
of capital to fund growth plans, operating obligations and
dividends.
The Corporation cautions readers that the foregoing list of
factors is not exhaustive. Readers are further cautioned that some
of the forward-looking statements in this press release, such as
statements concerning sales growth rate, capital expenditures,
inventory levels and expenses associated with the Corporation's
Strategy, may be considered to be financial outlooks for the
purposes of applicable securities legislation. These financial
outlooks are presented to evaluate potential future earnings and
anticipated future uses of cash flows and may not be appropriate
for other purposes. Readers should not assume these financial
outlooks will be achieved.
More information about risk factors can be found under the
"Uncertainties and Principal Risk Factors" section of the 2021
annual MD&A. Readers should review this section in detail. The
annual MD&A is available on the Lassonde Industries Inc.
website at www.lassonde.com and on the Corporation's SEDAR profile
at www.sedar.com.
Additional information concerning the Corporation, including its
Annual Information Form, is available on the Corporation's
SEDAR profile at www.sedar.com. All forward-looking statements
included herein speak only as of the date hereof. Unless required
by law, the Corporation does not undertake any obligation to
publicly update or revise forward-looking statements, whether as a
result of new information, future events or otherwise. All
forward-looking statements contained herein are expressly qualified
by this cautionary statement.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.