Canada Bread Company, Limited Reports Results for the Fourth Quarter 2013
TSX: CBY
TORONTO, Feb. 27, 2014 /CNW/ - Canada Bread Company, Limited (TSX: CBY) today reported its financial results for the fourth quarter and full year ended December 31, 2013. Fourth quarter and full year highlights include:
- Adjusted Operating Earnings(1)(2)(5) decreased 8.2% to $34.8 million in the fourth quarter compared to $37.9 million last year. For the full year, Adjusted Operating Earnings increased 8.0% to $127.1 million compared to $117.7 million last year.
- Net earnings from continuing operations(1)(5) for the quarter increased to $33.9 million compared to $24.2 million last year. For the full year, net earnings from continuing operations increased to $85.0 million from $75.5 million last year.
- Adjusted Earnings per Share(1)(3)(5) for the quarter was $1.00 compared to $1.07 in the fourth quarter of 2012. For the year, Adjusted Earnings per Share increased to $3.60 from $3.31 last year.
- The Company achieved an Adjusted EBITDA(1)(4)(5) margin of 13.3% in the fourth quarter compared to 13.5% last year. For the full year, the Adjusted EBITDA margin increased to 12.1% compared to 11.1% in 2012.
- The Company sold its Olivieri business for net proceeds of $116.3 million
"We delivered solid results in the quarter, benefiting from previous investments and strong gains in our U.K. operations," said Richard Lan, President and CEO. "We achieved an impressive Adjusted EBITDA margin of 12.1% in 2013. This year will be an exciting time of change and opportunity for the organization. With the planned sale of Canada Bread to Grupo Bimbo, which is expected to close in the second quarter, there is significant opportunity to build on the strong platform that this business has established."
Financial Overview
Canada Bread Company, Limited ("the Company") sales(5) for the fourth quarter decreased 2.9% to $359.7 million compared to $370.4 million last year, or 2.4% after adjusting for discontinued categories in the U.K., and the impact of currency translation on sales in the U.S. and U.K. as lower sales volumes, primarily in the Fresh Bakery segment, were partly offset by higher pricing.
Sales for the full year decreased 1.7% to $1,453.6 million compared to $1,479.2 million last year, or 0.9% after adjusting for discontinued categories and currency translation. Lower sales volumes in the fresh bread business and North American frozen bakery business were partly offset by stronger volumes in the U.K. and higher pricing across the Company.
Fourth quarter Adjusted Operating Earnings decreased 8.2% to $34.8 million from $37.9 million last year, primarily reflecting lower earnings in the fresh bread business that were partly offset by stronger earnings in the U.K. bakery business. For the full year, Adjusted Operating Earnings increased 8.0% to $127.1 million from $117.7 million last year, driven by the North American frozen and U.K. bakery businesses, partly offset by a small decline in earnings at the fresh bread business.
Net earnings from continuing operations was $33.9 million ($1.33 basic earnings per share) in the fourth quarter compared to $24.2 million ($0.95 basic earnings per share) last year. Net earnings from continuing operations for the full year was $85.0 million ($3.35 basic earnings per share) compared to $75.5 million ($2.97 basic earnings per share) last year.
Adjusted Earnings per Share was $1.00 for the fourth quarter (2012: $1.07) and $3.60 for the full year (2012: $3.31).
Several items are excluded from the discussions of underlying earnings performance as they are not representative of on-going operational activities. Refer to the section entitled Non-IFRS Financial Measures at the end of this News Release for a description and reconciliation of all non-IFRS financial measures.
Business Segment Review
The following table summarizes sales by business segment:
| Fourth Quarter | Year-to-Date | |||||||
| (Unaudited) | (Audited) | |||||||
| ($ thousands) | 2013 | 2012 | 2013 | 2012 | ||||
| Fresh Bakery (5) | $ | 224,644 | $ | 234,489 | $ | 940,043 | $ | 971,670 |
| Frozen Bakery | 135,017 | 135,949 | 513,543 | 507,573 | ||||
| Sales | $ | 359,661 | $ | 370,438 | $ | 1,453,586 | $ | 1,479,243 |
The following table summarized Adjusted Operating Earnings by business segment:
| Fourth Quarter | Year-to-Date | |||||||
| (Unaudited) | (Audited) | |||||||
| ($ thousands) | 2013 | 2012(1) | 2013 | 2012(1) | ||||
| Fresh Bakery (5) | $ | 20,585 | $ | 27,338 | $ | 88,657 | $ | 93,899 |
| Frozen Bakery | 14,245 | 10,587 | 38,460 | 23,793 | ||||
| Adjusted Operating Earnings(2) | $ | 34,830 | $ | 37,925 | $ | 127,117 | $ | 117,692 |
Fresh Bakery
Includes fresh bakery products, including breads, rolls, and bagels sold to retail, foodservice, and convenience channels. It includes national brands such as Dempster's® and many leading regional brands.
Fresh Bakery sales for the fourth quarter decreased 4.2% to $224.6 million compared to $234.5 million last year, as lower volumes were partly offset by the benefit of a price increase taken in the first quarter of 2013. For the full year, sales decreased 3.3% to $940.0 million compared to $971.7 million last year due to similar factors.
Adjusted Operating Earnings for the fourth quarter declined to $20.6 million from $27.3 million last year, as lower volumes were partly offset by increased efficiencies at the new Hamilton, Ontario bakery, simplification of the product portfolio, and the reorganization of the distribution network, all of which contributed to lower operating costs. The benefits of earlier price increases were offset by higher trade spend and inflationary costs in the quarter. For the full year, Adjusted Operating Earnings decreased 5.6% to $88.7 million from $93.9 million last year due to similar factors, as well the benefit of lower selling, general, and administrative expenses resulting from earlier restructuring initiatives.
Frozen Bakery
Includes frozen bakery products, including frozen par-baked bakery products, specialty and artisan breads, and bagels sold to retail, foodservice, and convenience channels in North America and the U.K. It includes national brands such as Tenderflake® and New York Bakery CoTM.
Frozen Bakery sales for the fourth quarter decreased 0.7% to $135.0 million, and increased 0.7% after adjusting for discontinued categories in the U.K. and the impact of currency translation on sales in the U.S. and U.K. The increase was driven by higher pricing across the segment, partly offset by a decline in volumes, primarily in the North American frozen bakery business.
For the full year, sales increased 1.2% to $513.5 million, or 3.7% after adjusting for discontinued categories and currency translation. The increase was due to higher pricing across the segment coupled with higher volumes in the U.K. that were partly offset by a decline in volumes in the North American Frozen bakery business.
Fourth quarter Adjusted Operating Earnings increased to $14.2 million from $10.6 million last year. The U.K. bakery business benefited from higher pricing and lower operating and selling, general, and administrative costs, which more than offset higher raw material and inflationary costs. North American frozen bakery business earnings decreased modestly, as inflationary costs, lower volumes, and higher selling, general, and administrative expenses were mostly offset by operating improvements.
For the full year, Adjusted Operating Earnings increased 61.6% to $38.5 million compared to $23.8 million last year, primarily driven by operating improvements in the North American frozen bakery business, increased volumes in the U.K. bakery business, and higher pricing in both businesses. These benefits were partly offset by lower volumes in the North American frozen bakery business and higher raw material and inflationary costs.
Sale of Olivieri Business
During the fourth quarter, the Company sold its Olivieri fresh pasta business for net proceeds of $116.3 million. The operating results and gain on sale of this business have been classified as discontinued operations and prior year amounts have been presented as discontinued operations on a comparable basis. The Olivieri business was previously reported in the Fresh Bakery segment. Earnings per share from discontinued operations were $2.85 for the fourth quarter (2012: a loss of $0.10) and $2.85 for the year ended December 31, 2013 (2012: a loss of $0.16). Included in the fourth quarter and full year 2013 figures is a net gain on sale of the business of $2.87 per share.
Subsequent Events
On February 12, 2014, the Company announced that Grupo Bimbo, S.A.B. de C.V. of Mexico ("Grupo Bimbo") had agreed to acquire all of the issued and outstanding common shares of the Company by way of a statutory arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). Under the terms of the Arrangement, Grupo Bimbo has agreed to acquire from common shareholders of the Company each common share for $72.00 per share in cash or $1.83 billion in aggregate pursuant to the terms of an arrangement agreement dated February 11, 2014 between the Company and Grupo Bimbo (the "Arrangement Agreement"). The Arrangement will require the approval of at least 66 2/3% of the votes cast by the shareholders of Canada Bread at a special meeting of shareholders expected to take place in early April 2014. Maple Leaf has entered into a voting support agreement with Grupo Bimbo pursuant to which Maple Leaf has agreed to vote all of its common shares of Canada Bread in favour of the Arrangement at such meeting. The Arrangement is also subject to receipt of court approval, regulatory approvals and other customary closing conditions. The transaction is expected to close in the second quarter of 2014.
On February 19, 2014, the Company sold an investment property located in the Toronto area, which was classified as an asset held for sale in the year end consolidated financial statements, for gross proceeds of $6.4 million.
Other Matters
On December 17, 2013, the Company declared a special dividend of $8.00 per share payable on January 6, 2014, to shareholders of record at the close of business on December 30, 2013. This dividend was considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".
On February 26, 2014, the Company declared a dividend of $0.75 per share payable on April 1, 2014, to shareholders of record at the close of business on March 7, 2014. Unless indicated otherwise by the Company in writing on or before the time the dividend is paid, this dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".
Reconciliation of Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted Operating Earnings and Adjusted Earnings per Share. Management believes that these non-IFRS measures provide useful information to both Management and investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS. Therefore, they may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted Operating Earnings
Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in the earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of net earnings from continuing operations as reported under IFRS to Adjusted Operating Earnings for the three months ended, as indicated below, and a reconciliation of net earnings from continuing operations as reported under IFRS in the audited consolidated statements of earnings to Adjusted Operating Earnings for the years then ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating results, as they are representative of the on-going operations of the Company.
| ($ thousands) | Three months ended December 31, 2013 | |||||||
| (Unaudited) | Fresh Bakery (5) |
Frozen Bakery |
Unallocated Costs |
Consolidated | ||||
| Net earnings from continuing operations | $ | 33,874 | ||||||
| Income taxes | 9,206 | |||||||
| Earnings before income taxes | $ | 43,080 | ||||||
| Interest expense | 355 | |||||||
| Earnings before interest and income taxes | $ | 20,834 | $ | 11,727 | $ | 10,874 | $ | 43,435 |
| Other (income) expense | 15 | (531) | (10,874) | (11,390) | ||||
| Restructuring and other related costs | (264) | 3,049 | - | 2,785 | ||||
| Adjusted Operating Earnings | $ | 20,585 | $ | 14,245 | $ | - | $ | 34,830 |
| ($ thousands) | Three months ended December 31, 2012(1) | |||||||
| (Unaudited) | Fresh Bakery (5) |
Frozen Bakery |
Unallocated Costs |
Consolidated | ||||
| Net earnings from continuing operations | $ | 24,207 | ||||||
| Income taxes | 9,827 | |||||||
| Earnings before income taxes | $ | 34,034 | ||||||
| Interest expense | 354 | |||||||
| Earnings before interest and income taxes | $ | 26,184 | $ | 8,204 | $ | - | $ | 34,388 |
| Other (income) expense | (109) | (168) | - | (277) | ||||
| Restructuring and other related costs | 1,263 | 2,551 | - | 3,814 | ||||
| Adjusted Operating Earnings | $ | 27,338 | $ | 10,587 | $ | - | $ | 37,925 |
| ($ thousands) | Twelve months ended December 31, 2013 | |||||||
| (Audited) | Fresh Bakery (5) |
Frozen Bakery |
Unallocated Costs |
Consolidated | ||||
| Net earnings from continuing operations | $ | 85,043 | ||||||
| Income taxes | 29,405 | |||||||
| Earnings before income taxes | $ | 114,448 | ||||||
| Interest expense | 970 | |||||||
| Earnings before interest and income taxes | $ | 76,917 | $ | 28,184 | $ | 10,317 | $ | 115,418 |
| Other (income) expense | (327) | 4,390 | (10,317) | (6,254) | ||||
| Restructuring and other related costs | 12,067 | 5,886 | - | 17,953 | ||||
| Adjusted Operating Earnings | $ | 88,657 | $ | 38,460 | $ | - | $ | 127,117 |
| ($ thousands) | Twelve months ended December 31, 2012(1) | |||||||
| (Audited) | Fresh Bakery (5) |
Frozen Bakery |
Unallocated Costs |
Consolidated | ||||
| Net earnings from continuing operations | $ | 75,514 | ||||||
| Income taxes | 31,178 | |||||||
| Earnings before income taxes | $ | 106,692 | ||||||
| Interest expense | 1,562 | |||||||
| Earnings before interest and income taxes | $ | 90,844 | $ | 17,410 | $ | - | $ | 108,254 |
| Other (income) expense | (1,676) | 41 | - | (1,635) | ||||
| Restructuring and other related costs | 4,731 | 6,342 | - | 11,073 | ||||
| Adjusted Operating Earnings | $ | 93,899 | $ | 23,793 | $ | - | $ | 117,692 |
Adjusted Earnings per Share
Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate on-going financial operating results. It is defined as basic earnings per share, adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of basic earnings per share from continuing operations as reported under IFRS to Adjusted Earnings per Share for the three months ended, as indicated below, and a reconciliation of basic earnings per share from continuing operations as reported under IFRS in the audited consolidated statements of earnings to Adjusted Earnings per Share for the years then ended, as indicated below. Management believes this basis is the most appropriate on which to evaluate financial results as they are representative of the on-going operations of the Company.
| Three months ended December 31, | Twelve months ended December 31, | ||||||||
| (Unaudited) | (Audited) | ||||||||
| ($ per share) | 2013 | 2012(1)(5) | 2013 | 2012(1)(5) | |||||
| Basic earnings per share from continuing operations | $ | 1.33 | $ | 0.95 | $ | 3.35 | $ | 2.97 | |
| Items not considered representative of on-going operations(i) | (0.42) | - | (0.28) | - | |||||
| Restructuring and other related costs(ii) | 0.09 | 0.12 | 0.54 | 0.34 | |||||
| Adjusted Earnings per Share (iii) | $ | 1.00 | $ | 1.07 | $ | 3.60 | $ | 3.31 | |
| (i) | Includes gains/losses associated with non-operational activities, including gains/losses related to restructuring activities, business combinations, discontinued operations, and assets held for sale, all net of tax. |
| (ii) | Includes per share impact of restructuring and other related costs, net of tax. |
| (iii) | May not add due to rounding |
Forward-Looking Statements
This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities laws. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates and beliefs and assumptions made by Management. Such statements include, but are not limited to, statements with respect to objectives and goals, as well as statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates, and intentions. Specific forward-looking information in this document includes, but is not limited to, statements concerning the expected timing of the completion of the sale of the shares of the Company to Grupo Bimbo (there can be no assurances that any transaction will be completed), expectations regarding the use of derivatives, futures and options, expectations regarding the timing and amount of capital investments, expectations regarding the timing and cost of old facility closures and new facility openings, the expected use of cash balances, source of funds for ongoing business requirements, capital investments and debt repayment, expectations regarding the impact of new accounting standards, expectations regarding sufficiency of the allowance for uncollectible accounts and expectations regarding pension plan performance and future pension liabilities and contributions. Words such as "expect", "anticipate", "intend", "attempt", "may", "will", "plan", "believe", "seek", "estimate" and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.
In particular, these statements are based on a variety of factors and assumptions that are discussed throughout this document. In addition, expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., and U.K. economies; the rate of exchange of the Canadian dollar to the U.S. dollar and British pound; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments and the general assumption that none of the risks identified below or elsewhere will materialize. All of these assumptions have been derived from information currently available to the Company including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied, or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.
Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or forecasted in such forward-looking information include, among other things:
- the risks associated with the acquisition by Grupo Bimbo
- the risks associated with changes in the Company's shared systems and processes;
- the risks associated with the management service agreement with Maple Leaf;
- the Company's exposure to currency exchange risks;
- the ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and options;
- the impact of international events on commodity prices and the free flow of goods;
- the risks associated with a consolidating retail environment;
- the risks related to capital expansion projects;
- the risks posed by food contamination, consumer liability, and product recalls;
- the risks related to acquisitions and divestitures;
- the risks posed by compliance with extensive government regulation;
- the risks posed by litigation;
- the impact of changes in consumer tastes and buying patterns;
- the impact of extensive environmental regulation and potential environmental liabilities;
- the risks associated with complying with differing employment laws and practices globally, the potential for work stoppages due to non-renewal of collective agreements, and recruiting and retaining qualified personnel;
- the impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity securities and changes in interest rates;
- the risks associated with the Company's independent distributors;
- the risks posed by competition;
- the risks associated with pricing the Company's products;
- the risks associated with managing the Company's supply chain; and
- the risks associated with failing to identify and manage the strategic risks facing the Company.
The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more detail under the heading "Risk Factors" in the Company's Management's Discussion and Analysis for the year ended December 31, 2013, that is available on SEDAR at www.sedar.com. The reader should review such section in detail. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise except as required by law.
Additional information concerning the Company, including the Company's Annual Information Form, will be available on SEDAR at www.sedar.com.
Canada Bread Company Limited, which is 90.0% owned by Maple Leaf Foods Inc. (TSX:MFI), is a leading manufacturer and distributor of fresh bakery products and frozen par-baked products. The Company had sales of $1.5 billion in 2013 and employs approximately 5,400 people at its operations across North America and in the U.K.
Footnote Legend
| (1) | 2012 figures have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 28 of the Company's audited consolidated financial statements. |
| (2) | Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release. |
| (3) | Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate on-going financial operating results. It is defined as basic earnings per share, adjusted for all items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release. |
| (4) | Adjusted EBITDA, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before interest and income taxes plus depreciation and intangible asset amortization, adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. |
| (5) | 2012 figures exclude the results of the Olivieri business in the Fresh Bakery segment. Olivieri results are reported as discontinued operations as disclosed in Note 20 of the Company's 2013 audited consolidated financial statements. |
Consolidated Financial Statements
(Expressed in Canadian dollars)
CANADA BREAD COMPANY, LIMITED
Three and twelve months ended December 31, 2013 and 2012
Consolidated Balance Sheets
(In thousands of Canadian dollars)
| As at | As at | As at | |||||||
| December 31, | December 31, | January 1, | |||||||
| 2013 | 2012 | 2012 | |||||||
| (Restated) | (Restated) | ||||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 325,062 | $ | 90,415 | $ | 59,223 | |||
| Accounts receivable | 38,480 | 50,465 | 56,522 | ||||||
| Notes receivable | 35,982 | 43,033 | 52,587 | ||||||
| Inventories | 52,371 | 62,766 | 60,048 | ||||||
| Income taxes recoverable | 4,725 | - | 2,162 | ||||||
| Prepaid expenses and other assets | 3,579 | 4,972 | 5,218 | ||||||
| Assets held for sale | 4,372 | - | - | ||||||
| $ | 464,571 | $ | 251,651 | $ | 235,760 | ||||
| Property and equipment | 372,542 | 410,479 | 425,944 | ||||||
| Investment property | 9,634 | 9,103 | 8,415 | ||||||
| Other long-term assets | 4,435 | 4,994 | 4,456 | ||||||
| Deferred tax asset | 9,218 | 17,874 | 17,917 | ||||||
| Goodwill | 268,444 | 264,243 | 266,013 | ||||||
| Intangible assets | 9,804 | 11,647 | 12,710 | ||||||
| Total assets | $ | 1,138,648 | $ | 969,991 | $ | 971,215 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities | |||||||||
| Bank indebtedness | $ | 4,408 | $ | - | $ | 3,153 | |||
| Accounts payable and accruals | 204,422 | 169,431 | 192,551 | ||||||
| Provisions | 7,375 | 9,928 | 23,066 | ||||||
| Due to Maple Leaf Foods Inc. | 4,036 | 4,830 | 2,451 | ||||||
| Dividends payable | 216,042 | 12,708 | 5,083 | ||||||
| Income taxes payable | - | 2,008 | - | ||||||
| Current portion of long-term debt | 568 | 358 | 2,452 | ||||||
| Other current liabilities | 100 | - | - | ||||||
| $ | 436,951 | $ | 199,263 | $ | 228,756 | ||||
| Long-term debt | 2,357 | 2,921 | 1,634 | ||||||
| Deferred tax liability | 36,954 | 19,998 | 21,784 | ||||||
| Employee benefits | 32,547 | 56,011 | 50,434 | ||||||
| Other long-term liabilities | 1,876 | - | - | ||||||
| Provisions | 5,630 | 6,277 | 5,005 | ||||||
| Total liabilities | $ | 516,315 | $ | 284,470 | $ | 307,613 | |||
| Shareholders' equity | |||||||||
| Share capital | $ | 142,965 | $ | 142,965 | $ | 142,965 | |||
| Retained earnings | 477,002 | 555,322 | 530,852 | ||||||
| Accumulated other comprehensive gain (loss) | 2,366 | (12,766) | (10,215) | ||||||
| Total shareholders' equity | $ | 622,333 | $ | 685,521 | $ | 663,602 | |||
| Total liabilities and shareholders' equity | $ | 1,138,648 | $ | 969,991 | $ | 971,215 | |||
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share amounts)
| Three months ended | Twelve months ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||
| (Unaudited) | (Unaudited) | (Restated) | ||||||||||||
| (Restated) | ||||||||||||||
| Sales | $ | 359,661 | $ | 370,438 | $ | 1,453,586 | $ | 1,479,243 | ||||||
| Cost of goods sold | 278,169 | 289,558 | 1,148,633 | 1,178,478 | ||||||||||
| Gross margin | $ | 81,492 | $ | 80,880 | $ | 304,953 | $ | 300,765 | ||||||
| Selling, general, and | ||||||||||||||
| administrative expenses | 46,662 | 42,955 | 177,836 | 183,073 | ||||||||||
| Earnings before the following: | $ | 34,830 | $ | 37,925 | $ | 127,117 | $ | 117,692 | ||||||
| Restructuring and other related costs | (2,785) | (3,814) | (17,953) | (11,073) | ||||||||||
| Other income | 11,390 | 277 | 6,254 | 1,635 | ||||||||||
| Earnings before interest and | ||||||||||||||
| income taxes from continuing operations | $ | 43,435 | $ | 34,388 | $ | 115,418 | $ | 108,254 | ||||||
| Interest expense | 355 | 354 | 970 | 1,562 | ||||||||||
| Earnings before income taxes | ||||||||||||||
| from continuing operations | $ | 43,080 | $ | 34,034 | $ | 114,448 | $ | 106,692 | ||||||
| Income taxes | 9,206 | 9,827 | 29,405 | 31,178 | ||||||||||
| Net earnings from continuing operations | $ | 33,874 | $ | 24,207 | $ | 85,043 | $ | 75,514 | ||||||
| Net earnings (loss) and gain on disposal | ||||||||||||||
| of discontinued operations | $ | 72,384 | $ | (2,516) | 72,513 | (4,034) | ||||||||
| Net earnings | $ | 106,258 | $ | 21,691 | $ | 157,556 | $ | 71,480 | ||||||
| Earnings per share attributable to | ||||||||||||||
| common shareholders | ||||||||||||||
| Basic and diluted earnings per share | $ | 4.18 | $ | 0.85 | $ | 6.20 | $ | 2.81 | ||||||
| Basic and diluted earnings per share | ||||||||||||||
| from continuing operations | $ | 1.33 | $ | 0.95 | $ | 3.35 | $ | 2.97 | ||||||
| Weighted average number | ||||||||||||||
| of shares (millions) | 25.4 | 25.4 | 25.4 | 25.4 | ||||||||||
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| (Unaudited) | (Unaudited) | (Restated) | |||||||||||
| (Restated) | |||||||||||||
| Net earnings | $ | 106,258 | $ | 21,691 | $ | 157,556 | $ | 71,480 | |||||
| Other comprehensive income (loss) | |||||||||||||
| Item that will be not be reclassified to profit or loss: | |||||||||||||
| Change in actuarial gains and losses | 4,525 | 3,012 | 18,292 | (3,812) | |||||||||
| Total item that will not be reclassified to profit or loss | $ | 4,525 | $ | 3,012 | $ | 18,292 | $ | (3,812) | |||||
| Items that are or may be reclassified subsequently to profit or loss: | |||||||||||||
| Change in accumulated foreign currency | |||||||||||||
| translation adjustment | 8,507 | 2,293 | 14,838 | (1,980) | |||||||||
| Change in unrealized gains and losses | |||||||||||||
| on cash flow hedges | 278 | 79 | 294 | (571) | |||||||||
| Total items that are or may be reclassified | |||||||||||||
| subsequently to profit or loss | $ | 8,785 | $ | 2,372 | $ | 15,132 | $ | (2,551) | |||||
| $ | 13,310 | $ | 5,384 | $ | 33,424 | $ | (6,363) | ||||||
| Comprehensive income | $ | 119,568 | $ | 27,075 | $ | 190,980 | $ | 65,117 | |||||
Consolidated Statements of Changes in Shareholders' Equity
(In thousands of Canadian dollars)
| Total | ||||||||||||
| accumulated | ||||||||||||
| other | Total | |||||||||||
| Share | Retained | comprehensive | shareholders' | |||||||||
| capital | earnings | (loss) income | equity | |||||||||
| Balance at December 31, 2012 | ||||||||||||
| (Restated) | $ | 142,965 | $ | 555,322 | $ | (12,766) | $ | 685,521 | ||||
| Net earnings | - | 157,556 | - | 157,556 | ||||||||
| Other comprehensive income | - | 18,292 | 15,132 | 33,424 | ||||||||
| Dividends declared ($10.00 per share) | - | (254,168) | - | (254,168) | ||||||||
| Balance at December 31, 2013 | $ | 142,965 | $ | 477,002 | $ | 2,366 | $ | 622,333 | ||||
| Total | ||||||||||||
| accumulated | ||||||||||||
| other | Total | |||||||||||
| Share | Retained | comprehensive | shareholders' | |||||||||
| capital | earnings | loss | equity | |||||||||
| Balance at January 1, 2012 | ||||||||||||
| (Restated) | $ | 142,965 | $ | 530,852 | $ | (10,215) | $ | 663,602 | ||||
| Net earnings | - | 71,480 | - | 71,480 | ||||||||
| Other comprehensive loss | - | (3,812) | (2,551) | (6,363) | ||||||||
| Dividends declared ($1.70 per share) | - | (43,198) | - | (43,198) | ||||||||
| Balance at December 31, 2012 | ||||||||||||
| (Restated) | $ | 142,965 | $ | 555,322 | $ | (12,766) | $ | 685,521 | ||||
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| (Unaudited) | (Unaudited) | (Restated) | |||||||||||
| (Restated) | |||||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||
| Operating activities | |||||||||||||
| Net earnings | $ | 106,258 | $ | 21,691 | $ | 157,556 | $ | 71,480 | |||||
| Add (deduct) items not affecting cash: | |||||||||||||
| Depreciation and amortization | 13,222 | 13,003 | 52,169 | 49,525 | |||||||||
| Deferred income taxes | 17,029 | 1,301 | 18,560 | 1,180 | |||||||||
| Income tax current | 3,085 | 7,656 | 21,797 | 28,603 | |||||||||
| Interest expense | 355 | 354 | 970 | 1,547 | |||||||||
| Gain on sale of long-lived assets | (419) | (341) | (1,806) | (478) | |||||||||
| Gain on sale of investment properties | (11,433) | - | (11,433) | - | |||||||||
| Gain on disposal of business | (84,042) | - | (84,042) | - | |||||||||
| Impairment of assets | 1,412 | - | 5,624 | - | |||||||||
| Increase (decrease) in pension liability | (1,438) | (471) | 1,268 | 369 | |||||||||
| Net income taxes paid | (7,467) | (6,043) | (31,043) | (24,265) | |||||||||
| Interest paid | (240) | (329) | (255) | (1,533) | |||||||||
| Change in provision for restructuring and | |||||||||||||
| other related costs | (1,563) | 983 | (1,780) | (6,772) | |||||||||
| Other | 1,106 | 599 | 1,147 | 903 | |||||||||
| Change in non-cash operating | |||||||||||||
| working capital | (6,850) | (9,899) | 60,244 | (11,452) | |||||||||
| Cash provided by operating activities | $ | 29,015 | $ | 28,504 | $ | 188,976 | $ | 109,107 | |||||
| Financing activities | |||||||||||||
| Dividends paid | $ | (12,709) | $ | (12,733) | $ | (50,834) | $ | (35,573) | |||||
| Net increase in long-term debt | (100) | (99) | (311) | (921) | |||||||||
| Cash used in financing activities | $ | (12,809) | $ | (12,832) | $ | (51,145) | $ | (36,494) | |||||
| Investing activities | |||||||||||||
| Additions to long-term assets | $ | (16,182) | $ | (12,357) | $ | (42,979) | $ | (44,537) | |||||
| Capitalization of interest expense to | |||||||||||||
| long-term assets | - | - | (323) | - | |||||||||
| Proceeds from sale of long-term assets | 3,637 | 1,387 | 7,076 | 6,269 | |||||||||
| Proceeds from sale of investment properties | 12,365 | - | 12,365 | - | |||||||||
| Proceeds from sale of business | 116,269 | - | 116,269 | - | |||||||||
| Cash provided by (used in) investing activities | $ | 116,089 | $ | (10,970) | $ | 92,408 | $ | (38,268) | |||||
| Increase in cash and | |||||||||||||
| cash equivalents | $ | 132,295 | $ | 4,702 | $ | 230,239 | $ | 34,345 | |||||
| Net cash and cash equivalents, | |||||||||||||
| beginning of period | 188,359 | 85,713 | 90,415 | 56,070 | |||||||||
| Net cash and cash equivalents, end of period | $ | 320,654 | $ | 90,415 | $ | 320,654 | $ | 90,415 | |||||
| Net cash and cash equivalents is comprised of: | |||||||||||||
| Cash and cash equivalents | $ | 325,062 | $ | 90,415 | $ | 325,062 | $ | 90,415 | |||||
| Bank indebtedness | (4,408) | - | (4,408) | - | |||||||||
| Net cash and cash equivalents, end of period | $ | 320,654 | $ | 90,415 | $ | 320,654 | $ | 90,415 | |||||
Segmented Financial Information
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| (Unaudited) | (Unaudited) | (Restated) | |||||||||||
| (Restated) | |||||||||||||
| Sales | |||||||||||||
| Fresh Bakery | $ | 237,788 | $ | 254,896 | $ | 1,018,450 | $ | 1,060,301 | |||||
| Frozen Bakery | 135,017 | 135,949 | 513,543 | 507,573 | |||||||||
| Total sales | $ | 372,805 | $ | 390,845 | $ | 1,531,993 | $ | 1,567,874 | |||||
| Sales from discontinued operations | (13,144) | (20,407) | (78,407) | (88,631) | |||||||||
| Sales from continuing operations | $ | 359,661 | $ | 370,438 | $ | 1,453,586 | $ | 1,479,243 | |||||
| Earnings before restructuring and | |||||||||||||
| other related costs and other income | |||||||||||||
| Fresh Bakery | $ | 19,835 | $ | 23,952 | $ | 88,080 | $ | 88,455 | |||||
| Frozen Bakery | 14,245 | 10,587 | 38,460 | 23,793 | |||||||||
| Earnings before restructuring and other related | |||||||||||||
| costs and other income | $ | 34,080 | $ | 34,539 | $ | 126,540 | $ | 112,248 | |||||
| Loss before restructuring and other related costs | |||||||||||||
| and other income from discontinued operations | 750 | 3,386 | 577 | 5,444 | |||||||||
| Earnings before restructuring and other related | |||||||||||||
| costs and other income from continuing operations | $ | 34,830 | $ | 37,925 | $ | 127,117 | $ | 117,692 | |||||
| Capital expenditures | |||||||||||||
| Fresh Bakery | $ | 8,712 | $ | 8,142 | $ | 16,707 | $ | 32,695 | |||||
| Frozen Bakery | 7,470 | 4,215 | 26,272 | 11,842 | |||||||||
| $ | 16,182 | $ | 12,357 | $ | 42,979 | $ | 44,537 | ||||||
| Depreciation and amortization | |||||||||||||
| Fresh Bakery | $ | 8,503 | $ | 8,226 | $ | 32,928 | $ | 30,848 | |||||
| Frozen Bakery | 4,719 | 4,777 | 19,241 | 18,677 | |||||||||
| $ | 13,222 | $ | 13,003 | $ | 52,169 | $ | 49,525 | ||||||
| As at | As at | As at | ||||||||
| December 31, | December 31, | January 1, | ||||||||
| 2013 | 2012 | 2012 | ||||||||
| Total assets | ||||||||||
| Fresh Bakery | $ | 427,722 | $ | 504,062 | $ | 522,236 | ||||
| Frozen Bakery | 329,631 | 356,311 | 369,523 | |||||||
| Non-allocated assets | 381,295 | 109,618 | 79,456 | |||||||
| $ | 1,138,648 | $ | 969,991 | $ | 971,215 | |||||
| Goodwill | ||||||||||
| Fresh Bakery | $ | 123,867 | $ | 125,892 | $ | 125,892 | ||||
| Frozen Bakery | 144,577 | 138,351 | 140,121 | |||||||
| $ | 268,444 | $ | 264,243 | $ | 266,013 | |||||
SOURCE: Canada Bread Company, Limited
Investor Contact: Nick Boland,
VP Investor Relations: 416-926-2005
Media Contact: 416-926-2020
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