Canada Bread Reports Results for First Quarter 2010
TORONTO, April 29 /CNW/ - Canada Bread Company, Limited (TSX: CBY) today reported its financial results for the first quarter ended March 31, 2010. First quarter highlights include:
- Adjusted Operating Earnings were $20.3 million; $21.4 million
last year
- Adjusted EPS were $0.55 compared to $0.60 last year
- Basic EPS were $0.50 compared to $0.59 last year
Note: Adjusted Operating Earnings are defined as earnings from
operations before restructuring and other related costs and other
income. Adjusted Earnings per Share ("Adjusted EPS") are defined as
basic earnings per share adjusted for the impact of restructuring and
other related costs, net of tax.
"Our first quarter results were impacted by transitory challenges in our Frozen Bakery business, including our North American and U.K. operations, which more than offset earnings growth in our Fresh Bakery business," said Richard Lan, President and CEO. "We are taking steps to reduce costs and build volumes, and as a result are seeing signs of improvement in these businesses. We are confident that these initiatives will drive better results."
Financial Overview
------------------
Sales for the first quarter declined to $381.9 million from $413.1 million in the prior year, due to the unfavourable impact of currency shifts and lower volumes in the Frozen Bakery segment.
Adjusted Operating Earnings in the quarter decreased to $20.3 million from $21.4 million. The earnings decline in the first quarter mostly reflected the impact of lower volumes in the Frozen Bakery segment. This was partly offset by increased operating earnings in the Fresh Bakery segment.
Net earnings declined to $12.7 million ($0.50 per share) compared to $14.9 million ($0.59 per share) last year. Adjusted EPS declined to $0.55 from $0.60 in the prior year.
Following is a reconciliation of Basic EPS to Adjusted EPS:
First Quarter
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Basic EPS $0.50 $0.59
Restructuring and other related costs $0.05 $0.02
-------------------------------------------------------------------------
Adjusted EPS(i) $0.55 $0.60
-------------------------------------------------------------------------
(i) Does not add due to rounding.
Business Segment Review
-----------------------
Following is a summary of Adjusted Operating Earnings by business
segment:
-------------------------------------------------------------------------
($ thousands) First Quarter
2010 2009
-------------------------------------------------------------------------
Fresh Bakery $20,691 $12,818
Frozen Bakery (367) 8,532
-------------------------------------------------------------------------
Adjusted Operating Earnings $20,324 $21,350
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Fresh Bakery
------------
Includes fresh bakery products, including breads, rolls, bagels, sweet goods, prepared sandwiches, and fresh pasta and sauces sold to retail, foodservice and convenience channels. It includes national brands such as Dempster's(R) and Olivieri(R) and many leading regional brands.
First quarter sales of $257.2 million were slightly lower than sales of $263.0 million in the same period last year, mostly due to lower sales in the fresh sandwich business and increased trade investment. Adjusted Operating Earnings in the quarter increased to $20.7 million from $12.8 million.
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(R) and New York Bakery Co(R).
Sales declined to $124.7 million from $150.1 million last year, in part due to the unfavourable impact of a stronger Canadian dollar on the Company's sales in the U.S. and U.K. and lower sales volume in both the North American and U.K. frozen bakery businesses.
Adjusted Operating Earnings in the quarter were a loss of $0.4 million compared to earnings of $8.5 million last year, mostly due to the decline in sales volume. Management expects the volume decline in North America to be transitory as new business is gradually being secured and is taking steps to reduce the cost base in the Company's U.K. operations until volumes improve.
Other Matters
-------------
On April 28, 2010, Canada Bread Company, Limited declared a dividend of $0.06 per share payable on July 2, 2010 to shareholders of record at the close of business on June 5, 2010. Unless indicated otherwise, by the Company, in writing at 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".
Forward-Looking Statements
--------------------------
This document contains, and the Company's oral and written public communications often contain, forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates and beliefs and assumptions made by the Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, as well as statements with respect to beliefs, plans, expectations, anticipations, estimates and intentions. 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 statements. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.
In particular, these forward-looking statements are based on expectations concerning performance of the Company's business in general, and are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, United States and United Kingdom economies; the rate of exchange of the Canadian dollar to the U.S. dollar and the British pound; initiatives to restore sales volumes in the North American and U.K. frozen bakery businesses; initiatives to reduce its cost base in the U.K.; 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 under the "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2009 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 statements, 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 or implied by forward-looking statements are discussed more fully under the heading "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2009 including the section entitled "Risk Factors" that will be available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking statements, whether written or oral, or whether as a result of new information, future events or otherwise except as required by law.
Canada Bread Company Limited, which is 89.8% owned by Maple Leaf Foods Inc., is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces. The Company had 2009 sales of $1.7 billion and employs approximately 8,000 people at its operations across North America and in the United Kingdom.
Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
CANADA BREAD COMPANY,
LIMITED
Three months ended March 31, 2010 and 2009
CANADA BREAD COMPANY, LIMITED
Consolidated Balance Sheets
(In thousands of Canadian dollars)
------------------------------------------------------------------------
As at As at As at
March 31, March 31, December 31,
2010 2009 2009
------------------------------------------------------------------------
(Unaudited) (Unaudited)
ASSSETS
Current assets
Cash and cash equivalents $ 68,471 $ 10,826 $ 57,698
Accounts receivable 56,399 57,619 63,620
Due from Maple Leaf Foods Inc. 6,740 2,500 -
Inventories 53,383 59,761 56,659
Future tax asset 1,629 5,612 1,640
Prepaid expenses and other assets 4,109 5,663 4,438
----------------------------------------------------------------------
$ 190,731 $ 141,981 $ 184,055
Property and equipment 373,477 417,381 387,252
Goodwill 375,107 406,573 386,807
Other intangible assets 15,196 20,045 16,678
Other long-term assets 11,066 10,298 11,620
-------------------------------------------------------------------------
$ 965,577 $ 996,278 $ 986,412
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ 6,167 $ 8,875 $ 4,247
Accounts payable and accrued
charges 171,597 184,014 172,172
Due to Maple Leaf Foods Inc. - - 3,817
Dividends payable 1,525 1,525 1,525
Income and other taxes payable 7,313 9,186 13,155
Current portion of long-term debt - 36 -
-----------------------------------------------------------------------
$ 186,602 $ 203,636 $ 194,916
Long-term debt 2,311 13,730 2,547
Future tax liability 31,196 36,402 33,338
Other long-term liabilities 8,187 17,006 8,524
Shareholders' equity 737,281 725,504 747,087
-------------------------------------------------------------------------
$ 965,577 $ 996,278 $ 986,412
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CANADA BREAD COMPANY, LIMITED
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share amounts)
-------------------------------------------------------------------------
Three months ended March 31,
(Unaudited) 2010 2009
-------------------------------------------------------------------------
Sales $ 381,932 $ 413,125
Cost of goods sold 306,807 337,266
-------------------------------------------------------------------------
Gross margin $ 75,125 $ 75,859
Selling, general and administrative expenses 54,801 54,509
-------------------------------------------------------------------------
Earnings from operations before the
following: $ 20,324 $ 21,350
Restructuring and other related costs (1,704) (573)
Other income 72 1,770
-------------------------------------------------------------------------
Earnings before interest and income taxes $ 18,692 $ 22,547
Interest expense 984 1,493
-------------------------------------------------------------------------
Earnings before income taxes $ 17,708 $ 21,054
Income taxes 4,981 6,172
-------------------------------------------------------------------------
Net earnings $ 12,727 $ 14,882
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share - basic and diluted $ 0.50 $ 0.59
-------------------------------------------------------------------------
Weighted average number of shares (millions) 25.4 25.4
-------------------------------------------------------------------------
CANADA BREAD COMPANY, LIMITED
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Three months ended March 31,
(Unaudited) 2010 2009
-------------------------------------------------------------------------
Net earnings $ 12,727 $ 14,882
Other comprehensive income (loss) (21,008) 3,794
-------------------------------------------------------------------------
Comprehensive income (loss) $ (8,281) $ 18,676
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statements of Retained Earnings
(In thousands of Canadian dollars, except share amounts)
-------------------------------------------------------------------------
Three months ended March 31,
(Unaudited) 2010 2009
-------------------------------------------------------------------------
Retained earnings, beginning of period $ 658,541 $ 587,163
Net earnings 12,727 14,882
Dividends declared ($0.06 per share;
2009: $0.06 per share) (1,525) (1,525)
-------------------------------------------------------------------------
Retained earnings, end of period $ 669,743 $ 600,520
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CANADA BREAD COMPANY, LIMITED
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Three months ended March 31,
(Unaudited) 2010 2009
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities
Net earnings $ 12,727 $ 14,882
Add (deduct) items not affecting cash:
Depreciation and amortization 12,691 14,077
Future income taxes (2,041) 76
Loss (gain) on sale of property and
equipment (52) 192
Amortization of terminated interest rate
swap 658 -
Asset impairments and change in provision
for restructuring and other related costs 1,072 (540)
Other 95 (643)
Change in non-cash operating working capital (7,715) (20,993)
-------------------------------------------------------------------------
Cash provided by operating activities $ 17,435 $ 7,051
-------------------------------------------------------------------------
Financing activities
Dividends paid $ (1,525) $ (1,525)
Net increase (decrease) in long-term debt (236) 9,248
-------------------------------------------------------------------------
Cash provided by (used in) financing
activities $ (1,761) $ 7,723
-------------------------------------------------------------------------
Investing activities
Additions to property and equipment $ (7,556) $ (14,842)
Proceeds from sale of property and equipment 685 392
Other 50 (1,200)
-------------------------------------------------------------------------
Cash used in investing activities $ (6,821) $ (15,650)
-------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents $ 8,853 $ (876)
Net cash and cash equivalents, beginning
of period 53,451 2,827
-------------------------------------------------------------------------
Net cash and cash equivalents, end of period $ 62,304 $ 1,951
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CANADA BREAD COMPANY, LIMITED
Segmented Financial Information
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Three months ended March 31,
(Unaudited) 2010 2009
-------------------------------------------------------------------------
Sales
Fresh Bakery $ 257,189 $ 263,003
Frozen Bakery 124,743 150,122
-------------------------------------------------------------------------
$ 381,932 $ 413,125
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings from operations before restructuring
and other related costs and other income
Fresh Bakery $ 20,691 $ 12,818
Frozen Bakery (367) 8,532
-------------------------------------------------------------------------
$ 20,324 $ 21,350
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to property and equipment
Fresh Bakery $ 4,084 $ 5,728
Frozen Bakery 3,472 9,114
-------------------------------------------------------------------------
$ 7,556 $ 14,842
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Depreciation and amortization
Fresh Bakery $ 6,789 $ 7,148
Frozen Bakery 5,902 6,929
-------------------------------------------------------------------------
$ 12,691 $ 14,077
-------------------------------------------------------------------------
-------------------------------------------------------------------------
------------------------------------------------------------------------
As at As at As at
March 31, March 31, December 31,
2010 2009 2009
------------------------------------------------------------------------
(Unaudited) (Unaudited)
Total assets
Fresh Bakery $ 442,995 $ 442,703 $ 441,020
Frozen Bakery 439,881 524,853 476,681
Non-allocated assets 82,701 28,722 68,711
------------------------------------------------------------------------
$ 965,577 $ 996,278 $ 986,412
------------------------------------------------------------------------
------------------------------------------------------------------------
Goodwill
Fresh Bakery $ 156,048 $ 156,264 $ 155,946
Frozen Bakery 219,059 250,309 230,861
------------------------------------------------------------------------
$ 375,107 $ 406,573 $ 386,807
------------------------------------------------------------------------
------------------------------------------------------------------------
For further information: Lynda Kuhn, SVP Communications, (416) 926-2026, www.canadabread.ca
Share this article