ROUGEMONT, QC, Aug. 11, 2017 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $383.3 million in the second quarter of 2017, a $23.1 million year-over-year increase. Profit attributable to the Company's shareholders for this period totalled $19.6 million, up $3.9 million from the second quarter of 2016.
| Financial highlights (in thousands of dollars) |
Second quarters ended |
||||
| July 1, 2017 |
July 2, 2016 |
||||
| Sales |
$ |
383,335 |
$ |
360,159 |
|
| Operating profit |
33,437 |
30,326 |
|||
| Profit before income taxes |
30,417 |
24,277 |
|||
| Profit attributable to the Company's shareholders |
19,606 |
15,686 |
|||
| Basic and diluted earnings per share (in $) |
$ |
2.81 |
$ |
2.24 |
|
| 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 July 1, 2017 will be available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc. |
"For the second quarter of 2017, our operating profit is in line with expectations even with industry volumes remaining low. However, we have seen strong upward movement in the Canadian dollar in recent months. While this could have a favourable impact in the long term, 2017 savings will likely be negligible, as the Company secures its foreign currency purchases using foreign exchange forward contracts," said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.
Financial results
The Company's sales totalled $383.3 million in the second quarter of 2017, up $23.1 million from $360.2 million in sales in the same quarter of 2016. This increase was primarily driven by an increase in sales of private label products and by a favourable foreign exchange impact, partly offset by a decrease in the sales volume of national brands in the United States. For the first six months of 2017, sales totalled $754.1 million, up 1.0% from $746.6 million in the first six months of 2016.
The Company's operating profit for the second quarter of 2017 totalled $33.4 million, up $3.1 million from $30.3 million in the same quarter last year. This increase came mainly from improved profitability within the Canadian operations due to higher sales and from a favourable change in "(Gains) losses on capital assets", partly offset by an unfavourable impact of higher orange concentrate costs. In the United States, the Company observed a slight decrease in the profitability of its operations arising from an increase in the cost of certain raw materials, partly offset by a favourable impact of foreign exchange movements on the conversion of the financial results of the U.S. entities. Operating profit for the first six months of 2017 stood at $57.1 million, down $0.7 million from $57.8 million in the first six months of 2016.
The Company's financial expenses went from $5.8 million in the second quarter of 2016 to $3.1 million this second quarter. This $2.7 million decrease came mainly from a $1.6 million decrease in interest expense, of which $0.9 million was due to a lower interest rate on the term loan of Lassonde Pappas and Company, Inc. ("LPC") and $0.7 million to a reduction in indebtedness. During the second quarter of 2016, the Company had recorded a $0.5 million expense to reflect a change in the fair value of participating loans that were fully settled in May 2016. The amortization of financial expenses was also down, decreasing by $0.4 million mainly due to the modification and renewal of the U.S. credit facilities. For the six‑month periods, financial expenses went from $11.5 million in 2016 to $6.4 million in 2017.
"Other (gains) losses" went from a $0.3 million loss in the second quarter of 2016 to a $0.1 million gain in the second quarter of 2017. The 2016 second-quarter loss of $0.3 million was mainly due to losses resulting from a change in the fair value of interest rate swaps related to LPC's term loan. The 2017 second-quarter gain of $0.1 million was essentially due to foreign exchange gains. For the six-month periods, the "Other (gains) losses" item was a below-$0.1-million loss in 2017 compared to a $1.1 million loss in 2016.
Profit before income taxes totalled $30.4 million in the second quarter of 2017, up $6.1 million from $24.3 million in the second quarter of 2016. For the first six months of 2017, profit before income taxes stood at $50.7 million, up $5.6 million from $45.1 million in the first six months of 2016.
Income tax expense went from $7.6 million in the second quarter of 2016 to $9.7 million in the second quarter of 2017. At 32.0%, the 2017 second-quarter effective income tax rate was higher than the 31.3% rate in the same quarter of 2016. This increase came essentially from a revision to the non-deductible expenses estimate that favourably affected the 2016 effective income tax rate, partly offset by a favourable impact of a non-taxable gain on a disposal of capital assets in 2017. Income tax expense for the first six months of 2017 stood at $16.0 million, up $1.4 million from $14.6 million in the first six months of 2016.
The 2017 second-quarter profit totalled $20.7 million, up $4.0 million from $16.7 million in the second quarter of 2016. For the first six months of 2017, profit totalled $34.6 million versus profit of $30.6 million in the first six months of 2016.
Profit attributable to the Company's shareholders was $19.6 million, resulting in basic and diluted earnings per share of $2.81 for the second quarter of 2017. In the second quarter of 2016, profit attributable to the Company's shareholders had totalled $15.7 million, resulting in basic and diluted earnings per share of $2.24. For the first six months of 2017, profit attributable to the Company's shareholders totalled $32.7 million, resulting in basic and diluted earnings per share of $4.68 and, in the same six-month period of 2016, profit had totalled $28.6 million, resulting in basic and diluted earnings per share of $4.10.
Cash flows from operating activities generated $62.0 million in cash during the second quarter of 2017, while they had generated $29.9 million in cash during the same quarter last year. Financing activities used $43.2 million in the second quarter of 2017, while these activities had used $12.3 million in the same quarter of 2016. Investing activities used $5.0 million in the second quarter of 2017 compared to $4.7 million used in the same quarter of 2016. At the end of the second quarter of 2017, the Company reported a cash and cash equivalents balance of $6.1 million and a bank overdraft of $1.7 million compared to a cash and cash equivalents balance of $27.1 million and a bank overdraft of $4.3 million at the end of the second quarter of 2016.
Outlook
In the second quarter of 2017, the Company observed relative stability in industry sales in the U.S. fruit juice and drink market. In the Canadian market, the situation was different, as industry sales volumes continued to decrease in the second quarter of 2017 when compared to the same period last year. The Company does not see any signs of this trend reversing in the next two quarters of 2017. The Company is seeking to limit the impact of this relative weakness in demand through national brand product innovation and continued private label customer development. It has also observed solid progress in its Canadian sales of low-calorie products in 2017. The Company is paying close attention to the Canadian food guide revision process and its potential impacts on the industry.
The Company posted a 6.4% year-over-year increase in sales in the second quarter of 2017. Excluding foreign exchange impacts, sales increased at an adjusted rate of 3.7%, in line with the Company's expectations despite lower national brand sales in the United States. Barring any significant external shocks (and excluding foreign exchange impacts to maintain a comparable basis), the Company remains optimistic about its ability to slightly increase its consolidated sales in 2017 compared to those of 2016.
About Lassonde
Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of a wide range of ready-to-drink fruit and vegetable juices and drinks marketed under brands such as Apple & Eve, Everfresh, Fairlee, Fruité, Graves, Oasis and Rougemont.
Lassonde is also one of the two largest producers of store brand shelf-stable fruit juices and drinks in the United States and a major producer of cranberry sauces.
Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company 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 2,100 people working in 14 plants across Canada and the United States. To learn more, visit www.lassonde.com.
SEDAR registration number: 00002099
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements that are based on certain assumptions. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Additional factors are discussed in materials filed from time to time with the securities regulatory authorities in Canada. Lassonde Industries Inc. disclaims any intention or obligation to update or revise any forward-looking statements except as required by law.
SOURCE Lassonde Industries Inc.
Investor contact: Guy Blanchette, FCPA, FCA, Executive Vice-President and Chief Financial Officer, Lassonde Industries Inc., 450-469-4926, extension 10782; Media contact: Stefano Bertolli, Vice-President Communications, Lassonde Industries Inc., 450-469-4926, extension 10265
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