ROUGEMONT, QC, Aug. 12, 2022 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde" or the "Corporation") posted sales of $529.5 million in the second quarter of 2022, up 12.8% year over year. The Corporation's operating profit for the second quarter of 2022 totalled $22.3 million, down from $29.9 million in the same quarter last year. Excluding $3.0 million in expenses related to the multi-year strategy discussed below, operating profit was down $4.6 million. The 2022 second‑quarter profit attributable to the Corporation's shareholders totalled $14.2 million, down $4.6 million year over year.
Financial highlights (in millions of $, unless otherwise indicated) |
Second quarters ended |
|||
July 2, 2022 |
July 3, 2021 |
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Sales |
$ 529.5 |
$ 469.3 |
||
Operating profit |
22.3 |
29.9 |
||
Profit before income taxes |
19.2 |
25.8 |
||
Profit attributable to the Corporation's shareholders |
14.2 |
18.8 |
||
Basic and diluted earnings per share (in $) |
$ 2.06 |
$ 2.71 |
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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 2, 2022 are available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc. |
"Our second-quarter results reflect persisting inflationary pressures on transportation and input costs, partially offset by selling price adjustments. Demand for our products remains strong and further price adjustments should catch up to these inflationary pressures to progressively improve our performance in the second half of the year," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc.
"We continue to carry out our investment program designed to strengthen our leadership position in the juice and drink industry as well as to improve long-term profitability. However, certain capital expenditures will be deferred to the first half of 2023 due to current market conditions that are making access to certain resources and equipment more difficult."
"We remain in a solid position given the depth of the Corporation's product portfolio combined with well-balanced sales contributions from branded and private label product offerings. We are staying the course to deliver long-term value to our shareholders," concluded Ms. Lassonde.
In the "Outlook" section of its 2021 annual MD&A, the Corporation announced the launch of a multi-year strategy to drive long-term value, accelerate growth, as well as improve overall margins and profitability. The three priorities of its multi-year strategy are as follows: 1) Build a growth-oriented portfolio; 2) Drive sustainable performance; and 3) Improve capacity to act.
In 2022, this strategic initiative is expected to result in related operating expenses ranging between $10 million and $15 million. In addition, the initiative is supported by significant capital expenditures, initially targeted at approximately $100 million for 2022. The Corporation now anticipates that capital expenditures will be approximately $65 million in 2022, with the $35 million balance being deferred to the first half of 2023. This deferral is mainly due to current market conditions that are making access to certain resources and equipment more difficult.
The first phase of the strategy, in 2022, focuses primarily on three key areas: 1) Strategic review to establish the cornerstones of the Corporation's growth plan for the coming years; 2) Revitalization of U.S. operations ("Project Eagle") to optimize and increase production capacity as well as increase operational efficiency; and 3) Implementation of new management systems and upgrading of technology infrastructures.
During the second quarter of 2022, the Corporation continued its strategic review and completed the diagnostic step of Project Eagle. Moreover, it began implementing new management systems, including demand planning and transportation management systems. The Corporation incurred $3.0 million in expenses related to these activities. For the first six months of 2022, the Corporation incurred $5.4 million in expenses related to these activities.
During the second quarter of 2022, the Corporation made capital expenditures of $2.8 million towards growth and optimization projects. These investments include an ongoing project aimed at improving productivity and production capacity in Canada; it also invested $1.9 million in technology projects. For the first six months of 2022, the Corporation made capital expenditures of $5.0 million towards growth and optimization projects; it also invested $3.4 million in technology projects.
Financial Results
- Sales of $529.5 million. Excluding an $11.5 million favourable foreign exchange impact, sales were up $48.7 million (10.4%) from the same quarter last year, mainly explained by the favourable impact of selling price adjustments.
- Gross profit of $138.7 million (26.2% of sales), up $8.6 million from the same quarter in 2021.
- Operating profit of $22.3 million, down $7.6 million from the same quarter last year;
- $12.7 million increase in transportation costs incurred to deliver products to clients resulting from higher fuel surcharges; and
- $3.0 million in expenses related to the multi-year strategy.
- Profit attributable to the Corporation's shareholders of $14.2 million, resulting in basic and diluted earnings per share of $2.06, down $4.6 million and $0.65, respectively, from the same quarter in 2021.
- $6.5 million in cash used by operating activities compared to $46.9 million in cash generated in the same quarter last year. This increase in cash outflows is essentially explained by a change in non-cash operating working capital items, which used $46.2 million more than in the same quarter of 2021, mainly due to a higher inventory level;
- As at July 2, 2022, long-term debt, including the current portion, stood at $243.0 million, up $67.6 million from December 31, 2021.
According to industry data, sales volume for the Canadian fruit juice and drink market slightly increased during the second quarter of 2022 when compared to the second quarter of 2021, whereas sales volume for the U.S. fruit juice and drink market decreased. Excluding the foreign exchange impact, Lassonde's sales were up 9.7% in the first six 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 challenges in addition to those related to the supply of certain raw materials affecting all business units. These challenges are still impacting the Corporation's ability to fully meet customer demand. Despite selling price adjustments that successfully offset significant increases in input costs, Lassonde's profitability decreased in the first six months of 2022, mainly due to inflationary pressure that is strongly affecting transportation costs.
As previously mentioned, Lassonde launched, in the first quarter of 2022, a multi-year strategy to drive long-term value, accelerate growth, as well as improve overall margins and profitability. During the last six months of 2022, Lassonde plans to progress the work undertaken to deploy its strategic review, the revitalization of its U.S. operations, and the upgrade of its technology infrastructures. It also plans to continue implementing new demand planning and transportation management systems in the United States.
For the second half of 2022, barring any significant external shocks and excluding foreign exchange impact, Lassonde expects that its sales growth rate will be slightly higher than that observed in the first six 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. Profitability will remain under pressure as the Corporation continues to address labour challenges and continued inflationary pressures, which are particularly affecting packaging, orange concentrate and transportation costs. However, the impact of early initiatives to revitalize U.S. operations and the run-rate effect of selling price adjustments are expected to progressively deliver increasing benefits in the second half of the year. Given that supply challenges appear to be slowly fading, the Corporation has revised its inventory accumulation strategy and expects to reduce its inventory levels in the last six months of 2022 to levels that will progressively converge towards historical averages.
In accordance with the Corporation's dividend policy, the Board of Directors today declared a quarterly dividend of $0.70 per share, payable on September 15, 2022 to all registered holders of Class A and Class B shares on August 24, 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.
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, Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde 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. It is also a major producer of cranberry sauces. The Corporation also produces fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food products such as pasta sauces and soups, mainly under private label, as well as fondue broths and sauces under the brand Canton. The Corporation also imports and markets selected wines from various countries and manufactures apple ciders and cider-based beverages.
The Corporation produces superior quality products through the expertise of more than 2,700 people working in 17 plants across Canada and the United States. To learn more, visit www.lassonde.com.
In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Corporation 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 Corporation 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 Corporation'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 Corporation'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.
Investor contact: Eric Gemme, Chief Financial Officer, Lassonde Industries Inc., 450-469-4926, extension 10456; Media contact: Isabelle Nadeau, Director, Communications, Lassonde Industries Inc., 450-469-4926, extension 10167
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