ROUGEMONT, QC, Nov. 10, 2017 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $369.5 million in the third quarter of 2017. Excluding a $9.1 million unfavourable foreign exchange impact, adjusted sales were up 0.4% year over year. Profit attributable to the Company's shareholders for this period totalled $20.1 million, up $2.5 million or 14.0% from the third quarter of 2016.
| Financial highlights (in thousands of dollars) |
Third quarters |
|||
| September 30, 2017 |
October 1, 2016 |
|||
| Sales |
$ |
369,484 |
$ |
377,225 |
| Operating profit |
33,963 |
32,304 |
||
| Profit before income taxes |
31,274 |
26,779 |
||
| Profit attributable to the Company's shareholders |
20,064 |
17,596 |
||
| Basic and diluted earnings per share (in $) |
$ |
2.87 |
$ |
2.52 |
| 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 September 30, 2017 will be available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc. |
"The 0.4% increase in adjusted sales is slightly below our expectations as national brand sales were below projections. Nevertheless, we remain optimistic that, for 2017 as a whole, our consolidated sales will slightly exceed those of 2016 when adjusted for the foreign exchange impact," said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.
Financial results
The Company's sales totalled $369.5 million in the third quarter of 2017, down $7.7 million from $377.2 million in sales in the same quarter of 2016. Excluding a $9.1 million unfavourable foreign exchange impact, sales increased by $1.4 million (0.4%), largely due to an increase in sales of private label products and a favourable change in the sales mix of national brands, partly offset by a decrease in the sales volume of national brands. For the first nine months of 2017, sales totalled $1,123.6 million, a slight decrease from $1,123.9 million in the first nine months of 2016. Excluding a $7.7 million unfavourable foreign exchange impact, sales for the first nine months of 2017 increased by 0.7% from sales in the first nine months of last year.
The Company's operating profit for the third quarter of 2017 totalled $34.0 million, up $1.7 million from $32.3 million in the same quarter last year. This increase came mainly from adjustments in performance-related salary expenses, partly offset by decreased profitability within the U.S. operations due to a change in the client mix of private label products and to lower national brand sales. Operating profit for the first nine months of 2017 stood at $91.1 million, up $1.0 million from $90.1 million in the first nine months of 2016.
The Company's financial expenses went from $6.1 million in the third quarter of 2016 to $2.9 million this third quarter. This $3.2 million decrease came mainly from a $1.6 million decrease in interest expense, of which $0.8 million was due to a lower interest rate on the term loan of Lassonde Pappas and Company, Inc. ("LPC") and $0.8 million to a reduction in indebtedness. During the third quarter of 2016, the Company had written off $1.3 million in capitalized financial costs following the modification and renewal of the U.S. credit facilities. The amortization of financial expenses was also down, decreasing by $0.3 million mainly due to the modification and renewal of the U.S. credit facilities. For the nine-month periods, financial expenses went from $17.6 million in 2016 to $9.3 million in 2017.
"Other (gains) losses" went from a $0.6 million gain in the third quarter of 2016 to a $0.2 million gain in the third quarter of 2017. The 2016 third-quarter gain of $0.6 million was mainly due to $0.3 million in foreign exchange gains and to a $0.2 million gain resulting from a change in the fair value of the interest rate swap related to LPC's term loan. The 2017 third-quarter gain of $0.2 million was essentially due to foreign exchange gains. For the nine‑month periods, the "Other (gains) losses" item was a $0.2 million gain in 2017 compared to a $0.6 million loss in 2016.
Profit before income taxes totalled $31.3 million in the third quarter of 2017, up $4.5 million from $26.8 million in the third quarter of 2016. For the first nine months of 2017, profit before income taxes stood at $81.9 million, up $10.0 million from $71.9 million in the first nine months of 2016.
Income tax expense went from $8.3 million in the third quarter of 2016 to $10.2 million in the third quarter of 2017. At 32.5%, the 2017 third-quarter effective income tax rate was higher than the 31.0% rate in the same quarter of 2016. The 2016 effective income tax rate had been favourably affected by a revision to the non-deductible expenses estimate and to the geographic distribution of profit before income taxes. The 2017 third-quarter effective income tax rate was favourably affected by a higher special deduction for domestic production activity in the United States. Income tax expense for the first nine months of 2017 stood at $26.2 million, up $3.3 million from $22.9 million in the first nine months of 2016.
The 2017 third-quarter profit totalled $21.1 million, up $2.6 million from $18.5 million in the third quarter of 2016. For the first nine months of 2017, profit totalled $55.7 million versus profit of $49.1 million in the first nine months of 2016.
Profit attributable to the Company's shareholders was $20.1 million, resulting in basic and diluted earnings per share of $2.87 for the third quarter of 2017. In the third quarter of 2016, profit attributable to the Company's shareholders had totalled $17.6 million, resulting in basic and diluted earnings per share of $2.52. For the first nine months of 2017, profit attributable to the Company's shareholders totalled $52.8 million, resulting in basic and diluted earnings per share of $7.55 and, in the same nine-month period of 2016, profit had totalled $46.2 million, resulting in basic and diluted earnings per share of $6.62.
Cash flows from operating activities generated $31.6 million in cash during the third quarter of 2017, while they had generated $46.9 million in cash during the same quarter last year. Financing activities used $23.3 million in the third quarter of 2017, while these activities had used $54.5 million in the same quarter of 2016. Investing activities used $6.7 million in the third quarter of 2017 compared to $7.0 million used in the same quarter of 2016. At the end of the third quarter of 2017, the Company reported a cash and cash equivalents balance of $9.3 million and a bank overdraft of $3.3 million compared to a cash and cash equivalents balance of $8.3 million and a bank overdraft of $nil at the end of the third quarter of 2016.
Outlook
For the third quarter of 2017, the Company noted a decline in industry sales for the U.S. fruit juice and beverage market. Some U.S. regions were affected by a particularly difficult hurricane season, which had an impact on demand and the capacity to deliver products to those areas. In the Canadian market, industry sales volumes for the third quarter of 2017 were down year over year. The Company does not see any signs of this trend reversing in the last quarter 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 2.1% year-over-year decline in sales in the third quarter of 2017. Excluding foreign exchange impacts, adjusted sales increased by 0.4%, which is slightly below our expectations, reflecting lower national brand sales in the U.S. as well as in Canada. 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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