MEGA Brands reports third quarter 2013 results

• EBITDA of $29.2 million compared to $28.2 million
• Diluted EPS of $0.79 compared to $0.63

MONTREAL, Oct. 31, 2013 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the third quarter ended September 30, 2013. (All figures are expressed in US dollars.)

Consolidated net sales in the third quarter were $140.9 million compared to $140.1 million in the corresponding 2012 period.

• Sales for the Toys segment increased 1% compared to the third quarter of 2012, with strong shipments of Preschool & Girls construction toys, offset by lower sales of Boys & Collectors construction toys.
• Sales for the Stationery & Activities segment were up 1%, the tenth consecutive quarter of year-over-year growth.
• On a geographical basis, North American sales were 1% higher and international sales were level.

Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased to $29.2 million compared to $28.2 million in the third quarter of 2012. EBITDA is a supplementary financial measure.

Net earnings were $22.6 million or $0.79 per diluted share ($0.99 per basic share) compared to $19.5 million or $0.63 per diluted share ($1.19 per basic share) in the third quarter of 2012.

For the nine-month period ended September 30, 2013, consolidated net sales increased 4% to $303.5 million compared to $292.7 million in the same period last year, with 4% growth in Toys, 2% in Stationery & Activities, 4% in North America and 2% in International. EBITDA increased to $38.1 million compared to $35.2 million in the corresponding period in 2012. Net earnings were $19.4 million or $0.82 per diluted share ($0.94 per basic share) compared to $12.6 million or $0.64 per diluted share ($0.77 per basic share) in the same 2012 period.

''With our solid Preschool & Girls offering and recent traction in Boys & Collectors construction toys, including the launch of Call of Duty Collector Construction Sets, we continue to focus on sustaining our positive sales momentum through the balance of 2013,'' said Marc Bertrand, President and CEO. ''In addition, we are continuing to move forward with initiatives to improve our balance sheet, global manufacturing position and brand portfolio.

Conference Call
A conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing 1 [phone] or [phone]. For those unable to participate, a replay will be available until November 7, 2013. The replay phone number is [phone] or 1 [phone], access code 50752892.

About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.

The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.

MD&A Filing
This press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the unaudited consolidated financial statements and notes for the three- and nine-month periods ended September 30, 2013 and 2012. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.

Supplementary Financial Measures
The Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the three- and nine-month periods ended September 30, 2013, which is available at www.sedar.com and on the Corporation's Web site.

Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2012, which are available at www.sedar.com and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.

Unaudited Interim Consolidated Income Statements
(in thousands of US dollars, except per share amounts)

		Three-month periods ended September 30,				Nine-month periods ended September 30,
		2013		2012		2013		2012
		$		$		$		$
Net sales		140,896		140,057		303,526		292,733
Cost of sales		86,704		84,076		190,217		183,056
Gross profit		54,192		55,981		113,309		109,677
Marketing and advertising expenses		3,265		3,358		11,872		9,234
Research and development expenses		3,679		3,754		11,572		11,813
Other selling, distribution and administrative expenses		21,224		23,533		62,790		62,646
Contingent consideration on business acquisition		87		95		260		287
Loss (gain) on foreign currency translation		449		574		(842)		103
Earnings from operations		25,488		24,667		27,657		25,594
Financial expenses		2,119		4,419		8,596		13,131
Early redemption of debentures		-		-		2,869		-
		2,119		4,419		11,465		13,131
Earnings before income taxes		23,369		20,248		16,192		12,463
Income taxes
	Current	793		725		(3,170)		(113)
	Deferred	-		-		-		-
		793		725		(3,170)		(113)
Net earnings		22,576		19,523		19,362		12,576
Earnings per share
	Basic	0.99		1.19		0.94		0.77
	Diluted	0.79		0.63		0.82		0.64

Unaudited Interim Consolidated Statements of Comprehensive Income
(in thousands of US dollars, except per share amounts)

		Three-month periods ended September 30,				Nine-month periods ended September 30,
		2013		2012		2013		2012
		$		$		$		$
Net earnings		22,576		19,523		19,362		12,576
Other comprehensive income (loss):
Items that may be reclassified subsequently to income or loss
	Cumulative translation adjustment	(8)		244		(551)		1,053
Items that will not be reclassified subsequently to income or loss
	Cumulative translation adjustment	(494)		(1,169)		2,250		304
Other comprehensive income (loss):		(502)		(925)		1,699		1,357
Comprehensive income		22,074		18,598		21,061		13,933

Unaudited Consolidated Statements of Financial Position
(in thousands of US dollars)

	September 30,		December 31,
	2013		2012
	$		$
Assets
Current assets
Cash and cash equivalents	4,038		8,018
Trade and other receivables	146,201		130,541
Inventories	69,909		45,779
Derivative financial instruments	-		113
Prepaid expenses	7,105		9,370
Total current assets	227,253		193,821
Non-current assets
Property, plant and equipment	46,329		39,817
Intangible assets	22,455		22,771
Goodwill	30,000		30,000
Total assets	326,037		286,409
Liabilities
Current liabilities
Asset-based credit facility	8,816		-
Trade and other payables	75,488		62,638
Income taxes	3,774		5,631
Derivative financial instruments	472		-
Current portion of long-term debt	1,888		8,023
	90,438		76,292
Non-current liabilities
Long-term debt	62,150		112,992
Derivative financial instruments	72		206
	62,222		113,198
Equity
Share capital	501,851		431,893
Warrants	8,486		24,029
Contributed surplus	5,460		4,478
Deficit	(338,374)		(357,736)
Accumulated other comprehensive loss	(4,046)		(5,745)
Total equity	173,377		96,919
Total liabilities and equity	326,037		286,409

Unaudited Consolidated Statement of Changes in Equity
(in thousands of US dollars)

	Share capital	Warrants	Contributed surplus		Deficit	Accumulated other comprehensive loss	Total equity
	$	$	$		$	$	$
Balance - December 31, 2011	429,007	24,430	3,492		(374,322)	(6,844)	75,763
Net earnings	-	-	-		12,576	-	12,576
Options exercised	316		(100)				216
Other comprehensive income	-	-	-		-	1,357	1,357
Stock-based compensation	-	-	692		-	-	692
Balance - September 30, 2012	429,323	24,430	4,084		(361,746)	(5,487)	90,604
Balance - December 31, 2012	431,893	24,029	4,478		(357,736)	(5,745)	96,919
Net earnings	-	-	-		19,362	-	19,362
Options exercised	1,679	-	(518)		-	-	1,161
Warrants exercised	68,279	(15,543)	-		-	-	52,736
Other comprehensive income	-	-	-		-	1,699	1,699
Stock-based compensation	-	-	1,500		-	-	1,500
Balance - September 30, 2013	501,851	8,486	5,460		(338,374)	(4,046)	173,377

Unaudited Consolidated Statements of Cash Flows
(in thousands of US dollars)

		Nine-month periods ended September 30,
		2013		2012
		$		$
Operating activities
Net earnings		19,362		12,576
Adjustments for:
	Depreciation of property, plant and equipment	9,817		9,045
	Amortization of intangible assets	316		316
	Stock-based compensation	1,500		692
	Financial expenses	8,596		13,131
	Early redemption of debentures	2,869		-
	Income taxes	(3,170)		(113)
	Loss (gain) on foreign currency	(634)		2,849
		38,656		38,496
	Net change in non-cash working capital balances	(26,390)		(13,640)
	Income taxes recovered (paid)	1,701		(472)
	Interest paid	(4,875)		(7,055)
Cash flows provided by operating activities		9,092		17,329
Financing activities
Repayment of debentures		(60,368)		(7,411)
Change in asset-based credit facility		8,816		(4,018)
Government loan		-		6,591
Issuance of capital stock		53,899		217
Issuance (repayment) of long-term debt		(317)		24
Cash flows provided (used) in financing activities		2,030		(4,597)
Investing activities
Acquisition of property, plant and equipment		(15,024)		(15,765)
Cash flows used in investing activities		(15,024)		(15,765)
Effect of changes in foreign exchange rates on cash and cash equivalents		(78)		(58)
Decrease in cash and cash equivalents		(3,980)		(3,091)
Cash and cash equivalents — Beginning of period		8,018		6,745
Cash and cash equivalents — End of period		4,038		3,654

 

 

SOURCE: MEGA Brands Inc.

Investor Contact:
Peter Ferrante
Vice President and Chief Financial Officer
Tel: [phone] ext. 2283