Sun-Rype reports Q2 2013 financial results

TSX:  SRF

KELOWNA, BC, Aug. 7, 2013 /CNW/ - Sun-Rype Products Ltd. (TSX:SRF) ("Sun-Rype" or the "Company") today released its financial results for the quarter ended June 29, 2013.

Financial Highlights

Sun-Rype's net sales in the second quarter of 2013 were $36.8 million compared to $38.1 million in the second quarter of 2012. The Company's net income in the second quarter of 2013 was $1.0 million or $0.09 per share compared to net income of $0.02 million or $0.00 per share in the second quarter of 2012.

The Company's net sales in the first two quarters of 2013 were $73.4 million compared to $77.1 million in the first two quarters of 2012. The Company's net income in the first two quarters of 2013 was $1.5 million or $0.14 per share, compared to $1.5 million or $0.13 per share in the first two quarters of 2012.

"The decrease in Sun-Rype's net sales in the second quarter and first two quarters of 2013 was due primarily to decreased branded and non-branded sales as compared to the same period last year," commented Dave McAnerney, President & CEO. "Gross profit increased by $1.9 million for the second quarter and $1.6 million for the first two quarters of 2013 compared to the comparable period in 2012.  The increase is primarily related to lower raw material cost and production overhead costs, and increased production efficiencies. Net Income increased for the second quarter by $1.0 million primarily related to increased gross profit and decreased distribution expenses, offset by increased sales, general and administrative expenses.  Net Income remained relatively flat for the first two quarters of 2013 compared to the first two quarters of 2012, as increased gross profit in 2013 was offset by increased selling, general and administrative expense."

Outlook

Despite reporting net income in 2012 and the first two quarters of 2013 after incurring a net loss in 2011, the Company continues to face challenges.  Market data indicates that sales in the shelf-stable juice category, in which the Company derives approximately 60% of its net sales, have been softening.  It is unclear whether these declines will continue.  Strong competitive pressures experienced on branded products in 2012 and the current year are anticipated to continue.  The prices of certain concentrates and apples are returning to historical averages, but price volatility is anticipated moving forward.

The Company is continuing to focus on launching innovative products and broadening geographic distribution of its products to increase sales.  Increased product development and launch costs are expected in 2013, and there is no certainty that the incremental sales from these products will exceed costs.

As previously released on July 25, 2013, the Company entered into a formal arrangement agreement (the "Arrangement Agreement") with Great Pacific Industries Inc. ("Great Pacific") and SRF Acquisition Inc. ("SRF"), a wholly-owned subsidiary of Great Pacific, to privatize Sun-Rype.  Pursuant to the Arrangement Agreement and subject to the satisfaction of various conditions, SRF will acquire by way of a plan of arrangement under the Business Corporations Act all of the issued and outstanding common shares of Sun-Rype other than those common shares held by Great Pacific and its affiliates (collectively, "SRF Affiliates").  The transaction is valued at approximately $94 million, including the assumption of net debt, liabilities and other obligations and inclusive of the value of approximately 54% of the outstanding common shares held by the SRF Affiliates.

The Arrangement is subject to customary Toronto Stock Exchange ("TSX"), Court and regulatory approvals, including, but not limited to, the approval by at least 66 2/3% of the votes cast by shareholders, in person or by proxy, at a special/extraordinary meeting of Sun-Rype's shareholders being called to consider the Arrangement, and the approval by a "majority of the minority", being a majority of the votes cast by shareholders other than the SRF Affiliates or other shareholders whose votes may not be included in determining if minority approval is obtained pursuant to MI 61-101.

Following completion of the Arrangement if approved, the common shares will be de-listed from the TSX and Sun-Rype will apply to cease to be a reporting issuer under applicable securities laws.

Sun-Rype Products Ltd., based in Kelowna, BC, is a manufacturer and marketer of fruit-based juices and snacks.  Sun-Rype is a publicly traded Canadian company with its common shares listed on the Toronto Stock Exchange under the symbol SRF.

Additional Information

The foregoing are financial highlights only. Management's Discussion and Analysis and consolidated financial statements and accompanying notes of Sun-Rype Products Ltd. for the year ended December 31, 2012, are available on the Canadian Securities Administrator's website at www.sedar.com and on the Company's website at www.sunrype.com.  Additional information relating to Sun-Rype's operations can be found in the Company's Annual Information Form, filed with all applicable Canadian securities commissions and available for viewing on the Canadian Securities Administrator's website at www.sedar.com and on the Company's website at www.sunrype.com.

Forward Looking Statements

Statements contained in this press release, which are not based on historical fact, including without limitation, statements containing the words "may", "will", "plans", "intends", "expects", "anticipates", "believes", "estimate", "continue" and similar expressions, constitute "forward looking information" within the meaning of applicable Canadian securities laws.  Forward looking statements contained in this document may involve, but are not limited to, statements relating to the Company's objectives, priorities, strategies, actions, targets, expectations and outlook.  Forward looking statements are necessarily based upon assumptions and predictions with respect to the future, including but not limited to the factors referred to below.  As a result, forward looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied thereby.  These risks, uncertainties and other factors include, but are not limited to, changes in the consumer packaged goods industry and external market factors, as well as the factors referred to in the Company's Annual Information Form dated March 6, 2013, and its other filings with the applicable Canadian securities regulatory authorities.  In light of these uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward looking statements.  Except as required by law, the Company assumes no obligation to update or revise such information to reflect later events or developments.

Sun-Rype Products Ltd.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands of Canadian dollars, except per share amounts)

				For the quarters ended				For the two quarters ended
					June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net sales				$	36,806	$	38,109	$	73,449	$	77,130
		Cost of sales			(28,567)		(31,737)		(57,970)		(63,264)
Gross profit					8,239		6,372		15,479		13,866
		Sales and marketing expenses			(3,553)		(2,997)		(6,364)		(5,096)
		Distribution expenses			(1,665)		(1,776)		(3,301)		(3,701)
		General and administrative expenses			(1,546)		(1,415)		(3,493)		(2,706)
Results from operating activities					1,475		184		2,321		2,363
		Finance income (costs)			41		(174)		(99)		(403)
Income before income tax					1,516		10		2,222		1,960
		Income tax expense (recovery)			536		(6)		713		503
Net income for the period					980		16		1,509		1,457
Other comprehensive income
		Foreign currency translation differences			110		16		163		2
			for foreign operations
Total comprehensive income for the period				$	1,090	$	32	$	1,672	$	1,459
Basic and diluted earnings per share				$	0.09	$	0.00	$	0.14	$	0.13

 

  

SOURCE: Sun-Rype Products Ltd.

Amanda Burns, CA
Vice President, Finance & CFO
Sun-Rype Products Ltd.
1165 Ethel Street
Kelowna, BC  V1Y 2W4
Tel:  [phone]
Fax: [phone]
[email protected] 

or 

Dave McAnerney
President & Chief Executive Officer
Sun-Rype Products Ltd.
1165 Ethel Street
Kelowna, BC  V1Y 2W4
Tel: [phone]
Fax: [phone]
[email protected] 

www.sunrype.com