ROUGEMONT, QC, May 10, 2019 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $403.5 million in the first quarter of 2019. Excluding the $29.8 million in sales by Old Orchard Brands, LLC ("OOB") and a $10.9 million favourable foreign exchange impact, first-quarter sales were up 1.4% year over year. The Company's operating profit for the first quarter of 2019 totalled $23.4 million, up $1.1 million from $22.3 million in the same quarter last year. First-quarter profit attributable to the Company's shareholders totalled $12.6 million. Excluding the impacts of the OOB acquisition, the 2019 first-quarter profit attributable to the Company's shareholders would have been $12.9 million, down $1.6 million year over year.

"The Company's 2019 first-quarter sales and operating profit were in line with our expectations. The Company is also seeing an easing of the inflationary pressures that have been affecting our U.S. operations in recent quarters. Adjustments to selling prices will continue to be gradually implemented in 2019 but at a pace that reflects Lassonde's competitive environment while taking into account the negative impacts that such price increases could potentially have on sales volume. To respond to the disruptions in our U.S. market, we are making the necessary adjustments to our business model," said Pierre-Paul Lassonde, Chairman of the Board of Lassonde Industries Inc.

"As Chairman of the Board, I am also pleased to announce the appointment of Nathalie Lassonde as Chief Executive Officer of the Company. She will be replacing me in this role while I will continue to carry out the role of Chairman of the Board of Directors, a position I have held since 1973. The Board of Directors has made this decision to help ensure the continuity and stability of the business. Nathalie Lassonde embodies all of our values, particularly those of integrity, respect and responsibility. She will rely on a strong team of executives, including Lassonde's President and Chief Operating Officer, Jean Gattuso, and its Executive Vice-President and Chief Financial Officer, Guy Blanchette, who have been at the heart of the business's success for many years. As head of the Company's talent management and development efforts, Nathalie Lassonde has gained an in-depth understanding of the business, one that will help her guide the management team," continued Pierre-Paul Lassonde.

Holding a bachelor's degree in finance from HEC Montréal, Nathalie Lassonde has worked for Lassonde Industries Inc. for 15 years and she has served as a member of its Board of Directors for 14 years. Having recently held the position of Assistant to the Chairman of the Board and Chief Executive Officer as well as that of Vice-President, Organizational Efficiency, she benefits from a profound understanding of the business.

"I'm honoured that the Board has decided to entrust me with this role so that we can continue Lassonde's tradition of excellence, and I will count on the support of our strong management team to do so. Lassonde's success does not depend on one individual; rather, it is rooted in the efforts of a team driven by a shared passion for excellence and benefiting from a wealth of complementary experience and talents. I am well aware of the challenge involved in maintaining the Company's growth momentum, and I am more than confident that Lassonde has everything it needs to succeed," said Nathalie Lassonde, the new Chief Executive Officer of Lassonde Industries Inc.

Financial Results

For the first quarter of 2019, the Company's sales totalled $403.5 million, up $45.8 million or 12.8% from $357.7 million in the first quarter of 2018. Sales from OOB added $29.8 million to the Company's first-quarter sales. Excluding OOB's sales and a $10.9 million favourable foreign exchange impact, the Company's first-quarter sales were up $5.1 million (1.4%) year over year. This increase was mainly due to sales price adjustments that had a favourable impact on national brand sales.

The Company's operating profit for the first quarter of 2019 totalled $23.4 million, up $1.1 million from $22.3 million in the same quarter last year. As for OOB, it posted a $2.5 million operating profit. Excluding the impact of the OOB acquisition, the Company's 2019 first-quarter operating profit was down $1.4 million year over year. This decrease was mainly due to a lower contribution margin reported by the Company's U.S. operations largely resulting from higher input costs, affecting more particularly the apple concentrate and the resin used to manufacture plastic bottles. As for the Canadian operations, the contribution margin is higher than the same quarter last year, mostly due to sales price adjustments and a favourable foreign exchange impact, partly offset by higher input costs. The decrease in the Company's operating profit is also explained by higher performance-related salary expenses and by an increase in transportation costs incurred to deliver the Company's products. It should be noted that the adoption of IFRS 16 on January 1, 2019 had a $0.2 million favourable impact on the 2019 first-quarter operating profit.

The Company's financial expenses went from $2.2 million in the first quarter of 2018 to $4.8 million in the first quarter of 2019. This increase is due to $2.5 million in interest expenses related to the financing of the OOB acquisition. Excluding these interest expenses, financial expenses were up $0.1 million, essentially due to a $0.3 million interest expense on lease liabilities resulting from the adoption of IFRS 16 on January 1, 2019 and to a $0.2 million unfavourable foreign exchange impact, partly offset by a $0.4 million decrease in interest on long-term debt.

"Other (gains) losses" went from a less than $0.1 million loss in the first quarter of 2018 to a $1.1 million loss in the first quarter of 2019. The 2019 first-quarter loss was mainly due to $0.7 million in foreign exchange losses and to a $0.5 million loss resulting from a change in the fair value of financial instruments whereas the 2018 first-quarter loss was essentially due to foreign exchange losses.

Profit before income taxes stood at $17.4 million in the first quarter of 2019, down $2.7 million from $20.1 million in the first quarter of 2018.

Income tax expense went from a $5.3 million expense in the first quarter of 2018 to a $4.6 million expense in the first quarter of 2019. At 26.5%, the 2019 first-quarter effective income tax rate was slightly higher than the 26.2% rate in the same quarter of 2018.

The 2019 first-quarter profit totalled $12.8 million, down $2.1 million from $14.9 million in the first quarter of 2018. It should be noted that the current quarter's results include $1.8 million, net of tax, in additional financial expenses related to the financing of the OOB acquisition, and a net profit of $1.4 million from OOB.

The 2019 first-quarter profit attributable to the Company's shareholders was $12.6 million, resulting in basic and diluted earnings per share of $1.80. In the first quarter of 2018, profit attributable to the Company's shareholders had totalled $14.5 million, resulting in basic and diluted earnings per share of $2.08. Excluding the impact of the OOB acquisition, the 2019 first-quarter profit attributable to the Company's shareholders was down $1.6 million year over year.

The Company's operating activities generated $19.6 million in cash during the first quarter of 2019, whereas they had used $2.1 million in cash during the same quarter last year. As for OOB's operating activities, they generated $2.8 million in cash during the first quarter of 2019. Financing activities used $18.4 million in cash during the first quarter of 2019, while they had used $2.6 million in the same quarter of 2018. Investing activities used $7.7 million in cash during the first quarter of 2019 compared to $9.4 million used in the same quarter of 2018. At the end of the first quarter of fiscal 2019, the Company reported a cash and cash equivalents balance of $1.1 million and a bank overdraft of $3.2 million, whereas, at the end of the first quarter of 2018, the cash and cash equivalents balance was $1.3 million and the bank overdraft balance was $4.3 million.

Outlook

The Company notes that industry volumes for U.S. and Canadian fruit juice and drinks markets were down slightly for the twelve-month period ended March 30, 2019. The Company's sales were up 12.8% in the first quarter of 2019 compared to the same period last year. Excluding foreign exchange impacts and the impact of the OOB acquisition, the adjusted sales increase was 1.4%. Barring any significant external shocks (and excluding foreign exchange impacts and the impact of the OOB acquisition to maintain a comparable basis), the Company expects that, for 2019, its consolidated annual sales growth rate will be slightly above that of 2018.

The Company has observed a stabilization in transportation costs and a return to normal levels for PET resin prices in the first quarter of 2019. The Company expects its selling price increases in the U.S. market to continue to gradually take effect in the second quarter of 2019 and that it will benefit from a major private label sales contract becoming effective in the middle of that quarter. However, it must remain cautious in a U.S. competitive environment that has become particularly difficult. In Canada, the Company is also paying close attention to the potential impacts of the recent changes made to Canada's Food Guide but has not yet observed any impact.

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.

In 2018, Lassonde acquired Old Orchard Brands, LLC, a fruit juice and beverage manufacturing company based in Sparta, Michigan. OOB's product portfolio consists of nearly 100 different varieties, including 100% juice, 100% juice blends, reduced-sugar juice cocktails, lemonades and flavoured teas. OOB is a leader in ready-to-drink fruit juices and drinks in the Central United States. Old Orchard is also the second largest frozen juice concentrates brand in the United States.

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 2,200 people working in 15 plants across Canada and the United States. To learn more, visit www.lassonde.com.

Caution Concerning Forward-Looking Statements 

In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Company 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 Company 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 Company'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 Company'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.

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