PR Newswire
MISSISSAUGA, ON, April 29, 2020
TSX: MFI
www.mapleleaffoods.com
Company continues to execute against its strategy, and remains steadfastly focused on the health and safety of its people, business continuity, elevating community outreach and maintaining a secure food supply
MISSISSAUGA, ON, April 29, 2020 /PRNewswire/ - Maple Leaf Foods Inc. ("Maple Leaf Foods" or "the Company") (TSX: MFI) today reported its financial results for the first quarter ending March 31, 2020.
"During the COVID-19 crisis, Maple Leaf's commitment to social purpose has taken on new meaning and increased importance," stated Michael H. McCain, the Company's President and CEO. "In keeping with this commitment, we have made significant contributions to support our communities and extraordinary healthcare professionals. We have also taken additional steps to protect our employees, who have maintained our critical infrastructure throughout this pandemic. Finally, we have embraced our responsibility as an essential service, to ensure the security and stability of our domestic and international supply chains. I am humbled by the dedication demonstrated by our entire team throughout this global challenge.
"Despite the unprecedented environment, Maple Leaf remains focused upon its strategic, financial, and operational targets, and continues to make steady progress in this regard. We are encouraged by the growth trajectory of our plant protein business, and continue to witness the benefits of our investments in brands and sustainable meats," concluded Mr. McCain.
First Quarter 2020 Highlights
(i) Refer to the section titled Non-IFRS Financial Measures in this news release. |
Financial Highlights
Measure(i) (Unaudited) | Three months ended March 31, | |||||
2020 | 2019 | Change | ||||
Sales | $ | 1,022.8 | $ | 907.1 | 12.8% | |
Net (Loss) Earnings | $ | (3.7) | $ | 50.1 | (107.4)% | |
Basic Earnings per Share | $ | (0.03) | $ | 0.41 | (107.3)% | |
Adjusted Operating Earnings(ii) | $ | 45.1 | $ | 42.1 | 7.3% | |
Adjusted Earnings per Share(ii) | $ | 0.21 | $ | 0.20 | 5.0% | |
Free Cash Flow(ii) | $ | (132.1) | $ | (41.4) | 219.1% |
(i) All financial measures in millions of dollars except Basic and Adjusted Earnings per Share. |
(ii) Refer to the section titled Non-IFRS Financial Measures in this news release. |
Sales for the first quarter of 2020 were $1,022.8 million compared to $907.1 million last year, an increase of 12.8%, driven by strong retail volume in the Meat Protein Group, favourable mix from growth in sustainable meats and pork exports to Asia, and from pricing action taken in the third quarter of 2019. Double-digit growth in the Plant Protein Group of 25.9% also contributed to the strong sales performance in the quarter.
Net loss for the first quarter of 2020 was $3.7 million ($0.03 per basic share) compared to earnings of $50.1 million ($0.41 per basic share) last year. Strong commercial performance in both the Meat and Plant Protein Groups was more than offset by strategic investments in plant protein to drive top line growth and a $36.7 million impact to earnings from non-cash fair value changes in biological assets and derivative contracts driven by depressed market prices for hogs, which are excluded in the calculation of Adjusted Operating Earnings below.
Adjusted Operating Earnings for the first quarter of 2020 were $45.1 million compared to $42.1 million last year, and Adjusted Earnings per Share for the first quarter of 2020 were $0.21 compared to $0.20 last year due to similar factors as noted above.
For further discussion on key metrics and a discussion of results by operating segment, refer to the section titled Operating Review.
Note: Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of all non-IFRS financial measures. |
Operating Review
The Company has two reportable segments. These segments offer different products, with separate organizational structures, brands, financial and marketing strategies. The Company's chief operating decision makers regularly review internal reports for these businesses; performance of the Meat Protein Group is based on revenue growth, Adjusted Operating Earnings and Adjusted EBITDA, while the performance of the Plant Protein Group is based predominantly on revenue growth rates, managing gross margins and controlling selling, general and administrative expenses ("SG&A"), which generate high revenue growth rates.
The following table summarizes the Company's sales, gross profit, SG&A, Adjusted Operating Earnings, Adjusted EBITDA, and Adjusted EBITDA margin by operating segment for the three months ended March 31, 2020 and March 31, 2019.
Three months ended March 31, 2020 | Three months ended March 31, 2019(ii) | |||||||||||
($ millions)(i) | Meat | Plant | Non- | Total | Meat Protein | Plant Protein | Non- | Total | ||||
Sales | $ | 981.4 | 46.3 | (5.0) | $ | 1,022.8 | $ | 871.1 | 36.8 | (0.8) | $ | 907.1 |
Gross profit | $ | 157.3 | 6.8 | (36.7) | $ | 127.4 | $ | 131.8 | 8.5 | 39.2 | $ | 179.5 |
Selling, general and administrative expenses | $ | 88.0 | 30.9 | — | $ | 118.9 | $ | 86.4 | 11.9 | — | $ | 98.3 |
Adjusted Operating Earnings | $ | 69.2 | (24.1) | — | $ | 45.1 | $ | 45.4 | (3.3) | — | $ | 42.1 |
Adjusted EBITDA | $ | 111.1 | (20.5) | — | $ | 90.5 | $ | 84.8 | (0.4) | — | $ | 84.4 |
Adjusted EBITDA margin(iv) | 11.3% | (44.3)% | N/A | 8.9% | 9.7% | (1.1)% | N/A | 9.3% |
(i) | Totals may not add due to rounding. |
(ii) | Comparative figures have been presented to align with current reportable segments. |
(iii) | Non-allocated includes eliminations of inter-segment sales and associated cost of goods sold, and non-allocated costs which are comprised of expenses not separately identifiable to reportable segments and are not part of the measures used by the Company when assessing a segment's operating results. |
(iv) | Refer to the section titled Non-IFRS Financial Measures in this news release. |
Meat Protein Group
The Meat Protein Group is comprised of prepared meats, ready-to-cook and ready-to-serve meals, value-added fresh pork and poultry products that are sold to retail, foodservice and industrial channels and agricultural operations in pork and poultry. The Meat Protein Group includes leading brands such as Maple Leaf®, Maple Leaf Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®, Swift® and many leading regional brands.
Sales for the first quarter of 2020 increased 12.7% to $981.4 million compared to $871.1 million last year, driven by a favourable mix-shift towards sustainable meats and branded products, increased exports to China and Japan, and strong volumes in the retail channel following a surge in demand in late March tied to COVID-19. Pricing actions implemented during the third quarter of 2019 to mitigate higher input costs also contributed to the strong sales performance.
Gross profit for the first quarter of 2020 was $157.3 million (gross margin of 16.0%) compared to $131.8 million (gross margin of 15.1%) last year. Gross profit performance benefited from a favourable mix attributed to expansion of sustainable meats and other branded products, in addition to growth in exports to Asian markets. Increased costs in hog production and fresh poultry as well as expenses associated with COVID-19 including labour bonus payments, personal protective equipment, and incremental sanitation negatively impacted gross profit. This partially offset strong commercial performance.
SG&A expenses for the first quarter of 2020 were $88.0 million (9.0% of sales), compared to $86.4 million (9.9% of sales) last year. The increase was primarily driven by COVID-19 donations to support front-line health care workers, partially offset by cost efficiencies across the meat portfolio.
Adjusted Operating Earnings for the first quarter of 2020 were $69.2 million compared to $45.4 million last year, driven by factors noted above.
Adjusted EBITDA margin was 11.3% compared to 9.7% last year, consistent with the factors noted above.
Plant Protein Group
The Plant Protein Group is comprised of refrigerated plant protein products, premium grain-based protein and vegan cheese products sold to retail, foodservice and industrial channels. The Plant Protein Group includes the leading brands Lightlife® and Field Roast Grain Meat Co.™
Sales for the first quarter of 2020 increased 25.9% to $46.3 million compared to $36.8 million last year, driven by expanded distribution of new products and continued volume increases in its existing portfolio.
Gross profit for the first quarter of 2020 was $6.8 million (gross margin of 14.6%) compared to $8.5 million (gross margin of 23.2%) last year. The decrease in gross profit was attributed to increased trade expenditures and higher supply chain costs.
SG&A expenses for the first quarter of 2020 were $30.9 million (66.6% of sales), compared to $11.9 million (32.3% of sales) last year. The increase in SG&A expenses reflects the evolution of the Company's plant protein strategy to drive sales growth and secure market share in a rapidly growing market. Supporting this strategy, significant investment in advertising, promotion and marketing was incurred during the quarter to enhance brand awareness and support new product launches and expand distribution. In addition, the Company invested to broaden organizational capacity and its pipeline of new product innovation.
Adjusted Operating Earnings for the first quarter of 2020 were a loss of $24.1 million compared to a loss of $3.3 million last year. The decline in Adjusted Operating Earnings is consistent with the factors noted above.
Other Matters
On April 28, 2020, the Board of Directors approved a quarterly dividend of $0.16 per share, $0.64 per share on an annual basis, payable June 30, 2020 to shareholders of record at the close of business June 9, 2020. Unless indicated otherwise by the Company at or before the time the dividend is paid, the dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".
Conference Call
An investor presentation related to the Company's first quarter financial results is available at www.mapleleaffoods.com and can be found under Presentations and Webcasts on the Investors page. A conference call will be held at 8:00 a.m. EST on April 29, 2020, to review Maple Leaf Foods' first quarter financial results. To participate in the call, please dial 416-764-8650 or 1-888-664-6383. For those unable to participate, playback will be made available an hour after the event at 416-764-8677 or 1-888-390-0541 (Passcode: 692371#).
A webcast of the first quarter conference call will also be available at:
https://www.mapleleaffoods.com/investors/events/
The Company's full unaudited condensed consolidated interim financial statements and related Management's Discussion and Analysis are available on the Company's website.
2020 Outlook
Maple Leaf Foods provided its expectations for 2020 prior to COVID-19 being declared a global pandemic, and the resulting responses from health officials and governments globally. By providing nutrition to people nationally and internationally, the Company has been designated an essential service. This responsibility does mitigate some of the more dramatic financial and operational impacts experienced in many other industries, however the current environment does increase operating costs, and creates the potential for short-term processing shut downs required to protect the health and safety of plant personnel.
In the second quarter of 2020, Maple Leaf Foods expects:
Maple Leaf's expectations for the financial performance of its business in 2020 remain largely unchanged, but there are several factors that could have an impact on its business, which it cannot estimate or control due to the COVID-19 pandemic, including:
Notwithstanding the potential unknown impacts of COVID-19, including incremental operating costs or disruption in the commodity markets, for 2020, the Company expects to achieve the following:
Meat Protein Group - Profitable Growth
Plant Protein Group - Investing for Growth
Capital
In addition to financial and operational priorities, Maple Leaf Foods believes that shared value and operating its business for the benefit of all stakeholders is crucial. The Company's guiding pillars to be the "Most Sustainable Protein Company on Earth" include Better Food, Better Care, Better Communities, Better Planet and are core to how Maple Leaf Foods conducts itself. To that end, the Company's priorities include:
COVID-19 Update
As an essential service, Maple Leaf Foods is focused on protecting the health and well-being of its people, maintaining business continuity, and broadening its social outreach. To manage through this unprecedented environment, the Company has taken a number of measures in its business and operating practices that include heightened safety policies and procedures, and close communication and collaboration with public health authorities. These measures have the effect of increasing the Company's cost structure in the short-term due to higher labour, personal protective equipment, sanitation and other expenses associated with the pandemic.
The health and safety of our people is paramount while ensuring the security of our food supply. To date, Maple Leaf Foods has seen some short-term interruption to a small portion of its overall production, and expects some operational disruptions will continue to occur. Overall, the Company believes its proactive and comprehensive efforts should mitigate operational impacts. As the COVID-19 situation evolves, Maple Leaf Foods will continue to adapt and adopt best practices that prioritize the health and safety of its employees and the stability of the food supply.
As part of Maple Leaf Foods' broader social responsibility, the Company has provided extensive support to front-line staff, emergency food relief efforts and health care providers. This includes a weekly bonus for its front-line team members, an incremental investment of over $1.0 million to support emergency food relief efforts, and a $2.5 million donation to launch a new fund to provide personal support to front line health care providers during the pandemic.
While the short-term impact of COVID-19 may be dynamic, Maple Leaf Foods' purpose and long-term strategy remain unchanged.
Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Construction Capital, Net Debt, Free Cash Flow and Return on Net Assets. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures used by Management to evaluate financial operating results. Adjusted Operating Earnings is defined as earnings before income taxes adjusted for items that are not considered representative of ongoing operational activities of the business and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Adjusted EBITDA is defined as Adjusted Operating Earnings plus depreciation and intangible asset amortization, adjusted for items included in other expense that are not considered representative of ongoing operational activities of the business. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by sales.
The table below provides a reconciliation of earnings (loss) before income taxes as reported under IFRS in the consolidated financial statements to Adjusted Operating Earnings and Adjusted EBITDA for the three months ended March 31, as indicated below. Management believes that these non-IFRS measures are useful in assessing the performance of the Company's ongoing operations and its ability to generate cash flows to fund its cash requirements, including the Company's capital investment program.
Three months ended March 31, 2020 | Three months ended March 31, 2019(ii) | |||||||||||
($ millions)(i) | Meat | Plant | Non- | Total | Meat | Plant | Non- | Total | ||||
Earnings (loss) before income taxes | $ | 68.2 | (24.1) | (47.2) | $ | (3.0) | $ | 42.3 | (3.3) | 29.9 | $ | 68.8 |
Interest expense and other financing costs | — | — | 7.9 | 7.9 | — | — | 7.4 | 7.4 | ||||
Other expense | 1.2 | — | 2.6 | 3.8 | 0.3 | — | 1.8 | 2.2 | ||||
Restructuring and other related costs | (0.2) | — | — | (0.2) | 2.8 | — | — | 2.8 | ||||
Earnings (loss) from operations | $ | 69.2 | (24.1) | (36.7) | $ | 8.5 | $ | 45.4 | (3.3) | 39.2 | $ | 81.3 |
Decrease (increase) in fair value of biological assets(iv) | — | — | 14.7 | 14.7 | — | — | (26.3) | (26.3) | ||||
Unrealized loss (gain) on derivative contracts(v) | — | — | 22.0 | 22.0 | — | — | (12.9) | (12.9) | ||||
Adjusted Operating Earnings | $ | 69.2 | (24.1) | — | $ | 45.1 | $ | 45.4 | (3.3) | — | $ | 42.1 |
Depreciation and amortization | 43.0 | 3.5 | — | 46.6 | 39.7 | 2.9 | — | 42.6 | ||||
Items included in other expense representative of | ||||||||||||
ongoing operations | (1.2) | — | — | (1.2) | (0.3) | — | — | (0.3) | ||||
Adjusted EBITDA | $ | 111.1 | (20.5) | — | $ | 90.5 | $ | 84.8 | (0.4) | — | $ | 84.4 |
Adjusted EBITDA margin | 11.3% | (44.3)% | N/A | 8.9% | 9.7% | (1.1)% | N/A | 9.3% |
(i) | Totals may not add due to rounding. |
(ii) | Comparative figures have been presented to align with current reportable segments. |
(iii) | Non-Allocated includes eliminations of inter-segment sales and associated cost of goods sold, and non-allocated costs which are comprised of expenses not separately identifiable to reportable segments and are not part of the measures used by the Company when assessing a segment's operating results. |
(iv) | Refer to Note 5 of the Company's 2020 first quarter consolidated financial statements for further details regarding biological assets. |
(v) | Unrealized gains/losses on derivative contracts are reported within cost of goods sold in the Company's 2020 first quarter consolidated financial statements. |
Adjusted Earnings per Share
Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as basic earnings per share and is adjusted on the same basis as Adjusted Operating Earnings. The table below provides a reconciliation of basic earnings per share as reported under IFRS in the consolidated financial statements to Adjusted Earnings per Share for the three months ended March 31, as indicated below. Management believes this basis is the most appropriate on which to evaluate financial results as they are representative of the ongoing operations of the Company.
($ per share) | Three months ended March 31, | |||
2020 | 2019 | |||
Basic (loss) earnings per share | $ | (0.03) | $ | 0.41 |
Restructuring and other related costs(i) | — | 0.02 | ||
Items included in other expense not considered representative of ongoing operations(ii) | 0.02 | 0.01 | ||
Change in fair value of biological assets(iii) | 0.09 | (0.16) | ||
Unrealized loss (gain) on derivative contracts(iii) | 0.13 | (0.08) | ||
Adjusted Earnings per Share | $ | 0.21 | $ | 0.20 |
(i) | Includes per share impact of restructuring and other related costs, net of tax. |
(ii) | Primarily includes (gains) and losses on disposal of investment properties, acquisition related costs and interest income, net of tax. |
(iii) | Includes per share impact of the change in unrealized loss (gain) on derivative contracts and the change in fair value of biological assets, net of tax. |
Construction Capital
Construction Capital, a non-IFRS measure, is used by Management to evaluate the amount of capital resources invested in specific strategic development projects that have not yet entered commercial production. It is defined as investments in projects over $50.0 million that are related to longer-term strategic initiatives, with no returns expected for at least 12 months in the future and the asset will be re-categorized from Construction Capital once operational. Current strategic initiatives primarily include the investments in the London, Ontario poultry production facility, and the plant protein production facility in Shelbyville, Indiana. The following table is a summary of Construction Capital activity and debt financing for the periods indicated below.
($ thousands) (Unaudited) | Three months ended March 31, | |||||||
2020 | 2019 | |||||||
Opening balance at January 1 | $ | 105,211 | $ | 22,422 | ||||
Additions | 56,926 | 18,100 | ||||||
Balance at March 31 | $ | 162,137 | $ | 40,522 | ||||
Construction Capital debt financing(i) | $ | 162,137 | $ | 40,522 |
(i) | Assumed to be fully funded by debt to the extent that the Company has Net Debt outstanding. |
Net Debt
The following table reconciles Net Debt to amounts reported under IFRS in the Company's consolidated financial statements as at March 31, as indicated below. The Company calculates Net Debt as cash and cash equivalents, less long-term debt and bank indebtedness. Management believes this measure is useful in assessing the amount of financial leverage employed.
($ thousands) | As at March 31, | |||
(Unaudited) | 2020 | 2019 | ||
Cash and cash equivalents | $ | 86,298 | $ | 82,295 |
Current portion of long-term debt | $ | (912) | $ | (170,408) |
Long-term debt | (726,002) | (296,262) | ||
Total debt | $ | (726,914) | $ | (466,670) |
Net Debt | $ | (640,616) | $ | (384,375) |
Free Cash Flow
Free Cash Flow, a non-IFRS measure, is used by Management to evaluate cash flow after investing in the maintenance or expansion of the Company's asset base. It is defined as cash provided by operations, less additions to long-term assets. The following table calculates Free Cash Flow for the periods indicated below:
($ thousands) | Three months ended March 31, | |||||||
2020 | 2019 | |||||||
Cash (used in) provided by operating activities | $ | (45,797) | $ | 18,576 | ||||
Additions to long-term assets | (86,292) | (59,997) | ||||||
Free Cash Flow | $ | (132,089) | $ | (41,421) |
Return on Net Assets
RONA is calculated by dividing tax effected earnings from operations (adjusted for items which are not considered representative of the underlying operations of the business) by average monthly net assets. Net assets are defined as total assets (excluding cash and deferred tax assets) less non-interest bearing liabilities (excluding deferred tax liabilities). Management believes that RONA is an appropriate basis upon which to evaluate long-term financial performance.
Forward-Looking Statements
This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities law. These statements are based on current expectations, estimates, projections, beliefs, judgments and assumptions based on information available at the time the applicable forward-looking statement was made and in light of the Company's experience combined with its perception of historical trends. Such statements include, but are not limited to, statements with respect to objectives and goals, in addition to statements with respect to beliefs, plans, targets, goals, objectives, expectations, anticipations, estimates, and intentions. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "could", "would", "believe", "plan", "intend", "design", "target", "undertake", "view", "indicate", "maintain", "explore", "entail", "schedule", "objective", "strategy", "likely", "potential", "outlook", "aim", "propose", "goal", and similar expressions suggesting future events or future performance. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Specific forward-looking information in this document may include, but is not limited to, statements with respect to:
Various factors or assumptions are typically applied by the Company in drawing conclusions or making the forecasts, projections, predictions or estimations set out in the forward-looking statements. These factors and assumptions are based on information currently available to the Company, including information obtained by the Company from third-party sources, and include but are not limited to the following:
Readers are cautioned that these assumptions may prove to be incorrect in whole or in part. The Company's actual results may differ materially from those anticipated in any forward-looking statements.
Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or projected in the forward-looking statements contained in this document include, among other things, risks associated with the following:
The Company cautions readers that the foregoing list of factors is not exhaustive.
Readers are further cautioned that some of the forward-looking information, such as statements concerning future capital expenditures, Adjusted EBITDA margin growth in the Meat Protein Group, expected sales and growth margin targets in the Plant Protein Group and SG&A spend, may be considered to be financial outlooks for purposes of applicable securities legislation. These financial outlooks are presented to evaluate potential future earnings and anticipated future uses of cash flows, and may not be appropriate for other purposes. Readers should not assume these financial outlooks will be achieved.
More information about risk factors can be found under the heading "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2019, that is available on SEDAR at www.sedar.com. The reader should review such section in detail. Additional information concerning the Company, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.
All forward-looking statements included herein speak only as of the date hereof. Unless required by law, the Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained herein are expressly qualified by this cautionary statement.
About Maple Leaf Foods Inc.
Maple Leaf Foods is a producer of food products under leading brands including Maple Leaf®, Maple Leaf Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®, Swift®, Lightlife®, and Field Roast Grain Meat Co.™ The Company employs approximately 13,000 people and does business primarily in Canada, the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI).
Consolidated Interim Balance Sheets
(In thousands of Canadian dollars) | As at March 31, | As at March 31, 2019(i) | As at December 31, 2019(i) | ||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 86,298 | $ | 82,295 | $ | 97,285 | |
Accounts receivable | 173,064 | 155,321 | 154,969 | ||||
Notes receivable | 52,463 | 30,950 | 31,699 | ||||
Inventories | 414,095 | 388,800 | 385,534 | ||||
Biological assets | 104,866 | 139,103 | 119,016 | ||||
Prepaid expenses and other assets | 58,068 | 49,698 | 51,494 | ||||
Assets held for sale | 31,036 | — | 34,293 | ||||
$ | 919,890 | $ | 846,167 | $ | 874,290 | ||
Property and equipment | 1,451,025 | 1,294,949 | 1,386,482 | ||||
Right-of-use assets | 245,509 | 232,971 | 227,426 | ||||
Investments | 17,300 | 3,101 | 3,448 | ||||
Other long-term assets | 10,564 | 11,205 | 12,497 | ||||
Goodwill | 669,442 | 661,435 | 657,179 | ||||
Intangible assets | 361,334 | 385,569 | 352,713 | ||||
Total assets | $ | 3,675,064 | $ | 3,435,397 | $ | 3,514,035 | |
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable and accruals | $ | 419,314 | $ | 356,049 | $ | 445,774 | |
Current portion of provisions | 4,413 | 2,403 | 3,973 | ||||
Current portion of long-term debt | 912 | 170,408 | 899 | ||||
Current portion of lease obligations | 42,717 | 38,980 | 39,505 | ||||
Income taxes payable | — | 19,225 | 205 | ||||
Other current liabilities | 52,980 | 20,082 | 44,698 | ||||
$ | 520,336 | $ | 607,147 | $ | 535,054 | ||
Long-term debt | 726,002 | 296,262 | 538,429 | ||||
Lease obligations | 219,880 | 208,321 | 204,013 | ||||
Employee benefits | 128,676 | 134,821 | 116,742 | ||||
Provisions | 42,674 | 47,452 | 44,929 | ||||
Other long-term liabilities | 18,153 | 2,056 | 3,026 | ||||
Deferred tax liability | 102,987 | 123,600 | 121,972 | ||||
Total liabilities | $ | 1,758,708 | $ | 1,419,659 | $ | 1,564,165 | |
Shareholders' equity | |||||||
Share capital | $ | 844,161 | $ | 849,655 | $ | 840,005 | |
Retained earnings | 1,106,952 | 1,183,042 | 1,137,450 | ||||
Contributed surplus | 8,778 | 11,079 | — | ||||
Accumulated other comprehensive (loss) income | (13,157) | 1,348 | 2,793 | ||||
Treasury stock | (30,378) | (29,386) | (30,378) | ||||
Total shareholders' equity | $ | 1,916,356 | $ | 2,015,738 | $ | 1,949,870 | |
Total liabilities and equity | $ | 3,675,064 | $ | 3,435,397 | $ | 3,514,035 |
(i) | Certain comparative figures have been restated to conform with current year presentation. |
Consolidated Interim Statements of Net Earnings
Three months ended | |||||
(In thousands of Canadian dollars, except share amounts) | |||||
(Unaudited) | 2020 | 2019 | |||
Sales | $ | 1,022,767 | $ | 907,090 | |
Cost of goods sold | 895,408 | 727,569 | |||
Gross profit | $ | 127,359 | $ | 179,521 | |
Selling, general and administrative expenses | 118,901 | 98,254 | |||
Earnings before the following: | $ | 8,458 | $ | 81,267 | |
Restructuring and other related (reversals) costs | (169) | 2,820 | |||
Other expense | 3,769 | 2,077 | |||
Earnings before interest and income taxes | $ | 4,858 | $ | 76,370 | |
Interest expense and other financing costs | 7,892 | 7,433 | |||
(Loss) earnings before income taxes | $ | (3,034) | $ | 68,937 | |
Income tax expense | 678 | 18,833 | |||
Net (loss) earnings | $ | (3,712) | $ | 50,104 | |
(Loss) earnings per share attributable to common shareholders: | |||||
Basic (loss) earnings per share | $ | (0.03) | $ | 0.41 | |
Diluted (loss) earnings per share | $ | (0.03) | $ | 0.40 | |
Weighted average number of shares (millions) | |||||
Basic | 123.0 | 123.5 | |||
Diluted | 123.0 | 125.4 |
Consolidated Interim Statements of Other Comprehensive Income (Loss)
(In thousands of Canadian dollars) | Three months ended March 31, | ||||||
(Unaudited) | 2020 | 2019 | |||||
Net (loss) earnings | $ | (3,712) | $ | 50,104 | |||
Other comprehensive loss | |||||||
Actuarial losses that will not be reclassified to profit or loss (Net of tax of | |||||||
$2.5 million; 2019: $9.3 million) | $ | (7,220) | $ | (26,382) | |||
Items that are or may be reclassified subsequently to profit or loss: | |||||||
Change in accumulated foreign currency translation adjustment (Net of tax of $0.0 | |||||||
million; 2019: $0.0 million) | $ | 21,600 | $ | (8,160) | |||
Change in foreign exchange on long-term debt designated as a net investment | |||||||
hedge (Net of tax of $3.5 million; 2019: $1.0 million) | (19,119) | 5,184 | |||||
Change in unrealized (losses) and gains on cash flow hedges (Net of tax of $6.5 | |||||||
million; 2019: $0.3 million) | (18,431) | 792 | |||||
Total items that are or may be reclassified subsequently to profit or loss | $ | (15,950) | $ | (2,184) | |||
Total other comprehensive loss | $ | (23,170) | $ | (28,566) | |||
Comprehensive (loss) income | $ | (26,882) | $ | 21,538 |
Consolidated Interim Statements of Changes in Total Equity
Accumulated other | ||||||||||
(In thousands of Canadian dollars) | Share | Retained | Contributed |
translation adjustment | Unrealized | Treasury | Total | |||
Balance at December 31, 2019 | $ | 840,005 | 1,137,450 | — | 4,274 | (1,481) | (30,378) | $ | 1,949,870 | |
Net loss | — | (3,712) | — | — | — | — | (3,712) | |||
Other comprehensive income (loss)(ii) | — | (7,220) | — | 2,481 | (18,431) | — | (23,170) | |||
Dividends declared ($0.16 per share) | — | (19,566) | — | — | — | — | (19,566) | |||
Share-based compensation expense | — | — | 3,866 | — | — | — | 3,866 | |||
Repurchase of shares | 4,156 | — | 4,912 | — | — | — | 9,068 | |||
Balance at March 31, 2020 | $ | 844,161 | 1,106,952 | 8,778 | 6,755 | (19,912) | (30,378) | $ | 1,916,356 | |
Accumulated other | ||||||||||
(In thousands of Canadian dollars) | Share | Retained | Contributed |
| Unrealized | Treasury | Total | |||
Balance at December 31, 2018 | $ | 849,655 | 1,178,389 | 4,649 | 8,518 | (4,986) | (29,386) | $ | 2,006,839 | |
Impact of new IFRS standards | — | (1,100) | — | — | — | — | (1,100) | |||
Net earnings | — | 50,104 | — | — | — | — | 50,104 | |||
Other comprehensive income (loss)(ii) | — | (26,382) | — | (2,976) | 792 | — | (28,566) | |||
Dividends declared ($0.145 per share) | — | (17,969) | — | — | — | — | (17,969) | |||
Share-based compensation expense | — | — | 5,150 | — | — | — | 5,150 | |||
Deferred taxes on share-based compensation | — | — | 1,300 | — | — | — | 1,300 | |||
Settlement of share-based compensation | — | — | (20) | — | — | — | (20) | |||
Balance at March 31, 2019 | $ | 849,655 | 1,183,042 | 11,079 | 5,542 | (4,194) | (29,386) | $ | 2,015,738 |
(i) | Items that are or may be subsequently reclassified to profit or loss. |
(ii) | Included in other comprehensive income (loss) is the change in actuarial gains and losses that will not be reclassified to profit or loss and has been reclassified to retained earnings. |
Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars) | Three months ended | |||
(Unaudited) | 2020 | 2019(i) | ||
CASH PROVIDED BY (USED IN): | ||||
Operating activities | ||||
Net (loss) earnings | $ | (3,712) | $ | 50,104 |
Add (deduct) items not affecting cash: | ||||
Change in fair value of biological assets | 14,659 | (26,263) | ||
Depreciation and amortization | 46,557 | 42,620 | ||
Share-based compensation | 3,866 | 5,150 | ||
Deferred income taxes | (7,517) | 5,906 | ||
Income tax current | 8,195 | 12,927 | ||
Interest expense and other financing costs | 7,892 | 7,433 | ||
Loss on sale of long-term assets | 336 | 194 | ||
Change in fair value of non-designated derivatives | 22,740 | (14,620) | ||
Interest on lease liability | 2,143 | 2,235 | ||
Change in net pension liability | 2,244 | 529 | ||
Net income taxes paid | (8,344) | (25,869) | ||
Interest paid | (9,699) | (8,968) | ||
Change in provision for restructuring and other related costs | (1,130) | 2,176 | ||
Change in derivatives margin | (23,957) | 7,588 | ||
Other | 1,150 | 244 | ||
Change in non-cash operating working capital | (101,220) | (42,810) | ||
Cash (used in) provided by operating activities | $ | (45,797) | $ | 18,576 |
Financing activities | ||||
Dividends paid | $ | (19,566) | $ | (17,969) |
Net increase in long-term debt | 164,861 | 89,861 | ||
Payment of lease obligation | (9,109) | (8,341) | ||
Payment of financing fees | (37) | (43) | ||
Cash provided by financing activities | $ | 136,149 | $ | 63,508 |
Investing activities | ||||
Additions to long-term assets | $ | (86,292) | $ | (59,997) |
Acquisition of business, net of cash acquired | — | (847) | ||
Capitalization of interest expense | (1,195) | (138) | ||
Purchase of investments | (13,852) | — | ||
Payment of income tax liabilities assumed on acquisition | — | (11,385) | ||
Cash used in investing activities | $ | (101,339) | $ | (72,367) |
(Decrease) increase in cash and cash equivalents | $ | (10,987) | $ | 9,717 |
Cash and cash equivalents, beginning of period | 97,285 | 72,578 | ||
Cash and cash equivalents, end of period | $ | 86,298 | $ | 82,295 |
(i) | Certain comparative figures have been restated to conform with current year presentation. |
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SOURCE Maple Leaf Foods Inc.