Canada Bread Reports Third Quarter 2009 Financial Results
- Press Release
- Source: Canada Bread Company, Limited
- On 8:55 am EDT, Wednesday October 28, 2009
TORONTO, Oct. 28 /CNW/ - Canada Bread Company, Limited (TSX: CBY - News) today reported its financial results for the third quarter ended September 30, 2009.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| CBY.TO | 50.49 | -0.01 |
- Net earnings per share increased to $0.99 compared to $0.77 last year
- Adjusted Operating Earnings increased to $36.9 million from
$31.9 million
- Sales declined to $424.6 million from $443.1 million last year
Note: Adjusted Operating Earnings are defined as earnings from operations
before restructuring and other related costs and other income (expense).
Adjusted Earnings per Share ("Adjusted EPS") are defined as basic
earnings per share adjusted for the impact of restructuring and other
related costs, net of tax.
"Our organization has achieved steady earnings growth despite challenging
global economic conditions," said Richard Lan, President and CEO. "We are
steadfastly focused on growing sales through deepening our relationships with
customers, delivering more product innovation to appeal to consumers, and
developing lots of excitement and momentum internally around our market wins
and opportunities ahead."Financial Overview ------------------Sales for the third quarter decreased by 4.2% to $424.6 million compared to $443.1 million last year due to lower volumes and a moderate change in mix from specialty to staple products primarily in the U.K.
Adjusted Operating Earnings increased 15.9% to $36.9 million compared to $31.9 million last year, while net earnings increased 27.0% to $25.1 million compared to $19.7 million last year.
The following is a summary of Adjusted Earnings per Share: << ------------------------------------------------------------------------- Third Quarter Year-to-Date Per share 2009 2008 2009 2008 ------------------------------------------------------------------------- EPS $0.99 $0.77 $2.46 $1.51 Restructuring and other related costs(i) 0.02 $0.16 $0.04 $0.23 ------------------------------------------------------------------------- Adjusted EPS(ii) $1.00 $0.93 $2.50 $1.75 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (i) Includes impact of restructuring and other related costs, net of tax. (ii) Does not add due to rounding. Business Segment Review ----------------------- Following is a summary of Adjusted Operating Earnings by business segment: ------------------------------------------------------------------------- ($ thousands) Third Quarter Year-to-Date 2009 2008 2009 2008 ------------------------------------------------------------------------- Fresh Bakery $33,260 25,985 $71,457 51,131 Frozen Bakery 3,655 5,874 19,949 12,670 ------------------------------------------------------------------------- Adjusted Operating Earnings $36,915 31,859 $91,406 63,801 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> Fresh Bakery (Fresh bakery products, sweet goods, sandwiches, and specialty fresh pasta and sauces)Fresh Bakery sales in the third quarter declined by 1.0% to $287.3 million, from $290.2 million last year, mainly due to lower sales of fresh sandwiches. Sales of fresh bakery products were largely consistent with the third quarter of 2008.
Adjusted Operating Earnings increased to $33.3 million in the third quarter compared to $26.0 million last year. The fresh bakery and pasta operations realized improved margins as a result of lower commodity prices, although the benefit was partly mitigated by a weaker Canadian dollar, which increased the cost of U.S. dollar priced flour and other ingredients. Earnings from the fresh sandwich business, which includes the 2008 Aliment Martel acquisition, have not met expectations. Management considers the business to be an important part of its growth strategy and is actively working on initiatives to improve its market share and profitability.
Fresh Bakery launched several exciting new innovative products in the quarter aimed at supporting margin and category expansion. Dempster's(R) OvenFresh(TM) is a line of fresh, long life white and multigrain baguettes and dinner rolls that finish baking at home in minutes. Under a licensing agreement, the Company has also launched Cadbury(TM) Snack Cakes in Eastern Canada, an exciting new addition to its sweet goods offerings in the region.
Frozen Bakery (North American and U.K. frozen bakery products; including frozen par-baked and specialty bakery products)Frozen Bakery sales decreased by 10.2% to $137.3 million from $152.9 million in the same period last year due to lower volumes and an unfavourable shift in mix from specialty to staple products primarily in the U.K. As the U.K. economy continues to be impacted by the global economic downturn, Management remains focused on initiatives to sustain sales volumes and expand product offerings that deliver value at reasonable prices.
Adjusted Operating Earnings in the quarter decreased to $3.7 million compared to $5.9 million last year. Earnings from the U.K. bakery operations declined in the quarter due to the continued effects of the recession on sales of premium specialty bakery products and also as a result of higher manufacturing overheads. North American frozen bakery operations benefited from lower commodity costs.
Other Income (Expense) ----------------------Other expense was $0.1 million in the quarter compared to other income of $4.8 million last year. Year-to-date other income was $2.4 million (2008: $6.4 million). Year-to-date and 2008 other income were primarily comprised of insurance proceeds received to cover business interruption losses resulting from the oven fire at the U.K. bakery in 2008.
Other Matters -------------On October 27, 2009, Canada Bread Company, Limited declared a dividend of $0.06 per share payable on January 4, 2010 to shareholders of record at the close of business on December 8, 2009. Unless indicated otherwise, by the Company, in writing at or before the time the dividend is paid, these dividends will not be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System".
Forward-Looking Statements --------------------------This document contains, and the Company's oral and written public communications often contain, forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates and beliefs and assumptions made by the Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, expectations regarding earnings potential in the fresh sandwich business, as well as statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Words such as "expect," "anticipate," "intend," "attempt," "may," "will," "plan," "believe," "seek," "estimate," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.
In particular, these forward-looking statements are based on expectations concerning performance of the Company's business in general, and are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, United States and United Kingdom economies; the rate of exchange of the Canadian dollar to the U.S. dollar; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments and the general assumption that none of the risks identified under the "Risk Factors" in the Company's Annual Management's Discussion and Analysis will materialize. All of these assumptions have been derived from information currently available to the Company including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied or forecasted in such forward-looking statements, which reflect the Company's expectations only as of the date hereof.
Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking statements are discussed more fully under the heading "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2008 and updated in each quarterly Management's Discussion and Analysis that are available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking statements, whether written or oral, or whether as a result of new information, future events or otherwise except as required by law.
Canada Bread Company Limited, which is 89.8% owned by Maple Leaf Foods Inc., is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces. The Company had 2008 sales of $1.7 billion and employs approximately 8,500 people at its operations across North America and in the United Kingdom.
Consolidated Financial Statements (Expressed in Canadian dollars) CANADA BREAD COMPANY, LIMITED Three and nine months ended September 30, 2009 and 2008 CANADA BREAD COMPANY, LIMITED Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- As at As at As at September 30, September 30, December 31, 2009 2008 2008 ------------------------------------------------------------------------- (Unaudited) (Unaudited) ASSETS Current assets Cash and cash equivalents $ 24,549 $ 20,328 $ 11,721 Accounts receivable 70,879 76,108 57,079 Inventories 58,266 58,451 58,696 Future tax asset 4,878 18,719 5,388 Prepaid expenses and other receivables 7,065 13,039 12,977 ----------------------------------------------------------------------- $ 165,637 $ 186,645 $ 145,861 Property and equipment 392,695 408,160 417,150 Other long-term assets 10,616 9,815 9,964 Goodwill 392,456 395,181 404,484 Other intangible assets 18,775 18,331 17,451 ------------------------------------------------------------------------- $ 980,179 $ 1,018,132 $ 994,910 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank indebtedness $ 4,357 $ 9,521 $ 8,894 Accounts payable and accrued charges 169,361 185,670 207,928 Due to Maple Leaf Foods Inc. 4,971 3,960 - Dividends payable 1,525 1,525 1,525 Income and other taxes payable 13,610 18,560 10,860 Current portion of long-term debt - 50 41 ----------------------------------------------------------------------- $ 193,824 $ 219,286 $ 229,248 Long-term debt - 78,453 4,477 Future tax liability 34,079 35,867 36,043 Other long-term liabilities 8,639 13,918 16,802 Shareholders' equity 743,637 670,608 708,340 ------------------------------------------------------------------------- $ 980,179 $ 1,018,132 $ 994,910 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Sales $ 424,555 $ 443,086 $ 1,273,598 $ 1,263,373 Cost of goods sold 335,413 363,501 1,023,257 1,054,553 ------------------------------------------------------------------------- Gross margin $ 89,142 $ 79,585 $ 250,341 $ 208,820 Selling, general and administrative expenses 52,227 47,726 158,935 145,019 ------------------------------------------------------------------------- Earnings from operations before the following: $ 36,915 $ 31,859 $ 91,406 $ 63,801 Restructuring and other related costs (597) (5,718) (1,271) (8,410) Other income (expense) (113) 4,797 2,429 6,372 ------------------------------------------------------------------------- Earnings before interest and income taxes $ 36,205 $ 30,938 $ 92,564 $ 61,763 Interest expense 673 2,147 3,980 5,982 ------------------------------------------------------------------------- Earnings before income taxes $ 35,532 $ 28,791 $ 88,584 $ 55,781 Income taxes 10,482 9,064 26,115 17,305 ------------------------------------------------------------------------- Net earnings $ 25,050 $ 19,727 $ 62,469 $ 38,476 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share - basic and diluted $ 0.99 $ 0.77 $ 2.46 $ 1.51 Weighted average number of shares (millions) 25.4 25.4 25.4 25.4 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Comprehensive Income (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net earnings $ 25,050 $ 19,727 $ 62,469 $ 38,476 Other comprehensive income (loss) (23,530) (7,571) (22,610) 1,664 ------------------------------------------------------------------------- Comprehensive income $ 1,520 $ 12,156 $ 39,859 $ 40,140 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Retained Earnings (In thousands of Canadian dollars, except per share amounts) ------------------------------------------------------------------------- Nine months ended September 30, (Unaudited) 2009 2008 ------------------------------------------------------------------------- Retained earnings, beginning of period $ 587,163 $ 528,327 Net earnings 62,469 38,476 Dividends declared ($0.18 per share; 2008: $0.18 per share) (4,575) (4,575) ------------------------------------------------------------------------- Retained earnings, end of period $ 645,057 $ 562,228 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- CASH PROVIDED BY (USED IN): Operating activities Net earnings $ 25,050 $ 19,727 $ 62,469 $ 38,476 Add (deduct) items not affecting cash: Depreciation and amortization 13,551 14,012 41,706 41,014 Future income taxes (1,303) 1,817 (2,099) 1,394 Loss (gain) on sale of property and equipment 131 (34) 461 139 Asset impairments and change in provision for restructuring and other related costs 367 4,987 (607) 6,904 Amortization of terminated interest rate swap 672 - 1,317 - Other (562) (218) (2,593) 1,087 Change in non-cash operating working capital (6,722) 1,154 (34,810) (33,752) ------------------------------------------------------------------------- Cash provided by operating activities $ 31,184 $ 41,445 $ 65,844 $ 55,262 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financing activities Dividends paid (1,525) (1,525) (4,575) (4,575) Net decrease in long-term debt (15,038) (11,768) (4,518) (29,145) Settlement of cross- currency interest rate swap with Maple Leaf Foods Inc. - - (8,502) 80,586 ------------------------------------------------------------------------- Cash provided by (used in) financing activities $ (16,563) $ (13,293) $ (17,595) $ 46,866 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Investing activities Additions to property and equipment (6,081) (14,155) (30,447) (40,025) Proceeds from sale of property and equipment 46 86 515 618 Acquisition of business, - net of cash acquired - (1,275) - (44,819) Other (7) (58) (952) (97) ------------------------------------------------------------------------- Cash used in investing activities $ (6,042) $ (15,402) $ (30,884) $ (84,323) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Increase in cash and cash equivalents 8,579 12,750 17,365 17,805 Net cash and cash equivalents, beginning of period 11,613 (1,943) 2,827 (6,998) ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 20,192 $ 10,807 $ 20,192 $ 10,807 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Segmented Financial Information (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Sales Fresh Bakery $ 287,285 $ 290,196 $ 840,546 $ 815,058 Frozen Bakery 137,270 152,890 433,052 448,315 ------------------------------------------------------------------------- $ 424,555 $ 443,086 $ 1,273,598 $ 1,263,373 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings from operations before restructuring and other related costs and other income (expense) Fresh Bakery $ 33,260 $ 25,985 $ 71,457 $ 51,131 Frozen Bakery 3,655 5,874 19,949 12,670 ------------------------------------------------------------------------- $ 36,915 $ 31,859 $ 91,406 $ 63,801 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Additions to property and equipment Fresh Bakery $ 4,246 $ 5,912 $ 15,677 $ 17,085 Frozen Bakery 1,835 8,243 14,770 22,940 ------------------------------------------------------------------------- $ 6,081 $ 14,155 $ 30,447 $ 40,025 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Fresh Bakery $ 6,757 $ 7,122 $ 20,816 $ 20,975 Frozen Bakery 6,794 6,890 20,890 20,039 ------------------------------------------------------------------------- $ 13,551 $ 14,012 $ 41,706 $ 41,014 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at As at September 30, September 30, December 31, 2009 2008 2008 ------------------------------------------------------------------------- (Unaudited) (Unaudited) Total assets Fresh Bakery $ 447,100 $ 459,396 $ 440,733 Frozen Bakery 493,270 507,191 523,843 Non-allocated assets 39,809 51,545 30,334 ------------------------------------------------------------------------- $ 980,179 $ 1,018,132 $ 994,910 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Goodwill Fresh Bakery $ 155,949 $ 156,691 $ 156,268 Frozen Bakery 236,507 238,490 248,216 ------------------------------------------------------------------------- $ 392,456 $ 395,181 $ 404,484 ------------------------------------------------------------------------- -------------------------------------------------------------------------
For further information
Lynda Kuhn, Senior Vice-President, Communications & Consumer Relations, (416) 926-2026, www.canadabread.ca
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