Andrew Peller Limited Reports Solid Results in Third Quarter Fiscal
2014
GRIMSBY, ONTARIO--(Marketwired - Feb 12, 2014) -
This news
release contains forward-looking information that is based upon
assumptions and is subject to risks and uncertainties as indicated
in the cautionary note contained elsewhere in this news
release.
Andrew Peller
Limited (TSX:ADW.A)(TSX:ADW.B) ("APL" or the "Company") announced
today its results for the three and nine months ended December 31,
2013.
FISCAL 2014
HIGHLIGHTS:
- Continued sales growth across majority of trade channels
primarily in our premium wine portfolio
- Gross margins impacted by intense price competition and
increased raw material costs
- Selling and administrative expenses decrease due to
restructuring initiative that began in Q4 of fiscal 2013
- High quality vintage 2013 grape crop largest in Company's
history
- Cash flow from operating activities rises to $19.1 million
through first nine months of year
- 11% increase in common share dividends announced in June
2013
"We were pleased
with our performance through the busy holiday season as we
generated solid sales growth in the majority of our established
trade channels. We look for this growth to continue through the
balance of the year," commented John Peller, President and CEO. "We
are also seeing the benefits of a number of programs implemented to
reduce costs and enhance efficiencies which we expect to result in
increased profitability in the coming years."
Sales for the three
months ended December 31, 2013 rose 2.6% to $81.9 million. The
third quarter is historically the strongest of the year due to
increased consumer purchases of the Company's products during the
holiday season. For the first nine months of fiscal 2014 sales
increased 2.8% to $231.8 million.
Gross margin was
36.0% of sales in the third quarter of fiscal 2014 compared to
38.6% in the same period last year. For the nine months ended
December 31, 2013 gross margin was 36.8% of sales compared to 38.6%
in the same prior year period. Gross margins in fiscal 2014 have
been affected by continued price competition in certain Western
Canadian markets, higher costs for wine and juice purchased on
international markets, and increased costs to expedite production
to meet higher than anticipated demand for certain products during
the third quarter. The decrease in gross margin was partially
offset by successful cost control initiatives to reduce
distribution, operating, and packaging expenses. A special levy
implemented by the Ontario government on July 1, 2010 served to
reduce sales and gross margin by approximately $1.5 million in the
first nine months of fiscal 2014 and fiscal 2013.
Selling and
administrative expenses declined in the first nine months of fiscal
2014 due to the ongoing restructuring that began in the fourth
quarter of fiscal 2013 in the Company's personal winemaking
division. As a percentage of sales, selling and administrative
expenses for the nine months ended December 31, 2013 improved to
23.9% from 25.1% last year.
Earnings before
interest, amortization, unrealized derivative gains (losses), other
expenses, and income taxes ("EBITA") were $11.4 million and $30.1
million for the three and nine months ended December 31, 2013
compared to $11.9 million and $30.4 million for the same periods in
fiscal 2013.
Interest expense
declined in fiscal 2014 due to lower debt levels resulting from
improved management of working capital.
Through the first
nine months of fiscal 2014 the Company incurred restructuring
charges of $0.4 million in the personal winemaking division related
to ongoing cost savings initiatives to outsource distribution and
reduce marketing and administrative expenses.
The Company recorded
a non-cash gain in the first nine months of fiscal 2014 related to
mark-to-market adjustments on an interest rate swap and foreign
exchange contracts aggregating approximately $0.5 million compared
to a non-cash gain of $1.1 million in the prior year. The Company
has elected not to apply hedge accounting and accordingly these
financial instruments are reflected in the Company's financial
statements at fair value each reporting period. These instruments
are considered to be effective economic hedges and have enabled
management to mitigate the volatility of changing costs and
interest rates during the year.
Other expenses in
fiscal 2014 relate primarily to pension liabilities incurred for
prior service that were negotiated as part of the new collective
agreement with the BC labour union signed in June 2013, partially
offset by income from the expropriation of the Company's Port Moody
facility which was closed effective December 31, 2005. The property
is temporarily being used as a staging area for the construction of
a rapid transit project. Payments amounting to $2.0 million for the
use of the property were received in advance and were recorded as
deferred income and are being recognized as other income over the
five-year term of the expropriation, which began on July 1,
2012.
Adjusted net
earnings, defined as net earnings not including restructuring
charges, unrealized losses and gains on derivative financial
instruments and other expenses or income, were $14.7 million for
the nine months ended December 31, 2013 compared to $14.5 million
in the prior year.
Net earnings for the
three and nine months ended December 31, 2013 were $6.0 million or
$0.43 per Class A Share and $14.6 million or $1.05 per Class A
Share compared to $6.6 million or $0.47 per Class A Share and $15.5
million or $1.11 per Class A Share, respectively, for the
comparable prior year periods. The reduction in net earnings in
fiscal 2014 is primarily due to the decrease in gross margins,
one-time restructuring charges, and the change in non-cash gains on
derivative financial instruments and other income and expenses
between the two fiscal years.
Strong Financial
Position
Working capital at
December 31, 2013 increased to $48.5 million compared to $41.7
million at March 31, 2013. Higher inventories and a decrease in
bank indebtedness were partially offset by an increase in income
taxes payable. The Company's debt to equity ratio was 0.71:1 at
December 31, 2013 compared to 0.83:1 at March 31, 2013.
Shareholders' equity as at December 31, 2013 was $141.5 million or
$9.89 per common share compared to $129.7 million or $9.07 per
common share as at March 31, 2013. The increase in shareholders'
equity is due to solid net earnings for the year partially offset
by the payment of dividends.
In the first nine
months of fiscal 2014 the Company generated cash from operating
activities, after changes in non- cash working capital items, of
$19.1 million compared to $6.7 million in the prior year. Cash flow
from operating activities increased due to strong earnings
performance, lower income tax installments, and a smaller increase
in non- cash working capital compared to the prior year.
Financial Highlights (Unaudited) |
(Condensed consolidated financial statements to follow) |
For the three and nine months ended December 31, |
Three Months |
|
Nine months |
|
(in $000) |
2013 |
|
2012(1) |
|
2013 |
|
2012(1) |
|
Sales |
|
81,854 |
|
|
79,813 |
|
|
231,798 |
|
|
225,557 |
|
Gross
margin |
|
29,475 |
|
|
30,801 |
|
|
85,376 |
|
|
87,108 |
|
Gross
margin (% of sales) |
|
36.0 |
% |
|
38.6 |
% |
|
36.8 |
% |
|
38.6 |
% |
Selling and administrative expenses |
|
18,097 |
|
|
18,942 |
|
|
55,302 |
|
|
56,697 |
|
EBITA |
|
11,378 |
|
|
11,859 |
|
|
30,074 |
|
|
30,411 |
|
Restructuring charge |
|
254 |
|
|
- |
|
|
353 |
|
|
- |
|
Unrealized gains on financial instruments |
|
(252 |
) |
|
(683 |
) |
|
(519 |
) |
|
(1,079 |
) |
Other
(income) expenses |
|
(22 |
) |
|
214 |
|
|
242 |
|
|
(213 |
) |
Net
earnings |
|
5,967 |
|
|
6,572 |
|
|
14,599 |
|
|
15,454 |
|
Earnings per share - Class A |
$ |
0.43 |
|
$ |
0.47 |
|
$ |
1.05 |
|
$ |
1.11 |
|
Earnings per share - Class B |
$ |
0.37 |
|
$ |
0.41 |
|
$ |
0.91 |
|
$ |
0.97 |
|
Dividend per share - Class A (annual) |
|
|
|
|
|
|
$ |
0.400 |
|
$ |
0.360 |
|
Dividend per share - Class B (annual) |
|
|
|
|
|
|
$ |
0.348 |
|
$ |
0.314 |
|
Cash
provided by operations (after changes in non-cash working capital
items) |
|
|
|
|
|
|
|
19,148 |
|
|
6,655 |
|
Working capital |
|
|
|
|
|
|
|
48,492 |
|
|
45,000 |
|
Shareholders' equity per share |
|
|
|
|
|
|
$ |
9.89 |
|
$ |
9.18 |
|
(1) |
Amounts for the period ended December 31, 2012 were restated to
reflect the adoption of the amendments to IAS 19. Please refer to
Note 2 in the Notes to the Financial Statements for the
period. |
The Company calculates adjusted earnings as follows:
For the three and nine months ended December 31, 2013 and 2012 |
Three Months |
|
Nine months |
|
(in $000) |
2013 |
|
2012(1) |
|
2013 |
|
2012(1) |
|
Net
earnings |
5,967 |
|
6,572 |
|
14,599 |
|
15,454 |
|
Restructuring costs |
254 |
|
- |
|
353 |
|
- |
|
Net
unrealized gains on derivatives |
(252 |
) |
(683 |
) |
(519 |
) |
(1,079 |
) |
Other
expenses (income) |
(22 |
) |
214 |
|
242 |
|
(213 |
) |
Income tax effect of the above |
5 |
|
122 |
|
(20 |
) |
336 |
|
Adjusted earnings |
5,952 |
|
6,225 |
|
14,655 |
|
14,498 |
|
(1) |
Amounts for the period ended December 31, 2012 were restated to
reflect the adoption of the amendments to IAS 19. Please refer to
Note 2 in the Notes to the Financial Statements for the
period. |
About Andrew Peller
Ltd.
Andrew Peller
Limited is a leading producer and marketer of quality wines in
Canada. With wineries in British Columbia, Ontario, and Nova
Scotia, the Company markets wines produced from grapes grown in
Ontario's Niagara Peninsula, British Columbia's Okanagan and
Similkameen Valleys, and from vineyards around the world. The
Company's award-winning premium and ultra-premium VQA brands
include Peller Estates, Trius, Hillebrand, Thirty Bench,
Crush, Wayne Gretzky, Sandhill, Calona
Vineyards Artist Series, and Red Rooster.
Complementing these premium brands are a number of popularly priced
varietal brands including Peller Estates French Cross in
the East, Peller Estates Proprietors Reserve in the West,
Copper Moon, XOXO, skinnygrape, Black Cellar and
Verano. Hochtaler, Domaine D'Or, Schloss Laderheim,
Royal, and Sommet are our key value priced brands.
The Company imports wines from major wine regions around the world
to blend with domestic wine to craft these popularly priced and
value priced brands. With a focus on serving the needs of all wine
consumers, the Company produces and markets premium personal
winemaking products through its wholly-owned subsidiary, Global
Vintners Inc., the recognized leader in personal winemaking
products. Global Vintners distributes products through over 250
Winexpert and Wine Kitz authorized retailers and franchisees and
more than 600 independent retailers across Canada, the United
States, the United Kingdom, New Zealand, Australia, and China.
Global Vintners award-winning premium and ultra-premium winemaking
brands include Selection, Vintners Reserve, Island Mist,
KenRidge, Cheeky Monkey, Ultimate Estate Reserve, Traditional
Vintage, and Cellar Craft. The Company owns and operates more
102 well-positioned independent retail locations in Ontario under
The Wine Shop and Wine Country Vintners store names. The Company
also owns Grady Wine Marketing Inc. based in Vancouver and The
Small Winemaker's Collection Inc. based in Ontario; both of these
wine agencies are importers of premium wines from around the world
and are marketing agents for these fine wines. The Company has
entered into an agreement to produce and market the Wayne
Gretzky brands across Canada. The Company's products are sold
predominantly in Canada with a focus on export sales for its
icewine and personal winemaking products.
The Company utilizes
EBITA (defined as earnings before interest, amortization,
unrealized derivative (gain) loss, other expenses, and income
taxes). EBITA is not a recognized measure under IFRS. Management
believes that EBITA is a useful supplemental measure to net
earnings, as it provides readers with an indication of cash
available for investment prior to debt service, capital
expenditures, and income taxes. Readers are cautioned that EBITA
should not be construed as an alternative to net earnings
determined in accordance with IFRS as an indicator of the Company's
performance or to cash flows from operating, investing and
financing activities as a measure of liquidity and cash flows. The
Company also utilizes gross margin (defined as sales less cost of
goods sold, excluding amortization) and adjusted earnings as
defined above. The Company's method of calculating EBITA, gross
margin, and adjusted earnings may differ from the methods used by
other companies and, accordingly, may not be comparable to measures
used by other companies.
Andrew Peller
Limited common shares trade on the Toronto Stock Exchange (symbols
ADW.A and ADW.B).
FORWARD-LOOKING
INFORMATION
Certain
statements in this news release may contain "forward-looking
statements" within the meaning of applicable securities laws,
including the "safe harbour provision" of the Securities Act
(Ontario) with respect to Andrew Peller Limited and its
subsidiaries. Such statements include, but are not limited to,
statements about the growth of the business in light of the
Company's recent acquisitions; its launch of new premium wines;
sales trends in foreign markets; its supply of domestically grown
grapes; and current economic conditions. These statements are
subject to certain risks, assumptions, and uncertainties that could
cause actual results to differ materially from those included in
the forward-looking statements. The words "believe", "plan",
"intend", "estimate", "expect", or "anticipate" and similar
expressions, as well as future or conditional verbs such
as "will", "should", "would", and "could" often identify
forward-looking statements. We have based these forward-looking
statements on our current views with respect to future events and
financial performance. With respect to forward-looking statements
contained in this news release, the Company has made assumptions
and applied certain factors regarding, among other things: future
grape, glass bottle, and wine prices; its ability to obtain grapes,
imported wine, glass, and its ability to obtain other raw
materials; fluctuations in the U.S./Canadian dollar exchange rates;
its ability to market products successfully to its anticipated
customers; the trade balance within the domestic Canadian wine
market; market trends; reliance on key personnel; protection of its
intellectual property rights; the economic environment; the
regulatory requirements regarding producing, marketing,
advertising, and labeling its products; the regulation of liquor
distribution and retailing in Ontario; and the impact of increasing
competition.
These
forward-looking statements are also subject to the risks and
uncertainties discussed in this news release, in the "Risk Factors"
section and elsewhere in the Company's MD&A and other risks
detailed from time to time in the publicly filed disclosure
documents of Andrew Peller Limited which are available at
www.sedar.com. Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties, and
assumptions which could cause actual results to differ materially
from those conclusions, forecasts, or projections anticipated in
these forward-looking statements. Because of these risks,
uncertainties and assumptions, you should not place undue reliance
on these forward-looking statements. The Company's forward-looking
statements are made only as of the date of this news release, and
except as required by applicable law, the Company undertakes no
obligation to update or revise these forward-looking statements to
reflect new information, future events or circumstances or
otherwise.
ANDREW PELLER LIMITED |
Condensed Consolidated Balance Sheets |
Unaudited |
These financial statements have not been reviewed by
our auditors |
|
December 31 |
March 31 |
April 1 |
|
2013 |
2013 |
2012 |
|
|
Restated(1) |
Restated(1) |
(in thousands of Canadian dollars) |
$ |
$ |
$ |
|
|
|
|
Assets |
|
|
|
|
Current Assets |
|
|
|
Accounts receivable |
24,383 |
25,484 |
24,937 |
Inventory |
122,330 |
115,931 |
110,256 |
Current portion of biological assets |
- |
938 |
881 |
Prepaid expenses and other assets |
1,555 |
1,573 |
1,338 |
Income taxes recoverable |
- |
268 |
- |
|
148,268 |
144,194 |
137,412 |
Property, plant, and equipment |
89,330 |
88,841 |
84,490 |
Biological assets |
13,826 |
13,405 |
12,556 |
Intangibles |
13,305 |
12,606 |
13,621 |
Goodwill |
37,473 |
37,473 |
37,473 |
|
302,202 |
296,519 |
285,552 |
|
Liabilities |
|
|
|
|
Current Liabilities |
|
|
|
Bank
indebtedness |
53,462 |
60,099 |
57,495 |
Accounts payable and accrued liabilities |
34,064 |
33,616 |
37,118 |
Dividends payable |
1,391 |
1,252 |
1,252 |
Income taxes payable |
2,472 |
- |
40 |
Current portion of derivative financial instruments |
1,002 |
1,107 |
1,272 |
Current portion of long-term debt |
7,385 |
6,450 |
5,366 |
|
99,776 |
102,524 |
102,543 |
Long-term debt |
39,921 |
41,473 |
41,456 |
Long-term derivative financial instruments |
508 |
1,215 |
1,943 |
Post-employment benefit obligations |
4,248 |
6,411 |
6,665 |
Deferred income |
1,010 |
1,314 |
- |
Deferred income taxes |
15,263 |
13,881 |
12,038 |
|
160,726 |
166,818 |
164,645 |
Shareholders' Equity |
|
|
|
|
Capital stock |
7,026 |
7,026 |
7,026 |
Retained earnings |
134,450 |
122,675 |
113,881 |
|
141,476 |
129,701 |
120,907 |
|
|
302,202 |
296,519 |
285,552 |
Commitments |
|
|
|
(1) |
Restated to reflect the adoption of the amendments to IAS 19. |
The above statements
should be read in conjunction with the entire interim consolidated
financial statements and notes.
They will be
available on the Investor Relations section of www.andrewpeller.com
or at www.sedar.com.
ANDREW PELLER LIMITED |
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Earnings |
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
These financial statements have not been reviewed by
our auditors |
For the three months ended |
|
For the three months ended |
|
For the nine months ended |
|
For the nine months ended |
|
(in thousands of Canadian dollars) |
December 31, 2013 $ |
|
December 31, 2012 Restated(1) $ |
|
December 31, 2013 $ |
|
December 31, 2012 Restated(1) $ |
|
|
|
Sales |
81,854 |
|
79,813 |
|
231,798 |
|
225,557 |
|
Cost of goods sold |
52,379 |
|
49,012 |
|
146,422 |
|
138,449 |
|
Amortization of plant and equipment used in
production |
1,205 |
|
1,180 |
|
3,600 |
|
3,527 |
|
Gross profit |
28,270 |
|
29,621 |
|
81,776 |
|
83,581 |
|
Selling and administration |
18,097 |
|
18,942 |
|
55,302 |
|
56,697 |
|
Amortization of plant, equipment, and intangibles used
in selling and administration |
732 |
|
646 |
|
2,367 |
|
2,426 |
|
Interest |
1,241 |
|
1,359 |
|
3,834 |
|
4,079 |
|
Restructuring costs |
254 |
|
- |
|
353 |
|
- |
|
Operating earnings |
7,946 |
|
8,674 |
|
19,920 |
|
20,379 |
|
Net unrealized gains on derivative financial
instruments |
(252 |
) |
(683 |
) |
(519 |
) |
(1,079 |
) |
Other expeses (income) |
(22 |
) |
214 |
|
242 |
|
(213 |
) |
Earnings before income taxes |
8,220 |
|
9,143 |
|
20,197 |
|
21,671 |
|
Provision for income taxes |
|
|
|
|
|
|
|
|
Current |
1,926 |
|
2,140 |
|
4,690 |
|
5,089 |
|
Deferred |
327 |
|
431 |
|
908 |
|
1,128 |
|
|
2,253 |
|
2,571 |
|
5,598 |
|
6,217 |
|
|
|
Net earnings for the period |
5,967 |
|
6,572 |
|
14,599 |
|
15,454 |
|
|
|
|
|
Net earnings per share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
|
|
Class
A shares |
0.43 |
|
0.47 |
|
1.05 |
|
1.11 |
|
|
Class
B shares |
0.37 |
|
0.41 |
|
0.91 |
|
0.97 |
|
|
|
(1) |
Restated to reflect the adoption of the amendments to IAS 19. |
The above statements
should be read in conjunction with the entire interim consolidated
financial statements and notes.
They will be
available on the Investor Relations section of www.andrewpeller.com
or at www.sedar.com.
ANDREW PELLER LIMITED |
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive
Income |
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
These financial statements have not been reviewed by our
auditors |
For the three months ended |
|
For the three months ended |
|
For the nine months ended |
|
For the nine months ended |
|
(in thousands of Canadian dollars) |
December 31, 2013 $ |
|
December 31, 2012 Restated(1) $ |
|
December 31, 2013 $ |
|
December 31, 2012 Restated(1) $ |
|
|
|
|
|
|
|
|
|
|
Net
earnings for the period |
5,967 |
|
6,572 |
|
14,599 |
|
15,454 |
|
|
|
|
|
|
|
|
|
|
Items
that are never reclassified to net income |
|
|
|
|
|
|
|
|
Net
actuarial gains (losses) on post-employment benefit plans |
499 |
|
(71 |
) |
1,822 |
|
(1,755 |
) |
Deferred income tax (provision) recovery |
(130 |
) |
17 |
|
(474 |
) |
454 |
|
Other
comprehensive income (loss) for the period |
369 |
|
(54 |
) |
1,348 |
|
(1,301 |
) |
Net
comprehensive income for the period |
6,336 |
|
6,518 |
|
15,947 |
|
14,153 |
|
|
|
(1) |
Restated to reflect the adoption of the amendments to IAS 19. |
The above statements
should be read in conjunction with the entire interim consolidated
financial statements and notes.
They will be
available on the Investor Relations section of www.andrewpeller.com
or at www.sedar.com.
ANDREW PELLER LIMITED |
|
Condensed Consolidated Statements of Cash Flows |
|
Unaudited |
|
These financial statements have not been reviewed by
our auditors |
|
|
For the nine months ended |
|
For the nine months ended |
|
|
December 31, 2013 |
|
December 31, 2012 |
|
|
|
|
Restated(1) |
|
(in thousands of Canadian dollars) |
$ |
|
$ |
|
|
|
Cash provided by (used in) |
|
|
|
|
Operating activities |
|
|
|
|
Net earnings for the period |
14,599 |
|
15,454 |
|
|
|
Adjustments for: |
|
|
|
|
|
Loss
(gain) on disposal of property and equipment |
63 |
|
(547 |
) |
|
Amortization of plant, equipment, and intangibles |
5,967 |
|
5,953 |
|
|
Interest expense |
3,834 |
|
4,079 |
|
|
Provision for income taxes |
5,598 |
|
6,217 |
|
|
Revaluation of biological assets |
99 |
|
295 |
|
|
Post-employment benefits |
(341 |
) |
(727 |
) |
|
Deferred income |
(304 |
) |
1,819 |
|
|
Net
unrealized gain on derivative financial instruments |
(519 |
) |
(1,079 |
) |
Interest paid |
(3,638 |
) |
(3,853 |
) |
Income taxes paid |
(1,950 |
) |
(3,201 |
) |
|
23,408 |
|
24,410 |
|
|
|
Changes in non-cash working capital items related to
operations (note 5) |
(4,260 |
) |
(17,755 |
) |
|
|
|
19,148 |
|
6,655 |
|
|
|
Investing activities |
|
|
|
|
Proceeds from disposal of property and equipment |
18 |
|
514 |
|
Purchase of property, equipment, and biological
assets |
(6,202 |
) |
(11,266 |
) |
Purchase of intangibles |
(1,512 |
) |
- |
|
Proceeds from disposal of a business |
- |
|
1,000 |
|
|
|
|
(7,696 |
) |
(9,752 |
) |
|
|
Financing activities |
|
|
|
|
Decrease in bank indebtedness |
(6,637 |
) |
4,789 |
|
Issuance of long-term debt |
4,086 |
|
6,500 |
|
Repayment of long-term debt |
(4,868 |
) |
(4,280 |
) |
Deferred financing costs |
- |
|
(155 |
) |
Dividends paid |
(4,033 |
) |
(3,757 |
) |
|
|
|
(11,452 |
) |
3,097 |
|
|
|
Increase (decrease) in cash during the period |
- |
|
- |
|
|
|
Cash, beginning of period |
- |
|
- |
|
|
|
Cash, end of period |
- |
|
- |
|
|
|
(1) |
Restated to reflect the adoption of the amendments to IAS 19. |
The above statements
should be read in conjunction with the entire interim consolidated
financial statements and notes. They will be available on the
Investor Relations section of www.andrewpeller.com or at
www.sedar.com.
Andrew Peller LimitedMr. Peter PatchetCFO and EVP Human
Resources(905) 643-4131 Ext.
2210peter.patchet@andrewpeller.comwww.andrewpeller.com
Andrew Peller (TSX:ADW.B)
Historical Stock Chart
From Oct 2024 to Nov 2024
Andrew Peller (TSX:ADW.B)
Historical Stock Chart
From Nov 2023 to Nov 2024