Andrew Peller Limited (TSX:ADW.A)(TSX:ADW.B) (the "Company") announced today its
results for the fiscal year ended March 31, 2009.
Sales for the fiscal year increased 9.8% to $268.2 million. Excluding the impact
of acquisitions, sales grew 5.7% to $258.2 million. Earnings before other
items(1), on a non-GAAP basis, declined 36.0% to $7.2 million for the year ended
March 31, 2009 from $10.6 million last year.
"We were pleased with the Company's performance in view of the severe economic
challenges presented to us, particularly over the last quarter of our fiscal
year," commented John Peller; President & CEO. "While we experienced strong
organic growth in our sales during fiscal 2009, our profitability was impacted
by the significant deterioration in the value of the Canadian dollar over the
last six months of the fiscal year and by the increase in costs for grapes and
wine both domestically and internationally. These input costs have now
stabilized and we are taking a number of aggressive steps to reduce our costs
and enhance production and operating efficiencies. These initiatives are
expected to result in improved performance in fiscal 2010. The Company will
maintain its current dividend rates of $0.33 per Class A share and $0.288 per
Class B share during the upcoming year."
The following is a comprehensive report on the Company's performance over the
three months and fiscal year ended March 31, 2009.
Sales for the three months ended March 31, 2009 increased 9.8% to $60.1 million
from $54.7 million in the prior year. For fiscal 2009, sales rose 9.8% to $268.2
million from $244.3 million last year. The increases are due primarily to the
acquisition of World Vintners Inc. ("WVI") on June 30, 2008 and Small Winemakers
Collection Inc. ("SWM") on October 8, 2008, ongoing initiatives to grow sales of
the Company's blended varietal table and premium wines through all trade
channels and the introduction of new products. Excluding the impact of
acquisitions, sales grew 4.5% and 5.7% for the three and twelve months ended
March 31, 2009, respectively.
Gross profit as a percentage of sales declined to 29.3% for the three months
ended March 31, 2009 compared to 42.6% in the same period last year. For fiscal
2009, gross profit as a percentage of sales was 38.0% compared to 42.1% in
fiscal 2008. The decline was due primarily to a significant increase in the cost
of domestic grapes and wine purchased on international markets, the increased
use of higher priced domestic grapes used to produce cellared in Canada wine and
the precipitous decline in value of the Canadian dollar principally over the
past four months of the fiscal year. The Company's gross profit margins have
stabilized and management is focused on enhancing production efficiency and
productivity improvements with the goal to improve overall profitability.
Selling and administrative expenses as a percentage of sales decreased to 29.4%
for the three months ended March 31, 2009 compared to 34.1% for the same period
last year. For the year ended March 31, 2009, selling and administration
expenses as a percentage of sales decreased to 28.3% compared to 29.9% in fiscal
2008. The increase in dollar amounts for selling and administrative expenses in
fiscal 2009 is due primarily to the acquisitions of WVI and SWM during the year
and one-time severance and other costs amounting to approximately $1.4 million
related to cost reduction initiatives. The decrease in dollar amounts for
selling and administrative expenses in the fourth quarter is the result of the
Company's cost reduction programs.
Included in net earnings (loss) for the year ended March 31, 2009 were non-cash
charges of $9.5 million related to mark-to-market adjustments on interest rate
swaps and foreign exchange contracts. For the fourth quarter of fiscal 2009 the
Company recorded a gain of $0.7 million related to these financial instruments.
These instruments are considered to be effective economic hedges and have
enabled management to mitigate the volatility of changing prices on operating
costs and interest expense. The Company expects to hold these contracts to
maturity and accordingly no actual gain or loss will ultimately be recognized.
In addition, for the fourth quarter and for the year ended March 31, 2009 the
Company recorded unusual items of $0.7 million and $1.3 million respectively
primarily related to the closure of its Quebec consumer-made wine distribution
center and a write-off in deferred financing costs. For the year ended March 31,
2008, the Company recorded a one-time reduction in its income tax provision by
$1.3 million due to substantively enacted changes in future income tax rates.
Including the net unrealized loss on derivative financial instruments and
unusual items, a net loss of $0.1 million was recorded for the year ended March
31, 2009 compared to net earnings of $11.4 million last year. For the three
months ended March 31, 2009 the Company incurred a net loss of $3.2 million
compared to net earnings of $0.8 million for the same period last year.
Financial Position
Working capital was $29.2 million at the end of the fourth quarter of fiscal
2009 compared to $25.4 million at March 31, 2008. Excluding the after-tax impact
of mark-to-market adjustments on interest rate swaps and foreign exchange
contracts, shareholders' equity at March 31, 2009 amounted to $102.9 million or
$6.91 per common share compared to $102.7 million or $6.89 per common share at
March 31, 2008. During fiscal 2009 the Company successfully refinanced its
long-term debt to April 30, 2015.
"Over the longer term, our strong presence in all of our trade channels should
generate continued organic sales growth while we continue our focus on reducing
costs and enhancing efficiencies to improve overall profitability," Mr. Peller
concluded.
Financial Highlights: Unaudited (Complete consolidated financial
statements to follow)
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Period Ended March 31, Three Months Twelve Months
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(in $000 except per share amounts) 2009 2008 2009 2008
----------------------------------------------------------------------------
Sales $ 60,112 $ 54,726 $ 268,212 $ 244,274
EBITA(2) (79) 4,689 25,835 29,708
Earnings (loss) before other
items (non-GAAP)(1) (3,202) 1,090 7,156 10,627
Net and comprehensive earnings (3,249) 802 (125) 11,381
Net earnings (loss) per share
(Basic per Class A share) $ (0.25) $ 0.05 $ (0.03) $ 0.78
Cash from operations (after changes
in non-cash working capital items) 13,705 9,951
Working capital 29,203 25,413
Shareholders' equity per share $6.50 $6.89
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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 vineyards around the world. The
Company's award-winning premium and ultra-premium brands include Peller Estates,
Trius, Hillebrand, Thirty Bench, Croc Crossing, XOXO, Sandhill, Copper Moon,
Calona Vineyards Artist Series and Red Rooster VQA wines. Complementing these
premium brands are a number of popular priced products including Hochtaler,
Domaine D'Or, Schloss Laderheim, Royal and Sommet. The Company also markets
craft beer under the Granville Island brand. With a focus on serving the needs
of all wine consumers, the Company produces and markets consumer-made wine kit
products through Winexpert, Vineco International Products, Wine Kitz and Heron
Bay. In addition, the Company owns and operates Vineyards Estate Wines, Aisle 43
and WineCountry Vintners, independent wine retailers in Ontario with more than
100 well-positioned retail locations. Andrew Peller Limited common shares trade
on the Toronto Stock Exchange (symbols ADW.A and ADW.B).
(1) Earnings (loss) before other items is defined as net earnings before the net
unrealized (gain)/loss on financial instruments, unusual items and to
substantively enacted changes in future income tax rates.
----------------------------------------------------------------------------
Three Months Twelve Months
----------------------------------------------------------------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
Net and comprehensive earnings (loss) (3,249) 802 (125) 11,381
----------------------------------------------------------------------------
Change in future income tax rates (1,250)
----------------------------------------------------------------------------
Net unrealized (gain)/loss of
financial instruments (651) 346 9,496 420
----------------------------------------------------------------------------
Unusual items 718 71 1,275 298
----------------------------------------------------------------------------
Income tax effect on the above (20) (129) (3,490) (222)
----------------------------------------------------------------------------
Earnings (loss) before other items (3,202) 1,090 7,156 10,627
----------------------------------------------------------------------------
(2) The Company utilizes EBITA (defined as earnings before interest, incomes
taxes, depreciation, amortization, other income (losses) and unusual items).
EBITA is not a recognized measure under GAAP. 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 GAAP
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. In
addition, the Company's method of calculating EBITA may differ from the methods
used by other companies and, accordingly, may not be comparable to measures used
by other companies.
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
(the "Company") 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 labelling 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
CONSOLIDATED BALANCE SHEETS
UNAUDITED March 31 March 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2009 2008
$ $
----------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable 22,430 23,072
Inventories 104,157 93,817
Prepaid expenses and other assets 2,339 3,046
Income taxes recoverable 5,892 823
-------------------------
134,818 120,758
Property, plant and equipment 102,367 94,819
Goodwill 40,134 36,171
Intangibles and other assets 16,938 7,996
-------------------------
294,257 259,744
-------------------------
-------------------------
Liabilities
Current Liabilities
Bank indebtedness 52,192 57,722
Accounts payable and accrued liabilities 43,349 29,273
Dividends payable 1,197 1,088
Current derivative financial instruments 2,719 432
Current portion of long-term debt 6,158 6,830
-------------------------
105,615 95,345
Long-term debt 71,549 46,412
Long-term derivative financial instruments 5,963 534
Employee future benefits 2,824 3,167
Future income taxes 11,515 11,606
-------------------------
197,466 157,064
-------------------------
Shareholders' Equity
Capital Stock 7,375 7,375
Retained Earnings 89,416 95,305
-------------------------
96,791 102,680
-------------------------
294,257 259,744
-------------------------
-------------------------
ANDREW PELLER LIMITED
Consolidated Statements of Earnings (Loss), Comprehensive Earnings (Loss)
and Retained Earnings
UNAUDITED
For the Three Months Ended For the Twelve Months Ended
March 31 March 31
2009 2008 2009 2008
$ $ $ $
----------------------------------------------- ----------------------------
Sales 60,112 54,726 268,212 244,274
Cost of goods sold,
excluding amortization 42,522 31,401 166,501 141,547
-------- -------- --------- ---------
Gross profit 17,590 23,325 101,711 102,727
Selling and administration 17,669 18,636 75,876 73,019
-------- -------- --------- ---------
Earnings before interest
and amortization (79) 4,689 25,835 29,708
Interest 2,120 1,581 6,855 5,964
Amortization of property,
equipment and intangible
assets 2,398 2,137 8,383 7,802
-------- -------- --------- ---------
Earnings before other items (4,597) 971 10,597 15,942
Net unrealized loss on
derivative financial
instruments 651 (346) (9,496) (420)
Unusual items (718) (71) (1,275) (298)
-------- -------- --------- ---------
Earnings (loss) before
income taxes (4,664) 554 (174) 15,224
-------- -------- --------- ---------
Provision for (recovery of)
income taxes
Current (1,766) 298 2,619 4,968
Future 351 (546) (2,668) (1,125)
-------- -------- --------- ---------
(1,415) (248) (49) 3,843
-------- -------- --------- ---------
Net and comprehensive
earnings (loss) for the
period (3,249) 802 (125) 11,381
Retained earnings
- Beginning of period 93,771 95,591 95,305 88,147
Impact of adopting
accounting pronouncements
on April 1, 2007 - - - 128
Impact of adopting
accounting pronouncement
on January 1, 2009 898 - 898 -
Impact of adopting
accounting pronouncement
on April 1, 2008 (807) - (1,875) -
-------- -------- --------- ---------
Retained earnings -
Beginning of period as
restated 93,862 95,591 94,328 88,275
-------- -------- --------- ---------
Dividends:
Class A and Class B (1,197) (1,088) (4,787) (4,351)
-------- -------- --------- ---------
Retained earnings - End
of period 89,416 95,305 89,416 95,305
-------- -------- --------- ---------
-------- -------- --------- ---------
Net earnings per share
Basic and diluted
Class A shares (0.25) 0.05 (0.03) 0.78
-------- -------- --------- ---------
-------- -------- --------- ---------
Class B shares (0.21) 0.05 (0.02) 0.68
-------- -------- --------- ---------
ANDREW PELLER LIMITED
Consolidated Statements of Cash Flows
UNAUDITED
For the Three Months Ended For the Twelve Months Ended
March 31 March 31
2009 2008 2009 2008
$ $ $ $
----------------------------------------------- ----------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period (3,249) 802 (125) 11,381
Items not affecting cash:
Gain on disposal of
property and equipment 11 29 11 29
Amortization of plant,
equipment and intangibles 2,398 2,137 8,383 7,802
Employee future benefits (126) (26) (343) (840)
Net unrealized loss on
derivative financial
instruments (651) 346 9,496 420
Future income taxes 351 (546) (2,668) (1,125)
Write-off of Dionysus
investment 148 - 148 -
Write-off of deferred
financing costs 76 - 442 -
Amortization of deferred
financing costs (69) 38 75 150
--------- -------- -------- --------
(1,111) 2,780 15,419 17,817
Changes in non-cash working
capital items related to
operations: 13,493 1,569 (1,715) (7,866)
--------- -------- -------- --------
12,382 4,349 13,704 9,951
--------- -------- -------- --------
Investing activities
Acquisition of businesses 1,267 - (15,315) -
Investment in deferred
product development costs (116) (857) (116) (857)
Proceeds from disposal of
property and equipment 3 109 3 109
Purchase of property and
equipment (2,640) (2,926) (10,329) (14,658)
--------- -------- -------- --------
(1,486) (3,674) (25,757) (15,406)
--------- -------- -------- --------
Financing activities
Increase in deferred
financing costs (36) (31) (340) (31)
Increase (decrease) in bank
indebtedness (8,330) (3,907) (7,217) 6,273
Increase in long-term debt - 5,830 29,036 9,300
Repayment of long-term debt (1,334) (1,479) (4,748) (5,907)
Dividends paid (1,196) (1,088) (4,678) (4,180)
--------- -------- -------- --------
(10,896) (675) 12,053 5,455
--------- -------- -------- --------
Cash at beginning and end
of period - - - -
--------- -------- -------- --------
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