Leading Brands, Inc. (NASDAQ:LBIX), announces
results for its third quarter of fiscal 2016, which ended November
30, 2016. All financial amounts are denominated in Canadian
dollars, with all financial figures rounded to the nearest $000.
On October 31, 2016 the Company announced that it had entered
into a binding agreement to sell its Edmonton bottling plant, land
and building with a scheduled closing date of February 1,
2017. This followed the September 22, 2016 announcement that
the Company had decided to exit the co-pack business and wind down
operations at its hot fill bottling plant. The Company stated
at the time that “This will likely result in a non-cash write down
of certain assets as well as incurring associated termination costs
in the current fiscal year.”
At the time of those releases the Company was unable to, with
reasonable certainty, predict the net amount it might receive for
its related hot-fill equipment and other assets. In the
ensuing weeks the Company has been able to better assess the
probable net realizable value for those assets and, as a
consequence, has made the following adjustments to its financial
statements:
- Reduce the net book value of its property, plant and equipment
to $5,550,000;
- Eliminate its deferred tax asset; and
- Record a provision against the net realizable value of its
branded hot-fill juice inventory of approximately $300,000.
Reflecting these one-time, non-cash adjustments, the Company’s
YTD net loss was $(4,826,000) or $(1.71) per share ($(1.71) fully
diluted) versus a net loss of $(809,000) or $(0.28) per share in
the first nine months of last year. Q3 2016 net loss was
$(4,973,000) or $(1.77) per share (($1.77) fully diluted) versus a
net loss of $(385,000) or $(0.13) per share in the same quarter of
fiscal 2015.
Non-GAAP Net Income (Loss) before SBC is determined as
follows:
|
|
Q3
2016 |
|
Q3
2015 |
|
YTD
2016 |
|
YTD
2015 |
Net Income (Loss) |
$ |
(4,973,000 |
) |
$ |
(385,000 |
) |
$ |
(4,826,000 |
) |
$ |
(809,000 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
84,000 |
|
Net income (loss)
before SBC |
$ |
(4,973,000 |
) |
$ |
(385,000 |
) |
$ |
(4,826,000 |
) |
$ |
(725,000 |
) |
Non-GAAP Net Income (Loss) per share before SBC is
determined as follows:
|
|
Q3 2016 |
|
Q3 2015 |
|
YTD 2016 |
|
YTD 2015 |
Net Income (Loss) |
$ |
(1.77 |
) |
$ |
(0.13 |
) |
$ |
(1.71 |
) |
$ |
(0.28 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
0.03 |
|
Net income (loss)
before SBC - Basic |
$ |
(1.77 |
) |
$ |
(0.13 |
) |
$ |
(1.71 |
) |
$ |
(0.25 |
) |
Pro-forma results for EBITDAS, as defined below, are
determined as follows:
|
|
Q3 2016 |
|
Q3 2015 |
|
YTD 2016 |
|
YTD 2015 |
Net Income (Loss) |
$ |
(4,973,000 |
) |
$ |
(385,000 |
) |
$ |
(4,826,000 |
) |
$ |
(809,000 |
) |
Add Back: |
|
|
|
|
|
|
|
|
Interest, net |
|
- |
|
|
(1,000 |
) |
|
- |
|
|
(4,000 |
) |
Depreciation and
amortization |
|
172,000 |
|
|
177,000 |
|
|
514,000 |
|
|
520,000 |
|
Impairment
adjustment |
|
1,773,000 |
|
|
- |
|
|
1,773,000 |
|
|
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
84,000 |
|
Non-cash income tax
expense |
|
2,490,000 |
|
|
(195,000 |
) |
|
2,480,000 |
|
|
(260,000 |
) |
Total Add Backs |
|
4,435,000 |
|
|
(19,000 |
) |
|
4,767,000 |
|
|
340,000 |
|
EBITDAS |
$ |
(538,000 |
) |
$ |
(404,000 |
) |
$ |
(59,000 |
) |
$ |
(469,000 |
) |
EBITDAS per share reconciles to earnings per share as
follows:
|
|
Q3 2016 |
|
Q3 2015 |
|
YTD 2016 |
|
YTD 2015 |
Net Income (Loss) |
$ |
(1.77 |
) |
$ |
(0.13 |
) |
$ |
(1.71 |
) |
$ |
(0.28 |
) |
Add Back: |
|
|
|
|
|
|
|
|
Interest, net |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Depreciation and
amortization |
|
0.06 |
|
|
0.06 |
|
|
0.18 |
|
|
0.18 |
|
Impairment
adjustment |
|
0.63 |
|
|
|
|
0.63 |
|
|
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
0.03 |
|
Non-cash income tax
expense |
|
0.89 |
|
|
(0.07 |
) |
|
0.88 |
|
|
(0.09 |
) |
Total Add Backs |
|
1.58 |
|
|
(0.01 |
) |
|
1.69 |
|
|
0.12 |
|
EBITDAS |
$ |
(0.19 |
) |
$ |
(0.14 |
) |
$ |
(0.02 |
) |
$ |
(0.16 |
) |
Gross profit margin for the quarter was 16.1%, down from 18.4%
in the same quarter last year, due to a change in product mix and
the write down of juice inventories.
Gross revenue for Q3 2016 was $2,535,000, versus $2,371,000 in
the comparative period of last year.
Discounts, rebates and slotting fees were $139,000 in Q3 2016, a
decrease of $10,000 compared to the same period of the prior year.
Selling, General and Administrative Expenses (“SG&A”) were
$927,000 in Q3 of fiscal 2016, versus $910,000 in Q3 of the
previous year.
As at November 30, 2016 the Company had 2,802,412 outstanding
common shares.
The Company anticipates that the net result of the various
transactions that it is in the process of concluding regarding the
Edmonton plant, will be cash on hand of approximately $5,000,000
before year end. Management continues to assess its ongoing
business plan with a view to providing all shareholders with the
best opportunity to maximize shareholder value.
About Leading Brands, Inc.
Leading Brands, Inc. (NASDAQ:LBIX) and its subsidiaries are
involved in the development, production, marketing, and
distribution of the Company’s branded beverage products.
The Company sells branded beverage products through its
Integrated Distribution System (IDS) of distributors, wholesalers,
and retail chains. Its principal product lines include premium
waters and juices.
Non-GAAP Measures
Any non-GAAP financial measures referenced in this release do
not have any standardized meaning prescribed by GAAP and are
therefore unlikely to be comparable to similar measures presented
by other issuers.
EBITDAS is a non-GAAP financial measure. EBITDAS is
defined as net income (loss) before income taxes, interest expense,
depreciation and amortization and stock-based compensation.
EBITDAS should not be construed as a substitute for net income (as
determined in accordance with GAAP) for the purpose of analyzing
operating performance, as EBITDAS is not defined by GAAP.
However, the Company regards EBITDAS as a complement to net income
and income before taxes.
Forward Looking Statements
Certain information contained in this press release includes
forward-looking statements. Words such as “believe”,
“expect,” “will,” or comparable terms, are intended to identify
forward-looking statements concerning the Company’s expectations,
beliefs, intentions, plans, objectives, future events or
performance and other developments. All forward-looking
statements included in this press release are based on information
available to the Company on the date hereof. Such statements
speak only as of the date hereof. Important factors that
could cause actual results to differ materially from the Company’s
estimations and projections are disclosed in the Company’s
securities filings and include, but are not limited to, the
following: general economic conditions, weather conditions,
changing beverage consumption trends, pricing, availability of raw
materials, economic uncertainties (including currency exchange
rates), government regulation, managing and maintaining growth, the
effect of adverse publicity, litigation, competition and other risk
factors described from time to time in securities reports filed by
Leading Brands, Inc. For all such forward-looking statements, we
claim the safe harbor for forward looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995.
©2017 Leading Brands, Inc.
This news release is available at
www.LBIX.com
(table follows)
LEADING BRANDS, INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME
(LOSS) |
(UNAUDITED) |
(EXPRESSED
IN CANADIAN DOLLARS) |
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
November 30, 2016 |
|
November 30, 2015 |
|
|
November 30, 2016 |
|
November 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Revenue |
$ |
2,534,800 |
|
$ |
2,371,358 |
|
|
$ |
8,795,677 |
|
$ |
9,442,367 |
|
|
Less:
Discount, rebates and slotting fees |
|
(139,036 |
) |
|
(149,394 |
) |
|
|
(579,805 |
) |
|
(348,198 |
) |
|
Net
Revenue |
|
2,395,764 |
|
|
2,221,964 |
|
|
|
8,215,872 |
|
|
9,094,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
2,010,149 |
|
|
1,814,056 |
|
|
|
5,725,900 |
|
|
6,279,967 |
|
|
Operations,
selling, general & administration expenses |
|
926,565 |
|
|
910,427 |
|
|
|
2,846,151 |
|
|
3,419,661 |
|
|
Depreciation of property, plant and equipment |
|
172,184 |
|
|
177,194 |
|
|
|
514,283 |
|
|
519,693 |
|
|
Interest,
net |
|
- |
|
|
(663 |
) |
|
|
- |
|
|
(4,262 |
) |
|
Change in
fair value of derivative liability |
|
(30,597 |
) |
|
(101,072 |
) |
|
|
(17,924 |
) |
|
(54,416 |
) |
|
Gain (loss)
on disposal of assets |
|
27,269 |
|
|
1,757 |
|
|
|
(279,505 |
) |
|
1,757 |
|
|
Impairment
on asset adjustments |
|
1,772,814 |
|
|
- |
|
|
|
1,772,814 |
|
|
- |
|
|
|
|
4,878,384 |
|
|
2,801,699 |
|
|
|
10,561,719 |
|
|
10,162,400 |
|
|
Net income
(loss) before taxes |
|
(2,482,620 |
) |
|
(579,735 |
) |
|
|
(2,345,847 |
) |
|
(1,068,231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
2,490,435 |
|
|
(194,681 |
) |
|
|
2,480,257 |
|
|
(259,620 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
and comprehensive income (loss) |
$ |
(4,973,055 |
) |
$ |
(385,054 |
) |
|
$ |
(4,826,104 |
) |
$ |
(808,611 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Basic
income (loss) per share |
$ |
(1.77 |
) |
$ |
(0.13 |
) |
|
$ |
(1.71 |
) |
$ |
(0.28 |
) |
|
Weighted
average number of shares outstanding – basic |
|
2,802,412 |
|
|
2,871,599 |
|
|
|
2,826,614 |
|
|
2,885,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully
diluted income (loss) per share |
$ |
(1.77 |
) |
$ |
(0.13 |
) |
|
$ |
(1.71 |
) |
$ |
(0.28 |
) |
|
Weighted
average number of shares outstanding – diluted |
|
2,802,412 |
|
|
3,116,460 |
|
|
|
2,826,614 |
|
|
3,110,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:
Leading Brands, Inc.
Tel: (604) 685-5200
Email: info@LBIX.com
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