TSX: MFI
www.mapleleaffoods.com
MISSISSAUGA, ON, May 2, 2019 /CNW/ - Maple Leaf Foods Inc. ("Maple
Leaf Foods" or "the Company") (TSX: MFI) today reported its
financial results for the first quarter ending March 31,
2019.
Quarter highlights
- Sales up 11.0% driven by acquisitions and growth in core
business
- Adjusted EBITDA(1) margin of 9.3%, impacted by
investments in growth for plant-based protein, start-up in new
capacity in protein kits and meat pies, and integration of 2018
acquisitions
- Announced capital investment of US$336.0
million to expand plant-based protein capacity to secure
continued leadership position and meet escalating demand
- Successfully executed refinancing to expand debt capacity and
provide flexibility to fund future growth
"Our first quarter of 2019 is headlined by higher sales growth,
fuelled by recent acquisitions, combined with some in-quarter
margin compression as we invested in that growth." said
Michael H. McCain, President and
CEO. "While market conditions continued to be adverse, they are
expected to improve for the balance of the year. We are progressing
on track on all strategic platforms to deliver structural margin
expansion and pursue our vision to be the most sustainable protein
company on earth."
Financial Highlights
Measure(a)
(Unaudited)
|
|
Three months ended
March 31,
|
|
|
|
2019
|
2018
|
% Change
|
Sales
|
|
$
|
907.1
|
$
|
817.5
|
11.0%
|
Net
Earnings
|
|
$
|
50.1
|
$
|
27.9
|
79.5%
|
Basic Earnings per
Share
|
|
$
|
0.41
|
$
|
0.22
|
86.4%
|
Adjusted EBITDA
Margin
|
|
9.3%
|
10.1%
|
(80) bps
|
Adjusted Operating
Earnings(2)
|
|
$
|
42.1
|
$
|
52.8
|
(20.3)%
|
Adjusted Earnings per
Share(3)
|
|
$
|
0.20
|
$
|
0.29
|
(31.0)%
|
(a) All financial measures
in millions of dollars except Adjusted EBITDA Margin and Basic and
Adjusted Earnings per Share.
|
|
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
Reconciliation of Non-IFRS Financial Measures at the end of this
news release for a description and reconciliation of all non-IFRS
financial measures.
|
Sales and Adjusted Operating Earnings Review
The following table summarizes the Company's total sales
and Adjusted Operating Earnings for the quarter.
($
thousands)
|
|
Three months ended
March 31,
|
(Unaudited)
|
|
2019
|
2018
|
Total
Sales
|
|
$
|
907,090
|
$
|
817,509
|
Adjusted Operating
Earnings
|
|
$
|
42,074
|
$
|
52,772
|
Adjusted EBITDA
Margin
|
|
|
9.3%
|
|
10.1%
|
Sales in the first quarter increased 11.0% to $907.1 million, including acquisitions. Sales
growth in the core business of 1.4% was driven primarily by pricing
actions, taken in the fourth quarter of 2018 to mitigate
inflationary pressures, and favourable mix due to food renovation.
Continued expansion of sustainable meats and plant-based protein
also contributed to growth in sales.
Adjusted Operating Earnings were $42.1
million compared to $52.8
million in the first quarter of 2018. Solid commercial
performance was driven primarily by pricing actions taken in the
prior quarter, improved sales mix from the Company's food
renovation initiatives, lower input costs for prepared meats, and
growth in value-added fresh pork and poultry. These improvements
were more than offset by adverse fresh market conditions and the
impact of growth initiatives. Growth initiatives in the quarter
included investments in plant-based protein to support the brands,
start-up costs related to capacity expansion in protein kits and
meat pies and the short-term dilutive impact of 2018
acquisitions.
Net earnings for the first quarter were $50.1 million ($0.41 per basic share) compared to $27.9 million ($0.22 per basic share) in the first quarter of
2018. The increase in net earnings was consistent with factors
noted above. In addition, net earnings were positively impacted by
changes in fair value of biological assets and unrealized gains on
derivative contracts, which are excluded in calculating Adjusted
Operating Earnings.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") margin for the quarter was 9.3% compared to
10.1% in the first quarter of 2018. Adjusted EBITDA margin was also
impacted by the adoption of IFRS 16 - Leases ("IFRS 16"). Upon the
adoption of IFRS 16, leases previously classified as operating
leases were capitalized on the Company's consolidated interim
balance sheet with an incremental $8.1
million in depreciation and $1.8
million in interest being recorded on the Company's
consolidated interim statement of earnings not included in
EBITDA.
Subsequent Events
On April 8, 2019, the Company
announced plans to build a US$310.0
million plant-based processing facility in Shelbyville, Indiana. The new Shelbyville facility will be supported by
approximately US$50.0 million in U.S.
government and utility grants and incentives, including
US$9.6 million toward capital and
one-time start-up costs, and approximately US$40.0 million in 10-year operational support.
The Company will also invest approximately US$26.0 million to support ongoing growth in
demand at its existing facilities. The project will be funded by a
combination of cash flow from operations and debt. Construction
will start in late spring 2019, and start-up is expected to
commence in late 2020. See Note 17 of the unaudited condensed
consolidated interim financial statements ("consolidated financial
statements").
On April 30, 2019, the Company
entered into a new syndicated credit facility consisting of a
$1,300.0 million unsecured committed
revolving line of credit maturing April 30,
2024 and two unsecured committed term credit facilities for
US$265.0 million and CDN$350.0 million maturing April 30, 2024 and April
30, 2023 respectively. The credit facility refinances and
replaces the Company's existing $250.0
million and $400.0 million
unsecured committed revolving credit facilities, which were due to
mature November 7, 2019 and
October 19, 2021 respectively.
The new facility bears interest based on short-term interest
rates and is intended to meet the Company's funding requirements
for investment in the construction of its new recently announced
manufacturing facilities in London,
Ontario and Shelbyville,
Indiana, in addition to providing appropriate levels of
liquidity and for general corporate purposes.
On April 30, 2019, the Company had
drawn US$265.0 million from the first
unsecured committed term credit facility and CDN$115 million from the second unsecured
committed term credit facility to repay all borrowings as at
March 31, 2019, including accrued
interest and fees (see Note 7 of the consolidated financial
statements).
Other Matters
On May 1, 2019, the Board of
Directors approved a dividend of $0.145 per share payable June 28, 2019 to shareholders of record at the
close of business on June 7, 2019.
Unless indicated otherwise by the Company at or before the time the
dividend is paid, this 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 will be available at www.mapleleaffoods.com
and can be found under Investor Information on the
Investors page. A conference call will be held
at 2:30 p.m. EDT on May 2,
2019, to review Maple Leaf Foods' first quarter financial
results. To participate in the call, please dial 416-764-8609 or
1-888-390-0605. 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: 206175#).
A webcast presentation of the first quarter financial results
will also be available at:
https://edge.media-server.com/m6/p/5ynqfucq
The Company's full unaudited condensed consolidated interim
financial statements and related Management's Discussion and
Analysis are available on the Company's website.
Reconciliation of Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted
Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA,
Adjusted EBITDA Margin and Net (Debt) Cash. 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 Operating Earnings, a non-IFRS measure, is used by
Management to evaluate financial operating results. It 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. The table below provides a
reconciliation of net earnings as reported under IFRS in the
consolidated financial statements, to Adjusted Operating Earnings
for the three months ended March 31,
as indicated below. Management believes that this basis is the most
appropriate on which to evaluate operating results, as they are
representative of the ongoing operations of the Company.
($ thousands)
(Unaudited)
|
Three months ended
March 31,
|
|
2019
|
|
2018
|
Net
earnings
|
|
$
|
50,104
|
|
$
|
27,918
|
Income
taxes
|
|
18,833
|
|
11,507
|
Earnings before
income taxes
|
|
$
|
68,937
|
|
$
|
39,425
|
Interest expense and
other financing costs
|
|
7,433
|
|
1,653
|
Other
expense
|
|
2,077
|
|
2,854
|
Restructuring and
other related costs
|
|
2,820
|
|
2,055
|
Earnings from
operations
|
|
$
|
81,267
|
|
$
|
45,987
|
(Increase) decrease
in fair value of biological assets(4)
|
|
|
(26,263)
|
|
|
7,097
|
Unrealized (gain)
loss on derivative contracts(4)
|
|
(12,930)
|
|
(312)
|
Adjusted Operating
Earnings
|
|
$
|
42,074
|
|
$
|
52,772
|
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 Company's 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)
(Unaudited)
|
Three months ended
March 31,
|
|
2019
|
|
2018
|
Basic earnings per
share
|
|
$
|
0.41
|
|
$
|
0.22
|
Restructuring and
other related costs(5)
|
|
0.02
|
|
0.01
|
Items included in
other income not considered representative of ongoing
operations(6)
|
|
0.01
|
|
0.02
|
Change in the fair
value of biological assets(7)
|
|
(0.16)
|
|
0.04
|
Change in the fair
value of unrealized (gain) loss on derivative
contracts(7)
|
|
(0.08)
|
|
-
|
Adjusted Earnings
per Share(8)
|
|
$
|
0.20
|
|
$
|
0.29
|
Adjusted Earnings Before Interest, Income Taxes,
Depreciation, and Amortization
Adjusted EBITDA is calculated as earnings before interest and
income taxes plus depreciation and intangible asset amortization,
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.
The following table provides a reconciliation of net earnings as
reported under IFRS in the consolidated financial statements to
Adjusted EBITDA for the three months ended March 31, as indicated below. Management believes
Adjusted EBITDA is 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.
($
thousands)
|
|
Three months ended
March 31,
|
(Unaudited)
|
|
|
2019
|
|
|
2018
|
Net
earnings
|
|
$
|
50,104
|
|
$
|
27,918
|
Income
taxes
|
|
18,833
|
|
11,507
|
Earnings before
income taxes
|
|
$
|
68,937
|
|
$
|
39,425
|
Interest expense and
other financing costs
|
|
7,433
|
|
1,653
|
Items included in
other income not representative of ongoing operations
|
|
1,824
|
|
2,690
|
Restructuring and
other related costs
|
|
2,820
|
|
2,055
|
Change in the fair
value of biological assets and unrealized (gains) losses
on
|
|
|
|
|
derivative
contracts
|
|
(39,193)
|
|
6,785
|
Depreciation and
amortization
|
|
42,620
|
|
29,874
|
Adjusted
EBITDA
|
|
$
|
84,441
|
|
$
|
82,482
|
Adjusted EBITDA
Margin
|
|
9.3%
|
|
10.1%
|
Net (Debt) Cash(9)
The following table reconciles Net (Debt) Cash to amounts
reported under IFRS in the Company's consolidated financial
statements as at March 31, as
indicated below. The Company calculates Net (Debt) Cash 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)
|
|
2019
|
|
|
2018
|
Cash and cash
equivalents
|
$
|
82,295
|
|
$
|
67,697
|
Current portion of
long-term debt
|
$
|
(170,408)
|
|
$
|
(816)
|
Long-term
debt
|
(296,262)
|
|
(59,938)
|
Total
debt
|
$
|
(466,670)
|
|
$
|
(60,754)
|
Net (Debt)
Cash
|
$
|
(384,375)
|
|
$
|
6,943
|
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, forecasts, and
projections about the industries in which the Company operates, as
well as beliefs and assumptions made by Management of the Company.
Such statements include, but are not limited to, statements with
respect to objectives and goals, in addition to statements with
respect to beliefs, plans, objectives, expectations, anticipations,
estimates, and intentions. Specific forward-looking information in
this document includes, but is not limited to, statements with
respect to: expectations regarding the use of derivatives, futures
and options; the expected use of cash balances; source of funds for
ongoing business requirements; capital investments and expectations
regarding capital expenditures; expectations regarding the
implementation of environmental sustainability initiatives;
expectations regarding the adoption of new accounting standards and
the impact of such adoption on financial position; expectations
regarding pension plan performance and future pension plan
liabilities and contributions; expectations regarding levels of
credit risk; and expectations regarding outcomes of legal actions.
Words such as "expect", "anticipate", "intend", "may", "will",
"plan", "believe", "seek", "estimate", and variations of such words
and similar expressions are intended to identify such
forward-looking information. All statements in this document, other
than statements of historical fact, are forward looking statements.
These statements are not guarantees of future performance and
involve assumptions, risks, and uncertainties that are difficult to
predict.
In addition, these statements and expectations concerning the
performance of the Company's business in general are based on a
number of factors and assumptions including, but not limited to:
the condition of the Canadian, U.S., and Japanese economies; the
rate of exchange of the Canadian dollar to the U.S. dollar, and the
Japanese yen; 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 below or elsewhere in this document 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
information, 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, implied, or forecasted by
forward looking information include, among other things:
- risks associated with the Company focusing solely on the
protein business;
- risks related to the Company's decisions regarding any
potential return of capital to shareholders;
- risks associated with the execution of capital projects,
including cost, schedule and regulatory variables;
- risks associated with concentration of production in fewer
facilities;
- risks associated with the availability of capital;
- risks associated with changes in the Company's information
systems and processes;
- risks associated with cyber threats;
- risks posed by food contamination, consumer liability, and
product recalls;
- risks associated with acquisitions, divestitures, and capital
expansion projects;
- impact on pension expense and funding requirements of
fluctuations in the market prices of fixed income and equity
securities and changes in interest rates;
- cyclical nature of the cost and supply of hogs and the
competitive nature of the pork market generally;
- risks related to the health status of livestock;
- impact of a pandemic on the Company's operations;
- the Company's exposure to currency exchange risks;
- ability of the Company to hedge against the effect of commodity
price changes through the use of commodity futures and
options;
- impact of changes in the market value of the biological assets
and hedging instruments;
- risks associated with the supply management system for poultry
in Canada;
- risks associated with the use of contract manufacturers;
- impact of international events on commodity prices and the free
flow of goods;
- risks posed by compliance with extensive government
regulation;
- risks posed by litigation;
- impact of changes in consumer tastes and buying patterns;
- impact of extensive environmental regulation and potential
environmental liabilities;
- risks associated with a consolidating retail environment;
- risks posed by competition;
- risks associated with complying with differing employment laws
and practices, the potential for work stoppages due to non-renewal
of collective agreements, and recruiting and retaining qualified
personnel;
- risks associated with pricing the Company's products;
- risks associated with managing the Company's supply chain;
- risks associated with failing to identify and manage the
strategic risks facing the Company; and,
- Impact of changes in International Financial Reporting
Standards and other accounting standards that the Company is
required to adhere to for regulatory purposes
The Company cautions the reader that the foregoing list of
factors is not exhaustive. These factors are discussed in more
detail under the heading "Risk Factors" in the Company's Annual
Management's Discussion and Analysis for the year ended
December 31, 2018, that is available
on SEDAR at www.sedar.com. The reader should review such section in
detail. Some of the forward-looking information may be considered
to be financial outlooks for purposes of applicable securities
legislation including, but not limited to, statements concerning
future capital expenditures. These financial outlooks are presented
to evaluate anticipated future uses of cash flows, and may not be
appropriate for other purposes and readers should not assume they
will be achieved. The Company does not intend to, and the Company
disclaims any obligation to, update any forward-looking
information, whether written or oral, or whether as a result of new
information, future events or otherwise, except as required by law.
Additional information concerning the Company, including the
Company's Annual Information Form is available on SEDAR at
www.sedar.com.
About Maple Leaf Foods Inc.
Maple Leaf Foods is a producer of food products under leading
brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural
Selections®, Schneiders®, Schneiders® Country Naturals®, Mina®,
Greenfield Natural Meat Co.®, LightlifeTM, Field Roast
Grain Meat Co.TM and Swift®. Maple Leaf employs
approximately 12,500 people and does business in Canada, the U.S. and Asia. The Company is headquartered in
Mississauga, Ontario and its
shares trade on the Toronto Stock Exchange (MFI).
Footnote Legend
- Adjusted EBITDA is calculated as earnings before interest
and income taxes plus depreciation and intangible asset
amortization, 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 margin is calculated as
Adjusted EBITDA divided by sales. Please refer to the section
entitled Reconciliation of Non-IFRS Financial Measures in this news
release.
- Adjusted Operating Earnings, a non-IFRS measure, is used by
Management to evaluate financial operating results. It 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. Please refer to the section
entitled Reconciliation of Non-IFRS Financial Measures in this news
release.
- 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. Please refer to the section entitled
Reconciliation of Non-IFRS Financial Measures in this news
release.
- Unrealized gains/losses on derivative contracts is reported
within cost of sales in the Company's 2019 first quarter unaudited
condensed consolidated interim financial statements. For biological
assets information, please refer to Note 5 of the Company's 2019
first quarter unaudited condensed consolidated interim financial
statements.
- Includes per share impact of restructuring and other related
costs, net of tax.
- Primarily includes vacancy costs, acquisition related costs,
interest income, and litigation costs, net of tax.
- Includes per share impact of the change in unrealized gains
on derivative contracts and the change in fair value of biological
assets, net of tax.
- May not add due to rounding.
- Net (debt) cash, a non-IFRS measure, is used by Management
to assess the amount of financial leverage that has been employed.
It is defined as total cash and cash equivalents less total
long-term debt. Please refer to the section entitled Reconciliation
of Non-IFRS Financial Measures in this news release.
Consolidated Interim Balance Sheets
|
As at March
31,
|
As at March
31,
|
As at December
31,
|
(In thousands of
Canadian dollars)
(Unaudited)
|
2019
|
2018(i)
|
2018(i)
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
82,295
|
$
|
67,697
|
$
|
72,578
|
Accounts
receivable
|
|
155,321
|
|
128,457
|
|
146,283
|
Notes
receivable
|
|
30,950
|
|
27,727
|
|
30,504
|
Inventories
|
|
388,800
|
|
326,519
|
|
348,901
|
Biological
assets
|
|
139,103
|
|
109,419
|
|
111,493
|
Prepaid expenses and
other assets
|
|
49,698
|
|
18,862
|
|
38,222
|
|
$
|
846,167
|
$
|
678,681
|
$
|
747,981
|
Property and
equipment
|
|
1,294,949
|
|
1,127,381
|
|
1,283,950
|
Right of use
assets
|
|
232,971
|
|
—
|
|
—
|
Investment
property
|
|
5,109
|
|
1,883
|
|
5,109
|
Employee
benefits
|
|
—
|
|
21,751
|
|
5,389
|
Other long-term
assets
|
|
9,197
|
|
8,135
|
|
8,074
|
Goodwill
|
|
661,435
|
|
612,398
|
|
664,879
|
Intangible
assets
|
|
385,569
|
|
282,681
|
|
424,616
|
Total
assets
|
$
|
3,435,397
|
$
|
2,732,910
|
$
|
3,139,998
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accruals
|
$
|
356,049
|
$
|
312,577
|
$
|
344,460
|
Current portion of
provisions
|
|
2,403
|
|
8,687
|
|
3,457
|
Current portion of
long-term debt
|
|
170,408
|
|
816
|
|
80,897
|
Current portion of
lease obligations
|
|
38,980
|
|
—
|
|
—
|
Income taxes
payable
|
19,225
|
10,584
|
42,884
|
Other current
liabilities
|
20,082
|
17,773
|
24,031
|
|
$
|
607,147
|
$
|
350,437
|
$
|
495,729
|
Long-term
debt
|
|
296,262
|
|
59,938
|
|
302,524
|
Lease
obligations
|
|
208,321
|
|
—
|
|
—
|
Employee
benefits
|
|
134,821
|
|
115,474
|
|
103,982
|
Provisions
|
|
47,452
|
|
9,891
|
|
49,895
|
Other long-term
liabilities
|
|
2,056
|
|
14,183
|
|
53,564
|
Deferred tax
liability
|
|
123,600
|
|
106,722
|
|
127,465
|
Total
liabilities
|
$
|
1,419,659
|
$
|
656,645
|
$
|
1,133,159
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
$
|
849,655
|
$
|
835,701
|
$
|
849,655
|
Retained
earnings
|
|
1,183,042
|
|
1,275,377
|
|
1,178,389
|
Contributed
surplus
|
|
11,079
|
|
—
|
|
4,649
|
Accumulated other
comprehensive income (loss)
|
|
1,348
|
|
(4,448)
|
|
3,532
|
Treasury
stock
|
|
(29,386)
|
|
(30,365)
|
|
(29,386)
|
Total shareholders'
equity
|
$
|
2,015,738
|
$
|
2,076,265
|
$
|
2,006,839
|
Total liabilities and
equity
|
$
|
3,435,397
|
$
|
2,732,910
|
$
|
3,139,998
|
(i)
|
Restated, see Note
16(a) of the Company's 2019 first quarter unaudited condensed
consolidated interim financial statements.
|
Consolidated Interim Statements of Net Earnings
(In thousands of
Canadian dollars, except share amounts)
|
Three months ended
March 31,
|
(Unaudited)
|
2019
|
2018
|
|
|
|
Sales
|
$
|
907,090
|
$
|
817,509
|
Cost of goods
sold
|
727,569
|
685,340
|
Gross
margin
|
$
|
179,521
|
$
|
132,169
|
Selling, general and
administrative expenses
|
98,254
|
86,182
|
Earnings before the
following:
|
$
|
81,267
|
$
|
45,987
|
Restructuring and
other related costs
|
(2,820)
|
(2,055)
|
Other income
(expense)
|
(2,077)
|
(2,854)
|
Earnings before
interest and income taxes
|
$
|
76,370
|
$
|
41,078
|
Interest expense and
other financing costs
|
7,433
|
1,653
|
Earnings before
income taxes
|
$
|
68,937
|
$
|
39,425
|
Income tax
expense
|
18,833
|
11,507
|
Net
earnings
|
$
|
50,104
|
$
|
27,918
|
|
|
Earnings per
share:
|
|
Basic earnings per
share
|
$
|
0.41
|
$
|
0.22
|
Diluted earnings per
share
|
$
|
0.40
|
$
|
0.22
|
Weighted average
number of shares (millions)
|
|
|
Basic
|
123.5
|
126.2
|
Diluted
|
125.4
|
129.3
|
Consolidated Interim Statements of Other Comprehensive Income
(Loss)
(In thousands of
Canadian dollars)
|
Three months ended
March 31,
|
(Unaudited)
|
2019
|
2018
|
|
|
|
Net
earnings
|
$
|
50,104
|
$
|
27,918
|
Other comprehensive
income
|
|
Actuarial (losses)
gains that will not be reclassified to profit or loss
|
|
(Net of tax of $9.3
million; 2018: $4.2 million)
|
$
|
(26,382)
|
$
|
11,775
|
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; 2018: $0.0 million)
|
$
|
(8,160)
|
$
|
11,829
|
Change in foreign
exchange gains (losses) on long-term debt designated as a net
investment
|
|
|
|
|
hedge (Net of tax of
$1.0 million; 2018: $0.5 million)
|
|
5,184
|
|
(1,497)
|
Change in unrealized
gains (losses) on cash flow hedges
|
|
|
|
|
(Net of tax of $0.3
million; 2018: $1.1 million)
|
|
792
|
|
(5,160)
|
Total items that are
or may be reclassified subsequently to profit or loss
|
$
|
(2,184)
|
$
|
5,172
|
Total other
comprehensive (loss) income
|
$
|
(28,566)
|
$
|
16,947
|
Comprehensive
income
|
$
|
21,538
|
$
|
44,865
|
Consolidated Interim Statements of Changes in Total
Equity
|
|
|
|
Accumulated
other
comprehensive income
(loss)(i)
|
|
|
(In thousands of Canadian dollars)
(Unaudited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
Balance as 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(iii)
|
|
—
|
|
(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 as at
March 31, 2019
|
$
|
849,655
|
$
|
1,183,042
|
$
|
11,079
|
$
|
5,542
|
$
|
(4,194)
|
$
|
(29,386)
|
$
|
2,015,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
comprehensive income
(loss)(i)
|
|
|
(In thousands of Canadian dollars)
(Unaudited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
Balance as at
December 31, 2017
|
$
|
835,154
|
$
|
1,253,035
|
$
|
—
|
$
|
(11,420)
|
$
|
1,800
|
$
|
(26,961)
|
$
|
2,051,608
|
Impact of new IFRS
standards
|
|
—
|
|
(3,695)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,695)
|
Net
earnings
|
|
—
|
|
27,918
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27,918
|
Other comprehensive
income (loss)(ii)
|
|
—
|
|
11,775
|
|
—
|
|
10,332
|
|
(5,160)
|
|
—
|
|
16,947
|
Dividends declared
($0.13 per share)
|
|
—
|
|
(16,475)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(16,475)
|
Share-based
compensation expense
|
|
—
|
|
—
|
|
4,870
|
|
—
|
|
—
|
|
—
|
|
4,870
|
Deferred taxes on
share-based compensation
|
|
—
|
|
—
|
|
(1,500)
|
|
—
|
|
—
|
|
—
|
|
(1,500)
|
Repurchase of
shares
|
|
333
|
|
5,477
|
|
(3,370)
|
|
—
|
|
—
|
|
—
|
|
2,440
|
Exercise of stock
options
|
|
214
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
214
|
Settlement of
share-based compensation
|
|
—
|
|
(2,658)
|
|
—
|
|
—
|
|
—
|
|
1,596
|
|
(1,062)
|
Shares purchased by
RSU trust
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,000)
|
|
(5,000)
|
Balance at March 31,
2018
|
$
|
835,701
|
$
|
1,275,377
|
$
|
—
|
$
|
(1,088)
|
$
|
(3,360)
|
$
|
(30,365)
|
$
|
2,076,265
|
(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.
|
(iii)
|
See Note 2(b) of the
Company's 2019 first quarter unaudited condensed consolidated
interim financial statements.
|
Consolidated Interim Statements of Cash Flows
(In thousands of
Canadian dollars)
|
Three months ended
March 31,
|
(Unaudited)
|
2019
|
|
2018
|
CASH PROVIDED BY
(USED IN):
|
|
|
|
Operating
activities
|
|
|
|
Net
earnings
|
$
|
50,104
|
|
$
|
27,918
|
Add (deduct) items not
affecting cash:
|
|
|
|
|
|
Change in fair value
of biological assets
|
|
(26,263)
|
|
|
7,097
|
Depreciation and
amortization
|
|
42,620
|
|
|
29,884
|
Share-based
compensation
|
|
5,150
|
|
|
4,870
|
Deferred income
taxes
|
|
5,906
|
|
|
6,106
|
Income tax
current
|
|
12,927
|
|
|
5,401
|
Interest expense and
other financing costs
|
|
7,433
|
|
|
1,653
|
Loss on sale of
long-term assets
|
|
194
|
|
|
385
|
Change in fair value
of non-designated derivative financial instruments
|
|
(14,620)
|
|
|
185
|
Change in net pension
liability
|
|
529
|
|
|
1,705
|
Net income taxes
paid
|
|
(25,869)
|
|
|
(2,468)
|
Interest
paid
|
|
(6,733)
|
|
|
(1,174)
|
Change in provision
for restructuring and other related costs
|
|
2,176
|
|
|
(585)
|
Change in derivatives
margin
|
|
7,588
|
|
|
6,530
|
Other
|
|
244
|
|
|
(6,443)
|
Change in non-cash
working capital
|
|
(42,810)
|
|
|
(49,009)
|
Cash provided by
operating activities
|
18,576
|
|
32,055
|
Financing
activities
|
|
|
|
Dividends
paid
|
$
|
(17,969)
|
|
$
|
(16,475)
|
Net increase in
long-term debt
|
|
89,861
|
|
|
49,337
|
Payment of lease
obligation
|
|
(8,341)
|
|
|
—
|
Exercise of stock
options
|
|
—
|
|
|
214
|
Repurchase of
shares
|
|
—
|
|
|
(22,090)
|
Payment of deferred
financing fees
|
|
(43)
|
|
|
(29)
|
Purchase of treasury
stock
|
|
—
|
|
|
(5,000)
|
Cash provided by
financing activities
|
$
|
63,508
|
|
$
|
5,957
|
Investing
activities
|
|
|
|
Additions to long-term
assets
|
$
|
(60,135)
|
|
$
|
(35,360)
|
Acquisition of
business, net of cash acquired
|
|
(847)
|
|
|
(138,380)
|
Payment of income tax
liabilities assumed on acquisition
|
|
(11,385)
|
|
|
—
|
Cash used in
investing activities
|
$
|
(72,367)
|
|
$
|
(173,740)
|
Increase
(decrease) in cash and cash equivalents
|
$
|
9,717
|
|
$
|
(135,728)
|
Cash and cash
equivalents, beginning of period
|
72,578
|
|
203,425
|
Cash and cash
equivalents, end of period
|
$
|
82,295
|
|
$
|
67,697
|
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SOURCE Maple Leaf Foods Inc.