MISSISSAUGA, ON, Feb. 21,
2018 /PRNewswire/ - Maple Leaf Foods Inc. (TSX: MFI) today
reported its financial results for the fourth quarter and full year
ended December 31, 2017.
- Sales and Adjusted EBITDA margin (1) growth in the
quarter, continuing momentum for the year
- Sustained commercial performance benefiting from balanced
portfolio
- 18% increase in quarterly dividend, the fourth consecutive
annual increase
- Completed acquisition of The Field Roast Grain Meat Company,
SPC, subsequent to year end
Financial Highlights
|
Measure(i)
(Unaudited)
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
2017
|
2016
|
% Change
|
2017
|
2016
|
% Change
|
|
Sales
|
$
|
876.8
|
$
|
828.2
|
5.9%
|
$
|
3,522.2
|
$
|
3,331.8
|
5.7%
|
|
Net
Earnings
|
$
|
59.1
|
$
|
76.2
|
(22.5)%
|
$
|
164.1
|
$
|
181.7
|
(9.7)%
|
|
Adjusted Operating
Earnings (2)
|
$
|
64.7
|
$
|
63.7
|
1.5%
|
$
|
263.8
|
$
|
239.3
|
10.3%
|
|
Adjusted
EBITDA
|
$
|
93.5
|
$
|
86.4
|
8.2%
|
$
|
381.1
|
$
|
343.4
|
11.0%
|
|
Adjusted EBITDA
Margin
|
10.7%
|
10.4%
|
+30bps
|
10.8%
|
10.3%
|
+50bps
|
|
Basic Earnings per
Share
|
$
|
0.47
|
$
|
0.57
|
(17.5)%
|
$
|
1.28
|
$
|
1.35
|
(5.2)%
|
|
Adjusted Earnings per
Share(3)
|
$
|
0.41
|
$
|
0.31
|
32.3%
|
$
|
1.54
|
$
|
1.23
|
25.2%
|
|
Free Cash
Flow(4)
|
$
|
40.3
|
$
|
35.9
|
12.1%
|
$
|
244.5
|
$
|
244.0
|
0.2%
|
|
(i) All financial measures in millions of dollars
except Adjusted EBITDA margin and Basic and Adjusted Earnings per
Share.
|
|
|
|
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.
|
"We completed 2017 with another quarter of both top-line sales
and margin growth which contributed to a highly successful year.
Improvement in prepared meats, plus accelerating growth in the U.S.
and plant protein, offset softening in pork processing, which
continues to demonstrate the benefits of our balanced portfolio."
said Michael H. McCain, President
and CEO. "Looking forward, we are excited about the future. In our
quest to be the most sustainable protein company on earth, the
coming year will mark the most ambitious brand renovation in our
history. We have great confidence our brand strategy will
support continued growth for years to come."
OPERATING REVIEW
The following is a summary of sales and Adjusted Operating
Earnings for the fourth quarter:
|
($
millions)
|
|
Fourth
Quarter
|
|
2017
|
2016
|
Change
|
|
Sales
|
|
$
|
876.8
|
$
|
828.2
|
5.9%
|
|
Adjusted Operating
Earnings
|
|
$
|
64.7
|
$
|
63.7
|
1.5%
|
|
Adjusted EBITDA
Margin
|
|
10.7%
|
10.4%
|
+30bps
|
The following table summarizes sales and Adjusted Operating
Earnings for the two years ended December
31:
|
($
millions)
|
|
2017
|
2016
|
Change
|
|
Sales
|
|
$
|
3,522.2
|
$
|
3,331.8
|
5.7%
|
|
Adjusted Operating
Earnings
|
|
$
|
263.8
|
$
|
239.3
|
10.3%
|
|
Adjusted EBITDA
Margin
|
|
10.8%
|
10.3%
|
+50bps
|
Sales and Earnings Review
Fourth Quarter
Sales for the fourth quarter increased 5.9% to $876.8 million or 5.4% after adjusting for the
impact of foreign exchange and acquisitions, driven primarily by
pricing and volume growth, with prepared meats sales benefiting
from innovation and the Company's development in the U.S. market.
Sales in the value-added fresh portfolio benefited from continued
increased demand for fresh value-added poultry. The addition
of Lightlife also contributed to the increase.
Adjusted Operating Earnings for the fourth quarter of 2017 were
$64.7 million compared to
$63.7 million in the fourth quarter
of 2016. Adjusted EBITDA margin increased to 10.7% in the fourth
quarter of 2017 from 10.4% in the prior year. Increased sales and
volume growth, lower operating costs, as well as a partial
reduction in year over year variable compensation costs,
contributed to higher earnings in the quarter. Commercial
performance in prepared meats partially offset a softening in the
pork complex, reversing the trend from earlier in the
year. Fourth quarter earnings also benefited from continued
high demand for fresh value-added poultry.
Net earnings for the quarter were $59.1
million compared to $76.2
million in the same period last year. The progress in the
business reflected in positive revenue and margin growth, and a tax
benefit associated with U.S. tax reform, was more than offset by
factors excluded in calculating Adjusted Operating Earnings. These
factors consist of unrealized losses on derivative contracts, the
change in fair value of biological assets and restructuring
costs.
Basic Earnings per Share was $0.47
for the fourth quarter of 2017 compared to $0.57 in the fourth quarter of 2016 due to the
factors described above. Adjusted Earnings per Share in the
fourth quarter of 2017 was $0.41
compared to $0.31 in the fourth
quarter of 2016.
Full Year 2017
Sales for 2017 increased 5.7% to $3,522.2
million, or 4.8% after adjusting for the impact of foreign
exchange and acquisitions compared to the prior year. Higher sales
across the portfolio benefited from improved volumes and pricing,
as well as the addition of Lightlife. Prepared meats sales
benefited from the same factors noted above. Sales in the
value-added fresh portfolio increased due to stronger volumes and
improved sales mix.
Adjusted Operating Earnings for 2017 increased to $263.8 million compared to $239.3 million in the prior year. Increased sales
across the business contributed to earnings growth. Earnings
performance in the value-added fresh portfolio was partially offset
by margin compression in prepared meats related to the volatility
in raw material costs for the majority of the year. During
the fourth quarter the trend reversed, with a softening in the pork
complex partially offset by improved commercial performance in
prepared meats.
Net earnings for the year were $164.1
million compared to $181.7
million in the prior year. Full year revenue and margin
growth, and a tax benefit associated with U.S. tax reform, were
also impacted by the factors noted above which are excluded in
calculating Adjusted Operating Earnings.
Basic Earnings per Share was $1.28
for 2017 compared to $1.35 in the
prior year. Adjusted Earnings per Share increased to $1.54 from $1.23 in
the prior year.
Subsequent Events
On November 30, 2017, the Company
signed a definitive agreement to acquire 100% of the outstanding
shares of The Field Roast Grain Meat Company, SPC, a privately held
U.S. based corporation engaged in the production and distribution
of premium grain-based protein and vegan cheese products. The
transaction was subject to customary U.S. regulatory review, and
was completed on January 29, 2018.
The purchase price was US$120.0
million plus transaction costs settled through a combination
of cash-on-hand and borrowings under the existing revolving credit
facility as described in Note 13 of the consolidated financial
statements. The transaction will be accounted for as a business
combination.
Other Matters
On February 20, 2018, the Board of
Directors approved a dividend of $0.13 per share, $0.52 per share on an annual basis, from
$0.11 per share, payable March 29, 2018 to shareholders of record at the
close of business March 9, 2018.
Unless indicated otherwise by the Company at or before the time the
dividend is paid, the 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 fourth quarter
financial results is available at www.mapleleaffoods.com and can be
found under Investor Material on the Investors page.
A conference call will be held at 2:30 p.m. EDT on
February 21, 2018, to review Maple Leaf Foods' fourth quarter
financial results. To participate in the call, please dial
416-340-2216 or 800-273-9672. For those unable to participate,
playback will be made available an hour after the event at
905-694-9451 or 800-408-3053 (Passcode: 2610656#).
A webcast presentation of the fourth quarter financial results
will also be available at:
https://edge.media-server.com/m6/p/dovrix49
The Company's full audited financial statements and related
Management's Discussion and Analysis are available on the Company's
website.
Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted
Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA,
and Free Cash Flow. Management believes that these non-IFRS
measures provide useful information to investors in measuring the
financial performance of the Company. 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
audited consolidated statement of earnings to Adjusted Operating
Earnings for the years ended, 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.
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
($
thousands)
|
2017
|
2016
|
2017
|
2016
|
|
Net
earnings
|
$
|
59,064
|
$
|
76,224
|
$
|
164,089
|
$
|
181,702
|
|
Income
taxes
|
12,153
|
28,681
|
50,192
|
67,891
|
|
Earnings before
income taxes
|
$
|
71,217
|
$
|
104,905
|
$
|
214,281
|
$
|
249,593
|
|
Interest expense and
other financing costs
|
1,276
|
1,231
|
5,168
|
6,367
|
|
Other (income)
expense
|
5,319
|
5,025
|
(3,609)
|
3,596
|
|
Restructuring and
other related costs
|
5,921
|
4,226
|
23,024
|
6,570
|
|
Earnings from
operations
|
$
|
83,733
|
$
|
115,387
|
$
|
238,864
|
$
|
266,126
|
|
Increase in fair
value of biological assets(5)
|
(27,629)
|
(48,172)
|
(1,267)
|
(6,263)
|
|
Unrealized loss
(gain) on derivative contracts(5)
|
8,548
|
(3,497)
|
26,243
|
(20,581)
|
|
Adjusted Operating
Earnings
|
$
|
64,652
|
$
|
63,718
|
$
|
263,840
|
$
|
239,282
|
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 audited consolidated statements of earnings to Adjusted
Earnings per Share for the years ended, 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)
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
2017
|
2016
|
2017
|
2016
|
|
Basic earnings per
share
|
$
|
0.47
|
$
|
0.57
|
$
|
1.28
|
$
|
1.35
|
|
Restructuring and
other related costs(6)
|
0.03
|
0.02
|
0.13
|
0.04
|
|
Items included in
other income not considered representative of ongoing
operations(7)
|
0.02
|
—
|
(0.01)
|
(0.02)
|
|
Increase in fair
value of biological assets(8)
|
(0.16)
|
(0.27)
|
(0.01)
|
(0.03)
|
|
Unrealized loss
(gain) on derivative contracts(8)
|
0.05
|
(0.02)
|
0.15
|
(0.11)
|
|
Adjusted Earnings
per Share(9)
|
$
|
0.41
|
$
|
0.31
|
$
|
1.54
|
$
|
1.23
|
Adjusted Earnings Before Interest, Tax, 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 audited consolidated statements of
earnings to Adjusted EBITDA for the years ended, 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
December 31,
|
Twelve months
ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
|
Net
earnings
|
|
$
|
59,064
|
|
|
$
|
76,224
|
|
|
$
|
164,089
|
|
|
$
|
181,702
|
|
Income
taxes
|
|
12,153
|
|
|
28,681
|
|
|
50,192
|
|
|
67,891
|
|
Earnings before
income taxes
|
|
$
|
71,217
|
|
|
$
|
104,905
|
|
|
$
|
214,281
|
|
|
$
|
249,593
|
|
Interest expense and
other financing costs
|
|
1,276
|
|
|
1,231
|
|
|
5,168
|
|
|
6,367
|
|
Items included in
other income not considered representative of ongoing
operations(7)
|
|
2,991
|
|
|
96
|
|
|
(3,582)
|
|
|
(2,518)
|
|
Restructuring and
other related costs
|
|
5,921
|
|
|
4,226
|
|
|
23,024
|
|
|
6,570
|
|
Increase in fair
value of biological assets and unrealized loss (gain) on derivative
contracts
|
|
(19,081)
|
|
|
(51,669)
|
|
|
24,976
|
|
|
(26,844)
|
|
Depreciation and
amortization
|
|
31,152
|
|
|
27,567
|
|
|
117,190
|
|
|
110,276
|
|
Adjusted
EBITDA
|
|
$
|
93,476
|
|
|
$
|
86,356
|
|
|
$
|
381,057
|
|
|
$
|
343,444
|
Free Cash Flow
Free Cash Flow, a non-IFRS measure, is used by Management to
evaluate cash flow after investing in the maintenance or expansion
of the Company's asset base. It is defined as cash provided by
operations, less additions to long-term assets. The following table
calculates Free Cash Flow for the periods indicated below:
|
($
thousands)
(Unaudited)
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
|
Cash provided by
operating activities
|
$
|
103,448
|
$
|
72,114
|
$
|
386,695
|
$
|
357,157
|
|
Additions to
long-term assets
|
(63,192)
|
(36,219)
|
(142,245)
|
(113,194)
|
|
Free Cash
Flow
|
$
|
40,256
|
$
|
35,895
|
$
|
244,450
|
$
|
243,963
|
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. 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 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;
and
- risks associated with failing to identify and manage the
strategic risks facing the Company.
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, 2017, 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 Inc. is a leading consumer protein company,
making high quality, innovative products under national brands
including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural
Selections®, Schneiders®, Schneiders® Country Naturals®, Mina® and
LightlifeTM. Maple Leaf employs approximately 11,500
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
|
|
|
|
1.
|
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 Non-IFRS Financial Measures in this
news release.
|
|
2.
|
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
Non-IFRS Financial Measures in this news release.
|
|
3.
|
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 Non-IFRS Financial
Measures in this news release.
|
|
4.
|
Free Cash Flow, a
non-IFRS measure, is used by Management to evaluate cash flow after
investing in the maintenance or expansion of the Company's asset
base. It is defined as cash provided by operations, less additions
to long-term assets. Please refer to the section entitled Non-IFRS
Financial Measures in this news release.
|
|
5.
|
Unrealized
gains/losses on derivative contracts is reported within cost of
sales in the Company's 2017 annual audited consolidated financial
statements. For biological assets information, please refer to Note
7 of the Company's 2017 annual audited consolidated financial
statements.
|
|
6.
|
Includes per share
impact of restructuring and other related costs, net of
tax.
|
|
7.
|
Primarily includes
(gains) and losses on disposal of investment properties, changes in
estimates of provisions, acquisition related costs, interest
income, assets held for sale, net of tax.
|
|
8.
|
Includes per share
impact of the change in unrealized loss (gain) on derivative
contracts and the change in fair value of biological assets, net of
tax.
|
|
9.
|
May not add due to
rounding.
|
Consolidated Balance Sheets
|
(In thousands of
Canadian dollars)
(Audited)
|
As at December
31,
2017
|
As at December
31,
2016
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
203,425
|
$
|
403,621
|
|
Accounts
receivable
|
123,968
|
127,749
|
|
Notes
receivable
|
28,918
|
32,485
|
|
Inventories
|
273,365
|
261,719
|
|
Biological
assets
|
111,735
|
111,445
|
|
Prepaid expenses and
other assets
|
24,393
|
30,372
|
|
Assets held for
sale
|
—
|
4,837
|
|
$
|
765,804
|
$
|
972,228
|
|
Property and
equipment
|
1,116,309
|
1,085,275
|
|
Investment
property
|
1,892
|
1,929
|
|
Employee
benefits
|
9,856
|
10,311
|
|
Other long-term
assets
|
6,125
|
6,557
|
|
Goodwill
|
517,387
|
428,236
|
|
Intangible
assets
|
215,197
|
128,085
|
|
Total
assets
|
$
|
2,632,570
|
$
|
2,632,621
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accruals
|
$
|
300,659
|
$
|
256,163
|
|
Provisions
|
9,335
|
11,889
|
|
Current portion of
long-term debt
|
805
|
794
|
|
Income taxes
payable
|
7,855
|
9,544
|
|
Other current
liabilities
|
31,597
|
96,857
|
|
$
|
350,251
|
$
|
375,247
|
|
Long-term
debt
|
8,443
|
9,119
|
|
Employee
benefits
|
117,808
|
108,730
|
|
Provisions
|
11,273
|
16,555
|
|
Other long-term
liabilities
|
12,689
|
12,654
|
|
Deferred tax
liability
|
80,498
|
22,293
|
|
Total
liabilities
|
$
|
580,962
|
$
|
544,598
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
$
|
835,154
|
$
|
853,633
|
|
Retained
earnings
|
1,253,035
|
1,247,737
|
|
Accumulated other
comprehensive (loss) income
|
(9,620)
|
1,619
|
|
Treasury
stock
|
(26,961)
|
(14,966)
|
|
Total shareholders'
equity
|
$
|
2,051,608
|
$
|
2,088,023
|
|
Total liabilities and
equity
|
$
|
2,632,570
|
$
|
2,632,621
|
Consolidated Statements of Net Earnings
|
(In thousands of
Canadian dollars, except share amounts)
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2017
|
|
2016
|
2017
|
2016
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
(Audited)
|
|
Sales
|
$
|
876,809
|
$
|
828,178
|
$
|
3,522,226
|
$
|
3,331,812
|
|
Cost of goods
sold
|
700,948
|
623,362
|
2,934,747
|
2,740,866
|
|
Gross
margin
|
$
|
175,861
|
$
|
204,816
|
$
|
587,479
|
$
|
590,946
|
|
Selling, general and
administrative expenses
|
92,128
|
89,429
|
348,615
|
324,820
|
|
Earnings before the
following:
|
$
|
83,733
|
$
|
115,387
|
$
|
238,864
|
$
|
266,126
|
|
Restructuring and
other related costs
|
(5,921)
|
(4,226)
|
(23,024)
|
(6,570)
|
|
Other income
(expense)
|
(5,319)
|
(5,025)
|
3,609
|
(3,596)
|
|
Earnings before
interest and income taxes
|
$
|
72,493
|
$
|
106,136
|
$
|
219,449
|
$
|
255,960
|
|
Interest expense and
other financing costs
|
1,276
|
1,231
|
5,168
|
6,367
|
|
Earnings before
income taxes
|
$
|
71,217
|
$
|
104,905
|
$
|
214,281
|
$
|
249,593
|
|
Income tax
expense
|
12,153
|
28,681
|
50,192
|
67,891
|
|
Net
earnings
|
$
|
59,064
|
$
|
76,224
|
$
|
164,089
|
$
|
181,702
|
|
Earnings per share
attributable to common shareholders:
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.47
|
$
|
0.57
|
$
|
1.28
|
$
|
1.35
|
|
Diluted earnings per
share
|
$
|
0.45
|
$
|
0.56
|
$
|
1.24
|
$
|
1.32
|
|
Weighted average
number of shares (millions)
|
|
|
|
|
|
Basic
|
126.9
|
133.5
|
128.6
|
134.2
|
|
Diluted
|
130.6
|
136.8
|
132.4
|
137.6
|
Consolidated Statements of Other Comprehensive Income
(Loss)
|
(In thousands of
Canadian dollars)
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
(Audited)
|
|
Net
earnings
|
$
|
59,064
|
$
|
76,224
|
$
|
164,089
|
$
|
181,702
|
|
Other comprehensive
(loss) income
|
|
|
|
|
|
Actuarial gains and
losses that will not be reclassified to
|
|
|
|
|
|
|
|
|
|
|
profit or loss (Net
of tax of $1.2 million and $1.0
million; 2016: $18.1 million and $17.0 million)
|
$
|
(3,508)
|
$
|
49,390
|
$
|
(3,117)
|
$
|
46,243
|
|
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, 2016: $0.0
million)
|
$
|
1,376
|
$
|
(1,427)
|
$
|
(13,536)
|
$
|
(390)
|
|
Change in unrealized
gains and losses on cash flow
|
|
|
|
|
|
|
hedges (Net of tax of
$1.6 million and $0.8 million;
2016: $0.6 million and $0.8 million)
|
(4,553)
|
(1,601)
|
2,297
|
2,423
|
|
Total items that are
or may be reclassified subsequently to
profit or loss
|
$
|
(3,177)
|
$
|
(3,028)
|
$
|
(11,239)
|
$
|
2,033
|
|
Total other
comprehensive (loss) income
|
$
|
(6,685)
|
$
|
46,362
|
$
|
(14,356)
|
$
|
48,276
|
|
Comprehensive
income
|
$
|
52,379
|
$
|
122,586
|
$
|
149,733
|
$
|
229,978
|
Consolidated Statements of Changes in Total Equity
|
|
|
|
|
Accumulated
other
comprehensive income
(loss)(i)
|
|
|
|
(In thousands of
Canadian dollars)
(Audited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
|
Balance at
December 31, 2016
|
$
|
853,633
|
$
|
1,247,737
|
$
|
—
|
$
|
2,116
|
$
|
(497)
|
$
|
(14,966)
|
$
|
2,088,023
|
|
Net
earnings
|
—
|
164,089
|
—
|
—
|
—
|
—
|
164,089
|
|
Other comprehensive
income (loss)(ii)
|
—
|
(3,117)
|
—
|
(13,536)
|
2,297
|
—
|
(14,356)
|
|
Dividends declared
($0.44 per share)
|
—
|
(56,640)
|
—
|
—
|
—
|
—
|
(56,640)
|
|
Share-based
compensation expense
|
—
|
—
|
21,087
|
—
|
—
|
—
|
21,087
|
|
Deferred taxes on
share-based compensation
|
—
|
—
|
4,750
|
—
|
—
|
—
|
4,750
|
|
Repurchase of
shares
|
(24,409)
|
(66,074)
|
(25,837)
|
—
|
—
|
—
|
(116,320)
|
|
Exercise of stock
options
|
5,930
|
—
|
—
|
—
|
—
|
—
|
5,930
|
|
Settlement of
share-based compensation
|
—
|
(32,960)
|
—
|
—
|
—
|
16,005
|
(16,955)
|
|
Shares purchased by
RSU trust
|
—
|
—
|
—
|
—
|
—
|
(28,000)
|
(28,000)
|
|
Balance at
December 31, 2017
|
$
|
835,154
|
$
|
1,253,035
|
$
|
—
|
$
|
(11,420)
|
$
|
1,800
|
$
|
(26,961)
|
$
|
2,051,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
comprehensive income
(loss)(i)
|
|
|
|
(In thousands of
Canadian dollars)
(Audited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
|
Balance at December
31, 2015(iii)
|
$
|
882,770
|
$
|
1,161,047
|
$
|
—
|
$
|
2,506
|
$
|
(2,920)
|
$
|
(2,086)
|
$
|
2,041,317
|
|
Net
earnings
|
—
|
181,702
|
—
|
—
|
—
|
—
|
181,702
|
|
Other comprehensive
income (loss)(ii)
|
—
|
46,243
|
—
|
(390)
|
2,423
|
—
|
48,276
|
|
Dividends declared
($0.36 per share)
|
—
|
(48,348)
|
—
|
—
|
—
|
—
|
(48,348)
|
|
Share-based
compensation expense
|
—
|
—
|
29,224
|
—
|
—
|
—
|
29,224
|
|
Deferred taxes on
share-based compensation
|
—
|
—
|
3,550
|
—
|
—
|
—
|
3,550
|
|
Repurchase of
shares
|
(31,963)
|
(83,778)
|
(32,418)
|
—
|
—
|
—
|
(148,159)
|
|
Exercise of stock
options
|
2,826
|
—
|
—
|
—
|
—
|
—
|
2,826
|
|
Settlement of
share-based compensation
|
—
|
(9,129)
|
(356)
|
—
|
—
|
5,032
|
(4,453)
|
|
Shares purchased by
RSU trust
|
—
|
—
|
—
|
—
|
—
|
(17,912)
|
(17,912)
|
|
Balance at December
31, 2016
|
$
|
853,633
|
$
|
1,247,737
|
$
|
—
|
$
|
2,116
|
$
|
(497)
|
$
|
(14,966)
|
$
|
2,088,023
|
|
|
|
(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)
|
Restated, see Note 3*
of the Company's 2017 audited consolidated financial statements for
further information.
|
Consolidated Statements of Cash Flows
|
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
(In thousands of
Canadian dollars)
|
2017
|
2016
|
2017
|
2016
|
|
CASH PROVIDED BY
(USED IN):
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
(Audited)
|
|
Operating
activities
|
|
|
|
|
|
Net
earnings
|
$
|
59,064
|
$
|
76,224
|
$
|
164,089
|
$
|
181,702
|
|
Add (deduct) items
not affecting cash:
|
|
|
|
|
|
|
Change in fair value
of biological assets
|
(27,629)
|
(48,172)
|
(1,267)
|
(6,263)
|
|
|
Depreciation and
amortization
|
31,161
|
27,576
|
117,227
|
111,651
|
|
|
Share-based
compensation
|
4,579
|
10,165
|
21,087
|
29,224
|
|
|
Deferred income
taxes
|
6,889
|
27,013
|
40,920
|
63,124
|
|
|
Income tax
current
|
5,264
|
1,668
|
9,272
|
4,767
|
|
|
Interest expense and
other financing costs
|
1,276
|
1,231
|
5,168
|
6,367
|
|
|
Gain on sale of
long-term assets
|
2,903
|
3,518
|
(5,781)
|
(1,235)
|
|
|
Change in fair value
of non-designated derivatives
|
6,972
|
(4,637)
|
21,877
|
(25,086)
|
|
|
Impairment of assets
(net of reversals)
|
—
|
638
|
3,776
|
2,831
|
|
Change in net pension
liability
|
4,482
|
5,623
|
5,379
|
24,903
|
|
Net income taxes
paid
|
(1,716)
|
(793)
|
(10,604)
|
(4,944)
|
|
Interest
paid
|
306
|
(991)
|
(2,299)
|
(3,904)
|
|
Change in provision
for restructuring and other related costs
|
(84)
|
271
|
9,037
|
(17,256)
|
|
Change in derivatives
margin
|
(12,059)
|
(22,745)
|
(13,210)
|
1,772
|
|
Other
|
(1,378)
|
(2,518)
|
(6,316)
|
520
|
|
Change in non-cash
operating working capital
|
23,418
|
(1,957)
|
28,340
|
(11,016)
|
|
Cash provided by
operating activities
|
$
|
103,448
|
$
|
72,114
|
$
|
386,695
|
$
|
357,157
|
|
Financing
activities
|
|
|
|
|
|
Dividends
paid
|
$
|
(13,963)
|
$
|
(11,967)
|
$
|
(56,640)
|
$
|
(48,348)
|
|
Net decrease in
long-term debt
|
(139)
|
(199)
|
(1,083)
|
(1,051)
|
|
Exercise of stock
options
|
—
|
1,165
|
5,930
|
2,826
|
|
Repurchase of
shares
|
(26,300)
|
(60,490)
|
(180,110)
|
(72,412)
|
|
Payment of deferred
financing fees
|
(677)
|
(631)
|
(1,302)
|
(2,412)
|
|
Purchase of treasury
stock
|
(6,000)
|
(4,811)
|
(28,000)
|
(17,912)
|
|
Cash used in
financing activities
|
$
|
(47,079)
|
$
|
(76,933)
|
$
|
(261,205)
|
$
|
(139,309)
|
|
Investing
activities
|
|
|
|
|
|
Additions to
long-term assets
|
$
|
(63,192)
|
$
|
(36,219)
|
$
|
(142,245)
|
$
|
(113,194)
|
|
Acquisition of
business
|
—
|
—
|
(199,440)
|
—
|
|
Proceeds from sale of
long-term assets
|
398
|
311
|
15,999
|
6,698
|
|
Cash used in
investing activities
|
$
|
(62,794)
|
$
|
(35,908)
|
$
|
(325,686)
|
$
|
(106,496)
|
|
(Decrease)
increase in cash and cash equivalents
|
$
|
(6,425)
|
$
|
(40,727)
|
$
|
(200,196)
|
$
|
111,352
|
|
Net cash and cash
equivalents, beginning of period
|
209,850
|
444,348
|
403,621
|
292,269
|
|
Net cash and cash
equivalents, end of period
|
$
|
203,425
|
$
|
403,621
|
$
|
203,425
|
$
|
403,621
|
SOURCE Maple Leaf Foods Inc.