Andrew Peller Limited (the "Company") (TSX: ADW.A)(TSX: ADW.B)
announced today its results for the three and six months ended
September 30, 2008.
Strong Growth Continues
For the three and six months ended September 30, 2008 sales
increased 13.3% to $69.4 million and 9.0% to $129.0 from $61.2
million and $118.4 million for the same periods last year. The
increase was due primarily to ongoing initiatives to grow sales of
the Company's blended table, premium and ultra-premium wines
through all trade channels, the acquisition of World Vintners Inc.
on June 30, 2008 and the introduction of new products over the last
twelve months.
Gross profit as a percentage of sales declined slightly to 42.0%
for the three months ended September 30, 2008 compared to 42.8% in
the same period last year. For the first six months of fiscal 2009,
gross profit as a percentage of sales was 41.9% compared to 42.8%
for the same period last year. The changes were due primarily to an
increase in the cost of domestic grapes and wine purchased on
international markets combined with higher packaging costs. Selling
and administrative expenses decreased marginally for the three and
six months ended September 30, 2008 to 30.0% and 29.9% of sales
respectively, compared to 30.1% and 30.0% of sales respectively,
for the same periods last year due primarily to the launch of new
products over the last twelve months and increased efforts to
market the Company's premium and ultra-premium wines.
Net and comprehensive earnings for the three and six months
ended September 30, 2008 were $2.4 million or $0.17 per Class A
share and $5.1 million or $0.35 per Class A share compared to $2.7
million or $0.18 per Class A share and $5.6 million of $0.38 per
Class A share for the same periods last year. Included in net and
comprehensive earnings in fiscal 2009 were other charges of $1.2
million related to non-cash mark-to-market adjustments on interest
rate swaps and foreign exchange contracts compared to a gain of
$0.04 million last year. Not including the other losses and unusual
items in each year, net and comprehensive earnings for the first
six months of fiscal 2009 increased 6.8% to $6.0 million compared
to the same period last year.
"We are pleased with our performance in the second quarter and
first six months of fiscal 2009," commented John Peller, President
and CEO. "The acquisitions of World Vintners Inc. and the remaining
50% interest in Rocky Ridge Vineyards completed during the second
quarter are making a solid contribution to the performance of our
Company, while our successful sales and marketing efforts continue
to build our brands across all of our targeted trade channels."
Solid Financial Position
The Company's balance sheet remained strong as at September 30,
2008. Working capital was $39.6 million at the end of the second
quarter of fiscal 2009 compared to $26.6 million at March 31, 2008.
Shareholders' equity at September 30, 2008 increased to $104.3
million or $7.00 per Class A share compared to $102.7 million or
$6.89 per Class A share at March 31, 2008 and $99.0 million or
$6.65 per Class A share at September 30, 2007. While credit markets
have tightened in recent months, the Company has successfully
refinanced its long-term debt to April 30, 2015 and is working on
converting its demand operating facility to a one year committed
facility.
Dividend Increase
As previously announced, common share dividends were increased
by 10% for shareholders of record on June 30, 2008. The annual
dividend on Class A shares was increased to $0.33 per share from
$0.30 per share. The dividend on Class B shares was increased to
$0.288 per share from $0.261 per share.
"Looking ahead, in the near term we expect our sales levels and
gross margin will remain stable through this unsettled economic
period, and we will be increasing our emphasis on generating
production efficiencies and reducing overhead costs to enhance our
bottom line. Over the longer term, we remain confident that our
focus on quality, our leading presence in all our distribution
channels, and our strong brand recognition will generate solid and
sustainable growth," Mr. Peller concluded.
Financial Highlights (unaudited - complete consolidated
financial statements to follow)
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Period Ended September 30, Three Months Six Months
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(in $000 except per share amounts) 2008 2007 2008 2007
--------------------------------------------------------------------------
Sales $ 69,356 $ 61,236 $ 128,974 $ 118,376
EBITA 8,294 7,765 15,478 15,196
Earnings before
other income and unusual items 4,663 4,408 8,635 8,514
Other income (loss)
and unusual items (1,073) (394) (1,292) (80)
Net and comprehensive earnings 2,444 2,652 5,097 5,566
Net earnings per share
(Basic per Class A share) $ 0.17 $ 0.18 $ 0.35 $ 0.38
Cash from operations 1,251 12,811 2,695 10,910
(after changes in
non-cash working capital items)
Working capital $ 39,586 $ 23,939
Shareholders' equity per share $7.00 $6.65
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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. With the acquisition of
Cascadia Brands Inc., 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 and Vineco International Products.
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).
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
These financial statements have not been reviewed
by our auditors September 30 March 31
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----------------------------------------------------------------------------
2008 2008
(expressed in thousands of Canadian dollars) $ $
----------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable 29,721 23,072
Inventories 94,715 93,817
Prepaid expenses and other assets 5,617 4,242
Income taxes recoverable 2,232 823
--------------------------
132,285 121,954
Property, plant and equipment 101,354 94,480
Goodwill (note 3) 44,515 36,171
Other assets 7,383 7,139
--------------------------
285,537 259,744
--------------------------
--------------------------
Liabilities
Current Liabilities
Bank indebtedness 51,046 57,722
Accounts payable and accrued liabilities 34,298 29,705
Dividends payable 1,197 1,088
Current portion of long - term debt (note 4) 6,158 6,830
--------------------------
92,699 95,345
Long-term debt (note 4) 74,767 46,946
Employee future benefits 2,964 3,167
Future income taxes 10,791 11,606
--------------------------
181,221 157,064
--------------------------
Shareholders' Equity
Capital Stock 7,375 7,375
Retained Earnings 96,941 95,305
--------------------------
104,316 102,680
--------------------------
285,537 259,744
--------------------------
--------------------------
The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
Consolidated Statements of Earnings, Comprehensive Earnings and Retained
Earnings
These financial statements have not been reviewed by our auditors
(expressed in thousands For the For the
of Canadian dollars) Three Months Six Months
Ended Ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
----------------------------------------------------- -------------------
Sales 69,356 61,236 128,974 118,376
Cost of goods sold,
excluding amortization 40,254 35,040 74,936 67,714
-------- -------- ------- ----------
Gross profit 29,102 26,196 54,038 50,662
Selling and administration 20,808 18,431 38,560 35,466
-------- -------- ------- ----------
Earnings before interest
and amortization 8,294 7,765 15,478 15,196
Interest 1,505 1,439 2,907 2,864
Amortization of plant,
equipment and intangibles 2,126 1,918 3,936 3,818
-------- -------- ------- ----------
Earnings before other items 4,663 4,408 8,635 8,514
Other (loss) income (1,017) (325) (1,178) 44
Unusual items (56) (69) (114) (124)
-------- -------- ------- ----------
Earnings before income taxes 3,590 4,014 7,343 8,434
-------- -------- ------- ----------
Provision for income taxes
Current 1,480 1,409 2,575 2,725
Future (334) (47) (329) 143
-------- -------- ------- ----------
1,146 1,362 2,246 2,868
-------- -------- ------- ----------
Net and comprehensive
earnings for the period 2,444 2,652 5,097 5,566
Retained earnings
- Beginning of period 95,694 90,101 95,305 88,147
Impact of adopting
accounting pronouncements on
April 1, 2007 - - - 128
Impact of adopting
accounting pronouncement on
April 1, 2008 - - (1,067) -
-------- -------- ------- ----------
Retained earnings
- Beginning of period as restated 95,694 90,101 94,238 88,275
-------- -------- ------- ----------
Dividends:
Class A and Class B (1,197) (1,087) (2,394) (2,175)
-------- -------- ------- ----------
Retained earnings - End of period 96,941 91,666 96,941 91,666
-------- -------- ------- ----------
-------- -------- ------- ----------
Net earnings per share
Basic and diluted
Class A shares 0.17 0.18 0.35 0.38
-------- -------- ------- ----------
-------- -------- ------- ----------
Class B shares 0.15 0.16 0.31 0.33
-------- -------- ------- ----------
-------- -------- ------- ----------
The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
Consolidated Statements of Cash Flows
These financial statements have not been reviewed by our auditors
(expressed in thousands For the For the
of Canadian dollars) Three Months Six Months
Ended Ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
----------------------------------------------------- -------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 2,444 2,652 5,097 5,566
Items not affecting cash:
Amortization of plant, equipment
and intangibles 2,126 1,918 3,936 3,818
Employee future benefits (154) (162) (203) (187)
Net unrealized loss (gain)
on foreign exchange contracts
and interest rate swaps 1,017 325 1,178 (44)
Future income taxes (334) (47) (329) 143
Amortization of
deferred financing costs 55 37 93 73
-------- -------- ------- ----------
5,154 4,723 9,772 9,369
Changes in non-cash
working capital items
related to operations (note 5) (3,903) 8,088 (7,077) 1,541
-------- -------- ------- ----------
1,251 12,811 2,695 10,910
-------- -------- ------- ----------
Investing activities
Acquisition
of World Vintners Inc. (note 3) (16) - (10,956) -
Acquisition
of Rocky Ridge
Vineyards Inc. (note 3) - - (4,016) -
Purchase of property
and equipment (2,933) (4,396) (5,431) (8,212)
-------- -------- ------- ----------
(2,949) (4,396) (20,403) (8,212)
-------- -------- ------- ----------
Financing activities
Increase
in deferred financing costs (73) - (287) -
Increase (decrease)
in bank indebtedness 3,882 (9,321) (6,676) (1,212)
Increase in
long-term debt (note 4) - 3,470 29,036 3,470
Repayment of long-term debt (914) (1,476) (2,080) (2,951)
Dividends paid (1,197) (1,088) (2,285) (2,005)
-------- -------- ------- ----------
1,698 (8,415) 17,708 (2,698)
-------- -------- ------- ----------
Cash at beginning
and end of period - - - -
-------- -------- ------- ----------
-------- -------- ------- ----------
Supplemental disclosure
of cash flow information
Cash paid during the period for
Interest 1,594 1,372 2,656 2,687
Income taxes 1,532 2,235 2,359 3,294
The accompanying notes are an integral part of these interim consolidated
financial statements
This news release contains forward-looking information that is
based upon assumptions and is subject to risks and uncertainties as
indicated in the cautionary note contained elsewhere in this news
release.
Contacts: Andrew Peller Limited Mr. Peter Patchet CFO and EVP
Human Resources (905) 643-4131 Ext. 2210 Email:
peter.patchet@andrewpeller.com
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