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.
Andrew Peller Limited (TSX:ADW.A)(TSX:ADW.B) (the "Company")
announced today continued strong operating and financial
performance for the three months ended June 30, 2012.
Q1 FISCAL 2013 HIGHLIGHTS:
-- Sales up 4.7% on solid growth through majority of trade channels
-- Acquisition of Cellar Craft and the partnership with Wayne Gretzky make
strong contribution to growth
-- EBITA up 2.1% to $9.7 million
-- Net earnings up 19.2% to $4.7 million or $0.34 per Class A Share
-- Balance sheet and financial position remain strong
"Our strong growth in sales and net income continued in the
first quarter following another year of record performance in
fiscal 2012," commented John Peller, President and CEO. "Looking
ahead, we believe fiscal 2013 will be another solid year as we
capitalize on rising demand for our high quality wines across all
of our well established trade channels."
Sales for the first quarter of fiscal 2013 rose 4.7% to $72.7
million from $69.4 million in the prior year. The positive impact
from the partnership with Wayne Gretzky and the acquisition of
Cellar Craft, new product introductions, ongoing initiatives to
grow sales of the Company's blended varietal table and premium
wines through provincial liquor boards, and strong export sales
contributed to the increase. The increase was partially offset by
lower sales of the Company's personal winemaking products.
Gross margin was 38.8% of sales for the three months ended June
30, 2012 compared to 39.4% last year. Gross margin percentage was
negatively affected by higher costs for wine purchased on
international markets as well as increased price competition in
certain markets. The increase was partially offset by the positive
impact of sales of higher margin products and successful cost
control initiatives to reduce operating and packaging expenses. A
special levy implemented on July 1, 2010 by the Province of Ontario
on international and Canadian blended (ICB) wines sold through the
Company's retail store network reduced sales and gross margin by
approximately $0.5 million in the first quarters of fiscal 2013 and
fiscal 2012. Management believes gross margin will be in the range
of approximately 37% to 38% range for the 2013 fiscal year.
Selling and administrative expenses increased in the first
quarter of fiscal 2013 due to an increase in sales and marketing
investments to grow sales volumes of its products through increased
advertising and promotional initiatives across all trade channels
and investments made to increase tourism at its estate wineries. As
a percentage of sales, selling and administrative expenses for the
first quarter of fiscal 2013 decreased to 25.5% from 25.7% in the
prior year period.
Interest expense declined in the first quarter of fiscal 2013
compared to last year due to a decrease in short and long-term
interest rates partially offset by higher levels of short-term
borrowings.
The Company recorded a non-cash gain in the first quarter of
fiscal 2013 related to mark-to-market adjustments on an interest
rate swap and foreign exchange contracts aggregating $0.2 million
compared to a loss of approximately $0.3 million in the prior year.
The Company has elected not to apply hedge accounting and
accordingly these financial instruments are reflected in the
Company's financial statements at fair value each reporting period.
These instruments are considered to be effective economic hedges
and have enabled management to mitigate the volatility of changing
costs and interest rates.
Other expenses incurred in the first quarter of fiscal 2013
relate to a fair value adjustment to vines and maintenance costs
for the Company's Port Moody facility which was closed effective
December 31, 2005. Other expenses in the first quarter of fiscal
2012 relate to a fair value adjustment to vines and maintenance
costs for the Company's Port Moody facility.
Net earnings excluding gains (losses) on derivative financial
instruments, other expenses, and the related income tax effect of
these items for the three months ended June 30, 2012 were $4.6
million compared to $4.3 million in the same period last year. Net
earnings for the three months ended June 30, 2012 were $4.7 million
or $0.34 per Class A Share compared to $3.9 million or $0.28 per
Class A Share in the first quarter of fiscal 2012.
Strong Financial Position
Working capital at June 30, 2012 decreased to $34.7 million
compared to $34.9 million at March 31, 2012. The change related to
lower levels of accounts payable and accrued liabilities which were
offset by an increase to bank indebtedness and a reduction in
inventory levels. The Company's debt to equity ratio was 0.94:1 at
June 30, 2012 compared to 0.87:1 at March 31, 2012. Shareholders'
equity as at June 30, 2012 was $123.7 million or $8.65 per common
share compared to $120.6 million or $8.43 per common share as at
March 31, 2012. The increase in shareholders' equity is primarily
due to higher net earnings for the year partially offset by the
payment of dividends.
In the first quarter of fiscal 2013 the Company used cash from
operating activities, after changes in non-cash working capital
items, of $5.6 million compared to $1.3 million in the prior year.
Cash flow from operating activities declined in the first quarter
of fiscal 2013 primarily due to the reduced levels of accounts
payable and accrued liabilities and higher accounts receivable due
to increased sales for the period. The decrease was partially
offset by reduced levels of inventory and strong earnings
performance.
Recent Events
The Company announced that its Thirty Bench Riesling 2011 had
been awarded a Lieutenant Governor's Award for Excellence in
Ontario Wines. Out of 258 wines submitted from 73 wineries, the
Thirty Bench varietal was selected for the award by a panel of
fourteen of Ontario's leading wine experts and sommeliers.
The Company's portfolio of leading ice wines have also been
recognized with a significant number of awards in a number of
prestigious international competitions, including gold medals in
Korea, the United Kingdom, China, Japan, Brussels, Paris, and the
United States for Peller Estates Vidal Icewine 2012, Peller Estates
Oak Aged Icewine 2010, and Peller Estates Riesling Icewine 2007.
The Company's recently-released Wayne Gretzky Cabernet Franc
Icewine 2010 has also received a Double Gold Medal at the 2012 San
Francisco International Wine Competition.
The Company recently launched its new brands, skinnygrape,
Canada's first low calorie wine and Verano, an exciting premium
Spanish wine.
Financial Highlights (Unaudited)
(Complete condensed consolidated financial statements to follow)
----------------------------------------------------------------------------
(in $000 except per share amounts) Three Months
For the Period Ended June 30, 2012 2011
----------------------------------------------------------------------------
Sales 72,662 69,407
Gross margin 28,227 27,313
Gross margin (% of sales) 38.8% 39.4%
Selling and administrative expenses 18,550 17,831
EBITA 9,677 9,482
Unrealized loss (gain) on financial
instruments (198) 300
Other expenses 86 164
Net earnings 4,662 3,911
Earnings per share - Class A $ 0.34 $ 0.28
Earnings per share - Class B $ 0.29 $ 0.24
Dividend per share - Class A (annual) $ 0.360 $ 0.360
Dividend per share - Class B (annual) $ 0.314 $ 0.314
Cash provided by operations (after changes
in non-cash working capital items) (5,607) (1,294)
Working capital 34,670 34,869
Shareholders' equity per share $ 8.65 $ 8.43
----------------------------------------------------------------------------
Net earnings before other expenses is defined as net earnings
before the net unrealized (gain) loss on financial instruments, and
other expenses, all adjusted by income tax rates as calculated
below:
Unaudited (in $,000) Three Months
Period ended June 30, 2012 2011
----------------------------------------------------------------------------
Net earnings 4,662 3,911
Net unrealized (gains) losses on derivatives (198) 300
Other expenses 86 164
Income tax effect of the above 29 (125)
----------------------------------------------------------------------------
Net earnings excluding (gains) losses on
derivative financial instruments, other
expenses, and the related income tax effect 4,579 4,250
----------------------------------------------------------------------------
Andrew Peller Limited ('APL' or the 'Company') 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 from
vineyards around the world. The Company's award-winning premium and
ultra-premium VQA brands include Peller Estates, Trius, Hillebrand,
Thirty Bench, Crush, Wayne Gretzky, Sandhill, Calona Vineyards
Artist Series, and Red Rooster. Complementing these premium brands
are a number of popularly priced varietal wine brands including
Peller Estates French Cross in the East, Peller Estates Proprietors
Reserve in the West, Copper Moon, XOXO, skinnygrape and Verano.
Hochtaler, Domaine D'Or, Schloss Laderheim, Royal, and Sommet are
our key value priced wine blends. The Company imports wines from
major wine regions around the world to blend with domestic wine to
craft these popularly priced and value priced wine brands. With a
focus on serving the needs of all wine consumers, the Company
produces and markets premium personal winemaking products through
its wholly-owned subsidiary, Global Vintners Inc., the recognized
leader in personal winemaking products. Global Vintners distributes
products through over 250 Winexpert and Wine Kitz authorized
retailers and franchisees and more than 600 independent retailers
across Canada, the United States, the United Kingdom, New Zealand,
and Australia. Global Vintners award-winning premium and
ultra-premium winemaking brands include Selection, Vintners
Reserve, Island Mist, Kenridge, Cheeky Monkey, Ultimate Estate
Reserve, Traditional Vintage, Cellar Craft, and Artful Winemaker.
The Company owns and operates more than 100 well- positioned
independent retail locations in Ontario under the Vineyards Estate
Wines, Aisle 43, and WineCountry Vintners store names. The Company
also owns Grady Wine Marketing Inc. based in Vancouver and The
Small Winemaker's Collection Inc. based in Ontario; both of these
wine agencies are importers of premium wines from around the world
and are marketing agents for these fine wines. The Company has
entered into a partnership to market the Wayne Gretzky Estate
Winery brands across Canada. The Company's products are sold
predominantly in Canada with a focus on export sales for its
icewine and personal winemaking products. 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,
amortization, unrealized derivative (gain) loss, other expenses,
and income taxes). EBITA is not a recognized measure under IFRS.
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 IFRS 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. The
Company also utilizes gross margin (defined as sales less cost of
goods sold, excluding amortization) and net earnings excluding
(gains) losses on derivative financial instruments, other expenses,
and the related income tax effect as defined above. The Company's
method of calculating EBITA and gross margin may differ from the
methods used by other companies and, accordingly, may not be
comparable to measures used by other companies.
Andrew Peller Limited common shares trade on the Toronto Stock
Exchange (symbols ADW.A and ADW.B).
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 labeling 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
Condensed Consolidated Balance Sheets
Unaudited
These financial statements have not been reviewed by
our auditors June 30 March 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2012 2012
(in thousands of Canadian dollars) $ $
----------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable 28,201 24,937
Inventory 105,510 110,256
Current portion of biological assets 2,116 881
Prepaid expenses and other assets 1,921 1,338
------------------------
137,748 137,412
Property, plant, and equipment 86,641 84,490
Biological assets 12,889 12,556
Intangibles 13,525 13,621
Goodwill 37,473 37,473
------------------------
288,276 285,552
------------------------
------------------------
Liabilities
Current Liabilities
Bank indebtedness 70,794 57,495
Accounts payable and accrued liabilities 24,064 37,118
Dividends payable 1,252 1,252
Income taxes payable 407 40
Current portion of derivative financial instruments 1,195 1,272
Current portion of long-term debt 5,366 5,366
------------------------
103,078 102,543
Long-term debt 40,188 41,456
Long-term derivative financial instruments 1,909 1,943
Post-employment benefit obligations 7,302 7,151
Deferred income taxes 12,075 11,907
------------------------
164,552 165,000
------------------------
Shareholders' Equity
Capital stock 7,026 7,026
Retained earnings 116,698 113,526
------------------------
123,724 120,552
------------------------
288,276 285,552
------------------------
------------------------
ANDREW PELLER LIMITED
Condensed Consolidated Statements of
Earnings
Unaudited
These financial statements have not For the three months For the three
been reviewed by our auditors ended months ended
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, 2012 June 30, 2011
(in thousands of Canadian dollars) $ $
------------------------------------------------------------ ---------------
Sales 72,662 69,407
Cost of goods sold 44,435 42,094
Amortization of plant and equipment
used in production 1,209 1,233
---------------------- ---------------
Gross profit 27,018 26,080
Selling and administration 18,550 17,831
Amortization of plant, equipment, and
intangibles used in selling and
administration 768 714
Interest 1,246 1,549
---------------------- ---------------
Operating earnings 6,454 5,986
Net unrealized (gains) losses on
derivative financial instruments (198) 300
Other expenses 86 164
---------------------- ---------------
Earnings before income taxes 6,566 5,522
---------------------- ---------------
Provision for income taxes
Current 1,653 1,516
Deferred 251 95
---------------------- ---------------
1,904 1,611
---------------------- ---------------
Net earnings for the period 4,662 3,911
Net earnings per share
Basic and diluted
Class A shares 0.34 0.28
---------------------- ---------------
Class B shares 0.29 0.24
---------------------- ---------------
ANDREW PELLER LIMITED
Condensed Consolidated Statements of Comprehensive
Income
Unaudited
These financial statements have not For the three For the three
been reviewed by our auditors months ended months ended
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, 2012 June 30, 2011
(in thousands of Canadian dollars) $ $
---------------------------------------------------------------------------
Net earnings for the period 4,662 3,911
Net actuarial losses on employee
future benefits (321) (326)
Deferred income taxes 83 85
------------------- -------------------
(238) (241)
------------------- -------------------
Net comprehensive income for the
period 4,424 3,670
------------------- -------------------
ANDREW PELLER LIMITED
Condensed Consolidated Statements of Cash
Flows
Unaudited
These financial statements have not been For the three For the three
reviewed by our auditors months ended months ended
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, 2012 June 30, 2011
(in thousands of Canadian dollars) $ $
---------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 4,662 3,911
Adjustments for:
Amortization of plant, equipment, and
intangibles 1,977 1,947
Interest expense 1,246 1,549
Provision for income taxes 1,904 1,611
Revaluation of vine biological assets 47 113
Post-employment benefits (170) (168)
Net unrealized (gain) loss on derivative
financial instruments (198) 300
Interest paid (1,187) (1,426)
Income taxes paid (1,286) (2,515)
--------------- ---------------
6,995 5,322
Changes in non-cash working capital items
related to operations (12,602) (6,616)
--------------- ---------------
(5,607) (1,294)
--------------- ---------------
Investing activities
Purchase of property, equipment and vine
biological assets (5,019) (1,582)
Purchases of intangibles (88) (6)
--------------- ---------------
(5,107) (1,588)
--------------- ---------------
Financing activities
Increase in bank indebtedness 13,299 5,363
Repayment of long-term debt (1,333) (1,333)
Dividends paid (1,252) (1,148)
--------------- ---------------
10,714 2,882
--------------- ---------------
Increase (decrease) in cash during the
period - -
Cash, beginning of period - -
Cash, end of period - -
--------------- ----------------
--------------- ----------------
The above statements should be read in conjunction with the
entire interim consolidated financial statements and notes. They
will be available through the Investor Relations section of
www.andrewpeller.com or at www.sedar.com.
Contacts: Andrew Peller Limited Mr. Peter Patchet CFO and EVP
Human Resources (905) 643-4131 Ext.
2210peter.patchet@andrewpeller.com
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