Richards Packaging Income Fund announces 2010 Second Quarter Results
August 03 2010 - 5:47PM
PR Newswire (Canada)
TORONTO, Aug. 3 /CNW/ -- TORONTO, Aug. 3 /CNW/ - Richards Packaging
Income Fund (TSX: RPI.UN) (the "Fund") announced today results for
the quarter ended June 30, 2010. "Second quarter organic sales
growth fell short of management expectation of $1.0 million, or
2.0%" commented Gerry Glynn, Chief Executive Officer. Total revenue
was down $3.9 million, or 8.0%, due to organic revenue shrinkage of
$1.0 million, or 2.3%, and the translation of Richards Packaging US
revenue as the Canadian dollar strengthened by U.S./Cdn. 11 cents.
EBITDA(1) decreased $0.6 million, or 9.6%, with EBITDA at 12.3% of
sales. Net income was $2.1 million, or 21.1 cents per Unit, down
67.7% over the same period in 2009, due primarily to the absence of
unrealized gains on financial instruments ($5.4 million). "On
balance, the first half results were satisfactory with margin and
cost improvements fully offsetting the $0.9 million adverse EBITDA
impact of the translation of Richards Packaging US as the Canadian
dollar strengthened by U.S./Cdn. 14 cents" added Mr. Glynn. Total
revenue was down $5.2 million, or 5.4%, due to organic revenue
growth of $1.2 million, or 1.3%, being more than offset by currency
translation. EBITDA(1) was flat at $11.2 million, with EBITDA at
12.4% of sales. Net income was $4.6 million, or 45.6 cents per
Unit, down 33.7% over the same period in 2009, due primarily to the
absence of unrealized gains on financial instruments ($3.9
million). The revenue shortfall during the second quarter resulted
in a further inventory increase of $1.6 million to a total of $3.6
million for the first half which will be recovered over the
remainder of the year by slowing purchases. The Fund paid monthly
distributions of 6.55 cents per Unit during the first half of 2010,
which represented an annualized yield of 9.8% on the June 30th
closing price of $8.00 per Unit. The payout ratio(3) for the second
quarter was 57% and for the first half of 2010 was 58%. During the
second quarter, an additional 20,600 Units were purchased for
cancellation at an average price of $7.25 per Unit. Details of the
Fund's results are currently available on Richards Packaging's
website at www.richardspackaging.com and on SEDAR at www.sedar.com
on August 4th. About Richards Packaging Income Fund The Fund owns
85% of Richards Packaging Inc. ("Richards Packaging"), the leading
packaging distributor in Canada, and third largest in North
America. Richards Packaging is a full-service packaging distributor
targeting small- and medium-sized North American businesses.
Richards Packaging has operated for over 97 years and currently
serves over 10,000 regional food, wine and spirits, cosmetic,
specialty chemical, pharmaceutical and other companies from 20
locations throughout North America. (1) Management defines EBITDA
as earnings before amortization, interest, unrealized losses
(gains) on financial instruments and taxes. EBITDA is the same as
income before under noted items, income taxes and non- controlling
interests as outlined in the interim consolidated financial
statements. Management believes that in addition to net income,
EBITDA is a useful supplemental measure for investors of earnings
available for distribution prior to debt service, capital
expenditures and taxes. Management uses this measure as a starting
point in the determination of earnings available for distribution
to unitholders and exchangeable shareholders. In addition, EBITDA
is intended to provide additional information on operating
performance. This earnings measure should not be construed as an
alternative to net income or as an alternative to cash flow from
operating, investing and financing activities as a measure of
liquidity and cash flows. EBITDA does not have a standardized
meaning prescribed by GAAP and therefore the method of calculating
EBITDA may not be comparable to similar measures presented by other
companies or income trusts. (2) Management defines distributable
cash flow, in accordance with the Company's credit agreement, as
EBITDA less interest, cash income tax expense, maintenance capital
expenditures and loan payments. The objective of presenting this
measure is to calculate the amount which is available for
distribution to unitholders and exchangeable shareholders.
Investors are cautioned that distributable cash flow should not be
construed as an alternative to cash flow from operating, investing
and financing activities as a measure of liquidity and cash flows.
Distributable cash flow does not have a standardized meaning
prescribed by GAAP and therefore the method of calculating
distributable cash flow may not be comparable to similar measures
presented by other income trusts. (3) Management defines payout
ratio as distributions and dividends declared over distributable
cash flow(2). The objective of presenting this measure is to
calculate the percentage of actual distributions in comparison to
the amount available for distribution. Payout ratio does not have a
standardized meaning prescribed by GAAP. The method of calculating
the payout ratio may not be comparable to similar measures
presented by other income trusts. (4) This release contains certain
forward looking information and statements within the meaning of
applicable securities laws (collectively "Statements") regarding
future growth potential, results of operations, performance and
business prospects and opportunities of the Fund. The Statements
are frequently identified by the use of such words as "will",
"may", "could", "expect", "plan", "anticipate", "believe" and other
similar terminology. These Statements reflect management's current
beliefs and are based on information currently available to the
management of Richards Packaging. A number of factors could cause
actual events or results to differ materially from those predicted,
expressed or implied in the Statements. Factors that could cause
such differences include, among other things, changes in customer
and supplier relationships, the extent and duration of the
worldwide recession and the impact on order volumes and pricing,
competition in the industry, inventory obsolescence, trade risks in
respect to foreign suppliers and fluctuations in foreign exchange
and interest rates. Although the Statements contained in this
release are based upon what management believes to be reasonable
assumptions, there can be no assurance that actual results will be
consistent with these Statements. These Statements are made as of
the date of this release and the Fund assumes no obligation to
update or revise them to reflect new events or circumstances.
%SEDAR: 00020433E Gerry Glynn, Chief Executive Officer, Richards
Packaging Inc., (905) 670-7760, gglynn@richardspackaging.com; Enzio
Di Gennaro, Chief Financial Officer, Richards Packaging Inc., (905)
670-7760, edigennaro@richardspackaging.com
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