Richards Packaging Income Fund announces 2011 Third Quarter Results
November 01 2011 - 1:28AM
PR Newswire (Canada)
TORONTO, Nov. 4, 2011 /CNW/ - Richards Packaging Income Fund (the
"Fund") announced today results for the quarter ended September 30,
2011. Third quarter performance continued to track at the
first half level with the exception of the inventory sell-off
impact, but below the profitability levels of 2010. Total
revenue was up 2.2% with organic revenue growth at 2.0% and an
inventory sell-off of $1.4 mil. being partially offset by the
U.S./Cdn. 6¢ appreciation of the dollar. EBITDA(1) was down
$0.6 million, or 10.5%, due to price erosion in selected larger
accounts and higher freight costs. Gross profit and EBITDA as
a percent of sales was depressed due to the inventory sell-off when
compared to the first half performance to run at levels of 15.5%
and 10.6% respectively. We expect that this trend will
continue into the fourth quarter. Net income was up $1.1
million, or 48.9%, mainly reflecting the mark-to-mark gain on
exchangeable shares. The nine months results reflect weakness
that began during the fourth quarter of 2010. Total revenue
was up by 0.2% with organic revenue growth of 2.0% being fully
offset by the U.S./Cdn. 6¢ appreciation of the Canadian
dollar. EBITDA(1) was down $2.1 million, or 12.0%, due to
price erosion in selected larger accounts and higher freight
costs. Net income was up $1.1 million mainly reflecting the
mark-to-mark gain on exchangeable shares. The working capital
increased by $0.2 million reflecting the increase in revenue, as
the inventory reduction of $2.0 million was offset by an associated
trade payable reduction. A further $1.3 million of inventory
is expected to be sold-off(4). The $1.6 million of free cash
flow generated in the third quarter was utilized to pay down $1.0
million of debt and to cover our expansion and working capital
needs. Over the remainder of the year, we expect to continue
to lower our investment in inventories and make further payments on
our debt(4). The Fund paid monthly distributions of 6.55¢ per Unit
during the third quarter, which represented an annualized yield of
11.1% on the September 30(th) closing price of $7.10 per
Unit. The payout ratio(3) for the third quarter was 59%,
slightly above the first half level. Details of the Fund's results
are currently available on Richards Packaging's website at
www.richardspackaging.com and on November 4(th) on SEDAR at
www.sedar.com. About Richards Packaging Income Fund The Fund owns
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 99 years
and currently serves over 11,000 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, financial expenses, patent defense
costs, unrealized losses (gains) and dividends on exchangeable
shares and taxes. EBITDA is the same as profit from
operations as outlined in the interim financial statements after
adding back amortization and patent defense costs. Management
believes that in addition to net income, EBITDA is a useful
supplemental measure for investors on operating performance and 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. This
earnings measure should not be construed as an alternative to net
income or as an alternative to cash flows 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.
2 Management defines distributable
cash flow, in accordance with Richards Packaging's credit
agreement, as EBITDA less interest, cash income tax expense and
maintenance capital expenditures. Free cash flow is
distributable cash flow less distributions. 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 companies.
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 Fund's method
of calculating the payout ratio may not be comparable to similar
measures presented by other companies. 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. Specifically this release
contains Statements with respect to compliance with certain
financial covenants and the recommencement of distributions. 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.
Richards Packaging Income Fund CONTACT: Gerry Glynn Enzio
DiGennaroChief Executive Officer ChiefFinancial OfficerRichards
Packaging Inc. RichardsPackaging Inc.(905) 670-7760
(905)670-7760gglynn@richardspackaging.com
edigennaro@richardspackaging.com
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