ROUGEMONT, QC, May 7, 2021 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $466.8 million in the first quarter of 2021, down 1.2% year over year. Excluding a $16.0 million unfavourable foreign exchange impact, sales were up 2.2% year over year. The Company's operating profit for the first quarter of 2021 totalled $31.4 million, up $1.1 million from $30.3 million in operating profit in the same quarter last year. The 2021 first–quarter profit attributable to the Company's shareholders totalled $20.1 million, down $2.8 million year over year.
(in thousands of $)
March 28, 2020
Profit before income taxes
Profit attributable to the Company's shareholders
Basic and diluted earnings per share (in $)
Note: These are financial highlights only. Management's Discussion and Analysis, the unaudited interim condensed consolidated financial statements and notes thereto for the quarter ended April 3, 2021 are available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.
"Although industry volumes and our sales are slightly down from the same period in 2020, they remain up from historical averages. It is also important to remember that sales in March 2020 were helped by an accumulation of food reserves related to the pandemic. We are pleased with our profitability level despite a marked increase in transportation and warehousing costs. We are seeing the effect of inflationary pressures on our costs and are gradually adjusting our prices in order to neutralize such effects on our profitability. Finally, I would like to thank our employees who, by their considerable effort and their resilience, contribute to pursuing our mission during these exceptional times," said Nathalie Lassonde, Chief Executive Officer and Vice Chairman of the Board of Directors of Lassonde Industries Inc.
For the first quarter of 2021, the Company's sales totalled $466.8 million, down $5.6 million or 1.2% from $472.4 million in the same quarter of 2020. Excluding a $16.0 million unfavourable foreign exchange impact, the Company's first-quarter sales were up $10.4 million or 2.2% year over year. This increase was largely due to an increase in sales of private label products and a favourable change in the sales mix of national brands, partly offset by a decrease in Canada in the sales volume of national brands. It is important to remember that sales for March 2020 benefited from an unusual increase in volume resulting from the accumulation of food reserves related to the pandemic.
The Company's operating profit for the first quarter of 2021 totalled $31.4 million, up $1.1 million from $30.3 million in the same quarter last year. This increase came from an increased profitability from the Canadian operations, mainly due to (i) a higher gross margin, explained by a favourable change in the sales mix and an improvement in the production rate at one of the Company's plants, which had been slowed in 2020 by investment related activities, and to (ii) lower selling and marketing expenses, partly offset by higher warehousing costs. As for the U.S. operations, the profitability is down essentially due to higher transportation and warehousing costs, partly offset by a higher gross margin attributable to a favourable change in the sales mix.
The Company's financial expenses went from $5.0 million in the first quarter of 2020 to $3.0 million in the first quarter of 2021. This decrease was essentially due to a decrease in the interest expense on long term debt resulting from a lower debt level.
"Other (gains) losses" went from a $3.4 million gain in the first quarter of 2020 to a $0.5 million loss in the first quarter of 2021. This 2021 first-quarter loss was essentially due to a $0.4 million loss resulting from a change in the fair value of financial instruments, whereas the 2020 first-quarter gain was mainly due to $3.1 million in foreign exchange gains resulting from the impact of a strong appreciation at quarter end of the U.S. dollar against the Canadian dollar.
Profit before income taxes stood at $27.7 million in the first quarter of 2021, down $0.8 million from $28.5 million in the first quarter of 2020.
Income tax expense went from $4.7 million in the first quarter of 2020 to $7.3 million in the first quarter of 2021. At 26.2%, the 2021 first-quarter effective income tax rate is significantly higher than the 16.7% rate in the same quarter of 2020. The 2020 first-quarter effective income tax rate reflected the impact of incentive measures adopted by the U.S. government to help businesses deal with the COVID-19 crisis. Excluding this item, the 2021 first-quarter effective income tax rate remains slightly higher than the adjusted rate in the same quarter of 2020 and mainly reflects a decrease in the deductible amounts on the Company's interest expense.
The 2021 first-quarter profit totalled $20.5 million, down $3.2 million from $23.7 million in the first quarter of 2020.
Profit attributable to the Company's shareholders was $20.1 million, resulting in basic and diluted earnings per share of $2.90 for the first quarter of 2021. In the first quarter of 2020, profit attributable to the Company's shareholders had totalled $22.9 million, resulting in basic and diluted earnings per share of $3.31.
The Company's operating activities generated $4.4 million in cash during the first quarter of 2021, while they had generated $24.9 million in cash during the same quarter last year. Financing activities generated $3.1 million in cash during the first quarter of 2021, while they had generated $110.3 million in the same quarter of 2020. During the first quarter of 2020, the cash inflows related to the financing of the acquisition of Sun-Rype Products Ltd. and of two of its affiliates ("Sun-Rype") were $89.3 million, leaving a difference of $17.9 million on a comparable basis. Investing activities used $12.6 million in cash during the first quarter of 2021 compared to $93.2 million used in the same quarter of 2020. Excluding the $82.8 million in cash flows related to the Sun-Rype acquisition in 2020, investing activities used $2.2 million more cash than during the first quarter of 2020. At the end of the first quarter of fiscal 2021, the Company reported a cash and cash equivalents balance of $2.8 million and the bank overdraft balance was $1.2 million, whereas, at the end of the first quarter of 2020, the cash and cash equivalents balance was $31.7 million and the Company reported no bank overdraft.
For the three-month period ended April 3, 2021, the Company noted a slight decrease in industry sales volumes in the U.S. and Canadian fruit juice and drinks markets. It recalls that sales for March 2020 benefited from an unusual increase in volume resulting from the accumulation of food reserves related to the pandemic. Excluding foreign exchange impacts, the Company's sales were up 2.2% in the first quarter of 2021 compared to the same period last year. Barring any significant external shocks, including foreign exchange impacts and the impacts of the evolution of COVID–19 and the speed at which the restrictions will be lifted, the Company expects that, for 2021, it will be able to maintain a sales level similar to 2020. However, the uncertainty surrounding such a forecast is higher than it is under normal circumstances, as the arrival of new variants could postpone the return to complete deconfinement. In addition, the level of food services activity could be affected by a higher proportion of teleworking than historically, even once the pandemic becomes a thing of the past.
The Company observed a reduction in the profitability of its U.S. operations during the first quarter of 2021 due to a sharp increase in transportation and warehousing costs, among other factors. The transportation challenges are attributable to an increase in demand exacerbated by a lack of truckers and equipment. The Company believes that this situation is likely to continue, at least until the end of 2021. Moreover, the combined impact of the current pandemic and the beginning of economic recovery following a gradual reduction in lockdown measures in the United States are creating strong pressures on the availability of workers and inflationary pressures affecting certain raw materials, such as PET resin. To offset these inflationary pressures, the Company believes it will be able to gradually adjust its sales prices in the second and third quarters, however the full effect of these price increases will not be felt before the third quarter due to the time required for them to come into effect.
Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of ready-to-drink juices and drinks marketed under brands such as Apple & Eve, Everfresh, Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde is the largest producer of fruit juices and drinks in Canada and one of the two largest producers of store brand shelf-stable fruit juices and drinks in the United States. It is also a major producer of cranberry sauces. The Company also produces fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company also imports and markets selected wines from various countries and manufactures apple ciders and cider-based beverages.
The Company produces superior quality products through the expertise of more than 2,700 people working in 17 plants across Canada and the United States. To learn more, visit www.lassonde.com.
Caution Concerning Forward-Looking Statements
In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Company may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements notably include estimates, expectations, forecasts, and projections of future investment spending, revenues, expenses, earnings, profit, indebtedness, financial position, losses, upcoming projects, business and management strategies, and business growth and expansion. In the context of this document, forward-looking statements are particularly used to discuss preliminary results, the rate of sales growth, and profit attributable to shareholders. The forward-looking statements contained herein are used to help readers better understand Lassonde's financial position and the results of its operations as at the dates presented and may not be appropriate for other purposes. Forward-looking statements can be recognized by such words as "may," "should," "believes," "predicts," "plans," "expects," "intends," "anticipates," "estimates," "projects," "objective," "continues," "proposes," "targets," or "aims" as well as words and expressions of a similar nature and whether they are used in the affirmative or negative or used in the conditional or future tense. Forward-looking statements also include any statements that do not refer to historical facts.
By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other statements will not be achieved or will differ significantly from those expressed or implied in such forward-looking statements or could affect the extent to which a particular forecast, projection or other statement materializes. Although Lassonde believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that these expectations will prove to be correct.
Readers are cautioned against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various significant factors. Such factors include, among others, the economic, industrial, competitive and regulatory environment in which Lassonde operates or factors that are likely to have an impact on its operations, its ability to attract and retain customers, consumers, and qualified staff, the availability and cost of raw materials and transportation, its operating costs, and the price of its finished products in the various markets where it operates.
The Company cautions that the foregoing list of factors is not exhaustive. For additional information about the risks, uncertainties, and assumptions that could cause Lassonde's actual results to differ from its stated expectations, readers may also consult the "Uncertainties and Principal Risk Factors" section of the Company's most recent annual MD&A and the other documents it files from time to time with securities regulators in Canada and available on www.sedar.com. The forward-looking statements contained in this press release reflect the Company's expectations on this date and are subject to change after this date. Lassonde does not undertake to update publicly or to revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.
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