Post by
lotus1 on Aug 07, 2020 4:55am
Solid Results - Blowout Quarter
Richards Packaging Income Fund announces 2020 Second Quarter Results
Three factors had a profound effect on our second quarter results. First the acquisition of Clarion on May 31st, a leading Canadian provider of medical, aesthetic, vision care and surgical equipment and consumables, second the dollar dropped by U.S./Cdn. 3¢ on higher Richards US sales and third the increased sales due to healthcare related products associated with combatting the coronavirus. Second quarter growth exceeded that of the first quarter by 8%
Financial highlights for the second quarter:
*Revenue excluding Clarion increased by $35.0 mil., or 40.9%, due to organic growth of 30.2% along with the $9.2 mil. translation impact of Richards US, with the Canadian dollar weakening by U.S./Cdn. 2.7¢ to 72.1¢. Clarion sales for the month of June was 15% higher than the average monthly sales for 2019 at $6.6 mil.
*Cosmetics packaging increased $17.2 mil., excluding the impact of translation, with $16.1 mil. due to volume related to the coronavirus. The remaining 5% increase represents normal activity.
*Healthcare increased $5.0 mil., excluding Clarion, with $3.2 mil. due to volume related to the coronavirus. The remaining increase of 6% for the quarter represents normal activity across the Healthcare customer base. Clarion June sales at $6.6 mil. was higher than the 2019 monthly average due to pent up demand as clinics reopened
*Food, beverage and other packaging increased by $3.6 mil.
*Gross profit margins were up 4.2% over the first quarter levels of 21.1% due to higher volumes and a 7% better product mix in cosmetics and healthcare. Resins price volatility did not have a material impact on margins due to management’s practice of passing through increases and decreases to customers.
*Free cash flow of $23.0 mil. and $8.0 mil. cash on hand was used to repay $15.0 mil. of term debt and provide $14.8 mil. for the Clarion acquisition and $3.0 mil. to extinguish Clarion debt
*Distributable cash flow up $14.8 mil., or $1.28 per Unit, resulting in a 25% payout ratio
*Monthly distributions of 11¢ per Unit have been characterized as return of capital.
Outlook
Management believes that the performance of Richards Packaging is on track to meet ongoing requirements for working capital, capital expenditures and to sustain monthly distributions to unitholders at the current level through 2020.
Third quarter revenues in July continue to grow at double digits on coronavirus related demand.
Comment by
DanielDarden123 on Aug 07, 2020 11:48am
Double digit increase in demand is noteworthy and encouraging given the payout ratio of 25%. Without surprises, a distribution boost seems inevitable in 2021.
Comment by
DanielDarden123 on Oct 31, 2020 11:52am
The Covid overhang is delaying the boost. Once it’s done a catch up should be in order.