TORONTO, March 8, 2013 /CNW/ - Richards Packaging Income Fund
(TSX: RPI.UN) (the "Fund") announced today results for the quarter and year ended December 31, 2012.
Performance in the fourth quarter was flat with organic revenue growth
of 2.2%, in line with growth levels for the packaging industry, being
partially offset by the Canadian dollar strengthening by U.S./Cdn. 3¢.
Gross profit and EBITDA1 as a percent of sales were up 0.8% and 1.4%, at 15.3% and 10.4%,
respectively, before the one-time $0.4 million charge for disputed
Mexican duties.
The 2012 results showed significant improvement in the first half with
7.1% organic growth, however growth slowed to 1.8% in the second half
returning to 2008 pre-financial crisis levels. The foreign currency
impact turned mildly positive with the translation of Richards
Packaging US contributing an additional $1.0 million due to the
U.S./Cdn. 1¢ weakening. We experienced an across the board revenue
improvement of 3.1% for our top 60 customers and 6.3% growth in our
small customers. EBITDA1 was up by $1.5 million, or 7.4%, due to higher sales and a slight
improvement in margins yielding an improvement of 0.3% as a percent of
sales to 11.0%. Net income was $6.1 million, or $0.56 per Unit, down
$2.0 million from the same period in 2011 which mainly reflects the
mark-to-market loss on exchangeable shares.
The Fund paid monthly distributions of 6.55¢ per Unit for the year,
which represents an annualized yield of 9.2% on the December 31st closing price of $8.54 per Unit. The payout ratio3 for the fourth quarter was 76% and 62% for 2012 with free cash flow2 mainly deployed in working capital.
The Fund also announces that it intends to continue the normal course
issuer bid to acquire up to 200,000 of its outstanding trust units
representing approximately 2% of its issued and outstanding units.
Under the previous normal course issuer bid, ending March 12, 2013, the
Fund had purchased 55,800 Units at an average weighted price of $8.84.
As at March 8, 2013, the Fund had 10,687,670 units issued and
outstanding. All purchases will be made through the facilities of and
in accordance with the rules of the Toronto Stock Exchange and all
units purchased will be cancelled. Except where reliance is had on the
Exchange's block purchase exemption, the maximum number of units
purchasable under the bid on any trading day will be limited to 2,200
units based on an average daily trading volume of 8,800. The normal
course issuer bid will commence on March 13, 2013 and end no later than
March 12, 2014. The Trustees of the Fund believe that such purchases
are an appropriate and desirable use of available funds.
Details of the Fund's results are currently available on Richards
Packaging's website at www.richardspackaging.com and on March 9th 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 since 1912 and currently serves over 11,300
regional food, wine and spirits, cosmetic, specialty chemical,
pharmaceutical and other companies from 18 locations throughout North
America.
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1
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Management defines EBITDA as earnings before amortization, interest,
losses (gains) on financial instruments and taxes. EBITDA is the same
as profit from operations as outlined in the annual 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 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 the operating performance. 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 method of
calculating EBITDA may not be comparable to similar measures presented
by other companies or income trusts.
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2
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Management defines distributable cash flow, in accordance with Richards
Packaging's credit agreement, as EBITDA less interest, cash income tax expense, maintenance capital expenditures and loan
payments. Free cash flow is distributable cash flow less
distributions. The objective of presenting these measures is to
calculate the amount which is available for distribution to unitholders
or exchangeable shareholders and to determine the amount available to
fund increases in working capital or expansion capital. 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 the 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.
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3
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Management defines payout ratio as distributions and dividends declared
over distributable cash flow2. 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
income trusts.
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4
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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.
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SOURCE: Richards Packaging Income Fund
