TORONTO, Nov. 1, 2013 /CNW/ - Richards Packaging Income Fund
(TSX: RPI.UN) (the "Fund") announced today results for the quarter ended September 30, 2013.
Strong third quarter performance recovered the remaining first quarter
shortfall, with total revenue up 6.8% mainly from 4.4% organic revenue
growth and a U.S./Cdn.4¢ weakening of the dollar. EBITDA1 was up $0.3 million, or 5.2%, due to higher sales. Gross profit and
EBITDA as a percent of sales were consistent with last year at 15.2%
and 10.9% respectively. Net income was down $0.5 million at $0.9
million, or 8.1¢ per Unit, mainly due to the $0.4 million of additional
patent defense legal costs and a $0.3 million mark-to-market loss on
the exchangeable shares resulting from a 78¢ per unit price increase.
Nine month total revenue was up 2.9% with organic revenue growth of 1.8%
and a U.S./Cdn.2¢ weakening of the dollar. EBITDA1 was flat as gains in the second and third quarters offset a soft first
quarter. Net income was down $0.4 million, or 3.7¢ per Unit, mainly
due to $1.1 million in higher patent defense legal costs and $0.4
million in higher income taxes offset by lower financial expenses of
$0.4 million and a lower mark-to-market loss on the exchangeable shares
of $0.5 million.
The $1.0 million of free cash flow2 generated in the third quarter, combined with cash on hand, was
utilized to pay down $1.5 million of debt. A further $1.8 million from
inventory reduction was offset by $1.0 million of additional
receivables on higher sales and $0.7 million of lower payables.
Although the cash on hand at September 30th appears to be unusually high, $0.7 million has been set aside to pay
Canadian taxes.
The Fund paid monthly distributions of 6.55¢ per Unit during the nine
months, which represented an annualized yield of 8% on the September 30th closing price of $9.88 per Unit. The payout ratio3 for the third quarter was 70%. During the third quarter no purchases
were made under the normal course issuer bid as prices increased
rapidly from the opening position of $9.10 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.
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 11,000
regional food, wine and spirits, cosmetic, specialty chemical,
pharmaceutical and other companies from 18 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, share of loss (income) - Vision 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 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.
|
2
|
Management defines distributable cash flow, in accordance with Richards
Packaging's credit agreement, as EBITDA less extraordinary items,
interest, cash income tax expense, maintenance capital expenditures. 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.
|
3
|
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.
|
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.
|
|
|
SOURCE Richards Packaging Income Fund
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
Copyright CNW Group 2013