MONTREAL, March 5, 2014 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB)
announced today its financial results for the fourth quarter and full
year ended December 31, 2013. (All figures are expressed in US
dollars.)
Full year 2013
-
Consolidated net sales decreased 4% to $404.7 million in 2013, compared
to $420.3 million in 2012.
-
Net earnings increased 25% to $20.8 million or $0.93 per diluted share,
compared to $16.6 million or $0.84 per diluted share in 2012.
Net sales decreased 5% in the Toys segment while net sales for
Stationery & Activities increased 1%. On a geographic segment basis,
net sales decreased 3% in North America and 5% in International.
Adjusted earnings before interest, taxes, depreciation and amortization
(''EBITDA'') was $47.0 million compared to $49.2 million in 2012.
Fourth quarter
-
Consolidated net sales decreased 21% to $101.2 million, compared to
$127.5 million in the fourth quarter of 2012.
-
Net earnings were $1.4 million or $0.04 per diluted share, compared to
$4.0 million or $0.01 per diluted share in the same 2012 period.
Net sales were down 24% in the Toys segment and 3% in Stationery &
Activities. On a geographic segment basis, North American net sales
decreased 20% and International net sales decreased 23%. Adjusted
EBITDA was $8.9 million compared to $13.9 million in the fourth quarter
of 2012.
Adjusted EBITDA is a supplementary financial measure and readers are
cautioned that this measures does not have standardized meaning and is
unlikely to be comparable to similar measures used by other issuers.
Several factors contributed to the decline in the Corporation's fourth
quarter shipments, including a difficult retail environment which
affected the performance of the entire toy industry, particularly in
products for boys. The Corporation also faced a difficult comparison
with the fourth quarter of 2012, which saw an 18% net sales increase
compared to the previous year.
2013 highlights
The MEGA BLOKS First Builders product line had a year of record growth and the retail performance of
the Call of Duty line equaled or bettered the sell through of any previous MEGA BLOKS
product launch. According to NPD Group, the Call of Duty product line was the top-selling new brand in the construction toy
category during the fourth quarter despite limited availability.
The Corporation ended 2013 in a strong financial position, with
long-term debt reduced 48% to $59.3 million compared to $113.0 million
at the end of 2012, cash on hand of $16.4 million compared to
$8.0 million the previous year, and no borrowings against our working
capital facility. The Corporation also completed a three-year program
during which it invested over $30 million to increase efficiency and
production capacity in its Montreal facility.
About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in
construction toys, games & puzzles, arts & crafts and stationery. They
offer engaging creative experiences for children and families through
innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.
The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board
Dudes are trademarks of MEGA Brands Inc. or its affiliates.
MD&A Filing
This press release should be read in conjunction with the Corporation's
Management's Discussion and Analysis (the ''MD&A'') as well as the
audited consolidated financial statements and notes for the year ended
December 31, 2013. The Corporation will file these documents today via
SEDAR. The MD&A, financial statements and notes will be posted today on
the Corporation's Web site.
Supplementary Financial Measures
The Corporation reports its financial results in accordance with
International Financial Reporting Standards (''IFRS''). However, the
Corporation believes that certain non-IFRS measures provide useful
information to investors regarding its financial condition and results
of operations. Readers are cautioned that non-IFRS financial measures
do not have standardized meaning and are unlikely to be comparable to
similar measures used by other issuers. A reconciliation of
supplementary financial measures with IFRS financial statements is
provided in the Corporation's MD&A for the year ended December 31,
2013, which is available at www.sedar.com and on the Corporation's Web site.
Forward-Looking Statements
All statements in this press release that do not directly and
exclusively relate to historical facts constitute "forward-looking
information" within the meaning of applicable Canadian securities laws
These statements represent the Corporation's intentions, plans,
expectations and beliefs. Readers are cautioned not to place undue
reliance on these forward-looking statements. Forward-looking
information and statements are based on a number of assumptions and
involve risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed or implied by them,
including, but not limited to risks, assumptions and uncertainties
described in the Corporation's MD&A for the year ended December 31,
2013, which are available at www.sedar.com and on the Corporation's Web site. The Corporation disclaims any
intention or obligation to publicly update or revise any
forward-looking information, whether as a result of new information,
future events or otherwise, other than as required by applicable law.
Consolidated Income Statements
(in thousands of US dollars, except per share amounts)
|
|
Three-month periods
ended December 31,
|
|
Twelve-month periods
ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
101,212
|
|
127,538
|
|
404,738
|
|
420,271
|
|
Cost of sales
|
65,485
|
|
79,396
|
|
255,702
|
|
262,452
|
|
Gross profit
|
35,727
|
|
48,142
|
|
149,036
|
|
157,819
|
|
|
|
|
|
|
|
|
|
|
Marketing and advertising expenses
|
6,359
|
|
7,703
|
|
18,231
|
|
16,937
|
|
Research and development expenses
|
3,817
|
|
4,405
|
|
15,389
|
|
16,218
|
|
Other selling, distribution and administrative expenses
|
21,269
|
|
25,184
|
|
84,059
|
|
87,830
|
|
Contingent consideration on business acquisition
|
87
|
|
96
|
|
347
|
|
383
|
|
Loss (gain) on foreign currency translation
|
(966)
|
|
473
|
|
(1,808)
|
|
576
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
5,161
|
|
10,281
|
|
32,818
|
|
35,875
|
|
|
|
|
|
|
|
|
|
|
Financial expenses
|
2,170
|
|
4,516
|
|
10,766
|
|
17,647
|
|
Early redemption of debentures
|
-
|
|
-
|
|
2,869
|
|
-
|
|
|
2,170
|
|
4,516
|
|
13,635
|
|
17,647
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
2,991
|
|
5,765
|
|
19,183
|
|
18,228
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
1,579
|
|
1,755
|
|
(1,591)
|
|
1,642
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
1,412
|
|
4,010
|
|
20,774
|
|
16,586
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
Basic
|
0.06
|
|
0.24
|
|
0.98
|
|
1.01
|
|
|
Diluted
|
0.04
|
|
0.01
|
|
0.93
|
|
0.84
|
Consolidated Statements of Comprehensive Income
(in thousands of US dollars)
|
|
Three-month periods
ended December 31,
|
|
Twelve-month periods
ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
1,412
|
|
4,010
|
|
20,774
|
|
16,586
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income or loss
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
(69)
|
|
(45)
|
|
(620)
|
|
1,008
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to income or loss
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
(1,841)
|
|
(213)
|
|
409
|
|
91
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
(1,910)
|
|
(258)
|
|
(211)
|
|
1,099
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
(498)
|
|
3,752
|
|
20,563
|
|
17,685
|
Consolidated Statements of Financial Position
(in thousands of US dollars)
|
December 31,
2013
|
|
December 31,
2012
|
|
|
$
|
|
$
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
16,417
|
|
8,018
|
|
Trade and other receivables
|
116,740
|
|
130,541
|
|
Inventories
|
54,101
|
|
45,779
|
|
Derivative financial instruments
|
-
|
|
113
|
|
Prepaid expenses
|
7,916
|
|
9,370
|
|
Total current assets
|
195,174
|
|
193,821
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
46,385
|
|
39,817
|
|
Intangible assets
|
22,349
|
|
22,771
|
|
Goodwill
|
30,000
|
|
30,000
|
|
Total assets
|
293,908
|
|
286,409
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
54,231
|
|
62,638
|
|
Income taxes
|
3,842
|
|
5,631
|
|
Derivative financial instruments
|
1,037
|
|
-
|
|
Current portion of long-term debt
|
1,844
|
|
8,023
|
|
|
60,954
|
|
76,292
|
|
Non-current liabilities
|
|
|
|
|
Long-term debt
|
59,285
|
|
112,992
|
|
Derivative financial instruments
|
58
|
|
206
|
|
|
59,343
|
|
113,198
|
|
Equity
|
|
|
|
|
Share capital
|
502,193
|
|
431,893
|
|
Warrants
|
8,485
|
|
24,029
|
|
Contributed surplus
|
5,851
|
|
4,478
|
|
Deficit
|
(336,962)
|
|
(357,736)
|
|
Accumulated other comprehensive loss
|
(5,956)
|
|
(5,745)
|
|
Total equity
|
173,611
|
|
96,919
|
|
Total liabilities and equity
|
293,908
|
|
286,409
|
Consolidated Statement of Changes in Equity
(in thousands of US dollars)
|
|
Share capital
|
|
Warrants
|
Contributed
surplus
|
|
Deficit
|
Accumulated
other
comprehensive
loss
|
Total equity
|
|
(Audited)
|
$
|
|
$
|
$
|
|
$
|
$
|
$
|
|
Balance - December 31, 2011
|
429,007
|
|
24,430
|
3,492
|
|
(374,322)
|
(6,844)
|
75,763
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
-
|
|
-
|
-
|
|
16,586
|
-
|
16,586
|
|
Options exercised
|
472
|
|
-
|
(148)
|
|
|
|
324
|
|
Warrants exercised
|
2,414
|
|
(401)
|
-
|
|
-
|
-
|
2,013
|
|
Other comprehensive loss
|
-
|
|
-
|
-
|
|
-
|
1,099
|
1,099
|
|
Stock-based compensation
|
-
|
|
-
|
1,134
|
|
-
|
-
|
1,134
|
|
Balance - December 31, 2012
|
431,893
|
|
24,029
|
4,478
|
|
(357,736)
|
(5,745)
|
96,919
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
-
|
|
-
|
-
|
|
20,774
|
-
|
20,774
|
|
Options exercised
|
2,018
|
|
-
|
(621)
|
|
|
|
1,397
|
|
Warrants exercised
|
68,282
|
|
(15,544)
|
-
|
|
-
|
-
|
52,738
|
|
Other comprehensive loss
|
-
|
|
-
|
-
|
|
-
|
(211)
|
(211)
|
|
Stock-based compensation
|
-
|
|
-
|
1,994
|
|
-
|
-
|
1,994
|
|
Balance - December 31, 2013
|
502,193
|
|
8,485
|
5,851
|
|
(336,962)
|
(5,956)
|
173,611
|
Consolidated Statements of Cash Flows
(in thousands of US dollars)
|
|
Twelve-month periods,
ended December 31
|
|
|
2013
|
|
2012
|
|
|
$
|
|
$
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
Net earnings
|
20,774
|
|
16,586
|
|
Adjustments for:
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
13,387
|
|
12,476
|
|
|
Amortization of intangible assets
|
422
|
|
422
|
|
|
Stock-based compensation
|
1,994
|
|
1,134
|
|
|
Financial expenses
|
10,766
|
|
17,647
|
|
|
Early redemption of debentures
|
2,869
|
|
-
|
|
|
Income taxes
|
(1,591)
|
|
1,642
|
|
|
Loss on foreign currency
|
459
|
|
2,316
|
|
|
49,080
|
|
52,223
|
|
|
Net change in non-cash working capital balances
|
(7,709)
|
|
14,406
|
|
|
Income taxes paid (recovered)
|
1,695
|
|
(1,473)
|
|
|
Interest paid
|
(7,654)
|
|
(13,158)
|
|
Cash flows provided by operating activities
|
35,412
|
|
51,998
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Repayment of debentures
|
(60,368)
|
|
(7,411)
|
|
Change in asset-based credit facility
|
-
|
|
(37,279)
|
|
Government loan
|
-
|
|
6,591
|
|
Issuance of long-term debt
|
216
|
|
4,524
|
|
Repayment of long-term debt
|
(750)
|
|
(220)
|
|
Issuance of capital stock
|
54,135
|
|
2,337
|
|
Cash flows used in financing activities
|
(6,767)
|
|
(31,458)
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Acquisition of property, plant and equipment
|
(20,228)
|
|
(19,234)
|
|
Cash flows used in investing activities
|
(20,228)
|
|
(19,234)
|
|
|
|
|
|
|
Effect of changes in foreign exchange rates on cash and cash equivalents
|
(18)
|
|
(33)
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
8,399
|
|
1,273
|
|
Cash and cash equivalents — Beginning of year
|
8,018
|
|
6,745
|
|
|
|
|
|
|
Cash and cash equivalents — End of year
|
16,417
|
|
8,018
|
SOURCE MEGA Brands Inc.
