TORONTO, March 7, 2014 /CNW/ - Richards Packaging Income Fund
(TSX: RPI.UN) (the "Fund") announced today a monthly distribution increase, results for the quarter and year ended
December 31, 2013 and a continuation of the normal course issuer bid.
The trustees approved a 12% increase to the monthly distribution by 0.8¢
to 7.35¢ per Unit beginning with the distribution to unitholders of
record at the close of business on March 31, 2014 payable on April 14,
2014.
Strong fourth quarter performance with total revenue growth of 6.5%
ahead of growth levels for the packaging industry, with both organic
revenue growth of 3.4% and the Canadian dollar weakening by U.S./Cdn.
5¢. EBITDA1 increased $0.3 million, or 5.7%, on higher revenues as gross profit and
EBITDA as a percent of sales were flat at 15.1% and 10.3%,
respectively. Net income was down $0.7 million as the higher EBITDA
and the $0.4 million gain on a positive resolution of the Mexican
duties dispute was fully offset by $1.2 million mark-to-market loss on
exchangeable shares as the price per Unit rose $2 to $10.52 and $0.5
million of higher taxes.
The 2013 results showed significant improvement after a soft first
quarter with organic growth in excess of 3% for the rest of the year
resulting in overall growth of 2.2%. The foreign currency impact
turned strongly positive during the second half with the translation of
Richards Packaging US contributing an additional $3.1 million due to
the U.S./Cdn. 3¢ weakening. We experienced an across the board revenue
improvement of 3.1% for our top 60 customers and 4.1% growth in our
small customers. EBITDA1 was up by $0.2 million, or 1.0%, as higher sales and a slight
degradation in margins allowed EBITDA as a percent of sales to remain
at 11%. Net income was $5.0 million, or $0.46 per Unit, down $1.1
million from the same period in 2012 which mainly reflects the
mark-to-market loss on exchangeable shares. The payout ratio3 for the fourth quarter was 77% and 72% for 2013. The $3.5 million in
free cash flow2 for the year, combined with the $4.6 million inventory reduction, was
utilized to pay down $6.0 million in debt, bringing our leverage ratio
to 1.6, to pay for the completion of the patent defense case and to
purchase $0.4 million units under the normal course issuer bid.
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, 2014, the
Fund had purchased 19,500 Units at an average weighted price of $9.00.
As at March 7, 2014, the Fund had 10,702,778 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 1,500
units based on an average daily trading volume of 6,300. The normal
course issuer bid will commence on March 13, 2014 and end no later than
March 12, 2015. 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 7th 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, financial
expenses, exceptional items (disputed duties and patent defense costs),
unrealized losses and dividends on exchangeable shares, share of income
- Vision 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. The definition was changed in
2013 to exclude disputed duties and as a result, relevant comparative
amounts have been recalculated to conform to the presentation.
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 IFRS and therefore the method
of calculating EBITDA may not be comparable to similar measures
presented by other companies.
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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 extraordinary items,
interest, cash income tax expense and 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 liquidity
and cash flows. Distributable cash flow does not have a standardized
meaning prescribed by IFRS therefore the method of calculating
distributable cash flow may not be comparable to similar measures
presented by other companies.
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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 IFRS. The method of calculating the payout ratio
may not be comparable to similar measures presented by other companies.
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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. 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, 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
