TORONTO, July 28, 2016 /CNW/ - Richards Packaging
Income Fund (TSX: RPI.UN) (the "Fund") announced today results for the quarter ended June 30,
2016.
Second quarter performance was in line with our 2016 outlook as total revenue increased 20.3% due to the Healthmark
acquisition and organic revenue growth and a U.S./Cdn. 3.7¢ weakening of the dollar to 78¢, up from 73¢ in the first quarter.
Gross profit and EBITDA1 as a percent of sales were consistent with the first quarter at 17.2% and 13.2%
respectively. EBITDA was up $2.5 million, or 34.5%, due to higher sales and the translation
impact of Richards US. Net income decreased $4.5 million, or 42.0¢, with higher EBITDA offset
by a $4 million contingent consideration revaluation for the Healthmark acquisition, higher
mark-to-market loss on the exchangeable shares and higher income taxes.
The $2.9 million of free cash flow2 generated in the second quarter increased the
cash on hand by $2.4 million to $3.2 million after paying $2.1 million
of income tax payable from the first quarter. The remaining cash, together with the $1.1
million working capital reduction, was utilized to pay $2.0 million of term debt and invest in
$0.1 million of expansion capital. We are building up cash balances to fund the $6.0 million contingent consideration for the Healthmark acquisition due in the first quarter of 2017. The
Fund's leverage remained at 1.4x, same as at March 31, 2016.
The Fund paid monthly distributions of 9.35¢ per Unit during the second quarter, which represented an annualized yield of
4.7% on the June 30th closing price of $24.00 per
Unit. The payout ratio3 for the second quarter was 54% up 9% from the first quarter to reflect a 27% increase in
the monthly distribution rate to 9.35¢ 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 13,300 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, contingent consideration revaluation, financial expenses, 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 contingent consideration revaluation. 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 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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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
