ROUGEMONT, QC, Nov. 12, 2021 /CNW Telbec/ -Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $469.3 million in the third quarter of 2021, down 5.2% year over year. Excluding a $14.2 million unfavourable foreign exchange impact, sales were down 2.4% year over year. The Company's operating profit for the third quarter of 2021 totalled $25.4 million, down $14.6 million from $40.0 million in the same quarter last year. The 2021 third–quarter profit attributable to the Company's shareholders totalled $16.8 million, down $8.5 million year over year.
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Financial highlights
(in thousands of $)
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Third quarters
ended
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October 2,
2021
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September 26,
2020
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Sales
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$
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469,263
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$
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495,207
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Operating profit
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25,408
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40,018
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Profit before income taxes
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23,257
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35,205
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Profit attributable to the Company's shareholders
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16,832
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25,333
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Basic and diluted earnings per share (in $)
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$
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2.43
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$
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3.65
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Note: These are financial highlights only. Management's Discussion and Analysis, the unaudited interim condensed consolidated financial statements and notes thereto for the quarter ended October 2, 2021 are available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.
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"While demand for our products remains strong, the Company has been facing shortages in labour and supplies and in the availability of raw materials. The combination of these factors has slowed productivity and our ability to fully meet demand. Like the other companies in our industry, we are being hit by inflationary pressures that are affecting transportation costs as well as the cost of inputs. I would like to thank our teams, who have been sparing no effort to meet the needs of our customers and to make the necessary adjustments to minimize impacts on our profitability," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc.
Financial results
For the third quarter of 2021, the Company's sales totalled $469.3 million, down $25.9 million or 5.2% from $495.2 million in the same quarter of 2020. Excluding a $14.2 million unfavourable foreign exchange impact, the Company's third-quarter sales were down $11.7 million or 2.4% year over year. This decrease was largely due to lower sales of private label products in the United States as certain plants experienced a slower production rate given labour scarcity, partly offset by a higher sales volume of national brands in the United States and by selling price adjustments that had a favourable impact on the Company's national brand sales. For the first nine months of 2021, sales totalled $1,405.3 million, down 4.1% from $1,465.9 million in the first nine months of 2020.
The Company's operating profit for the third quarter of 2021 totalled $25.4 million, down $14.6 million from $40.0 million in the same quarter last year. This decrease came mainly from a lower gross margin realized by U.S. operations. This lower gross margin is explained by (i) a decrease in sales of private label products, which had an unfavourable impact on the allocation of manufacturing overhead to product costs and by (ii) an increase in the cost of certain inputs. As for the Canadian operations, the gross margin was slightly lower, essentially reflecting higher costs for certain inputs, partly offset by a favourable foreign exchange impact applicable to purchases of raw materials in foreign currencies. Operating profit was also affected by increases in marketing expenses and warehousing costs in Canada and by higher global transportation costs, partly offset by lower performance-related salary expenses. For the first nine months of 2021, the Company's operating profit totalled $86.7 million, down $26.3 million from $113.0 million in the first nine months of 2020.
The Company's financial expenses went from $4.0 million in the third quarter of 2020 to $2.6 million in the third quarter of 2021. This decrease was essentially due to a decrease in the interest expense on long-term debt resulting from a lower debt level. For the nine-month periods, financial expenses went from $13.6 million in 2020 to $8.4 million in 2021.
"Other (gains) losses" went from a $0.7 million loss in the third quarter of 2020 to a $0.5 million gain in the third quarter of 2021. This 2021 third-quarter gain was mainly due to a change in the fair value of financial instruments, whereas the 2020 third-quarter loss was essentially due to $0.5 million in foreign exchange losses. For the nine-month periods, the "Other (gains) losses" item was a $1.0 million loss in 2021 compared to a $2.1 million gain in 2020.
Profit before income taxes totalled $23.3 million in the third quarter of 2021, down $11.9 million from $35.2 million in the third quarter of 2020. For the first nine months of 2021, profit before income taxes stood at $76.8 million, down $24.0 million from $100.8 million in the first nine months of 2020.
Income tax expense went from $8.8 million in the third quarter of 2020 to $6.1 million in the third quarter of 2021. At 26.2%, the 2021 third-quarter effective income tax rate is higher than the 25.1% rate in the same quarter of 2020. This higher 2021 effective income tax rate mainly reflects a decrease in the deductible amounts on the Company's interest expense. Income tax expense for the first nine months of 2021 stood at $20.2 million, down $3.0 million from $23.2 million in the first nine months of 2020.
The 2021 third-quarter profit totalled $17.2 million, down $9.2 million from $26.4 million in the third quarter of 2020. For the first nine months of 2021, profit totalled $56.7 million versus profit of $77.6 million in the first nine months of 2020.
Profit attributable to the Company's shareholders was $16.8 million, resulting in basic and diluted earnings per share of $2.43 for the third quarter of 2021. In the third quarter of 2020, profit attributable to the Company's shareholders had totalled $25.3 million, resulting in basic and diluted earnings per share of $3.65. For the first nine months of 2021, profit attributable to the Company's shareholders totalled $55.7 million, resulting in basic and diluted earnings per share of $8.03 and, in the same nine-month period of 2020, it had totalled $74.3 million, resulting in basic and diluted earnings per share of $10.71.
The Company's operating activities generated $23.9 million in cash during the third quarter of 2021, while they had generated $65.9 million in cash during the same quarter last year. Financing activities used $15.2 million in cash during the third quarter of 2021, while they had used $53.9 million in the same quarter of 2020. Investing activities used $8.9 million in cash during the third quarter of 2021 compared to $11.1 million used in the same quarter of 2020. At the end of the third quarter of fiscal 2021, the Company reported a cash and cash equivalents balance of $3.2 million and a bank overdraft balance of $5.9 million, whereas, at the end of the third quarter of 2020, the cash and cash equivalents balance was $6.4 million and the bank overdraft was $0.1 million.
Outlook
The Company noted a decrease in industry sales volumes in the U.S. and Canadian fruit juice and drink markets for the three-month period ended October 2, 2021 when compared to the same period in 2020, which reflected, however, a significant increase compared to the equivalent period in 2019. Excluding foreign exchange impacts, the Company's sales were up 0.2% in the first nine months of 2021 compared to the same period last year. Barring any significant external shocks, and disregarding foreign exchange impacts, the Company expects that, for fiscal 2021, it will be able to maintain a sales level that is relatively similar to that of fiscal 2020. However, the uncertainty surrounding such a forecast is higher than it is under normal circumstances because of the following factors: (i) the availability of labour affecting the production rates, mainly for its U.S. activities and (ii) the impact of the current global supply chain crisis on the availability of certain inputs, including the main concentrates and types of packaging used by the Company.
The Company observed a significant reduction in the profitability of its U.S. operations during the first nine months of 2021 due to inflationary pressures affecting, among other costs, transportation costs affected by the global supply chain crisis, warehousing costs, and the cost of certain raw materials. Moreover, the combined impact of the current COVID–19 pandemic and the beginning of an economic recovery is affecting the availability and cost of labour, thereby adding significant additional pressure on volumes produced as well as the production rate and costs. The Company believes that this situation is likely to continue over the coming months. To offset the overall impact of these inflationary pressures, the Company has adjusted its selling prices during the second and third quarters. However, these price increases are not sufficient, as inflationary pressures are intensifying. In addition, the availability and delivered price of apple concentrates and certain types of packaging are still being affected by a limited availability of containers. Finally, higher oil costs are having an unfavourable impact on several of the Company's cost components, including PET resin. Therefore, the Company will make additional selling price adjustments over the coming months, while remaining attentive to the impact of these adjustments on the demand for its products.
Dividend
The Company's Board of Directors today declared a quarterly dividend of $0.88 per share on Class A subordinate voting shares and Class B multiple voting shares, payable on December 15, 2021 to all registered holders on November 24, 2021. In accordance with its dividend policy, this dividend represents, on an annualized basis, approximately 25% of the 2020 profit attributable to the Company's shareholders. This dividend is an eligible dividend.
About Lassonde
Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of ready-to-drink juices and drinks marketed under brands such as Apple & Eve, Everfresh, Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde is the largest producer of fruit juices and drinks in Canada and one of the two largest producers of store brand shelf-stable fruit juices and drinks in the United States. It is also a major producer of cranberry sauces. The Company also produces fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company also imports and markets selected wines from various countries and manufactures apple ciders and cider-based beverages.
The Company produces superior quality products through the expertise of more than 2,700 people working in 17 plants across Canada and the United States. To learn more, visit www.lassonde.com.
Caution Concerning Forward-Looking Statements
In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Company may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements notably include estimates, expectations, forecasts, and projections of future investment spending, revenues, expenses, earnings, profit, indebtedness, financial position, losses, upcoming projects, business and management strategies, and business growth and expansion. In the context of this document, forward-looking statements are particularly used to discuss preliminary results, the rate of sales growth, and profit attributable to shareholders. The forward-looking statements contained herein are used to help readers better understand Lassonde's financial position and the results of its operations as at the dates presented and may not be appropriate for other purposes. Forward-looking statements can be recognized by such words as "may," "should," "believes," "predicts," "plans," "expects," "intends," "anticipates," "estimates," "projects," "objective," "continues," "proposes," "targets," or "aims" as well as words and expressions of a similar nature and whether they are used in the affirmative or negative or used in the conditional or future tense. Forward-looking statements also include any statements that do not refer to historical facts.
By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other statements will not be achieved or will differ significantly from those expressed or implied in such forward-looking statements or could affect the extent to which a particular forecast, projection or other statement materializes. Although Lassonde believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that these expectations will prove to be correct.
Readers are cautioned against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various significant factors. Such factors include, among others, the economic, industrial, competitive and regulatory environment in which Lassonde operates or factors that are likely to have an impact on its operations, its ability to attract and retain customers, consumers, and qualified staff, the availability and cost of raw materials and transportation, its operating costs, and the price of its finished products in the various markets where it operates.
The Company cautions that the foregoing list of factors is not exhaustive. For additional information about the risks, uncertainties, and assumptions that could cause Lassonde's actual results to differ from its stated expectations, readers may also consult the "Uncertainties and Principal Risk Factors" section of the Company's most recent annual MD&A and the other documents it files from time to time with securities regulators in Canada and available on www.sedar.com. The forward-looking statements contained in this press release reflect the Company's expectations on this date and are subject to change after this date. Lassonde does not undertake to update publicly or to revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.
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