Lassonde Industries Inc. announces its Q4 and fiscal 2023 results

ROUGEMONT, QC, March 21, 2024 /CNW/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde" or the "Corporation") today announced its financial results for its fourth quarter and year ended December 31, 2023.

Financial Highlights:

"Lassonde Industries achieved solid performance in 2023, concluding the year with record sales of $2.3 billion and strong year-over-year profit improvement," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc. "The progress shown over the past year reflects the continued execution of our strategic plan. It represents another important step towards achieving our long-term growth ambitions and creating lasting value for our shareholders."

"Reflecting solid momentum throughout the organization, all divisions delivered profit growth in the fourth quarter and for 2023. Simultaneously, we continued to progress on all pillars of our multi-year strategy, which includes fortifying the foundation of our U.S. business," said Vince Timpano, President and COO, Lassonde Industries Inc. "In 2024, in addition to building back our U.S. sales volume, we will commission our new single-serve line in North Carolina in the second half of the year. In Canada, our team is focused on addressing price inflation on orange juice and bringing to market multiple product innovations. We also continue to focus on growing our specialty food products portfolio. Given our attention and market dynamics, we anticipate sales growth in the mid-single-digit range for 2024 excluding foreign exchange impacts."

Fourth Quarter Highlights:

• Sales of $604.8 million. Excluding a $1.1 million favourable foreign exchange impact, sales were up $47.7 million (8.6%) from the same quarter last year, mainly due to selling price adjustments and to an increase in U.S. sales volume, partly offset by a decrease in the Canadian sales volume of national brand products.
• Gross profit of $152.5 million (25.2% of sales). Excluding a $3.7 million unfavourable foreign exchange impact, gross profit was up $32.6 million from the same quarter last year. This net increase, coming from all of the Corporation's divisions, results mainly from the following items:
  • Favourable impact of selling price adjustments to offset cost increases, including the higher cost for certain inputs, especially apple and orange concentrates;
  • Gross profit loss of $3.7 million in 2022 following a production interruption of the cranberry sauce line at the Corporation's New Jersey plant; and
  • $2.0 million in expenses related to business optimization.
• Operating profit of $32.1 million, up $15.4 million from the same quarter last year. This net increase results mainly from the following items:
  • Higher gross profit;
  • $6.0 million increase in selling and marketing expenses, essentially in Canada;
  • $6.0 million increase in performance-related compensation expenses;
  • $4.2 million decrease in transportation costs incurred to deliver products to customers, resulting (i) from decreases in fuel surcharges and in base transportation rates, and (ii) from savings related to the use of new processes and the transportation management system ("TMS") in the U.S.;
  • $1.9 million increase in certain administrative expenses; and
  • $1.5 million in expenses related to business optimization.
• Excluding items impacting comparability, adjusted EBITDA1 was $52.6 million (8.7% of sales), up $14.3 million from the same quarter last year.
• Profit attributable to the Corporation's shareholders of $21.0 million, resulting in basic and diluted earnings per share ("EPS") of $3.08, up $10.6 million and $1.55, respectively, from the same quarter in 2022. Excluding items impacting comparability, adjusted EPS1 was $3.14 compared to $2.09 in the same quarter last year.
• Dividend of $0.50 per share, paid on December 15, 2023.

Fiscal 2023 Highlights:

• Sales of $2,314.9 million. Excluding a $43.8 million favourable foreign exchange impact, sales were up $120.1 million (5.6%) from last year, mainly due to the favourable impact of selling price adjustments and to a favourable change in the sales mix of private label products, partly offset by a decrease in sales volume, essentially in the U.S.
• Gross profit of $587.7 million (25.4% of sales). Excluding a $5.1 million unfavourable foreign exchange impact, gross profit was up $69.4 million from last year. This net increase, coming from all of the Corporation's divisions, results mainly from the following items:
  • Favourable impact of selling price adjustments to offset cost increases, including the higher cost for all inputs, especially apple and orange concentrates and the increase in the Corporation's conversion costs;
  • Gross profit loss of $5.2 million in 2022 following a production interruption on the cranberry sauce line at the Corporation's New Jersey plant; and
  • $2.0 million in expenses related to business optimization.
• Operating profit of $135.4 million, up $54.1 million from last year. This net increase results mainly from the following items:
  • Higher gross profit;
  • $38.9 million decrease in transportation costs incurred to deliver products to customers, resulting (i) from decreases in fuel surcharges and in base transportation rates, (ii) from savings related to the use of new processes and the TMS in the U.S. and (iii) from a decrease in sales volume;
  • $28.9 million increase in performance-related compensation expenses;
  • $8.1 million increase in certain administrative expenses;
  • $6.5 million unfavourable foreign exchange impact that affected the conversion of the selling and administrative expenses of the U.S. entities into Canadian dollars;
  • $6.4 million increase in selling and marketing expenses, essentially in Canada;
  • $5.7 million decrease in expenses related to the multi-year strategy and its deployment; and
  • $1.9 million in expenses related to business optimization.
• Excluding items impacting comparability, adjusted EBITDAi was $207.1 million (8.9% of sales), up $50.0 million from last year.
• Profit attributable to the Corporation's shareholders of $87.5 million, resulting in EPS of $12.83, up $33.6 million and $4.99, respectively, from 2022. Excluding items impacting comparability, adjusted EPS1 was $13.18 compared to $9.37 last year.
• As at December 31, 2023, long-term debt, including the current portion, stood at $210.5 million, representing a net debt to adjusted EBITDAi ratio of 0.92:1. This is down $38.9 million from December 31, 2022.
• Dividends totalling $2.20 per share, for a total amount of $15.0 million paid in 2023.

Outlook

Lassonde continues to expect the largest factors impacting its performance in fiscal 2024 will be the financial health of consumers and the inflationary environment. As a result, the Corporation is currently retaining the following assumptions for its fiscal year 2024:

Sales growth rate

• For 2024, barring any significant external shocks and excluding foreign exchange impacts, Lassonde expects:
  • a sales growth rate in the mid-single-digit range, mainly driven by the run rate effect of its selling price adjustments together with the volume growth expected in the second half of the year; and
  • a slight decrease in sales volume in the first half of the year with sequential improvement in the second half resulting from the combined impact of the following items: (i) the pace of the U.S. demand build back strategy for the Corporation's products; ii) additional volumes available following the deployment of its single serve line in North Carolina; and (iii) the overall stabilization of demand.
• Lassonde will also consider further pricing action to be implemented over the course of 2024 if inflation persists. However, the Corporation is closely monitoring the evolution of consumer food habits and demand elasticity in a context of price increases.

Key commodity and input costs

• Lassonde's input costs have increased significantly since 2021. More recently, the prices for orange juice and orange concentrates remain an area of focus.
• Given that a large portion of the raw material purchases made by Lassonde's Canadian operations are in U.S. dollars, a strengthening of this currency against the Canadian dollar results in a higher cost for products sold in the Canadian market. Furthermore, the Corporation is expecting an unfavourable foreign exchange impact for 2024 when considering its hedged positions.

Expenses, including items impacting the comparability between the periods

• The Corporation's performance-related compensation expenses are expected to return in 2024 to levels below those observed in 2023.
• During 2024, Lassonde plans to continue deploying its multi-year strategy, optimizing its business and upgrading its key systems and technology infrastructures to improve its efficiency. Planned spending in support of these elements is expected to reach up to $5.0 million in 2024.

Effective tax rate

• Effective tax rate should be about 26.5% for fiscal 2024.

Working capital

• The Corporation's Days Operating Working Capital1 is now closer to its historical levels and only incremental improvements are expected for this ratio over the course of 2024. However, this outlook might be impacted by (i) opportunistic decisions to secure inventory cost ahead of potential additional price increases from suppliers, (ii) the objective of ensuring an adequate service level, or (iii) the decisions to counter new potential supply chain disruptions.

Capital expenditures

• The Corporation's overall capital expenditures program for 2024 is estimated to reach up to 5.0% of its sales as it continues to deploy capital in support of its multi-year strategy. This estimate depends on the rate of progress of certain large capital projects and on the evolution of the macroeconomic environment.

The above forward-looking statements exclude items related to Diamond Estates Wines & Spirits Inc. and have been prepared using the following key assumptions: currently observed geopolitical situation and macroeconomic trends, including employment, inflation and interest rates; a stable exchange rate between the U.S. dollar and the Canadian dollar; the continuity of recently observed consumer behaviours and market trends for the Corporation's products; no material disruption to the Corporation's operations (including workforce availability) or to its supply chain; the effectiveness of the Corporation's selling price adjustment initiatives; the limited impact of the Corporation's selling price adjustment initiatives on product demand; the continuity of observed trends in the competitive environment and the effectiveness of the Corporation's strategy to position itself competitively in the markets in which it operates; limited additional cost increases from suppliers; adequate availability of key inputs; the continuity of recently observed normalized trends in the throughput capacity of key U.S. plants; expected lead time for new manufacturing equipment; and adequate contractor or consultant availability to progress the Corporation's capital expenditures. The Corporation cautions readers that the foregoing list of factors is not exhaustive. It should be noted that some of these key assumptions, including those related to the geopolitical situation and macroeconomic trends, are volatile and rapidly evolving. In preparing its outlook, the Corporation made assumptions that do not consider extraordinary events or circumstances beyond its control. The Corporation believes the expectations reflected in these forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. For additional information, refer to the Caution Concerning Forward-Looking Statements section at the end of this press release and to Section 2 – " Forward-Looking Statements" of the Corporation's MD&A for the year ended December 31, 2023.

Conference Call to Discuss Fourth Quarter 2023 Financial Results

A live audio broadcast of the conference call will be available on the Corporation's website, on the Investors page or here: https://www.gowebcasting.com/13135. A replay of the webcast will remain available at the same link until midnight, March 29, 2024.

Financial Measures Not in Accordance With IFRS

To provide more information for evaluating the Corporation's performance, the financial information in the financial documents contains certain supplementary financial measures and certain data or ratios that are not financial measures defined under IFRS ("non-IFRS measures"), which are also calculated on an adjusted basis to exclude specific items impacting the comparability between periods. The Corporation believes that providing these non-IFRS measures is useful to management, investors, and analysts, as they provide additional information to analyze its performance and financial position. These measures may not be comparable to similar measures presented by other issuers.

Items impacting the comparability between periods

The following table contains a list, description and quantification of items impacting the comparability of the financial performance between the periods:

EBITDA and Adjusted EBITDA

EBITDA is a financial measure used by the Corporation and investors to assess the Corporation's capacity to generate future cash flows from operating activities and pay financial expenses. Adjusted EBITDA is a financial measure used by the Corporation to compare EBITDA between periods by excluding items impacting comparability. EBITDA consists of the sum of operating profit and of the "depreciation of property, plant and equipment and amortization of intangible assets" item and "(Gains) losses on capital assets," item, as shown in the Consolidated Statement of Cash Flows. Adjusted EBITDA is calculated by adjusting the EBITDA with items considered by management as impacting the comparability between periods.

Adjusted Profit Attributable to the Corporation's Shareholders and Adjusted EPS

Adjusted profit attributable to the Corporation's shareholders and adjusted EPS are financial measures used by the Corporation to compare profit attributable to the Corporation's shareholders and EPS between periods by excluding items impacting comparability. They are calculated by adjusting them with items considered by management as impacting the comparability between periods.

Net Debt to Adjusted EBITDA

Net debt to adjusted EBITDA is a financial measure used by the Corporation to assess its ability to pay off existing debt and define available borrowing capacity. To calculate the net debt to adjusted EBITDA ratio, net debt is divided by the sum of adjusted EBITDA from the last four quarters. Net debt represents long-term debt, including the current portion, less the "Cash and cash equivalents" item, as they are presented in the Corporation's Consolidated Statement of Financial Position.

Days Operating Working Capital

Days operating working capital is a financial efficiency measure used by the Corporation to represent the amount of sales tied up as operating working capital. To calculate this financial measure, operating working capital is divided by the last quarter's sales, as they are presented in this press release, and multiplied by 91 days. Starting in the annual MD&A for the year ended December 31, 2023 and to ensure a better representativeness, the Corporation has decided to adopt a more detailed approach in its calculation of operating working capital by considering only certain items of accounts receivable and accounts payable and accrued liabilities. Operating working capital now consists of the sum of trade accounts receivable, discounts receivable and inventories, less trade payables and accrued expenses and trade spending, as they are presented in the accompanying notes to the Corporation's consolidated financial statements.

About Lassonde

Lassonde Industries Inc. is a leader in the food and beverage industry in North America. The Corporation develops, manufactures, and markets a wide range of private label and national brand products, including ready-to-drink beverages, fruit-based snacks as well as frozen juice concentrates. It is also a leading producer of cranberry sauces and specialty food products such as pasta sauces, soups and fondue broths and sauces. The Corporation also produces, imports and markets selected wines from several countries of origin and produces and markets apple cider and cider-based drinks.

The Corporation operates 16 plants located in Canada and the United States and produces its superior quality products through the expertise of over 2,700 full-time equivalent employees. To learn more, visit www.lassonde.com

The Corporation is active in two market segments:

• Retail sales consist of sales to food retailers and wholesalers such as supermarket chains, independent grocers, superstores, warehouse clubs, major pharmacy chains; and
• Food service sales consist of sales to restaurants, hotels, hospitals, schools, and wholesalers serving these institutions.

Caution Concerning Forward-Looking Statements

This document contains "forward-looking information" and the Corporation's oral and written public communications that do not constitute historical fact may be deemed to be "forward-looking information" within the meaning of applicable Canadian securities law. These forward-looking statements include, but are not limited to, statements on the Corporation's objectives and goals and are based on current expectations, projections, beliefs, judgments, and assumptions based on information available at the time the applicable forward-looking statement was made and considering the Corporation's experience combined with its perception of historical trends.

Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "could", "would", "believe", "plan", "intend", "design", "target", "objective", "strategy", "likely", "potential", "outlook", "aim", "goal", and similar expressions suggesting future events or future performance in addition to the negative forms of these terms or any variations thereof. All statements other than statements of historical fact included in this document may constitute a forward-looking statement.

In this document, forward-looking statements include, but are not limited to, those set forth in the above "Outlook" section, which also presents some (but not all) of the key assumptions used in determining the forward-looking statements. Some of the forward-looking statements in this report, such as statements concerning volume and sales growth rate, key commodity and input costs, expenses, including items impacting the comparability between the periods, effective tax rate, working capital, and capital expenditures may be considered financial outlooks for the purposes of applicable Canadian securities regulation. These financial outlooks are presented to evaluate potential future earnings and anticipated future uses of cash flows and may not be appropriate for other purposes.

Various factors or assumptions are applied by the Corporation in elaborating the forward‑looking statements. These factors and assumptions are based on information currently available to the Corporation, including information obtained by the Corporation from third-party sources. Readers are cautioned that the assumptions considered by the Corporation to support these forward-looking statements may prove to be incorrect in whole or in part.

The significant factors that could cause actual results to differ materially from the conclusions, forecasts or projections reflected in the forward-looking statements contained herein include, among other things, risks associated with the following: deterioration of general macroeconomic conditions, including international conflicts, which can lead to negative impacts on the Corporation's suppliers, customers and operating costs; the availability of raw materials and packaging and related price variations (including the prices of orange juice and orange concentrates, key commodities for the Corporation, which have continued to trade above historical highs for the past several months and show no sign of favourable change); loss of key suppliers or supplier concentration; disruptions in or failures of the Corporation's information technology systems, as well as the development and performance of technology; cyber threats and other information-technology-related risks relating to business disruptions, confidentiality, data integrity, and business email compromise-related fraud; the successful deployment of the Corporation's multi-year strategy (defined in Section 4 - "Multi-Year Strategy" of the Corporation's MD&A for the year ended December 31, 2023); the Corporation's ability to maintain strong sourcing and manufacturing platforms and efficient distribution channels; fluctuations in the prices of inbound and outbound freight, the impact of oil prices (and derivatives thereof) on the Corporation's direct and indirect costs along with the Corporation's ability to transfer those increases through higher prices or other means, if any, to its customers in competitive market conditions and considering demand elasticity; climate change and disasters causing higher operating costs and capital expenditures and reduced production output, and impacting the availability, quality or price volatility of key commodities sourced by the Corporation; the scarcity of labour and the related impact on the hiring, training, developing, retaining and reliance of personnel together with their productivity, employment matters, compliance with employment laws across multiple jurisdictions, and the potential for work stoppages due to non-renewal of collective bargaining agreements or other reasons; the successful deployment of the Corporation's health and safety programs in compliance with applicable laws and regulations; serious injuries or fatalities, which could have a material impact on the Corporation's business continuity and reputation and lead to compliance-related costs; disputes with significant suppliers; the increasing concentration of customers in the food industry, providing them with significant bargaining power particularly on the Corporation's selling prices; the implementation, cost and impact of environmental sustainability initiatives, as well as the cost of remediating environmental liabilities; changes made to laws and rules that affect the Corporation's activities, particularly in matters of tax and customs duties, as well as the interpretation thereof, and new positions adopted by relevant authorities; the ability to adapt to changes and developments affecting the Corporation's industry, including customer preferences, tastes, and buying patterns, market conditions and the activities of competitors and customers; failure to maintain the quality and safety of the Corporation's products, which could result in product recalls and product liability claims for misbranded, adulterated, contaminated, or spoiled food products, along with reputational damage; risks related to fluctuations in interest rates, currency exchange rates, liquidity and credit, stock price and pension obligations; the incurrence of restructuring, disposal, or other related charges together with the recognition of impairment charges on goodwill or long-lived assets; the sufficiency of insurance coverage; and the implications and outcome of potential legal actions, litigation or regulatory proceedings to which the Corporation may be a party. The Corporation cautions readers that the foregoing list of factors is not exhaustive.

The Corporation's ability to achieve its sustainability targets and goals is further subject to, among other factors, its ability to access and implement all technology necessary to achieve them as well as the development, deployment and performance of technology, and environmental regulation. The Corporation's ability to achieve its environmental, social and governance risk commitments is further subject to, among other factors, its ability to leverage its supplier relationships.

The assumptions, expectations, and estimates involved in preparing forward-looking statements and risks and uncertainties that could cause actual results to differ materially from forward-looking statements are discussed in the Corporation's materials filed with the Canadian securities regulatory authorities from time to time, including information about risk factors that can be found in Section 19 - "Uncertainties and Principal Risk Factors" of the Corporation's MD&A for the year ended December 31, 2023. Readers should review this section in detail.

All forward-looking statements included herein speak only as of the date hereof. Unless required by law, the Corporation does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained herein are wholly and expressly qualified by this cautionary statement.

SOURCE Lassonde Industries Inc.

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