Ridley Inc. (TSX:RCL) today reported its financial results for the
first quarter of fiscal 2013, the three months ended September 30,
2012. All currency amounts are stated in U.S. dollars unless
otherwise noted.
For the first three months of fiscal 2013, Ridley's earnings
before interest, taxes, depreciation and amortization (EBITDA (i))
were $10.2 million compared to $3.8 million last year. Net profit
after income taxes (NPAT) was $5.3 million ($0.41 per share)
compared to $0.7 million ($0.06 cents per share) last year.
"Our earnings results for this quarter are clearly satisfying,
but we note that these were the result of exceptional circumstances
impacting commodity prices and forage availability largely brought
about by the severe drought in the United States. We remain
concerned for our customers, livestock and poultry producers, whose
operations are being stressed by high commodity prices and
increased costs from replacing normal forage sources with
commercial feed supplements," said Steve VanRoekel, President and
CEO of Ridley Inc. "While Ridley is well positioned to respond to
market dynamics, we are also cognizant that these are unusual
conditions. Eventually the effects of the drought, and its positive
stimulus to feed demand, will diminish and more normal conditions
should return," added VanRoekel.
Ridley's tonnage volumes were 3.9% higher in the first quarter
of fiscal 2013 while gross profits increased by 32.5% to $22.5
million from $17.0 million last year. Sales revenues of $174.3
million were 11.4% higher than last year but the major part of this
increase was the effect of higher raw material costs on selling
prices. The increase in Ridley's gross profits this quarter
reflects volume growth, partly the effect of the drought on demand
for feed and forage supplementation, and inventory gains realized
from sharply higher prices in the last several months for
commodities and other feed ingredients.
Net operating expenses decreased by $1.2 million on more
efficient administrative activities and a reduction in bad debts
provisions. Operating expenses last year included a loss on the
sale of facilities and overheads related to two facilities that
were closed later in the year.
U.S. Feed Operations (USFO) and Ridley Block Operations (RBO)
produced strong results in the first quarter of fiscal 2013 on
increased volumes of feed supplements and feed blocks in the beef
cattle sector and improved unit margins. Prices for most feed
commodities were sharply higher in the first quarter of fiscal 2013
as a result of drought conditions throughout much of the United
States. Inventory gains from rising feed ingredient prices were
favourable to unit margins. Poor pasture and forage conditions
contributed to increased demand for supplements. Ridley Feed
Ingredients (RFI) reported results in the first quarter that were
largely unchanged from last year. Canadian Feed Operations (CFO)
reported lower volumes in the first quarter as a result of the
temporary closure of a facility in Brandon, Manitoba during a major
capital project.
On October 18, 2012, Ridley announced that it had entered into
agreements with Masterfeeds Inc., a subsidiary of Omaha-based Ag
Processing Inc. (AGP), to merge their respective Canadian animal
nutrition businesses into a new limited partnership entity that
will operate as Masterfeeds LP, headquartered in London, Ontario.
The new entity will operate, among other things, 22 feed
manufacturing plants and employ over 500 people in a business
spanning across Quebec, Ontario and the Prairie Provinces. Each of
Masterfeeds Inc. and Ridley Inc. will contribute essentially all of
their Canadian feed operating assets in exchange for relative
shareholdings in Masterfeeds LP. That transfer is expected to
result in no material effect on the structure or other operations
of Ridley Inc. Completion of the merger is expected in the second
quarter of Ridley's fiscal 2013 and is subject to the execution of
definitive agreements and normal conditions including regulatory
approvals.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This management's discussion and analysis dated as of October
24, 2012 and the accompanying interim consolidated financial
statements for the three months ended September 30, 2012 have been
prepared using International Financial Reporting Standards
("IFRS").
First Quarter Results
The following summary data is presented to assist in
understanding the fiscal 2013 first quarter results:
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Summary of Results Three months ended
September 30
($ million except for EPS) 2012 2011
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Revenue $ 174.3 $ 156.5
Gross profit 22.5 16.0
Operating income 8.3 1.5
Net earnings before exceptions 5.3 0.9
Exceptions, net of income taxes (noted below (ii)) - 0.2
Net earnings 5.3 0.7
Diluted earnings per share (EPS) $ 0.41 $ 0.06
EBITDA (i) $ 10.2 $ 3.8
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(i) EBITDA - Operating income before depreciation, amortization and
exceptions. EBITDA does not have a standardized meaning prescribed by IFRS
and, therefore, is not readily comparable to similar measures presented by
other companies. However, management believes that this measure provides
investors with useful supplemental information.
(ii) Exceptions - In the preceding summary data, net earnings were reported
before exceptions. Those exceptions in the three months ended September 30,
2011 were comprised of $0.2 million net of taxes from the loss on the sale
of a previously closed facility in Syracuse, Indiana.
Consolidated First Quarter Results
Revenue of $174.3 million in the first quarter of fiscal 2013
was higher by $17.8 million from the same period last year. A
comparison of revenue is not necessarily indicative of the strength
of Ridley's business because revenue is influenced by fluctuating
commodity prices. Sharply rising feed ingredient prices account for
the major part of the increase in revenues in the first quarter of
fiscal 2013. Total sales volume, as measured in tons of feed
products sold, was 3.9% higher than the prior year. The increase in
volume was concentrated in the RBO and USFO segments which have
benefited from improvements in the demand for feed supplementation
in the beef and dairy sectors. Persistent drought in the
south-central U.S. has prompted an increase in sales of feed
supplement blocks suited to open range cattle. Although the beef
cattle population has declined for several years, tighter stocks
have meant significantly improved cattle prices enabling cow/calf
producers to operate profitably during the quarter.
Consolidated gross profit in the first quarter of fiscal 2013
was $22.5 million compared to $17.0 million in the same period of
fiscal 2012. USFO's gross profit in the first quarter of fiscal
2013 increased by $2.5 million on growth in volumes and higher unit
margins from inventory gains during a period of rising raw material
prices. RBO's gross profits increased by $2.4 million in the period
on strong volume growth in a profitable beef production economy and
weather conditions that were positive to feed supplementation.
RFI's gross profits were slightly lower over last year as a result
of lower volumes and higher manufacturing costs that offset
improved unit margins. CFO's gross profits improved by $0.7 million
in the first quarter as improved unit margins more than offset
lower volumes.
Operating expenses, which include technical services, selling,
administration expenses and research and development, were $14.3
million in the first quarter of fiscal 2013 compared to $15.5
million last year. Administration expenses were lower by $0.6
million in the period due to more efficient operations and the
elimination of consulting fees related to the implementation last
year of lean manufacturing initiatives. Other income in the first
quarter this year includes a reduction of $0.4 million in bad debts
provisions. The loss on sale of facilities of $0.3 million in the
first quarter of fiscal 2012 relates to the disposal of previously
closed facilities in Syracuse, Indiana and Manitou, Manitoba.
EBITDA is comprised of operating income before depreciation,
amortization and exceptions. For the three months ended September
30, 2012 EBITDA was $10.2 million compared to $3.8 million for the
same period last year. There were no material exceptions in the
first quarter of the current year. Exceptions in the first quarter
of fiscal 2012 were comprised of a $0.2 million loss net of income
taxes on the sale of a redundant facility.
Net earnings after taxes for the first quarter of fiscal 2013
were $5.3 million (earnings per share of $0.41) compared to $0.7
million (earnings per share of $0.06) in the same period of fiscal
2012.
Comprehensive Income
Comprehensive income (loss) is the change in net assets that
results from transactions, events and circumstances from sources
other than investments by and/or distributions to shareholders.
Other comprehensive income (OCI) is comprised entirely of
unrealized gains and losses on translation of financial statements
of related entities with foreign functional currency to U.S. dollar
reporting currency. Comprehensive income in the first quarter of
fiscal 2012 was $6.2 million which was comprised of net income of
$5.3 million, as reported above, plus unrealized gains of $0.9 on
translation of the financial statements of Canadian entities to
U.S. currency. Last year, an unrealized loss of $1.9 million on
translation of Canadian currency resulted in a comprehensive loss
of $1.2 million in the first quarter.
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EBITDA Three months ended
September 30
($ million) 2012 2011
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Net earnings $ 5.3 $ 0.7
Provision for income taxes 3.0 0.7
Interest income (0.1) (0.1)
Finance costs 0.1 0.1
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Operating income $ 8.3 $ 1.5
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Amortization of property, plant and equipment 1.7 1.8
Other amortization 0.2 0.2
Loss on sale of facilities - 0.3
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EBITDA $ 10.2 $ 3.8
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SEGMENT RESULTS
The following is a summary of operating income (loss) of
Ridley's reporting segments.
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Operating Income (Loss) Three months ended
September 30
($ million) 2012 2011
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Canadian Feed Operations (CFO) $ 0.0 $ (1.1)
U.S. Feed Operations (USFO) 3.5 0.4
Ridley Feed Ingredients (RFI) 0.7 0.6
Ridley Block Operations (RBO) 4.8 2.3
Corporate (0.7) (0.8)
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Consolidated Operating Income $ 8.3 $ 1.5
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Canadian Feed Operations (CFO)
The Canadian Feed Operations (CFO) segment consists of eight
full-line production facilities operating in Canada, producing and
marketing products for the core animal nutrition market. CFO plants
derive most of their business by manufacturing and marketing a
broad range of complete feeds, supplements and premixes to meat,
milk and egg producers, and owners of equine and companion animals
located mostly in the Prairie Provinces and Ontario. Tonnage volume
was lower by 5.6% in the first quarter of fiscal 2013 compared to
last year mainly due to the temporary closure of the Brandon,
Manitoba facility during a major capital project to replace
ingredient bins. The facility resumed full operations in October
this year. CFO gross profits in the first quarter this year were
$2.9 million compared to $2.1 million in the same period last year.
Improved unit margins in supplements and ingredients, increased
volume of high value added micro premixes, and lower manufacturing
costs, more than offset lower overall volumes in the first quarter
this year. Operating expenses in the first quarter of fiscal 2013
were also lower by $0.4 million as a result of more efficient
administrative activities and a reduction in outside consulting
projects related to implementation of lean manufacturing
initiatives.
U.S. Feed Operations (USFO)
The U.S. Feed Operations (USFO) segment consists of twenty-one
full-line production facilities operating in the United States
producing and marketing products for the core animal nutrition
market. USFO plants derive most of their business by manufacturing
and marketing a broad range of complete feeds, supplements and
premixes to meat, milk and egg producers, and owners of equine and
companion animals located mostly in the Midwestern United States.
Tonnage volume was higher by 8.2% in the first quarter of fiscal
2013 compared to last year. The increase in volumes in the first
quarter of 2012 reflects a stronger performance in sales of higher
value added supplements in the beef cattle sector.
Gross profits in the first quarter this year were $10.6 million
compared to $8.1 million in the same period last year. Unit margins
were higher in this year as a consequence of higher trending feed
ingredient markets. USFO operating expenses in the first quarter of
fiscal 2013 were lower by $0.5 million following from a reduction
of $0.4 million in bad debts provisions and more efficient
administrative activities.
Ridley Feed Ingredients (RFI)
The Ridley Feed Ingredients (RFI) segment produces and
distributes vitamin and trace mineral premixes, small packaged
specialty products, medicated and non-medicated feed additives and
micro feed ingredients to customers throughout North America from
its facility in Mendota, Illinois. Revenue in the first quarter of
fiscal 2013, including intersegment sales, decreased by 5.9% from
the same period last year, as a result of declining prices for
feed-grade vitamins and amino acids, which comprise the major part
of RFI's manufactured and resale products. Tonnage volume was
slightly lower in the first quarter and average unit margins in the
first quarter were lower than last year due to the decline in key
raw materials, but these were largely offset by an increase in
supplier rebates over last year. Variable production costs and
manufacturing overheads increased in the quarter and, as a result,
RFI reported a 2.6% decrease in gross profit from last year. As
administrative expenses were lower from last year, largely from the
consulting fees incurred last year in lean manufacturing
initiatives, RFI produced an increase in operating income of 11.7%
to $0.7 million in the first quarter of fiscal 2013.
Ridley Block Operations (RBO)
The Ridley Block Operations (RBO) segment manufactures a
complete range of block supplements, including low moisture,
pressed, compressed, composite and poured blocks and loose bagged
minerals from seven U.S. based facilities. Tonnage volume in the
first quarter of fiscal 2013 was higher by 21.4% relative to last
year as a result of a favourable beef cattle economy and producers'
needs for increased feed supplementation following from the severe
drought which reduced the quantity and quality of pasture and
forages. Costs of production and manufacturing overhead were higher
in the quarter because of the increased volume, but these
manufacturing costs were held to an increase of less than 6%
overall, which enabled RBO to report a 45.8% increase in gross
profit. The $0.1 million decrease in operating expenses in the
first quarter of fiscal 2013 reflects the inclusion last year of a
$0.3 million loss (before income taxes) on the sale of the
previously closed facility in Syracuse, Indiana.
Liquidity/Capital Resources/Cash Flow
Ridley's non-cash working capital and debt-to-equity positions
are summarized below.
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September June March December September
Balances ($000) 30 30 31 31 30
as of: 2012 2012 2012 2011 2011
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Non-cash
working
capital (i) $ 45,265 $ 38,215 $ 45,506 $ 44,133 $ 44,580
Net debt (cash
surplus) (ii) 12,311 11,032 (8,453) (2,624) 2,432
Equity 125,519 119,322 148,724 144,344 139,866
Net debt-to-
equity ratio 9.8% 9.2% n/a n/a 1.7%
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(i) Non-cash working capital is defined as current assets less current
liabilities, excluding the following items: cash; short-term deposits;
short-term debt; and the current portion of long-term debt.
(ii) Net debt (cash surplus) is defined as bank obligations and capital
leases less cash and short-term deposits. A cash surplus is defined as an
excess of cash and short-term deposits over bank obligations and capital
leases.
Net debt of $12.3 million as at September 30, 2012 was comprised
of total long term debt of $14.0 million less $1.7 million of cash
and short term deposits. For the three months year-to-date the
Company funded $2.9 million of capital expenditures from the
proceeds of debt financing.
The following is a summary of cash generated or utilized by
business operations, net of capital expenditures on plant and
equipment and other intangibles, excluding business
acquisitions:
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Summary of Changes in Cash Available Three months ended
September 30
($ million) 2012 2011
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Cash flow from operating activities $ 7.3 $ 2.9
Net increase in non-cash working capital balances (7.1) (5.5)
Decrease (increase) in loans receivable, net (0.3) (0.5)
Proceeds on disposal of property, plant and equipment 0.0 0.4
Capital expenditures, including purchase of intangible
assets (3.0) (2.1)
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Decrease in cash available $ (3.1) $ (4.8)
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For the first quarter of fiscal 2013, cash flows from operations
net of capital expenditures were a deficit of $3.1 million compared
to a deficit of $4.8 million in the same three-month period last
year. Net non-cash working capital balances increased by $7.1
million in the three months ended September 30, 2012. Delays in the
implementation of upgrades to the Company's business systems in
September resulted in the accumulation of higher accounts
receivable and accounts payable balances at the end of the first
quarter. Those balances have since been reduced as the Company
completed its system upgrades. Inventories were also higher at the
end of the period due to higher raw material prices and additional
stocks on hand as the Company responded to anticipated feed demands
from the severe drought in U.S. markets.
Capital Expenditures
Capital expenditures on property, plant and equipment, and
intangible assets (software) in the first quarter of fiscal 2013
were $2.9 million, compared to $2.1 million in the same period a
year ago. Major capital expenditures in the first three months of
fiscal 2013 included the replacement of ingredient bins at the
Brandon, Manitoba facility and the installation of robotic package
handling equipment at four U.S. facilities.
Business Acquisitions
The Company has entered into an agreement with Masterfeeds Inc.,
a subsidiary of Omaha-based Ag Processing Inc. (AGP), to merge
their respective Canadian animal nutrition businesses into a new
limited partnership entity that will operate as Masterfeeds LP,
headquartered in London, Ontario. The new entity will operate,
among other things, 22 feed manufacturing plants and employ over
500 people in a business spanning across Quebec, Ontario and the
Prairie Provinces. Each of Masterfeeds Inc. and Ridley Inc. will
contribute essentially all of their Canadian feed operating assets
in exchange for relative shareholdings in Masterfeeds LP. That
transfer is expected to result in no material effect on the
structure or other operations of Ridley Inc. Completion of the
merger is expected in the second quarter of Ridley's fiscal 2013
and is subject to the execution of definitive agreements and normal
conditions including regulatory approvals.
Outstanding Share Data
The Company's share capital consists of an unlimited number of
common shares, with no par value. On December 12, 2011, the Company
received approval from the Toronto Stock Exchange (the "TSX") to
initiate a normal course issuer bid for the Company's shares
through the facilities of the TSX. The shares repurchase program
permits the Company to purchase for cancellation up to 639,499 of
its common shares over the twelve-month period ending December 14,
2012. As at September 30, 2012, the Company had repurchased no
shares under the current normal course issuer bid. The number of
shares outstanding as at September 30, 2012 and as at October 24,
2012 was 12,789,978.
Seasonality and Commodity Variability
The Company experiences seasonal variations in revenue.
Historically, revenue is strongest in the second and third fiscal
quarters when colder weather from October to March typically
increases demand for beef feed. Other product lines are only
marginally affected by seasonal conditions. Certain of the raw
materials comprising the Company's products incorporate
commodity-based products and the by-products of commodity
processing. Fluctuating commodity prices may therefore influence
revenues and associated cost of sales as the Company's selling
prices are adjusted to reflect current raw materials markets.
Selected Quarterly Financial Information (i)
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(US$ millions except per
share data) Fiscal First Second Third Fourth
Year Quarter Quarter Quarter Quarter
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Revenue 2013 174.3
2012 156.5 177.2 167.3 148.5
2011 127.5 159.3 154.2 146.5
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Net earnings (loss) 2013 5.3
(before exceptions (ii) 2012 0.9 4.0 5.3 0.4
net of income taxes) 2011 1.6 4.9 3.4 (0.4)
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Net earnings (loss) 2013 5.3
2012 0.7 4.0 4.0 0.3
2011 1.6 4.9 3.4 (0.4)
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Net earnings (loss) 2013 0.41
per share (EPS) 2012 0.06 0.31 0.30 0.03
2011 0.13 0.38 0.27 (0.04)
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(i) Financial information presented above was prepared in accordance with
International Financial Reporting Standards.
(ii) Exceptions include asset impairment loss, restructuring charges, and
loss on sale of facilities.
Internal Control Over Financial Reporting
The Chief Executive Officer and Chief Financial Officer have
each signed form 52-109F2 - Certification of Interim Filings and
filed it with the appropriate securities regulators in Canada in
compliance with Multilateral Instrument 52-109 - Certification of
Disclosure in Issuers' Annual and Interim Filings issued by the
Canadian Securities Administrators. There has been no change in
Ridley's internal controls over financial reporting or disclosure
controls and procedures that occurred during the most recent
interim period that has materially affected, or is reasonably
likely to materially affect, Ridley's internal control over
financial reporting.
Forward-Looking Information
This report contains "forward-looking" information. The
forward-looking information includes statements concerning the
proposed transaction described herein, Ridley's outlook for the
future, as well as other statements of beliefs, plans and
strategies or anticipated events, and similar expressions
concerning matters that are not historical facts. Forward-looking
information and statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed in, contemplated or implied by, such statements. These
risks and uncertainties include the risk that the proposed
transaction described herein will not be completed, the ability to
make effective acquisitions and successfully integrate newly
acquired businesses into existing operations, the availability and
prices of raw materials and supplies, livestock disease, product
pricing, the competitive environment and related market conditions,
operating efficiencies, access to capital, the cost of compliance
with environmental and health standards and other regulatory
requirements affecting Ridley's business, adverse results from
ongoing litigation, and actions of domestic and foreign
governments. Other risks are outlined in the Risk Management
section of the MD&A included in Ridley's Annual Report. Unless
otherwise required by applicable securities law, Ridley disclaims
any intention or obligation to publicly update or revise this
information, whether as a result of new information, future events
or otherwise. Ridley cautions readers not to place undue reliance
upon forward-looking statements.
OUTLOOK
Long term growth in global demand for agricultural products will
be favourable to livestock and poultry production in North America,
but disruptions can arise from the prevailing economic
circumstances for livestock and poultry producers, which have
historically been cyclical. Factors in Ridley's near term results
will continue to be variability in farm gate prices for meat milk,
and eggs, the level and degree of volatility in feed prices, and
weather conditions. Throughout much of the first half of fiscal
2012, raw material prices trended lower, which had a negative
effect on Ridley's margins. Starting in December 2011, raw material
prices trended higher, which contributed to improved unit margins
for Ridley in the second half of fiscal 2012. Since the start of
fiscal 2013 raw material prices have risen even more sharply
resulting in the favourable margins for Ridley in the current
quarter. However, raw material prices remain volatile by historical
standards so there is no certainty that the positive effects of
this trend will extend to subsequent periods. The severe drought
that impacted much of the major crop growing regions this year has
contributed to the declining trend in the U.S. beef cattle herd of
more than a decade. Livestock and poultry producers in all sectors
will continue to push hard to minimize their feed costs. In
response to the uncertainties of this environment, Ridley continues
to focus on improving its competitive strengths and value to
customers. Initiatives are in progress to improve operating
efficiencies using lean manufacturing techniques and to better
utilize information technology in logistics and customer service.
Ridley continues to develop opportunities in growing lifestyle
markets and higher-value-added products that tend to be more stable
in market demand. Ridley's strong balance sheet and available debt
capacity provide the flexibility necessary to capitalize on
acquisition opportunities that fit the Company's strategic goals
during this period of uncertainty.
Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg,
Manitoba, is one of North America's leading commercial animal
nutrition companies. Ridley employs more than 900 people in the
United States and Canada in the manufacture, sales and marketing of
a full range of animal nutrition products under highly regarded
trade names. Ridley's common shares are listed on The Toronto Stock
Exchange (trading symbol: RCL). Additional information, including
the notes to the interim financial statements and Ridley's Annual
Information Form (AIF), are available at www.sedar.com. Visit our
website at www.ridleyinc.com.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars) (unaudited)
Note September 30 June 30 September 30
2012 2012 2011
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ASSETS
Current assets
Cash 1,678 1,676 334
Accounts receivable 50,569 32,971 35,954
Inventories 6 51,191 47,783 50,480
Income taxes recoverable - - 541
Prepaids and other current assets 2,458 1,124 2,111
Current portion of loans
receivable 1,071 852 1,381
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Total current assets 106,967 84,406 90,801
Non-current assets
Loans receivable 389 307 393
Assets-held-for-sale 8 330 330 -
Property, plant and equipment 71,072 69,623 72,451
Deferred income tax asset 8,880 8,489 8,449
Other assets - - 17
Intangible assets 7,267 7,392 7,795
Goodwill 37,982 37,982 37,982
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Total non-current assets 125,920 124,123 127,087
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TOTAL ASSETS 232,887 208,529 217,888
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LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Outstanding cheques in excess of bank
balances 4,477 4,217 3,293
Short-term debt - - 2,239
Accounts payable and accrued
liabilities 53,122 37,052 40,623
Advances from customers 486 943 590
Income taxes payable 868 1,451 -
Current portion of long-term debt 60 59 57
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Total current liabilities 59,013 43,722 46,802
Non-current liabilities
Long-term debt 13,869 10,973 470
Deferred income tax liability 16,973 16,768 19,720
Other accrued liabilities 423 492 509
Post-employment benefit
obligations 17,090 17,252 10,521
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Total non-current liabilities 48,355 45,485 31,220
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Total liabilities 107,368 89,207 78,022
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Shareholders' equity
Share capital 10 53,159 53,159 53,159
Retained earnings 74,239 68,982 89,634
Accumulated other comprehensive income
(loss) (1,879) (2,819) (2,927)
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72,360 66,163 86,707
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Total shareholders' equity 125,519 119,322 139,866
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TOTAL LIABILITIES and SHAREHOLDERS'
EQUITY 232,887 208,529 217,888
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Refer to accompanying notes to the interim consolidated financial
statements.
Approved by the Board of Directors
(signed) B. P. Martin, Director (signed) W. Harden, Director
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Expressed in thousands of U.S. dollars) (unaudited)
Three Months Ended
September 30
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Note 2012 2011
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Revenue 174,292 156,517
Cost of sales 6 151,764 139,510
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Gross profit 22,528 17,007
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Operating (income) expenses
Technical services, selling and administrative 14,430 14,805
Other expense (income) (322) 225
Loss on sale of facilities 8 - 314
Research and development 156 146
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Net operating expenses 14,264 15,490
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Operating income 8,264 1,517
Finance expense (102) (102)
Finance income 48 53
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Income before income taxes 8,210 1,468
Income tax expense 9 2,953 746
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Net income for the period 5,257 722
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Retained earnings, beginning of period 68,982 88,912
Net income for the period 5,257 722
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Retained earnings, end of period 74,239 89,634
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Net income per share, basic and diluted 0.41 0.06
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of U.S. dollars) Three Months Ended
(unaudited) September 30
--------------------
2012 2011
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Net income for the period 5,257 722
Unrealized gain (loss) on translation of
financial statements of related entities with
foreign functional currency to U.S. dollar
reporting currency 940 (1,872)
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Other comprehensive income (loss) for the period 940 (1,872)
Comprehensive income (loss) for the period 6,197 (1,150)
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Refer to accompanying notes to the interim consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of U.S. dollars) (unaudited)
Share Retained Accumulated other Total
Note capital earnings comprehensive loss Equity
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Balance at June
30, 2011 53,159 88,912 (1,055) 141,016
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Change in
currency
translation - - (1,872) (1,872)
Net income for
the period - 722 - 722
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Balance at
September 30,
2011 10 53,159 89,634 (2,927) 139,866
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Share Retained Accumulated other Total
Note capital earnings comprehensive loss Equity
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Balance at June
30, 2012 53,159 68,982 (2,819) 119,322
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Change in
currency
translation - - 940 940
Net income for
the period - 5,257 - 5,257
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Balance at
September 30,
2012 10 53,159 74,239 (1,879) 125,519
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Accumulated other comprehensive loss is comprised entirely of the unrealized
loss on translation of financial statements of related entities with foreign
functional currency to U.S. dollar reporting currency.
Refer to accompanying notes to the interim consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. dollars) (unaudited)
Three Months Ended
September 30
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Note 2012 2011
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Cash flow from operating activities
Net income for the period 5,257 722
Add (deduct) items not affecting cash:
Depreciation of property, plant and
equipment 1,701 1,819
Deferred income taxes 120 (241)
Loss on sale of property, plant and
equipment 118 31
Loss on sale of facilities 8 - 314
Other amortization 195 193
Other items not affecting cash (77) 32
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7,314 2,870
Net change in non-cash working capital balances
Accounts receivable (17,234) (2,026)
Inventories (3,093) (3,554)
Prepaids and other current assets (1,317) (1,090)
Accounts payable and accrued liabilities 15,576 729
Advances from customers (461) (537)
Income taxes payable and recoverable (583) 1,012
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(7,112) (5,466)
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Net cash from (for) operating activities 202 (2,596)
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Cash flow from investing activities
Proceeds on disposal of property, plant
and equipment and facilities 8 388
Purchase of property, plant and equipment (2,925) (2,078)
Purchase of intangible assets (97) -
Decrease (increase) in loans receivable, net (300) (519)
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Net cash utilized for investing activities (3,314) (2,209)
Cash flow from financing activities
Repayment of short- and long-term debt (1,949) (4,984)
Proceeds from short- and long-term debt 4,829 6,293
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Net cash utilized from (for) financing activities 2,880 1,309
Effect of exchange rate changes on cash (26) 69
(Decrease) increase in cash and cash equivalents (258) (3,427)
Cash and cash equivalents - beginning of period (2,541) 468
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Cash and cash equivalents - end of period (2,799) (2,959)
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Cash and cash equivalents are comprised of:
Cash 1,678 334
Outstanding cheques in excess of bank balances (4,477) (3,293)
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(2,799) (2,959)
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Refer to accompanying notes to the interim
consolidated financial statement
Contacts: Ridley Inc. Steve VanRoekel President and CEO (507)
388-9412 Ridley Inc. Gordon Hildebrand Chief Financial Officer
(507) 388-9577