Financial Results for the Second Quarter of Fiscal 2007, Ended September 30, 2006
Financial Results for the Second Quarter of Fiscal 2007, Ended September 30, 2006
11/07/2006 0:00 UTC
Net earnings at $58.3 million, up 5.6% for the quarter
Net earnings at $111.6 million, up 2.0% since the beginning of the fiscal year
(Montreal, November 7, 2006) – Saputo Inc. released today its financial results for the second quarter of fiscal 2007, which ended September 30, 2006.
- Net earnings totalled $58.3 million ($0.56 basic per share), up $3.1 million compared to the $55.2 million ($0.52 basic per share) for the same quarter in fiscal 2006.
- Consolidated revenues for the quarter ended September 30, 2006 totalled $994.1 million, a $36.7 million decrease compared to the $1.031 billion for the same period last year. This reduction is attributed to the US Dairy Products Sector, whose revenues decreased by $66.5 million compared to the same period last year, as a result of a lower average block market1 per pound of cheese, the continued appreciation of the Canadian dollar and reduced sales volumes. The Canadian and Other Dairy Products Sector revenues increased by $29.3 million compared to the same period last year. Higher selling prices in the Canadian operations in accordance with the increase in the cost of milk as raw material, greater sales volume for the Argentinean operations, along with the inclusion of the German operations acquired on April 13, 2006, are the main factors responsible for the increase. Revenues from the Grocery Products Sector showed a slight increase of $0.7 million, due to the inclusion of Boulangerie Rondeau Inc. and Biscuits Rondeau Inc. (“Rondeau”), acquired on July 28, 2006, partially offset by lower revenues generated by the co-packing agreements for the manufacturing of products for the US market.
- Consolidated EBITDA2 stood at $106.8 million, an increase of $5.3 million compared to the $101.5 million for the corresponding quarter of fiscal 2006. Higher EBITDA in the Canadian and Other Dairy Products Sector of approximately $7 million offset a decrease in EBITDA of approximately $2 million in the US Dairy Products Sector. The Grocery Products Sector EBITDA increased by $0.3 million compared to the same quarter last year.
- EBITDA for the Canadian and Other Dairy Products Sector totalled $76.8 million, an increase of 10.2% compared to $69.7 million for the same period last year. This increase is mainly due to the benefit of rationalization activities completed in prior years, better efficiencies generated in operations, and synergies derived from the merger of the former Milk and Cheese divisions. During the second quarter of fiscal 2007, the by-product market price positively impacted EBITDA by approximately $1 million. In Argentina, EBITDA continued to show a steady growth, although negatively affected by the appreciation of the Canadian dollar and costs incurred in relation to the export tax. In August 2006, the Argentinean government reduced the export tax rates close to the levels applicable prior to the July 2005 increase.
- EBITDA for the US Dairy Products Sector totalled $22.9 million, resulting in a $2.1 million or 8.4% decrease, compared to $25.0 million for the same period last year. This decrease is due to a lower average block market per pound of cheese, the appreciation of the Canadian dollar, and the continued increase in fuel, ingredients and other costs. The relationship between the average block market per pound of cheese and the cost of milk as raw material improved slightly compared to the same period last year. Efforts with respect to improved operational efficiencies, increased selling prices, and the reduction of the cost associated with milk handling increased the EBITDA by approximately $4 million in the quarter compared to the same period last year, despite the closure of the Peru, Indiana facility and lower sales volumes. The California Department of Agriculture’s decision announced last July to reduce the class 4b milk price became effective on November 1, 2006.
- EBITDA for the Grocery Products Sector stood at $7.1 million, an increase of $0.3 million compared to the same quarter last year due mainly to a reduction in expenses related to marketing activities.
- Cash generated by operating activities before changes in non-cash working capital items amounted to $77.9 million, an increase of $3.5 million compared to $74.4 million for the same period last year.
- In the second quarter, the Company used $12.2 million for the acquisition of the activities of Rondeau, a fresh tarts and fresh cookies manufacturer and distributor operating mainly in the province of Quebec, completed on July 28, 2006. The Company added $24.1 million in fixed assets during the quarter. The Company also issued shares for a cash consideration of $3.3 million as part of the Stock Option Plan and purchased shares for cancellation for an amount of $8.5 million as part of the normal course issuer bid.
For more information on the results of the second quarter of fiscal 2007, please read the attached interim report for the quarter ended September 30, 2006, which forms an integral part of this press release.
Dividends
The Board of Directors declared a dividend of $0.20 per share, payable on December 22, 2006 to shareholders of record on December 11, 2006. This dividend relates to the quarter ended September 30, 2006.
Normal Course Issuer Bid
The Company has the intention to purchase by way of a normal course issuer bid (the “Bid”), for cancellation purposes, some of its common shares through the facilities of the Toronto Stock Exchange, beginning on November 13, 2006.
Under the Bid, the Company may repurchase for cancellation up to 5,179,304 common shares. This represents 5% of its 103,586,089 issued and outstanding common shares as of October 31, 2006. These purchases will be made in accordance with applicable regulations over a maximum period of 12 months beginning on November 13, 2006 and ending on November 12, 2007. The Company will not purchase greater than 2% of the issued and outstanding common shares in any 30-day period. The consideration, which will be in cash, that the Company will pay for any common shares acquired by it under the Bid will be the market price of such common shares at the time of acquisition. Within the previous twelve months, Saputo purchased, for cancellation purposes, by way of a normal course issuer bid established in November 2005, 2,029,200 of its common shares at an average price of $34.9523 per share.
The Company believes that the purchase of its own shares may, in appropriate circumstances, be a responsible investment of funds on hand.
Conference Call
A conference call to discuss the second quarter results of fiscal 2007 will be held on Tuesday, November 7, 2006 at 2:00 PM, Eastern time. To participate in the conference call, dial 1 800 525 6384. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/110706/index.php in your web browser.
For those unable to participate, an instant replay will be available until midnight, Tuesday, November 14, 2006. To access the replay dial 1 800 395 0403, ID number 9668277. A replay of the conference call will also be available on the Company’s web site at www.saputo.com.
About Saputo
Always with an expert hand, Saputo transforms into success the passion and initiative of the 8,500 dedicated men and women who work in its 46 plants around the world. Combining tradition and innovation, the Company produces, commercializes and distributes the highest quality products under such well-known brands as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, De Lucia, Dragone, DuVillage de Warwick, Frigo, Kingsey, La Paulina, Nutrilait, Princesse, Ricrem, Sir Laurier d’Arthabaska, Stella, Treasure Cave, Big Daddy, HOP&GO!, Rondeau and Vachon. As one of the top twenty dairy processors in the world, the largest dairy processor in Canada, among the top five cheese producers in the United States, the third largest dairy processor in Argentina and the largest snack-cake manufacturer in Canada, Saputo renews its commitment to excellence and growth every day. Saputo Inc. is a public company whose shares are listed on the Toronto Stock Exchange under the symbol SAP. Visit our Web site at www.saputo.com.
1“Average block market” is the average daily price of a 40 pound block of Cheddar traded on the Chicago Mercantile Exchange (CME), used as the base price for the cheese.
2Measurement of results not in accordance with generally accepted accounting principles
The Company assesses its financial performance based on its EBITDA, this being earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measurement of performance as defined by generally accepted accounting principles in Canada, and consequently may not be comparable to similar measurements presented by other companies.
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Information
Manon Goudreault
Director, Communications
514.328.3377
REPORT
Net earnings at $111.6 million, up 2.0% since the beginning of the fiscal year
(Montreal, November 7, 2006) – Saputo Inc. released today its financial results for the second quarter of fiscal 2007, which ended September 30, 2006.
- Net earnings totalled $58.3 million ($0.56 basic per share), up $3.1 million compared to the $55.2 million ($0.52 basic per share) for the same quarter in fiscal 2006.
- Consolidated revenues for the quarter ended September 30, 2006 totalled $994.1 million, a $36.7 million decrease compared to the $1.031 billion for the same period last year. This reduction is attributed to the US Dairy Products Sector, whose revenues decreased by $66.5 million compared to the same period last year, as a result of a lower average block market1 per pound of cheese, the continued appreciation of the Canadian dollar and reduced sales volumes. The Canadian and Other Dairy Products Sector revenues increased by $29.3 million compared to the same period last year. Higher selling prices in the Canadian operations in accordance with the increase in the cost of milk as raw material, greater sales volume for the Argentinean operations, along with the inclusion of the German operations acquired on April 13, 2006, are the main factors responsible for the increase. Revenues from the Grocery Products Sector showed a slight increase of $0.7 million, due to the inclusion of Boulangerie Rondeau Inc. and Biscuits Rondeau Inc. (“Rondeau”), acquired on July 28, 2006, partially offset by lower revenues generated by the co-packing agreements for the manufacturing of products for the US market.
- Consolidated EBITDA2 stood at $106.8 million, an increase of $5.3 million compared to the $101.5 million for the corresponding quarter of fiscal 2006. Higher EBITDA in the Canadian and Other Dairy Products Sector of approximately $7 million offset a decrease in EBITDA of approximately $2 million in the US Dairy Products Sector. The Grocery Products Sector EBITDA increased by $0.3 million compared to the same quarter last year.
- EBITDA for the Canadian and Other Dairy Products Sector totalled $76.8 million, an increase of 10.2% compared to $69.7 million for the same period last year. This increase is mainly due to the benefit of rationalization activities completed in prior years, better efficiencies generated in operations, and synergies derived from the merger of the former Milk and Cheese divisions. During the second quarter of fiscal 2007, the by-product market price positively impacted EBITDA by approximately $1 million. In Argentina, EBITDA continued to show a steady growth, although negatively affected by the appreciation of the Canadian dollar and costs incurred in relation to the export tax. In August 2006, the Argentinean government reduced the export tax rates close to the levels applicable prior to the July 2005 increase.
- EBITDA for the US Dairy Products Sector totalled $22.9 million, resulting in a $2.1 million or 8.4% decrease, compared to $25.0 million for the same period last year. This decrease is due to a lower average block market per pound of cheese, the appreciation of the Canadian dollar, and the continued increase in fuel, ingredients and other costs. The relationship between the average block market per pound of cheese and the cost of milk as raw material improved slightly compared to the same period last year. Efforts with respect to improved operational efficiencies, increased selling prices, and the reduction of the cost associated with milk handling increased the EBITDA by approximately $4 million in the quarter compared to the same period last year, despite the closure of the Peru, Indiana facility and lower sales volumes. The California Department of Agriculture’s decision announced last July to reduce the class 4b milk price became effective on November 1, 2006.
- EBITDA for the Grocery Products Sector stood at $7.1 million, an increase of $0.3 million compared to the same quarter last year due mainly to a reduction in expenses related to marketing activities.
- Cash generated by operating activities before changes in non-cash working capital items amounted to $77.9 million, an increase of $3.5 million compared to $74.4 million for the same period last year.
- In the second quarter, the Company used $12.2 million for the acquisition of the activities of Rondeau, a fresh tarts and fresh cookies manufacturer and distributor operating mainly in the province of Quebec, completed on July 28, 2006. The Company added $24.1 million in fixed assets during the quarter. The Company also issued shares for a cash consideration of $3.3 million as part of the Stock Option Plan and purchased shares for cancellation for an amount of $8.5 million as part of the normal course issuer bid.
For more information on the results of the second quarter of fiscal 2007, please read the attached interim report for the quarter ended September 30, 2006, which forms an integral part of this press release.
Dividends
The Board of Directors declared a dividend of $0.20 per share, payable on December 22, 2006 to shareholders of record on December 11, 2006. This dividend relates to the quarter ended September 30, 2006.
Normal Course Issuer Bid
The Company has the intention to purchase by way of a normal course issuer bid (the “Bid”), for cancellation purposes, some of its common shares through the facilities of the Toronto Stock Exchange, beginning on November 13, 2006.
Under the Bid, the Company may repurchase for cancellation up to 5,179,304 common shares. This represents 5% of its 103,586,089 issued and outstanding common shares as of October 31, 2006. These purchases will be made in accordance with applicable regulations over a maximum period of 12 months beginning on November 13, 2006 and ending on November 12, 2007. The Company will not purchase greater than 2% of the issued and outstanding common shares in any 30-day period. The consideration, which will be in cash, that the Company will pay for any common shares acquired by it under the Bid will be the market price of such common shares at the time of acquisition. Within the previous twelve months, Saputo purchased, for cancellation purposes, by way of a normal course issuer bid established in November 2005, 2,029,200 of its common shares at an average price of $34.9523 per share.
The Company believes that the purchase of its own shares may, in appropriate circumstances, be a responsible investment of funds on hand.
Conference Call
A conference call to discuss the second quarter results of fiscal 2007 will be held on Tuesday, November 7, 2006 at 2:00 PM, Eastern time. To participate in the conference call, dial 1 800 525 6384. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/110706/index.php in your web browser.
For those unable to participate, an instant replay will be available until midnight, Tuesday, November 14, 2006. To access the replay dial 1 800 395 0403, ID number 9668277. A replay of the conference call will also be available on the Company’s web site at www.saputo.com.
About Saputo
Always with an expert hand, Saputo transforms into success the passion and initiative of the 8,500 dedicated men and women who work in its 46 plants around the world. Combining tradition and innovation, the Company produces, commercializes and distributes the highest quality products under such well-known brands as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, De Lucia, Dragone, DuVillage de Warwick, Frigo, Kingsey, La Paulina, Nutrilait, Princesse, Ricrem, Sir Laurier d’Arthabaska, Stella, Treasure Cave, Big Daddy, HOP&GO!, Rondeau and Vachon. As one of the top twenty dairy processors in the world, the largest dairy processor in Canada, among the top five cheese producers in the United States, the third largest dairy processor in Argentina and the largest snack-cake manufacturer in Canada, Saputo renews its commitment to excellence and growth every day. Saputo Inc. is a public company whose shares are listed on the Toronto Stock Exchange under the symbol SAP. Visit our Web site at www.saputo.com.
1“Average block market” is the average daily price of a 40 pound block of Cheddar traded on the Chicago Mercantile Exchange (CME), used as the base price for the cheese.
2Measurement of results not in accordance with generally accepted accounting principles
The Company assesses its financial performance based on its EBITDA, this being earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measurement of performance as defined by generally accepted accounting principles in Canada, and consequently may not be comparable to similar measurements presented by other companies.
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Information
Manon Goudreault
Director, Communications
514.328.3377
REPORT
Lynda Leith
Investor Relations
(514) 328-3381
