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Press release from CNW Group

MEGA Brands reports first quarter 2012 results

Thursday, May 10, 2012

MEGA Brands reports first quarter 2012 results07:00 EDT Thursday, May 10, 2012Consolidated sales up 14%Toys sales up 10%Stationery & Activities sales up 26%MONTREAL, May 10, 2012 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the first quarter ended March 31, 2012. (All figures are expressed in US dollars.)Consolidated net sales in the first quarter increased 14% to $58.2 million compared to $51.0 million in the corresponding 2011 period.Toy sales increased 10% compared to the first quarter of 2011, driven by higher product shipments in the Preschool and Boys construction categories. Toys sales have increased year-over-year in nine of the last ten quarters.Sales of Stationery and Activities products were up 26%, the fourth consecutive quarter of year-over-year growth in this segment.On a geographical basis, sales were 21% higher in North America and 2% in international markets compared to the first quarter of 2011.Earnings before interest, taxes, depreciation and amortization (''EBITDA'') improved by $1.7 million to $(2.2) million compared to $(3.9) million in the first quarter of 2011. EBITDA is a supplementary financial measure.Net loss improved to $8.5 million or $0.52 basic and diluted per share compared to a net loss of $9.3 million or $0.57 per basic and diluted share in the first quarter of 2011. The Corporation's business is seasonal and historically the first quarter is the period with the lowest sales of the year and negative profitability.''Our first quarter results show good sales growth, particularly in North America, and our key profitability metrics have improved compared to last year,'' said Marc Bertrand, President and CEO. ''Our top priority for the rest of the year is to capitalize on the strong momentum we have built in our brands.''Conference CallA conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing 1 (888) 231-8191 or (647) 427-7450. For those unable to participate, a replay will be available until May 17, 2012. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 71875755.About MEGA BrandsMEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit for more information.The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.MD&A FilingThis press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the unaudited consolidated financial statements and notes for the three-month periods ended March 31, 2012 and 2011. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.Supplementary Financial MeasuresThe Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the three-month period ended March 31, 2012, which is available at and on the Corporation's Web site.Forward-Looking StatementsAll statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2011, which are available at and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.Unaudited Interim Consolidated IncomeStatements(in thousands of US dollars, except per share amounts)    Three-month periodsended March 31, 20122011 $$   Net sales58,18751,036Cost of sales38,75633,224Gross profit19,43117,812   Marketing and advertising expenses2,8482,864Research and development expenses4,0563,276Other selling, distribution and administrative expenses18,45817,910Contingent consideration on business acquisition96168Loss (gain) on foreign currency translation(905)121   Loss from operations(5,122)(6,527)   Financial expenses4,4234,673   Loss before income taxes (9,545)(11,200)   Income taxes    Current(1,012)(1,451) Deferred-(485) (1,012)(1,936)   Net loss(8,533)(9,264)   Loss per share    Basic(0.52)(0.57) Diluted(0.52)(0.57)    Unaudited Interim Consolidated Statements of Comprehensive Loss(in thousands of US dollars, except per share amounts)    Three-month periods ended March 31, 20122011 $$   Net loss(8,533)(9,264)   Other comprehensive income (loss):   Cumulative translation adjustment1,042(566)   Other comprehensive income (loss):1,042(566)   Comprehensive loss(7,491)(9,830)   Consolidated Statements of Financial Position(in thousands of US dollars)    March 31,December 31, 20122011 (Unaudited)(Audited) $$   Assets  Current assets  Cash and cash equivalents5,6296,745Trade and other receivables81,293126,359Inventories79,05169,560Derivative financial instruments565904Prepaid expenses 10,69513,760Total current assets177,233217,328   Non-current assets  Property, plant and equipment36,46732,172Intangible assets23,08723,193Goodwill30,00030,000Derivative financial instruments118231Total assets266,905302,924      Liabilities     Current liabilities  Asset-based credit facility29,71737,279Trade and other payables52,81071,762Income taxes4,7145,832Current portion of long-term debt7,3137,013 94,554121,886Non-current liabilities  Long-term debt103,747105,275 103,747105,275Equity  Share capital429,007429,007Warrants24,43024,430Contributed surplus3,8243,492Deficit(382,855)(374,322)Accumulated other comprehensive loss(5,802)(6,844)Total equity68,60475,763Total liabilities and equity266,905302,924Unaudited Consolidated Statement of Changes in Equity(in thousands of US dollars)  Share capital WarrantsContributedsurplusDeficitAccumulatedothercomprehensivelossTotal equity $$$$$$Balance - December 31, 2010429,00724,4301,982(382,652)(5,260)67,507Net loss---(9,264)-(9,264)Other comprehensive loss----(566)(566)Stock-based compensation--535--535Balance - March 31, 2011429,00724,4302,517(391,916)(5,826)58,212       Balance - December 31, 2011429,00724,4303,492(374,322)(6,844)75,763Net loss---(8,533)-(8,533)Other comprehensive income----1,0421,042Stock-based compensation--332--332Balance - March 31, 2012429,00724,4303,824(382,855)(5,802)68,604Unaudited Consolidated Statements of Cash Flows (in thousands of US dollars)   Three-month periodsended March 31, 20122011 $$   Operating activities  Net loss(8,533)(9,264)Adjustments for:   Depreciation of property, plant and equipment2,7652,404 Amortization of intangible assets105105 Stock-based compensation332535 Financial expenses4,4234,673 Income taxes(1,012)(1,936) Gain on foreign currency(762)(31) (2,682)(3,514) Net change in non-cash working capital balances23,33922,211 Income taxes recovered (paid)(272)1,312 Interest paid(446)(92)Cash flows provided by operating activities19,93919,917   Financing activities  Repayment of debentures(7,267)-Change in asset-based credit facility(7,562)-Repayment of long-term debt(12)(14)Cash flows used in financing activities(14,841)(14)   Investing activities  Acquisition of property, plant and equipment(6,248)(8,575)Cash flows used in investing activities(6,248)(8,575)   Effect of changes in foreign exchange rates on cash and cash equivalents34(31)   Increase (decrease) in cash and cash equivalents(1,116)11,297Cash and cash equivalents — Beginning of period6,7455,277   Cash and cash equivalents — End of period5,62916,574 For further information: Investor Contact: Peter Ferrante Vice President and Chief Financial Officer Tel: (514) 333-5555 ext. 2283