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Press release from CNW Group

Legumex Walker Reports Second Quarter 2012 Financial Results

Tuesday, August 14, 2012

Legumex Walker Reports Second Quarter 2012 Financial Results07:00 EDT Tuesday, August 14, 2012- Market Conditions for Special Crops Improving As Company Prepares to Commence Canola Processing Operations Early Next Year -WINNIPEG, Aug. 14, 2012 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the three months and six months ended June 30, 2012.  All figures are in Canadian dollars unless otherwise stated.Highlights for the Three Months Ended June 30, 2012Revenues of $68.5 million for the three months ended June 30, 2012 compared to $65.8 million for the three months ended March 31, 2012;EBITDA1 of $2.4 million for the three months ended June 30, 2012 compared to $2.2 million for the three months ended March 31, 2012;Net earnings for the three months ended June 30, 2012 of $0.3 million, or $0.03 per share compared to a net loss of $1.8 million, or net loss per share of $0.13, for the three months ended March 31, 2012;Special Crops segment EBITDA1 of $3.5 million for the three months ended June 30, 2012 compared to $3.3 million for the three months ended March 31, 2012;Cash flow from operations1 of $0.9 million for the three months ended June 30, 2012 compared to $1.0 million for the three months ended March 31, 2012;Sold stake in Blue Hills Processors (2003) Ltd. for $1.8 million as part of ongoing initiative to optimize its wholly owned processing capacity resulting in a net gain of $1.0 million;Pacific Coast Canola, LLC ("PCC") commenced a canola seed purchasing program to meet requirements for commissioning and commercial operations;Construction on the PCC plant progressed according to plan, with the facility expected to commence commercial operations in the first quarter of 2013; and,Bruce Scherr, Chairman & CEO of Informa Economics, Inc., was appointed Chairman of the Company's Board of Directors."We are beginning to see an improvement in demand for special crops as those buyers impacted by political uncertainty, currency fluctuations and the European financial crisis are gradually coming back to the market to replenish depleted inventories," said Joel Horn, President and Chief Executive Officer, Legumex Walker Inc.  "We expect the positive trend in demand conditions to continue throughout the remainder of year, complemented by a strong North American pulse crop resulting from favorable growing conditions throughout most of our sourcing regions.  All of this positions us well heading into our busiest part of the year for our Special Crops business."Mr. Horn continued, "At the same time, we continue to move steadily forward in our preparations for the start-up operations for the PCC canola processing facility in the first quarter of next year.  Construction is nearing completion, the majority of the key personnel are now on board, and the facility recently took delivery of its first feedstock. PCC is well positioned to capitalize on the growing overall demand for canola oil, as well as its location as the first commercial-scale canola processing facility west of the Rockies.  The addition of the canola operations will be transformational for our Company, effectively doubling our output and adding higher margin product as per our growth strategy."Results for the Three Months Ended June 30, 2012Total consolidated sales for the three months ended June 30, 2012 was $68.5 million compared to $65.8 million for the three months ended March 31, 2012. The quarter over quarter increase is primarily attributable to the US operations acquired in February, 2012. Revenue was generated entirely from sales from the Special Crops Segment through the sale of pulse and other special crops.Selling, general, and administrative expenses for the three months ended June 30, 2012 were $4.5 million (6.5 percent of sales) compared to $4.3 million (6.5 percent of sales) for the three months ended March 31, 2012. Category expenses reflect the relatively fixed nature of the Company's indirect costs, which consist primarily of personnel salaries and benefits, professional fees, insurance, property and business taxes and utilities. The Company has deemed $0.6 million of its selling, general and administrative costs during the quarter to be non-recurring costs attributable to events and factors related to the commencement of business as a going concern, integration activities and the acquisition of St. Hilaire Seed Company and assets of Anderson Seed Company.Earnings before interest, taxes, depreciation and amortization (EBITDA1) for the three months ended June 30, 2012 was $2.4 million compared to $2.2 million for the three months ended March 31, 2012. Net earnings for the three months ended June 30, 2012 was $0.3 million, or $0.03 per share compared to a net loss of $1.8 million, or net loss per share of $0.13. Excluding the impact of certain charges related to acquisition and transaction costs, gain on sale of investment and foreign exchange, adjusted net loss1 was $0.8 million, or $0.06 per share for the three months ended June 30, 2012 compared to an adjusted net loss1 of $0.8 million, or $0.06 per share for the three months ended March 31, 2012.Special CropsSales for the three months ended June 30, 2012 was $68.5 million compared to $65.8 million for the three months ended March 31, 2012. The second quarter is historically the slowest for the Company's special crops business. The quarter over quarter increase is largely attributable to the US operations acquired in February 2012.  Market factors, including the European financial crisis, currency fluctuations and political instability in some of the Company's traditional markets continued to impact negatively on sales. The Company also saw increased competition from emerging pulse producing countries that have pricing advantages due to lower transportation costs as a result of their closer proximity to some buyers and relatively low currencies values. Moreover, it is a fundamental part of the Company's growth strategy to diversify its sourcing into new geographic regions to reduce risk, increase flexibility and strengthen its competitive position versus companies in emerging pulse producing nations.Cost of sales, which includes the cost of special crops, internal processing costs, third-party processing costs and freight, for the three months ended June 30, 2012 was $62.2 million compared to $60.1 million for the three months ended March 31, 2012, resulting in a gross margin of $6.3 million (9.2 percent of sales) and $5.7 million (8.7 percent of sales) for the respective periods. The increase in gross margin percentage is largely due to higher margins on beans and sunflower sales. Gross margin percentage will vary from quarter to quarter and year to year based on the strength of demand, product mix, as well as the timing and location of purchases by the Company of pulses and other special crops.EBITDA generated by the Special Crops segment for the three months ended June 30, 2012 was $3.5 million compared to $3.3 million for the three months ended March 31, 2012.Oilseed ProcessingConstruction of the Pacific Coast Canola processing facility continues to proceed on schedule and the Company continues preparations for the start-up operations, expected during the first quarter of 2013.Operating expenses for the three months ended June 30, 2012 were approximately $0.3 million. The majority of costs incurred by the Oilseed Processing segment were capitalized as plant costs.Results for the Six Months Ended June 30, 2012Total consolidated sales for the six months ended June 30, 2012 was $134.3 million.Selling, general, and administrative expenses for the six months ended June 30, 2012 were $8.8 million (6.5% of sales).  Approximately $1.4 million of selling, general and administrative costs during the first six months of 2012 were deemed by management to be non-recurring costs.EBITDA1 for the six months ended June 30, 2012 was $4.6 million.  Net loss for the six months ended June 30, 2012 was $1.5 million, or $0.11 per share, and includes the impact of non-cash foreign exchange and non-recurring charges.  Excluding non-cash foreign exchange and non-recurring charges, adjusted net loss1 for the six months ended June 30, 2012 was $1.6 million, or $0.12 per share.Special CropsSales for the Special Crops segment for the six months ended June 30, 2012 were $134.3 million.Cost of sales for the six months ended June 30, 2012 was $122.3 million, resulting in a gross margin of $12.0 million (8.9 percent of sales).EBITDA for the Special Crops division for the six months ended June 30, 2012 was $6.8 million.Oilseed ProcessingOperating expenses for the the six months ended June 30, 2012 were $0.5 million. The majority of costs incurred by PCC during the quarter were capitalized as PCC Plant costs.1Non-GAAP MeasuresThis press release contains references to "EBIT", "EBITDA," "Cash Flow from Operations", "Non-recurring Costs" and "Adjusted Net Earnings." EBIT is defined for the purposes of this MD&A as earnings from operations before interest, taxes and non-recurring costs. EBITDA is defined for the purposes of this MD&A as earnings from operations before other income (expenses, amortization, financing costs, non-recurring costs and income taxes). Cash Flow from Operations is defined for the purposes of this MD&A as the cash from (or used in) operating activities excluding non-cash working capital changes. Management believes excluding the seasonal swings of non-cash working capital assists in evaluation of long-term liquidity. Non-recurring Costs is defined as one-time costs deemed to be non-recurring by management relating to acquisitions, financing and other corporate activities. Adjusted Net Earnings is defined for the purposes of this MD&A as EBIT less financing costs and income taxes. Management believes that EBIT, EBITDA, Cash Flow from Operations and Adjusted Net Earnings are useful supplemental measures of cash flow prior to debt service, capital expenditures, income taxes and other non-cash items included in earnings. Management uses Cash Flow from Operations as a financial measure of liquidity. EBIT, EBITDA, Cash Flow from Operations and Adjusted Net Earnings are not recognized earnings measures under Canadian Generally Accepted Accounting Principles or IFRS (collectively referred to herein as "Canadian GAAP") and do not have standardized meanings prescribed by Canadian GAAP. Therefore, EBIT, EBITDA, Cash Flow from Operations and Adjusted Net Earnings may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBIT, EBITDA, Cash Flow from Operations and Adjusted Net Earnings should not be construed as an alternative to net income or loss (which are determined in accordance with Canadian GAAP) as an indicator of the performance of the Company or as a measure of liquidity and cash flows. The Company believes that EBIT, EBITDA and cash flow from operations are useful supplemental measures of cash flow prior to debt service, investing and financing activities and income taxes. The Company also believes that Adjusted Net Earnings is a useful supplemental measure of net earnings prior to giving effect to certain items. The Company's method of calculating EBIT, EBITDA, Cash Flow from Operations and Adjusted Net Earnings may differ materially from the methods used by other public companies and, accordingly, may not be comparable to similarly titled measures used by other public companies.Financial Statements and MD&ALegumex Walker's financial statements and management's discussion and analysis ("MD&A") for the periods ended June 30, 2012 are available on the Company's website at www.legumexwalker.com in the "Investors" section.Conference CallLegumex Walker will host a conference call on Tuesday, August 14, 2012 at 8:30a.m. ET to discuss its second quarter 2012 financial results. To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191.  Please connect approximately 10 minutes prior to the start of the call to ensure access.A recording of the conference call will be archived for replay by telephone until Tuesday, August21, 2012 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 10962541.A live audio webcast of the conference call will be available http://www.legumexwalker.com/investors-presentations.php. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.About Legumex Walker Inc.Legumex Walker is a growth-oriented processor and merchandiser of pulses (lentils, peas, beans and chickpeas), other special crops and canola products. The Company is one of the largest processors of pulses and other special crops in Canada with 11 processing facilities strategically located in key growing regions in the Canadian Prairie Provinces, the American Midwest, and China, a global sales, logistics, and distribution platform and access to multimodal transportation capabilities. In addition the Company has an 85 percent interest in Pacific Coast Canola, LLC, a company that is constructing a canola oilseed processing facility in Washington State.Cautionary Note on Forward Looking StatementsThis press release contains certain forward-looking statements. Forward-looking statements include, but are not limited to, those with respect to, the positive trend in demand for special crops; construction, staffing and operations of the PCC Plant, the growth of the Company's business. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company (including its operating subsidiaries) to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such risks and uncertainties include, among others, timing and cost overrun risks associated with the construction of the PCC Plant (as defined herein), risks related to the operation of the PCC Plant, product liabilities, environmental risks, regulations related to agricultural commodities, weather related risks, the demand for and availability of rail, port and other transportation services, the actual results of harvests, fluctuations in the price of pulses and other crops, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, risks relating to the integration of acquisitions, as well as those factors referred to in the section entitled "Risk Factors" in the Company's Management's Discussion and Analysis for the period ended June 30, 2012, which is available on SEDAR at www.sedar.com and which should be reviewed in conjunction with this document. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.  Although the Company believes the assumptions inherent in forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this press release. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.SOURCE: Legumex Walker Inc.For further information: INVESTOR& MEDIA RELATIONS: Marin Landis Investor Relations - Legumex Walker marinl@legumexwalker.com (206) 535‐2427 Lawrence Chamberlain TMX Equicom lchamberlain@equicomgroup.com (416) 815-0700 ext. 257