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Press release from CNW Group

Legumex Walker Reports Fourth Quarter and 2012 Financials - Sells and Ships First Food-Grade Canola Oil Ahead of Schedule

Wednesday, March 20, 2013

Legumex Walker Reports Fourth Quarter and 2012 Financials - Sells and Ships First Food-Grade Canola Oil Ahead of Schedule18:28 EDT Wednesday, March 20, 2013- 2012 Marked bySignificant Investment and Fundamental Transformation to Diverse Special Crops and Canola Oil Company With Significantly Expanded Earnings Potential -WINNIPEG, March 20, 2013 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the three months and twelve months ended December 31, 2012.  All figures are in Canadian dollars unless otherwise stated.Highlights for the Three Months Ended December 31, 2012Revenues of $104.0 million compared with $62.4 million for the same period of 2011;Adjusted gross profit1 of $3.9 million compared with $6.4 million for the same period of 2011, which was composed of:Special Crops adjusted gross profit1 of $4.9 million (average commodity margin of $78 per tonne, excluding plant costs) compared with $6.4 million (average commodity margin of $109 per tonne, excluding plant costs) for the same period in 2011;Oilseed Processing loss of $0.9 million.Loss before interest, taxes, depreciation and amortization, and other items1 of $0.9 million for the three months ended December 31, 2012 compared with EBITDA1 of $2.7 million for the same period of 2011;Net loss attributable to shareholders of $5.4 million, or $0.34 per share, compared with net earnings attributable to shareholders of $1.9 million, or $0.15 per share, for the same period of 2011;Special Crops segment EBITDA1 of $2.2 million compared with EBITDA1 of $4.2 million for the same period of 2011;Cash flow used in operations1 of $0.2 million consistent with cash flow used in operations1 for the same period of 2011;The Company acquired Manitoba-based Keystone Grain Ltd. and KGL Transport Ltd., one of the largest sunflower and birdfood processors in North America, which added 63,000 tonnes of capacity, significantly broadening the Company's product mix and geographic coverage;The Company reorganized its Special Crops business into three operating divisions:  the Edible Bean Division; the Sunflower, Flax and Birdfood Division; and the Pea, Lentil and Canaryseed Division;Construction on the PCC plant was largely completed in December 2012 and key components of the plant were placed in service.  The Company commenced production, crushed over 900 tonnes of canola seed and sold and shipped super-degummed oil and canola meal prior to December 31, 2012. This qualifies PCC for about $66 million in bonus depreciation.Highlights for the Year Ended December 31, 2012(Note: No comparable results are presented because the Company only reported results for 171 days in 2011.)Revenue of $294.8 million;Adjusted gross profit1 of $19.0 million (Special Crops $95 per tonne average commodity margin, excluding plant costs);EBITDA1 of $1.5 million;Net loss attributable to shareholders of $12.6 million, or $0.89 per share;Special Crops EBITDA1 of $10.6 million;Cash flow used in operations1 of $2.2 million.Highlights Subsequent to the End of 2012On March 19, 2013, PCC completed the commissioning of the deodorizer and sold and shipped its first refined, bleached and deodorized (RBD) food-grade canola oil ahead of schedule and,On January 1, 2013, the Company launched the first version of it integrated inventory management and accounting system and stopped entering data into the legacy systems it has been using since July 2011."Fiscal 2012 was a year of substantial investment and achievement in building our organization, highlighted by three acquisitions, the expansion of our Chinese operations and putting our canola processing facility into service," said Joel Horn, President and Chief Executive Officer, Legumex Walker Inc.  "Our investments in facilities, technology and people have significantly diversified our products and geography while expanding our earnings potential considerably.""While we are confident that our accomplishments in 2012 will drive meaningful shareholder value, especially over the next several years, these investments impacted our financial performance in the short term.  In the fourth quarter, while we saw overall volumes improve, profitability was impacted by low commodity margins particularly on Edible Beans, the result of a confluence of factors, including bean inventory and contractual obligations attached to the St. Hilaire acquisition and compounded by a sharp decline in prices late in the year, as well as a dry crop and cold weather, both of which impacted the quality of our product.  The diversification of our products, sourcing and processing should minimize the impact that such factors have on our overall business going forward.""We entered 2012 with eight processing facilities and approximately 300,000 metric tonnes of capacity, about 80% of which was concentrated in our Lentil and Pea Division. We ended the year with 15 facilities and approximately 875,000 metric tons of processing capacity that is over 40% Canola and less than 30% Lentils and Peas.  Adding these additional products increases our diversification into higher margin products. For example, average 2012 commodity margins from our Pea, Lentil and Canaryseed Division were $68 per tonne while average margins from our Edible Bean and Sunflower, Flax and Birdfood Divisions were $134 per tonne and $125 per tonne, respectively.  We're also making quick progress to increase the efficiency in our Pea, Lentil and Canaryseed Division to sustain and enhance margins in 2013.  On top of this, commissioning of the PCC facility is progressing well and we will begin to benefit from its contribution as we ramp to commercial level production of food-grade canola oil, expected by mid-year.  By 2014, PCC will be well positioned to realize the full potential of our efforts."Results for the Three Months Ended December 31, 2012Total consolidated sales for the three months ended December 31, 2012 increased 67% to $104.0 million compared with $62.4 million for the same period in 2011 and was generated almost entirely from sales by the Special Crops Division through the sale of pulse and other special crops. The increase is primarily attributable to product mix and higher sales volumes resulting from the acquisitions of the St. Hilaire Seed Company and assets from the Anderson Seed Company in February 2012 and the acquisition of Keystone Grain Ltd. in October 2012, as well as higher shipping volumes from the legacy Canadian operations.Selling, general, and administrative expenses for the three months ended December 31, 2012 were $5.5 million compared with $3.7 million for the same period in 2011. These expenses reflect the relatively fixed nature of the Company's indirect costs, which consist primarily of personnel salaries and benefits, professional fees, information technology, insurance, property and business taxes and utilities. The Company deemed $0.5 million of its selling, general and administrative costs during the three months ended December 31, 2012 to be non-recurring costs1 attributable to events and factors related to the acquisition of St. Hilaire Seed Company and assets of Anderson Seed Company, the acquisition of Keystone Grain Ltd., integration activities and the amalgamation of the legacy businesses.Adjusted gross profit1, which excludes depreciation and amortization, for the three months ended December 31, 2012 was $3.9 million compared with $6.4 million for the same period of 2011.  The decrease is attributable to lower commodity margins and increased plant costs from the plants acquired with St. Hilaire Seed Company, assets of Anderson Seed Company and Keystone Grain Ltd., which were partially offset by higher volumes.  Commodity margins, excluding plant processing costs, decreased to $78 per tonne for the quarter ended December 31, 2012 compared to $109 per tonne for the same period of 2011 due to edible bean inventory and contractual obligations acquired with St. Hilaire Seed Company early in 2012 compounded by a precipitous decline in edible bean prices in the fourth quarter.  Plant costs per tonne increased in 2012 compared to 2011 as a result of acquiring throughput capacity for edible beans and sunflowers, flax and birdfood which typically require more processing and therefore have a lower throughput than Peas, Lentils and Canaryseed.Loss before interest, taxes, depreciation and amortization, and other items1 for the three months ended December 31, 2012 was $0.9 million compared with EBITDA1 of $2.7 million for the same period of 2011.Net loss attributable to shareholders for the three months ended December 31, 2012 was $5.4 million, or $0.34 loss per share, compared with net earnings attributable to shareholders of $1.9 million, or $0.15 earnings per share, for the same period in 2011.Special CropsSales for the three months ended December 31, 2012 were $103.5 million compared with $62.4 million for the same period in 2011. The increase is primarily attributable to incremental sales from the US operations acquired in February 2012 and the Keystone acquisition in October 2012.Adjusted gross profit1 for the three months ended December 31, 2012 was $4.9 million compared with $6.4 million for the same period in 2011. Commodity margin per tonne  (excluding plant costs) for the three months ended December 31, 2012 was $78 per tonne compared to $109 per tonne for the same period in 2011.  Edible beans and sunflower inventory and contractual obligations purchased with the US Operations suppressed commodity margins, particularly following the decline in edible bean prices in the fourth quarter.Special Crops Division EBITDA1 for the three months ended December 31, 2012 was $2.2 million compared with $4.2 million for the same period of 2011.Oilseed ProcessingConstruction of the Pacific Coast Canola processing facility was largely completed in 2012 and key components of the plant were placed in service in mid-December. The Company commenced production, crushed over 900 tonnes of canola seed and sold and shipped super-degummed oil and canola meal prior to December 31, 2012. On March 19, 2013, the Company completed the start-up of its deodorizer and completed the first sale of RBD (refined, bleached and deodorized) food-grade canola oil.Sales for the three months ended December 31, 2012 were $0.5 million.Adjusted gross profit for the three months ended December 31, 2012 was a loss of $0.9 million as costs for the initial commissioning and staffing of the plant were not recouped from the limited production of super-degummed oil and meal during the period.Selling, general and administrative expenses for the three months ended December 31, 2012 were $0.5 million compared with $0.1 million for the same period in 2011.All borrowing costs incurred by the Oilseed Processing segment were capitalized as plant costs until commencement of commissioning of the crushing equipment on December 17, 2012.Results for the Twelve Months Ended December 31, 2012(Note: No comparable results are presented because the Company only reported results for 171 days in 2011.)Total consolidated sales for the twelve months ended December 31, 2012 were $294.8 million.Selling and administrative expenses for the twelve months ended December 31, 2012 were $19.8 million, with $2.2 million of selling and administrative costs were deemed by management to be non-recurring1 costs.EBITDA1 for the twelve months ended December 31, 2012 was $1.5 million.Net loss attributable to shareholders for the twelve months ended December 31, 2012 was $12.6 million, or $0.89 per share, and includes the impact of  non-recurring1 charges.Special CropsSales for the Special Crops Division for the twelve months ended December 31, 2012 were $294.3 million.Cost of sales for the twelve-months ended December 31, 2012 was $274.3 million.Adjusted gross profit1 for the twelve months ended December 31, 2012 was $20.0 million.  Commodity margin per tonne, after excluding plant costs, for the twelve months ended December 31, 2012 was $95 per tonne.EBITDA for the Special Crops Division for the twelve months ended December 31, 2012 was $10.6 million.Oilseed ProcessingSales for the twelve months ended December 31, 2012 were $0.5 million.Adjusted gross profit1 for the twelve months ended December 31, 2012 was a loss of $0.9 million as costs for the initial commissioning and staffing of the plant were not recouped from the limited production of super-degummed oil and meal during the period.Selling, general and administrative expenses for the twelve months ended December 31, 2012 were $1.7 million and include $0.4 million in plant costs incurred during the plant construction period prior to the fourth quarter.All borrowing costs incurred by the Oilseed Processing segment were capitalized as plant costs until commencement of commissioning of the crushing equipment on December 17, 2012.1Non-GAAP MeasuresThis news release contains references to "Adjusted gross profit", "EBITDA," "Cash Flow from Operations", and "Non-recurring Costs". Adjusted gross profit is defined for the purposes of this news release as gross profit before depreciation and amortization.  EBITDA is defined for the purposes of this news release as earnings from operations before other income and expenses, depreciation and amortization, financing costs, non-recurring costs and income taxes.  Cash Flow from Operations is defined for the purposes of this news release as the cash provided by 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, integration and other incorporation or amalgamation activities. Management believes that EBITDA and Cash Flow from Operations are useful supplemental measures of cash flow prior to finance costs, capital expenditures, income taxes and other non-cash items included in earnings. Management uses Cash Flow from Operations as a financial measure of liquidity. EBITDA and Cash Flow from Operations 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, EBITDA and Cash Flow from Operations may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBITDA and Cash Flow from Operations should not be construed as an alternative to net earnings 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 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's method of calculating  EBITDA and Cash Flow from Operations 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 period ended December 31, 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 Thursday, March 21, 2013 at 8:30 a.m. ET to discuss its fourth quarter and year end 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 Thursday, March 28, 2013 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 19875487.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.  Legumex Walker has 14 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, which operates the first and only commercial-scale canola oilseed processing facility West of the Rocky Mountains.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 growth of the Company's business, the expansion of the Company's earnings potential and the increase in efficiency in certain divisions to sustain and enhance margins. 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 December 31, 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