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Press release from CNW Group

MEGA Brands Reports Fourth Quarter and 2012 Results

Friday, March 01, 2013

MEGA Brands Reports Fourth Quarter and 2012 Results01:10 EST Friday, March 01, 2013Consolidated net sales up 18% in Q4 and 12% full yearToys net sales up 21% in Q4 and 12% full yearEBITDA up 33% in Q4 and 25% full yearMONTREAL, March 1, 2013 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2012. (All figures are expressed in US dollars.)Fourth quarter 2012 consolidated net sales increased 18% to $127.5 million compared to $108.5 million in the corresponding 2011 period.Sales were up 21% in Toys product lines and 1% in Stationery & Activities.On a geographic segment basis, North American sales rose 22 % and International sales were up 7%.Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased 33% to $13.9 million compared to $10.4 million in the fourth quarter of 2011. EBITDA is a supplementary financial measure.Net earnings were $4.0 million or $0.24 per basic share ($0.01 per diluted share), compared to $0.2 million or $0.01 per basic share (loss of $0.21 per diluted share) in the same 2011 period.Full year 2012For 2012, consolidated net sales increased 12% to $420.3 million compared to $376.8 million in 2011.Sales increased 12% in Toys product lines and 9% for Stationery & Activities.On a geographic segment basis, sales were up 20% in North America and down 4% in international markets.EBITDA increased 25% to $49.2 million compared to $39.2 million in 2011. Net earnings were $16.6 million or $1.01 per basic share ($0.84 per diluted share), compared to $8.3 million or $0.51 per basic share ($0.46 per diluted share) in 2011.Management's comments''MEGA Brands achieved a solid fourth quarter in 2012, with higher sales, gross margin, profitability and cash flow compared to the same period in 2011,'' said Marc Bertrand, President and Chief Executive Officer. ''Our brands and our financial position continue to strengthen, and we will continue to invest in product development and to increase efficiency and manufacturing capacity at our Montreal facility.''''Looking ahead, we expect continued sales growth based on our momentum in the marketplace and positive feedback on our product lines at recent toy fairs in Asia, Europe and North America,'' concluded Marc Bertrand.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 (514) 807-9895 or 1 (888) 231-8191. For those unable to participate, a replay will be available until March 8, 2013. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 87704752.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 audited consolidated financial statements and notes for the years ended December 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.Use of 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 year ended December 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, 2012, 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.MEGA Brands Inc.       Consolidated Income Statements       (in thousands of US dollars, except per share amounts)                Three-month periods ended December 31, Twelve-month periods ended December 31, 2012201120122011 (Unaudited)(Unaudited)(Audited)(Audited) $$$$        Net sales127,538 108,495 420,271 376,827Cost of sales79,396 68,575 262,452 235,649Gross profit48,142 39,920 157,819 141,178        Marketing and advertising expenses7,703 7,808 16,937 17,027Research and development expenses4,405 4,491 16,218 14,456Other selling, distribution and administrative expenses25,184 21,596 87,830 82,540Contingent consideration on business acquisition96 110 383 994Loss on foreign currency translation473 801 576 1,421        Earnings from operations10,281 5,114 35,875 24,740        Financial expenses4,516 4,604 17,647 18,666Loss on settlement of debt- - - 2,984 4,516 4,604 17,647 21,650        Earnings before income taxes 5,765 510 18,228 3,090        Income taxes         Current1,755 (7,369) 1,642 (12,337) Government loans- 7,645 - 7,097 1,755 276 1,642 (5,240)        Net earnings4,010 234 16,586 8,330        Earnings per share         Basic0.24 0.01 1.01 0.51 Diluted0.01 (0.21) 0.84 0.46MEGA Brands Inc.       Consolidated Statements of Comprehensive Income       (in thousands of US dollars, except per share amounts)                Three-month periods ended December 31, Twelve-month periods ended December 31, 2012201120122011 (Unaudited)(Unaudited)(Audited)(Audited) $$ $$        Net earnings4,010 234 16,586 8,330        Other comprehensive income (loss):        Cumulative translation adjustment(258) 479 1,099 (1,584)        Other comprehensive income (loss)(258) 479 1,099 (1,584)        Comprehensive income3,752 713 17,685 6,746MEGA Brands Inc.    Consolidated Statements of Financial Position    (in thousands of US dollars)          December 31,December 31, 20122011 (Audited) (Audited)  $$     Assets    Current assets    Cash and cash equivalents8,018 6,745 Trade and other receivables130,541 126,359 Inventories45,779 69,560 Derivative financial instruments113 904 Prepaid expenses 9,370 13,760 Total current assets193,821 217,328      Non-current assets    Property, plant and equipment39,817 32,172 Intangible assets22,771 23,193 Goodwill30,000 30,000 Derivative financial instruments- 231 Total assets286,409 302,924      Liabilities         Current liabilities    Government loans- 37,279 Trade and other payables62,638 71,762 Income taxes5,631 5,832 Current portion of long-term debt8,023 7,013  76,292 121,886 Non-current liabilities    Long-term debt112,992 105,275 Derivative financial instruments206 -  113,198 105,275 Equity    Share capital431,893 429,007 Warrants24,029 24,430 Contributed surplus4,478 3,492 Deficit(357,736) (374,322) Accumulated other comprehensive loss(5,745) (6,844) Total equity96,919 75,763 Total liabilities and equity286,409 302,924 MEGA Brands Inc.       Consolidated Statement of Changes in Equity       (in thousands of US dollars)                 Share capital Warrants Contributedsurplus DeficitAccumulatedothercomprehensivelossTotal equity(Audited) $$$$$$Balance - December 31, 2010 429,00724,4301,982(382,652)(5,260)67,507Net earnings ---8,330-8,330Other comprehensive loss ----(1,584)(1,584)Stock-based compensation --1,510--1,510Balance - December 31, 2011 429,00724,4303,492(374,322)(6,844)75,763        Net earnings ---16,586-16,586Other comprehensive income ----1,0991,099Options exercised 472-(148)  324Warrants exercised 2,414(401)---2,013Stock-based compensation --1,134--1,134Balance - December 31, 2012 431,89324,0294,478(357,736)(5,745)96,919MEGA Brands Inc.   Consolidated Statements of Cash Flows   (in thousands of US dollars)        Twelve-month periods, ended December 31 20122011 (Audited)(Audited) $$    Operating activities   Net earnings16,586 8,330Adjustments for:    Depreciation of property, plant and equipment12,476 13,074 Amortization of intangible assets422 422 Loss on settlement of debt- 1,236 Stock-based compensation1,134 1,511 Financial expenses17,647 18,666 Writeoff deferred financing costs- 1,748 Income taxes1,642 (5,240) Loss (gain) on foreign currency2,316 (374)  52,223 39,373 Net change in non-cash working capital balances14,406 (24,011) Income taxes paid (recovered)(1,473) 1,312 Interest paid(13,158) (13,755)Cash flows provided by operating activities51,998 2,919    Financing activities   Repayment of debentures(7,411) (20,678)Change in asset-based credit facility(37,279) 37,279Government loans6,591 5,065Issuance of long-term debt4,524 32Repayment of long-term debt(220) -Issuance of capital stock2,337 -Cash flows provided by (used in) financing activities(31,458) 21,698    Investing activities   Acquisition of property, plant and equipment(19,234) (23,248)Cash flows used in investing activities(19,234) (23,248)    Effect of changes in foreign exchange rates on cash and cash equivalents(33) 99    Increase in cash and cash equivalents1,273 1,468Cash and cash equivalents — Beginning of year6,745 5,277    Cash and cash equivalents — End of year8,018 6,745   SOURCE: MEGA BRANDS INC.For further information: Investor Contact: Peter Ferrante Chief Financial Officer Tel: (514) 333-5555 ext. 2283