The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

Legumex Walker Reports Financial Results for the Second Quarter 2013

Tuesday, August 13, 2013

Legumex Walker Reports Financial Results for the Second Quarter 2013

17:17 EDT Tuesday, August 13, 2013

- Pacific Coast Canola Achieves Significant Milestone with Start of Commercial Production/ Special Crops Continues to Generate Solid Cash Flow -

WINNIPEG, Aug. 13, 2013 /CNW/ - Legumex Walker Inc. (TSX: LWP) (the "Company") today reported its financial results for the three months and six months ended June 30, 2013.  All figures are in Canadian dollars unless otherwise stated.

Highlights for the First Half Ended June 30, 2013 (all growth metrics reflect comparison to the first half ended June 30, 2012)

  • Special Crops Segment:
  • Revenue increased 29% to $173.9 million on an increase in tonnes shipped of 24% to 201,900;
  • Adjusted gross profit1 increased 21% to $14.5 million from $12.0 million;
  • EBITDA1 increased to $8.9 million from $8.0 million.
  • Consolidated:
  • Loss before interest, taxes depreciation and amortization of $3.0 million compared with EBITDA of $4.5 million, primarily attributable to commissioning of the PCC plant;
  • Excluding cash flow used in operations1 by PCC during commissioning, cash flow provided by operations (net of corporate costs) of $3.6 million compared with $3.4 million.

Highlights for the Second Quarter Ended June 30, 2013 (all growth metrics reflect comparison to the second quarter ended June 30, 2012):

  • Special Crops Segment:
  • Revenue increased for the quarter 33% to $91.2 million on an increase in tonnes shipped of 30% to 104,400 tonnes;
  • Adjusted gross profit for the quarter of $5.3 million compared with $6.3 million;
  • EBITDA for the quarter of $2.6 million compared with $4.0 million;
  • Commenced the addition of a new processing plant in Dalian, China, expected to be in operation in time for the fall harvest, to take advantage of growth in sales opportunities out of China;
  • Undertook targeted marketing efforts in grower areas of western Canada, Minnesota and North Dakota, added additional procurement resources and secured sourcing and storage agreements in order to secure sufficient handling volumes to meet customer demand.
  • Oilseed Processing Segment:
  • Completed commissioning and, in late July, entered commercial operations at the Pacific Coast Canola plant ("PCC Plant"), currently operating one of two lines or approximately 50% capacity;
  • PCC Plant expected to achieve full production this year.
  • Consolidated:
  • Loss before interest, taxes depreciation and amortization for the quarter of $3.2 million compared with EBITDA of $2.3 million, primarily attributable to final commissioning of the PCC plant;
  • Excluding cash flow used in operations by PCC during commissioning, cash flow provided by operations (net of corporate costs) for the quarter of $928,000 compared with $3.7 million.

"We are very pleased to report that we are now in commercial production at our Pacific Coast Canola facility, running one of our two lines, or about 50% capacity," said Joel Horn, President and Chief Executive Officer.  "The plant is operating as designed, all key industry certifications are in place, and the quality of our oil and meal continues to exceed our expectations.  It is fully capable of running at full production and we are actively building the commercial business and enhancing our logistics capabilities to support full production, which we expect to reach this year as the harvest of the new crop gets into full swing."

"The start of commercial production at PCC is a tremendous milestone and the entire team there is to be commended for their hard work and congratulated for their success," added Mr. Horn.  "We have an outstanding team at PCC and look forward to their continued success as they focus on the exciting next step of building the commercial business."

Mr. Horn continued, "It was another solid quarter our Special Crops business, which is contributing enough cash to cover the corporate expenses of our entire business, " added Mr. Horn.  "We realized growth in tonnage and revenue, while we continued to benefit from the increased diversification in our business.  After normalizing for exceptionally high commodity margins in the second quarter of last year stemming from our St. Hilaire Seed acquisition, we saw meaningful year-over-year growth in profitability and cash flow.  We are pleased with the performance of this segment in 2013 as we continue to leverage our platform for sales and margin opportunities while pursuing opportunities for efficiencies, utilization and lower operating costs."

Results for the Quarter Ended June 30, 2013

Consolidated revenue for the second quarter of 2013 increased by 64% to $112.1 million compared with $68.5 million for the second quarter of 2012. The increase is primarily the result of product mix and higher tonnes sold from the Special Crops segment and revenue generated by the Oilseed Processing segment, which sold and shipped 29,900 tonnes of oil and meal.

Adjusted gross profit for the second quarter of 2013 was $2.1 million compared with $6.3 million for the second quarter of 2012.  The decrease reflects a $1.0 million decrease in contribution from the Special Crops segment, primarily due to the absence of exceptionally high Edible Bean margins realized in the second quarter of 2012 and a $3.2 million loss from the Oilseed Processing segment during the commissioning phase of the PCC Facility, offset by increased volumes and margin from sunflower, flax and birdfood sales.

The loss before interest, taxes, depreciation and amortization for the second quarter of 2013 was $3.2 million compared with EBITDA of $2.3 million in the second quarter of 2012. The loss for the second quarter of 2013 included a loss of $3.9 million for the Oilseed Processing segment during the final commissioning phase of the PCC Facility. Selling and administrative (S&A) expenses for the second quarter were $5.4 million compared with $4 million for the second quarter of 2012 adjusted for non-recurring items. S&A expenses included non-cash stock-based compensation expenses for the second quarter of 2013 of $0.4 million compared with $0.2 million for the second quarter of 2012. Corporate costs for the second quarter of 2013 were $1.9 million compared with $1.4 million for the second quarter of 2012.

Net loss attributable to shareholders for the second quarter of 2013 was $8.7 million, or $0.53 loss per share, compared with earnings attributable to shareholders of $250,000, or $0.02 per share, for the second quarter of 2012. The loss attributable to shareholders for the second quarter of 2013 includes a loss of $5.4 million, or $0.33 loss per share, during the commissioning of the PCC plant.

Special Crops Segment

Revenue for the Special Crops segment for the second quarter of 2013 increased 33% to $91.2 million compared with $68.5 million for the second quarter of 2012. The Company sold 104,400 tonnes of special crops in the second quarter of 2013, up 30% from 80,500 tonnes sold in the second quarter of 2012. The increase in volume was entirely attributable to the acquisition of Keystone Grain Limited in October, 2012.

Increased volumes contributed $2.3 million of incremental commodity profit in the second quarter of 2013, which was offset by a $1.7 million reduction from lower commodity margins. The second quarter of 2012 benefitted from exceptionally high Edible Beans margins reflecting the value of contracts executed at peak pricing in the prior year complemented by favourable carrying values on inventories assumed with the St. Hilaire Seed acquisition. Adjusted gross profit for the second quarter of 2013 was $5.3 million, compared with $6.3 million for the second quarter of 2012, and was impacted by an increase of $1.6 million in plant processing costs related to the acquisitions of Keystone Grain Limited in October, 2012.

EBITDA for the second quarter of 2013 was $2.6 million compared with $4.0 million in 2012. The decrease was attributable to a $1 million reduction in adjusted gross profit and a $494,000 increase in S&A costs adjusted for non-recurring items. Normalized S&A costs for the second quarter of 2013 were $2.8 million, compared with $2.3 million for the second quarter of 2012 adjusted for non-recurring items. S&A costs for the second quarter of 2013 include $0.2 million in non-cash, stock-based compensation expenses.

Oilseed Processing Segment

Commissioning of the PCC plant continued as planned in the second quarter.  Following quarter-end, in late July, the PCC plant completed commissioning, entered commercial production and is currently operating one of two operating lines or about 50% capacity, with full production expected this year.

Revenue for the Oilseed Processing segment for the second quarter of 2013 was $21.0 million, the result of the high quality of oil and meal produced during the commissioning phase of the PCC plant. Although the PCC Plant had not yet achieved commercial production levels during the quarter, the quality and proportion of oil and meal processed was generally consistent with expectations. Total canola seed crushed in the quarter was 31,500 tonnes, of which 29,900 tonnes was shipped.

Adjusted gross profit for the second quarter of 2013 was a loss of $3.2 million, as the commissioning of the PCC plant incurred costs of $1.9 million that were not fully recouped from the limited production and sale of canola oil and meal during the commissioning phase.  The PCC plant generated a commodity loss due to the high value of 2012 canola seed stocks relative to the underlying market value of oil and meal which arose due to a disconnect between canola seed prices and the soy oil and meal complex.

Operating costs will continue to exceed revenues until the PCC plant is operating above breakeven production levels.

The loss before interest, taxes depreciation and amortization for the second quarter of 2013 was $3.9 million compared with $0.4 million for the second quarter of 2012. S&A expenses for the second quarter of 2013 were $0.7 million, lower than those incurred in the first quarter of 2013 during the initial ramp up of operations for commissioning purposes.

Results for the First Half Ended June 30, 2013

Consolidated revenue for the first half of 2013 increased by 48% to $199.4 million from $134.3 million in the first half of 2012. The increase is almost entirely attributable to the Special Crops segment.

S&A expenses for the first half of 2013 were $10.8 million compared with $7.6 million for the first half of 2012 adjusted for non-recurring items. S&A expenses include non-cash stock-based compensation expenses for the first half of 2013 of $0.7 million, compared with $0.3 million for the first half of 2012.

The loss before interest, taxes, depreciation and amortization for the first half of 2013 was $3.0 million compared with EBITDA of $4.5 million for the first half of 2012.  The loss for the first half of 2013 includes a loss of $13.1 million for the Oilseed Processing segment during the commissioning phase of the PCC plant.

Excluding cash flow used in operations by PCC during commissioning, cash flow provided by operations (net of corporate costs) of $3.6 million compared with $3.4 million;

Special Crops Segment

Revenue for the Special Crops segment for the first half of 2013 increased by 29% to $173.9 million from $134.3 million for the second quarter of 2012.

Adjusted gross profit for the first half of 2013 increased by 21% to $14.5 million from $12.0 million for the second quarter of 2012.

EBITDA for the first half of 2013 increased by 12% to $8.9 million from $8.0 million for the first half of 2012. The increase was attributable to a $2.5 million increase in adjusted gross profit offset by a $1.5 million increase in S&A expenses, adjusted for non-recurring items.

Oilseed Processing Segment

Revenue for the Oilseed Processing segment for the first half of 2013 was $25.5 million. The adjusted gross loss for the first half of 2013 was $6.8 million.

1 Non-GAAP Measures
This 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 Adjusted Gross Profit, 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 Adjusted Gross Profit, 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, Adjusted Gross Profit, 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 Adjusted Gross Profit, 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.  A reconciliation of Adjusted Gross Profit and EBITDA to Net Earnings (loss) and a reconciliation of Cash Flow from Operations to Cash Flow provided by Operating Activities is set out in section 13 of the MD&A (as defined below).

Financial Statements and MD&A

Legumex Walker's Financial Statements and Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2013 are available on the Company's website at www.legumexwalker.com in the "Investors" section.

Conference Call

Legumex Walker will host a conference call on Wednesday, August 14, 2013 at 8:30 a.m. ET to discuss its second quarter 2013 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 Wednesday, August 21, 2013 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 22224512.

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, 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 Statements

This 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, including statements with respect to the PCC plant reaching full production, leveraging our platform for margin opportunities and opportunities in efficiencies, utilization and lower operating costs. Such 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 and are based on the assumption that the PCC Plant will reach full production before the end of the year and that the Company will have the opportunity to improve margins, increase efficiencies and improve utilization and operating costs. Such risks and uncertainties include, among others, timing and cost overrun risks associated with the commissioning 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 and canola oil prices, 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 and the Company's 2013 Annual Information Form, which are 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

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

Digital Business Solutions
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections