Financial Results for Fiscal 2020 First Quarter Ended June 30, 2019
Revenues at
Net earnings at
Adjusted net earnings at
- Revenues for the quarter amounted to
$3.668 billion , an increase of$400.6 million or 12.3%. - Adjusted EBITDA* amounted to
$358 .0 million, an increase of$50 .5 million or 16.4%. - Net earnings totalled
$121.4 million , a decrease of$4.6 million or 3.7%. - Adjusted net earnings* totalled
$164.9 million , an increase of$4.6 million or 2.9%. - Net earnings per share (basic and diluted) were
$0.31 for the quarter, as compared to$0.32 for the corresponding quarter last fiscal year, a decrease of 3.1%. - Adjusted net earnings per share* (basic and diluted) were
$0.42 for the quarter, as compared to$0.41 for the corresponding quarter last fiscal year, an increase of 2.4%.
(in millions of Canadian (CDN) dollars, except per share amounts) | ||||
(unaudited) | For the three-month periods ended |
|||
2019 | 2018 | |||
Revenues | 3,668.4 | 3,267.8 | ||
Adjusted EBITDA* | 358.0 | 307.5 | ||
Net earnings | 121.4 | 126.0 | ||
Adjusted net earnings* | 164.9 | 160.3 | ||
Net earnings per share | ||||
Basic | 0.31 | 0.32 | ||
Diluted | 0.31 | 0.32 | ||
Adjusted net earnings per share* | ||||
Basic | 0.42 | 0.41 | ||
Diluted | 0.42 | 0.41 |
- On
April 15, 2019 , the Company completed the acquisition ofDairy Crest Group plc (Dairy Crest Acquisition), based in theUnited Kingdom . The Dairy Crest Acquisition is now presented as part of the Europe Sector and contributed positively to revenues and adjusted EBITDA for 11 weeks in the quarter. - The activities of
F&A Dairy Products, Inc. (F&A Acquisition), the activities ofShepherd Gourmet Dairy (Ontario) Inc. (Shepherd Gourmet Acquisition) and the activities ofMurray Goulburn Co-Operative Co. Limited (Murray Goulburn) (Murray Goulburn Acquisition) collectively contributed for the full quarter as compared to a partial contribution for the same quarter last fiscal year. USA Market Factors** negatively impacted adjusted EBITDA by approximately$8 million .- The adoption of IFRS 16, Leases positively impacted adjusted EBITDA by approximately
$15 million . Considering the additional depreciation and interest expenses related to the adoption of IFRS 16, Leases, the impact on net earnings was unfavourable by approximately$1 million for the quarter. - The fluctuation of the Canadian dollar versus foreign currencies during the quarter had a negative impact on adjusted EBITDA of approximately $4 million, as compared to the same quarter last fiscal year.
- The Board of Directors reviewed the dividend policy and increased the quarterly dividend from
$0.165 per share to$0.17 per share, representing a 3.0% increase. The quarterly dividend will be payable onSeptember 13, 2019 to common shareholders of record onSeptember 3, 2019 .
________________________ | |
* | Non-IFRS measures described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
** | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
Additional Information
For more information on the first quarter results of fiscal 2020, reference is made to the condensed interim consolidated financial statements, the notes thereto and to the Management’s Discussion and Analysis for the first quarter of fiscal 2020. These documents can be obtained on SEDAR under the Company’s profile at www.sedar.com and in the “Investors” section of the Company’s website, at www.saputo.com.
Conference Call
A conference call to discuss the fiscal 2020 first quarter results will be held on
To listen to this call on the Web, please enter http://www.gowebcasting.com/10036 in your Web browser.
For those unable to participate, a replay of the conference will be available until
About Saputo
Saputo produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. Saputo is one of the top ten dairy processors in the world, a leading cheese manufacturer and fluid milk and cream processor in
*Trademark used under licence.
Media Inquiries
1-514-328-3141 / 1-866-648-5902
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release contains statements which are forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to the Company’s objectives, outlook, business projects and strategies to achieve those objectives, statements with respect to the Company's beliefs, plans and expectations, and statements other than historical facts. Specific forward-looking statements in this news release include statements with respect to the Company's expected financial performance for fiscal 2020. The words “may”, “should”, “will”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective”, “continue”, “propose” or “target”, or the negative of these terms or variations of them, the use of conditional or future tense or words and expressions of similar nature, are intended to identify forward-looking statements. All statements other than statements of historical facts included in this news release may constitute forward-looking statements within the meaning of applicable securities laws.
These statements are based, among other things, on Saputo’s assumptions, expectations, estimates, objectives, plans, business strategy and intentions as of the date hereof regarding the projected revenues and expenses, the economic, industry, competitive and regulatory environments in which the Company operates or which could affect its activities, its ability to attract and retain customers and consumers, as well as the availability and cost of milk and other raw materials and energy supplies, its operating costs and the pricing of its finished products on the various markets in which it carries on business. The Company's expected financial performance for fiscal 2020 is specifically based on assumptions about the successful execution of its business plan, the contribution of recent acquisitions, the capacity of the Company to generate operational efficiencies and revenues, the general economic conditions and the competitive environment within the dairy industry, the anticipated market supply and demand levels for dairy products, the cost of milk as raw material, the anticipated warehousing, logistical and transportation costs, the anticipated cost of the enterprise resource planning (ERP) program and the volatility in international selling prices of cheese and dairy ingredients. Such forward-looking statements, including the Company's expected financial performance for fiscal 2020, are intended to provide shareholders with information regarding the Company, including its assessment of future financial plans, and may not be appropriate for other purposes.
By their nature, forward-looking statements are subject to a number of inherent risks and uncertainties. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking statements. As a result, the Company cannot guarantee that any forward-looking statements will materialize, and the Company warns readers that these forward-looking statements are not fact or guarantees of future performance in any way. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause actual results to differ materially from current expectations are discussed in the Company’s materials filed with the Canadian securities regulatory authorities from time to time, including the "Risks and Uncertainties" section of the Company's Management’s Discussion and Analysis dated
Forward-looking statements are based on Management’s current estimates, expectations and assumptions, which Management believes are reasonable as of the date hereof, and, accordingly, are subject to changes after such date. Undue importance should not be placed on forward-looking statements, and the information contained in such forward-looking statements should not be relied upon as of any other date.
Except as required under applicable securities legislation, Saputo does not undertake to update or revise these forward-looking statements, whether written or verbal, that may be made from time to time by itself or on its behalf, whether as a result of new information, future events or otherwise.
CONSOLIDATED RESULTS
Consolidated revenues for the three-month period ended
Consolidated adjusted EBITDA for the three-month period ended
Depreciation andamortization for the three-month period ended
Inventory revaluation resulting from a business acquisition for the three-month period ended
Acquisition costs for the three-month period ended
Net interest expense for the three-month period ended
In accordance with IAS29, Financial Reporting in Hyperinflationary Economies,
________________________ | |
* | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
Income taxes for the three-month period ended
Net earnings for the three-month period ended
Adjusted net earnings for the three-month period ended
SELECTED QUARTERLY FINANCIAL INFORMATION
(in millions of CDN dollars, except per share amounts) | ||||||||||
Fiscal years | 2020 | 2019 | 2018 | |||||||
Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||
Revenues | 3,668.4 | 3,236.5 | 3,577.2 | 3,420.4 | 3,267.8 | 2,744.4 | 3,021.8 | 2,884.2 | ||
Adjusted EBITDA* | 358.0 | 275.1 | 321.2 | 317.5 | 307.5 | 261.7 | 318.0 | 329.8 | ||
Net earnings | 121.4 | 124.2 | 342.0 | 163.1 | 126.0 | 130.0 | 337.0 | 185.2 | ||
Gain on disposal of assets1 | - | - | (167.8 | ) | - | - | - | - | - | |
Acquisition and restructuring costs1 | 21.5 | 1.6 | 0.2 | - | 34.3 | 5.3 | 25.1 | 0.2 | ||
Inventory revaluation resulting from a business acquisition | 22.0 | - | - | - | - | - | - | - | ||
- | - | - | - | - | - | (178.9 | ) | - | ||
Adjusted net earnings* | 164.9 | 125.8 | 174.4 | 163.1 | 160.3 | 135.3 | 183.2 | 185.4 | ||
Per share | ||||||||||
Net earnings | ||||||||||
Basic | 0.31 | 0.32 | 0.88 | 0.42 | 0.32 | 0.34 | 0.87 | 0.48 | ||
Diluted | 0.31 | 0.32 | 0.87 | 0.42 | 0.32 | 0.33 | 0.86 | 0.47 | ||
Adjusted net earnings* | ||||||||||
Basic | 0.42 | 0.32 | 0.45 | 0.42 | 0.41 | 0.35 | 0.47 | 0.48 | ||
Diluted | 0.42 | 0.32 | 0.44 | 0.42 | 0.41 | 0.35 | 0.47 | 0.47 | ||
Earnings coverage ratio** | 10.76 | 12.69 | 14.20 | 12.57 | 15.37 | 20.83 | 23.34 | 26.69 |
* | Non-IFRS measures described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
** | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
1 | Net of income taxes. |
Selected factors positively (negatively) affecting financial performance
(in millions of CDN dollars) | ||||||||||
Fiscal years | 2020 | 2019 | ||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
(8 | ) | 4 | (19 | ) | (7 | ) | 2 | |||
Inventory write-down | - | (2 | ) | (1 | ) | - | - | |||
Foreign currency exchange1, 2 | (4 | ) | 2 | 1 | 5 | (13 | ) |
* | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
1 | As compared to the same quarter last fiscal year. |
2 | Foreign currency exchange includes effect on adjusted EBITDA of conversion of US dollars, Australian dollars, British pounds sterling and Argentine pesos to Canadian dollars. |
OUTLOOK
Saputo benefits from a solid financial position and capital structure, supplemented by a high level of cash generated by operations, allowing the Company to continue to grow through targeted acquisitions and organically through strategic capital investments, innovation and diversification of its product portfolio. Profitability enhancement and shareholder value creation remain the cornerstones of the Company’s objectives. Saputo has a long-standing commitment to manufacture quality products and will remain focused on operational efficiencies.
In fiscal 2020, the Company continues to expect its business operations, excluding the positive contribution of the Dairy Crest Acquisition and the adoption of IFRS 16, Leases, to deliver slightly higher adjusted EBITDA when compared to fiscal 2019. While benefiting from the contribution of other recent acquisitions, the Company expects to continue to face headwinds primarily relating to the competitive market conditions in both
The Company reports its business under the Canada Sector, the
Canada Sector
While competitive market conditions are anticipated to persist in fiscal 2020, the Dairy Division (
We expect the imbalance between supply and demand of dairy products stemming from the current approach to tariff policies to continue in fiscal 2020, resulting in challenging domestic commodity market conditions. The
During fiscal 2020, the Company expects improved cheese and dairy ingredient market conditions, which should lead to increased selling prices of cheese and dairy ingredients. However, market volatility is expected until the end of fiscal 2020.
During the upcoming quarters, the Cheese Division (
The Dairy Foods Division (
International Sector
The International Sector will continue to pursue sales volume growth in existing markets, as well as develop additional international markets. The Sector will continue to focus on controlling costs, evaluating overall activities to improve efficiencies and aim to maximize its operational flexibility in order to mitigate fluctuations in market conditions and their impact on financial performance. The Sector will also continue to focus on innovation, and optimize its product mix and customer portfolios, both domestically and internationally.
For fiscal 2020, in light of the decrease in Australian milk production, the Dairy Division (
On
Despite a steep and sustained devaluation of the Argentine peso, the Dairy Division (
During fiscal 2020, the Company continues to expect a slight improvement in the international selling prices of cheese and dairy ingredients until the end of the second quarter with market volatility expected until the end of fiscal 2020.
Europe Sector
In fiscal 2020, the Company will work on integrating the Dairy Division (
ERP Program
The Company will continue planning, designing and implementing activities for the migration to the new ERP system, which has been implemented in
Trade Agreements
In
The renegotiated North American Free Trade Agreement, now known as
Finally, the goal remains to continue to improve overall efficiencies in all sectors, pursue growth organically and through acquisitions, and always strive to be a stronger and better operator.
INFORMATION BY SECTOR
(in millions of CDN dollars) |
|||||
Fiscal years | 2020 | 2019 | |||
Q1 | Q4 | Q3 | Q2 | Q1 | |
Revenues | 968.8 | 924.8 | 1,059.6 | 1,047.7 | 1,011.0 |
Adjusted EBITDA* | 98.5 | 90.0 | 113.8 | 104.4 | 105.5 |
* | Non-IFRS measure described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
The Canada Sector consists of the Dairy Division (
(in millions of CDN dollars) |
|||||
Fiscal years | 2020 | 2019 | |||
Q1 | Q4 | Q3 | Q2 | Q1 | |
Revenues | 1,757.7 | 1,616.6 | 1,678.5 | 1,618.0 | 1,594.6 |
Adjusted EBITDA* | 173.6 | 134.2 | 122.4 | 133.8 | 154.3 |
* | Non-IFRS measure described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
Selected factors positively (negatively) affecting financial performance (in millions of CDN dollars) |
|||||||||
Fiscal years | 2020 | 2019 | |||||||
Q1 | Q4 | Q3 | Q2 | Q1 | |||||
(8 | ) | 4 | (19 | ) | (7 | ) | 2 | ||
US currency exchange1 | 6 | 7 | 6 | 7 | (8 | ) |
* | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
1 | As compared to same quarter of previous fiscal year. |
Other pertinent information (in US dollars, except for average exchange rate) |
|||||
Fiscal years | 2020 | 2019 | |||
Q1 | Q4 | Q3 | Q2 | Q1 | |
Block market* price | |||||
Opening | 1.645 | 1.430 | 1.690 | 1.555 | 1.530 |
Closing | 1.858 | 1.645 | 1.430 | 1.690 | 1.555 |
Average | 1.711 | 1.520 | 1.453 | 1.605 | 1.603 |
Butter market* price | |||||
Opening | 2.255 | 2.218 | 2.320 | 2.268 | 2.215 |
Closing | 2.410 | 2.255 | 2.218 | 2.320 | 2.268 |
Average | 2.330 | 2.264 | 2.238 | 2.264 | 2.339 |
Average whey market price per pound* | 0.370 | 0.443 | 0.452 | 0.387 | 0.279 |
Spread* | 0.061 | 0.054 | 0.021 | 0.095 | 0.135 |
US average exchange rate to Canadian dollar1 | 1.337 | 1.330 | 1.321 | 1.307 | 1.290 |
* | Refer to the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
1 | Based on Bloomberg published information. |
The
INTERNATIONAL SECTOR | |||||
(in millions of CDN dollars) |
|||||
Fiscal years | 2020 | 2019 | |||
Q1 | Q4 | Q3 | Q2 | Q1 | |
Revenues | 790.3 | 695.1 | 839.1 | 754.7 | 662.2 |
Adjusted EBITDA* | 59.7 | 50.9 | 85.0 | 79.3 | 47.7 |
* | Non-IFRS measure described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
Selected factors positively (negatively) affecting financial performance (in millions of CDN dollars) |
|||||||||||
Fiscal years | 2020 | 2019 | |||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | |||||||
Inventory write-down | - | (2 | ) | (1 | ) | - | - | ||||
Foreign currency exchange1 | (10 | ) | (3 | ) | (5 | ) | - | (7 | ) |
1 | As compared to same quarter of previous fiscal year. |
The International Sector consists of the Dairy Division (
(in millions of CDN dollars) |
|||||
Fiscal years | 2020 | 2019 | |||
Q1 | Q4 | Q3 | Q2 | Q1 | |
Revenues | 151.6 | - | - | - | - |
Adjusted EBITDA* | 26.2 | - | - | - | - |
* | Non-IFRS measure described in the ‘‘Glossary’’ section on page 20 of the Management’s Discussion and Analysis for the first quarter of fiscal 2020. |
The new Europe Sector consists of the Dairy Division (
Source: Saputo Inc.