Dominion Citrus Income Fund
TSX : DOM.UN

Dominion Citrus Income Fund

October 29, 2009 17:33 ET

Dominion Citrus Income Fund: Third Quarter 2009 Report to Unitholders

Three months ended September 19, 2009 and September 20, 2008

TORONTO, ONTARIO--(Marketwire - Oct. 29, 2009) - Dominion Citrus Income Fund ("Dominion", the "Fund") (TSX:DOM.UN) reports net earnings from continuing operations of $1,888,000 or $0.09 per unit for the three months ended September 19, 2009 compared to a net loss of $108,000 or ($0.00) per unit for the same period in 2008. The net earnings from discontinued operations for the same periods were a net loss of $55,000 or ($0.00) per unit versus a net loss of $142,000 or ($0.01) per unit in 2008.

Third quarter revenue from continuing operations of $18,479,000, was lower by 18.7% versus the third quarter of 2008 due to the discontinuance of less profitable products in Dominion Citrus Wholesale, lower sales of certain commodities for grading and packaging, and lower commodity costs being passed through to customers. The higher Canadian to US Dollar exchange rate has also yielded lower revenue over time in import commodities as landed costs, including exchange, are passed through to customers. Gross margin for the third quarter of fiscal 2009 of $3,813,000 decreased by $464,000 from the same period last year mainly due to reduced volume. Gross margin on a percentage basis did however improve by 1.8% to 20.6% given the discontinuance of less profitable products earlier in the year and further in the third quarter, continued initiatives on inventory controls, and positive pricing for certain commodities.

Total expenses for the third quarter of 2009 net of restructuring expenses of $185,000 decreased to $4,092,000 from $4,774,000 for the same period in 2008. The decrease was attributable to cost cutting measures in basic operations, a more focused portfolio of commodities in the wholesale business, and lower consulting and legal expenses.

Included in the net profit for the third quarter is $185,000 of restructuring expenses and a net gain on sale of $2,397,000 which is mainly attributable to a $2,403,000 gain for the sale of two Type "A" selling stalls at the Ontario Food Terminal formerly used by Dominion Citrus Wholesale.

The quarterly results are summarized below (all figures in $000's except per unit):



Three months ended
19-Sep-09 20-Sep-08
-------------------
Revenue, continuing operations 18,479 22,719
Revenue, discontinued operations 54 1,811
Earnings/(Loss) before other income (expense),
continuing operations (464) (497)
Earnings/(Loss) before other income (expense),
discontinued operations (157) (204)
Net earnings (loss), continuing operations 1,888 (108)
Net earnings (loss), discontinued operations (55) (142)
EBITDA, continuing operations (312) (323)
EBITDA, discontinued operations (148) (123)
Basic and diluted earnings (loss), continuing operations $0.09 ($0.00)
Basic and diluted earnings (loss), discontinued
operations ($0.00) ($0.01)


Nine months ended
19-Sep-09 20-Sep-08
-------------------
Revenue, continuing operations 57,707 65,854
Revenue, discontinued operations 2,950 9,939
Earnings/(Loss) before other income (expense), continuing
operations (1,537) (766)
Earnings/(Loss) before other income (expense),
discontinued operations (516) (1,116)
Net earnings (loss), continuing operations 1,419 (144)
Net earnings (loss), discontinued operations (295) (496)
EBITDA, continuing operations (1,108) (250)
EBITDA, discontinued operations (495) (867)
Basic and diluted earnings (loss), continuing operations $0.07 ($0.01)
Basic and diluted earnings (loss), discontinued
operations ($0.01) ($0.02)


The Fund has declared a one time 2009 distribution of five cents per unit, payable on December 30, 2009 to unitholders of record on December 16, 2009.

Fiscal 2009 Outlook

The Fund is now focused on its core businesses after the sales of the operating assets of Delta Foods in 2008 and Apple Valley Juice in June 2009. The Fund will continue to perpetuate further operating efficiencies in all divisions and finalize its restructuring of the wholesale division. The combination of improved gross margins and a right sized overhead structure continues to have overall profitability trending positively. The Fund has improved its financial profile and balance sheet strength through the last few quarters and will focus on maintaining financial flexibility.

On September 16, 2009, The Fund and its subsidiary, Dominion Citrus Limited, announced the acceptance of an offer of $820,000, subject to certain conditions, for the sale of its Brockville facilities which consist of two buildings totaling approximately 44,000 square feet situated on 4.15 acres of land that had previously been used by Delta Foods to store and produce maple syrup products. Subsequent to the end of the third quarter, the Company announced that the offering party requested and was granted a mutual release from the purchase offer during the conditional period due to an inability to raise satisfactory financing. The Company will continue to market the Brockville facilities for sale.

The Fund completed the sale of two of its four type "A" stalls at the Ontario Food Terminal for gross proceeds of $3.5 million in the third quarter of 2009. This transaction is a key milestone in the restructuring of the Dominion Citrus Wholesale operation as it increases focus and operating efficiency while further increasing balance sheet strength. The sale was accompanied by an expense reduction initiative. The wholesale operations are now right sized for the business plan and the facility has been substantially renovated. Dominion Citrus Wholesale will concentrate on operational efficiency, produce quality, exemplary service, and the sales and marketing of a more focused group of core commodities going forward.

Several ongoing risks and uncertainties exist in the Fund's core businesses including, amongst others, the highly competitive nature of the segments of the food industry in which the Fund participates resulting in volume and margin pressures, and continuing fluctuation and volatility of the Canadian dollar as against the US dollar which impact revenue and product margin.

Caution regarding Forward-Looking Statements

This release contains statements, which, to the extent that they are not a recitation of historical fact, may constitute "forward-looking statements". Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or performance, or our underlying assumptions. The words "estimate", "anticipate", "believe", "expect", "intend" or other similar expressions of future or conditional verbs such as "will", "should", "would" and "could" are intended to identify forward-looking statements. Persons reading this press release are cautioned that such statements are only expectations, and that our actual results or performance may be materially different.

Forward-looking information involves certain risks, assumptions, uncertainties and other factors which may cause actual future results to differ materially from those expressed or implied in any forward-looking statements.

Readers should not place undue reliance on these forward-looking statements when making decisions, and should consider the date onto which the statements were made. Except as required by applicable security law, management disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Dominion

The Fund is a publicly traded, unincorporated, open-ended limited purpose income trust. On January 1, 2006, all of the common shares of Dominion Citrus Limited ("DCL") were exchanged for trust units of the Fund. The trust units are listed on the TSX under the symbol DOM.UN. The Series A preference shares of DCL continue to be listed on the TSX under the symbol DMN.PR.A.

Dominion is a diversified food company supplying fresh produce to a wide variety of customers in retail, foodservice and food distribution businesses. The Fund provides procurement, processing, repacking, sorting, grading, warehousing and distribution services to its major domestic markets being Ontario and Quebec. The Fund also supplies products to customers in the United States. The website may be accessed at www.dominioncitrus.com.

Contact Information

  • Dominion Citrus Income Fund - Investors
    Jason Fielden
    VP Finance, CFO & Corporate Secretary
    416-242-8341 x250
    or
    Dominion Citrus Income Fund - Media
    Winston R. Ash
    President & CEO
    416-242-8341 x249
    www.dominioncitrus.com