Brampton Brick Limited

Brampton Brick Limited

March 08, 2005 17:12 ET

Brampton Brick Reports Earnings for the Fourth Quarter and Year Ended December 31, 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: BRAMPTON BRICK LIMITED

TSX SYMBOL: BBL.SV.A

MARCH 8, 2005 - 17:12 ET

Brampton Brick Reports Earnings for the Fourth Quarter
and Year Ended December 31, 2004

BRAMPTON, ONTARIO--(CCNMatthews - March 8, 2005) - Brampton Brick
Limited (TSX:BBL.SV.A) today reported net income for the year ended
December 31, 2004 of $15,707,000, or $1.45 per share, on a weighted
average 10,847,000 Class A Subordinate Voting and Class B Multiple
Voting shares outstanding compared to $17,975,000, or $1.66 per share,
on a weighted average 10,833,000 Class A Subordinate Voting and Class B
Multiple Voting shares outstanding for the year ended December 31, 2003.

For the fourth quarter ended December 31, 2004, net income was
$1,260,000, or $0.12 per share. Net income for the comparable period in
2003 was $3,526,000, or $0.33 per share.

The factors contributing to the $2,268,000 decrease in net income for
the year were lower clay brick shipments, reduced margins in the
concrete products business segment, a foreign currency exchange loss, a
charge against earnings to write-off the net book value of unutilized
production equipment in the concrete products business segment and
start-up losses of the new Da Vinci Stone Craft operations.

The above noted variances were partially offset by lower interest costs,
an increase in the equity income contribution from the Company's 38.2%
investment in Richvale York Block Inc., lower income taxes and the
non-controlling interests' share of losses incurred in the concrete
products business segment.

In addition, net income for 2003 included a gain on sale of land which,
net of estimated income taxes thereon, amounted to $558,000, or $0.05
per share.

In the clay brick business segment, persistent rainy weather conditions
throughout much of the year, a strike during the second quarter by road
and sewer construction trade unions and the additional time now required
by land developers and builders to obtain all necessary approvals
resulted in a 6.1% decline in clay brick shipments for the year.

Gross profit in this business segment was down only marginally from 2003
in spite of the decrease in the clay brick shipments. Operating results
in 2003 were significantly impacted by the kiln improvement project
undertaken in the first quarter of 2003.

In the concrete products business segment, the positive effect of higher
volumes was offset by lower average selling prices, primarily in the
U.S. market. Lower selling prices were largely due to price reductions
for certain products which were implemented in the third quarter in
response to product being shipped into the Michigan market at
substantially lower prices. The impact of these price reductions was
estimated to be in excess of $900,000.

Lower selling prices combined with higher manufacturing costs and
additional expenses of new business initiatives, specifically the new
Chicago sales depot opened in August, 2003 and the Da Vinci Stone Craft
business acquired in September, 2003, resulted in reduced margins and
lower gross profit in this business segment.

In the medical waste business segment, higher volumes produced an
increase in net sales and gross profit. This business segment also
benefited from an adjustment in 2004 to record the income tax benefit
applicable to income tax losses carried forward from prior years.

With respect to the fourth quarter results, the $2,266,000 decrease in
net income was due to lower clay brick shipments, the adjustment to
write-off of the net book value of unutilized production equipment in
the concrete products business segment and an increase in the foreign
currency exchange loss.

Similar to the annual results, lower interest costs, lower income taxes,
the non-controlling interests' share of losses in the concrete products
business segment and improved operating results of Richvale York Block
Inc. partially offset the negative impact of the factors noted above.

As a result of the implementation of the new CICA Handbook Section 3110
- "Asset Retirement Obligations" - which became effective January 1,
2004, the Company is required to restate the prior period comparative
financial statements utilizing the new accounting policy. Consequently,
previously reported net income of $18,004,000, or $1.66 per share, for
the year ended December 31, 2003 has been reduced by $29,000 to
$17,975,000, also $1.66 per share, and previously reported fourth
quarter net income of $3,532,000, or $0.33 per share, has been reduced
by $6,000 to $3,526,000, also $0.33 per share.

Effective January 1, 2004 the Company also adopted a new method of
presentation of trucking and delivery expenses with respect to brick and
concrete product shipments. These expenses are now reported under Cost
of sales, selling, general and administrative expenses. Previously, they
were netted against cartage revenue which is reported under Net sales.
The effect of this change has been to increase previously reported
amounts for Net sales and Cost of sales, selling, general and
administrative expenses by $1,073,000 for the quarter and by $4,653,000
for the year ended December 31, 2003. There was no effect on reported
net income as a result of this change.

Cash flow generated by operating activities totaled $22,560,000 for the
year ended December 31, 2004 compared to $21,654,000 in 2003. The
negative effect of lower earnings was more than offset by a significant
reduction in income tax payments in 2004 compared to 2003.

Significant income tax instalments were paid in February, 2003 with
respect to the increase in taxable income from clay brick operations in
2002 over 2001 and to the 2002 taxable income generated by the newly
incorporated concrete products subsidiaries. The timing of these
payments, which is provided for under applicable income tax legislation,
had a substantial negative impact on cash flow from operations in 2003.

Cash resources expended for the purchase of property, plant and
equipment were considerably lower in 2004 than in 2003. Capital
expenditures in 2003 included $3,300,000 related to the kiln improvement
project undertaken in the first quarter of last year. There was no
similar major capital expenditure project undertaken in 2004.

The Company acquired an additional 7% interest in Oaks Concrete Products
Ltd, effective June 30, 2004, for cash consideration of $3,844,000
bringing its aggregate interest to 70%.

During the fourth quarter of 2004, cash flow provided by operations
amounted to $5,579,000 compared to $9,631,000 for the comparable period
in 2003, reflecting lower earnings and the net effects of changes in
non-cash items, notably future income taxes, the loss on disposal of
property, plant and equipment and accounts receivable.

As previously announced, the Board of Directors declared a dividend of
$0.10 per Class A Subordinate Voting Share and Class B Multiple Voting
Share outstanding, payable on December 31, 2004 to shareholders of
record on December 15, 2004. The aggregate dividend amount was
$1,085,000. The Board of Directors has adopted a policy to pay
semi-annual dividends of $0.10 per share, subject to specific Board of
Directors' approval of each future dividend at the time, anticipated to
be paid in June and December of each year.

Certain statements contained herein constitute "forward-looking
statements". Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements of the Company to be materially different
from any future result, performance or achievements expressed or implied
by such forward-looking statements.

Brampton Brick is Canada's second largest manufacturer of clay brick.
Products are used for residential construction and for industrial
commercial, and institutional building projects. Oaks Concrete Products
Ltd., a 70% owned subsidiary, manufactures concrete paving stones,
retaining walls and enviro products and sells related accessory products
for residential use and for industrial, commercial and institutional
building projects. Da Vinci Stone Craft Ltd., a 75% owned subsidiary of
Oaks Concrete Products Ltd. acquired in September, 2003, manufactures
limestone cast fireplace surrounds, wall tiles and other decorative
products. Medical Waste Management Inc., a 65% owned subsidiary,
operates a facility for the destruction of biomedical and pharmaceutical
waste, including the only commercially operated medical waste
incinerator in Ontario. Roxy Construction Co. Limited, an 80% owned
subsidiary, provides trucking services to third parties in addition to
transporting raw materials and finished products for the Company. The
Company also holds a 38.2% interest in Richvale York Block Inc., the
largest manufacturer of concrete block in Ontario.



BRAMPTON BRICK Limited

Selected Financial Information
(Thousands of dollars, except per share amounts)
---------------------------------------------------------------------
(unaudited)
Three months ended Year ended
December 31 December 31
CONSOLIDATED STATEMENTS OF INCOME 2004 2003 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------

Net sales $ 20,655 $ 24,307 $ 105,920 $ 107,332

Cost of sales, selling, general
and administrative expenses 15,309 15,441 70,843 69,268
Amortization 2,670 2,564 10,696 10,069
-------- -------- --------- ---------
17,979 18,005 81,539 79,337

Operating income before the
undernoted items 2,676 6,302 24,381 27,995

Interest on long-term debt (248) (344) (971) (1,585)
Other interest income (expense) 42 (13) (95) (191)
Equity income (loss) from
Richvale York Block Inc (19) (192) 502 251
Foreign currency exchange
gain (loss) (352) (125) (685) 47
Other expense (822) (28) (803) (247)
-------- -------- --------- ---------
(1,399) (702) (2,052) (1,725)
Income before gain on sale
of land 1,277 5,600 22,329 26,270

Gain on sale of land - 49 - 719
-------- -------- --------- ---------

Income before income taxes 1,277 5,649 22,329 26,989

Provision for income taxes 289 2,384 6,952 8,877
-------- -------- --------- ---------

Income before non-controlling
interests 988 3,265 15,377 18,112

Non-controlling interests 272 261 330 (137)
-------- -------- --------- ---------

Net income for the period $ 1,260 $ 3,526 $ 15,707 $ 17,975
-------- -------- --------- ---------

Net income per Class A and B
share $ 0.12 $ 0.33 $ 1.45 $ 1.66
-------- -------- --------- ---------

Weighted average Class A and B
shares outstanding (000's) 10,847 10,846 10,847 10,833
---------------------------------------------------------------------



---------------------------------------------------------------------
(unaudited)
Three months ended Year ended
CONSOLIDATED STATEMENTS OF December 31 December 31
CASH FLOWS 2004 2003 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash provided by (used for)
Operating activities
Net income for the period $ 1,260 $ 3,526 $ 15,707 $ 17,975
Items not affecting cash
Amortization and accretion 2,670 2,564 10,736 10,108
Future income taxes (693) 1,316 (630) 2,722
Non-controlling interests (272) (261) (330) 137
Equity (income) loss from
Richvale York Block Inc. 19 192 (502) (251)
Gain on sale of land - (49) - (719)
Loss (gain) on disposal of
property, plant and equipment 1,172 (19) 1,287 494
------- ------- -------- --------
4,156 7,269 26,268 30,466

Changes in non-cash operating
items
Accounts receivable 6,075 6,954 991 (345)
Inventories (2,712) (2,412) (2,983) (2,543)
Accounts payable and accrued
liabilities (1,248) (1,172) (2,795) 578
Income taxes payable (net) (909) (1,084) 878 (6,038)
Other 217 76 201 (464)
------- ------- -------- --------
1,423 2,362 (3,708) (8,812)

Cash provided by operations 5,579 9,631 22,560 21,654

Investing activities
Purchase of property, plant and
equipment (839) (1,216) (3,588) (9,766)
Increase in investment in Oaks
Concrete Products Ltd. - - (3,844) -
Business acquisition - - - (325)
Proceeds from disposal of
property, plant and equipment (5) 30 960 668
Receipt of land sale proceeds
held in trust - 549 86 1,211
------- ------- -------- --------

Cash used for investment (844) (637) (6,386) (8,212)

Financing activities
Increase (decrease) in bank
operating advances 226 (2,088) 629 530
Increase in term loans - - - 155
Repayment of term loans (33) (6,508) (130) (16,514)
Payment of obligations under
capital leases (464) (600) (2,374) (2,408)
Payment of dividend (1,085) 0 (1,085) -
Proceeds from exercise of
stock options - 31 - 140
------- ------- -------- --------
Cash used for financing (1,356) (9,165) (2,960) (18,097)

Foreign exchange on cash held
in foreign currency 3 1 1 (62)
------- ------- -------- --------
Increase (decrease) in cash
and cash equivalents 3,382 (170) 13,215 (4,717)
Cash and cash equivalents -
Beginning of the period 10,189 526 356 5,073
------- ------- -------- --------
Cash and cash equivalents -
End of the period $ 13,571 $ 356 $ 13,571 $ 356
------- ------- -------- --------



(Thousands of dollars)
---------------------------------------------------------------------
December 31 December 31
CONSOLIDATED BALANCE SHEETS 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 13,571 $ 356
Accounts receivable 9,227 10,036
Inventories 15,723 12,987
Income taxes recoverable 37 1,229
Other current assets 1,341 1,447
Future income taxes 36 -
--------- ---------
39,935 26,055

Property, plant and equipment (net) 101,343 109,799

Other assets
Goodwill 27,193 27,663
Future income taxes 714 -
Other 12,530 12,028
--------- ---------
40,437 39,691
--------- ---------
$ 181,715 $ 175,545
--------- ---------
--------- ---------
LIABILITIES
Current liabilities
Bank operating advances $ 2,440 $ 1,810
Accounts payable and accrued liabilities 9,094 12,156
Income taxes payable 537 327
Long-term debt, current portion 1,827 2,163
--------- ---------
13,898 16,456

Long-term debt, less current portion 16,442 17,646
Future income taxes 11,224 11,098
Asset retirement obligation 914 874
--------- ---------
42,478 46,074

Non-controlling interests 14,066 18,157
--------- ---------

SHAREHOLDERS' EQUITY 125,171 111,314
--------- ---------
$ 181,715 $ 175,545
--------- ---------
--------- ---------



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