Brampton Brick Limited
TSX : BBL.SV.A

Brampton Brick Limited

November 07, 2005 18:02 ET

Brampton Brick Reports Third Quarter Results, Semi-Annual Dividend Declared

BRAMPTON, ONTARIO--(CCNMatthews - Nov. 7, 2005) - Brampton Brick Limited (TSX:BBL.SV.A) today reported net income of $4,781,000, or $0.44 per share, for the third quarter ended September 30, 2005 compared to $4,894,000, or $0.45 per share, for the same period last year. The weighted average number of Class A Subordinate Voting Shares and Class B Multiple Voting Shares outstanding was 10,847,000 during both periods.

Net sales for the quarter increased by $2,744,000, or 9.1%, to $33,051,000 on the strength of higher volumes in all three business segments and higher average selling prices in the clay brick business segment. The increase in average clay brick selling prices was due to a shift in product mix to a larger sized brick.

Increases in the cost of sales, combined with increased shipping expenses and higher selling, general and administrative expenses, offset much of the increase in net sales. Consequently, gross margins were negatively affected.

Operating income before interest and other items increased to $7,768,000 for the quarter from $7,628,000 for the third quarter of 2004.

The Company incurred a foreign exchange loss of $871,000 for the quarter due to the impact of the strengthening of the Canadian dollar versus the U.S. dollar. In the third quarter of 2004 the foreign exchange loss was $474,000.

For the nine months ended September 30, 2005 net income was $10,886,000, or $1.00 per share, compared to $14,447,000, or $1.33 per share, for the same period in 2004. The weighted average number of shares outstanding was 10,847,000 during both periods.

Net sales for the nine months to September 30, 2005 were $85,971,000 compared to $85,265,000 in 2004.

Of the $3,561,000 decrease in net income to September 30, $2,899,000 occurred in the first quarter. A scheduled kiln shutdown and substantially lower brick shipments due to poor weather conditions and a return to more traditional, seasonal building patterns resulted in a $2,572,000 decline in net income attributable to the clay brick business segment in the first quarter of 2005. In addition to the repair and maintenance expenses incurred in connection with the kiln shutdown, the reduction in production volumes during this period resulted in a much higher proportion of manufacturing costs being charged against operations.

The loss incurred by the highly seasonal concrete products business segment was also higher in the first quarter of 2005 compared to the same period in 2004.

Cash flow from operations amounted to $15,630,000 for the third quarter of 2005 and $14,243,000 for the nine month period compared to $11,017,000 and $16,981,000, respectively, for the comparative periods in 2004.

Higher collections of accounts receivable in third quarter of 2005 were the result of much higher sales in the month of June, 2005 compared to June, 2004. This variance accounted for most of the increase in cash flow from operations for the quarter. For the nine month period, the negative impact of lower earnings was partially offset by a reduction in the net change in other non-cash operating items.

Cash requirements for the purchase of property, plant and equipment totaled $1,675,000 for the third quarter compared to $826,000 for the third quarter of 2004. For the nine months ended September 30, 2005, purchases of property, plant and equipment totaled $5,496,000 compared to $2,749,000 for the same period last year. Included in these amounts for 2005 were the expenditures pertaining to the new automated tumbling system equipment installed in the Michigan concrete products plant. Commercial production from this new equipment commenced in September.

The decrease of $4,145,000 in bank operating advances for the third quarter reflected the normal seasonal fluctuation, primarily in the concrete products business segment. The increase of $1,985,000 for the nine month period reflected the effect of lower cash flow from operations to date in 2005 compared to last year plus higher cash requirements for capital expenditures.

The Company also announced today that 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, 2005 to shareholders of record on December 15, 2005.

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., manufactures fireplace surrounds and accessory 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, transports raw materials and finished products for the Company as well as providing trucking services to third parties. The Company also holds a 38.2% interest in Richvale York Block Inc., the largest manufacturer of concrete block in Ontario.



Selected Financial Information

(Unaudited) (thousands of dollars, except per share amounts)
---------------------------------------------------------------------
Three months ended Nine months ended
CONSOLIDATED STATEMENTS OF September 30 September 30
INCOME 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Net sales $ 33,051 $ 30,307 $ 85,971 $ 85,265

Cost of sales, selling,
general and
administrative expenses 22,692 19,924 60,994 55,494

Amortization 2,591 2,755 7,981 8,066
-------- -------- -------- -------

25,283 22,679 68,975 63,560

Operating income before the
undernoted items 7,768 7,628 16,996 21,705
Interest on long-term debt (225) (241) (737) (723)
Other interest income
(expense) 24 (15) 6 (137)
Equity income from Richvale
York Block Inc. 306 172 675 521
Foreign exchange loss (871) (474) (701) (333)
Other income (expense) (43) (47) (72) 19
-------- -------- -------- -------
(809) (605) (829) (653)

Income before income taxes 6,959 7,023 16,167 21,052

(Provision for) recovery of
income taxes
Current (2,316) (2,181) (6,044) (6,717)
Future 96 132 604 54
-------- -------- -------- -------
(2,220) (2,049) (5,440) (6,663)

Income before non-controlling
interests 4,739 4,974 10,727 14,389

Non-controlling interests 42 (80) 159 58
-------- -------- -------- -------

Net income for the period $ 4,781 $ 4,894 $ 10,886 $ 14,447
-------- -------- -------- -------
-------- -------- -------- -------

Net income per Class A and B
share $ 0.44 $ 0.45 $ 1.00 $ 1.33
-------- -------- -------- -------
-------- -------- -------- -------

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



Selected Financial Information

(Unaudited) (thousands of dollars)
---------------------------------------------------------------------
Three months ended Nine months ended
CONSOLIDATED STATEMENTS OF September 30 September 30
CASH FLOWS 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash provided by (used for)

Operating activities
Net income for the period $ 4,781 $ 4,894 $ 10,886 $ 14,447
Items not affecting cash
Amortization 2,591 2,755 7,981 8,066
Future income taxes (96) (132) (604) (54)
Non-controlling interests (42) 80 (159) (58)
Equity income from Richvale
York Block Inc. (306) (172) (675) (521)
Unrealized foreign exchange
gain (5) 1 (69) 1
Loss on disposal of
property, plant and
equipment 134 101 28 114
--------- --------- --------- --------
7,057 7,527 17,388 21,995

Changes in non-cash
operating items
Accounts receivable 5,688 2,625 (7,718) (5,084)
Inventories 2,072 1,824 1,929 (271)
Accounts payable and accrued
liabilities 284 (1,229) 2,925 (1,547)
Income taxes (net) 521 105 63 1,904
Other 8 165 (344) (16)
--------- --------- --------- --------
8,573 3,490 (3,145) (5,014)

Cash provided by operations 15,630 11,017 14,243 16,981

Investing activities
Purchase of property, plant
and equipment (1,675) (826) (5,496) (2,749)
Proceeds from disposal of
property,
plant and equipment 132 229 435 965
Dividend from Richvale York
Block Inc. - - 763 -
Increase in investment in
Oaks Concrete Products Ltd. - - - (3,844)
Net proceeds from sale of
land - - - 86
--------- --------- --------- --------
Cash used for investment (1,543) (597) (4,298) (5,542)

Financing activities
Increase (decrease) in bank
operating advances (4,145) (3,235) 1,985 405
Repayment of term loans (274) (33) (342) (97)
Payments on obligations
under capital leases (508) (475) (1,523) (1,912)
Repurchase of capital stock (13) - (15) -
Proceeds from exercise of
stock options 17 - 17 -
Payment of dividend - - (1,085) -
--------- --------- --------- --------
Cash used for financing (4,923) (3,743) (963) (1,604)

Foreign exchange on cash
held in foreign currency 11 (12) 4 (2)
--------- --------- --------- --------

Increase in cash and cash
equivalents 9,175 6,665 8,986 9,833

Cash and cash equivalents -
Beginning of the period 13,382 3,524 13,571 356
--------- --------- --------- --------
Cash and cash equivalents -
End of the period $ 22,557 $ 10,189 $ 22,557 $ 10,189
--------- --------- --------- --------
--------- --------- --------- --------

---------------------------------------------------------------------



Selected Financial Information

(thousands of dollars) (unaudited)
---------------------------------------------------------------------
September 30 December 31
CONSOLIDATED BALANCE SHEETS 2005 2004
---------------------------------------------------------------------

ASSETS
Current assets
Cash and cash equivalents $ 22,557 $ 13,571
Accounts receivable 16,862 9,227
Inventories 13,490 15,723
Income taxes recoverable - 37
Other current assets 2,054 1,341
Future income taxes - 36
----------- -----------
54,963 39,935

Property, plant and equipment (net) 101,572 101,343

Other assets
Goodwill 26,757 27,193
Investment in Richvale York Block Inc. 8,692 8,780
Future income taxes 1,344 714
Other 3,750 3,750
----------- -----------
40,543 40,437
----------- -----------

$ 197,078 $ 181,715
----------- -----------
----------- -----------
LIABILITIES

Current liabilities
Bank operating advances $ 4,425 $ 2,440
Accounts payable and accrued liabilities 12,380 9,094
Income taxes payable 564 537
Long-term debt, current portion 1,668 1,827
----------- -----------
19,037 13,898

Long-term debt, less current portion 17,326 16,442

Future income taxes 11,258 11,224

Asset retirement obligation 946 914
----------- -----------
----------- -----------

48,567 42,478

Non-controlling interests 13,741 14,066

SHAREHOLDERS' EQUITY 134,770 125,171
----------- -----------

$ 197,078 $ 181,715
----------- -----------
----------- -----------


Contact Information