McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

October 30, 2013 16:00 ET

McGraw-Hill Ryerson Reports Third Quarter Results

WHITBY, ONTARIO--(Marketwired - Oct. 30, 2013) - McGraw-Hill Ryerson Limited (TSX:MHR) -

Attention: Business/Financial Editors

Three Months to September 30 ($000) 2013 2012
(unaudited)
Sales revenue, less returns $ 30,307 $ 31,242
Other income 558 667
Rental income 144 128
Total Revenue $ 31,009 $ 32,037
Net income $ 6,093 $ 6,239
Net income per share $ 3.05 $ 3.12
Nine Months to September 30 ($000) 2013 2012
(unaudited)
Sales revenue, less returns $ 49,261 $ 53,326
Other income 1,175 1,408
Rental income 508 359
Total Revenue $ 50,944 $ 55,093
Net income $ 3,796 $ 3,783
Net income per share $ 1.90 $ 1.90

Summary

The Company's revenues are typically more heavily weighted towards the second half of the calendar year leading up to the beginning of the school season, while expenses are more evenly distributed over the course of the year. In the third quarter, McGraw-Hill Ryerson's revenues generally exceed the first two quarters combined. For the third quarter in 2013, the net income is $6.1 million, compared to net income of $6.2 million in the third quarter of 2012. For the nine months ended September 30, 2013, net income was $3.8 million, consistent with the first nine months of 2012.

Three Months Ended September 30, 2013

Total revenue for the third quarter decreased by 3.2% to $31.0 million in 2013 compared to $32.0 million in 2012.

While industry sales data indicate a decrease in spending year to date, Higher Education Division sales increased by $0.6 million to $22.7 million in the third quarter of 2013 compared to the third quarter of 2012. This increase was mainly the result of strong sales from our digital initiatives.

The School Division sales decreased by $1.7 million to $6.1 million in the third quarter of 2013 from $7.8 million in the corresponding quarter of 2012 as a result of non-recurring product sales tied to final phase of curriculum changes in the Western provinces last year. This is consistent with industry sales data which show a significant decline in the K-12 space.

In the Professional Division, sales increased by $0.2 million in the third quarter of 2013 to $1.5 million as a result of an increase in orders from the campus store and wholesaler channels.

Other income, representing billed freight, copyright licensing, and translation fees, decreased in the third quarter of 2013 by 16.3% to $0.6 million from $0.7 million in the corresponding quarter of 2012. The major contributing factor to the decrease is copyright licensing income.

Income before taxes was $8.2 million compared to $8.4 million in the third quarter last year, mainly the result of the decrease in sales.

Nine Months Ended September 30, 2013

Total revenue for the first nine months decreased by 7.5% to $51.0 million in 2013 compared to $55.1 million in 2012.

While industry sales data indicate a decrease in spending year to date, Higher Education Division sales increased 1.3% to $33.4 million compared to the first nine months of 2012. The slight increase can be attributed to the success of our digital initiatives.

The School Division sales decreased by $4.4 million to $12.3 million in the first nine months of 2013 from $16.8 million in the corresponding period of 2012 as a result of non-recurring product sales tied to final phase of curriculum changes in the Western provinces last year as well as the closing of the Alberta Learning Resource Centre. This is consistent with industry sales data which show a significant decline in the K-12 space.

In the Professional Division, sales remained consistent in the first nine months of 2013 at $3.5 million.

Other income, representing billed freight, copyright licensing, and translation fees, decreased in the first nine months of 2013 to $1.2 million when compared to the corresponding period of 2012. The major contributing factor to the decrease is copyright licensing income.

Rental income from the tenant at the Company's Whitby, Ontario facility fluctuates based on escalation charges.

Cost of goods sold decreased to $18.6 million by the compared to $19.5 million for the same period in 2012. lower sales in the first nine months of the year.

end of the third quarter of 2013 The decrease is consistent with the

Operating expenses decreased for the nine months of 2013 to $20.5 million compared to $23.2 million for the same period in 2012. The decrease is a result of selling, compensation, and professional expense savings.

Year to date income before taxes was $5.3 million, consistent with $5.3 million in the third quarter of last year. The decrease in sales has been offset by a decrease in operating expense and amortization savings.

In business since 1944, McGraw-Hill Ryerson Limited is a leading Canadian publisher of educational resources, and information products and services for lifelong learning and enjoyment. Total revenue in 2012 was $77 million. Additional information is available at http://www.mheducation.ca.

McGraw-Hill Ryerson Limited
STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
[in thousands of dollars except per share data]
(unaudited)
Three months ended
September 30
Nine months ended
September 30
2013 2012 2013 2012
$ $ $ $
Sales revenue, less returns 30,307 31,242 49,261 53,326
Other income 558 667 1,175 1,408
Rental income 144 128 508 359
Total revenue 31,009 32,037 50,944 55,093
Cost of goods sold 11,911 11,789 18,557 19,458
Gross profit 19,098 20,248 32,387 35,635
Operating expenses 6,994 7,507 20,509 23,167
Amortization - pre-publication costs 3,720 4,190 5,975 6,929
Depreciation - property, plant and equipment 193 209 594 635
Operating income 8,191 8,342 5,309 4,904
Finance income 21 30 86 219
Finance costs 47 32 126 98
Foreign exchange gain (loss) 74 96 (11 ) 270
Income before income taxes 8,239 8,436 5,258 5,295
Income tax expense 2,146 2,197 1,462 1,512
Net income and comprehensive income for the period attributable to equity holders of the Company 6,093 6,239 3,796 3,783
Income per share
Basic and diluted $3.05 $3.12 $1.90 $1.90
Other comprehensive gain (loss)
Actuarial gain (loss) on employee future benefits, net of tax - - 191 (61 )
Comprehensive income 6,093 6,239 3,987 3,722
McGraw-Hill Ryerson Limited
STATEMENTS OF FINANCIAL POSITION
[in thousands of dollars]
(unaudited)
As at September 30, December 31, September 30,
2013 2012 2012
$ $ $
ASSETS
Current
Cash and cash equivalents 13,873 15,146 26,017
Marketable securities 915 799 771
Trade and other receivables, net 16,268 10,463 16,226
Inventories, net 4,475 4,601 6,064
Due from parent and affiliated companies 647 1,783 501
Income taxes receivable 578 - 815
Prepaid expenses and other assets 442 333 372
Total current assets 37,198 33,125 50,806
Property, plant and equipment, net 12,882 13,423 13,547
Intangible assets 11,158 13,754 13,345
Deferred tax assets 703 731 534
Total non-current assets 24,743 27,908 27,426
Total assets 61,941 61,033 78,232
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 9,450 10,691 9,100
Income taxes payable - 265 -
Due to parent and affiliated companies 5,247 4,693 3,941
Total current liabilities 14,697 15,649 13,041
Employee future benefits 2,604 2,517 2,344
Long-term payable - 350 8
Total non-current liabilities 2,604 2,867 2,352
Total liabilities 17,301 18,516 15,393
Equity
Issued capital
Authorized 5,000,000 no par value common shares
Issued and outstanding 1,996,638 common shares 1,997 1,997 1,997
Paid-in capital 1,265 1,081 981
Retained earnings 41,500 39,561 59,800
Accumulated other comprehensive income (loss) (122 ) (122 ) 61
Total equity 44,640 42,517 62,839
Total liabilities and equity 61,941 61,033 78,232
McGraw-Hill Ryerson Limited
STATEMENTS OF CHANGES IN EQUITY
[in thousands of dollars]
(unaudited)
Accumulated
other
Issued Paid-in comprehensive Retained
capital capital income earnings Total
$ $ $ $ $
Balance, December 31, 2011 1,997 702 61 71,760 74,520
Dividends paid ($7.885 per share) - - - (15,743 ) (15,743 )
Additional paid-in capital - 279 - - 279
Net income attributable to equity holders of the Company - - - 3,783 3,783
Balance, September 30, 2012 1,997 981 61 59,800 62,839
Balance, December 31, 2012 1,997 1,081 (122 ) 39,561 42,517
Dividends paid ($0.93 per share) - - - (1,857 ) (1,857 )
Additional paid-in capital - 184 - - 184
Net income attributable to equity holders of the Company - - - 3,796 3,796
Balance, September 30, 2013 1,997 1,265 (122 ) 41,500 44,640
McGraw-Hill Ryerson Limited
STATEMENTS OF CASH FLOWS
[in thousands of dollars]
(unaudited)
Nine months ended September 30
2013 2012
$ $
Operating activities
Net income for the period 3,796 3,783
Add (deduct) charges not affecting cash:
Amortization - pre-publication costs 5,975 6,929
Depreciation - property, plant and equipment 594 635
Decrease in long-term payable (350 ) (36 )
Employee future benefits 87 124
Deferred taxes 28 (40 )
Net change in non-cash working capital balances related to operations (6,161 ) (7,825 )
Cash provided in operating activities 3,969 3,570
Investing activities
Investment in pre-publication costs (3,400 ) (3,849 )
Investment in property, plant and equipment (53 ) (111 )
Increase in financial instruments (116 ) (55 )
Cash used in investing activities (3,569 ) (4,015 )
Financing activities
Dividends paid to shareholders (1,857 ) (15,743 )
Change in paid-in capital 184 279
Cash used in financing activities (1,673 ) (15,464 )
Net decrease in cash and cash equivalents (1,273 ) (15,909 )
Cash and cash equivalents, beginning of period 15,146 41,926
Cash and cash equivalents, end of period 13,873 26,017

Contact Information

  • McGraw-Hill Ryerson Limited
    Brenda Arseneault
    Vice-President and Chief Financial Officer
    (905) 430-5223
    http://www.mheducation.ca