MANKATO, MINNESOTA and WINNIPEG, MANITOBA--(Marketwire - Feb. 9, 2010) - Ridley Inc. (TSX:RCL) today reported its financial results for the second quarter of fiscal 2010, the three months ended December 31, 2009. All currency amounts are stated in U.S. dollars unless otherwise noted.
For the three months ended December 31, 2009, Ridley earned $5.0 million after income taxes (37 cents per share) compared to $0.7 million (5 cents per share) last year. Earnings before interest, taxes and amortization (EBITA (i)) for the second quarter of fiscal 2010 were $10.2 million compared to $7.3 million last year.
Several factors contributed to Ridley's earnings growth in the second quarter of fiscal 2010. Unit margins improved over last year with an improved product mix and the stabilization of raw material prices this year. Operating cost structures improved as a result of efficiency initiatives undertaken last year. Colder weather with good snow cover throughout much of the trade area was favourable to beef feed volumes.
Ridley Feed Operations (RFO) was the most improved operating segment in the second quarter with an increase in operating income of $5.9 million over last year. U.S. feed operations accounted for most of this increase while Canadian operations recorded a modest profit this year compared to a loss last year. Ridley Nutrition Solutions (RNS) performed as expected, increasing operating income by $0.9 million, aided by favourable weather conditions. Operating income at Ridley Feed Ingredients (RFI) fell $1.1 million from last year due to the absence of raw material pricing gains realized last year.
"Considering the difficult economic environment for livestock and poultry producers, we are satisfied with the results of the second quarter and appreciative of the hard work of our employees in achieving those results, but we remain cautious in our outlook for the remainder of the year", said Steve VanRoekel, President & CEO of Ridley Inc. "There are indications that producer profitability is improving but animal numbers will remain low in many sectors. While that happens, a strong balance sheet puts us on a solid footing to move forward with new business development initiatives that will position Ridley for future growth", added VanRoekel.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following Management Discussion and Analysis as of February 9, 2010 is based on the accompanying financial statements prepared using Canadian Generally Accepted Accounting Principles ("GAAP"). All amounts are in U.S. dollars unless otherwise stated.
Second Quarter Results The following summary data is presented to assist in understanding the fiscal 2010 second quarter results:
| |
|
Three months ended |
Six months ended |
| Summary of Results |
December 31 |
December 31 |
| ($ million except for EPS) |
2009 |
2008 |
2009 |
2008 |
| Revenue |
150.0 |
163.6 |
|
285.7 |
332.9 |
|
| Gross profit |
23.5 |
22.1 |
|
40.9 |
45.2 |
|
| Operating income |
8.1 |
1.8 |
|
10.4 |
7.0 |
|
| Net earnings before exceptions |
5.0 |
3.0 |
|
6.1 |
5.7 |
|
| Exceptions, net of income taxes (noted below (ii)) |
- |
(2.3 |
) |
- |
(2.1 |
) |
| Net earnings |
5.0 |
0.7 |
|
6.1 |
3.6 |
|
| Diluted earnings per share (EPS) |
$0.37 |
$0.05 |
|
$0.45 |
$0.26 |
|
| EBITA (i) |
10.2 |
7.3 |
|
14.6 |
14.4 |
|
| i. |
EBITA – Operating income before amortization and exceptions. EBITA does not have a standardized meaning prescribed by Canadian GAAP and, therefore, is not readily comparable to similar measures presented by other companies. However, management believes that this measure provides investors with useful supplemental information. |
| ii. |
Exceptions – In the preceding summary data, net earnings were reported before exceptions. Those exceptions, which are mainly unusual or non-recurring items, are summarized below, net of income taxes: |
| |
|
|
|
| |
|
Three months ended |
Six months ended |
| Exceptions (Net of Income Taxes) |
December 31 |
December 31 |
| ($ million) |
2009 |
2008 |
2009 |
2008 |
| Gain on sale of facilities |
- |
- |
|
- |
0.2 |
|
| Asset impairment loss |
- |
(0.9 |
) |
- |
(0.9 |
) |
| Restructuring charges |
- |
(1.5 |
) |
- |
(1.5 |
) |
| Total Exceptions |
- |
(2.3 |
) |
- |
(2.1 |
) |
Consolidated Second Quarter Results
Revenue of $150.0 million in the second quarter of fiscal 2010 was lower by 8.3% from the same period last year. A comparison of revenue is not necessarily indicative of the strength of Ridley's business because revenue can be influenced by fluctuating commodity prices. The revenue decline in the second quarter of 2010 was due to lower volumes and raw material prices. Total sales volumes, as measured in tons of feed products sold, were 4.8% lower than the prior year. The decline in volume occurred in the Ridley Feed Operations (RFO) segment, particularly in Canadian feed operations where poor producer profitability has led to reduced animal numbers.
Consolidated gross profit in the second quarter of fiscal 2010 was $23.5 million compared to $22.1 million in the same period of fiscal 2009. Gross profits were higher mainly in the U.S. feed operations of RFO, which benefited from more stable raw material prices and a favourable product mix, and in Ridley Nutrition Solutions (RNS), which generated improved volumes.
Operating expenses, which include selling, general and administrative expenses as well as amortization of property, plant and equipment, were $15.5 million in the second quarter of fiscal 2010 compared to $20.4 million last year. In the second quarter last year the Company undertook an initiative to reduce overhead costs and recorded $2.1 million in restructuring expenses. Operating expenses last year also included an asset impairment loss of $1.4 million from the closure of a facility in North Carolina. The efficiency initiatives last year accounted for approximately $1 million in lower overhead costs in the second quarter this year.
EBITA is comprised of operating income before amortization and unusual items which, in the prior year, included a gain on the sale of a facility, an asset impairment loss and restructuring expenses. There were no unusual items of material significance in the second quarter of 2010. As a result of the improvement in operating income, EBITA in the second quarter of fiscal 2010 increased to $10.2 million from $7.3 million in the prior year.
Net earnings after taxes for the second quarter of fiscal 2010 were $5.0 million (earnings per share of $0.37) compared with net earnings after taxes of $0.7 million (earnings per share of $0.05) in the same period of fiscal 2009.
Comprehensive income is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Other comprehensive income (OCI) is comprised entirely of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Ridley recorded comprehensive income in the second quarter of fiscal 2010 of $4.5 million, comprised of net income of $5.0 million, as reported above, less unrealized losses of $0.5 million on the translation to U.S. currency of financial statements of Canadian entities.
Consolidated Six Months Results
For the six months ended December 31, 2009, revenues of $285.7 million were 14.2% lower than the same period in the previous year. Lower raw material prices and a 6.4% decrease in volume accounted for most of the decline in revenue. Softer demand for feed products is reflective of the continuing economic difficulties of livestock and poultry producers and declines in the size of cattle and swine herds and poultry flocks. Gross profit for the first half of the year was $40.9 million, a decline of 9.5% from the prior year. The decline in gross profits follows from decreased volume for the year to-date and lower unit margins this year compared to last year when the company held more favourable raw material inventory positions.
Operating expenses of $30.6 million in the first half of fiscal 2010 were $7.7 million lower than the previous year. Included in operating expenses last year were $2.1 million in restructuring expenses and an asset impairment loss of $1.4 million for closure of a redundant facility. Operating expenses last year also included $0.8 million in advisory services related to the strategic review process which concluded following the sale by Ridley Corporation Limited of its 69% interest in Ridley Inc. to Fairfax Financial Holdings Limited. Last year also included a $0.3 million gain on the sale of property at a closed facility.
EBITA in the first six months of fiscal 2010 was $14.6 million compared to $14.4 million for the same period last year. EBITA is comprised of operating income before amortization and unusual items, which last year included a gain on the sale of facilities ($0.3 million), restructuring charges ($2.1 million) and an asset impairment loss ($1.4 million). There were no unusual items of material significance in the first six months of fiscal 2010.
Net earnings after taxes for the six months ended December 31, 2009 were $6.1 million (earnings per share of $0.45) compared with net earnings after taxes of $3.6 million (earnings per share of $0.26) in the same period last year.
Reconciliation of Non-GAAP Financial Measures
The Company reports its financial results according to Canadian GAAP. However, included in this management discussion and analysis are certain non-GAAP financial measures and ratios which the Company's management believes provide useful information in measuring the financial performance and financial condition of the Company. These measures and ratios do not have a standardized meaning prescribed by Canadian GAAP and, therefore, may not be comparable to similar measures presented by other public companies, nor should they be construed as an alternative to other financial measures described by Canadian GAAP. Operating income is defined as net earnings before finance costs, interest income and provision for income taxes. Earnings before interest, taxes and amortization (EBITA) are defined as operating income before amortization, gain on sale of facilities, asset impairment loss and restructuring charges.
The following table is a reconciliation of EBITA to net earnings, the most closely comparable GAAP measure to EBITA:
| Earnings before interest, taxes and amortization |
Three months ended |
|
Six months ended |
|
| (EBITA) |
December 31 |
|
December 31 |
|
| ($ million) |
2009 |
|
2008 |
|
2009 |
|
2008 |
|
| Net earnings/(loss) |
5.0 |
|
0.7 |
|
6.1 |
|
3.6 |
|
| Provision for income taxes |
3.0 |
|
0.4 |
|
4.0 |
|
2.2 |
|
| Interest income |
(0.1 |
) |
(0.1 |
) |
(0.2 |
) |
(0.3 |
) |
| Finance costs |
0.2 |
|
0.8 |
|
0.3 |
|
1.5 |
|
| Operating income |
8.1 |
|
1.8 |
|
10.4 |
|
7.0 |
|
| Amortization of property, plant and equipment |
2.1 |
|
2.0 |
|
4.2 |
|
4.1 |
|
| Other amortization |
- |
|
- |
|
0.1 |
|
0.1 |
|
| Gain on sale of facilities |
- |
|
- |
|
- |
|
(0.3 |
) |
| Asset impairment loss |
- |
|
1.4 |
|
- |
|
1.4 |
|
| Restructuring charges |
- |
|
2.1 |
|
- |
|
2.1 |
|
| Earnings before interest, taxes and amortization (EBITA) |
10.2 |
|
7.3 |
|
14.6 |
|
14.4 |
|
| |
|
|
|
|
|
|
|
|
| SEGMENT RESULTS |
|
|
|
|
|
|
|
|
| The following is a summary of operating income (loss) of Ridley's reporting segments. |
|
|
|
| |
Three months ended |
|
Six months ended |
|
| Operating Income (Loss) (iii) |
December 31 |
|
December 31 |
|
| ($ million) |
2009 |
|
2008 |
|
2009 |
|
2008 |
|
| Ridley Feed Operations (RFO) |
$4.2 |
|
$(1.7 |
) |
$3.9 |
|
$(0.8 |
) |
| Ridley Feed Ingredients (RFI) |
0.9 |
|
2.0 |
|
2.4 |
|
4.9 |
|
| Ridley Nutrition Solutions (RNS) |
3.7 |
|
2.8 |
|
5.6 |
|
6.1 |
|
| Corporate |
(0.7 |
) |
(1.3 |
) |
(1.5 |
) |
(3.2 |
) |
| Consolidated Operating Income |
$8.1 |
|
$1.8 |
|
$10.4 |
|
$7.0 |
|
| (iii) Operating income is earnings before interest and taxes. |
|
|
|
|
|
|
|
|
Ridley Feed Operations (RFO)
The Ridley Feed Operations (RFO) segment consists of full-line feed manufacturing facilities operating in the United States and Canada, producing and marketing products for traditional livestock and poultry markets. RFO's overall volumes were lower by 5.6% in the second quarter of fiscal 2010 compared to last year. The downturn in volumes is reflective of reduced animal numbers, particularly in Canada, and a continuation of the Company's strategic shift in product mix towards lower inclusion, higher value added products. Colder weather conditions in the second quarter were more favourable to RFO's U.S. feed operations which market a higher proportion of its volume to the beef sector. Volume in Canadian feed operations declined by 12.5% for the quarter, while volume in U.S. feed operations declined by 1.7% from last year. For the six months year to-date, volume in Canadian feed operations was lower by 9.9% compared to last year, while volume in U.S. feed operations was lower by 5.0%.
Lower commodity prices this year over last year translated into lower revenue for RFO as feed prices are generally set at a fixed margin above raw material costs. Revenue was 10.2% lower in the second quarter of 2010 compared to last year. About two-thirds of the decline in revenue was due to reduced unit prices while the remainder was due to lower volumes.
RFO gross profits in the second quarter this year were 12.2% higher than the same period last year due to a 20.3% increase in unit margins partly offset by a 5.6% decline in sales volumes. For the six months of fiscal 2010, RFO gross profits were lower by 4.1%, largely due to lower unit margins in the first quarter.
RFO operating expenses in the second quarter were lower by $4.3 million as a result of unusual expenses last year including $1.9 million related to restructuring charges and $1.4 million for closure of a facility. Lower operating expenses this year also the result of efficiency initiatives undertaken last year.
Ridley Feed Ingredients (RFI)
The Ridley Feed Ingredients (RFI) segment consists of feed-grade vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients produced and distributed through a specialized facility in Illinois. Revenue in the second quarter of fiscal 2010 declined by 10.2% from the same period last year, mainly the result of the softening of raw material prices that were abnormally high last year and reduced demand for feed ingredients following from lower animal numbers. The absence of gains from inventory positions this year reduced unit margins, resulting in a 29.8% decrease in gross profit in the second quarter compared to last year. Gross profits for the first six months of fiscal 2010 were 33.8% lower than the same period last year.
Ridley Nutrition Solutions (RNS)
Ridley Nutrition Solutions (RNS) includes Ridley's feed supplement block and equine nutrition businesses. RNS volumes have been impacted negatively by the lower trending cattle population of the last several years. However, colder weather conditions in the second quarter of fiscal 2010 were favourable to sales of feed supplement blocks resulting in an increase in RNS volumes of 8.7% over last year. For the six months of fiscal 2010, volumes were 1.6% lower than last year as a result of reduced volume in the first quarter of this year.
Gross profits in the second quarter this year were 9.0% higher than last year due to improved volume and slightly more favourable unit margins as the RNS product mix improved towards higher value-added products. Gross profits for the year to-date lag behind last year due to lower volume and reduced unit margins in the first quarter, which followed from less favourable inventory positions.
Corporate
Corporate expenses include certain corporate management, board of directors' and other public company expenses, as well as legal expenses related to the BSE class action lawsuits. Corporate expenses in the second quarter this year were $0.6 million lower than last year, mainly the result of unusual expenditures last year related to the strategic review process and restructuring initiatives. For similar reasons, corporate expenses for the six months to-date this year were lower by $1.7 million compared to last year.
Liquidity/Capital Resources/Cash Flow
Ridley's working capital and debt to equity positions are summarized below:
| |
|
December |
September |
June |
March |
December |
| |
|
31 |
30 |
30 |
31 |
31 |
| Balances ($000) as of: |
2009 |
2009 |
2009 |
2009 |
2008 |
| Working capital (i) |
$47,816 |
|
$47,022 |
|
$45,546 |
|
$53,163 |
|
$48,969 |
|
| Net debt (ii) |
11,429 |
|
11,912 |
|
8,652 |
|
16,247 |
|
18,020 |
|
| Equity |
153,061 |
|
151,478 |
|
149,013 |
|
155,461 |
|
152,788 |
|
| Net debt to equity ratio |
7.5 |
% |
7.9 |
% |
5.8 |
% |
10.5 |
% |
11.8 |
% |
- Working capital is defined as current assets less current liabilities, excluding cash and short term deposits.
- Net debt is defined as bank obligations and capital leases, less cash and short term deposits.
Net debt of $11.4 million as at December 31, 2009 was comprised of long term debt of $11.2 million and a $1.9 million balance in revolving credit, less $1.6 million of cash and short term deposits. For the six months year-to-date the Company funded all capital expenditures from operating cash flows. The $2.8 million increase in net debt from the start of the current fiscal year reflects the expenditure of $3.7 million on the repurchase of the Company's shares for cancellation.
The following is a summary of cash generated or utilized by business operations, net of capital expenditures on plant and equipment, excluding business acquisitions.
| |
|
Three months ended |
Six months ended |
| Summary of Changes in Cash Available |
December 31 |
December 31 |
| ($ million) |
2009 |
2008 |
2009 |
2008 |
| Cash flow from operating activities |
7.7 |
|
3.3 |
|
10.4 |
|
7.6 |
|
| Net decrease (increase) in non-cash working capital balances |
(0.5 |
) |
6.0 |
|
(5.0 |
) |
(9.4 |
) |
| Decrease in loans receivable, net |
- |
|
- |
|
0.1 |
|
- |
|
| Proceeds on disposal of property, plant and equipment |
0.1 |
|
0.1 |
|
0.4 |
|
0.5 |
|
| Capital expenditures, excluding business acquisitions |
(2.9 |
) |
(2.1 |
) |
(5.4 |
) |
(4.6 |
) |
| Business acquisitions |
- |
|
- |
|
- |
|
(0.1 |
) |
| Increase (decrease) in cash available |
4.4 |
|
7.2 |
|
0.4 |
|
(6.1 |
) |
For the second quarter of fiscal 2010, cash flows from operations net of capital expenditures were $4.4 million compared to $7.2 million in the same three-month period last year. Cash flows were significantly increased last year by falling raw material prices which reduced inventory and accounts receivable balances.
Capital Expenditures
Expenditures on plant and equipment in the second quarter of fiscal 2010 were $2.9 million compared to $2.1 million in the same period a year ago. Major capital projects in the quarter included $1.1 million for expansion of the Worthington, MN and Mendota, IL facilities. For the six months to-date, $2.2 million has been invested in the Worthington and Mendota capital projects. The balance of capital expenditures ($1.8 million in the second quarter and $3.2 million for the year-to-date) was made on a variety of smaller projects for the maintenance of equipment and facilities.
Seasonality and Commodity Variability
The Company experiences seasonal variations in revenue. Historically, revenue is strongest in the second and third fiscal quarters when colder weather from October to March increases demand for beef feed. Other product lines are only marginally affected by seasonal conditions.
Commodity-based agricultural raw materials constitute a significant component of the Company's complete feed production. Fluctuating commodity prices can influence revenues and associated cost of sales as selling prices and product costs move in relation to changes in commodity prices.
Selected Quarterly Financial Information
| (US $ millions except per share data) |
Fiscal |
First |
Second |
Third |
Fourth |
| |
Year |
Quarter |
Quarter |
Quarter |
Quarter |
| Revenue |
2010 |
135.7 |
150.0 |
|
|
|
|
| |
2009 |
169.3 |
163.6 |
|
140.7 |
129.8 |
|
| |
2008 |
139.8 |
167.0 |
|
167.3 |
159.4 |
|
| Net earnings (loss) (before unusual items (i) |
2010 |
1.1 |
5.0 |
|
|
|
|
| net of income taxes). |
2009 |
2.7 |
3.0 |
|
3.5 |
(0.2 |
) |
| |
2008 |
2.0 |
4.5 |
|
5.2 |
0.9 |
|
| Net earnings (loss) |
2010 |
1.1 |
5.0 |
|
|
|
|
| |
2009 |
2.9 |
0.7 |
|
3.5 |
(8.4 |
) |
| |
2008 |
2.6 |
(2.8 |
) |
5.0 |
1.2 |
|
| Net earnings (loss) per share (EPS) |
2010 |
0.08 |
0.37 |
|
|
|
|
| |
2009 |
0.21 |
0.05 |
|
0.25 |
(0.60 |
) |
| |
2008 |
0.19 |
(0.21 |
) |
0.37 |
0.08 |
|
| (i) Unusual items include: asset impairment loss, restructuring charges, and gain on sale of facilities. |
Outstanding Share Data
Ridley's share capital consists of an unlimited number of common shares, with no par value. On December 11, 2009 the Company received approval from the Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid for the Company's shares through the facilities of the TSX. The share repurchase program permits the Company to purchase for cancellation up to 663,169 of its common shares over the twelve month period ending December 14, 2010. This normal course issuer bid follows a previous share repurchase program which terminated on December 14, 2009. Under the previous share repurchase program, the Company had repurchased for cancellation 595,922 shares at an average price of C$7.48 per share, excluding commissions. As at December 31, 2009, the Company had made no share repurchases under the new normal course issuer bid. The number of shares outstanding as at December 31, 2009 and as at February 9, 2010 was 13,263,378.
Internal Control Over Financial Reporting
The Chief Executive Officer and Chief Financial Officer have signed form 52-109F2 – Certification of Interim Filings and filed it with the appropriate securities regulators in Canada in compliance with Multilateral Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.
International Financial Reporting Standards
The Canadian Accounting Standards Board (AcSB) requires all public companies to adopt International Financial Reporting Standards (IFRS) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. Companies will be required to provide IFRS comparative information for the previous fiscal period. The impact of the adoption of IFRS on the consolidated financial statements of the Company may be significant and, as such, the Company has begun developing its convergence plan to transition its financial statement reporting, presentation and disclosure for IFRS to meet its first quarter fiscal 2012 deadline. The Company continues to evaluate the potential impact of IFRS on its consolidated financial statements. The process will be ongoing as new standards and recommendations are issued by the International Accounting Standards Board and AcSB.
BSE Class Action Lawsuits
In April 2005, representative plaintiffs filed proposed class actions in Alberta, Saskatchewan, Ontario and Quebec against the Government of Canada and Ridley Inc. to include all Canadian cattle farmers who allegedly suffered damage as a result of international bans on trade in Canadian beef and cattle following the 2003 diagnosis of Bovine Spongiform Encephalopathy (BSE) in a cow in Alberta. A settlement agreement between Ridley and the representative plaintiffs was finalized in January 2009 when Ridley made payment of C$6.0 million into a plaintiffs' settlement trust fund for the benefit of the plaintiffs in continuation of their litigation against the Government of Canada. In agreeing to the settlement, Ridley made no admission of liability or wrongdoing in the matter. The settlement effectively capped Ridley's exposure to the claims made by the plaintiffs to that amount.
Following the settlement agreement with plaintiffs the Ontario Superior Court granted Ridley's motion for dismissal of the Ontario action as against Ridley on July 28, 2009. The Quebec Superior Court dismissed the Quebec action as against Ridley on November 13, 2009. Ridley will seek to obtain similar court orders in Alberta and Saskatchewan where the plaintiffs commenced identical actions. If the remaining jurisdictions grant dismissal motions, Ridley will cease to be a party to the continuing class action lawsuits.
Forward-Looking Information
This report contains "forward-looking" information. The forward-looking information includes statements concerning Ridley's outlook for the future, as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward- looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of the MD&A included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.
OUTLOOK
The external drivers of Ridley's commercial feed business are strongly influenced by the economic dynamics of the North American livestock and poultry production industry. Demand for commercial animal feed in 2010 will be influenced by any improvement in the profit margins of livestock and poultry producers. Longer term commercial feed demand will depend on the eventual reversal of the reduction in animal numbers across most segments in the U.S. and Canada.
The outlook is encouraging for improved profitability amongst most sectors of livestock and poultry production within the next six to twelve months. However, in the near term, many sectors continue to operate below breakeven levels, which negatively affects producer demand for feed supplementation.
Management continues to focus on the needs of Ridley's customers, making customer satisfaction a top priority while helping producers find profitable feeding solutions in a challenging economic environment. Maintaining a balanced presence amongst each of the sectors of livestock and poultry production remains important for diversifying Ridley's earnings across multiple geographies and product categories.
Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg, Manitoba, is one of North America's leading commercial animal nutrition companies. Ridley employs more than 900 people in the United States and Canada in the manufacture and distribution of a full range of animal nutrition products under highly regarded trade names.
Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL).
Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at www.sedar.com. Visit our website at www.ridleyinc.com.
| RIDLEY Inc. |
|
|
|
| Consolidated Balance Sheets |
|
|
|
| (Unaudited) |
|
|
|
| (Expressed in thousands of U.S. dollars) |
December 31 |
June 30 |
December 31 |
| |
2009 |
2009 |
2008 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| |
Cash and short-term deposits |
1,594 |
1,954 |
6,087 |
| |
Accounts receivable |
36,026 |
30,697 |
39,295 |
| |
Inventories (Note 8) |
50,708 |
48,153 |
58,475 |
| |
Income taxes recoverable |
58 |
1,867 |
1,516 |
| |
Prepaids and other current assets |
2,105 |
721 |
2,206 |
| |
Current portion of loans receivable |
1,069 |
1,013 |
1,168 |
| |
Assets held-for-sale (Note 12) |
- |
245 |
- |
| |
Future income tax asset |
1,602 |
1,545 |
1,439 |
| Total current assets |
93,162 |
86,195 |
110,186 |
| |
| Non-current assets |
|
|
|
| |
Loans receivable |
472 |
603 |
952 |
| |
Assets held-for-sale (Note 12) |
598 |
598 |
867 |
| |
Property, plant and equipment |
91,439 |
88,604 |
88,812 |
| |
Future income tax asset |
4,256 |
3,425 |
- |
| |
Other assets |
3,980 |
4,431 |
2,604 |
| |
Other intangibles |
4,642 |
4,379 |
4,466 |
| |
Goodwill |
37,982 |
37,982 |
48,477 |
| Total non-current assets |
143,369 |
140,022 |
146,178 |
| |
| TOTAL ASSETS |
236,531 |
226,217 |
256,364 |
| |
| LIABILITIES and SHAREHOLDERS' EQUITY |
|
|
|
| Current liabilities |
|
|
|
| |
Outstanding cheques in excess of bank balances |
3,920 |
2,038 |
408 |
| |
Short-term debt |
1,871 |
364 |
1,767 |
| |
Accounts payable and accrued liabilities |
34,451 |
34,525 |
43,588 |
| |
Advances from customers |
3,366 |
1,716 |
4,397 |
| |
Claim settlement provision (Note 14) |
- |
- |
4,902 |
| |
Income taxes payable |
91 |
- |
- |
| |
Current portion of long-term debt |
53 |
52 |
68 |
| Total current liabilities |
43,752 |
38,695 |
55,130 |
| |
| Long-term liabilities |
|
|
|
| |
Long-term debt |
11,099 |
10,190 |
22,272 |
| |
Future income tax liability |
24,672 |
24,427 |
21,836 |
| |
Other accrued liabilities |
3,947 |
3,892 |
4,338 |
| Total long-term liabilities |
39,718 |
38,509 |
48,446 |
| |
| Total liabilities |
83,470 |
77,204 |
103,576 |
| |
| Shareholders' equity |
|
|
|
| Share capital (Note 11) |
55,127 |
57,315 |
57,601 |
| Retained earnings |
86,706 |
81,285 |
86,199 |
| Accumulated other comprehensive income (Note 4) |
11,228 |
10,413 |
8,988 |
| |
97,934 |
91,698 |
95,187 |
| Total shareholders' equity |
153,061 |
149,013 |
152,788 |
| |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY |
236,531 |
226,217 |
256,364 |
| RIDLEY Inc. |
|
|
|
|
| Consolidated Statements of Earnings and Retained Earnings |
|
|
|
| (Unaudited) |
|
|
|
|
| (Expressed in thousands of U.S. dollars) |
Three Months Ended |
Six Months Ended |
| |
December 31 |
December 31 |
| |
2009 |
2008 |
2009 |
2008 |
| |
| Revenue |
149,969 |
|
163,562 |
|
285,676 |
|
332,866 |
|
| Cost of sales (Note 8) |
126,453 |
|
141,413 |
|
244,736 |
|
287,628 |
|
| Gross profit |
23,516 |
|
22,149 |
|
40,940 |
|
45,238 |
|
| |
|
| Operating (income) expenses |
|
|
|
|
|
|
|
|
| |
Selling, general and administrative |
13,095 |
|
16,755 |
|
25,806 |
|
32,481 |
|
| |
Amortization of property, plant and equipment |
2,093 |
|
2,047 |
|
4,185 |
|
4,116 |
|
| |
Gain on sale of facility (Note 12) |
- |
|
- |
|
- |
|
(316 |
) |
| |
Research and development |
228 |
|
140 |
|
498 |
|
486 |
|
| |
Other amortization |
44 |
|
44 |
|
87 |
|
87 |
|
| |
Asset impairment loss (Note 13) |
- |
|
1,407 |
|
- |
|
1,407 |
|
| Net operating expenses |
15,460 |
|
20,393 |
|
30,576 |
|
38,261 |
|
| |
|
| Operating income |
8,056 |
|
1,756 |
|
10,364 |
|
6,977 |
|
| |
|
| Finance costs |
(170 |
) |
(845 |
) |
(348 |
) |
(1,450 |
) |
| Interest income |
87 |
|
145 |
|
166 |
|
262 |
|
| Earnings before income taxes |
7,973 |
|
1,056 |
|
10,182 |
|
5,789 |
|
| |
|
| Provision for income taxes (Note 9) |
2,953 |
|
385 |
|
4,037 |
|
2,184 |
|
| Net earnings for the period |
5,020 |
|
671 |
|
6,145 |
|
3,605 |
|
| |
|
| Retained earnings, beginning of period |
82,410 |
|
85,528 |
|
81,285 |
|
82,594 |
|
| Net earnings for the period |
5,020 |
|
671 |
|
6,145 |
|
3,605 |
|
| Excess over stated value of shares |
|
|
|
|
|
|
|
|
| |
purchased for cancellation (Note 11) |
(724 |
) |
- |
|
(724 |
) |
- |
|
| Retained earnings, end of period |
86,706 |
|
86,199 |
|
86,706 |
|
86,199 |
|
| |
|
| Net earnings per share, basic and diluted |
0.37 |
|
0.05 |
|
0.45 |
|
0.26 |
|
| |
|
| Consolidated Statements of Comprehensive Income |
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
|
| (Expressed in thousands of U.S. dollars) |
Three Months Ended |
|
Six Months Ended |
|
| |
December 31 |
|
December 31 |
|
| |
2009 |
|
2008 |
|
2009 |
|
2008 |
|
| |
|
| Net earnings for the period |
5,020 |
|
671 |
|
6,145 |
|
3,605 |
|
| Unrealized gains (losses) on translation of financial |
|
|
|
|
|
|
|
|
| |
statements of related entities with foreign functional |
|
|
|
|
|
|
|
|
| |
currency to U.S. dollar reporting currency (Note 4) |
(525 |
) |
(3,298 |
) |
815 |
|
(4,317 |
) |
| Other comprehensive income (loss) for the period |
(525 |
) |
(3,298 |
) |
815 |
|
(4,317 |
) |
| Comprehensive income (loss) for the period |
4,495 |
|
(2,627 |
) |
6,960 |
|
(712 |
) |
| |
|
|
|
|
| RIDLEY Inc. |
|
|
|
|
| Consolidated Statements of Cash Flows |
|
|
|
|
| (Unaudited) |
|
|
|
|
| (Expressed in thousands of U.S. dollars) |
Three Months Ended |
Six Months Ended |
| |
December 31 |
December 31 |
| |
2009 |
2008 |
2009 |
2008 |
| |
| Cash flow from operating activities |
|
|
|
|
|
|
|
|
| |
Net earnings for the period |
5,020 |
|
671 |
|
6,145 |
|
3,605 |
|
| |
Add (deduct) items not affecting cash: |
|
|
|
|
|
|
|
|
| |
Amortization of property, plant and equipment |
2,093 |
|
2,047 |
|
4,185 |
|
4,116 |
|
| |
Future income taxes |
414 |
|
(1,037 |
) |
(214 |
) |
(1,468 |
) |
| |
Asset impairment loss (Note 13) |
- |
|
1,407 |
|
- |
|
1,407 |
|
| |
Loss on sale of property, plant and equipment |
75 |
|
47 |
|
114 |
|
49 |
|
| |
Gain on sale of facility (Note 12) |
- |
|
- |
|
- |
|
(316 |
) |
| |
Other amortization |
44 |
|
44 |
|
87 |
|
87 |
|
| |
Other items not affecting cash |
46 |
|
121 |
|
94 |
|
148 |
|
| |
7,692 |
|
3,300 |
|
10,411 |
|
7,628 |
|
| Net change in non-cash working capital balances related to operations: |
|
|
|
|
|
|
|
|
| |
Accounts receivable |
(329 |
) |
1,987 |
|
(4,160 |
) |
(6,538 |
) |
| |
Inventories |
(1,911 |
) |
14,520 |
|
(1,677 |
) |
8,920 |
|
| |
Prepaids and other current assets |
187 |
|
343 |
|
(1,343 |
) |
(361 |
) |
| |
Accounts payable and accrued liabilities |
(1,028 |
) |
(11,219 |
) |
(1,361 |
) |
(12,541 |
) |
| |
Advances from customers |
2,336 |
|
3,331 |
|
1,626 |
|
2,125 |
|
| |
Income taxes payable and recoverable |
287 |
|
(3,005 |
) |
1,883 |
|
(1,048 |
) |
| Net cash from (utilized for) operating activities |
7,234 |
|
9,257 |
|
5,379 |
|
(1,815 |
) |
| |
|
| Cash flow from investing activities |
|
|
|
|
|
|
|
|
| |
Proceeds on disposal of facilities, property, plant and equipment |
102 |
|
57 |
|
368 |
|
526 |
|
| |
Purchase of property, plant and equipment |
(2,931 |
) |
(2,095 |
) |
(5,098 |
) |
(4,632 |
) |
| |
Purchase of intangibles |
- |
|
- |
|
(350 |
) |
- |
|
| |
Decrease in loans receivable, net |
43 |
|
15 |
|
94 |
|
- |
|
| |
Business acquisitions (Note 10) |
- |
|
- |
|
- |
|
(137 |
) |
| Net cash utilized for investing activities |
(2,786 |
) |
(2,023 |
) |
(4,986 |
) |
(4,243 |
) |
| |
|
| Cash flow from financing activities |
|
|
|
|
|
|
|
|
| |
Repayment of short- and long-term debt |
(4,770 |
) |
(18,699 |
) |
(6,493 |
) |
(26,275 |
) |
| |
Proceeds from short- and long-term debt |
1,852 |
|
9,476 |
|
7,782 |
|
34,484 |
|
| |
Purchases of share capital for cancellation (Note 11) |
(3,745 |
) |
(3 |
) |
(3,745 |
) |
(3 |
) |
| Net cash from (utilized for) financing activities |
(6,663 |
) |
(9,226 |
) |
(2,456 |
) |
8,206 |
|
| |
|
| Effect of exchange rate changes on cash |
(36 |
) |
28 |
|
(179 |
) |
21 |
|
| |
|
| Increase (decrease) in cash and cash equivalents |
(2,251 |
) |
(1,964 |
) |
(2,242 |
) |
2,169 |
|
| Cash and cash equivalents - beginning of period |
(75 |
) |
7,643 |
|
(84 |
) |
3,510 |
|
| Cash and cash equivalents - end of period |
(2,326 |
) |
5,679 |
|
(2,326 |
) |
5,679 |
|
| |
|
| Cash and cash equivalents are comprised of: |
|
|
|
|
|
|
|
|
| |
Cash and short-term deposits |
1,594 |
|
6,087 |
|
1,594 |
|
6,087 |
|
| |
Outstanding cheques in excess of bank balances |
(3,920 |
) |
(408 |
) |
(3,920 |
) |
(408 |
) |
| |
(2,326 |
) |
5,679 |
|
(2,326 |
) |
5,679 |
|