Ridley Inc.
TSX : RCL

September 11, 2014 13:02 ET

Ridley Inc. Reports Financial Results for Fiscal 2014 Fourth Quarter

MANKATO, MINNESOTA--(Marketwired - Sept. 11, 2014) - Ridley Inc. (TSX:RCL) today reported its financial results for the three and twelve months ended June 30, 2014. All currency amounts are stated in U.S. dollars unless otherwise noted.

For the three months ended June 30, 2014, Ridley's earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") from continuing operations were $7.0 million compared to $5.2 million last year. Net income from continuing operations (net of income tax expense) for the fourth quarter of fiscal 2014 was $2.3 million ($0.19 per share) compared to $1.6 million ($0.12 per share) last year. For the twelve months of fiscal 2014, adjusted EBITDA from continuing operations increased by $3.3 million to $39.3 million. Net income from continuing operations for the full year of fiscal 2014 was $20.7 million ($1.62 per share) compared to $17.9 million ($1.44 per share) last year.

Ridley's results in the fourth quarter of fiscal 2014 reflect a continuation of a favourable economic environment for producers of meat, milk and egg products. Revenue in the fourth quarter increased 3.5% over last year, which was mainly the result of a 6.6% overall increase in tonnage volume partly offset by reduced average selling prices. Most of the volume increase in the quarter was in the dairy and swine sectors. Reduced average selling prices in the period also reflect generally lower raw material prices relative to the same period last year. For the twelve months of fiscal 2014, tonnage volume grew by 2.4% over last year.

Consolidated gross profit from continuing operations in the fourth quarter of fiscal 2014 was $19.2 million compared to $16.4 million in the same period last year. The increase of $2.8 million in gross profit in the fourth quarter was largely the result of increased volumes and higher average unit margins relative to last year that followed from the continuing shift in product mix to higher value-added products. For the twelve months of fiscal 2014, gross profit increased by $4.8 million.

Operating expenses were $14.0 million in continuing operations in the fourth quarter this year compared to $13.0 million last year. The increase of $1.0 million in the fourth quarter was mainly the result of increased employee incentives and benefits expense. For the twelve months of fiscal 2014 operating expenses increased by $1.7 million net of exceptions, which included a gain of $0.4 million on the sale of a closed facility and $0.2 million of restructuring expense net of the reversal of an asset impairment related to discontinuation of production at the Chambersburg, Pennsylvania facility.

Ridley's share of the earnings of Masterfeeds LP, a limited partnership formed in 2012 by the merger of Ridley's Canadian feed assets with those of Masterfeeds Inc., was $0.7 million for the fourth quarter of fiscal 2014. Included in the share of Masterfeeds income for the fourth quarter was $0.8 million in insurance proceeds related to a fire at the Humboldt, Saskatchewan facility. For the twelve months of fiscal 2014, Ridley's share of Masterfeeds income was $1.4 million.

A special dividend of C$2.00 per common share ($23.6 million in total) was paid in the fourth quarter of fiscal 2014. The dividend was funded using available cash generated from operating activities and borrowing on Ridley's credit facility. Debt increased to $18.3 million as at June 30, 2014 from $12.0 million as at the same time last year.

Included in income tax expense were withholding taxes of $1.3 million incurred on the cash distributions made by Ridley's U.S. subsidiary to its Canadian parent entity mainly for the funding of the special dividend paid to shareholders in the fourth quarter.

Summary of Results of Operations Three Months Ended
June 30
Twelve Months Ended
June 30
($000s) 2014 2013 2014 2013
Continuing Operations (i)
Revenue 134,654 130,053 568,691 574,750
Gross profit 19,214 16,394 84,299 79,511
Operating income 5,243 3,444 32,338 29,245
Net income before exceptions 2,287 1,561 20,516 17,924
Exceptions, net of income tax (ii) 56 - 153 -
Net income from continuing operations 2,343 1,561 20,669 17,924
Net income per share, from continuing operations $0.19 $0.12 $1.62 $1.40
Adjusted EBITDA (iii) 6,958 5,206 39,338 36,063
Net income from discontinued operations - 86 - 579
Net income for the period 2,343 1,647 20,669 18,503
Net income per share, basic and diluted $0.19 $0.12 $1.62 $1.44
  1. Continuing Operations excludes the results of Ridley's feed manufacturing operations in Canada previously reported as the Canadian Feed Operations (CFO) segment and now comprising discontinued operations.
  2. Exceptions - In the preceding summary data, net income of continuing operations was reported before exceptions. Exceptions in the twelve months of fiscal 2014 were comprised of the gain on the sale of a previously closed facility in Castleton, Indiana, and the asset impairment reversal and restructuring accrued for closure of the Chambersburg, Pennsylvania facility. There were no exceptions in fiscal 2013.
  3. Adjusted EBITDA - Operating income before depreciation, amortization and exceptions. "EBITDA" does not have a standardized meaning prescribed by 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.

Implementation of amendments to the international accounting standard for employee benefits ("IAS 19"), significantly changed the recognition and measurement of defined benefit pension and post-retirement expense in Ridley's financial statements and required restatement of the fiscal 2013 comparative amounts for net income, retained earnings, and accumulated other comprehensive income (loss). For the twelve months ended June 30, 2013, net income was reduced by $0.7 million as a result of the restatement.

Ridley's audited consolidated financial statements and MD&A for the year ended June 30, 2014 will be contained in Ridley's 2014 annual report, which will be filed with SEDAR on September 26, 2014 and mailed to shareholders on October 2, 2014. Both documents will also be available on the Company's website at www.ridleyinc.com or at www.sedar.com.

Outlook

Ridley's commercial animal nutrition business is heavily influenced by the structural and economic dynamics of the livestock and poultry production industry in North America, which comprises the largest part of the Company's customer base. Each of the major market segments of the industry - beef cattle, hogs, poultry and dairy - generated profitable returns for most producers throughout Ridley's 2014 fiscal year. Farm gate prices for meat, milk, and egg products generally increased throughout this period, while the costs of purchased animal feed and ingredients trended lower.

Severe drought in 2013 contributed to higher commodity prices and increased costs to producers from replacing normal forage sources with commercial feed supplements. The reduced quality and supply of forage during the drought and rising raw material prices were a positive factor for Ridley's volumes and unit margins in that year. In 2014, forage conditions were markedly improved and grain prices were lower following a successful crop year. However, improved economic conditions for producers in all market segments and a hard winter season helped to sustain a strong level of demand for feed products in Ridley's fiscal 2014.

Current conditions for livestock and poultry producers remain positive. Cattle prices are at record highs due to foreign demand and the reduced size of the herd population in the U.S. While drought persists in the cattle growing regions of the Western and Southwestern U.S., pastures in much of Ridley's trading area in the Midwest are in generally good or improving condition, which will be a positive factor for the rebuilding of herd populations. Currently high dairy prices are encouraging to increased production of milk, and expectations for another record U.S. corn crop this year will be beneficial to producers' cost of production in all market segments.

Under normal conditions, lower trending commodity prices tend to be a negative factor for Ridley's unit margins. Market prices for feed ingredients, which generally move in tandem with commodities, directly impact the value of Ridley's raw materials inventories and the margin between ingredient cost and market driven prices realized on the sale of finished feed products. Consequently, the potential for volatility in feed ingredient prices and the abundance of livestock forage in much of the Midwest will be amongst the more significant drivers of Ridley's results in fiscal 2015.

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.

Ridley Inc., headquartered in Mankato, Minnesota, is one of North America's leading commercial animal nutrition companies. Ridley employs approximately 700 people in the manufacture, sales and marketing 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 Ridley's Annual Information Form (AIF), is available at www.sedar.com.

Contact Information

  • RIDLEY Inc.
    Steve VanRoekel
    President and CEO
    (507) 388-9400

    RIDLEY Inc.
    Gordon Hildebrand
    Chief Financial Officer
    (507) 388-9577