Quarter Ended | |||
2020 | 2019 | ||
(thousands of US dollars, except per share amounts) | |||
Revenue | 213,596 | 224,035 | |
Net income | 23,546 | 29,188 | |
Income tax expense | 8,605 | 10,535 | |
Net finance income | (1,030) | (1,137) | |
Depreciation and amortization | 10,835 | 10,158 | |
EBITDA (1) | 41,956 | 48,744 | |
Net income attributable to equity holders of the Company | 23,155 | 28,429 | |
Net income attributable to non-controlling interests | 391 | 759 | |
Net income | 23,546 | 29,188 | |
Basic and diluted earnings per share (cents) | 36 | 44 |
1 EBITDA is not a recognized measure under International Financial Reporting Standards (IFRS). Management believes that in addition to net income, this measure provides useful supplemental information to investors including an indication of cash available for distribution prior to debt service, capital expenditures, payment of lease liabilities and income taxes. Investors should be cautioned, however, that this measure should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company's performance. The Company's method of calculating this measure may differ from other companies and, accordingly, the results may not be comparable. |
(presented in US dollars)
Forward-looking statements: Certain statements made in the following report contain forward-looking statements including, but not limited to, statements concerning possible or assumed future results of operations of the Company. Forward-looking statements represent the Company's intentions, plans, expectations and beliefs, and are not guarantees of future performance. Such forward-looking statements represent
Financial Performance
Net income attributable to equity holders of the Company for the first quarter of 2020 of
Operating Segments and Product Groups
The Company provides three distinct types of packaging technologies: a) flexible packaging, b) rigid packaging and flexible lidding and c) packaging machinery. Each is deemed to be a separate operating segment.
The flexible packaging segment includes the modified atmosphere packaging, specialty films and biaxially oriented nylon product groups. Modified atmosphere packaging extends the shelf life of perishable foods, while at the same time maintains or improves the quality of the product. The packaging is used for a wide range of markets and applications, including fresh and processed meats, poultry, cheese, medical device packaging, high performance pouch applications and high-barrier films for converting applications. Specialty films include a full line of barrier and non-barrier films which are ideal for converting applications such as printing, laminating and bag making, including shrink bags. Biaxially oriented nylon film is stretched by length and width to add stability for further conversion using printing, metalizing or laminating processes and is ideal for food packaging applications such as cheese, fluid and viscous liquids, and industrial applications such as book covers and balloons.
The rigid packaging and flexible lidding segment includes the rigid containers, lidding and specialized printed packaging product groups. Rigid containers include portion control and single-serve containers, as well as plastic sheet, custom and retort trays, which are used for applications such as food, pet food, beverage, dairy, industrial and healthcare. Lidding products are available in die-cut, daisy chain and rollstock formats and are used for applications such as food, dairy, beverage, industrial and healthcare. Specialized printed packaging provides packaging solutions to the pharmaceutical, healthcare, nutraceutical, cosmetic and personal care markets.
Packaging machinery includes a full line of horizontal fill/seal machines for preformed containers and vertical form/fill/seal pouch machines for pumpable liquid and semi-liquid products and certain dry products.
Revenue
Revenue in the first quarter of 2020 of
Gross Profit Margins
Gross profit margins in the current quarter of 30.0 percent dropped by 0.9 percentage points from the 2019 first quarter result of 30.9 percent. Lower sales volumes led to heightened manufacturing costs per unit of production due to lower equipment utilization, generating a reduction in gross profit margins. This was partially mitigated by raw material costs declining to a greater extent than the related selling price adjustments. This expansion in margins resulted from the timing of selling price pass-through adjustments to customers on formal price indexing programs.
The raw material purchase price index dropped by 2.0 percent compared to the fourth quarter of 2019. In the past 12 months, the decrease in the index was more pronounced at 8.9 percent. During the first quarter, polypropylene resin prices fell by 13 percent while all other major raw materials were relatively unchanged.
Expenses and Other
In the first quarter of 2020, operating expenses, exclusive of foreign exchange and the acquisition of
Capital Resources, Cash Flow and Liquidity
The Company's cash and cash equivalents balance ended the first quarter at
Summary of Quarterly Results
Thousands of US dollars, except per share amounts (US cents) | |||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | ||||||||
2020 | 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||
Revenue | 213,596 | 217,456 | 212,734 | 219,618 | 224,035 | 222,138 | 220,647 | 225,191 | |||||||
Net income attributable to equity holders | |||||||||||||||
of the Company | 23,155 | 26,679 | 28,578 | 31,086 | 28,429 | 26,683 | 27,835 | 28,042 | |||||||
EPS | 36 | 41 | 44 | 48 | 44 | 41 | 43 | 43 |
The Company initially applied IFRS 16 "Leases" at
Looking Forward
Commencing in the middle of March, customer order volumes have changed in earnest reflecting the pronounced shift in consumer behavior with elevated buying at the retail level due to pantry loading and increased at-home food consumption. However, the demand for products in the restaurant and food service industry has deteriorated considerably. The flexible packaging segment has experienced a sizeable increase in orders within the protein and cheese markets. Several of our customers' protein plants have been shut down, for up to two weeks, due to COVID-19 cases within their operations which may negatively affect their future order levels. This segment has had a notable softening in order activity in the food service and non-food retail markets. The lidding product group has had a moderate uptick in volumes within the specialty beverage, food rollstock and case ready meat categories with other die-cut lidding remaining steady. Rigid container products have realized moderate expansion in fresh meat trays along with newly awarded pet food retort tray business scaling-up in the second quarter. However, sizeable volume reductions have been evident in single-serve rigid containers for the food service sector. Unrelated to the effects of COVID-19, rigid containers had a substantial contraction in volumes as a result of the diminished supply position with the new recyclable specialty beverage polypropylene cup which is expected to continue into the future. The packaging machinery segment has a healthy machine order backlog which should keep it operating at capacity for the remainder of 2020. For the near term, plant operations are being closely monitored to ensure everything possible is being done to provide a safe work place for our dedicated employees and where possible, production will be distributed amongst
Capital spending was relatively light in the first quarter, due mainly to timing of supplier payments, and expenditures are forecasted to be in the range of
Interim Condensed Consolidated Financial Statements
First Quarter Ended:
These interim condensed consolidated financial statements have not been audited or reviewed by the Company's independent external auditors,
Condensed Consolidated Balance Sheets | |||
(thousands of US dollars) (unaudited) | |||
2020 | 2019 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | 417,385 | 397,159 | |
Trade and other receivables | 141,467 | 141,855 | |
Income taxes receivable | 6,009 | 1,253 | |
Inventories | 127,109 | 130,467 | |
Prepaid expenses | 4,859 | 2,715 | |
Derivative financial instruments | - | 527 | |
696,829 | 673,976 | ||
Non-current assets: | |||
Property, plant and equipment | 482,593 | 489,267 | |
Intangible assets | 36,937 | 37,326 | |
Employee benefit plan assets | 11,176 | 11,131 | |
Deferred tax assets | 667 | 688 | |
531,373 | 538,412 | ||
Total assets | 1,228,202 | 1,212,388 | |
Equity and Liabilities | |||
Current liabilities: | |||
Trade payables and other liabilities | 56,832 | 64,134 | |
Contract liabilities | 2,489 | 3,715 | |
Provisions | 149 | 149 | |
Income taxes payable | 283 | 3,529 | |
Derivative financial instruments | 1,697 | 8 | |
61,450 | 71,535 | ||
Non-current liabilities: | |||
Employee benefit plan liabilities | 11,878 | 11,411 | |
Deferred income | 13,883 | 14,237 | |
Provisions and other long-term liabilities | 4,590 | 4,839 | |
Deferred tax liabilities | 50,110 | 44,604 | |
80,461 | 75,091 | ||
Total liabilities | 141,911 | 146,626 | |
Equity: | |||
Share capital | 29,195 | 29,195 | |
Reserves | (1,243) | 380 | |
Retained earnings | 1,026,963 | 1,005,202 | |
Total equity attributable to equity holders of the Company | 1,054,915 | 1,034,777 | |
Non-controlling interests | 31,376 | 30,985 | |
Total equity | 1,086,291 | 1,065,762 | |
Total equity and liabilities | 1,228,202 | 1,212,388 |
Condensed Consolidated Statements of Income | |||
(thousands of US dollars, except per share amounts) (unaudited) | |||
Quarter Ended | |||
2020 | 2019 | ||
Revenue | 213,596 | 224,035 | |
Cost of sales | (149,427) | (154,905) | |
Gross profit | 64,169 | 69,130 | |
Sales, marketing and distribution expenses | (17,701) | (17,689) | |
General and administrative expenses | (8,093) | (8,634) | |
Research and technical expenses | (4,053) | (4,077) | |
Pre-production expenses | (178) | - | |
Other expenses | (3,023) | (144) | |
Income from operations | 31,121 | 38,586 | |
Finance income | 1,659 | 2,106 | |
Finance expense | (629) | (969) | |
Income before income taxes | 32,151 | 39,723 | |
Income tax expense | (8,605) | (10,535) | |
Net income for the period | 23,546 | 29,188 | |
Attributable to: | |||
Equity holders of the Company | 23,155 | 28,429 | |
Non-controlling interests | 391 | 759 | |
23,546 | 29,188 | ||
Basic and diluted earnings per share - cents | 36 | 44 | |
Condensed Consolidated Statements of Comprehensive Income | |||
(thousands of US dollars) (unaudited) | |||
Quarter Ended | |||
2020 | 2019 | ||
Net income for the period | 23,546 | 29,188 | |
Items that will not be reclassified to the statements of income: | |||
Cash flow hedge gains recognized | - | 459 | |
Cash flow hedge losses transferred to property, plant and equipment | - | 95 | |
Income tax effect | - | - | |
- | 554 | ||
Items that are or may be reclassified subsequently to the statements of income: | |||
Cash flow hedge (losses) gains recognized | (2,143) | 691 | |
Cash flow hedge (gains) losses transferred to the statements of income | (73) | 546 | |
Income tax effect | 593 | (331) | |
(1,623) | 906 | ||
Other comprehensive (loss) income for the period - net of income tax | (1,623) | 1,460 | |
Comprehensive income for the period | 21,923 | 30,648 | |
Attributable to: | |||
Equity holders of the Company | 21,532 | 29,889 | |
Non-controlling interests | 391 | 759 | |
21,923 | 30,648 |
Condensed Consolidated Statements of Changes in Equity | ||||||
(thousands of US dollars) (unaudited) | ||||||
Attributable to equity holders of the Company | ||||||
Non- | ||||||
Share | Retained | controlling | ||||
capital | Reserves | earnings | Total | interests | Total equity | |
Balance at | 29,195 | (2,264) | 893,279 | 920,210 | 27,693 | 947,903 |
Comprehensive income for the period | ||||||
Cash flow hedge gains, net of tax | - | 965 | - | 965 | - | 965 |
Cash flow hedge losses transferred to the statements | ||||||
of income, net of tax | - | 400 | - | 400 | - | 400 |
Cash flow hedge losses transferred to property, plant and | ||||||
equipment | - | 95 | - | 95 | - | 95 |
Other comprehensive income | - | 1,460 | - | 1,460 | - | 1,460 |
Net income for the period | - | - | 28,429 | 28,429 | 759 | 29,188 |
Comprehensive income for the period | - | 1,460 | 28,429 | 29,889 | 759 | 30,648 |
Dividends | - | - | (1,460) | (1,460) | - | (1,460) |
Balance at | 29,195 | (804) | 920,248 | 948,639 | 28,452 | 977,091 |
Balance at | 29,195 | 380 | 1,005,202 | 1,034,777 | 30,985 | 1,065,762 |
Comprehensive (loss) income for the period | ||||||
Cash flow hedge losses, net of tax | - | (1,570) | - | (1,570) | - | (1,570) |
Cash flow hedge gains transferred to the statements | ||||||
of income, net of tax | - | (53) | - | (53) | - | (53) |
Other comprehensive loss | - | (1,623) | - | (1,623) | - | (1,623) |
Net income for the period | - | - | 23,155 | 23,155 | 391 | 23,546 |
Comprehensive (loss) income for the period | - | (1,623) | 23,155 | 21,532 | 391 | 21,923 |
Dividends | - | - | (1,394) | (1,394) | - | (1,394) |
Balance at | 29,195 | (1,243) | 1,026,963 | 1,054,915 | 31,376 | 1,086,291 |
Condensed Consolidated Statements of Cash Flows | |||
(thousands of US dollars) (unaudited) | |||
Quarter Ended | |||
2020 | 2019 | ||
Cash provided by (used in): | |||
Operating activities: | |||
Net income for the period | 23,546 | 29,188 | |
Items not involving cash: | |||
Depreciation | 10,802 | 10,418 | |
Amortization - deferred income | (388) | (372) | |
Amortization - intangible assets | 421 | 112 | |
Employee defined benefit plan expenses | 915 | 856 | |
Net finance income | (1,030) | (1,137) | |
Income tax expense | 8,605 | 10,535 | |
Other | (341) | (739) | |
Cash flow from operating activities before the following | 42,530 | 48,861 | |
Change in working capital: | |||
Trade and other receivables | 388 | (1,810) | |
Inventories | 3,358 | 3,619 | |
Prepaid expenses | (2,144) | (1,213) | |
Trade payables and other liabilities | (7,151) | (1,324) | |
Contract liabilities | (1,226) | (1,958) | |
Employee defined benefit plan contributions | (1,299) | (1,984) | |
Income tax paid | (7,292) | (8,251) | |
Interest received | 1,549 | 2,132 | |
Interest paid | (477) | (889) | |
Net cash from operating activities | 28,236 | 37,183 | |
Investing activities: | |||
Acquisition of property, plant and equipment - net | (6,387) | (17,315) | |
Acquisition of intangible assets | (31) | (18) | |
(6,418) | (17,333) | ||
Financing activities: | |||
Payment of lease liabilities | (101) | (104) | |
Dividends paid | (1,491) | (1,429) | |
(1,592) | (1,533) | ||
Change in cash and cash equivalents | 20,226 | 18,317 | |
Cash and cash equivalents, beginning of period | 397,159 | 344,322 | |
Cash and cash equivalents, end of period | 417,385 | 362,639 |
SOURCE
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