Maple Leaf Foods Reports Third Quarter 2018 Financial Results

Canada NewsWire

MISSISSAUGA, ON, Oct. 25, 2018

TSX: MFI
www.mapleleaffoods.com

MISSISSAUGA, ON, Oct. 25, 2018 /CNW/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the third quarter, September 30, 2018.

Maple Leaf Foods Inc. (CNW Group/Maple Leaf Foods Inc.)

"It was a challenging period driven by temporary global trade instability, but our performance held up exceptionally well reflecting the strength of our balanced portfolio and commercial momentum in our business," said Michael H. McCain, President and CEO. "These abnormal markets have no impact on our core business strategies or our longer-term financial goals. We are focused on key levers of value creation over time, including our sustainability agenda, our brands, strategic acquisitions and cost reduction."

Financial Highlights

Third quarter sales decreased 3.7% to $874.8 million and Adjusted Earnings per Share(2)decreased 25.6% to $0.29 compared to the same quarter last year. Adjusted EBITDA Margin for the quarter was 9.3%, while Free Cash Flow(3) decreased to $45.1 million.

For the nine months ended September 30, 2018, sales decreased 1.7% and Adjusted Earnings per Share decreased 17.7%. Adjusted EBITDA Margin was 9.8% while Free Cash Flow was $64.8 million.

Measure(a)

Three months ended
September 30,




Nine months ended
September 30,



(Unaudited)

2018


2017


% Change


2018



2017


% Change

Sales(b)

874.8


908.4


(3.7)%


2,601.6



2,645.4

(1.7)%

Net Earnings

26.6


37.6


(29.3)%


89.4



105.0

(14.9)%

Basic Earnings per
Share

0.21


0.29


(27.6)%


0.71



0.81

(12.3)%

Adjusted EBITDA
Margin

9.3%


10.6%


(130)bps


9.8%



10.9%

(110)bps

Adjusted Operating
Earnings(4)

51.0


65.2


(21.7)%


161.6



199.2

(18.9)%

Adjusted Earnings
per Share

0.29


0.39


(25.6)%


0.93



1.13

(17.7)%

Free Cash Flow

45.1


154.3


(70.8)%


64.8



204.2

(68.3)%


(a) All financial measures in millions of dollars except Adjusted EBITDA Margin and Basic and Adjusted Earnings per Share.

(b)  2018 sales include the impact of the adoption of new accounting standard IFRS 15 - Revenue from Contracts with Customers ("IFRS 15"). Refer to note 2(b) of the unaudited condensed consolidated interim financial statements for further details on the impact of the adoption of new accounting standards.

Note:  Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of all non-IFRS financial measures.

 

Sales and Earnings

($ thousands)

(Unaudited)

Three months ended September 30,



Nine months ended September 30,

2018


2017



2018


2017

Total Sales


$

874,827



$

908,359




$

2,601,580



$

2,645,417

Adjusted
Operating
Earnings


$

51,021



$

65,152




$

161,626



$

199,188

Adjusted
EBITDA
Margin



9.3%




10.6%





9.8%




10.9%

 

Sales for the third quarter of 2018 decreased 3.7% to $874.8 million or a decrease of 1.6% after adjusting for IFRS15 and acquisitions. The Company benefited from growth in sustainable meat products, improved mix in branded prepared meats and a continued increase in plant protein. However, this positive performance was more than offset by lower fresh market values.

Sales for the first nine months decreased 1.7% to $2,601.6 million or a decrease of 0.1% after adjusting for IFRS15 and acquisitions. The drivers of the decrease are primarily attributed to the factors noted above.

Net earnings for the third quarter decreased to $26.6 million ($0.21 per basic share) compared to $37.6 million ($0.29 per basic share) in the third quarter of 2017. Continued growth in value-added pork and poultry and plant protein was more than offset by adverse underlying market conditions, including heightened volatility in hog prices, and strategic investments in food renovation to support long-term growth and market leadership in the Company's major brands. Third quarter results were also impacted by changes in the fair value of biological assets and derivative contracts, which are excluded in the calculation of Adjusted Operating Earnings below.

For the first nine months, net earnings were $89.4 million ($0.71 per basic share) compared to $105.0 million ($0.81 per basic share). The decrease in net earnings for year to date is consistent with the factors noted above.

Adjusted Operating Earnings decreased to $51.0 million from $65.2 million in the third quarter of 2017. The impact of lower hog prices and strategic investments in food renovation supporting major brand strategies were partially offset by lower input costs in prepared meats, expansion in value-added pork and poultry, plant protein and improved sales mix in branded prepared meats.

Adjusted Operating Earnings in the first nine months was $161.6 million compared to $199.2 million last year. Year to date results were also impacted by challenging market conditions in the pork complex and the other factors noted above.

Adjusted EBITDA Margin for the third quarter was 9.3% compared to 10.6% the third quarter of 2017. For the first nine months, Adjusted EBITDA Margin decreased to 9.8% from 10.9% consistent with the factors noted above.

Other Matters

On October 24, 2018, the Board of Directors approved a dividend of $0.13 per share payable December 28, 2018 to shareholders of record at the close of business on December 7, 2018. Unless indicated otherwise by the Company at or before the time the dividend is paid, this dividend will be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System". 

Subsequent Event

On October 1, 2018, the Company signed a definitive agreement to acquire 100% of the outstanding shares of VIAU Food Products Inc., a privately held company engaged in the production and distribution of Italian cooked, dry-cured and charcuterie meats. The anticipated purchase price is $215.0 million prior to transaction fees, debt settlement, and working capital adjustments. The consideration will consist of $30.0 million in Maple Leaf Food's shares and the balance in cash financed with debt, and is expected to close in late 2018, subject to regulatory review.

Conference Call

An investor presentation related to the Company's third quarter financial results is available at www.mapleleaffoods.com and can be found under Investor Information on the Investors page. A conference call will be held at 2:30 p.m. EDT on October 25, 2018, to review Maple Leaf Foods' third quarter financial results. To participate in the call, please dial 416-340-2216 or 1-800-273-9672. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 or 1-800-408-3053 (Passcode:9669183#).

A webcast presentation of the third quarter financial results will also be available at:
https://edge.media-server.com/m6/p/bfcve233

The Company's full unaudited condensed consolidated interim financial statements and related Management's Discussion and Analysis are available on the Company's website.

Reconciliation of Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Free Cash Flow and Net (Debt) Cash. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.  

Adjusted Operating Earnings 

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes adjusted for items that are not considered representative of ongoing operational activities of the business and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of net earnings as reported under IFRS in the consolidated financial statements of earnings to Adjusted Operating Earnings for the three and nine months ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating results, as they are representative of the ongoing operations of the Company.  

($ thousands)
(Unaudited)

Three months ended September 30,



Nine months ended September 30,



2018



2017




2018



2017

Net earnings


$

26,556



$

37,578




$

89,399



$

105,025

Income taxes



9,029




11,939





33,621




38,039

Earnings before income
taxes


$

35,585



$

49,517




$

123,020



$

143,064

Interest expense and
other financing costs



2,274




1,320





5,793




3,892

Other expense (income)



3,346




(12,764)





4,431




(8,928)

Restructuring and other
related costs



0




5,627





3,971




17,103

Earnings from
operations


$

41,205



$

43,700




$

137,215



$

155,131

Decrease in the fair value
of biological assets(5)



5,781




20,645





33,134




26,362

Unrealized loss (gain) on
derivative contracts(5)



4,035




807





(8,723)




17,695

Adjusted Operating
Earnings


$

51,021



$

65,152




$

161,626



$

199,188

 

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as basic earnings per share and is adjusted on the same basis as Adjusted Operating Earnings. The table below provides a reconciliation of basic earnings per share as reported under IFRS in the consolidated financial statements of earnings to Adjusted Earnings per Share for the three and nine months ended, as indicated below. Management believes this basis is the most appropriate on which to evaluate financial results as they are representative of the ongoing operations of the Company.

($ per share)
(Unaudited)

Three months ended September 30,



Nine months ended September 30,

2018



2017





2018




2017

Basic earnings per share


$

0.21



$

0.29




$

0.71



$

0.81

Restructuring and other related costs(6)




0.03




0.02



0.10

Items included in other(income)
expense not














considered representative of
ongoing operations(7)


0.02



(0.06)




0.05



(0.03)

Change in the fair value of biological
assets(8)


0.03



0.12




0.19



0.15

Unrealized loss (gain) on
derivative contracts(8)


0.02






(0.05)



0.10

Adjusted Earnings per Share (9)


$

0.29



$

0.39




$

0.93



$

1.13

 

Adjusted Earnings Before Interest, Income Taxes, Depreciation, and Amortization

Adjusted EBITDA is calculated as earnings before interest and income taxes plus depreciation and intangible asset amortization, adjusted for items that are not considered representative of ongoing operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. The following table provides a reconciliation of net earnings as reported under IFRS in the consolidated financial statements of earnings to Adjusted EBITDA for the three and nine months ended, as indicated below. Management believes Adjusted EBITDA is useful in assessing the performance of the Company's ongoing operations and its ability to generate cash flows to fund its cash requirements, including the Company's capital investment program.

($ thousands)
(Unaudited)

Three months ended September 30,


Nine months ended September 30,

2018



2017




2018



2017

Net earnings


$

26,556



$

37,578



$

89,399



$

105,025

Income taxes


9,029



11,939



33,621



38,039

Earnings before income taxes


$

35,585



$

49,517



$

123,020



$

143,064

Interest expense and other
financing costs


2,274



1,320



5,793



3,892

Items included in other expense
(income) not













considered representative of
ongoing operations(7)


3,002



(10,412)



7,294



(6,573)

Restructuring and other related
costs


0



5,627



3,971



17,103

Change in the fair value of
biological assets and













unrealized loss on
derivative contracts(8)


9,816



21,452



24,411



44,057

Depreciation and amortization


30,455



28,907



90,733



86,038

Adjusted EBITDA


$

81,132



$

96,411



$

255,222



$

287,581

 

Free Cash Flow

Free Cash Flow, a non-IFRS measure, is used by Management to evaluate cash flow after investing in the maintenance or expansion of the Company's asset base. It is defined as cash provided by (used in) operations, less additions to long-term assets. The following table calculates Free Cash Flow for the periods indicated below.

($ thousands)
(Unaudited)

Three months ended September 30,



Nine months ended September 30,

2018


2017




2018



2017

Cash provided by
operations


$

90,198



$

186,107




$

192,724



$

283,247

Additions to long-term
assets


(45,070)



(31,816)




(127,971)



(79,053)

Free Cash Flow


$

45,128



$

154,291




$

64,753



$

204,194

 

Net (Debt) Cash

The following table reconciles Net (Debt) Cash to amounts reported under IFRS in the Company's consolidated financial statements for the three months ended, as indicated below. The Company calculates Net (Debt) Cash as cash and cash equivalents, less long-term debt and bank indebtedness. Management believes this measure is useful in assessing the amount of financial leverage employed. 

($ thousands)
(Unaudited)

As at September 30,


2018



2017

Cash and cash equivalents


$

109,643



$

209,850

Current portion of long-term debt


839



794

Long-term debt


174,276



8,494

Total debt


$

175,115



$

9,288

Net (Debt) Cash


$

(65,472)



$

200,562


 

FORWARD-LOOKING STATEMENTS

This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates, as well as beliefs and assumptions made by Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, in addition to statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates, and intentions. Specific forward-looking information in this document includes, but is not limited to, statements with respect to: expectations regarding the use of derivatives, futures and options; the expected use of cash balances; source of funds for ongoing business requirements; capital investments and expectations regarding capital expenditures; acquisitions and potential acquisitions and the expectations regarding acquisitions; expectations regarding the implementation of environmental sustainability initiatives; expectations regarding the adoption of new accounting standards and the impact of such adoption on financial position; expectations regarding pension plan performance and future pension plan liabilities and contributions; expectations regarding levels of credit risk; and expectations regarding outcomes of legal actions. Words such as "expect", "anticipate", "intend", "may", "will", "plan", "believe", "seek", "estimate", and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict. 

In addition, these statements and expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., and Japanese economies; the rate of exchange of the Canadian dollar to the U.S. dollar, and the Japanese yen; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments; and the general assumption that none of the risks identified below or elsewhere in this document will materialize. All of these assumptions have been derived from information currently available to the Company, including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied, or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.   

Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or forecasted by forward looking information include, among other things:   

The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more detail under the heading "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2017, that is available on SEDAR at www.sedar.com. The reader should review such section in detail. Some of the forward-looking information may be considered to be financial outlooks for purposes of applicable securities legislation including, but not limited to, statements concerning future capital expenditures. These financial outlooks are presented to evaluate anticipated future uses of cash flows, and may not be appropriate for other purposes and readers should not assume they will be achieved. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by law. Additional information concerning the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

About Maple Leaf Foods Inc.

Maple Leaf Foods Inc. is a leading consumer protein company, making high quality, innovative products under national brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina®, SWIFT®, LightlifeTM and Field Roast Grain Meat Co.™. Maple Leaf employs approximately 11,500 people and does business in Canada, the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI).

Footnote Legend


1.

Adjusted EBITDA, a non-IFRS measure, is calculated as earnings before interest and income taxes plus depreciation and intangible asset amortization, adjusted for items that are not considered representative of ongoing operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by sales. Please refer to the section entitled Non-IFRS Financial Measures in the Company's 2018 third quarter Management's Discussion and Analysis.

2.

Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as basic earnings per share and is adjusted on the same basis as Adjusted Operating Earnings.  Please refer to the section entitled Non-IFRS Financial Measures in the Company's 2018 third quarter Management's Discussion and Analysis.

3.

Free Cash Flow, a non-IFRS measure, is used by Management to evaluate cash flow after investing in the maintenance or expansion of the Company's asset base. It is defined as cash provided by operations, less additions to long-term assets. Please refer to the section entitled Non-IFRS Financial Measures in the Company's 2018 third quarter Management's Discussion and Analysis.

4.

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes adjusted for items that are not considered representative of ongoing operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Non-IFRS Financial Measures in the Company's 2018 third quarter Management's Discussion and Analysis.

5.

Unrealized gains/losses on derivative contracts is reported within cost of sales in the Company's 2018 third quarter unaudited condensed consolidated interim financial statements. For biological assets information, please refer to Note 6 of the Company's 2018 third quarter unaudited condensed consolidated interim financial statements.

6.

Includes per share impact of restructuring and other related costs, net of tax.

7.

Includes acquisition related costs, interest income and gains/losses associated with investment properties, net of tax. 

8.

Includes per share impact of the change in unrealized losses on derivative contracts and the change in fair value of biological assets, net of tax.

9.

May not add due to rounding.

 

Consolidated Interim Balance Sheets

(In thousands of Canadian dollars)


As at September 30,
 2018


As at September 30,
 2017


As at December 31,
 2017



(Unaudited)


(Unaudited)(i)






ASSETS




Current assets




Cash and cash equivalents


$

109,643


$

209,850


$

203,425

Accounts receivable


150,232


131,394


123,968

Notes receivable


26,823


29,008


28,918

Inventories


306,590


279,129


273,365

Biological assets


87,935


86,083


111,735

Prepaid expenses and other assets


17,082


29,508


24,393



$

698,305


$

764,972


$

765,804

Property and equipment


1,152,900


1,087,115


1,116,309

Investment property


5,109


1,901


1,892

Employee benefits


39,658


15,609


9,856

Other long-term assets


8,212


5,749


6,125

Goodwill


666,620


516,857


517,387

Intangible assets


212,278


217,906


215,197

Total assets


$

2,783,082


$

2,610,109


$

2,632,570








LIABILITIES AND EQUITY







Current liabilities







Accounts payable and accruals


$

308,288


$

288,813


$

300,659

Provisions


3,917


14,539


9,335

Current portion of long-term debt


839


794


805

Income taxes payable


11,382


4,408


7,855

Other current liabilities


45,042


29,908


31,597



$

369,468


$

338,462


$

350,251

Long-term debt


174,276


8,494


8,443

Employee benefits


101,427


114,396


117,808

Provisions


8,937


11,337


11,273

Other long-term liabilities


14,771


12,882


12,689

Deferred tax liability


116,044


77,019


80,498

Total liabilities


$

784,923


$

562,590


$

580,962








Shareholders' equity







Share capital


$

820,588


$

841,020


$

835,154

Retained earnings


1,208,848


1,233,903


1,253,035

Accumulated other comprehensive loss


(4,891)


(6,443)


(9,620)

Treasury stock


(26,386)


(20,961)


(26,961)

Total shareholders' equity


$

1,998,159


$

2,047,519


$

2,051,608

Total liabilities and equity


$

2,783,082


$

2,610,109


$

2,632,570



(i)    

Restated, see Note 17(b) of the Company's 2018 third quarter unaudited condensed consolidated interim financial statements.


 

Consolidated Interim Statements of Net Earnings

(In thousands of Canadian dollars, except share amounts)


Three months ended September 30,


Nine months ended September 30,

(Unaudited)


2018


2017


2018


2017













Sales


$

874,827


$

908,359


$

2,601,580


$

2,645,417

Cost of goods sold


756,245


778,115



2,211,571


2,233,799

Gross margin


$

118,582


$

130,244


$

390,009


$

411,618

Selling, general and administrative expenses


77,377


86,544



252,794



256,487

Earnings before the following:


$

41,205


$

43,700


$

137,215


$

155,131

Restructuring and other related costs



(5,627)



(3,971)



(17,103)

Other (expense) income


(3,346)


12,764



(4,431)



8,928

Earnings before interest and income taxes


$

37,859


$

50,837


$

128,813


$

146,956

Interest expense and other financing costs


2,274


1,320



5,793



3,892

Earnings before income taxes


$

35,585


$

49,517


$

123,020


$

143,064

Income taxes


9,029


11,939



33,621



38,039

Net earnings


$

26,556


$

37,578


$

89,399


$

105,025











Earnings per share:










Basic earnings per share


$

0.21


$

0.29


$

0.71


$

0.81

Diluted earnings per share


$

0.21


$

0.29


$

0.70


$

0.79

Weighted average number of shares (millions)










Basic


124.6


128.1


125.6



129.2

Diluted


126.6


131.4


128.0



132.6

 

Consolidated Interim Statements of Other Comprehensive Income (Loss)

(In thousands of Canadian dollars)
(Unaudited)


Three months ended September 30,


Nine months ended September 30,


2018



2017


2018


2017














Net earnings


$

26,556


$

37,578


$

89,399


$

105,025

Other comprehensive income


















Actuarial gains that will not be reclassified to profit or loss









(Net of tax of $4.1 million and $13.4 million; 2017: $6.3 million and $0.1 million)


$

11,542


$

17,952


$

38,191


$

391

Items that are or may be reclassified subsequently to profit or loss:









Change in accumulated foreign currency translation adjustment









(Net of tax of $0.0 million and $0.0 million; 2017: $0.0 million and $0.0 million)


$

(6,330)


$

(7,727)


$

12,868


$

(14,912)

Change in foreign exchange gains on long-term debt designated as a net investment









(Net of tax of $0.1 million and $0.3 million; 2017: $0.0 million and $0.0 million)



604


$



(2,251)


$

Change in unrealized gains (losses) on cash flow hedges









(Net of tax of $0.2 million and $0.7 million; 2017: $0.2 million and $2.4 million)



479



(508)



(5,888)



6,850

Total items that are or may be reclassified subsequently to profit or loss


$

(5,247)


$

(8,235)


$

4,729


$

(8,062)

Total other comprehensive income (loss)


$

6,295


$

9,717


$

42,920


$

(7,671)

Comprehensive income


$

32,851


$

47,295


$

132,319


$

(97,354)

 

Consolidated Interim Statements of Changes in Total Equity





Accumulated other
comprehensive income
(loss)
(i)


(In thousands of Canadian dollars)
(Unaudited)

Share
capital

Retained
earnings

Contributed
surplus

Foreign
currency
translation
adjustment
 

Unrealized
gains and
losses on
cash flow
hedges

Treasury
stock

Total
equity

Balance as at December 31, 2017

$

835,154

$

1,253,035

$

$

(11,420)

$

1,800

$

(26,961)

$

2,051,608

Impact of new IFRS standards(iii)

(3,695)

$

(3,695)

Net earnings

89,399

89,399

Other comprehensive income (loss)(ii)

38,191

10,617

(5,888)

42,920

Dividends declared ($0.39 per share)

(49,023)

(49,023)

Share-based compensation expense

13,785

13,785

Deferred taxes on share-based compensation

(1,100)

(1,100)

Repurchase of shares

(30,406)

(101,495)

(12,685)

(144,586)

Exercise of stock options

15,840

15,840

Settlement of share-based compensation

(17,564)

10,575

(6,989)

Shares purchased by RSU trust

(10,000)

(10,000)

Balance as at September 30, 2018

$

820,588

$

1,208,848

$

$

(803)

$

(4,088)

$

(26,386)

$

1,998,159

























Accumulated other
comprehensive income
(loss)(i)



(In thousands of Canadian dollars)
(Unaudited)


Share
capital


Retained
earnings

Contributed
surplus

Foreign
currency
translation
adjustment

Unrealized
gains and
losses on
cash flow
hedges

Treasury
stock

Total
equity

Balance as at December 31, 2016

$

853,633

$

1,247,737

$

$

2,116

$

(497)

$

(14,966)

$

2,088,023

Net earnings

105,025

105,025

Other comprehensive income (loss)(ii)

391

(14,912)

6,850

(7,671)

Dividends declared ($0.33 per share)

(42,677)

(42,677)

Share-based compensation expense

16,508

16,508

Deferred taxes on share-based compensation

3,750



3,750

Repurchase of shares

(18,543)

(47,755)

(20,258)

(86,556)

Exercise of stock options

5,930

5,930

Settlement of share-based compensation

(28,818)

16,005

(12,813)

Shares purchased by RSU trust

(22,000)

(22,000)

Balance at September 30, 2017

$

841,020

$

1,233,903

$

$

(12,796)

$

6,353

$

(20,961)

$

2,047,519



(i)

Items that are or may be subsequently reclassified to profit or loss.

(ii)

Included in other comprehensive income (loss) is the change in actuarial gains and losses that will not be reclassified to profit or loss and has been reclassified to retained earnings.

(iii)

See Note 2 of the Company's 2018 third quarter unaudited condensed consolidated interim financial statements.


 

Consolidated Interim Statements of Cash Flows

(In thousands of Canadian dollars)


Three months ended September 30,


Nine months ended September 30,

(Unaudited)


2018


2017



2018



2017

CASH PROVIDED BY (USED IN):












Operating activities












Net earnings


$

26,556


$

37,578


$

89,399


$

105,025

Add (deduct) items not affecting cash:









Change in fair value of biological assets


5,781


20,645


33,134


26,362

Depreciation and amortization


30,467


28,916


90,764


86,066

Share-based compensation


4,547


4,666


13,785


16,508

Deferred income taxes


7,590


11,550


23,250


34,031

Income tax current


1,439


389


10,371


4,008

Interest expense and other financing costs


2,274


1,320


5,793


3,892

Loss (gain) on sale of long-term assets


806


(8,174)


4,638


(8,684)

Change in fair value of non-designated derivative financial instruments


3,818


1,088


(8,482)


14,905

Impairment of assets (net of reversals)



3,776



3,776

Change in net pension liability


1,915


5,458


5,520


897

Net income taxes paid


(2,154)


(2,523)


(6,424)


(8,888)

Interest paid


(1,695)


(955)


(4,334)


(2,605)

Change in provision for restructuring and other related costs


(2,356)


4,177


(6,643)


9,121

Change in derivatives margin


(1,702)


12,973


14,583


(1,151)

Other


(2,014)


(5,021)


(6,878)


(4,938)

Change in non-cash working capital


14,926


70,244


(65,752)


4,922

Cash provided by operating activities


$

90,198


$

186,107


$

192,724


$

283,247

Financing activities









Dividends paid


$

(16,179)


$

(14,147)


$

(49,023)


$

(42,677)

Net increase (decrease) in long-term debt


118,110


(666)


162,964


(944)

Exercise of stock options



418


15,840


5,930

Repurchase of shares


(68,472)


(42,398)


(139,416)


(153,810)

Payment of deferred financing fees


(475


(483)


(554)


(625)

Purchase of treasury stock



(5,000)



(6,000)


(10,000)



(22,000)

Cash provided by (used in) financing activities


$

27,984


$

(63,276)


$

(20,189)


$

(214,126)

Investing activities









Additions to long-term assets


$

(45,070)


$

(31,816)


$

(127,971)


$

(79,053)

Acquisition of business, net of cash acquired




(138,380)


(199,440)

Proceeds from sale of long-term assets


34


14,015


34


15,601

Cash used in investing activities


$

(45,036)


$

(17,801)


$

(266,317)


$

(262,892)

Increase (decrease) in cash and cash equivalents


$

73,146


$

105,030


$

(93,782)


$

(193,771)

Cash and cash equivalents, beginning of period


36,497


104,820


203,425


403,621

Cash and cash equivalents, end of period


$

109,643


$

209,850


$

109,643


$

209,850

 

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SOURCE Maple Leaf Foods Inc.

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