ROUGEMONT, QC, March 26, 2021 /CNW/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") announced today that profit attributable to the Company's shareholders for fiscal 2020 was up 35.9%.
Lassonde also announced the appointment of Mr. Vincent R. Timpano to succeed Mr. Jean Gattuso as President and Chief Operating Officer of Lassonde as of October 1, 2021. Lassonde has previously announced that in accordance with its succession plan, Mr. Gattuso indicated his decision to step down on September 30, 2021.
Since his appointment in September 2020 as President and Chief Executive Officer of Lassonde Pappas and Company Inc. ("LPC,"), Lassonde's largest manufacturing and sales subsidiary of ready-to-drink juices and drinks, Mr. Timpano took on the oversight of the strategic growth and development of our U.S. operations. During the six-month transition period provided for in the Corporation's succession plan, he will benefit from the support of the Corporation's executive team as he transitions to his new set of responsibilities, while Mr. Gattuso maintains his current role until September 30, 2021.
"The choice of Mr. Timpano as successor was clear because of his leadership, his expertise in the area of consumer products, his success managing LPC and his alignment with our values. He will succeed Mr. Gattuso who, over the last 34 years with Lassonde, contributed exceptionally to the growth and expansion of the Corporation on both sides of the border. This transition between executive officers will ensure continuity of a proven business model," said Nathalie Lassonde, Chief Executive Officer and Vice Chairman of the Board of Directors and Pierre-Paul Lassonde, Chairman of the Board of Directors.
Vincent R. Timpano will soon join Lassonde's management team at the Rougemont head office, from where he will be carrying out his duties.
"I am excited about the prospect of working with Nathalie Lassonde and the rest of the management team to continue implementing the Corporation's business strategy. Lassonde has a strong entrepreneurial spirit, a portfolio of quality brands and a sound financial position," said Mr. Timpano.
Mr. Timpano has a solid track record as a corporate officer with extensive commercial and operational experience. Over the past 20 years, he has served in various executive roles, including President, Global Coalitions at Aimia Inc., President of Coca-Cola Canada and President and Chief Executive Officer of The Minute Maid Company Canada. In addition, Mr. Timpano has served on numerous boards, including as Chair, with United Way Toronto. He currently serves on the board of advisors with The Napoleon Group of Companies.
Mr. Timpano is a graduate of the Institute of Corporate Directors, Rotman School of Management of the University of Toronto and received an MBA from the Ivey Business School of the University of Western Ontario.
Lassonde posted sales of $1,980.9 million in 2020, up 18.0% from $1,678.3 million in 2019. Excluding the $175.4 million in sales from Sun-Rype, an entity acquired on January 3, 2020, and a $13.3 million favourable foreign exchange impact, adjusted sales were up 6.8% year over year. The 2020 profit attributable to the Company's shareholders totalled $97.6 million compared to $72.0 million last year. Excluding the impacts of the Sun-Rype acquisition and of a gain of $13.8 million, net of tax, realized in 2019 following the settlement of an insurance claim, the 2020 profit attributable to the Company's shareholders was up $34.5 million year over year.
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December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Profit before income taxes
Profit attributable to the Company's
Basic and diluted earnings per
Note: These are financial highlights only. Management's Discussion and Analysis and the audited consolidated financial statements and notes thereto for the year ended December 31, 2020 are available on the SEDAR website at www.sedar.com and on the website of Lassonde Industries Inc.
"Industry volumes as well as our sales increased significantly in 2020. While this is a significant progression, we believe it is too early to conclude that this is a sustainable phenomenon. We are particularly pleased with our improved profitability, which is the result of good performance in all our business units. Demand for our products remains strong and we are striving to meet this demand despite the constrained availability of labour due to the need to maintain a safe environment for all our employees in the context of the ongoing pandemic. I would like to take this opportunity to thank our employees for their exceptional work during these difficult times," said Nathalie Lassonde, Chief Executive Officer and Vice Chairman of the Board of Directors of Lassonde Industries Inc.
2020 Financial Results
On January 3, 2020, the Company completed the acquisition of Sun-Rype Products Ltd. and of two of its affiliates ("Sun-Rype") for a cash consideration of $89.3 million that was paid at the close of the transaction. This amount included preliminary adjustments related to cash, working capital, and property, plant and equipment. During the second quarter of 2020, an amount of $2.2 million was received from the seller following the final settlement of these adjustments. As part of the transaction, the Company assumed liabilities of $23.0 million related to lease liabilities for the Sun-Rype facilities. The acquisition was financed by the Company's existing Canadian credit facility. The transaction costs, incurred mainly in the fourth quarter of 2019, were $1.5 million. The Company has recognized this business combination using the acquisition method in accordance with the provisions of IFRS 3. Therefore, the 2020 consolidated financial statements include the results of Sun-Rype from January 3, 2020.
For 2020, the Company's sales totalled $1,980.9 million, up $302.6 million or 18.0% from $1,678.3 million in 2019. Sales from Sun-Rype added $175.4 million to the Company's 2020 sales. Excluding Sun-Rype's sales and a $13.3 million favourable foreign exchange impact, the Company's sales were up $113.9 million or 6.8% year over year. This increase was largely due to an increase in sales of private label products. The Company believes that a significant portion of this increase could be due to changes in food habits related to the impacts of COVID–19, as industry sales volumes have also benefited from a notable increase.
The Company's 2020 operating profit totalled $151.9 million, up $51.1 million from $100.8 million last year. During 2020, Sun-Rype posted $8.2 million in operating profit whereas in 2019, the Company had incurred $1.5 million in expenses related to the Sun-Rype acquisition. Excluding these items, the Company's operating profit was up $41.4 million year over year. This increase was explained by higher gross margins from the Company's U.S. and Canadian operations, mainly due to a favourable change in the sales mix, to an increase in sales volume and to a decrease in the cost of certain raw materials, especially orange concentrate and the resin used to manufacture plastic bottles ("PET resin"), partly offset by additional production costs related to the pandemic. The operating profit was also affected by higher performance related salary expenses and an increase in warehousing and transportation costs, partly offset by lower selling and marketing expenses.
The Company's financial expenses went from $19.5 million in 2019 to $17.3 million in 2020. Excluding $2.7 million in interest expense related to the Sun-Rype acquisition, financial expenses were down $4.9 million. This decrease was essentially due to a reduction in the interest expense on long-term debt explained by lower debt levels resulting from a significant cash flow generation in 2020.
"Other (gains) losses" went from a $19.2 million gain in 2019 to a $0.8 million gain in 2020. This 2020 gain was due to $0.6 million in gains realized following the settlement of various insurance claims and to a $0.2 million gain resulting from a change in the fair value of financial instruments, whereas the 2019 gain was mainly due to a $20.8 million gain realized following the settlement of an insurance claim directly related to the acquisition price of Old Orchard Brands, LLC ("OOB"), partly offset by a $1.0 million loss resulting from a change in the fair value of financial instruments and by $0.8 million in foreign exchange losses.
Profit before income taxes stood at $134.6 million in 2020, up $34.1 million from $100.5 million in 2019.
Income tax expense went from $25.5 million in 2019 to $32.7 million in 2020. At 24.3%, the 2020 effective income tax rate was lower than the 25.4% rate in 2019. The 2019 effective income tax rate reflected the unfavourable impact of changes to U.S. tax regulations affecting the deductibility of certain interest expenses. Excluding this item, the 2020 effective income tax rate was similar to the adjusted rate in 2019 and mainly reflects a decrease in the deductible amounts on the Company's interest expense offset by the impact of incentive measures adopted by the U.S. government to help businesses deal with the COVID-19 crisis.
The 2020 profit totalled $101.9 million, up $27.0 million from $74.9 million in 2019. The current results include a profit of $5.6 million from Sun-Rype and an amount of $1.3 million, net of tax, in additional financial expenses related to the financing of the Sun-Rype acquisition while the 2019 profit included a $15.3 million gain, net of tax, realized following the settlement of an insurance claim and $1.1 million, net of tax, in Sun-Rype acquisition-related costs. Excluding these items, the Company's 2020 profit was up $36.9 million year over year.
Profit attributable to the Company's shareholders was $97.8 million, resulting in basic and diluted earnings per share of $14.11 for 2020. In 2019, profit attributable to the Company's shareholders had totalled $72.0 million, resulting in basic and diluted earnings per share of $10.37. Excluding the impacts of the Sun-Rype acquisition and of the gain realized in 2019 following the settlement of an insurance claim, the 2020 profit attributable to the Company's shareholders was up $34.5 million year over year.
The Company's operating activities generated $231.2 million in cash during 2020, while they had generated $140.7 million in cash during 2019. As for Sun-Rype's operating activities, they generated $16.5 million in cash during 2020. Financing activities used $92.6 million in cash during 2020, while they had used $100.7 million in 2019. Investing activities used $121.0 million in cash during 2020 compared to $55.3 million used in 2019. At year-end 2020, the Company reported a cash and cash equivalents balance of $6.8 million and no bank overdraft, whereas, at the end of 2019, the cash and cash equivalents balance was $1.8 million and the bank overdraft balance was $12.4 million.
Fourth Quarter Financial Results
For the fourth quarter of 2020, the Company's sales totalled $515.1 million, up $83.0 million or 19.2% from $432.1 million in the fourth quarter of 2019. Sun–Rype's fourth-quarter sales totalled $48.1 million, leaving a $34.9 million favourable variance on a comparable basis. This increase was mainly due to an increase in sales of private label products and to the favourable impact of selling price adjustments on national brand sales.
The Company's operating profit for the fourth quarter of 2020 totalled $38.9 million, up $13.9 million from $25.0 million in the same quarter last year. During the fourth quarter of 2020, Sun-Rype posted $1.7 million in operating profit whereas in 2019, the Company had incurred $1.5 million in expenses related to the Sun-Rype acquisition. Excluding these items, the Company's operating profit was up $10.7 million year over year. The increase came from higher gross margin from the Company's Canadian operations, mainly due to selling price adjustments, partly offset by higher performance-related salary expenses and by an increase in marketing expenses in Canada.
The Company's financial expenses went from $5.1 million in the fourth quarter of 2019 to $3.7 million in the fourth quarter of 2020. Excluding $0.5 million in interest expense related to the Sun-Rype acquisition, financial expenses were down $1.9 million. This decrease was essentially due to a decrease in the interest expense on long-term debt.
"Other (gains) losses" went from a $20.9 million gain in the fourth quarter of 2019 to a $1.2 million loss in the fourth quarter of 2020. This 2020 fourth-quarter loss was essentially due to $1.8 million in foreign exchange losses, partly offset by $0.4 million in gains realized following the settlement of various insurance claims, whereas the 2019 fourth-quarter gain was mainly due to a $20.8 million gain realized following the settlement of an insurance claim directly related to the OOB acquisition price.
Profit before income taxes stood at $33.8 million in the fourth quarter of 2020, down $6.9 million from $40.7 million in the fourth quarter of 2019.
Income tax expense went from $10.3 million in the fourth quarter of 2019 to $9.6 million in the fourth quarter of 2020. At 28.3%, the 2020 fourth quarter effective income tax rate was higher than the 25.4% rate in the same quarter of 2019. The 2019 fourth-quarter effective income tax rate reflected the unfavourable impact of changes to U.S. tax regulations affecting the deductibility of certain interest expenses and special taxes related thereto. Excluding this item, the 2020 fourth-quarter higher effective income tax rate mainly reflects a decrease in the deductible amounts on the Company's interest expense, adjustments resulting from an unfavourable variance of the geographic distribution of the Company's profit before income taxes and a U.S. withholding tax related to an intercompany dividend.
The 2020 fourth-quarter profit totalled $24.3 million, down $6.1 million from $30.4 million in the fourth quarter of 2019. The current quarter's results include a profit of $1.2 million from Sun-Rype and an amount of $0.2 million, net of tax, in additional financial expenses related to the financing of the Sun-Rype acquisition while the 2019 fourth-quarter profit included a $15.3 million gain, net of tax, realized following the settlement of an insurance claim and $1.1 million, net of tax, in Sun-Rype acquisition-related costs. Excluding these items, the Company's 2020 fourth–quarter profit was up $7.1 million year over year.
Profit attributable to the Company's shareholders was $23.5 million, resulting in basic and diluted earnings per share of $3.39 for the fourth quarter of 2020. In the fourth quarter of 2019, profit attributable to the Company's shareholders had totalled $28.5 million, resulting in basic and diluted earnings per share of $4.10. Excluding the impacts of the Sun-Rype acquisition and of the gain realized in 2019 following the settlement of an insurance claim, the 2020 fourth-quarter profit attributable to the Company's shareholders was up $6.8 million year over year.
For the twelve-month period ended December 31, 2020, the Company noted a marked increase in industry sales volumes in the U.S. and Canadian fruit juice and drinks markets. Excluding Sun-Rype's sales and foreign exchange impacts, the Company's sales were up 6.8% in 2020 compared to 2019. It believes that a non-negligible portion of this increase could be due to the direct and indirect effects of the pandemic on consumer behaviour. In addition, the Company observed a change in its package mix relating to size of products purchased by consumers, as well as in the distribution channels used by them. There is no reliable way to determine whether these changes in purchasing habits are permanent or will fade when COVID-19 is a thing of the past. Barring any significant external shocks, including the impacts of the evolution of COVID-19 and the speed in which the restrictions will be lifted, the Company expects that, for 2021, it will be able to maintain a sales level similar to 2020. However, the uncertainty surrounding such a forecast is higher than it is under normal circumstances, as the impact in 2020 of the lockdown and physical distancing measures on demand for the Company's products is hard to measure.
During 2020, the Company observed improved profitability at its U.S. operations due to strong demand for its products, although the competitive environment continues to be challenging at the private label level in the United States. However, it notes a rise of inflationary pressures, in particular on transportation costs affected by both scarcity of labour and equipment. In Canada, it expects to benefit from a full year of improvement in the production rate at one of its specialty food products plants, which was significantly affected by investment-related activities in 2019 and in the beginning of 2020.
The Company expects its investment-related cash outflows in 2021 to exceed the average of the last five years. Among other things, this increase is attributable to the upgrade of its ERP software in Canada. The Company also expects to make investments designed to increase its storage capacity at one of its Canadian plants and the production capacity for single-serve fruit juices and drinks in the United States. It believes that its use of investing cash flows could reach between $50 million and $60 million in 2021. These disbursements will have a limited impact on the Company's profit for 2021 but will affect its cash flows.
Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of ready-to-drink juices and drinks marketed under brands such as Apple & Eve, Everfresh, Fairlee, Fruité, Graves, Oasis, Old Orchard, Rougemont and Sun-Rype. Lassonde is the largest producer of fruit juices and drinks in Canada and one of the two largest producers of store brand shelf-stable fruit juices and drinks in the United States. It is also a major producer of cranberry sauces. The Company also produces fruit-based snacks in the form of bars and bites.
Lassonde also develops, manufactures and markets specialty food products under brands such as Antico and Canton. The Company also imports and markets selected wines from various countries and manufactures apple ciders and cider–based beverages.
The Company produces superior quality products through the expertise of more than 2,700 people working in 17 plants across Canada and the United States. To learn more, visit www.lassonde.com.
Caution Concerning Forward-Looking Statements
In this document and in other documents filed with Canadian regulatory authorities or in other communications, the Company may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements notably include estimates, expectations, forecasts, and projections of future investment spending, revenues, expenses, earnings, profit, indebtedness, financial position, losses, upcoming projects, business and management strategies, and business growth and expansion. In the context of this document, forward-looking statements are particularly used to discuss preliminary results, the rate of sales growth, and profit attributable to shareholders. The forward-looking statements contained herein are used to help readers better understand Lassonde's financial position and the results of its operations as at the dates presented and may not be appropriate for other purposes. Forward-looking statements can be recognized by such words as "may," "should," "believes," "predicts," "plans," "expects," "intends," "anticipates," "estimates," "projects," "objective," "continues," "proposes," "targets," or "aims" as well as words and expressions of a similar nature and whether they are used in the affirmative or negative or used in the conditional or future tense. Forward-looking statements also include any statements that do not refer to historical facts.
By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other statements will not be achieved or will differ significantly from those expressed or implied in such forward-looking statements or could affect the extent to which a particular forecast, projection or other statement materializes. Although Lassonde believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that these expectations will prove to be correct.
Readers are cautioned against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various significant factors. Such factors include, among others, the economic, industrial, competitive and regulatory environment in which Lassonde operates or factors that are likely to have an impact on its operations, its ability to attract and retain customers, consumers, and qualified staff, the availability and cost of raw materials and transportation, its operating costs, and the price of its finished products in the various markets where it operates.
The Company cautions that the foregoing list of factors is not exhaustive. For additional information about the risks, uncertainties, and assumptions that could cause Lassonde's actual results to differ from its stated expectations, readers may also consult the "Uncertainties and Principal Risk Factors" section of the Company's most recent annual MD&A and the other documents it files from time to time with securities regulators in Canada and available on sedar.com. The forward-looking statements contained in this press release reflect the Company's expectations on this date and are subject to change after this date. Lassonde does not undertake to update publicly or to revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation.
SEDAR registration number: 00002099
SOURCE Lassonde Industries Inc.