Winpak Reports Fourth Quarter Results
(firmenpresse) - WINNIPEG, MANITOBA -- (Marketwire) -- 02/16/12 -- Winpak Ltd. (TSX: WPK) today reports consolidated results in US dollars for the fourth quarter of 2011, which ended on December 25, 2011.
Basis of Presentation
The 2011 amounts have been determined in accordance with International Financial Reporting Standards (IFRS) and accordingly, the comparative amounts have been restated to conform with IFRS, unless otherwise stated.
Winpak Ltd. manufactures and distributes high-quality packaging materials and related packaging machines. The Company's products are used primarily for the packaging of perishable foods, beverages and in health care applications.
(1) EBITDA is not a recognized measure under 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 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.
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 Winpak's current views based on information as at the date of this report. They involve risks, uncertainties and assumptions and the Company's actual results could differ, which in some cases may be material, from those anticipated in these forward-looking statements. Unless otherwise required by applicable securities law, we disclaim any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. The Company cautions investors not to place undue reliance upon forward-looking statements.
The following report and analysis for the three months and year ended December 25, 2011 reflects the Company's adoption of International Financial Reporting Standards (IFRS) as of December 27, 2010, the start of the 2011 fiscal year. Comparative periods for fiscal 2010 have been restated in accordance with IFRS, including the December 28, 2009 transition date balance sheet.
Financial Performance
Net income attributable to common shareholders for the fourth quarter of 2011 was $18.5 million or 28 cents in earnings per share compared to $12.8 million or 20 cents per share in the corresponding period of 2010, an increase of 44.5 percent. However, included in the 2010 fourth quarter result was the recognition of a withdrawal liability from the one multiemployer defined benefit pension plan in which the Company participates, which reduced net income by $4.6 million or 7 cents per share. If this one-time item were excluded, the improvement in net income attributable to common shareholders in the fourth quarter of 2011 versus the same period in 2010 would have been $1.1 million or 6.1 percent. Modest volume growth contributed 1 cent in earnings per share while expense curtailment and a lower net income attributed to non-controlling interests added 2.5 cents and 1 cent in earnings per share respectively. Partially offsetting these positive elements were the negative impact of foreign exchange and a higher effective income tax rate which decreased earnings per share by 2.5 cents and 1 cent respectively.
For the year, net income attributable to common shareholders advanced to $63.8 million or 98 cents in earnings per share, up 15.3 percent from the $55.3 million or 85 cents per share recorded in 2010. Excluding the 2010 impact of recognizing the multiemployer pension plan withdrawal liability, net income attributable to common shareholders in 2011 improved by $3.9 million or 6.4 percent. Higher sales volumes produced 5.5 cents in additional earnings per share while gross profit improvement and limited operating expense growth, in relation to volume expansion, netted a further 4 cents and 3.5 cents per share accordingly. In comparison to 2010, foreign exchange had a negative impact on earnings per share of approximately 7 cents, while an increased effective income tax rate offset a lower amount of income attributed to non-controlling interests at 1 cent per share each.
Revenue
Fourth quarter revenue of 2011 grew to $171.5 million, an increase of $16.6 million or 10.7 percent over the same quarter in 2010. Volumes outdistanced the prior year comparable quarter by 4.7 percent, with all product lines experiencing some growth with the exception of the more commodity-related offerings of biaxially oriented nylon and specialty films. Shipments were especially robust in rigid packaging, where volumes rose by over 20 percent in specialty beverage and custom containers. Volume expansion in the mid-single digit percentage range was witnessed in packaging machinery and lidding sales, while modified atmosphere packaging had only marginal growth. Both biaxially oriented nylon and specialty films experienced shipment declines in the neighborhood of 10 percent, mainly attributed to the sluggishness of the US economy as well as customers driving down inventory levels as the year-end approached. Higher overall selling prices, in response to raw material cost increases, and changes in product mix, contributed 6.0 percent to fourth quarter revenue. In comparison to the fourth quarter of 2010, foreign exchange had only a negligible effect on revenue in the current quarter.
For the entire year, revenue reached a high of $652.1 million, increasing by $72.6 million or 12.5 percent from the prior year. More than half of the revenue expansion was due to volume growth of 6.6 percent, with rigid containers leading the way at over a 20 percent ascent. Packaging machinery also had a strong year, advancing by over 15 percent. Lidding and modified atmosphere packaging sales volumes progressed in the low single-digit percentage range, while the more commodity-related biaxially oriented nylon and specialty films receded by a similar amount. Selling price increases paralleled higher raw material costs and together with sales mix changes, furthered 2011 revenue by 5.2 percent. The conversion of Canadian dollar sales into US funds at a higher average exchange rate in 2011 versus 2010 supplemented revenue by an additional 0.7 percent.
Gross profit margins
Gross profit margins declined to 29.3 percent of revenue in the fourth quarter of 2011 from the 30.8 percent of revenue registered in the same quarter of 2010. In dollar terms, however, gross profit rose by 5.3 percent to $50.2 million in the current quarter compared to the corresponding quarter in 2010, keeping up with the increase in sales volume of 4.7 percent, resulting in a slight boost to earnings. Product mix improvements offset the negative impact of raw material cost escalations on gross profit.
In 2011, gross profit margins reached a level of 28.8 percent of revenue, one full percentage point less than the result achieved in the prior year. However, the growth in strictly dollar terms of gross profit was $15.3 million or 8.9 percent, which exceeded the relative increase in volumes of 6.6 percent. The net result was an increment of 4 cents in earnings per share and was a result of product mix improvements, enhanced manufacturing performance, and a reasonable amount of success in matching raw material cost progressions with selling price increases.
For reference, the following presents the weighted indexed purchased cost of Winpak's eight primary raw materials in the reported quarter and each of the preceding eight quarters, where base year 2001 = 100. The index was rebalanced as of December 27, 2010 to reflect the mix of the eight primary raw materials purchased in 2010.
The purchase price index in the fourth quarter of 2011 fell by 5.1 percent from the previous three-month period, after reaching a recent peak in the second quarter of the current year. However, the index still remains 12.2 percent higher than a year earlier, 25.3 percent greater than the level of two years prior and appears to have bottomed out in the current quarter. Resin suppliers have already implemented price increases in the first quarter of 2012 for certain materials in the mid-to-upper single digit percentage range and further price increases have been announced. It has proven to be a challenge all year to prevent margin erosion in this high material cost environment and it appears this will continue to remain so going forward.
Expenses and Other
Operating expenses declined substantially in the fourth quarter of 2011 versus the corresponding period in 2010 due to a number of factors, the largest of which was a one-time charge in 2010 related to pensions. The board of independent trustees of the one multiemployer defined benefit pension plan in which the Company participates, communicated that this plan was in a critical status position from a funding perspective in 2010. During the fourth quarter of 2010, the Company determined that the only economically feasible course of action was to withdraw from the plan and as a result, a withdrawal liability was recognized under IFRS which reduced earnings per share in that quarter by 7 cents. Furthermore, although sales volumes in the fourth quarter of 2011 increased by 4.7 percent in relation to the corresponding period in 2010, operating expenses, adjusted for foreign exchange, actually declined by over $1.4 million, resulting in an addition to earnings per share of 2.5 cents. The expense reduction was due to lower compensation, bad debt and customer claim costs. This was further augmented through a lower amount of net income being attributed to non-controlling interests in the fourth quarter of 2011, contributing 1 cent in earnings per share. Offsetting these positive developments were negative foreign exchange impacts of 2.5 cents in earnings per share and a higher effective income tax rate in the current quarter versus the fourth quarter of 2010 which lowered earnings per share by 1 cent, due primarily to a larger proportion of net income being earned in higher tax jurisdictions.
On an annual basis, foreign exchange had a negative impact of 7 cents in earnings per share compared to 2010. This was due to the translation of net Canadian dollar costs into US funds at a higher exchange rate in 2011 than 2010, foreign exchange losses on Canadian net monetary assets in 2011, and foreign exchange gains recorded by the Canadian legal entities on filing their 2010 income tax returns in Canadian dollars. In 2011, the Company received approval to file its Canadian tax returns in US dollars, thereby eliminating this latter foreign exchange fluctuation in 2011 and subsequent years. The aforementioned recording of the multiemployer pension plan withdrawal liability resulted in a lowering of earnings per share by 7 cents in 2010. While sales volumes increased by 6.6 percent in 2011 over 2010, the Company was able to supplement earnings per share by 3.5 cents by limiting the escalation in operating expenses to only 3.5 percent, excluding foreign exchange impacts. The reduction in net income attributed to non-controlling interests resulted in an additional 1 cent in earnings per share compared to 2010 while a higher overall effective income tax rate in 2011 reduced earnings per share by 1 cent.
Capital Resources, Cash Flow and Liquidity
The Company's cash and cash equivalents balance ended the fourth quarter at $126.9 million, an increase of $19.3 million from the start of the three-month period. Winpak continued to generate strong cash flow from operating activities before changes in working capital of $35.3 million in the quarter, improving upon the comparable period in 2010 by $12.2 million. Cash was further augmented by reductions in working capital of $15.1 million, led by a decrease in inventory in the quarter of $10.1 million. Property, plant and equipment additions of $21.1 million, income tax payments of $5.9 million, employee benefit plan payments of $2.2 million and dividends of $1.9 million were the main uses of cash during the three-month period.
For the year, the Company added $36.4 million to its cash position. Cash flow from operating activities before changes in working capital of $124.1 million, eclipsed the prior year result by $18.9 million. The investment in working capital for the year only advanced by $1.6 million, while revenue forged ahead by $72.6 million. Cash was also used to fund property, plant and equipment additions of $48.9 million, income tax payments of $22.3 million, dividends of $7.8 million, employee benefit plan payments of $5.1 million, distributions to non-controlling interests in a subsidiary of $1.8 million and sundry items of $0.2 million. The Company remains debt-free and has unutilized operating lines of $38 million, with the ability to increase borrowing capacity further should the need arise. As a result, Winpak is confident that sufficient financial resources are in place to meet all anticipated cash requirements in the foreseeable future.
Looking Forward
The Company is optimistic as it enters 2012, after a very satisfying end to 2011. The outlook for the US economy, where over three-quarters of the Company's business is conducted, appears to be more favorable moving forward, which should strengthen future sales volumes. Unfortunately, with enhanced economic activity usually comes increased raw material costs which will bring pressure to bear on margins. The challenge will be to match these raw material increases with selling price changes to the greatest degree possible. With over 60 percent of the organization's revenues subject to customer price-indexing agreements, whereby selling prices are adjusted as raw material costs change, albeit with a time lag, Winpak has a built-in partial hedge to raw material cost inflation. This should help to keep margins within a few percentage points of current levels for 2012.
The Company's commitment to investment in the latest technology to remain at the forefront in terms of product offerings continued in 2011 with the highest levels ever spent on property, plant and equipment in Winpak's history. Although capital investment is never without risk, the focus continues on markets within which the Company is familiar and utilizing extrusion technologies that have formed the backbone of the organization's success. This will continue in 2012 with plans to approximately double capital spending to further broaden the product range as well as add to existing capacity aimed at achieving $1 billion in revenue by the year 2015. A major expansion is planned for the Montreal facility to bolster the Company's foil technology, extrusion capacity will be expanded in the modified atmosphere packaging plant in Winnipeg, additional extrusion equipment is planned for the specialty films unit in Georgia and extrusion lines will be installed in the new Sauk Village, Illinois rigid packaging site. As capacity comes on stream and equipment is commissioned, there will be temporary margin contractions while technical challenges get resolved and sales build to the anticipated volumes. The Company also remains dedicated to evaluating external acquisition opportunities that would complement its core competencies in the areas of food and health care packaging. With Winpak's extremely solid financial position, it has the resources available to consummate an acquisition transaction while still remaining strongly committed to the organic growth capital investment plan.
These interim consolidated financial statements have not been audited or reviewed by the Company's independent external auditors, PricewaterhouseCoopers LLP. For a complete set of notes to the consolidated financial statements, refer to or the Company's website, .
Contacts:
Winpak Ltd.
K.P. Kuchma
Vice President and CFO
(204) 831-2254
Winpak Ltd.
B.J. Berry
President and CEO
(204) 831-2216
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 16.02.2012 - 22:19 Uhr
Sprache: Deutsch
News-ID 115828
Anzahl Zeichen: 0
contact information:
Town:
WINNIPEG, MANITOBA
Kategorie:
Machinery & Tools
Diese Pressemitteilung wurde bisher 242 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Winpak Reports Fourth Quarter Results"
steht unter der journalistisch-redaktionellen Verantwortung von
Winpak Ltd. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
