Winpak Reports First Quarter Results
(firmenpresse) - WINNIPEG, MANITOBA -- (Marketwire) -- 04/25/12 -- Winpak Ltd. (TSX: WPK) today reports consolidated results in US dollars for the first quarter of 2012, which ended on April 1, 2012.
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) The 2012 fiscal year comprises 53 weeks and the 2011 fiscal year comprised 52 weeks. Consequently, the first quarter of 2012 included 14 weeks, whereas the first quarter of 2011 included 13 weeks.
(2) 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 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.
Financial Performance
Net income attributable to common shareholders for the first quarter of 2012 was $17.0 million or 26 cents in earnings per share compared to $14.7 million or 23 cents per share in the corresponding quarter of 2011, an increase of 15.4 percent. Volume growth contributed 2.5 cents in earnings per share while gross profit improvement added a further 2.5 cents in earnings per share. This was offset in part by higher income taxes and greater operating expenses which decreased earnings per share by 1.5 cents and 0.5 cents respectively.
The fiscal year of the Company ends on the last Sunday of the calendar year and is usually 52 weeks in duration. However, the 2012 fiscal year consists of 53 weeks, with the first quarter comprising 14 weeks, one week more than the prior year. If net income was earned evenly throughout the quarter, then one extra week would represent approximately an additional 7.7 percent or less than 2 cents in earnings per share.
Revenue
Revenue for the first quarter of 2012 was $171.8 million, an increase of $23.3 million or 15.7 percent over the same period in 2011. Volumes advanced by 12.3 percent over the prior year comparable quarter, and were solid, even after factoring in the additional week of revenue in the 2012 quarter. The three largest business units experienced a healthy climb in demand, which rose between 13 and 18 percent over the first quarter of 2011. Die-cut lidding led the way with particularly robust growth in the yogurt customer base. Rigid packaging revenue expanded in the areas of condiment and specialty beverage containers while modified atmosphere packaging experienced widespread success across all regions. Demand was muted in the more commodity based products of biaxially oriented nylon and specialty films as well as packaging machinery, where volume growth was in the low single digit percentage range. Higher overall selling prices, in response to raw material cost increases, and changes in product mix, resulted in an increase of 3.5 percent in first quarter revenue compared to 2011. Foreign exchange had little impact on revenue in the current quarter in relation to the corresponding prior year period.
Gross profit margins
Gross profit margins improved to 29.7 percent of revenue in the first quarter of 2012 from the 29.1 percent of revenue recorded in the same quarter of 2011. Gross profit in absolute terms grew by 18.0 percent, eclipsing the expansion in sales volumes of 12.3 percent. This resulted in augmenting earnings per share by 2.5 cents and was due to a combination of product mix improvements, selling price increases, favorable manufacturing performance, and leverage generated from fixed overheads.
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 26, 2011 to reflect the mix of the eight primary raw materials purchased in 2011.
The purchase price index in the first quarter of 2012 increased marginally by 1.4 percent from the last quarter of 2011 and is 4.0 percent higher than a year earlier. Raw material pricing, in aggregate, has remained fairly steady although there have been more significant movements in certain resins within the index. Announcements from resin suppliers indicate that price increases into the second quarter of 2012 overall should remain within a few percentage points of current levels, barring unforeseen events. The Company will continue to monitor raw material costs and adjust selling prices where possible as deemed necessary.
Expenses and Other
Operating expenses progressed at a higher rate than the expansion in sales volumes in the first quarter of 2012 versus the corresponding period in 2011, resulting in a reduction of 0.5 cents in earnings per share. Increased headcount, particularly in the sales function, was the greatest contributor to higher expenses as new personnel were hired to generate additional revenue in pursuit of the Company's $1 billion BDC (Billion Dollar Commitment) sales goal by 2015. Additionally, share-based compensation accruals increased general and administrative expenses as the Company's stock price rose by nearly 20 percent in the quarter. Higher income taxes reduced earnings per share by approximately 1.5 cents in comparison to the first quarter of 2011 due in part to a larger proportion of net income being earned in higher tax jurisdictions.
Capital Resources, Cash Flow and Liquidity
The Company's cash and cash equivalents balance ended the first quarter at $123.3 million, a decrease of $3.6 million from the start of the year. Winpak continued to generate strong cash flow from operating activities before changes in working capital of $32.7 million in the quarter, surpassing the comparable period in 2011 by $5.1 million. Additions to working capital reduced the cash balance by $7.2 million, primarily to augment inventory levels to service increased levels of business. Cash was also utilized for property, plant and equipment additions of $19.7 million, income tax payments of $5.5 million, dividends of $1.9 million, employee defined benefit plan payments of $1.7 million and other items of $0.3 million. The new 260,000 square foot facility in Sauk Village, Illinois was essentially completed in this quarter and the first extrusion line in this new plant is currently being commissioned with commercial production slated for the third quarter of 2012. 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.
Looking Forward
The Company's management remains upbeat entering the second quarter of 2012. The US economy, where over three-quarters of the Company's business is conducted, appears to be in recovery mode, albeit at a relatively moderate pace. Raw material costs, although at a considerably high level, seem to be in a more stable pattern. 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, Winpak has a built-in partial hedge to raw material cost inflation should the current situation change. The Company's investments in technology and capital to remain at the forefront in terms of product offerings have accelerated in 2012 with the highest levels planned for spending on property, plant and equipment in Winpak's history. Plans for 2012 call for capital expenditures approaching $100 million to further broaden the product range as well as to add to existing capacity, all aimed at growing annual revenue organically to $1 billion by the year 2015. As capacity comes on stream and equipment is commissioned, there will be temporary margin contractions while technical challenges get resolved and revenues build to the anticipated volumes, the magnitude of which are dependent on a number of factors. However, margins are not expected to deviate from current levels by more than a few percentage points. 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 remaining strongly committed to the capital investment plan.
Winpak Ltd.
Interim Condensed Consolidated Financial Statements
First Quarter Ended: April 1, 2012
These interim condensed 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 condensed 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
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Datum: 25.04.2012 - 18:44 Uhr
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News-ID 139279
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