MEGA Brands reports third quarter 2013 results
- EBITDA of $29.2 million compared to $28.2 million
- Diluted EPS of $0.79 compared to $0.63
MONTREAL, Oct. 31, 2013 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the third quarter ended September 30, 2013. (All figures are expressed in US dollars.)
Consolidated net sales in the third quarter were $140.9 million compared to $140.1 million in the corresponding 2012 period.
- Sales for the Toys segment increased 1% compared to the third quarter of 2012, with strong shipments of Preschool & Girls construction toys, offset by lower sales of Boys & Collectors construction toys.
- Sales for the Stationery & Activities segment were up 1%, the tenth consecutive quarter of year-over-year growth.
- On a geographical basis, North American sales were 1% higher and international sales were level.
Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased to $29.2 million compared to $28.2 million in the third quarter of 2012. EBITDA is a supplementary financial measure.
Net earnings were $22.6 million or $0.79 per diluted share ($0.99 per basic share) compared to $19.5 million or $0.63 per diluted share ($1.19 per basic share) in the third quarter of 2012.
For the nine-month period ended September 30, 2013, consolidated net sales increased 4% to $303.5 million compared to $292.7 million in the same period last year, with 4% growth in Toys, 2% in Stationery & Activities, 4% in North America and 2% in International. EBITDA increased to $38.1 million compared to $35.2 million in the corresponding period in 2012. Net earnings were $19.4 million or $0.82 per diluted share ($0.94 per basic share) compared to $12.6 million or $0.64 per diluted share ($0.77 per basic share) in the same 2012 period.
''With our solid Preschool & Girls offering and recent traction in Boys & Collectors construction toys, including the launch of Call of Duty Collector Construction Sets, we continue to focus on sustaining our positive sales momentum through the balance of 2013,'' said Marc Bertrand, President and CEO. ''In addition, we are continuing to move forward with initiatives to improve our balance sheet, global manufacturing position and brand portfolio.
Conference Call
A conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing 1 (888) 231-8191 or (514) 807-9895. For those unable to participate, a replay will be available until November 7, 2013. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 50752892.
About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.
The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.
MD&A Filing
This press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the unaudited consolidated financial statements and notes for the three- and nine-month periods ended September 30, 2013 and 2012. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.
Supplementary Financial Measures
The Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the three- and nine-month periods ended September 30, 2013, which is available at www.sedar.com and on the Corporation's Web site.
Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2012, which are available at www.sedar.com and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.
Unaudited Interim Consolidated Income Statements
(in thousands of US dollars, except per share amounts)
| Three-month periods ended September 30, |
Nine-month periods ended September 30, |
|||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| $ | $ | $ | $ | |||||
| Net sales | 140,896 | 140,057 | 303,526 | 292,733 | ||||
| Cost of sales | 86,704 | 84,076 | 190,217 | 183,056 | ||||
| Gross profit | 54,192 | 55,981 | 113,309 | 109,677 | ||||
| Marketing and advertising expenses | 3,265 | 3,358 | 11,872 | 9,234 | ||||
| Research and development expenses | 3,679 | 3,754 | 11,572 | 11,813 | ||||
| Other selling, distribution and administrative expenses | 21,224 | 23,533 | 62,790 | 62,646 | ||||
| Contingent consideration on business acquisition | 87 | 95 | 260 | 287 | ||||
| Loss (gain) on foreign currency translation | 449 | 574 | (842) | 103 | ||||
| Earnings from operations | 25,488 | 24,667 | 27,657 | 25,594 | ||||
| Financial expenses | 2,119 | 4,419 | 8,596 | 13,131 | ||||
| Early redemption of debentures | - | - | 2,869 | - | ||||
| 2,119 | 4,419 | 11,465 | 13,131 | |||||
| Earnings before income taxes | 23,369 | 20,248 | 16,192 | 12,463 | ||||
| Income taxes | ||||||||
| Current | 793 | 725 | (3,170) | (113) | ||||
| Deferred | - | - | - | - | ||||
| 793 | 725 | (3,170) | (113) | |||||
| Net earnings | 22,576 | 19,523 | 19,362 | 12,576 | ||||
| Earnings per share | ||||||||
| Basic | 0.99 | 1.19 | 0.94 | 0.77 | ||||
| Diluted | 0.79 | 0.63 | 0.82 | 0.64 | ||||
Unaudited Interim Consolidated Statements of Comprehensive Income
(in thousands of US dollars, except per share amounts)
| Three-month periods ended September 30, |
Nine-month periods ended September 30, |
|||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| $ | $ | $ | $ | |||||
| Net earnings | 22,576 | 19,523 | 19,362 | 12,576 | ||||
| Other comprehensive income (loss): | ||||||||
| Items that may be reclassified subsequently to income or loss | ||||||||
| Cumulative translation adjustment | (8) | 244 | (551) | 1,053 | ||||
| Items that will not be reclassified subsequently to income or loss | ||||||||
| Cumulative translation adjustment | (494) | (1,169) | 2,250 | 304 | ||||
| Other comprehensive income (loss): | (502) | (925) | 1,699 | 1,357 | ||||
| Comprehensive income | 22,074 | 18,598 | 21,061 | 13,933 | ||||
Unaudited Consolidated Statements of Financial Position
(in thousands of US dollars)
| September 30, | December 31, | ||
| 2013 | 2012 | ||
| $ | $ | ||
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 4,038 | 8,018 | |
| Trade and other receivables | 146,201 | 130,541 | |
| Inventories | 69,909 | 45,779 | |
| Derivative financial instruments | - | 113 | |
| Prepaid expenses | 7,105 | 9,370 | |
| Total current assets | 227,253 | 193,821 | |
| Non-current assets | |||
| Property, plant and equipment | 46,329 | 39,817 | |
| Intangible assets | 22,455 | 22,771 | |
| Goodwill | 30,000 | 30,000 | |
| Total assets | 326,037 | 286,409 | |
| Liabilities | |||
| Current liabilities | |||
| Asset-based credit facility | 8,816 | - | |
| Trade and other payables | 75,488 | 62,638 | |
| Income taxes | 3,774 | 5,631 | |
| Derivative financial instruments | 472 | - | |
| Current portion of long-term debt | 1,888 | 8,023 | |
| 90,438 | 76,292 | ||
| Non-current liabilities | |||
| Long-term debt | 62,150 | 112,992 | |
| Derivative financial instruments | 72 | 206 | |
| 62,222 | 113,198 | ||
| Equity | |||
| Share capital | 501,851 | 431,893 | |
| Warrants | 8,486 | 24,029 | |
| Contributed surplus | 5,460 | 4,478 | |
| Deficit | (338,374) | (357,736) | |
| Accumulated other comprehensive loss | (4,046) | (5,745) | |
| Total equity | 173,377 | 96,919 | |
| Total liabilities and equity | 326,037 | 286,409 |
Unaudited Consolidated Statement of Changes in Equity
(in thousands of US dollars)
| Share capital | Warrants | Contributed surplus |
Deficit | Accumulated other comprehensive loss |
Total equity | ||
| $ | $ | $ | $ | $ | $ | ||
| Balance - December 31, 2011 | 429,007 | 24,430 | 3,492 | (374,322) | (6,844) | 75,763 | |
| Net earnings | - | - | - | 12,576 | - | 12,576 | |
| Options exercised | 316 | (100) | 216 | ||||
| Other comprehensive income | - | - | - | - | 1,357 | 1,357 | |
| Stock-based compensation | - | - | 692 | - | - | 692 | |
| Balance - September 30, 2012 | 429,323 | 24,430 | 4,084 | (361,746) | (5,487) | 90,604 | |
| Balance - December 31, 2012 | 431,893 | 24,029 | 4,478 | (357,736) | (5,745) | 96,919 | |
| Net earnings | - | - | - | 19,362 | - | 19,362 | |
| Options exercised | 1,679 | - | (518) | - | - | 1,161 | |
| Warrants exercised | 68,279 | (15,543) | - | - | - | 52,736 | |
| Other comprehensive income | - | - | - | - | 1,699 | 1,699 | |
| Stock-based compensation | - | - | 1,500 | - | - | 1,500 | |
| Balance - September 30, 2013 | 501,851 | 8,486 | 5,460 | (338,374) | (4,046) | 173,377 |
Unaudited Consolidated Statements of Cash Flows
(in thousands of US dollars)
| Nine-month periods ended September 30, |
||||
| 2013 | 2012 | |||
| $ | $ | |||
| Operating activities | ||||
| Net earnings | 19,362 | 12,576 | ||
| Adjustments for: | ||||
| Depreciation of property, plant and equipment | 9,817 | 9,045 | ||
| Amortization of intangible assets | 316 | 316 | ||
| Stock-based compensation | 1,500 | 692 | ||
| Financial expenses | 8,596 | 13,131 | ||
| Early redemption of debentures | 2,869 | - | ||
| Income taxes | (3,170) | (113) | ||
| Loss (gain) on foreign currency | (634) | 2,849 | ||
| 38,656 | 38,496 | |||
| Net change in non-cash working capital balances | (26,390) | (13,640) | ||
| Income taxes recovered (paid) | 1,701 | (472) | ||
| Interest paid | (4,875) | (7,055) | ||
| Cash flows provided by operating activities | 9,092 | 17,329 | ||
| Financing activities | ||||
| Repayment of debentures | (60,368) | (7,411) | ||
| Change in asset-based credit facility | 8,816 | (4,018) | ||
| Government loan | - | 6,591 | ||
| Issuance of capital stock | 53,899 | 217 | ||
| Issuance (repayment) of long-term debt | (317) | 24 | ||
| Cash flows provided (used) in financing activities | 2,030 | (4,597) | ||
| Investing activities | ||||
| Acquisition of property, plant and equipment | (15,024) | (15,765) | ||
| Cash flows used in investing activities | (15,024) | (15,765) | ||
| Effect of changes in foreign exchange rates on cash and cash equivalents | (78) | (58) | ||
| Decrease in cash and cash equivalents | (3,980) | (3,091) | ||
| Cash and cash equivalents — Beginning of period | 8,018 | 6,745 | ||
| Cash and cash equivalents — End of period | 4,038 | 3,654 | ||
SOURCE MEGA Brands Inc.
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