Connors Bros. Income Fund (TSX: CBF.UN) (the "Fund"), whose subsidiaries market consumer food products under brands such as Bumble Bee(R), Clover Leaf(R), Brunswick(R), Castleberry's(R) and Sweet Sue(R), today announced its results in US Dollars for the quarter ended June 30, 2007.
Second Quarter Summary:
- The Fund’s operating results for the quarter were negatively impacted by estimated net charges of $34.3 million due to a recall in July of non-seafood products processed on one line of its
Summary Results Three months ended
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June 30, 2007
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Excluding Recall Including July 1,
(in millions) Recall Charges Recall 2006
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Revenue $ 231.8 $ (13.5) $ 218.3 $ 220.6
Cost of sales 196.9 11.8 208.7 185.3
Gross profit 34.9 (25.3) 9.6 35.3
SG&A 23.3 - 23.3 21.7
Recall expense - (13.0) 13.0 -
Net earnings (loss) $ 8.3 $ (34.3) $ (26.1) $ 6.2
Adjusted EBITDA $ 20.8 $ (34.8) $ (14.0) $ 18.5
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- Revenues, excluding Recall charges, increased by $11.2 million, or 5.1% to $231.8 million for the second quarter of 2007 compared to the same period last year. Case volume was up 3.3% behind strong performance in tuna and other seafood categories.
- Market shares remain strong in both the
- The net loss, recognizing the Recall, for the second quarter was $26.1 million, or $0.52 per unit, and included $34.3 million, or $0.68 per unit, in estimated net charges related to the Recall.
- Net earnings excluding the net Recall charges for the second quarter were $8.3 million, or $0.16 per unit, an increase of $2.1 million from the same period in 2006.
- EBITDA of $20.8 million for the second quarter, excluding the impact of the Recall, increased by $2.3 million, or 12.3%, due to solid volume performance and the sale of non-strategic assets. EBITDA factoring in the Recall charge was a loss of $14.0 million compared to a gain of $18.5 million in 2006.
- Working capital improvement efforts resulted in a $36 million reduction in inventory versus the same period a year ago, to $224 million, the lowest level in 20 months.
- Standardized distributable cash generated for the quarter was C$22.7 million or C$0.45 per unit, resulting in a standardized distributable cash payout ratio of 76.6% due primarily to solid operating cash flows and a reduction in working capital levels.
- On August 7, 2007 the Fund announced that, as a result of the expected cost of the Recall, it was suspending the payment of regular monthly cash distributions for an expected six month period.
â€The voluntary recall of products and the shutdown of our Augusta, Georgia processing facility highlighted continuing challenges in our meat and poultry business,†said Chris Lischewski, president and chief executive officer of the Fund’s operating subsidiaries. “Our seafood business has performed well in both the
â€The recall will present a challenge for the organization in the second half of 2007, but we are working to minimize the expense of the recall and the impact on the Fund’s financial performance. Specifically, the second half of the year will be negatively impacted by the loss of certain meat and poultry sales related to the recall as we believe the
Operational and Financial Summary:
Revenue excluding Recall charges for the second quarter of 2007 was $231.8 million, an increase of $11.2 million or 5.1% as compared to $220.6 million for the second quarter of 2006. Revenue excluding Recall charges increased due to improved
The net loss for the second quarter of 2007 was $26.1 million, or $0.52 per unit, and included net charges related to the Recall of $34.3 million, or $0.68 per unit. Net earnings excluding net Recall charges for the second quarter were $8.3 million, or $0.16 per unit, an increase of $2.1 million from $6.2 million, or $0.12 per unit, for the second quarter of 2006. The increase was mainly attributable to a $2.5 million gain on sale of non-strategic red meat brands and a $4.3 million charge to write off deferred debt issuance costs on extinguished debt incurred in the second quarter of 2006 (with no comparable charge in the current quarter), offset by an increase in the income tax provision (excluding the Recall tax benefit). Net earnings excluding the net Recall charges decreased $0.2 million to $18.0 million, or $0.35 per unit for the first six months of 2007 from $18.2 million, or $0.35 per unit for the first six months of 2006.
Adjusted EBITDA, which excludes the negative impact of the Recall charges, for the second quarter of 2007 increased by $2.3 million to $20.8 million, or 12.3%, from $18.5 million in the second quarter of 2006 as a result of strong seafood performance and the gain on sale of non strategic red meat brands. For the first six months of 2007, adjusted EBITDA increased to $41.6 million from $38.2 million, up 8.9%, from the comparable period in 2006.