LAS.A Lassonde Industries Inc

ROUGEMONT, QC, March 25, 2022 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde") posted sales of $1,892.9 million in 2021, down 4.4% from $1,980.9 million in 2020. Excluding a $72.9 million unfavourable foreign exchange impact, sales were down 0.8% year over year. The 2021 profit attributable to the Company's shareholders totalled $77.5 million, down $20.3 million from $97.8 million in 2020.

"Results achieved in the fourth quarter and in fiscal 2021, while below 2020, compare favourably against 2019 results. During the year, inflationary pressure, issues related to availability of inputs, persistently high logistical and transportation costs, and labour scarcity affected our profitability, particularly that of our U.S. operations. Despite this challenging environment, our teams worked in exemplary fashion to meet strong demand for our products and continued providing exceptional value to our customers. I thank our teams wholeheartedly for their resilience and dedication," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc.

2021 Financial Results

For 2021, the Company's sales totalled $1,892.9 million, down 4.4% from $1,980.9 million in 2020. Excluding a $72.9 million unfavourable foreign exchange impact, the Company's sales were down 0.8% year over year. This decrease was largely due to lower sales of private label products in the United States, as certain plants and co‑packers used by the Company experienced a slower production rate given labour-related issues. This decrease in the United States was partly offset by higher sales of private label products in Canada and by selling price adjustments that had a favourable impact on the Company's national brand sales. It should also be noted that sales in 2020 had benefitted from an unusual volume increase during the months of March to May given an accumulation of food reserves triggered by the pandemic.

The Company's 2021 operating profit totalled $118.4 million, down from $151.9 million last year. This decrease came mainly from a lower gross margin realized by U.S. operations. This lower gross margin was due to (i) a decrease in sales of private label products and an unfavourable impact from this decrease on the allocation of manufacturing overhead to product costs and to (ii) higher input costs, including an increase in the cost of transporting them to the Company's plants. As for the Canadian operations, gross margin increased year over year, essentially reflecting an increase in sales volume and the impact of selling price adjustments, partly offset by higher input costs, including an increase in the cost of transporting them to the Company's plants. Operating profit was also affected by higher transportation costs incurred to deliver products to the Company's clients and by higher warehousing costs, partly offset by lower performance-related salary expenses.

The Company's financial expenses went from $17.3 million in 2020 to $11.1 million in 2021. This decrease was essentially due to a lower interest expense on long term debt given a lower debt level.

Profit before income taxes totalled $106.0 million in 2021, down from $134.6 million in 2020.

At 26.0%, the 2021 effective income tax rate was higher than the 24.3% rate in 2020. This higher 2021 effective income tax rate mainly reflects the impact of a non-renewal in 2021 of incentive measures adopted in 2020 by the U.S. government to help businesses deal with the COVID-19 crisis and a decrease in the deductible amounts on the Company's interest expense.

The Company's 2021 profit totalled $78.5 million, down from $101.9 million in 2020.

Profit attributable to the Company's shareholders totalled $77.5 million, resulting in basic and diluted earnings per share of $11.18 for 2021 compared to $97.8 million and $14.11, respectively, for 2020.

The Company's operating activities generated $93.7 million in cash during 2021, while they had generated $231.2 million in cash during 2020.

Financing activities used $64.9 million in cash during 2021, while they had used $92.6 million in 2020. During 2020, the cash inflows related to the financing of the acquisition of Sun‑Rype Products Ltd. and of two of its affiliates ("Sun-Rype") had totalled $89.3 million, leaving a difference of $117.0 million on a comparable basis.

Investing activities used $40.4 million in cash during 2021 compared to $121.0 million used in 2020. Excluding the $80.6 million in cash used in 2020 to acquire Sun-Rype, net of acquired cash on hand, investing activities used a similar amount of cash in 2021 as in 2020.

At year-end 2021, the Company's long-term debt, including the current portion, stood at $175.4 million compared to $215.5 million at year-end 2020.

Fourth Quarter Financial Results

For the fourth quarter of 2021, the Company's sales totalled $487.5 million, down 5.3% from $515.1 million in the fourth quarter of 2020. Excluding a $9.9 million unfavourable foreign exchange impact, the Company's fourth‑quarter sales were down 3.4% year over year. This decrease was largely due to lower sales of private label products in the United States as certain plants and co-packers used by the Company experienced a slower production rate given labour-related issues. This decrease in the United States was partly offset by selling price adjustments that had a favourable impact on the Company's national brand sales. 

The Company's operating profit for the fourth quarter of 2021 totalled $31.6 million, down from $38.9 million in the fourth quarter of 2020. This decrease came mainly from a lower gross margin realized by U.S. operations. This lower gross margin was due to (i) a decrease in sales of private label products and an unfavourable impact from this decrease on the allocation of manufacturing overhead to product costs and to (ii) higher input costs, including an increase in the cost of transporting them to the Company's plants. As for the Canadian operations, gross margin increased slightly year over year, reflecting (i) the favourable impact of selling price adjustments on the Company's national brand sales and (ii) a favourable foreign exchange impact that affected purchases of raw materials in foreign currencies, partly offset by higher input costs, including an increase in the cost of transporting them to the Company's plants. Operating profit, however, benefitted from lower marketing costs and a decrease in depreciation and amortization expenses, partly offset by an increase in transportation costs incurred to deliver products to the Company's clients resulting from higher tariffs.

The Company's financial expenses went from $3.7 million in the fourth quarter of 2020 to $2.7 million in the fourth quarter of 2021. This decrease was essentially due to lower interest expense on long-term debt given a lower debt level.

Profit before income taxes totalled $29.2 million in the fourth quarter of 2021, down from $33.8 million in the fourth quarter of 2020.

At 25.3%, the 2021 fourth-quarter effective income tax rate is lower than the 28.3% rate in the same quarter of 2020. This lower 2021 effective income tax rate mainly reflects adjustments resulting from a favourable change in the geographic distribution of the Company's profit before income taxes and a U.S. withholding tax in 2020 related to an intercompany dividend, partly offset by a decrease in the deductible amounts on the Company's interest expense.

The 2021 fourth-quarter profit totalled $21.8 million, down from $24.3 million in the fourth quarter of 2020.

Profit attributable to the Company's shareholders totalled $21.8 million, resulting in basic and diluted earnings per share of $3.15 for the fourth quarter of 2021 compared to $23.5 million and $3.39, respectively, for the fourth quarter of 2020.

Outlook

According to industry data, overall sales volume in 2021 for the Canadian and U.S. fruit juice and drink markets declined slightly compared to 2020 while category volumes remained well above 2019 levels. Excluding a foreign exchange impact, the Company's sales were down 0.8% in 2021 compared to 2020 mainly due to its U.S. operations. These operations continued to endure supply- and labour-related challenges limiting its ability to meet customer demand. Despite selling price adjustments, profitability at the Company's U.S. operations decreased in 2021 as a result of inflationary pressure, which affected transportation costs, warehousing expenses, and the cost of raw materials, among others, and as a result of lower fixed cost absorption due to lower volumes. While Canadian operations were also affected by inflationary pressure, the business delivered solid performance, mainly driven by volume growth, new distribution, and price adjustments.

In the first quarter of 2022, the Company has initiated a multi-year strategy to drive long-term value, accelerate growth, as well as improve overall margins and profitability. In 2022, this strategic initiative will result in project-related operating expenses ranging between $10 million and $15 million. In addition, the initiative will be supported by overall capital expenditures targeted at approximately $100 million in 2022.  A key investment priority in 2022 will focus on revitalizing the U.S. business, specifically improving its operations capacity, cost structure and overall capabilities. Additionally, the strategic initiative includes the installation of a new single-serve production line. Simultaneously, investments will be made to strengthen operations in Canada, including upgrading IT infrastructure and enhancing the capacity and productivity of the aseptic single-serve production capabilities.

Based on industry projections, sales volumes for the fruit juice and drink markets in Canada and U.S. are expected to slightly decrease in 2022. Despite this anticipated decrease, the Company expects to deliver moderate sales growth year over year. In the first half of 2022, profitability will be under pressure as the Company addresses ongoing supply chain issues, labour challenges, and continued inflationary pressure. Early transformation initiatives in the U.S. and the run-rate effect of selling price adjustments are expected to deliver benefits in the second half of the year, which should offset a softer first-half performance. 

About Lassonde

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, 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 such as pasta sauces, mainly under private label, as well as fondue broths and sauces under the brand 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 www.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.