World News: 23:21 GMT Wednesday 12th June 2019. [Andrew Peller Limited via Globe Newswire via SPi World News]
GRIMSBY, Ontario, June 12, 2019 (GLOBE NEWSWIRE) -- Andrew Peller Limited ADW.A/ADW.B (“APL” or the “Company”) announced solid growth for the year ended March 31, 2019.
“We are pleased with our results in fiscal 2019 as solid growth across the majority of our trade channels drove another year of strong operating performance,” commented John Peller, Chief Executive Officer. “We are also very pleased to announce a 4.8% increase in common share dividends, a reflection of our confidence in the future and our commitment to enhancing shareholder value over the long term.”
“Fiscal 2019 was a year of significant investment in developing new brands and products, as well as the research and creation of new and comprehensive marketing and media campaigns to support their launch in fiscal 2020,” added Randy Powell, President. “We are confident these investments will generate strong sales growth this year and going forward.”
Gross margin as a percentage of sales strengthened in fiscal 2019 to 41.6% from 41.3% in the prior year. Gross margin in fiscal 2019 benefited from the rationalization of lower performing products, an increased focus on higher margin products, and the positive impact of the Company’s cost control initiatives, partially offset by the softer markets in Western Canada and increased competition from new low-priced imported wines, which decreased gross margin in the second half of the year compared to the prior year. On the acquisition of the three wineries in October 2017, the Company recorded an increase of $10.4 million to inventory to represent the fair value of goods acquired from the new wineries. This increase is being expensed over time to the consolidated statement of earnings as finished goods are sold, thus reducing gross margin. For the year ended March 31, 2019 the Company recorded a charge of $5.5 million to cost of goods sold as a result of this adjustment compared to $3.0 million in fiscal 2018. Management is continually focused on enhancing production efficiency and productivity and believes gross margin will strengthen over the long term.
Selling and administrative expenses increased in fiscal 2019 compared to the prior year due to additional expenditures related to compensation to build out the Company’s marketing team, extensive consumer research, large innovation projects and the creation of marketing campaigns for the launch of Peller Family Vineyards and No. 99 Rye Lager in the first quarter of fiscal 2020. Selling and administrative expenses also increased by approximately $1.2 million in fiscal 2019 due to the increase in minimum wage in Ontario. In the fourth quarter of fiscal 2019, selling and administrative expenses decreased significantly compared to the prior year’s fourth quarter due primarily to the Company’s ongoing focus on reducing costs and the realization of synergies on acquisitions. Investments made during fiscal 2019 in sales and marketing are expected to result in increased sales, thus reducing selling and administrative expenses as a percentage of revenues compared to fiscal 2019.
Other income in the third quarter of last year includes a one-time gain of approximately $4.2 million related to one of the acquisitions completed in October 2017.
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes (“EBITA”) were $52.9 million for the year ended March 31, 2019, consistent with the prior year. EBITA in fiscal 2019 was impacted by the increase in selling and administrative expenses and the larger reduction in margin due to the inventory fair value adjustment charged to cost of sales, partially offset by the increase in sales and the improved gross margin. Adjusted EBITA, which excludes from EBITA one-time acquisition related charges, was $58.3 million for the year ended March 31, 2019 compared to $57.2 million in the prior year. For the three months ended March 31, 2019 EBITA increased to $6.6 million from $4.3 million in the same quarter last year due primarily to the decrease in selling and administrative expenses. Adjusted EBITA was $6.5 million in the fourth quarter of fiscal 2019 compared to $5.7 million in the prior year.
Interest expense increased in fiscal 2019 compared to the prior year primarily due to long-term debt incurred to complete the three acquisitions in October 2017. Amortization expense has also increased due to the addition of the three acquired wineries and operational improvements at the Company’s production facilities.
The Company recorded a net unrealized non-cash loss in the fourth quarter and year ended March 31, 2019 of $1.2 million and $1.7 million, respectively, related to mark-to-market adjustments on interest rate swaps and foreign exchange contracts compared to an unrealized net gain of $0.8 million and $1.4 million, respectively, in the comparable prior year periods.
Adjusted earnings, defined as net earnings not including net unrealized gains and losses on derivative financial instruments, other (income) expenses, non-recurring, non-operating (gains) and losses, and the related income tax effect were $29.4 million for the year ended March 31, 2019 compared to $29.3 million in the prior year. For the fourth quarter of fiscal 2019 adjusted net earnings were $1.5 million compared to a loss of $0.9 million in the fourth quarter of fiscal 2018. Net earnings in fiscal 2019 were $22.0 million or $0.51 per Class A Share compared to $30.1 million or $0.71 per Class A Share in the prior year. Net earnings in fiscal 2018 included a one-time gain of approximately $4.2 million related to one of the acquisitions completed in October 2017.
Shareholders’ equity as at March 31, 2019 increased to $234.8 million or $5.31 per common share, up from $220.2 million or $4.99 per common share at March 31, 2018. The increase in shareholders’ equity was due to the net earnings in the period partially offset by the payment of dividends.
For the ended March 31, 2019, the Company generated cash from operating activities, after changes in non-cash working capital items, of $49.0 million compared to $21.7 million in the prior year. Investing activities were $23.4 million and relate primarily to capital expenditures to improve operations. In fiscal 2018 the Company invested approximately $77.4 million in the acquisition of three wineries.
The Company utilizes EBITA (defined as earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes) and Adjusted EBITA (defined as EBITA before non-recurring expenses such as acquisition transaction and transition costs) to measure its financial performance. EBITA and Adjusted EBITA are not recognized measures under IFRS. Management believes that EBITA and Adjusted EBITA are useful supplemental measures to net earnings, as these measures provide readers with an indication of earnings available for investment prior to debt service, capital expenditures, and income taxes, as well as provide an indication of recurring earnings compared to prior periods. Readers are cautioned that EBITA and Adjusted EBITA should not be construed as an alternative to net earnings determined in accordance with IFRS as indicators of the Company’s performance or to cash flows from operating, investing, and financing activities as a measure of liquidity and cash flows. The Company also utilizes gross margin (defined as sales less cost of goods sold, excluding amortization) and adjusted earnings. The Company’s method of calculating EBITA, Adjusted EBITA, gross margin, and adjusted earnings may differ from the methods used by other companies and, accordingly, may not be comparable to measures used by other companies.
Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols ADW.A and ADW.B).
For more information, please contact: Mr. Steve Attridge, CFO and Executive Vice-President, IT(905) 643-4131
Globe Newswire: 23:21 GMT Wednesday 12th June 2019
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