Lassonde Industries, Inc. Class A · TSX:LAS.A
Lassonde Industries, Inc. Class A — Q3 2019 Earnings Presentation
39 slides from Lassonde Industries, Inc. Class A's earnings presentation, Nov 8, 2019
Slide 1: Lassonde Industries Inc. Corporate Presentation
LASSONDE INDUSTRIES INC. CORPORATE PRESENTATION Financial Results for Fiscal 2018 and Third Quarter 2019 November 8, 2019
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Caution regarding forward-looking statements Certain statements made in this presentation, including, but not limited to, statements regarding the prospects of the industry, plans, financial position, and business strategy of the Company may constitute forward-looking stat
Slide 3: Highlights – Fiscal 2018
HIGHLIGHTS – FISCAL 2018 Earnings In millions of $ Years ended (except EPS) December 31 %Δ %Δ 2018 2017 2016 18 vs 17 17 vs 16 Sales 1,594.0 1,526.1 1,509.5 4.4% 1.1% Operating profit 105.2 133.3 126.2 -21.1% 5.6% Operating profit/Sales 6.6% 8.7% 8.4% Profit 68.0 95.5 72.2 -28.8% 32.4% Profit attrib
Slide 4: Highlights – Fiscal 2018: Earnings (cont'd)
HIGHLIGHTS – FISCAL 2018 Earnings (cont’d) Sales of $1,594.0M, $67.9M (or 4.4%) vs $1,526.1M in 2017: • Excluding Old Orchard Brands’ (OOB) sales of $66.9M and an unfavourable foreign exchange impact of $1.0M, sales for 2018 were up $2.0M, mainly due to: • $10.3M increase in sales of private label
Slide 5: Highlights – Fiscal 2018: Earnings (cont'd)
HIGHLIGHTS – FISCAL 2018 Earnings (cont’d) Financial expenses of $15.1M in 2018 vs $12.2M in 2017, $2.9M: • A $5.6M increase in financial expenses resulting from the financing of the OOB acquisition; and • A $1.3M decrease in amortization of transaction costs and a $1.0M decrease in interest expen
Slide 6: Highlights – Fiscal 2018: Statements of Financial Position
HIGHLIGHTS – FISCAL 2018 Consolidated Statements of Financial Position In millions of $ As at December 31 %Δ %Δ 2018 2017 2016 18 vs 17 17 vs 16 Non-cash working capital 196.2 145.0 169.5 35.3% -14.5% Property, plant and equipment 305.6 273.3 268.8 11.8% 1.7% Total assets 1,318.6 1,055.7 1,103.6 24.
Slide 7: Highlights – Fiscal 2018: Free Cash Flow Analysis
HIGHLIGHTS – FISCAL 2018 Free Cash Flow Analysis In m illions of $ Years ended December 31 Variance 2018 2017 2018-2017 Free cash flow Profit 68.0 95.5 (27.5) Adjustments Amortization and Depreciation 48.8 45.2 3.6 Pension plans, income tax and other 5.7 (0.9) 6.6 Change in non-cash working capital
Slide 8: Highlights – Third Quarter 2019
HIGHLIGHTS – THIRD QUARTER 2019 Earnings In millions of $ (except EPS) Third Quarters ended First Nine Months ended Sept. 28 Sept. 29 % Δ $Δ Sept. 28 Sept. 29 %Δ $Δ 2019 2018 19 vs 18 19 vs 18 2019 2018 19 vs 18 19 vs 18 Sales 422.9 418.6 1.0% 4.3 1,246.2 1,167.2 6.8% 79.0 Operating profit 25.0 29.1
Slide 9: Highlights – Third Quarter 2019: Earnings (cont'd)
HIGHLIGHTS – THIRD QUARTER 2019 Earnings (cont’d) Sales of $422.9M, $4.3M from $418.6M in 2018: • During the third quarter of 2018, the Company had benefited from a favourable decision by a U.S. administrative tribunal on product classification and that reduced the customs duties paid in previous
Slide 10: Highlights – Third Quarter 2019: Earnings (cont'd)
HIGHLIGHTS – THIRD QUARTER 2019 Earnings (cont’d) Financial expenses of $4.6M vs $5.1M in 2018, $0.5M: • A $0.8M decrease in the interest expense on long-term debt; and • A $0.3M interest expense on lease liabilities resulting from the adoption of IFRS 16 on January 1, 2019. “Other (gains) losses”
Slide 11: Dividends and Outlook
DIVIDENDS AND OUTLOOK Third quarter of fiscal 2019 Dividend: • Quarterly dividend of $0.595 per share (payable on December 13, 2019 for Q4); and • Down 26.5% from 2018; and • On an annualized basis, approximately 25% of 2018 profit attributable to shareholders. Outlook: • The Company’s sales were up
Slide 12: Building on a solid foundation towards new horizons
Building on a solid foundation towards new horizons LASSONDE INDUSTRIES INC.
Slide 13: Overview
OVERVIEW 2018 Sales: Cash flows from operating activities: 1,594.0 M$ 114.7 M$ Lassonde Pappas A. Lassonde Lassonde Specialties Arista Wines and Company The Canadian Develops, Imports and markets An American leader in leader in the manufactures, and selected wines the development, development, marke
Slide 14: Geographic Sales Distribution
GEOGRAPHIC SALES DISTRIBUTION In millions $1,800 Canada United States Other $1,600 $1,400 $1,200 60% $1,000 $800 $600 6% $400 40% 92% $200 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 14
Slide 15: Lassonde Today
LASSONDE TODAY 1. Calgary (AB) 2. Thornbury (ON) 3. Toronto (ON) 4. Rougemont, Saint-Damase, 1 Boisbriand (QC) head office and multiple facilities 5 5. Port Williams (NS) 4 2 14 3 6 13 6. Carver (MA) cranberry receiving station 8 7 9 7. Seabrook (NJ) 8. Carneys Point (NJ) 12 LPC head office 11 10 9.
Slide 16: Competitive Environment
COMPETITIVE ENVIRONMENT Lassonde faced a difficult competitive environment in a context of significant cost increases in 2018: • In January 2018, a major European company acquired the bottling business of the Company's main US competitor, thereby changing the structure of the private label fruit jui
Slide 17: Canada Food Guide
CANADA FOOD GUIDE The new Canada Food Guide was published in January 2019. • 1977 to 2007: 125 ml of 100% juice is equivalent to one serving of fruit; • 2019: 100% juice is considered a sweet drink to be consumed in moderation. A Leger Marketing survey of 1,518 Canadians in April 2019 revealed that:
Slide 18: Canada Food Guide
CANADA FOOD GUIDE We know that: • Juice is a minimally processed product and comes from fruits that do not meet the standards for the fresh fruit market; • 100% juice is better than the fruit that is not consumed: fruit and vegetable consumption is down 13% between 2004 and 2015 in Canada1. In the U
Slide 19: Canadian Food Guide
CANADIAN FOOD GUIDE Nutrient Unit Orange 100 g Orange juice 100 g The molecular Proximate analysis biodiversity of the Water g 86.75 87.22 juice is comparable Energy kcal 47 49 to that of the fruit. Protein g 0.94 0.68 Lipids g 0.12 0.12 In terms of vitamins Carbohydrates g 11.75 11.54 and minerals,
Slide 20: Canadian Food Guide
CANADIAN FOOD GUIDE Nutrient Unit Apple 100 g Apple juice 100 g The molecular Proximate analysis biodiversity of the Water g 85.56 88.24 juice is comparable Energy kcal 52 46 to that of the fruit. Protein g 0.26 0.10 Lipids g 0.17 0.13 In terms of vitamins Carbohydrates g 13.81 11.3 and minerals, th
Slide 21: Canadian Food Guide: Our Initiatives
CANADIAN FOOD GUIDE Our initiatives: • Since 2014, our product development strategy has focused primarily on hydration and health; • By 2025, we will have reduced the sugar content of our products by 20% compared to 2015 values; • Communication campaigns are being developed to promote the benefits o
Slide 22: Corporate Strategy
CORPORATE STRATEGY TO OFFER THE RIGHT PRODUCT IN THE RIGHT SIZE AT THE RIGHT PRICE INNOVATE - Healthy Products - Hydration TO CONSOLIDATE TO PROMOTE SUSTAINABLE DEVELOPMENT 22
Slide 23: Consolidate
CONSOLIDATE • To remain relevant to both our customers and our suppliers; Acquisition of Old Orchard Brands • Improves the company's manufacturing footprint in the United States against a backdrop of rising transportation costs; • Resulted in a contract with a major client; • Provides access to the
Slide 24: Right Product, Right Size, Right Price
RIGHT PRODUCT, RIGHT SIZE, RIGHT PRICE Increased production capacity at Lassonde Specialties: • Average growth rate of sales over 5 years (CAGR): 14.2% • Average growth rate of EBITDA over 5 years: (CAGR): 28.7% • Total investment of nearly $30.0M to double production capacity for low acidity produc
Slide 25: Sustainable Development: Packaging
SUSTAINABLE DEVELOPMENT Packaging – goals by 2025 • Commit to finding solutions to replace plastic straws; • Aim for 20% post-consumer recycled content in our packaging; • Use 100% recyclable packaging for our products; • Work with governments, industry and associations to promote the collection of
Slide 26: Sustainable Development: Water and Health
SUSTAINABLE DEVELOPMENT Water • Lassonde is a world leader in reducing AVERAGE WATER CONSUMED TO PRODUCE ONE the amount of water used to produce LITRE OF FINISHED PRODUCT - 2018 each liter of juice; • Investments in our Boisbriand plant will enable us to reduce its water consumption by 67%. 1.7 2.0
Slide 27: Innovate – Healthy Products and Hydration
INNOVATE – HEALTHY PRODUCTS AND HYDRATION Innovate in our current market segments: fruit juices and drinks, iced tea, ready-to-drink infusions and smoothies • Accelerate innovation and pursue growth opportunities; • Improve our operational efficiency to increase our profitability; • Maximize existin
Slide 28: Innovate – Healthy Products and Hydration
INNOVATE – HEALTHY PRODUCTS AND HYDRATION We prioritize two segments in product development: • Health and well-being; • Hydration. Health and wellness: sugar reduction efforts between 2014 and 2018 • We have introduced many products with less sugar and fewer calories (Oasis Hydrafruit, Infusion, Fru
Slide 29: New Products in 2019
INNOVATE – HEALTHY PRODUCTS AND HYDRATION New products in 2019: even more hydration solutions FRUIT DROP OASIS MORNING DEL MONTE PRUNE SPARKLING 1 L SMOOTHIE 1.36 L NECTAR 945 ML OASIS INFUSION 1 L DEL MONTE COCONUT ARIZONA 200 ML WATER 1 L 29
Slide 30: Mission and Vision
INNOVATE – HEALTHY PRODUCTS AND HYDRATION MISSION: • Provide naturally good, flavourful and specialized solutions that help people with unique dietary needs enjoy healthier and happier lives. True to our legacy as innovators, we can do that + more. VISION: • Be a key player in selected hydration and
Slide 31: Action Plan: Lassonde Pappas
ACTION PLAN: LASSONDE PAPPAS Sharpen LPC’s competitive edge: • Disciplined management of the contribution margin required for the use of the Company's production capacity: gradual elimination of low margin customers; • Selective increase in selling prices based on an optimization of the analysis of
Slide 32: Action Plan: Lassonde Pappas
ACTION PLAN: LASSONDE PAPPAS Production and supply chain: • Optimize fixed production costs by conducting a detailed analysis of cost drivers and identifying activities that do not create added value for the Company; • Assess the automation potential of certain production activities. Labour scarcity
Slide 33: Follow-up on 2018 Priorities
FOLLOW-UP ON 2018 PRIORITIES Finalize the Old Orchard Brands acquisition and start the integration Acquisition completed on May 31, 2018 process. Raise the production capacity of Lassonde Specialties to meet the SLI investment program is progressing needs of the strong growth of this subsidiary. Thi
Slide 34: 2019 Priorities
2019 PRIORITIES • Restore the profitability of our U.S. operations through disciplined application of the minimum contribution margin for the use of the Company’s production capacity. • Pursue the investment program of Lassonde Specialties to meet the needs stemming from strong growth of that subsid
Slide 35: Financial Performance
Financial Performance LASSONDE INDUSTRIES INC.
Slide 36: Selected Financial Information – 5 Years
SELECTED FINANCIAL INFORMATION 5 years Sales (in millions of $) EBITDA (in millions of $) *CAGR 5 years: 8.9% *CAGR 5 years: 5.9% 1,800.0 200.0 1,594.0 177.9 1,600.0 1,509.5 1,526.1 180.0 171.2 1,449.3 160.0 154.0 154.0 1,400.0 1,181.0 140.0 1,200.0 123.2 120.0 1,000.0 100.0 800.0 80.0 600.0 60.0 40
Slide 37: Selected Financial Information – 5 Years (cont'd)
SELECTED FINANCIAL INFORMATION 5 years (cont’d) EBIT (in millions of $) EPS (in $) *CAGR 5 years: 4.8% *CAGR 5 years: 8.1% 160.0 14.00 12.87 140.0 133.3 126.2 12.00 120.0 111.3 9.75 9.50 105.2 10.00 100.0 8.15 88.4 8.00 80.0 6.47 6.00 60.0 4.00 40.0 2.00 20.0 0.0 0.00 2014 2015 2016 2017 2018 2014 2
Slide 38: Questions
Questions LASSONDE INDUSTRIES INC.
Slide 39: Lassonde Industries Inc. Financial Results
LASSONDE INDUSTRIES INC. CORPORATE PRESENTATION Financial Results for Fiscal 2018 and Third Quarter 2019 November 8, 2019