TSX:TWH
TORONTO, Nov. 12 /CNW/ -
Financial Highlights
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Three months ended Nine months ended
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(in thousands of dollars September September September September
except per share amounts) 30, 2007 30, 2006 30, 2007 30, 2006
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Revenue 96,992 25,723 141,416 40,373
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EBITDA(1) 40,424 16,999 55,814 22,260
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Interest and other
income (expense) (6,194) (7) (7,572) (288)
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Equity income (loss) 117 2,926 (2,239) 11,698
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Provision for income taxes 12,631 4,037 17,924 7,950
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Non-controlling interest 2,611 - 3,934 -
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Net earnings 12,712 15,080 14,145 23,345
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Earnings per share - basic $0.56 $0.66 $0.62 $1.02
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Weighted average shares
outstanding 22,800 22,932
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(1) EBITDA is not a recognized performance measure under Canadian GAAP.
EBITDA is defined as earnings before taxes, interest, depreciation,
amortization, non-controlling interest and earnings from equity
accounted investments. Management believes that in addition to net
earnings, this measure is useful supplemental information to provide
investors with an indication of income available prior to debt
service, capital expenditures and income taxes. Investors should be
cautioned, however, that this measure should not be construed as an
alternative to net earnings determined in accordance with GAAP as an
indicator of the Company.
TODAY, THE COMPANY ANNOUNCED THE REGULAR ELIGIBLE DIVIDEND
OF $0.06 PER SHARE TO BE PAID ON DECEMBER 31st TO SHAREHOLDERS
OF RECORD AS AT DECEMBER 10TH
Third Quarter Operating Highlights
The tourist operations at White Pass and the golf operations of ClubLink are highly seasonal. The majority of the revenue and earnings from these businesses occur during the third quarter of the year. Accordingly, the earnings of the Company will fluctuate with those of the underlying business units.
On June 1st, 2007, the Company acquired an additional 6,635,300 shares of ClubLink (representing 39.0% of ClubLink's outstanding common shares) to increase its ownership interest to 70.7%. The purchase price of this additional interest, including transaction costs, was $88,018,000 and was funded through issuance of a one year unsecured note of $35,000,000 bearing interest at a rate of the greater of the Canadian prime lending rate and 6%, with the balance of $53,018,000 in cash. The acquisition has been accounted for under the purchase method of accounting. As part of the accounting treatment, the Company allocated the purchase price on the identifiable assets and liabilities acquired based on their estimated fair values at the time of acquisition. The earnings of ClubLink have been accounted for under the equity method to May 31st, 2007 and subsequently have been included in the consolidated statement of income and cash flow from June 1st, 2007.
The purchase price allocation is considered preliminary until the Company has obtained the necessary information to complete its allocations. As a result, the purchase price allocation may be adjusted in the fourth quarter of 2007.
The Company's operating income originates from White Pass and ClubLink. White Pass is a wholly owned subsidiary. Significant revenue is generated in the third quarter as ship arrivals peak and tourist traffic is at its high point. EBITDA from the Alaska operations decreased from US$15,337,000 in 2006 to US$15,048,000 for the third quarter of 2007. Although passenger counts increased by approximately 7%, White Pass incurred unusually high maintenance costs to sustain the efficiency and safety of the operation. As well, this division established a reserve of US$1,578,000 relating to the settlement of one of its major labour contracts.
The results of the subsidiary, which is deemed self-sustaining, are translated into Canadian currency using average rates during the period. A change in average exchange rates can impact the net earnings of the Company.
EBITDA (defined as revenue less cost of sales and operating expenses) for the nine months ended September 30, 2007 was $55,814,000 compared with $22,260,000 for the nine months ended September 30, 2006. The positive variance of $33,554,000 over the same period last year is mainly due to the acquisition of ClubLink on June 1, 2007, and accordingly Tri-White is consolidating the results of ClubLink for the four month period from June 1st to September 30th.
Tri-White has a significant ownership interest in two public entities, for which it has recorded income on an equity basis. ClubLink Corporation ("ClubLink") is Canada's largest owner, operator and developer of high-quality Member Golf Clubs, Daily Fee Golf Clubs and Golf Resorts, with 39 and one-half 18-hole equivalent golf courses open for play in 2007. Like the White Pass port and tourist operations, ClubLink operates in a highly seasonal market. For the five months ended May 31, 2007 the Company recorded an equity loss of $2,096,000 compared to income of $864,000 during the nine months ended September 30, 2006. Commencing June 1st, 2007, the Company has reflected the earnings of ClubLink on a consolidated basis.
The Company also accounts for its investment in Renasant Financial Partners Ltd. ("Renasant") using the equity method. The acquisition of the Company's 34.5% interest in Renasant was obtained in November 2003. The Company's interest as at September 30, 2007 stands at 36.5%. The equity income recorded by Tri-White for the quarter ended September 30, 2007 was $117,000, (2006 - equity income of $410,000). This was based on the operating results of Renasant for the three months ended June 30, 2007. The Company records its equity interest in Renasant on a three-month trailing basis. No dividends were received in the quarter ended September 30, 2007 (2006 - $22,182,000).
Net earnings for the nine months ended September 30, 2007 reached $14,145,000 or $0.62 per share as compared with $23,345,000 or $1.02 per share in 2006. The variance is largely attributable to a one-time gain in 2006 on distributions from the investment in Renasant resulting in income of $10,834,000 or $0.47 per share.
Long-term investments include 3.2 million shares of Renasant carried at $5,460,000. At September 30, 2007, the market value of these assets exceeds their carrying cost by $1,416,000 (December 31, 2006 - below market value by $1,478,000).
Corporate Developments
Tri-White has advised ClubLink Corporation that it does not intend to make a follow-up offer to purchase the balance of the outstanding shares of ClubLink on the same terms as it acquired 6,635,300 common shares of ClubLink on June 1st, 2007. The shares of ClubLink are held for investment purposes; Tri-White may increase or decrease its beneficial ownership of ClubLink shares as circumstances warrant.
The Company has been approved by the Toronto Stock Exchange to make a normal course issuer bid to purchase up to 1,136,828 common shares. The program expires September 19, 2008. During the nine months ended September 30, 2007 the Company purchased 204,700 shares (September 30, 2006 - nil).
The Company continued with its regular quarterly dividend program and paid an eligible dividend of $0.06 per share, or $1,356,000 on September 28th.
Financial statements are attached.
Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continue," "estimate," "expects," and "will" and words of similar import, constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; changes in business strategy or development/acquisition plans; environmental exposures, financing risk; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in the Company's filings with Canadian securities regulators. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update or revise any forward-looking statements.
Management's discussion and analysis, financial statements and other disclosure information relating to the Company is available through SEDAR and at www.sedar.com and on the Company website at www.tri-white.com.
TRI-WHITE CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
September 30, 2007
TRI-WHITE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(in thousands of dollars) 2007 2006
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ASSETS
Current
Cash $ 4,484 $ 21,853
Accounts receivable 20,597 543
Mortgages and loans receivable 417 16,892
Inventories and prepaid expenses 13,512 4,939
Other assets 3,230 -
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42,240 44,227
Long-term investments 5,460 36,554
Mortgages and loans receivable 5,780 -
Capital assets 597,868 73,957
Other assets 3,618 -
Intangible assets 10,607 -
Goodwill 9,107 -
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Total assets $ 674,680 $ 154,738
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Revolving long-term debt $ 23,791 $ 21,706
Non-revolving long-term debt 11,373 -
Capital lease obligations 5,098 -
Note payable 35,000 -
Convertible debentures 10,092 -
Accounts payable and accrued liabilities 30,364 1,915
Income and other taxes payable 10,465 1,655
Prepaid annual dues and deposits 17,748 -
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143,931 25,276
Revolving long-term debt 43,996 -
Non-revolving long-term debt 239,498 -
Capital lease obligations 10,346 -
Deferred membership fees 56,672 -
Future income taxes 17,961 17,055
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Total liabilities 512,404 42,331
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Non-controlling interest 50,842 -
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Shareholders' equity
Share capital 60,765 61,278
Contributed surplus 237 191
Retained earnings 73,889 65,205
Accumulated other comprehensive income (23,457) (14,267)
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Total shareholders' equity 111,434 112,407
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Total liabilities and shareholders' equity $ 674,680 $ 154,738
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TRI-WHITE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
For the For the
Three months ended Nine months ended
(thousands of dollars Sep. 30 Sep. 30 Sep. 30 Sep. 30
except per share amounts) 2007 2006 2007 2006
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REVENUE
Operating revenue $ 93,527 $ 25,723 $ 136,723 $ 40,373
Amortization of membership
fees 3,465 - 4,693 -
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96,992 25,723 141,416 40,373
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EXPENSES
Operating expenses 56,568 8,724 85,602 18,113
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Earnings before other items,
income taxes and non-
controlling interest 40,424 16,999 55,814 22,260
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OTHER ITEMS
Amortization of capital
assets (5,066) (801) (8,122) (2,375)
Amortization of other
assets and intangibles (284) - (435) -
Land lease rent (1,043) - (1,443) -
Investment income 677 535 1,911 1,159
Interest expense (6,750) (557) (9,490) (1,590)
Gain (loss) on sale of
investments and capital
assets - (3) 7 (3)
Unrealized foreign
exchange gain (loss) (121) 18 - 146
Income (loss) on equity
accounted investments
- ClubLink Corporation - 2,516 (2,096) 864
- Renasant Financial
Partners Ltd. 117 410 (143) 10,834
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(12,470) 2,118 (19,811) 9,035
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Earnings before income taxes
and non-controlling interest 27,954 19,117 36,003 31,295
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Provision for income taxes
Current 10,274 6,954 14,552 9,472
Future 2,357 (2,917) 3,372 (1,522)
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12,631 4,037 17,924 7,950
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Net earnings before non-
controlling interest 15,323 15,080 18,079 23,345
Non-controlling interest (2,611) - (3,934) -
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Net earnings 12,712 15,080 14,145 23,345
Unrealized foreign currency
translation loss (3,150) (199) (9,190) (3,369)
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Total comprehensive earnings $ 9,562 $ 14,881 $ 4,955 $ 19,976
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Earnings per share
Basic $ 0.56 $ 0.66 $ 0.62 $ 1.02
Diluted $ 0.55 $ 0.65 $ 0.61 $ 1.01
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TRI-WHITE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
For the For the
Three months ended Nine months ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
(in thousands of dollars) 2007 2006 2007 2006
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OPERATING ACTIVITIES
Net earnings for the period $ 12,712 $ 15,080 $ 14,145 $ 23,345
Items not affecting cash:
Amortization of capital
assets 5,066 801 8,122 2,375
Amortization of other
assets and intangibles 284 - 435 -
Future income taxes 2,357 (2,917) 3,372 (1,522)
Amortization of
membership fees (3,465) - (4,693) -
Loss (gain) on sale of
assets and investments - 3 (7) 3
(Income) loss of equity
accounted investment
- ClubLink - (2,516) 2,096 (864)
(Income) loss of equity
accounted investment
- Renasant (117) (410) 143 (10,834)
Non controlling interest
- ClubLink 2,611 - 3,934 -
Net unrealized foreign
exchange loss (gain) 121 (18) - (146)
Stock compensation expense 15 15 46 46
Distributions from equity
accounted investments - 12,377 664 13,532
Collection of membership
fee installments 7,727 - 9,864 -
Net change in operating
assets and liabilities (5,622) 7,364 (19,539) 2,228
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Cash provided by operating
activities 21,689 29,779 18,582 28,163
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FINANCING ACTIVITIES
Promissory notes - (6,000) - (17,935)
Proceeds on issue of
subsidiary common shares 34 - 50 -
Shares purchased for
cancellation - - (1,906) -
Dividends paid (1,356) (1,360) (4,068) (4,080)
Dividends paid
- minority interest (301) - (301) -
Capital lease obligations 665 - 1,779 -
Deferred financing charges - - (95) -
Revolving long-term debt (13,116) 183 9,672 -
Non-revolving long-term debt (2,213) - (2,213) -
Loan payable (4,000) - - 6,384
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Cash provided by (used in)
financing activities (20,287) (7,177) 2,918 (15,631)
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INVESTING ACTIVITIES
Purchase of capital assets (5,130) (1,087) (16,633) (2,096)
Long-term investments - (762) (52,918) (762)
Return of capital - 10,073 9,480 10,073
Cash acquired by increasing
interest in ClubLink - - 1,603 -
Advances of loan receivable - - (5,204) -
Repayment of loans receivable 4,701 5,000 26,815 5,000
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Cash provided by (used in)
investing activities (429) 13,224 (36,857) 12,215
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Net effect of currency
translation adjustment on
cash and cash equivalents (1,216) (93) (2,012) (751)
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Net increase (decrease) in
cash and cash equivalents
during the period (243) 35,733 (17,369) 23,996
Cash and cash equivalents,
beginning of period 4,727 8,732 21,853 20,469
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Cash and cash equivalents,
end of period $ 4,484 $ 44,465 $ 4,484 $ 44,465
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Represented by
Cash $ 4,484 $ 44,465 $ 4,484 $ 44,465
Cash equivalents - - - -
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$ 4,484 $ 44,465 $ 4,484 $ 44,465
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%SEDAR: 00009355E