Lassonde sales up double digits in Q3
Apple & Eve acquisition boosts sales
Lassonde Industries Inc., Rougemont, Quebec, posted sales of $315 million in the third quarter of 2014, marking a 22.3 percent increase compared with the prior-year period. Sales for the third quarter included the Apple & Eve LLC (A&E) portfolio, which was acquired earlier this year. Profit attributable to the company's shareholders for this period totaled $10.6 million, reflecting a decrease of $600,000 from the third quarter of 2013.
"Our 2014 third-quarter results reflect a combined impact of solid performance by our U.S. private-label products and charges incurred to acquire Apple & Eve,” said Pierre-Paul Lassonde, chairman of the board and chief executive officer of Lassonde Industries, in a statement. “Furthermore, we are satisfied with the progress made in integrating our new subsidiary."
Lassonde Industries completed the acquisition of A&E on July 25 for a cash consideration of $147.6 million, which was paid at the close of the transaction and subject to adjustments for working capital and other items. The company now owns a 90 percent stake in A&E, and members of the Lassonde family own the remaining 10 percent interest. Moreover, the interim consolidated financial statements for the third quarter of 2014 include the results of A&E from July 25 to Sept. 27 as well as certain transaction fees related to the acquisition.
Excluding A&E's sales, the company's third-quarter sales posted a year-over-year increase of 7.2 percent, mainly because of higher sales of private-label products and a favorable foreign exchange impact, partly offset by higher trade spending that had an unfavorable impact on sales of national brands. For the first nine months of 2014, sales totaled $831.6 million, up 9.9 percent from the same time period in 2013.
Lassonde Industries’ operating profit for the third quarter of 2014 totaled $20 million, down $2.1 million from last year’s operating profit. However, when excluding the impact of the A&E acquisition, operating profit was up $2 million from last year's third quarter. This increase was mostly because of an improvement in the profitability of private-label products in the United States partly offset by higher selling and administrative expenses.
During the third quarter of 2014, the company incurred $3.5 million in expenses related to the A&E acquisition. In addition, A&E posted a $600,000 operating loss due, in part, to a $1 million increase in cost of sales attributable to an inventory step-up resulting from the acquisition. Operating profit for the first nine months of 2014 stood at $56.1 million, up $600,000 from the prior-year period.
The company's financial expenses went from $5.8 million in the third quarter of 2013 to $6 million this quarter, an increase that was mostly attributable to a higher interest expense related to the financing of the A&E acquisition. For the first nine months, financial expenses went from $16.7 million in 2013 to $15.3 million this fiscal year.
Profit before income taxes stood at $14.9 million for the third quarter of 2014, down $800,000 from the prior-year period. For the first nine months of 2014, profit before income taxes totaled $42 million, up $2.9 million compared with the prior-year period.
Going forward, the company expects the A&E acquisition to have a significant impact on its comparative financial data. The company also expects to incur integration costs of approximately $700,000 during the last quarter of 2014. Barring any major external shocks and excluding future sales from A&E, Lassonde Industries remains optimistic about its ability to slightly increase its consolidated sales in 2014 compared with those of 2013, it says.