MEGA Brands reports first quarter 2012 results

  • Consolidated sales up 14%
  • Toys sales up 10%
  • Stationery & Activities sales up 26%

MONTREAL, May 10, 2012 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the first quarter ended March 31, 2012. (All figures are expressed in US dollars.)

Consolidated net sales in the first quarter increased 14% to $58.2 million compared to $51.0 million in the corresponding 2011 period.

  • Toy sales increased 10% compared to the first quarter of 2011, driven by higher product shipments in the Preschool and Boys construction categories. Toys sales have increased year-over-year in nine of the last ten quarters.
  • Sales of Stationery and Activities products were up 26%, the fourth consecutive quarter of year-over-year growth in this segment.
  • On a geographical basis, sales were 21% higher in North America and 2% in international markets compared to the first quarter of 2011.

Earnings before interest, taxes, depreciation and amortization (''EBITDA'') improved by $1.7 million to $(2.2) million compared to $(3.9) million in the first quarter of 2011. EBITDA is a supplementary financial measure.

Net loss improved to $8.5 million or $0.52 basic and diluted per share compared to a net loss of $9.3 million or $0.57 per basic and diluted share in the first quarter of 2011. The Corporation's business is seasonal and historically the first quarter is the period with the lowest sales of the year and negative profitability.

''Our first quarter results show good sales growth, particularly in North America, and our key profitability metrics have improved compared to last year,'' said Marc Bertrand, President and CEO. ''Our top priority for the rest of the year is to capitalize on the strong momentum we have built in our brands.''

Conference Call
A conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing 1 (888) 231-8191 or (647) 427-7450. For those unable to participate, a replay will be available until May 17, 2012. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 71875755.

About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.

The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.

MD&A Filing
This press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the unaudited consolidated financial statements and notes for the three-month periods ended March 31, 2012 and 2011. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.

Supplementary Financial Measures
The Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the three-month period ended March 31, 2012, which is available at www.sedar.com and on the Corporation's Web site.

Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2011, which are available at www.sedar.com and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.

Unaudited Interim Consolidated Income Statements
(in thousands of US dollars, except per share amounts) 
   
  Three-month periods
ended March 31,
  2012 2011
  $ $
     
Net sales 58,187 51,036
Cost of sales 38,756 33,224
Gross profit 19,431 17,812
     
Marketing and advertising expenses 2,848 2,864
Research and development expenses 4,056 3,276
Other selling, distribution and administrative expenses 18,458 17,910
Contingent consideration on business acquisition 96 168
Loss (gain) on foreign currency translation (905) 121
     
Loss from operations (5,122) (6,527)
     
Financial expenses 4,423 4,673
     
Loss before income taxes (9,545) (11,200)
     
Income taxes     
  Current (1,012) (1,451)
  Deferred - (485)
  (1,012) (1,936)
     
Net loss (8,533) (9,264)
     
Loss per share    
  Basic (0.52) (0.57)
  Diluted (0.52) (0.57)
       
Unaudited Interim Consolidated Statements of Comprehensive Loss
(in thousands of US dollars, except per share amounts) 
   
  Three-month periods
ended March 31,
  2012 2011
  $ $
     
Net loss (8,533) (9,264)
     
Other comprehensive income (loss):    
  Cumulative translation adjustment 1,042 (566)
     
Other comprehensive income (loss): 1,042 (566)
     
Comprehensive loss (7,491) (9,830)
     
Consolidated Statements of Financial Position
(in thousands of US dollars)
     
  March 31, December 31,
  2012 2011
  (Unaudited) (Audited)
  $ $
     
Assets    
Current assets    
Cash and cash equivalents 5,629 6,745
Trade and other receivables 81,293 126,359
Inventories 79,051 69,560
Derivative financial instruments 565 904
Prepaid expenses  10,695 13,760
Total current assets 177,233 217,328
     
Non-current assets    
Property, plant and equipment 36,467 32,172
Intangible assets 23,087 23,193
Goodwill 30,000 30,000
Derivative financial instruments 118 231
Total assets 266,905 302,924
     
     
Liabilities    
     
Current liabilities    
Asset-based credit facility 29,717 37,279
Trade and other payables 52,810 71,762
Income taxes 4,714 5,832
Current portion of long-term debt 7,313 7,013
  94,554 121,886
Non-current liabilities    
Long-term debt 103,747 105,275
  103,747 105,275
Equity    
Share capital 429,007 429,007
Warrants 24,430 24,430
Contributed surplus 3,824 3,492
Deficit (382,855) (374,322)
Accumulated other comprehensive loss (5,802) (6,844)
Total equity 68,604 75,763
Total liabilities and equity 266,905 302,924

Unaudited Consolidated Statement of Changes in Equity
(in thousands of US dollars)
 
  Share capital Warrants Contributed
surplus
Deficit Accumulated
other
comprehensive
loss
Total equity
  $ $ $ $ $ $
Balance - December 31, 2010 429,007 24,430 1,982 (382,652) (5,260) 67,507
Net loss - - - (9,264) - (9,264)
Other comprehensive loss - - - - (566) (566)
Stock-based compensation - - 535 - - 535
Balance - March 31, 2011 429,007 24,430 2,517 (391,916) (5,826) 58,212
             
Balance - December 31, 2011 429,007 24,430 3,492 (374,322) (6,844) 75,763
Net loss - - - (8,533) - (8,533)
Other comprehensive income - - - - 1,042 1,042
Stock-based compensation - - 332 - - 332
Balance - March 31, 2012 429,007 24,430 3,824 (382,855) (5,802) 68,604

Unaudited Consolidated Statements of Cash Flows 
(in thousands of US dollars) 
 
  Three-month periods
ended March 31,
  2012 2011
  $ $
     
Operating activities    
Net loss (8,533) (9,264)
Adjustments for:    
  Depreciation of property, plant and equipment 2,765 2,404
  Amortization of intangible assets 105 105
  Stock-based compensation 332 535
  Financial expenses 4,423 4,673
  Income taxes (1,012) (1,936)
  Gain on foreign currency (762) (31)
  (2,682) (3,514)
  Net change in non-cash working capital balances 23,339 22,211
  Income taxes recovered (paid) (272) 1,312
  Interest paid (446) (92)
Cash flows provided by operating activities 19,939 19,917
     
Financing activities    
Repayment of debentures (7,267) -
Change in asset-based credit facility (7,562) -
Repayment of long-term debt (12) (14)
Cash flows used in financing activities (14,841) (14)
     
Investing activities    
Acquisition of property, plant and equipment (6,248) (8,575)
Cash flows used in investing activities (6,248) (8,575)
     
Effect of changes in foreign exchange rates on cash and cash equivalents 34 (31)
     
Increase (decrease) in cash and cash equivalents (1,116) 11,297
Cash and cash equivalents — Beginning of period 6,745 5,277
     
Cash and cash equivalents — End of period 5,629 16,574

 

SOURCE MEGA BRANDS INC.




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