MEGA Brands Reports Fourth Quarter and 2012 Results

  • Consolidated net sales up 18% in Q4 and 12% full year
  • Toys net sales up 21% in Q4 and 12% full year
  • EBITDA up 33% in Q4 and 25% full year

MONTREAL, March 1, 2013 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2012. (All figures are expressed in US dollars.)

Fourth quarter 2012 consolidated net sales increased 18% to $127.5 million compared to $108.5 million in the corresponding 2011 period.

  • Sales were up 21% in Toys product lines and 1% in Stationery & Activities.
  • On a geographic segment basis, North American sales rose 22 % and International sales were up 7%.

Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased 33% to $13.9 million compared to $10.4 million in the fourth quarter of 2011. EBITDA is a supplementary financial measure.

Net earnings were $4.0 million or $0.24 per basic share ($0.01 per diluted share), compared to $0.2 million or $0.01 per basic share (loss of $0.21 per diluted share) in the same 2011 period.

Full year 2012
For 2012, consolidated net sales increased 12% to $420.3 million compared to $376.8 million in 2011.

  • Sales increased 12% in Toys product lines and 9% for Stationery & Activities.
  • On a geographic segment basis, sales were up 20% in North America and down 4% in international markets.

EBITDA increased 25% to $49.2 million compared to $39.2 million in 2011. Net earnings were $16.6 million or $1.01 per basic share ($0.84 per diluted share), compared to $8.3 million or $0.51 per basic share ($0.46 per diluted share) in 2011.

Management's comments
''MEGA Brands achieved a solid fourth quarter in 2012, with higher sales, gross margin, profitability and cash flow compared to the same period in 2011,'' said Marc Bertrand, President and Chief Executive Officer. ''Our brands and our financial position continue to strengthen, and we will continue to invest in product development and to increase efficiency and manufacturing capacity at our Montreal facility.''

''Looking ahead, we expect continued sales growth based on our momentum in the marketplace and positive feedback on our product lines at recent toy fairs in Asia, Europe and North America,'' concluded Marc Bertrand.

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 (514) 807-9895 or 1 (888) 231-8191. For those unable to participate, a replay will be available until March 8, 2013. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 87704752.

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 audited consolidated financial statements and notes for the years ended December 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.

Use of 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 year ended December 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, 2012, 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.


MEGA Brands Inc.              
Consolidated Income Statements              
(in thousands of US dollars, except per share amounts)              
               
  Three-month periods
ended December 31,
  Twelve-month periods
ended December 31,
  2012 2011 2012 2011
  (Unaudited) (Unaudited) (Audited) (Audited)
  $ $ $ $
               
Net sales 127,538   108,495   420,271   376,827
Cost of sales 79,396   68,575   262,452   235,649
Gross profit 48,142   39,920   157,819   141,178
               
Marketing and advertising expenses 7,703   7,808   16,937   17,027
Research and development expenses 4,405   4,491   16,218   14,456
Other selling, distribution and administrative expenses 25,184   21,596   87,830   82,540
Contingent consideration on business acquisition 96   110   383   994
Loss on foreign currency translation 473   801   576   1,421
               
Earnings from operations 10,281   5,114   35,875   24,740
               
Financial expenses 4,516   4,604   17,647   18,666
Loss on settlement of debt -   -   -   2,984
  4,516   4,604   17,647   21,650
               
Earnings before income taxes 5,765   510   18,228   3,090
               
Income taxes               
  Current 1,755   (7,369)   1,642   (12,337)
  Government loans -   7,645   -   7,097
  1,755   276   1,642   (5,240)
               
Net earnings 4,010   234   16,586   8,330
               
Earnings per share              
  Basic 0.24   0.01   1.01   0.51
  Diluted 0.01   (0.21)   0.84   0.46

MEGA Brands Inc.              
Consolidated Statements of Comprehensive Income              
(in thousands of US dollars, except per share amounts)              
               
  Three-month periods
ended December 31,
  Twelve-month periods
ended December 31,
  2012 2011 2012 2011
  (Unaudited) (Unaudited) (Audited) (Audited)
  $ $ $
               
Net earnings 4,010   234   16,586   8,330
               
Other comprehensive income (loss):              
  Cumulative translation adjustment (258)   479   1,099   (1,584)
               
Other comprehensive income (loss) (258)   479   1,099   (1,584)
               
Comprehensive income 3,752   713   17,685   6,746

MEGA Brands Inc.        
Consolidated Statements of Financial Position        
(in thousands of US dollars)        
         
  December 31, December 31,
  2012 2011
  (Audited)   (Audited)  
  $ $
         
Assets        
Current assets        
Cash and cash equivalents 8,018   6,745  
Trade and other receivables 130,541   126,359  
Inventories 45,779   69,560  
Derivative financial instruments 113   904  
Prepaid expenses  9,370   13,760  
Total current assets 193,821   217,328  
         
Non-current assets        
Property, plant and equipment 39,817   32,172  
Intangible assets 22,771   23,193  
Goodwill 30,000   30,000  
Derivative financial instruments -   231  
Total assets 286,409   302,924  
         
Liabilities        
         
Current liabilities        
Government loans -   37,279  
Trade and other payables 62,638   71,762  
Income taxes 5,631   5,832  
Current portion of long-term debt 8,023   7,013  
  76,292   121,886  
Non-current liabilities        
Long-term debt 112,992   105,275  
Derivative financial instruments 206   -  
  113,198   105,275  
Equity        
Share capital 431,893   429,007  
Warrants 24,029   24,430  
Contributed surplus 4,478   3,492  
Deficit (357,736)   (374,322)  
Accumulated other comprehensive loss (5,745)   (6,844)  
Total equity 96,919   75,763  
Total liabilities and equity 286,409   302,924  

MEGA Brands Inc.              
Consolidated Statement of Changes in Equity              
(in thousands of US dollars)              
               
    Share capital Warrants Contributed
surplus
Deficit Accumulated
other
comprehensive
loss
Total equity
(Audited)   $ $ $ $ $ $
Balance - December 31, 2010   429,007 24,430 1,982 (382,652) (5,260) 67,507
Net earnings   - - - 8,330 - 8,330
Other comprehensive loss   - - - - (1,584) (1,584)
Stock-based compensation   - - 1,510 - - 1,510
Balance - December 31, 2011   429,007 24,430 3,492 (374,322) (6,844) 75,763
               
Net earnings   - - - 16,586 - 16,586
Other comprehensive income   - - - - 1,099 1,099
Options exercised   472 - (148)     324
Warrants exercised   2,414 (401) - - - 2,013
Stock-based compensation   - - 1,134 - - 1,134
Balance - December 31, 2012   431,893 24,029 4,478 (357,736) (5,745) 96,919

MEGA Brands Inc.      
Consolidated Statements of Cash Flows      
(in thousands of US dollars)      
       
  Twelve-month periods,
ended December 31
  2012 2011
  (Audited) (Audited)
  $ $
       
Operating activities      
Net earnings 16,586   8,330
Adjustments for:      
  Depreciation of property, plant and equipment 12,476   13,074
  Amortization of intangible assets 422   422
  Loss on settlement of debt -   1,236
  Stock-based compensation 1,134   1,511
  Financial expenses 17,647   18,666
  Writeoff deferred financing costs -   1,748
  Income taxes 1,642   (5,240)
  Loss (gain) on foreign currency 2,316   (374)
    52,223   39,373
  Net change in non-cash working capital balances 14,406   (24,011)
  Income taxes paid (recovered) (1,473)   1,312
  Interest paid (13,158)   (13,755)
Cash flows provided by operating activities 51,998   2,919
       
Financing activities      
Repayment of debentures (7,411)   (20,678)
Change in asset-based credit facility (37,279)   37,279
Government loans 6,591   5,065
Issuance of long-term debt 4,524   32
Repayment of long-term debt (220)   -
Issuance of capital stock 2,337   -
Cash flows provided by (used in) financing activities (31,458)   21,698
       
Investing activities      
Acquisition of property, plant and equipment (19,234)   (23,248)
Cash flows used in investing activities (19,234)   (23,248)
       
Effect of changes in foreign exchange rates on cash and cash equivalents (33)   99
       
Increase in cash and cash equivalents 1,273   1,468
Cash and cash equivalents — Beginning of year 6,745   5,277
       
Cash and cash equivalents — End of year 8,018   6,745

 

 

 

SOURCE MEGA BRANDS INC.




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