2014

MEGA Brands reports third quarter 2013 results

  • EBITDA of $29.2 million compared to $28.2 million
  • Diluted EPS of $0.79 compared to $0.63

MONTREAL, Oct. 31, 2013 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the third quarter ended September 30, 2013. (All figures are expressed in US dollars.)

Consolidated net sales in the third quarter were $140.9 million compared to $140.1 million in the corresponding 2012 period.

  • Sales for the Toys segment increased 1% compared to the third quarter of 2012, with strong shipments of Preschool & Girls construction toys, offset by lower sales of Boys & Collectors construction toys.
  • Sales for the Stationery & Activities segment were up 1%, the tenth consecutive quarter of year-over-year growth.
  • On a geographical basis, North American sales were 1% higher and international sales were level.

Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased to $29.2 million compared to $28.2 million in the third quarter of 2012. EBITDA is a supplementary financial measure.

Net earnings were $22.6 million or $0.79 per diluted share ($0.99 per basic share) compared to $19.5 million or $0.63 per diluted share ($1.19 per basic share) in the third quarter of 2012.

For the nine-month period ended September 30, 2013, consolidated net sales increased 4% to $303.5 million compared to $292.7 million in the same period last year, with 4% growth in Toys, 2% in Stationery & Activities, 4% in North America and 2% in International. EBITDA increased to $38.1 million compared to $35.2 million in the corresponding period in 2012. Net earnings were $19.4 million or $0.82 per diluted share ($0.94 per basic share) compared to $12.6 million or $0.64 per diluted share ($0.77 per basic share) in the same 2012 period.

''With our solid Preschool & Girls offering and recent traction in Boys & Collectors construction toys, including the launch of Call of Duty Collector Construction Sets, we continue to focus on sustaining our positive sales momentum through the balance of 2013,'' said Marc Bertrand, President and CEO. ''In addition, we are continuing to move forward with initiatives to improve our balance sheet, global manufacturing position and brand portfolio.

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 (514) 807-9895. For those unable to participate, a replay will be available until November 7, 2013. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 50752892.

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- and nine-month periods ended September 30, 2013 and 2012. 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- and nine-month periods ended September 30, 2013, 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.

Unaudited Interim Consolidated Income Statements
(in thousands of US dollars, except per share amounts)

  Three-month periods
ended September 30,
  Nine-month periods
ended September 30,
  2013   2012   2013   2012
  $   $   $   $
               
Net sales 140,896   140,057   303,526   292,733
Cost of sales 86,704   84,076   190,217   183,056
Gross profit 54,192   55,981   113,309   109,677
               
Marketing and advertising expenses 3,265   3,358   11,872   9,234
Research and development expenses 3,679   3,754   11,572   11,813
               
Other selling, distribution and administrative expenses 21,224   23,533   62,790   62,646
Contingent consideration on business acquisition 87   95   260   287
Loss (gain) on foreign currency translation 449   574   (842)   103
               
Earnings from operations 25,488   24,667   27,657   25,594
               
Financial expenses 2,119   4,419   8,596   13,131
Early redemption of debentures -   -   2,869   -
  2,119   4,419   11,465   13,131
               
Earnings before income taxes 23,369   20,248   16,192   12,463
               
Income taxes              
  Current 793   725   (3,170)   (113)
  Deferred -      
  793   725   (3,170)   (113)
               
Net earnings 22,576   19,523   19,362   12,576
               
Earnings per share              
  Basic 0.99   1.19   0.94   0.77
  Diluted 0.79   0.63   0.82   0.64


Unaudited Interim Consolidated Statements of Comprehensive Income
(in thousands of US dollars, except per share amounts)

  Three-month periods
ended September 30,
  Nine-month periods
ended September 30,
  2013   2012   2013   2012
  $     $  
               
Net earnings 22,576   19,523   19,362   12,576
               
Other comprehensive income (loss):              
               
Items that may be reclassified subsequently to income or loss              
  Cumulative translation adjustment (8)   244   (551)   1,053
               
Items that will not be reclassified subsequently to income or loss              
  Cumulative translation adjustment (494)   (1,169)   2,250   304
               
Other comprehensive income (loss): (502)   (925)   1,699   1,357
               
Comprehensive income 22,074   18,598   21,061   13,933


Unaudited Consolidated Statements of Financial Position
(in thousands of US dollars)

  September 30,   December 31,
  2013   2012
  $   $
       
Assets      
Current assets      
Cash and cash equivalents 4,038   8,018
Trade and other receivables 146,201   130,541
Inventories 69,909   45,779
Derivative financial instruments -   113
Prepaid expenses  7,105   9,370
Total current assets 227,253   193,821
       
Non-current assets      
Property, plant and equipment 46,329   39,817
Intangible assets 22,455   22,771
Goodwill 30,000   30,000
Total assets 326,037   286,409
       
       
Liabilities      
       
Current liabilities      
Asset-based credit facility 8,816   -
Trade and other payables 75,488   62,638
Income taxes 3,774   5,631
Derivative financial instruments 472   -
Current portion of long-term debt 1,888   8,023
  90,438   76,292
Non-current liabilities      
Long-term debt 62,150   112,992
Derivative financial instruments 72   206
  62,222   113,198
Equity      
Share capital 501,851   431,893
Warrants 8,486   24,029
Contributed surplus 5,460   4,478
Deficit (338,374)   (357,736)
Accumulated other comprehensive loss (4,046)   (5,745)
Total equity 173,377   96,919
Total liabilities and equity 326,037   286,409


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, 2011 429,007 24,430 3,492   (374,322) (6,844) 75,763
Net earnings - - -   12,576 - 12,576
Options exercised 316   (100)       216
Other comprehensive income - - -   - 1,357 1,357
Stock-based compensation - - 692   - 692
Balance - September 30, 2012 429,323 24,430 4,084   (361,746) (5,487) 90,604
               
Balance - December 31, 2012 431,893 24,029 4,478   (357,736) (5,745) 96,919
Net earnings - -   19,362 - 19,362
Options exercised 1,679 - (518)   - - 1,161
Warrants exercised 68,279 (15,543) -   - - 52,736
Other comprehensive income - - -   - 1,699 1,699
Stock-based compensation - - 1,500   - - 1,500
Balance - September 30, 2013 501,851 8,486 5,460   (338,374) (4,046) 173,377


Unaudited Consolidated Statements of Cash Flows
(in thousands of US dollars)

  Nine-month periods
ended September 30,
  2013   2012
  $  
       
Operating activities      
Net earnings 19,362   12,576
Adjustments for:      
  Depreciation of property, plant and equipment 9,817   9,045
  Amortization of intangible assets 316   316
  Stock-based compensation 1,500   692
  Financial expenses 8,596   13,131
  Early redemption of debentures 2,869   -
  Income taxes (3,170)   (113)
  Loss (gain) on foreign currency (634)   2,849
  38,656   38,496
  Net change in non-cash working capital balances (26,390)   (13,640)
  Income taxes recovered (paid) 1,701   (472)
  Interest paid (4,875)   (7,055)
Cash flows provided by operating activities 9,092   17,329
       
Financing activities      
Repayment of debentures (60,368)   (7,411)
Change in asset-based credit facility 8,816   (4,018)
Government loan -   6,591
Issuance of capital stock 53,899   217
Issuance (repayment) of long-term debt (317)   24
Cash flows provided (used) in financing activities 2,030   (4,597)
       
Investing activities      
Acquisition of property, plant and equipment (15,024)   (15,765)
Cash flows used in investing activities (15,024)   (15,765)
       
Effect of changes in foreign exchange rates on cash and cash equivalents (78)   (58)
       
Decrease in cash and cash equivalents (3,980)   (3,091)
Cash and cash equivalents — Beginning of period 8,018   6,745
       
Cash and cash equivalents — End of period 4,038   3,654

 

 

SOURCE MEGA Brands Inc.



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