Michael Foods Reports Fourth Quarter Results

MINNETONKA, Minn., March 21, 2014 /PRNewswire/ -- Michael Foods Group, Inc. today reported financial results for the fourth quarter of 2013.

Net sales for the quarter ended December 28, 2013 were $512.7 million, compared to $503.6 million in 2012, an increase of 1.8%. Net earnings for the quarter ended December 28, 2013 were $15.9 million, compared to $13.7 million in 2012. Net sales for the year ended December 28, 2013 were $1,948.3 million, compared to $1,856.1 million in 2012, an increase of 5%. Net earnings for the year ended December 28, 2013 were $50.4 million, compared to $30.1 million in 2012.

Earnings before interest, taxes, depreciation, amortization ("EBITDA") and other adjustments ("adjusted EBITDA," as defined in the Company's credit facility) for the quarter ended December 28, 2013 were $69.7 million, compared to $67.3 million in 2012. Adjusted EBITDA for the year ended December 28, 2013 were $257.8 million, compared to $242.8 million in 2012, an increase of 6.2%.

"Our team at Michael Foods performed well in a volatile and competitive 2013 environment, delivering excellent Q4 and full year results.  We saw solid growth across the egg and potato businesses behind customer wins.  The cheese and dairy business began to respond in the fourth quarter to our focus on core product lines and markets.  We are delighted to deliver another record year of EBITDA." said Jim Dwyer, Chairman and CEO.

Michael Foods Group, Inc. uses adjusted EBITDA as a measurement of financial results, as an indication of the relative strength of its operating performance, and to determine incentive compensation levels. Management believes that EBITDA and adjusted EBITDA provide potential investors with useful information with which to analyze and compare with other companies in our industry our operating performance and our ability to service debt.

Certain items contained in this release may be "forward-looking statements." Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future sales or performance, capital expenditures, financing needs, ability to fund operations, intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industries and economies in which we operate and other information that is not historical information. When used herein, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes" and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance.

All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them, but there can be no assurance that our expectations, beliefs and projections will be realized. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this release, including the factors described under "Risk Factors" in our 2012 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2013. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this release include changes in domestic and international economic conditions.

Unaudited segment data follows (in thousands):



Egg
Products


Refrigerated
Potato
Products


Cheese &
Other
Dairy-Case
Products


Corporate


Total

 

Quarter ended December 28, 2013
















External net sales


$

376,039


$

47,680


$

89,017


$


$

512,736

Net earnings (loss)



16,911



4,840



2,992



(8,841)



15,902

Adjusted EBITDA



52,835



10,532



8,032



(1,662)



69,737

 

Quarter ended December 29, 2012
















External net sales


$

355,557


$

43,619


$

104,444


$


$

503,620

Net earnings (loss)



16,399



4,322



3,224



(10,237)



13,708

Adjusted EBITDA



49,970



11,401



7,840



(1,948)



67,263

 

Year ended December 28, 2013
















External net sales


$

1,431,218


$

170,870


$

346,195


$


$

1,948,283

Net earnings (loss)



61,569



12,075



11,533



(34,813)



50,364

Adjusted EBITDA



201,998



32,478



30,910



(7,543)



257,843

 

Year ended December 29, 2012
















External net sales


$

1,315,705


$

153,481


$

386,868


$


$

1,856,054

Net earnings (loss)



45,524



9,241



13,441



(38,112)



30,094

Adjusted EBITDA



190,822



29,964



33,550



(11,529)



242,807

Beginning January 1, 2013, we changed our retail selling costs allocation methodology between segments. The allocation impacts the net earnings and adjusted EBITDA reported by each segment. This change increased the net earnings and adjusted EBITDA for the Cheese and Other Dairy-Case Products segment and decreased the net earnings and adjusted EBITDA for the Egg Products and Refrigerated Potato Products segments. The amounts for the December 29, 2012 periods have been restated to reflect the allocation change.

Adjusted EBITDA is a financial indicator used to analyze and compare companies on the basis of operating performance. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles and is not indicative of operating profit or cash flow from operations as determined under generally accepted accounting principles.

The following table reconciles net earnings (loss) to adjusted EBITDA for the quarter ended December 28, 2013 (unaudited, in thousands):





Egg
Products


Refrigerated
Potato
Products


Cheese &
Other
Dairy-Case
Products


Corporate


Total

Net earnings (loss)


$

16,911


$

4,840


$

2,992


$

(8,841)


$

15,902

Unrealized loss on currency transactions (a)



539









539

Consolidated net earnings (loss)



17,450



4,840



2,992



(8,841)



16,441

Interest expense



77



36





21,426



21,539

Intercompany interest expense (income)



6,606



461



1,007



(8,074)



Income tax expense (benefit)



8,296



1,504



1,859



(4,479)



7,180

Depreciation and amortization



17,730



3,220



1,754



1



22,705

Non-cash and stock option compensation









540



540

Costs associated with permitted acquisition



715









715

Realized loss upon the disposition of property not in the ordinary course of business



79









79

Equity sponsor management fee









649



649

Expenses related to industrial revenue bonds guaranteed by certain of our subsidiaries



108









108

Unrealized gain on swap contracts



(219)









(219)

Intercompany allocation of corporate admin costs



1,993



471



420



(2,884)



Adjusted EBITDA, as defined in the credit agreement


$

52,835


$

10,532


$

8,032


$

(1,662)


$

69,737

(a) The unrealized loss on currency transactions relates to an intercompany note receivable denominated in Canadian currency due from our Canadian subsidiary, MFI Food Canada Ltd.

The following table reconciles net earnings (loss) to adjusted EBITDA for the quarter ended December 29, 2012 (unaudited, in thousands):





Egg
Products


Refrigerated
Potato
Products


Cheese &
Other
Dairy-Case
Products


Corporate


Total

Net earnings (loss)


$

16,399


$

4,322


$

3,224


$

(10,237)


$

13,708

Unrealized loss on currency transactions (a)



256









256

Consolidated net earnings (loss)



16,655



4,322



3,224



(10,237)



13,964

Interest expense



113



90





22,059



22,262

Intercompany interest expense (income)



7,084



495



1,079



(8,658)



Income tax expense (benefit)



6,289



3,336



1,350



(7,212)



3,763

Depreciation and amortization



18,605



2,919



1,939



1



23,464

Non-cash and stock option compensation









535



535

Costs associated with debt issuance









224



224

Costs associated with unconsummated acquisitions









1,832



1,832

Equity sponsor management fee









587



587

Expenses related to industrial revenue bonds guaranteed by certain of our subsidiaries



139









139

Unrealized loss on swap contracts



493









493

Intercompany allocation of corporate admin costs



592



239



248



(1,079)



Adjusted EBITDA, as defined in the credit agreement


$

49,970


$

11,401


$

7,840


$

(1,948)


$

67,263

(a) The unrealized loss on currency transactions relates to an intercompany note receivable denominated in Canadian currency due from our Canadian subsidiary, MFI Food Canada Ltd.

The following table reconciles net earnings (loss) to adjusted EBITDA for the year ended December 28, 2013 (unaudited, in thousands):





Egg
Products


Refrigerated
Potato
Products


Cheese &
Other
Dairy-Case
Products


Corporate


Total

Net earnings (loss)


$

61,569


$

12,075


$

11,533


$

(34,813)


$

50,364

Unrealized loss on currency transactions (a)



1,156









1,156

Consolidated net earnings (loss)



62,725



12,075



11,533



(34,813)



51,520

Interest expense



274



226





85,962



86,462

Intercompany interest expense (income)



26,589



1,856



4,052



(32,497)



Income tax expense (benefit)



32,631



4,726



6,599



(18,748)



25,208

Depreciation and amortization



72,521



11,978



7,032



4



91,535

Non-cash and stock option compensation









2,163



2,163

Unusual charges (b)









(1,342)



(1,342)

Costs associated with permitted acquisition



961









961

Realized gain upon the disposition of property not in the ordinary course of business



(283)



(283)







(566)

Equity sponsor management fee









2,608



2,608

Expenses related to industrial revenue bonds guaranteed by certain of our subsidiaries



441









441

Unusual gain



(943)









(943)

Unrealized gain on swap contracts



(204)









(204)

Intercompany allocation of corporate admin costs



7,286



1,900



1,694



(10,880)



Adjusted EBITDA, as defined in the credit agreement


$

201,998


$

32,478


$

30,910


$

(7,543)


$

257,843

(a) The unrealized loss on currency transactions relates to an intercompany note receivable denominated in Canadian currency due from our Canadian subsidiary, MFI Food Canada Ltd.

(b) The unusual charges relate to the mediated settlement in the National Pasteurized Eggs, Inc. litigation.

The following table reconciles net earnings (loss) to adjusted EBITDA for the year ended December 29, 2012 (unaudited, in thousands):




Egg
Products


Refrigerated
Potato
Products


Cheese &
Other
Dairy-Case
Products


Corporate


Total

Net earnings (loss)


$

45,524


$

9,241


$

13,441


$

(38,112)


$

30,094

Unrealized gain on currency transactions (a)



(440)









(440)

Consolidated net earnings (loss)



45,084



9,241



13,441



(38,112)



29,654

Interest expense



659



439





89,466



90,564

Intercompany interest expense (income)



28,342



1,978



4,319



(34,639)



Income tax expense (benefit)



23,304



5,523



6,952



(23,255)



12,524

Depreciation and amortization



78,901



11,370



7,370



5



97,646

Non-cash and stock option compensation









2,121



2,121

Costs associated with debt issuance









224



224

Costs associated with unconsummated acquisitions









1,832



1,832

Unusual charges (b)









5,842



5,842

Equity sponsor management fee









2,425



2,425

Expenses related to industrial revenue bonds guaranteed by certain of our subsidiaries



564









564

Unrealized gain on swap contracts



(589)









(589)

Intercompany allocation of corporate admin costs



14,557



1,413



1,468



(17,438)



Adjusted EBITDA, as defined in the credit agreement


$

190,822


$

29,964


$

33,550


$

(11,529)


$

242,807

(a) The unrealized gain on currency transactions relates to an intercompany note receivable denominated in Canadian currency due from our Canadian subsidiary, MFI Food Canada Ltd.

(b) The unusual charges relate to the jury award in the National Pasteurized Eggs, Inc. trial.

Michael Foods Group, Inc., based in Minnetonka, Minnesota, is a producer and distributor of food products to the foodservice, retail and food-ingredient markets. Its principal products are egg products, refrigerated potato products, cheese and other dairy-case products.

Consolidated statements of earnings are as follows:

Michael Foods Group, Inc.

Consolidated Statements of Earnings

For the periods ended December 28, 2013 and December 29, 2012

(In thousands)




Quarter Ended



Year Ended




2013



2012



2013



2012


Net sales


$

512,736



$

503,620



$

1,948,283



$

1,856,054


Cost of sales



428,575




420,391




1,623,024




1,544,501


Gross profit



84,161




83,229




325,259




311,553


 

Selling, general and administrative expenses



39,024




42,010




161,336




177,164


Operating profit



45,137




41,219




163,923




134,389


 

Interest expense, net



21,530




22,205




86,421




90,356


Unrealized (gain) loss on currency transactions



539




256




1,156




(440)


Earnings before income taxes and equity in (earnings) losses of unconsolidated subsidiary



23,068




18,758




76,346




44,473


 

Income tax expense



7,180




3,763




25,208




12,524


Equity in (earnings) losses of unconsolidated subsidiary



(14)




1,287




774




1,855


Net earnings


$

15,902



$

13,708



$

50,364



$

30,094


 



December 28,
2013



December 29,
2012


Selected Balance Sheet Information:









 

Cash and equivalents


$

60,677



$

43,274


 

Accrued interest


$

22,534



$

22,920


 

Long-term debt, including current maturities


$

1,171,062



$

1,209,403


SOURCE Michael Foods Group, Inc.




Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.