ATLANTA, Feb. 9, 2012 (GLOBE NEWSWIRE) -- The most recent publication of the PRGX Accounts Payable Productivity Index (APPI) report, released today by The Institute of Financial Operations (The Institute), indicates organizations across the globe are continuing to see improvements in key efficiency metrics that make up the APPI.
Developed in collaboration with APQC, the leading benchmarking and best practices research organization, the PRGX APPI measures productivity using eight core indicators of AP efficiency and effectiveness. The APPI provides valuable insight into AP performance trends, including best practices of top-performing organizations. It also gauges how AP performance is affected by process and organizational changes, as well as by the deployment of new technology.
The median APPI for 2010 increased by 2.5 percent over 2009, with improvements mainly driven by increases in efficiency in processing AP. This comes as more organizations and their suppliers continue to gain leverage through globalization, shared services organizations, electronic invoice processing, and advanced data-capture technologies.
Interestingly, the report showed that, while median APPI efficiency scores increased, top-performing organizations' efficiency scores decreased. This is a strong indicator that opportunities for enhancements become more difficult as organizations reach advanced levels of AP transformation maturity.
"The AP Productivity Index is a key focus of PRGX's investments in thought leadership in AP," said PRGX president and CEO Romil Bahl. "The report provides factual evidence regarding a number of best practices adopted by top-quartile-performing organizations, as well as potential ceilings for select productivity metrics."
"The Index has become a valuable tool for professionals in accounts payable," said Thomas M. Bohn, president and CEO of The Institute. "As we continue this joint research project with PRGX, we'll be able to establish benchmarks for AP departments to measure themselves against the best of the best," said Bohn. "CFOs and other top-level leaders can use insight from the AP Productivity Index to improve their organizations across the board."
About PRGX Global, Inc.
Headquartered in Atlanta, Georgia, PRGX Global, Inc. is the world's leading provider of recovery audit services. With approximately 1,500 employees, the company operates and serves clients in more than 30 countries and provides its services to over 75% of the top 30 global retailers. PRGX is also pioneering Profit Discovery™, a unique combination of audit, analytics and advisory services that improves client financial performance. For additional information, please visit PRGX at www.prgx.com.
For more information please contact:
PRGX Global, Inc. Alexandra Gobbi, Vice President, Marketing and Communications phone: +1-770-779-3253 fax: +1-770-779-3195 alexandra.gobbi@prgx.com 600 Galleria Parkway, Suite 100 Atlanta, GA 30339 About The Institute of Financial Operations
The Institute of Financial Operations is the umbrella association comprising four membership affiliates for finance professionals: International Accounts Payable Professionals (IAPP), International Accounts Receivable Professionals (IARP), the National Association of Purchasing & Payables (NAPP), and The Association for Work Process Improvement (TAWPI). Based in Orlando, Fla., with offices in Boston and London, The Institute serves as a global voice, chief advocate, recognized authority, acknowledged leader, and principal educator for people in financial operations, with a particular focus on accounts payable, accounts receivable, procure-to-pay, automation, document management, and data capture. Combined, the associations have more than 6,000 members. Visit The Institute at www.financialops.org or contact:
Laureen Crowley, Editor in Chief The Institute of Financial Operations 615 E. Colonial Drive Orlando, FL 32803 phone: +1-407-351-3322 or 877-885-4277 fax: +1-407-895-5031 info@financialops.org
About APQC
APQC is a member-based nonprofit and one of the world's leading proponents of benchmarking, best practices, and knowledge management. Working with more than 500 member organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with greater confidence. Visit APQC at www.apqc.org or contact:
APQC 123 North Post Oak Lane, Third Floor Houston, TX 77024-7797 phone: +1-713-681-4020 or 800-776-9676 fax: +1-713-681-8578 apqcinfo@apqc.org
Source: PRGX Global, Inc.CLEWISTON, Fla., Feb. 9, 2012 /PRNewswire/ -- Does home-lake advantage play a role when 320 of the world's best anglers gather to see who can find the heaviest four-day stringer of bass for a first-place cash prize of up to $125,000? Just look at the leaderboard of the season-opening Walmart FLW Tour on Lake Okeechobee presented by Evinrude.
EverStart pro Randall Tharp of Gardendale, Ala., crossed the stage Thursday with a five-bass limit weighing 33 pounds, 9 ounces to lead day one of the event. Tharp now holds a slim 2-ounce lead over Brandon McMillan of Clewiston, Fla., who caught five bass weighing 33-7. Add to the top-five anglers John Cox (third) of Debary, Fla., and freshly-out-of-retirement Roland Martin (fifth) of Naples, Fla., and you have a handful of anglers with intimate knowledge of Okeechobee leading the tournament's full field of anglers from all across the United States, Canada, Spain and Japan.
Link to photo of pro leader Randall Tharp
"The wind blew 15 to 20 (miles per hour)," Tharp said. "So I adjusted. And that's just something you know how to do from fishing here. A lot of the guys here have put all their eggs in one basket."
Even though he's not a Floridian, Tharp said his familiarity with the lake gave him an edge on the first day of competition.
"I was going out there to catch a 40-pound sack, to be honest," Tharp said. "I probably had 20 bites today. Ten of them were big ones. And by big ones I mean 5 pounds or better."
Tharp said his first bite didn't come until about 9 a.m. but was well worth the wait. That bite came from a bass weighing almost 10 pounds. By 10 a.m. Tharp was culling his small fish.
Tharp said the wind would dictate where anglers would be able to fish on the second day of competition and it would continue to be a "game of adjustments" for the anglers.
"The weather made it horrible on me," McMillan said. "It made it tough to flip through the mat and make the bait fall the way you need to make it fall.
"It wasn't like the Okeechobee that I was used to fishing," McMillan added. "I figured 20 or 24 pounds would be a good sack. I figured someone would bust 30, but I didn't figure I would do it."
Rounding out the top 10 pros after day one on Lake Okeechobee are:
3rd: John Cox, Debary, Fla., five bass, 27-104th: Art Ferguson III, St. Clair Shores, Mich., five bass, 26-125th: Roland Martin, Naples, Fla., five bass, 26-46th: Steve Kennedy, Auburn, Ala., five bass, 26-17th: Todd Auten, Lake Wylie, S.C., five bass, 24-48th: Glenn Browne, Ocala, Fla., five bass, 21-119th: National Guard pro Justin Lucas, Guntersville, Ala., five bass, 21-910th: Matt Peters, Cotter, Ark., five bass, 21-6
For a full list of results visit FLWOutdoors.com.
Tharp caught Thursday's big bass weighing 9-8 on the pro side to win $500.
Overall there were 724 bass weighing 1,813 pounds, 12 ounces caught by pros Thursday. The catch included 121 five-bass limits.
Pros are competing for a top award of up to $125,000 this week plus valuable points in the hope of qualifying for the 2013 Forrest Wood Cup presented by Walmart, the world championship of bass fishing. The top five anglers in the point standings from the four Walmart FLW Tour Open tournaments will qualify.
Spiro Agouros of Peterborough, Ontario, leads the Co-angler Division with five bass weighing 20-2 followed by Ralph Myhlhousen of Council Bluffs, Iowa, in second place with five bass weighing 18-1.
Rounding out the top 10 co-anglers are:
3rd: Mike Daley, Springfield, Ill., five bass, 17-64th: Robert Gulley, Tupelo, Miss., five bass, 16-125th: Derek Savage, Port St. Lucie, Fla., five bass, 16-86th: Aymon Wilcox, Lauderdale Lakes, Fla., five bass, 16-57th: Wayne Lloyd, Lake Worth, Fla., five bass, 15-148th: John Hendry, Lakeland, Fla., five bass, 15-29th: Jeffrey Cummins, Marion, Ohio, five bass, 14-1310th: Marlon Crowder, Tampa, Fla., five bass, 14-5
For a full list of results visit FLWOutdoors.com.
Daley and Agouros tied for Thursday's big bass with fish weighing 8-1 in the co-angler division. They each received $125.
Overall there were 477 bass weighing 925 pounds, 7 ounces caught by co-anglers Thursday. The catch included 49 five-bass limits.
Co-anglers are fishing for a top award of $25,000 this week plus valuable points that could help them qualify for the 2013 Forrest Wood Cup presented by Walmart. The top five co-anglers in the point standings from the four Walmart FLW Tour Open tournaments will qualify.
Anglers will take off from Roland & Mary Ann Martins Marina & Resort located at 920 E. Del Monte Ave. in Clewiston at 7:30 a.m. Friday morning and from the Clewiston Boat Basin at 7:30 a.m. Saturday and Sunday morning. Friday's weigh-in will also be held at Roland & Mary Ann Martins Marina & Resort beginning at 3 p.m. Saturday and Sunday's final weigh-ins will be held at the Walmart located at 1005 W. Sugarland Highway in Clewiston beginning at 4 p.m.
Fans will be treated to the FLW Outdoors Expo at Walmart on Saturday and Sunday from noon to 4 p.m. prior to the final weigh-ins. The Expo includes Ranger boat simulators, the opportunity to interact with professional anglers, enjoy interactive games, activities and giveaways provided by sponsors, and fans can learn more about the sport of fishing and other outdoor activities. All activities are free and open to the public.
Coverage of the Lake Okeechobee tournament will be broadcast in high-definition (HD) on NBC Sports Network when "FLW" airs March 18 from 1 to 2 p.m. ET. "FLW" is hosted by Jason Harper and is broadcast to more than 559 million households worldwide, making it the most widely distributed weekly outdoors-sports television show in the world.
For complete details and updated information visit FLWOutdoors.com. For regular updates, photos, tournament news and more, follow the EverStart Series on Facebook at Facebook.com/FLWFishing and on Twitter at Twitter.com/FLWFishing.
ABOUT FLW
FLW is the industry's premier tournament-fishing organization, providing unparalleled fishing resources and entertainment to our sponsors, fans and host communities. FLW is offering anglers of all skill levels the opportunity to compete for millions in prize money nationwide in 2012 over the course of 191 tournaments across five tournament circuits, each providing an avenue to the sport's richest payday and most coveted championship trophy – the Forrest Wood Cup. FLW is committed to providing a lifestyle experience that is the "Best in Fishing, On and Off the Water," through a variety of platforms including tournaments, outdoor expos and the world's richest fantasy sports game – FLW Fantasy Fishing. For more information about FLW and FLW Fantasy Fishing, visit FLWOutdoors.com or FantasyFishing.com and look for FLW on Twitter and Facebook.
SOURCE FLW
- Higher 2011 fourth quarter and full year earnings from operations expected
- Gross premiums written increased in 2011: fourth quarter up 9%, full year up 20%
- Earnings conference call to be held on February 23, 2012
- Management to present at Bank of America Merrill Lynch 2012 Insurance Conference
RICHFIELD, Ohio, Feb. 9, 2012 (GLOBE NEWSWIRE) -- National Interstate Corporation (Nasdaq: NATL) today reported anticipated earnings per share and gross premiums written for the 2011 fourth quarter and full year. The Company's estimated earnings from operations improved significantly in the 2011 fourth quarter contributing to an expected 11% to 13% increase in 2011 full year after–tax earnings from operations per share when compared to the 2010 full year. Both underwriting income and net investment income improved during the 2011 fourth quarter contributing to the estimated increase in operating earnings. Gross premiums written increased 8.6% for the 2011 fourth quarter and 20.0% for the 2011 full year compared to the same 2010 periods reflecting the favorable impact of growth in existing businesses as well as the Vanliner Insurance Company acquisition in 2010.
Earnings
The table below shows the Company's estimated net income per share determined in accordance with U.S. generally accepted accounting principles (GAAP), reconciled between several non-GAAP financial measures to better reflect the results related to the ongoing business.
| Three Months Ended December 31, | |||||
| 2011 Expected Range | 2010 | ||||
| Net after-tax earnings from operations per share, diluted | $ 0.54 | to | $ 0.57 | $ 0.36 | |
| After-tax net realized gain from investments per share, diluted | 0.04 | to | 0.06 | 0.03 | |
| After-tax impact from balance sheet guaranty for Vanliner per share, diluted | -- | to | 0.01 | (0.11) | |
| Net income per share, diluted | $ 0.58 | to | $ 0.64 | $ 0.28 | |
| Year Ended December 31, | |||||
| 2011 Expected Range | 2010 | ||||
| Net after-tax earnings from operations per share, diluted | $ 1.76 | to | $ 1.79 | $ 1.58 | |
| After-tax net realized gain from investments per share, diluted | 0.14 | to | 0.16 | 0.14 | |
| After-tax impact from balance sheet guaranty for Vanliner per share, diluted | (0.11) | to | (0.10) | (0.11) | |
| Gain on bargain purchase of Vanliner, diluted | -- | to | -- | 0.38 | |
| Change in valuation allowance related to net capital losses per share, diluted | -- | to | -- | 0.04 | |
| Net income per share, diluted | $ 1.79 | to | $ 1.85 | $ 2.03 | |
Net after-tax earnings from operations includes underwriting income and net investment income. After-tax realized gains from investments, the after-tax impact on underwriting results related to the balance sheet guaranty and the gain on bargain purchase from the Vanliner acquisition are separately presented as discussed above to better reflect the results related to ongoing business.
Underwriting Results:
Improved fourth quarter 2011 underwriting income included favorable claims results primarily in the passenger transportation products, both Alternative Risk Transfer (ART) and traditional. Underwriting income for the 2011 full year declined slightly due to combined ratios that trended higher compared to 2010 offset by growth in earned premium during the year.
Investments:
Net investment income for 2011 was higher in all quarters when compared to 2010 which accounted for the increase in operating income. The increase in net investment income was in part due to the addition of the Vanliner portfolio. The Company also took advantage of the steep yield curve and volatility in the fixed income sectors in 2011 to reposition its portfolio into higher yielding investments resulting in improved net investment income with minimal impact on the duration (4.1 years) and credit quality (fixed income portfolio 94% NAIC 1 or 2). In addition, the Company had net realized gain from investments in all four quarters of 2011 primarily from security sales at gains as part of the portfolio repositioning.
Gross Premiums Written
The table below summarizes gross premiums written by business component:
| Three Months Ended December 31, | |||||
| 2011 | 2010 | ||||
| Amount | Percent | Amount | Percent | ||
| (Dollars in thousands) | |||||
| Alternative Risk Transfer | $ 62,541 | 54.6% | $ 50,091 | 47.4% | |
| Transportation | 36,358 | 31.7% | 38,374 | 36.3% | |
| Specialty Personal Lines | 10,644 | 9.3% | 12,194 | 11.6% | |
| Hawaii and Alaska | 3,465 | 3.0% | 3,669 | 3.5% | |
| Other | 1,645 | 1.4% | 1,243 | 1.2% | |
| Gross premiums written | $ 114,653 | 100.0% | $ 105,571 | 100.0% | |
| Year Ended December 31, | |||||
| 2011 | 2010 | ||||
| Amount | Percent | Amount | Percent | ||
| (Dollars in thousands) | |||||
| Alternative Risk Transfer | $ 285,351 | 54.2% | $ 229,844 | 52.4% | |
| Transportation | 162,870 | 30.9% | 123,752 | 28.2% | |
| Specialty Personal Lines | 53,729 | 10.2% | 61,662 | 14.1% | |
| Hawaii and Alaska | 18,137 | 3.5% | 18,104 | 4.1% | |
| Other | 6,225 | 1.2% | 5,268 | 1.2% | |
| Gross premiums written | $ 526,312 | 100.0% | $ 438,630 | 100.0% | |
Gross premiums written for the 2011 fourth quarter compared to the 2010 fourth quarter reflect growth in the ART component offset by declines in the other components. ART growth is attributable to new programs initiated earlier in the year as well as continuing very high customer retention and new customers in existing programs. The Transportation component would have been flat for the fourth quarter excluding the premium that was part of the Vanliner balance sheet guarantee which does not impact the Company's operating results. Gross premiums written for the Specialty Personal Lines component have declined in each quarter of 2011 when compared to the same 2010 quarter reflecting underwriting actions taken in the commercial vehicle product and fewer recreational vehicle quotes.
The nearly 20% increase in 2011 full year gross premiums written was the result of continued growth in the ART component and a full year of Vanliner premium in 2011 compared to only the six months following the July 2010 acquisition.
Earnings Conference Call
The Company will hold a conference call to discuss the 2011 fourth quarter and full year results on Thursday, February 23, 2012 at 10:00 a.m. Eastern Time. There are two communication modes available to listen to the call. Telephone access to the conference call and Q and A session will be available by dialing 888-713-4213 and providing the confirmation code 94201526. Please dial in 5 to 10 minutes prior to the scheduled starting time. To pre-register for the conference call, go to https://www.theconferencingservice.com/prereg/key.process?key=PFQKGNDXG and follow the instructions provided. The conference call will be broadcast live over the Internet. To listen to the call via the Internet, access our website at http://invest.natl.com and follow the instructions at the web cast link. The archived web cast will be available shortly after the call on our website.
Investor Conference
The Company's management will make a presentation at the upcoming Bank of America Merrill Lynch 2012 Insurance Conference in New York City on February 15, 2012. The presentation may include forward-looking and other material information and will be available on the Company's website at http://invest.natl.com.
Forward-Looking Statements
This document, including any information incorporated by reference, contains "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995). All statements, trend analyses and other information contained in this press release relative to markets for our products and trends in our operations or financial results, as well as other statements including words such as "may," "target," "anticipate," "believe," "plan," "estimate," "expect," "intend," "project," and other similar expressions, constitute forward-looking statements. We made these statements based on our plans and current analyses of our business and the insurance industry as a whole. We caution that these statements may and often do vary from actual results and the differences between these statements and actual results can be material. Factors that could contribute to these differences include, among other things: general economic conditions, any weaknesses in the financial markets and other factors, including prevailing interest rate levels and stock and credit market performance which may affect or continue to affect (among other things) our ability to sell our products and to collect amounts due to us, our ability to access capital resources and the costs associated with such access to capital and the market value of our investments; our ability to manage our growth strategy, customer response to new products and marketing initiatives; tax law and accounting changes; increasing competition in the sale of our insurance products and services and the retention of existing customers; changes in legal environment; regulatory changes or actions, including those relating to regulation of the sale, underwriting and pricing of insurance products and services and capital requirements; levels of natural catastrophes, terrorist events, incidents of war and other major losses; adequacy of insurance reserves; and availability of reinsurance and ability of reinsurers to pay their obligations. The forward-looking statements herein are made only as of the date of this document. The Company assumes no obligation to publicly update any forward-looking statements.
About National Interstate Corporation
An Insurance Experience Built Around You.
National Interstate Corporation (Nasdaq: NATL), founded in 1989, is the holding company for a specialty property-casualty insurance group which differentiates itself by offering products and services designed to meet the unique needs of niche markets. Products include insurance for passenger, truck, and moving and storage transportation companies, alternative risk transfer, or captive programs for commercial risks, specialty personal lines products focused primarily on recreational vehicle owners and small commercial vehicle accounts, and transportation and general commercial insurance in Hawaii and Alaska. The Company's insurance subsidiaries, including the three primary insurers, National Interstate Insurance Company, Vanliner Insurance Company and Triumphe Casualty Company, are rated "A" (Excellent) by A.M. Best Company. Headquartered in Richfield, Ohio, National Interstate is an independently operated subsidiary of Great American Insurance Company, a property-casualty subsidiary of American Financial Group, Inc. (NYSE: AFG) (Nasdaq: AFG).
CONTACT: Tanya Inama
National Interstate Corporation
877-837-0339
investorrelations@nationalinterstate.com
www.natl.com
Source: National Interstate Corporation
MANKATO, MINNESOTA and WINNIPEG, MANITOBA -- (MARKET WIRE) -- 02/09/12 -- Ridley Inc. (TSX: RCL) today reported its financial results for the three and six months ended December 31, 2011. All currency amounts are stated in U.S. dollars unless otherwise noted.
For the three months ended December 31, 2011, Ridley's earnings before interest, taxes, depreciation and amortization (EBITDA (i)) were $8.3 million compared to $9.8 million last year. Net profit after income taxes (NPAT) was $4.0 million (31 cents per share) compared to $4.9 million (38 cents per share) last year.
Ridley's revenues grew by 11.3% to $177.2 million in the second quarter this year, primarily a result of an elevated level of raw material prices relative to the same period last year and a continuing shift in product mix towards higher value added products. Overall tonnage volumes were even with the same period last year as positive sales results under generally favourable economic conditions for livestock and poultry producers were offset by unseasonably mild weather. Gross profits decreased by 8.2% in the quarter to $20.1 million as average unit margins were pressured by the negative effect of declining commodity prices since the start of the current fiscal year on raw materials held in inventory. Operating expenses of $13.9 million were materially unchanged from last year. Operating income before interest and taxes of $6.2 million was lower by $1.7 million from the previous year.
Ridley Block Operations' $4.7 million in operating income in the second quarter of fiscal 2012 was unchanged from last year as unfavourable weather conditions offset stronger private label sales. U.S. Feed Operations contributed $1.8 million in the second quarter, compared to $2.4 million last year, as declining commodity prices and increased operating expenses more than offset growth in tonnage volumes. Ridley Feed Ingredients' contribution of $0.3 million in the quarter compared to $0.9 million last year reflects lower volume from a discontinued product, declining commodity prices and higher operating costs. Canadian Feed Operations contributed operating income of $0.2 million for the quarter compared to $0.8 million last year as product mix improvements and good cost controls were offset by lower volumes and declining commodity prices. Corporate overhead expenses were in line with the same period last year.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management Discussion and Analysis dated as at February 9, 2012 and the accompanying interim consolidated financial statements for the three and six months ended December 31, 2011 have been prepared to reflect the adoption of International Financial Reporting Standards ("IFRS") by the Company, with effect from July 1, 2010. Note 22 to the interim consolidated financial statements contains a detailed description of the Company's conversion to IFRS, including a line-by-line reconciliation of its consolidated financial statements previously prepared under Canadian GAAP to those prepared under IFRS for the three and six months ended December 31, 2010 and for the year ended June 30, 2011. Although the adoption of IFRS resulted in adjustments to Ridley's financial statements, it did not materially impact the underlying cash flows or profitability of the Company's operations.
For the fiscal year 2012, the Company has modified its reporting segments. Prior to fiscal 2012 Ridley Feed Operations (RFO) was comprised of Ridley's traditional Canadian and U.S. feed businesses. The RFO segment has now been divided into two reporting segments: Canadian Feed Operations (CFO) and U.S. Feed Operations (USFO). Prior to fiscal 2012, Ridley Nutrition Solutions (RNS) was a combination of Ridley's feed supplement block business and McCauley Bros., a premium equine feed business. Starting in fiscal 2012 the McCauley equine business is reported within the results of U.S. Feed Operations while the block business of RNS is renamed Ridley Block Operations (RBO). The Ridley Feed Ingredients (RFI) reporting segment, which produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients, is unchanged from prior years. Corporate overhead expenses were in line with the same period last year.
Second Quarter Results
The following summary data is presented to assist in understanding the
fiscal 2012 second quarter results.
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Summary of Results Three months ended Six months ended
December 31 December 31
($ million except for EPS) 2011 2010 2011 2010
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Revenue $177.2 $159.3 $333.7 $286.8
Gross profit 20.1 21.9 36.1 37.4
Operating income 6.2 7.9 7.7 10.7
Net earnings before exceptions 4.0 4.9 4.9 6.6
Exceptions, net of income taxes
(noted below (ii)) - - 0.2 -
Net earnings 4.0 4.9 4.7 6.6
Diluted earnings per share (EPS) $0.31 $0.38 $0.37 $0.51
EBITDA (i) $8.3 $9.8 $12.1 $14.5
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(i) EBITDA - Operating income before depreciation, amortization and
exceptions. EBITDA does not have a standardized meaning prescribed by
IFRS and, therefore, is not readily comparable to similar measures
presented by other companies. However, management believes that this
measure provides investors with useful supplemental information.
(ii) Exceptions - In the preceding summary data, net earnings were reported
before exceptions. Exceptions in the six months ended December 31, 2011
were comprised of a $0.2 million loss net of taxes from the sale of a
previously closed facility in Syracuse, Indiana.
Consolidated Second Quarter Results
Revenue of $177.2 million in the second quarter of fiscal 2012 was higher by $18.0 million from the same period last year. A comparison of revenue is not necessarily indicative of the strength of Ridley's business because revenue is influenced by fluctuating commodity prices. Raw material prices were generally higher this year than the same period last year, which had the effect of increasing average unit selling prices for the Company's feed products. Overall sales volumes were not significantly changed from last year; consequently, the 11.3% increase in sales revenues in the second quarter was largely the result of higher raw material prices relative to last year and continually improving product mix.
Consolidated gross profit in the second quarter of fiscal 2012 was $20.1 million compared to $21.9 million in the same period last year. Gross profit is comprised of the margin of sales revenues over ingredient costs less the costs of manufacturing and delivery. Margins for feed products may be affected by inventory holding gains or losses realized during periods in which market prices for feed ingredients are rising or falling. Most of the $1.8 million reduction in consolidated gross profits was the result of declining feed ingredient prices since the start of the current fiscal year from elevated levels last year. In the second quarter last year the Company recorded a credit of $0.5 million to cost of goods sold for the market valuation of unrealized gains in the second quarter associated with open sales contracts with customers. Because of declining commodity prices this year, the unrealized gain on open sales contracts was less than $0.1 million. Increased manufacturing costs in the second quarter also reduced gross profits.
Operating expenses include selling, marketing and administration, as well as depreciation of property, plant and equipment. In the second quarter of fiscal 2012, operating expenses of $13.9 million were largely unchanged from last year. While selling and marketing expenses were even with last year, lower administration expenses reflected improved operating efficiencies.
EBITDA is comprised of operating income before depreciation, amortization and exceptions. For the three months ended December 31, 2011 EBITDA was $8.3 million compared to $9.8 million for the same period last year. There were no material exceptions in the second quarter of this year or the prior year.
Net earnings after taxes for the second quarter of fiscal 2012 were $4.0 million (earnings per share of $0.31) compared to $4.9 million (earnings per share of $0.38) in the same period of fiscal 2011.
Comprehensive income (loss) is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Other comprehensive income (OCI) is comprised primarily of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Comprehensive income in the second quarter of fiscal 2012 was $4.5 million which was comprised of net income of $4.0 million, as reported above, plus unrealized gains of $0.5 million on the translation of the financial statements of Canadian entities to U.S. currency.
Consolidated Six Months Results
For the six months ended December 31, 2011, revenue of $333.7 million was $46.9 million higher than the same period last year. Generally higher raw material prices this year had the effect of increasing average unit selling prices for the Company's feed products. As tonnage volumes this year were approximately even with last year, the 16.4% increase in sales revenues in the current year-to-date mostly reflects the higher level of raw material costs over last year and continued improvements in product mix. Factors bearing on tonnage volumes in the first half of fiscal 2012 included positive sales results under good economic conditions for livestock and poultry producers, combined with favourable weather conditions for block sales in the first quarter this year, which more than offset by unfavourable, unseasonably mild weather in the second quarter.
Consolidated gross profit of $36.1 million for the first half of fiscal 2012 was $1.2 million lower from the prior year due to generally declining prices for feed ingredients during fiscal 2012. Increased manufacturing costs in the first half this year also contributed to reduced gross profits.
Operating expenses in the first half of fiscal 2012 were $28.4 million, an increase of $1.7 million over last year. Selling and marketing expenses were higher by $0.7 million in the first half this year while administration expenses were higher by $0.5 million due to the reallocation of certain expenses from manufacturing overhead, and consulting fees related to the implementation of lean manufacturing initiatives. The loss on sale of facility of $0.3 million (before income taxes) recorded in the first quarter of fiscal 2012 related to the disposal of a previously closed facility in Syracuse, Indiana.
EBITDA in the first six months of fiscal 2012 was $12.1 million compared to $14.5 million for the same period last year. EBITDA is comprised of operating income before amortization and exceptions. Exceptions in fiscal 2012 consisted of the $0.2 million loss (net of income taxes) on the sale of a redundant facility recorded in the first quarter this year. There were no exceptions of material significance in the first six months of the prior year.
Net earnings after taxes for the six months ended December 31, 2011 were $4.7 million (earnings per share of $0.37) compared with net earnings after taxes of $6.6 million (earnings per share of $0.51) in the same period last year.
Comprehensive income of $3.3 million in the six months year-to-date of fiscal 2012 was comprised of net income of $4.7 million, as reported above, less unrealized losses of $1.3 million on the translation to U.S. currency of financial statements of Canadian entities.
International Financial Reporting Standards
The Canadian Accounting Standards Board (AcSB) requires all public companies to adopt International Financial Reporting Standards (IFRS) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Company has commenced reporting its financial results in accordance with IFRS for the year ended June 30, 2012 and its quarterly unaudited interim results starting with the quarter ending September 30, 2011. The notes accompanying the interim financial statements provide comparative data on an IFRS basis, including an opening balance sheet as at July 1, 2010.
Differences between Canadian GAAP and IFRS in the method for the determination of impairment of assets resulted in the Company realizing an impairment of certain assets in its conversion to IFRS. The impairment amount of $12.7 million is reflected as a decrease in property, plant and equipment in the opening transition balance sheet as at July 1, 2010. IFRS and Canadian GAAP also differ on the recognition of actuarial gains/losses associated with long-term employee obligations such as defined benefit pensions and post-retirement medical benefits. Canadian GAAP allows for deferral and subsequent amortization of actuarial gains/losses while IFRS recognize gains/losses immediately through comprehensive income. The opening transition entries include an increase in liabilities of $11.4 million associated with long-term employee benefits. Deferred tax benefits of $8.3 million are recorded under IFRS for the income tax effects of the aforementioned transition entries. Combined, these changes realized from the conversion to IFRS resulted in a net reduction to equity of $15.8 million in the opening transition balance sheet as at July 1, 2010.
The Company elected to reclassify all cumulative translation differences as of January 1, 2010 from a separate component of equity to retained earnings. The effect of this reclassification was a reduction in the balance sheet account of accumulated other comprehensive income, and an increase in retained earnings, of $11.2 million.
The Company has performed an evaluation of its financial information systems and the financial reporting impact of divergences identified to-date and concluded that transition to IFRS did not require material modifications to information and reporting systems. The Company concluded that its internal controls over financial reporting, disclosure controls and procedures are appropriately designed and properly functioning for an IFRS reporting environment. The design includes new controls over the transition accounting.
Reconciliation of Non-IFRS Financial Measures
The Company reports its financial results according to IFRS. However, included in this management discussion and analysis are certain non-IFRS financial measures and ratios which the Company's management believes provide useful information in measuring the financial performance and financial condition of the Company. These measures and ratios do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other public companies, nor should they be construed as an alternative to other financial measures described by IFRS.
The following table is a reconciliation of EBITDA to net earnings, the most closely comparable IFRS measure to EBITDA. For purposes of this table, operating income is defined as net earnings before finance costs, interest income and provision for income taxes. EBITDA is defined as operating income before depreciation, amortization and exceptions.
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EBITDA Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
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Net earnings $4.0 $4.9 $4.7 $6.6
Provision for income taxes 2.3 2.9 3.0 4.0
Interest income (0.1) (0.1) (0.1) (0.1)
Finance costs 0.1 0.1 0.2 0.2
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Operating income $6.2 $7.9 $7.7 $10.7
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Amortization of property, plant
and equipment 1.8 1.7 3.7 3.5
Other amortization 0.2 0.2 0.4 0.4
Loss on sale of facilities - - 0.3 -
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EBITDA $8.3 $9.8 $12.1 $14.5
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SEGMENT RESULTS
The following is a summary of operating income (loss) of Ridley's reporting
segments.
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Operating Income (Loss) Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
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Canadian Feed Operations (CFO) $0.2 $0.8 $(0.9) $1.0
U.S. Feed Operations (USFO) 1.8 2.4 2.2 3.3
Ridley Feed Ingredients (RFI) 0.3 0.9 0.9 1.7
Ridley Block Operations (RBO) 4.7 4.7 7.0 6.5
Corporate (0.7) (0.9) (1.5) (1.8)
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Consolidated Operating Income $6.2 $7.9 $7.7 $10.7
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Canadian Feed Operations (CFO)
The Canadian Feed Operations (CFO) segment consists of eight full-line production facilities producing and marketing products for the core animal nutrition market. CFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Prairie Provinces and Ontario.
Approximately 70% of CFO's total volumes are of complete feed products which typically carry lower unit margins within the product mix. Although CFO's tonnage volumes in the second quarter of fiscal 2012 declined by 5.0% compared to last year, the decline was concentrated in lower margin complete swine feeds and, therefore, had a less proportionate impact on total margins. For the year-to-date, CFO volumes were lower by 5.5%, mainly in complete swine feeds.
CFO gross profits in the second quarter this year were $2.6 million compared to $3.3 million in the same period last year. Reduced complete feed volumes and declining feed ingredient prices were the primary drivers of the $0.7 million decline in gross profits in the second quarter compared to last year. For the six months year-to-date gross profit was lower by $1.3 million.
Operating expenses were higher by $0.5 million for the year-to-date, largely a result of first quarter investments in lean manufacturing improvements. Operating income for the quarter was $0.2 million, a decrease of $0.6 million over last year. For the year-to-date, CFO recorded an operating loss of $0.9 million compared to operating income of $1.0 million last year.
U.S. Feed Operations (USFO)
The U.S. Feed Operations (USFO) segment consists of twenty-one full-line production facilities producing and marketing products for the core animal nutrition market. USFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Midwestern United States.
Tonnage volume was higher by 4.0% in the second quarter of fiscal 2012 compared to last year. For the year-to-date volumes were higher by 3.6% over last year. The increase in volumes in fiscal 2012 reflected a stronger performance in sales of higher value added supplements and generally favourable producer economics despite unseasonably mild winter conditions in the second quarter.
Gross profits in the second quarter this year were $8.8 million compared to $9.3 million in the same period last year. Average unit margins were slightly lower in fiscal 2012 as a consequence of declining feed ingredient prices, which more than offset improved product mix. Gross profits for the six months year-to-date were lower by $0.2 million. Operating expenses in the second quarter were higher by $0.2 million and were $0.9 million higher for the year-to-date. Operating income for the quarter was $1.8 million, a decrease of $0.7 million from last year. For the year-to-date operating income was $2.2 million compared to $3.3 million for the same period last year.
Ridley Feed Ingredients (RFI)
The Ridley Feed Ingredients (RFI) segment produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients to customers throughout North America from its production facility in Mendota, Illinois.
Tonnage volumes in the second quarter of fiscal 2012 were lower by 11.8% compared to last year, primarily as a result of the discontinuance of a private-label toll-milled product. For the same reason, tonnage volumes for the year-to-date were lower by 10.9%.
Gross profit in the second quarter was lower by $0.6 million or 34.8% from last year as a result of lower volumes and unit margins combined with higher manufacturing costs. Average unit margins in the second quarter were lower than last year but were slightly above last year for the first six months. Unit margins reflected declining market prices of ingredient this year. Variable production costs were lower in the first half of fiscal 2012 as plant staffing levels were adjusted to lower volumes; however, manufacturing overhead expenses in the second quarter were higher. For the year-to-date gross profit was lower by $0.5 million or 16.0%.
Operating expenses in the second quarter were even with the prior year but higher by $0.2 million for the year-to-date on increased consulting fees related to lean manufacturing initiatives. Operating income for the quarter was $0.3 million, a decrease of $0.6 million over last year. For the year-to-date, operating income was $0.9 million compared to $1.7 million last year.
Ridley Block Operations (RBO)
The Ridley Block Operations (RBO) segment manufactures and markets a complete range of block supplements, including low moisture, pressed, compressed, composite and poured blocks, and loose minerals from seven U.S. facilities. Tonnage volumes in the second quarter of fiscal 2012 were 4.2% lower relative to last year and reflected the unusually mild winter conditions this year, which were less favourable to cattle feed supplementation. For the year-to-date, RBO volumes were 5.6% ahead of last year as a result of a favourable beef cattle economy, growth in private label sales and drought in the south-central U.S. that supported higher tonnage volumes earlier in the current year.
Gross profits of $7.4 million in the second quarter this year were unchanged from last year as reduced volumes were offset by higher average unit margins resulting from continuing improvements in product mix. For the six months year-to-date, gross profits were ahead of last year by $0.9 million on increased tonnage volumes and improved average unit margins, which more than offset increased manufacturing expenses.
Operating expenses in the second quarter of fiscal 2012 were unchanged from $2.7 million last year. Six months year-to-date operating expenses increased by $0.3 million, which reflected a $0.3 million loss (before income taxes) on the sale of the previously closed facility in Syracuse, Indiana. Operating income for the quarter was $4.7 million, unchanged from last year, while operating income for the year-to-date of $7.0 million was ahead of last year by $0.5 million.
Liquidity/Capital Resources/Cash Flow
Ridley's working capital and debt-to-equity positions are summarized below.
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December September June
31 30 30
Balances ($000) as of: 2011 2011 2011
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Working capital (i) $45,595 $45,961 $40,967
Net debt (cash surplus) (ii) (2,624) 2,432 (1,606)
Equity 144,344 139,866 141,016
Net debt-to-equity ratio n/a 1.7% n/a
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(i) Working capital is defined as current assets less current liabilities,
excluding the following items: cash; short term deposits; short-term
debt; and current portion of long-term debt.
(ii) Net debt (cash surplus) is defined as bank obligations and capital
leases, less cash and short-term deposits. A cash surplus is defined as
an excess of cash and short term deposits over bank obligations and
capital leases.
Working capital balances decreased by $0.4 million in the three months between September 30, 2011 and December 31, 2011. Increased accounts receivable and inventories, reflective of the seasonal increase in sales volumes, and a decrease in the amount of outstanding cheques were offset by a $5.3 million increase in advances from mainly U.S. customers who prepay their feed accounts for tax reasons. Working capital balances since the start of the current year were higher by $4.6 million as accounts receivable and inventory balances were higher by $6.3 million reflecting the seasonal increase in sales volumes. Turnover rates for accounts receivable and inventories were improved in the second quarter and for the year-to-date as the Company continues to focus on more efficient asset management.
Cash surplus of $2.6 million as at December 31, 2011 was comprised of $4.1 million of cash and short term deposits, less long term debt of $0.5 million and a $1.0 million balance in revolving credit. The Company funded all capital expenditures in the current year from operating cash flows.
The following is a summary of cash generated or utilized by business operations, net of capital expenditures on plant and equipment and other intangibles, excluding business acquisitions.
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Summary of Changes in Cash Available Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
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Cash flow from operating activities $6.1 $7.6 $9.0 $11.3
Net decrease (increase) in non-cash
working capital balances 4.0 1.3 (1.4) (0.9)
Increase in loans receivable, net (0.1) (0.1) (0.6) (0.0)
Proceeds on disposal of property,
plant and equipment 0.1 0.3 0.5 0.3
Capital expenditures, excluding
business acquisitions (1.9) (1.8) (4.0) (3.9)
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Increase in cash available $8.2 $7.3 $3.4 $6.7
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For the second quarter of fiscal 2012, cash flows from operations net of capital expenditures were $8.2 million compared to $7.3 million in the same three-month period last year. Cash flows from decreased working capital balances were $4.0 million in the second quarter of fiscal 2012. A $5.3 million increase in customer advances between September 30, 2011 and December 31, 2011 offset higher accounts receivable and inventory balances in the period.
Capital Expenditures
Capital expenditures in the second quarter of fiscal 2012 were $1.9 million compared to $1.8 million in the same period a year ago. Capital expenditures for the year-to-date were $4.0 million compared to $3.9 million last year. Capital expenditures in fiscal 2012 were mainly on a variety of routine equipment and facility upgrades and continuing automation projects.
Outstanding Share Data
Ridley's share capital consists of an unlimited number of common shares, with no par value. On December 12, 2011 Ridley received approval from the Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid for the Company's shares through the facilities of the TSX. The shares repurchase program permits the Company to purchase for cancellation up to 639,499 of its common shares over the twelve month period ending December 14, 2012. As at December 31, 2011 the Company had repurchased no shares under the current normal course issuer bid. The number of shares outstanding as at December 31, 2011 and as at February 9, 2012 was 12,789,978.
Seasonality and Commodity Variability
The Company experiences seasonal variations in volumes. Historically, volume is strongest in the second and third fiscal quarters when colder weather increases demand for feed. Certain of the raw materials comprising the Company's products incorporate commodities. Fluctuating commodity prices may therefore influence revenues and the associated cost of sales as the Company's selling prices are adjusted to reflect current commodity markets.
Selected Quarterly Financial Information (i)
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(US $ millions except per share
data) Fiscal First Second Third Fourth
Year Quarter Quarter Quarter Quarter
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Revenue 2012 156.5 177.2 - -
2011 127.5 159.3 154.2 146.5
2010 135.7 150.0 141.6 120.3
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Net earnings (loss) (before
exceptions (ii) 2012 0.9 4.0 - -
net of income taxes). 2011 1.6 4.9 3.4 (0.4)
2010 1.1 5.0 2.5 (1.5)
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Net earnings (loss) 2012 0.7 4.0 - -
2011 1.6 4.9 3.4 (0.4)
2010 1.1 5.0 2.5 (3.9)
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Net earnings (loss) per share (EPS) 2012 0.06 0.31 - -
2011 0.13 0.38 0.27 (0.04)
2010 0.08 0.37 0.19 (0.28)
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(i) Financial information presented above for all quarters of fiscal 2010
was prepared in accordance with Canadian Generally Accepted Accounting
Principles. Fiscal 2012 and 2011 were prepared in accordance with
International Financial Reporting Standards.
(ii) Exceptions include: asset impairment loss, restructuring charges, and
gain or loss on sale of facilities.
Internal Control Over Financial Reporting
The Chief Executive Officer and Chief Financial Officer have each signed form 52-109F2 - Certification of Interim Filings and filed it with the appropriate securities regulators in Canada in compliance with National Instrument 52-109: Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.
Forward-Looking Information
This report contains "forward-looking" information. The forward-looking information includes statements concerning Ridley's outlook for the future as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of the MD&A included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.
OUTLOOK
At the present time, most sectors of livestock and poultry production in North America, with the notable exception of the U.S. broiler industry, are operating profitably because of improved prices for meat, milk and eggs. Since 2008, high feed ingredient prices have limited herd and flock expansion. The potential for continuing volatility in feed ingredient prices will remain one of the more significant drivers for Ridley's results. Ridley's business will be sensitive to any changes in the economic environment for producers and herd or flock populations. Ridley's growing lifestyle markets and higher-value added products tend to be more stable in market demand. In the face of these external uncertainties, the Company continues to improve its cost competitiveness through a number of initiatives to improve operating efficiencies including additional manufacturing automation, using lean manufacturing techniques and better utilization of information technology.
Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg, Manitoba, is one of North America's leading commercial animal nutrition companies. Ridley employs more than 800 people in the United States and Canada in the manufacture, sales and marketing of a full range of animal nutrition products under highly regarded trade names. Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL). Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at www.sedar.com. Visit our website at www.ridleyinc.com.
Contacts: RIDLEY Inc. Steve VanRoekel President and CEO (507) 388-9412 RIDLEY Inc. Gordon Hildebrand Chief Financial Officer (507) 388-9577
Source: Ridley Inc.
MANKATO, MINNESOTA and WINNIPEG, MANITOBA--(Marketwire - Feb. 9, 2012) - Ridley Inc. (TSX: RCL) today reported its financial results for the three and six months ended December 31, 2011. All currency amounts are stated in U.S. dollars unless otherwise noted.
For the three months ended December 31, 2011, Ridley's earnings before interest, taxes, depreciation and amortization (EBITDA (i)) were $8.3 million compared to $9.8 million last year. Net profit after income taxes (NPAT) was $4.0 million (31 cents per share) compared to $4.9 million (38 cents per share) last year.
Ridley's revenues grew by 11.3% to $177.2 million in the second quarter this year, primarily a result of an elevated level of raw material prices relative to the same period last year and a continuing shift in product mix towards higher value added products. Overall tonnage volumes were even with the same period last year as positive sales results under generally favourable economic conditions for livestock and poultry producers were offset by unseasonably mild weather. Gross profits decreased by 8.2% in the quarter to $20.1 million as average unit margins were pressured by the negative effect of declining commodity prices since the start of the current fiscal year on raw materials held in inventory. Operating expenses of $13.9 million were materially unchanged from last year. Operating income before interest and taxes of $6.2 million was lower by $1.7 million from the previous year.
Ridley Block Operations' $4.7 million in operating income in the second quarter of fiscal 2012 was unchanged from last year as unfavourable weather conditions offset stronger private label sales. U.S. Feed Operations contributed $1.8 million in the second quarter, compared to $2.4 million last year, as declining commodity prices and increased operating expenses more than offset growth in tonnage volumes. Ridley Feed Ingredients' contribution of $0.3 million in the quarter compared to $0.9 million last year reflects lower volume from a discontinued product, declining commodity prices and higher operating costs. Canadian Feed Operations contributed operating income of $0.2 million for the quarter compared to $0.8 million last year as product mix improvements and good cost controls were offset by lower volumes and declining commodity prices. Corporate overhead expenses were in line with the same period last year.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management Discussion and Analysis dated as at February 9, 2012 and the accompanying interim consolidated financial statements for the three and six months ended December 31, 2011 have been prepared to reflect the adoption of International Financial Reporting Standards ("IFRS") by the Company, with effect from July 1, 2010. Note 22 to the interim consolidated financial statements contains a detailed description of the Company's conversion to IFRS, including a line-by-line reconciliation of its consolidated financial statements previously prepared under Canadian GAAP to those prepared under IFRS for the three and six months ended December 31, 2010 and for the year ended June 30, 2011. Although the adoption of IFRS resulted in adjustments to Ridley's financial statements, it did not materially impact the underlying cash flows or profitability of the Company's operations.
For the fiscal year 2012, the Company has modified its reporting segments. Prior to fiscal 2012 Ridley Feed Operations (RFO) was comprised of Ridley's traditional Canadian and U.S. feed businesses. The RFO segment has now been divided into two reporting segments: Canadian Feed Operations (CFO) and U.S. Feed Operations (USFO). Prior to fiscal 2012, Ridley Nutrition Solutions (RNS) was a combination of Ridley's feed supplement block business and McCauley Bros., a premium equine feed business. Starting in fiscal 2012 the McCauley equine business is reported within the results of U.S. Feed Operations while the block business of RNS is renamed Ridley Block Operations (RBO). The Ridley Feed Ingredients (RFI) reporting segment, which produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients, is unchanged from prior years. Corporate overhead expenses were in line with the same period last year.
Second Quarter Results
The following summary data is presented to assist in understanding the
fiscal 2012 second quarter results.
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Summary of Results Three months ended Six months ended
December 31 December 31
($ million except for EPS) 2011 2010 2011 2010
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Revenue $177.2 $159.3 $333.7 $286.8
Gross profit 20.1 21.9 36.1 37.4
Operating income 6.2 7.9 7.7 10.7
Net earnings before exceptions 4.0 4.9 4.9 6.6
Exceptions, net of income taxes
(noted below (ii)) - - 0.2 -
Net earnings 4.0 4.9 4.7 6.6
Diluted earnings per share (EPS) $0.31 $0.38 $0.37 $0.51
EBITDA (i) $8.3 $9.8 $12.1 $14.5
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(i) EBITDA - Operating income before depreciation, amortization and
exceptions. EBITDA does not have a standardized meaning prescribed by
IFRS and, therefore, is not readily comparable to similar measures
presented by other companies. However, management believes that this
measure provides investors with useful supplemental information.
(ii) Exceptions - In the preceding summary data, net earnings were reported
before exceptions. Exceptions in the six months ended December 31, 2011
were comprised of a $0.2 million loss net of taxes from the sale of a
previously closed facility in Syracuse, Indiana.
Consolidated Second Quarter Results
Revenue of $177.2 million in the second quarter of fiscal 2012 was higher by $18.0 million from the same period last year. A comparison of revenue is not necessarily indicative of the strength of Ridley's business because revenue is influenced by fluctuating commodity prices. Raw material prices were generally higher this year than the same period last year, which had the effect of increasing average unit selling prices for the Company's feed products. Overall sales volumes were not significantly changed from last year; consequently, the 11.3% increase in sales revenues in the second quarter was largely the result of higher raw material prices relative to last year and continually improving product mix.
Consolidated gross profit in the second quarter of fiscal 2012 was $20.1 million compared to $21.9 million in the same period last year. Gross profit is comprised of the margin of sales revenues over ingredient costs less the costs of manufacturing and delivery. Margins for feed products may be affected by inventory holding gains or losses realized during periods in which market prices for feed ingredients are rising or falling. Most of the $1.8 million reduction in consolidated gross profits was the result of declining feed ingredient prices since the start of the current fiscal year from elevated levels last year. In the second quarter last year the Company recorded a credit of $0.5 million to cost of goods sold for the market valuation of unrealized gains in the second quarter associated with open sales contracts with customers. Because of declining commodity prices this year, the unrealized gain on open sales contracts was less than $0.1 million. Increased manufacturing costs in the second quarter also reduced gross profits.
Operating expenses include selling, marketing and administration, as well as depreciation of property, plant and equipment. In the second quarter of fiscal 2012, operating expenses of $13.9 million were largely unchanged from last year. While selling and marketing expenses were even with last year, lower administration expenses reflected improved operating efficiencies.
EBITDA is comprised of operating income before depreciation, amortization and exceptions. For the three months ended December 31, 2011 EBITDA was $8.3 million compared to $9.8 million for the same period last year. There were no material exceptions in the second quarter of this year or the prior year.
Net earnings after taxes for the second quarter of fiscal 2012 were $4.0 million (earnings per share of $0.31) compared to $4.9 million (earnings per share of $0.38) in the same period of fiscal 2011.
Comprehensive income (loss) is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Other comprehensive income (OCI) is comprised primarily of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Comprehensive income in the second quarter of fiscal 2012 was $4.5 million which was comprised of net income of $4.0 million, as reported above, plus unrealized gains of $0.5 million on the translation of the financial statements of Canadian entities to U.S. currency.
Consolidated Six Months Results
For the six months ended December 31, 2011, revenue of $333.7 million was $46.9 million higher than the same period last year. Generally higher raw material prices this year had the effect of increasing average unit selling prices for the Company's feed products. As tonnage volumes this year were approximately even with last year, the 16.4% increase in sales revenues in the current year-to-date mostly reflects the higher level of raw material costs over last year and continued improvements in product mix. Factors bearing on tonnage volumes in the first half of fiscal 2012 included positive sales results under good economic conditions for livestock and poultry producers, combined with favourable weather conditions for block sales in the first quarter this year, which more than offset by unfavourable, unseasonably mild weather in the second quarter.
Consolidated gross profit of $36.1 million for the first half of fiscal 2012 was $1.2 million lower from the prior year due to generally declining prices for feed ingredients during fiscal 2012. Increased manufacturing costs in the first half this year also contributed to reduced gross profits.
Operating expenses in the first half of fiscal 2012 were $28.4 million, an increase of $1.7 million over last year. Selling and marketing expenses were higher by $0.7 million in the first half this year while administration expenses were higher by $0.5 million due to the reallocation of certain expenses from manufacturing overhead, and consulting fees related to the implementation of lean manufacturing initiatives. The loss on sale of facility of $0.3 million (before income taxes) recorded in the first quarter of fiscal 2012 related to the disposal of a previously closed facility in Syracuse, Indiana.
EBITDA in the first six months of fiscal 2012 was $12.1 million compared to $14.5 million for the same period last year. EBITDA is comprised of operating income before amortization and exceptions. Exceptions in fiscal 2012 consisted of the $0.2 million loss (net of income taxes) on the sale of a redundant facility recorded in the first quarter this year. There were no exceptions of material significance in the first six months of the prior year.
Net earnings after taxes for the six months ended December 31, 2011 were $4.7 million (earnings per share of $0.37) compared with net earnings after taxes of $6.6 million (earnings per share of $0.51) in the same period last year.
Comprehensive income of $3.3 million in the six months year-to-date of fiscal 2012 was comprised of net income of $4.7 million, as reported above, less unrealized losses of $1.3 million on the translation to U.S. currency of financial statements of Canadian entities.
International Financial Reporting Standards
The Canadian Accounting Standards Board (AcSB) requires all public companies to adopt International Financial Reporting Standards (IFRS) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Company has commenced reporting its financial results in accordance with IFRS for the year ended June 30, 2012 and its quarterly unaudited interim results starting with the quarter ending September 30, 2011. The notes accompanying the interim financial statements provide comparative data on an IFRS basis, including an opening balance sheet as at July 1, 2010.
Differences between Canadian GAAP and IFRS in the method for the determination of impairment of assets resulted in the Company realizing an impairment of certain assets in its conversion to IFRS. The impairment amount of $12.7 million is reflected as a decrease in property, plant and equipment in the opening transition balance sheet as at July 1, 2010. IFRS and Canadian GAAP also differ on the recognition of actuarial gains/losses associated with long-term employee obligations such as defined benefit pensions and post-retirement medical benefits. Canadian GAAP allows for deferral and subsequent amortization of actuarial gains/losses while IFRS recognize gains/losses immediately through comprehensive income. The opening transition entries include an increase in liabilities of $11.4 million associated with long-term employee benefits. Deferred tax benefits of $8.3 million are recorded under IFRS for the income tax effects of the aforementioned transition entries. Combined, these changes realized from the conversion to IFRS resulted in a net reduction to equity of $15.8 million in the opening transition balance sheet as at July 1, 2010.
The Company elected to reclassify all cumulative translation differences as of January 1, 2010 from a separate component of equity to retained earnings. The effect of this reclassification was a reduction in the balance sheet account of accumulated other comprehensive income, and an increase in retained earnings, of $11.2 million.
The Company has performed an evaluation of its financial information systems and the financial reporting impact of divergences identified to-date and concluded that transition to IFRS did not require material modifications to information and reporting systems. The Company concluded that its internal controls over financial reporting, disclosure controls and procedures are appropriately designed and properly functioning for an IFRS reporting environment. The design includes new controls over the transition accounting.
Reconciliation of Non-IFRS Financial Measures
The Company reports its financial results according to IFRS. However, included in this management discussion and analysis are certain non-IFRS financial measures and ratios which the Company's management believes provide useful information in measuring the financial performance and financial condition of the Company. These measures and ratios do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other public companies, nor should they be construed as an alternative to other financial measures described by IFRS.
The following table is a reconciliation of EBITDA to net earnings, the most closely comparable IFRS measure to EBITDA. For purposes of this table, operating income is defined as net earnings before finance costs, interest income and provision for income taxes. EBITDA is defined as operating income before depreciation, amortization and exceptions.
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EBITDA Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
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Net earnings $4.0 $4.9 $4.7 $6.6
Provision for income taxes 2.3 2.9 3.0 4.0
Interest income (0.1) (0.1) (0.1) (0.1)
Finance costs 0.1 0.1 0.2 0.2
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Operating income $6.2 $7.9 $7.7 $10.7
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Amortization of property, plant
and equipment 1.8 1.7 3.7 3.5
Other amortization 0.2 0.2 0.4 0.4
Loss on sale of facilities - - 0.3 -
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EBITDA $8.3 $9.8 $12.1 $14.5
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SEGMENT RESULTS
The following is a summary of operating income (loss) of Ridley's reporting
segments.
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Operating Income (Loss) Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
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Canadian Feed Operations (CFO) $0.2 $0.8 $(0.9) $1.0
U.S. Feed Operations (USFO) 1.8 2.4 2.2 3.3
Ridley Feed Ingredients (RFI) 0.3 0.9 0.9 1.7
Ridley Block Operations (RBO) 4.7 4.7 7.0 6.5
Corporate (0.7) (0.9) (1.5) (1.8)
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Consolidated Operating Income $6.2 $7.9 $7.7 $10.7
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Canadian Feed Operations (CFO)
The Canadian Feed Operations (CFO) segment consists of eight full-line production facilities producing and marketing products for the core animal nutrition market. CFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Prairie Provinces and Ontario.
Approximately 70% of CFO's total volumes are of complete feed products which typically carry lower unit margins within the product mix. Although CFO's tonnage volumes in the second quarter of fiscal 2012 declined by 5.0% compared to last year, the decline was concentrated in lower margin complete swine feeds and, therefore, had a less proportionate impact on total margins. For the year-to-date, CFO volumes were lower by 5.5%, mainly in complete swine feeds.
CFO gross profits in the second quarter this year were $2.6 million compared to $3.3 million in the same period last year. Reduced complete feed volumes and declining feed ingredient prices were the primary drivers of the $0.7 million decline in gross profits in the second quarter compared to last year. For the six months year-to-date gross profit was lower by $1.3 million.
Operating expenses were higher by $0.5 million for the year-to-date, largely a result of first quarter investments in lean manufacturing improvements. Operating income for the quarter was $0.2 million, a decrease of $0.6 million over last year. For the year-to-date, CFO recorded an operating loss of $0.9 million compared to operating income of $1.0 million last year.
U.S. Feed Operations (USFO)
The U.S. Feed Operations (USFO) segment consists of twenty-one full-line production facilities producing and marketing products for the core animal nutrition market. USFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Midwestern United States.
Tonnage volume was higher by 4.0% in the second quarter of fiscal 2012 compared to last year. For the year-to-date volumes were higher by 3.6% over last year. The increase in volumes in fiscal 2012 reflected a stronger performance in sales of higher value added supplements and generally favourable producer economics despite unseasonably mild winter conditions in the second quarter.
Gross profits in the second quarter this year were $8.8 million compared to $9.3 million in the same period last year. Average unit margins were slightly lower in fiscal 2012 as a consequence of declining feed ingredient prices, which more than offset improved product mix. Gross profits for the six months year-to-date were lower by $0.2 million. Operating expenses in the second quarter were higher by $0.2 million and were $0.9 million higher for the year-to-date. Operating income for the quarter was $1.8 million, a decrease of $0.7 million from last year. For the year-to-date operating income was $2.2 million compared to $3.3 million for the same period last year.
Ridley Feed Ingredients (RFI)
The Ridley Feed Ingredients (RFI) segment produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients to customers throughout North America from its production facility in Mendota, Illinois.
Tonnage volumes in the second quarter of fiscal 2012 were lower by 11.8% compared to last year, primarily as a result of the discontinuance of a private-label toll-milled product. For the same reason, tonnage volumes for the year-to-date were lower by 10.9%.
Gross profit in the second quarter was lower by $0.6 million or 34.8% from last year as a result of lower volumes and unit margins combined with higher manufacturing costs. Average unit margins in the second quarter were lower than last year but were slightly above last year for the first six months. Unit margins reflected declining market prices of ingredient this year. Variable production costs were lower in the first half of fiscal 2012 as plant staffing levels were adjusted to lower volumes; however, manufacturing overhead expenses in the second quarter were higher. For the year-to-date gross profit was lower by $0.5 million or 16.0%.
Operating expenses in the second quarter were even with the prior year but higher by $0.2 million for the year-to-date on increased consulting fees related to lean manufacturing initiatives. Operating income for the quarter was $0.3 million, a decrease of $0.6 million over last year. For the year-to-date, operating income was $0.9 million compared to $1.7 million last year.
Ridley Block Operations (RBO)
The Ridley Block Operations (RBO) segment manufactures and markets a complete range of block supplements, including low moisture, pressed, compressed, composite and poured blocks, and loose minerals from seven U.S. facilities. Tonnage volumes in the second quarter of fiscal 2012 were 4.2% lower relative to last year and reflected the unusually mild winter conditions this year, which were less favourable to cattle feed supplementation. For the year-to-date, RBO volumes were 5.6% ahead of last year as a result of a favourable beef cattle economy, growth in private label sales and drought in the south-central U.S. that supported higher tonnage volumes earlier in the current year.
Gross profits of $7.4 million in the second quarter this year were unchanged from last year as reduced volumes were offset by higher average unit margins resulting from continuing improvements in product mix. For the six months year-to-date, gross profits were ahead of last year by $0.9 million on increased tonnage volumes and improved average unit margins, which more than offset increased manufacturing expenses.
Operating expenses in the second quarter of fiscal 2012 were unchanged from $2.7 million last year. Six months year-to-date operating expenses increased by $0.3 million, which reflected a $0.3 million loss (before income taxes) on the sale of the previously closed facility in Syracuse, Indiana. Operating income for the quarter was $4.7 million, unchanged from last year, while operating income for the year-to-date of $7.0 million was ahead of last year by $0.5 million.
Liquidity/Capital Resources/Cash Flow
Ridley's working capital and debt-to-equity positions are summarized below.
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December September June
31 30 30
Balances ($000) as of: 2011 2011 2011
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Working capital (i) $45,595 $45,961 $40,967
Net debt (cash surplus) (ii) (2,624) 2,432 (1,606)
Equity 144,344 139,866 141,016
Net debt-to-equity ratio n/a 1.7% n/a
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(i) Working capital is defined as current assets less current liabilities,
excluding the following items: cash; short term deposits; short-term
debt; and current portion of long-term debt.
(ii) Net debt (cash surplus) is defined as bank obligations and capital
leases, less cash and short-term deposits. A cash surplus is defined as
an excess of cash and short term deposits over bank obligations and
capital leases.
Working capital balances decreased by $0.4 million in the three months between September 30, 2011 and December 31, 2011. Increased accounts receivable and inventories, reflective of the seasonal increase in sales volumes, and a decrease in the amount of outstanding cheques were offset by a $5.3 million increase in advances from mainly U.S. customers who prepay their feed accounts for tax reasons. Working capital balances since the start of the current year were higher by $4.6 million as accounts receivable and inventory balances were higher by $6.3 million reflecting the seasonal increase in sales volumes. Turnover rates for accounts receivable and inventories were improved in the second quarter and for the year-to-date as the Company continues to focus on more efficient asset management.
Cash surplus of $2.6 million as at December 31, 2011 was comprised of $4.1 million of cash and short term deposits, less long term debt of $0.5 million and a $1.0 million balance in revolving credit. The Company funded all capital expenditures in the current year from operating cash flows.
The following is a summary of cash generated or utilized by business operations, net of capital expenditures on plant and equipment and other intangibles, excluding business acquisitions.
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Summary of Changes in Cash Available Three months ended Six months ended
December 31 December 31
($ million) 2011 2010 2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operating activities $6.1 $7.6 $9.0 $11.3
Net decrease (increase) in non-cash
working capital balances 4.0 1.3 (1.4) (0.9)
Increase in loans receivable, net (0.1) (0.1) (0.6) (0.0)
Proceeds on disposal of property,
plant and equipment 0.1 0.3 0.5 0.3
Capital expenditures, excluding
business acquisitions (1.9) (1.8) (4.0) (3.9)
----------------------------------------------------------------------------
Increase in cash available $8.2 $7.3 $3.4 $6.7
----------------------------------------------------------------------------
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For the second quarter of fiscal 2012, cash flows from operations net of capital expenditures were $8.2 million compared to $7.3 million in the same three-month period last year. Cash flows from decreased working capital balances were $4.0 million in the second quarter of fiscal 2012. A $5.3 million increase in customer advances between September 30, 2011 and December 31, 2011 offset higher accounts receivable and inventory balances in the period.
Capital Expenditures
Capital expenditures in the second quarter of fiscal 2012 were $1.9 million compared to $1.8 million in the same period a year ago. Capital expenditures for the year-to-date were $4.0 million compared to $3.9 million last year. Capital expenditures in fiscal 2012 were mainly on a variety of routine equipment and facility upgrades and continuing automation projects.
Outstanding Share Data
Ridley's share capital consists of an unlimited number of common shares, with no par value. On December 12, 2011 Ridley received approval from the Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid for the Company's shares through the facilities of the TSX. The shares repurchase program permits the Company to purchase for cancellation up to 639,499 of its common shares over the twelve month period ending December 14, 2012. As at December 31, 2011 the Company had repurchased no shares under the current normal course issuer bid. The number of shares outstanding as at December 31, 2011 and as at February 9, 2012 was 12,789,978.
Seasonality and Commodity Variability
The Company experiences seasonal variations in volumes. Historically, volume is strongest in the second and third fiscal quarters when colder weather increases demand for feed. Certain of the raw materials comprising the Company's products incorporate commodities. Fluctuating commodity prices may therefore influence revenues and the associated cost of sales as the Company's selling prices are adjusted to reflect current commodity markets.
Selected Quarterly Financial Information (i)
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(US $ millions except per share
data) Fiscal First Second Third Fourth
Year Quarter Quarter Quarter Quarter
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue 2012 156.5 177.2 - -
2011 127.5 159.3 154.2 146.5
2010 135.7 150.0 141.6 120.3
----------------------------------------------------------------------------
Net earnings (loss) (before
exceptions (ii) 2012 0.9 4.0 - -
net of income taxes). 2011 1.6 4.9 3.4 (0.4)
2010 1.1 5.0 2.5 (1.5)
----------------------------------------------------------------------------
Net earnings (loss) 2012 0.7 4.0 - -
2011 1.6 4.9 3.4 (0.4)
2010 1.1 5.0 2.5 (3.9)
----------------------------------------------------------------------------
Net earnings (loss) per share (EPS) 2012 0.06 0.31 - -
2011 0.13 0.38 0.27 (0.04)
2010 0.08 0.37 0.19 (0.28)
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(i) Financial information presented above for all quarters of fiscal 2010
was prepared in accordance with Canadian Generally Accepted Accounting
Principles. Fiscal 2012 and 2011 were prepared in accordance with
International Financial Reporting Standards.
(ii) Exceptions include: asset impairment loss, restructuring charges, and
gain or loss on sale of facilities.
Internal Control Over Financial Reporting
The Chief Executive Officer and Chief Financial Officer have each signed form 52-109F2 - Certification of Interim Filings and filed it with the appropriate securities regulators in Canada in compliance with National Instrument 52-109: Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.
Forward-Looking Information
This report contains "forward-looking" information. The forward-looking information includes statements concerning Ridley's outlook for the future as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of the MD&A included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.
OUTLOOK
At the present time, most sectors of livestock and poultry production in North America, with the notable exception of the U.S. broiler industry, are operating profitably because of improved prices for meat, milk and eggs. Since 2008, high feed ingredient prices have limited herd and flock expansion. The potential for continuing volatility in feed ingredient prices will remain one of the more significant drivers for Ridley's results. Ridley's business will be sensitive to any changes in the economic environment for producers and herd or flock populations. Ridley's growing lifestyle markets and higher-value added products tend to be more stable in market demand. In the face of these external uncertainties, the Company continues to improve its cost competitiveness through a number of initiatives to improve operating efficiencies including additional manufacturing automation, using lean manufacturing techniques and better utilization of information technology.
Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg, Manitoba, is one of North America's leading commercial animal nutrition companies. Ridley employs more than 800 people in the United States and Canada in the manufacture, sales and marketing of a full range of animal nutrition products under highly regarded trade names. Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL). Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at www.sedar.com. Visit our website at www.ridleyinc.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
RIDLEY Inc.
Steve VanRoekel
President and CEO
(507) 388-9412
RIDLEY Inc.
Gordon Hildebrand
Chief Financial Officer
(507) 388-9577
Source: Ridley Inc.
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