|March 10, 2010 |
Viterra Records Solid First Quarter Earnings
REGINA, SASKATCHEWAN--(Marketwire - March 10, 2010) - Viterra's (TSX:VT) (ASX:VTA) consolidated sales and other operating revenues for the first quarter of fiscal 2010 grew 29% or $404.0 million to $1.8 billion (2009 - $1.4 billion), buoyed by contributions associated with the acquisition of ABB Grain Ltd. ("ABB") of Australia in September 2009.
EBITDA for the quarter was $89.8 million (refer to the Section entitled Non-GAAP Measures for the definition) compared to a first quarter EBITDA loss of $6.4 million in fiscal 2009, which included a fertilizer inventory write-down of $28.1 million.
EBITDA from Viterra's North American operations for the quarter was $23.2 million, a significant improvement from last year's first quarter results. EBITDA contributions from the Company's Australian operations was $66.6 million, primarily reflecting a recovery in South Australian production levels and the corresponding increase in first quarter receipts into its system due to a return to normalized production levels and a successful harvest in South Australia.
Viterra's first quarter net earnings were $10.7 million or $0.03 per share, which compares to a net loss of $33.0 million or $0.14 per share in the same three-month period of 2009 (excluding the 2009 first quarter write-down, the net loss last year was $13.6 million). The first quarter of fiscal 2010 includes a full three months of contributions from Australia.
President and Chief Executive Officer, Mayo Schmidt said, "Results from our acquisition of the Australian operations reflect normalized conditions for this business. We are implementing a proven pipeline grain handling and marketing model for our core operations focused on an integrated grower relations program and a comprehensive handling, logistics and international marketing strategy. It is a model that we are confident will improve the value proposition for all stakeholders over the long-term and solidify Viterra as the marketer of choice within the region."
"For our North American operations, our agri-products business has seen solid demand for fertilizer products and a 12% increase in producer pre-payments in the first quarter, a positive signal that spring demand for crop inputs is recovering. The North American businesses are operating as expected and we believe that 2010 will be a year of recovery for the Australian business. Viterra's focus is on maximizing our integration efforts and solidifying our enhanced position in the international agricultural marketplace."
First Quarter Operating Highlights
- Viterra's North American grain shipments for the quarter ended January 31, 2010 were 3.6 million tonnes, comparable with the 3.8 million tonnes shipped in the first quarter of 2009. Canadian Wheat Board shipments were on par with last year, while open market shipments were lower than the previous year's quarter due to lower canola shipments resulting from temporary import restrictions into China. North American margins were consistent with the previous year, despite slightly lower volumes, due to additional drying revenues and blending opportunities relative to the previous year's period.
- Receivals into South Australia were 6.2 million tonnes and the majority of the margin contribution came from receival revenues. Shipments were marginal at 0.6 million tonnes for the quarter. Growers were reluctant to sell their grain during the harvest period due to low commodity prices. Management believes this is a timing issue and that the majority of South Australia's margin contributions from storage, shipping and merchandising activities will materialize during the balance of the year.
- EBITDA from the Company's Grain Handling and Marketing Segment was $109.7 million of which the Australian contribution was $64.0 million. The North American contribution was $45.7 million, just slightly lower than $47.9 million in the first quarter of 2009.
- In Viterra's Agri-products segment (which includes financial products), sales and other operating revenues were $215.3 million compared to $189.9 million for the same three-month period of 2009. Fertilizer sales volumes were 15% higher in North America than the prior year's first quarter reflecting affordable fertilizer pricing and growers' desire to replenish soil nutrients in the spring.
- Customer retail pre-payments in North America totaled $272.0 million at the end of January 2010, which compares to $242.0 million last year at the same time. Pre-payments in 2010 were primarily for fertilizer products, while last year pre-payments were made for a variety of crop input products.
- Sales in the Processing segment for the quarter, which now include contributions from food and feed processing operations, were $311.5 million, up $65.8 million from the comparable period of 2009. The year-over-year increase in sales primarily reflects:
- The addition of the Australian malt business, which generated sales of $79.5 million for the quarter;
- The acquisition of a canola crush plant in June of 2009, which generated $30.4 million in sales for the quarter;
- The addition of the New Zealand feed business, which generated sales of $18.1 million for the quarter; and
- The revenue increases more than offset a decline in North American feed sales in the first quarter of fiscal 2010, which reflect similar volumes, but substantially lower commodity prices.
The Processing segment's EBITDA for the quarter was $23.2 million, an increase of $11.4 million from the first quarter of fiscal 2009, which included EBITDA of $15.5 million from food manufacturing in the quarter and $7.7 million from feed manufacturing.
For the three months ended January 31, 2010, cash flow provided by operations increased by $75.0 million to $60.1 million or $0.16 per share.
Subsequent to quarter end, on March 6, 2010, Standard and Poor's upgraded its corporate credit rating on Viterra to investment grade from BB+ reflecting the Company's enhanced risk profile.
Viterra's balance sheet at January 31, 2010, remained strong with total debt-to-capital of 29.2%. Viterra had no cash drawings on its $800.0 million North American revolving credit facility at the end of the quarter and had $477.0 million Australian Dollars ("AUD") drawn on the $1.2 billion AUD operating facility that funds the Australian and New Zealand businesses.
In January 2010, Viterra used $300.0 million AUD of cash to reduce the short-term debt of Viterra Australia. This action is expected to reduce the Company's interest expense by approximately $1.3 million per month. Availability under the $1.2 billion AUD facility was not impacted.
Viterra will be hosting a conference call for interested parties on March 10, 2010 at 1:15 p.m. Toronto time, 11:15 a.m. Calgary time to discuss its First Quarter Financial Report. Details are available on Viterra's website, under Newsroom at www.viterra.ca.
Certain statements in this news release are forward-looking statements and reflect Viterra's expectations regarding future results of operations, financial condition and achievements. All statements that address activities, events or developments that Viterra or its management expects or anticipates will or may occur in the future, including such things as growth of its business and operations, competitive strengths, strategic initiatives, planned capital expenditures, plans and references to future operations and results, critical accounting estimates and expectations regarding future capital resources and liquidity of the Company and such matters, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and achievements of Viterra to be materially different from any future results, performance and achievements expressed or implied by those forward-looking statements. A number of factors could cause actual results to differ materially from expectations. These factors and assumptions are further detailed in Viterra's First Quarter Financial Report.
Viterra Inc. provides premium quality ingredients to leading global food manufacturers. Headquartered in Canada, the global agribusiness has extensive operations across Western Canada, Australia, and New Zealand, with Adelaide, Australia as the base for Viterra's Southeast Asian operations. Our growing international presence also extends to operations in the United States, as well as offices in Japan, Singapore, China and Switzerland. Driven by an entrepreneurial spirit we operate in three interrelated business areas: grain handling and marketing, agri-products, and processing. Our expertise, close relationships with producers, and superior logistical assets allow the Company to consistently meet the needs of the most discerning end-use customers, helping to fulfill the nutritional needs of people around the world.
FIRST QUARTER FINANCIAL REPORT - JANUARY 31, 2010
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.0 Responsibility for Disclosure
Management's Discussion and Analysis ("MD&A") was prepared based on information available to Viterra Inc. (referred to herein as "Viterra" or the "Company") as of March 9, 2010. Management prepared this report to help readers interpret Viterra's consolidated financial results for the three months ended January 31, 2010 and January 31, 2009.
To support the discussion, this report includes information with respect to the agri-business industry, the markets in which the Company operates and trends that may affect operating and financial performance into the future. Please read this report in conjunction with Viterra's 2009 Annual Financial Review, the 2009 Business Review and the 2009 Annual Information Form, which are available on Viterra's website at www.viterra.ca, as well as on SEDAR's website at www.sedar.com, under Viterra Inc.
This MD&A, the unaudited Consolidated Balance Sheets, Statements of Earnings (Loss), Statements of Cash Flows, Statements of Comprehensive Income (Loss), Statements of Shareholders' Equity and Notes to the Consolidated Financial Statements have been prepared in accordance with Canadian GAAP and are presented in Canadian dollars unless specifically stated to the contrary.
2.0 Company Overview
Viterra is a vertically integrated global agri-business headquartered in Canada with operations in North America, Australia and New Zealand.
The Company acquired, on September 23, 2009, all of the issued and outstanding common shares of ABB Grain Ltd. (referred to herein as "ABB", "Viterra Australia" or "Viterra"), an Australian based agri-business.
As a major participant in the value-added agri-food supply chain, Viterra's core businesses are organized among three primary segments: Agri-products sales and services (including financial products), Grain Handling and Marketing, and Processing (which includes both food and feed manufacturing). The consolidation of these segments was done to better align Viterra's external reporting with its internal operating structure.
Geographically, Viterra's operations are diversified across Western Canada, South Australia, New Zealand, and a feed production and marketing business throughout the western United States ("U.S."). The Company also has marketing offices in Canada, Australia, Japan, Singapore and Switzerland. Viterra participates in fertilizer manufacturing through its 34% ownership in Canadian Fertilizers Limited ("CFL"). It has wholly owned feed processing, oat milling, canola crushing and malt processing operations. It also has a 42% interest in Prairie Malt Limited ("Prairie Malt"), a Saskatchewan-based single site malting facility operated as part of Cargill Malt's operations. Viterra is involved in other commodity-related businesses through strategic alliances and supply agreements with domestic and international grain traders and food processing companies. The Company markets commodities directly to customers in more than 50 countries.
Viterra's shares trade on the Toronto Stock Exchange ("TSX") under the symbol "VT" and its CHESS Depository Interests ("CDIs") trade on the Australian Securities Exchange under the symbol, "VTA".