International Multifoods Corp. today reported first-quarter fiscal 2001 earnings from continuing operations of $4.8 million, or 25 cents per diluted share, compared with $4.6 million, or 24 cents per share, in the same period last year.
Including results from the company’s Venezuelan business, which was divested last year, the company reported a net loss of $3.2 million, or 17 cents per diluted share, in the year-earlier first quarter.
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Operating earnings for the first quarter ended May 27 increased 9 percent to $11.2 million, up from $10.3 million a year ago. First-quarter net sales were $610.3 million, up 4 percent from $588.8 million last year. The company’s Economic Value Added (EVA) improved $2.4 million. This improvement was primarily driven by the divestiture of Venezuela Foods.
Gary E. Costley, International Multifoods chairman and chief executive officer, said the company’s results were in line with expectations.
“We continue to benefit from the strong performance of our foodservice manufacturing businesses,” Costley said. “In distribution, we are encouraged by the progress being made to reduce costs and improve productivity. Overall, we remain comfortable with our outlook for the balance of the year. As we said at year-end, we expect the first-half year-over-year comparisons to be even with the prior year and to improve significantly as the year goes on.
“During the quarter, we continued to take steps to strengthen our core foodservice manufacturing and distribution businesses,” Costley said. “We completed two consolidation projects in distribution, and we made additional investments in our foodservice manufacturing operation to capitalize on market trends and emerging growth opportunities.”
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By GlobalDataFirst-Quarter Operating Results by Segment
Multifoods Distribution Group. Operating earnings were $5.2 million, down from $6.3 million in the first quarter a year ago. Net sales were $495.9 million, up 5 percent from $472 million in the prior year.
During the first quarter, the company continued to gain market share in vending distribution. Sales to vending operators were up about 4 percent as a result of new business and greater penetration with current customers. The company also experienced growth in the targeted segments of fund-raising and sandwich shops, which more than offset the loss of an unprofitable regional foodservice account. In addition, cheese prices reduced first-quarter sales by nearly $4 million. Overall, volumes increased 3 percent, after adjusting for the acquisition of Better Brands, the relinquished account and deflation.
The decline in operating earnings was the result of higher delivery and distribution expenses, driven in part by a $600,000 increase in fuel costs, and competitive pricing pressures in certain regions in vending distribution.
“Over the last two years, we undertook several major initiatives to better position our distribution business for future growth,” Costley said. “These initiatives, however, put short-term pressure on productivity. Now, with nearly all of our projects completed, we are beginning to see the benefits of our efforts to reduce costs in distribution. We believe our recovery is underway, and we look for steady improvements in the distribution group’s profitability throughout the year.”
North America Foods. Operating earnings increased 19 percent to $7.5 million, up from $6.3 million in the first quarter last year. Net sales were $114.4 million, down from $116.8 million a year ago.
The improvement in operating earnings stemmed from a more favorable foodservice product mix, lower ingredient costs and better asset utilization. The company’s U.S. foodservice manufacturing business reported strong demand for its ready-to-bake products and frozen desserts. In Canada, the company experienced solid growth in its foodservice businesses, which helped offset weaker activity in consumer foods. Sales of foodservice condiments increased 5 percent, and sales of frozen desserts rose 9 percent.
“North America Foods continued to achieve outstanding results — turning in another first-quarter record on top of the records it set each of the two previous years,” Costley said. “Our foodservice manufacturing business continued to benefit from growing demand among bakery and foodservice customers for differentiated, easy-to-prepare products.”
The company recently signed an agreement to sell its corporate headquarters building at 200 East Lake Street in Wayzata, Minn. The transaction is expected to close by the end of August. As a result, the company expects to recognize an after-tax unusual gain of about $3.5 million, or 19 cents per share, in the second quarter ended Aug. 26. Costley noted that cash received from the transaction would be used to pay down debt.
International Multifoods is a manufacturer for and distributor to the foodservice industry in North America. The company also is a leading manufacturer and marketer of consumer foods in Canada.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company’s operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; market or weather conditions that may affect the costs of grain, cheese, other raw materials and fuel; changes in laws and regulations; fluctuations in interest rates; the company’s ability to realize the book value of its remaining Venezuelan assets; fluctuations in foreign exchange rates; the company’s ability to reduce delivery and distribution costs, and realize the earnings benefits from the distribution group’s consolidation and expansion plans; risks commonly encountered in international trade; and other factors as may be discussed in the company’s Report on Form 10-K for the year ended Feb. 29, 2000, and other reports filed with the Securities and Exchange Commission.
International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)
FY 2001 – First Quarter Ended May 27
————————————
Net Operating Operating
Sales Costs Earnings
——- ——— ———
Multifoods Distribution Group $495.9 $(490.7) $ 5.2
North America Foods 114.4 (106.9) 7.5
Corporate Expenses – (1.5) (1.5)
——- ——— ———
Total $610.3 $(599.1) $ 11.2
======= ========= =========
Reconciliation of operating earnings to net earnings:
—————————————————–
Total
———
Operating earnings $ 11.2
Interest, net (3.2)
Other income (expense), net (0.3)
———
Earnings from continuing operations
before income taxes 7.7
Income taxes (2.9)
———
Earnings from continuing operations 4.8
Loss from discontinued operations –
———
Net earnings $ 4.8
=========
Basic earnings per share:
Continuing operations $ 0.25
Discontinued operations –
———
Total $ 0.25
=========
Diluted earnings per share:
Continuing operations $ 0.25
Discontinued operations –
———
Total $ 0.25
=========
International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)
FY 2000 – First Quarter Ended May 31
————————————
Net Operating Operating
Sales Costs Earnings
——- ——— ———
Multifoods Distribution Group $472.0 $(465.7) $ 6.3
North America Foods 116.8 (110.5) 6.3
Corporate Expenses – (2.3) (2.3)
——- ——— ———
Total $588.8 $(578.5) $ 10.3
======= ========= =========
Reconciliation of operating earnings to net loss:
————————————————-
Total
———
Operating earnings $ 10.3
Interest, net (2.7)
Other income (expense), net (0.2)
———
Earnings from continuing operations
before income taxes 7.4
Income taxes (2.8)
———
Earnings from continuing operations 4.6
Loss from discontinued operations (7.8)
———
Net loss $ (3.2)
=========
Basic earnings (loss) per share:
Continuing operations $ 0.24
Discontinued operations (0.41)
———
Total $(0.17)
=========
Diluted earnings (loss) per share:
Continuing operations $ 0.24
Discontinued operations (0.41)
———
Total $(0.17)
=========
International Multifoods Corporation
Consolidated Statements of Operations
(unaudited)
First Quarter Ended
——————-
May 27, May 31,
(in millions, except per share data) 2000 1999
————————————————————–
Net sales $ 610.3 $ 588.8
Cost of materials and production (522.1) (504.4)
Delivery and distribution (43.5) (40.6)
————————————————————–
Gross profit 44.7 43.8
Selling, general and administrative (33.5) (33.5)
————————————————————–
Operating earnings 11.2 10.3
Interest, net (3.2) (2.7)
Other income (expense), net (0.3) (0.2)
————————————————————–
Earnings from continuing operations
before income taxes 7.7 7.4
Income taxes (2.9) (2.8)
————————————————————–
Earnings from continuing operations 4.8 4.6
Loss from discontinued operations – (7.8)
————————————————————–
Net earnings (loss) $ 4.8 $ (3.2)
==============================================================
Basic earnings (loss) per share:
Continuing operations $ 0.25 $ 0.24
Discontinued operations – (0.41)
————————————————————–
Total $ 0.25 $ (0.17)
==============================================================
Diluted earnings (loss) per share:
Continuing operations $ 0.25 $ 0.24
Discontinued operations – (0.41)
————————————————————–
Total $ 0.25 $ (0.17)
==============================================================
Average shares outstanding:
Basic 18.7 18.8
Diluted 18.8 18.8
————————————————————–
International Multifoods Corporation
Consolidated Condensed Balance Sheets
(unaudited)
May 27, Feb. 29, May 31,
(in millions) 2000 2000 1999
—————————————————————–
Assets
——
Current assets:
Cash and cash equivalents $ 7.9 $ 11.2 $ 5.3
Trade accounts receivable, net 121.3 122.6 130.6
Inventories 164.1 171.3 160.4
Other current assets 50.8 48.9 44.4
——————————————————————
Total current assets 344.1 354.0 340.7
——————————————————————
Property, plant and equipment, net 205.9 204.9 172.1
Goodwill, net 84.0 84.9 81.6
Net noncurrent assets of
discontinued operations – – 45.0
Other assets 95.2 92.4 64.6
——————————————————————
Total assets $729.2 $736.2 $704.0
==================================================================
Liabilities and Shareholders’ Equity
————————————
Current liabilities:
Notes payable $ 59.7 $ 41.5 $ 48.6
Current portion of long-term debt 16.0 20.0 5.5
Accounts payable 155.9 167.3 153.1
Net current liabilities of
discontinued operations – – 13.2
Other current liabilities 42.2 48.7 55.7
——————————————————————
Total current liabilities 273.8 277.5 276.1
——————————————————————
Long-term debt 146.2 147.2 121.2
Employee benefits and other liabilities 57.0 56.4 52.0
——————————————————————
Total liabilities 477.0 481.1 449.3
——————————————————————
Shareholders’ equity 252.2 255.1 254.7
——————————————————————
Total liabilities and
shareholders’ equity $729.2 $736.2 $704.0
==================================================================
