Regina, Saskatchewan
October 12, 2006
Saskatchewan Wheat Pool Inc.
(TSX:SWP)
Strong sales in each of the
Pool's three business segments drove fourth quarter sales and
other operating revenues to $602.1 million, a 10% increase from
$546.7 million last year. Grain Handling and Marketing sales
climbed 15%, Agri-product sales were up over 6%, and Agri-food
Processing posted a 12% improvement from the levels of the
fiscal 2005 fourth quarter.
Segment EBITDA, or earnings before interest, taxes, depreciation
and amortization was $59.2 million for the fourth quarter of
2006, an increase from $55.2 million generated in the prior
year's quarter. All three of the Pool's wholly owned operations
posted fourth quarter improvements.
Fourth Quarter Highlights
- The Pool's grain shipments in the final quarter of 2006
exceeded the same period last year by 6.8%. Shipments reached 2
million metric tonnes (mmt) with non-Board shipments up 17.3%.
Canadian Wheat Board shipments were on par with the previous
year's period.
- The Pool's gross margin per tonne rose $3.04 to $21.90 in the
final quarter of fiscal 2006 compared to the $18.86 per tonne
generated in the same period last year (which excludes $1.53 per
tonne in one-time items recorded in the final three months of
fiscal 2005).
- The Pool's Agri-products retail operations generated fourth
quarter EBITDA of $21.3 million, up $3 million from the previous
year's quarter, partially offsetting reduced contributions from
Western Co-operative Fertilizer Limited (WCFL).
- Net earnings in the fourth quarter of fiscal 2006 were $13.5
million compared to $29.5 million in the prior year's quarter
with the decrease resulting from a number of one-time items
recorded in the fourth quarter this year. Excluding these
adjustments, net earnings for the final three months of the year
were $25.6 million, compared to $23.0 million in the same period
a year ago. Readers should refer to Tables 1 and 2 for a list of
adjustments and their impact on net earnings.
- Cash flow from continuing operations was $44.5 million, an
8.1% increase from the fourth quarter last year when the Pool
generated $41.2 million.
"Despite some challenges in the northeastern part of the
Province due to excessive rains, our employees remained focused
on their objectives and delivered a strong performance in our
final quarter of 2006. I am extremely pleased with the results
we achieved from our core operations," said President and Chief
Executive Officer, Mayo Schmidt.
Consolidated Financial Results - Fourth Quarter
Segment EBITDA was up 7.4% for the fourth quarter in fiscal 2006
to $59.2 million. All three of the Pool's wholly owned
operations, which include Grain Handling and Marketing, the
retail Agri-products network and Can-Oat Milling, posted fourth
quarter improvements that more than offset lower contributions
from Prairie Malt Limited and WCFL.
Corporate expenses in the fourth quarter of fiscal 2006 were
$5.3 million, down from $8.1 million in the prior year's quarter
mainly due to lower capital taxes and lower salaries, wages, and
benefits. In last year's fourth quarter, the Pool began paying
Saskatchewan capital taxes as a result of becoming a Canadian
Business Corporation in March 2005. In fiscal 2006, the taxes
were recorded throughout the year.
The Pool also recorded a $15 million provision for a pension
settlement in this year's fourth quarter reflecting management's
best estimate of the minimum cost to the Pool of resolving a
dispute regarding the Saskatchewan Wheat Pool/Grain Services
Union Pension Plan solvency deficiency. Management made its
estimate based on a range of potential outcomes that could
include a negotiated settlement, litigation, or payment of all
or a portion of the deficiency payments.
Table 1
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted Adjusted Adjusted
Results Fourth One- Fourth Fourth One- Fourth
Quarter time Quarter Quarter time Quarter
(in millions) 2006 items 2006 2005 items 2005
------------------------------------------------------------------------
Grain
Handling
and
Marketing
(1)(2) $ 23.3 $ 5.3 $ 18.0 $ 17.2 $ 2.9 $ 14.3
Agri-products 31.8 - 31.8 34.4 - 34.4
Agri-food
Processing 4.1 - 4.1 3.6 - 3.6
------------------------------------------------------------------------
Segment EBITDA $ 59.2 $ 5.3 $ 53.9 $ 55.2 $ 2.9 $ 52.3
Corporate
expenses (5.3) - (5.3) (8.1) - (8.1)
Provision for
pension
settlement (15.0) (15.0) - - - -
------------------------------------------------------------------------
Consolidated
EBITDA $ 38.9 $ (9.7) $ 48.6 $ 47.1 $ 2.9 $ 44.2
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) One-time item recorded in 2006 relates to an actuarial adjustment
to the Hourly Employees' Retirement Plan
(2) One-time items recorded in 2005 relate to interest income on
corporate income tax refunds
Table 1 illustrates the impact of
one-time items, including the provision for pension settlement,
together with corporate expenses on the Pool's quarterly
financial performance.
Consolidated EBITDA was $38.9 million versus $47.1 million for
the fourth quarters of fiscal 2006 and fiscal 2005 respectively.
Consolidated EBITDA before one-time items reflects the Pool's
improved financial performance and was up 10% to $48.6 million
in the fourth quarter compared to $44.2 million for the same
period in fiscal 2005.
EBIT (earnings before interest and taxes) in the fourth quarter
of fiscal 2006 was $31.8 million versus $40.4 million in fiscal
2005. EBIT before one-time items was $41.5 million and $37.5
million for the respective quarters (see Table 2).
Interest in the fiscal 2006 fourth quarter was $2.7 million,
down from $10 million in the prior year period. Cash interest
expenses fell 35.1% to $2.2 million, reflecting substantially
lower long-term debt levels in the final quarter of fiscal 2006.
The Pool recorded non-cash interest of $0.5 million, well below
$6.5 million for the same three-month period in fiscal 2005. The
variance resulted primarily from writing off $3.9 million of
financing costs when the Pool repaid its $100 million Senior
Secured Notes in June 2005. The remaining $2.1 million non-cash
variance primarily related to accretion recorded in the prior
year's fourth quarter for the Pool's $150 million Senior
Subordinated Notes, which were repaid on May 5, 2006. Accretion
is an accounting concept whereby discounted debt balances are
increased on a systematic basis to eventually equal their face
value at maturity.
Table 2
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted
Results
Adjusted Adjusted
(in millions Fourth One- Fourth Fourth One- Fourth
except per Quarter time Quarter Quarter time Quarter
share data) 2006 items 2006 2005 items 2005
------------------------------------------------------------------------
Consolidated
EBITDA $ 38.9 $ (9.7) $ 48.6 $ 47.1 $ 2.9 $ 44.2
Amortization (7.1) - (7.1) (6.7) - (6.7)
------------------------------------------------------------------------
EBIT $ 31.8 $ (9.7) $ 41.5 $ 40.4 $ 2.9 $ 37.5
Interest
expense (2.7) - (2.7) (10.0) - $(10.0)
------------------------------------------------------------------------
Consolidated
EBT $ 29.1 $ (9.7) $ 38.8 $ 30.4 $ 2.9 $ 27.5
Tax impact
of one-time
items and
tax recoveries - 3.5 (3.5) - (0.3) 0.3
Corporate
taxes (1) (15.7) (6.0) (9.7) (4.8) - (4.8)
------------------------------------------------------------------------
Earnings
(loss) from
continuing
Operations $ 13.4 $(12.2) $ 25.6 $ 25.6 $ 2.6 $ 23.0
Discontinued
operations 0.1 0.1 - 3.9 3.9 -
------------------------------------------------------------------------
Net earnings
(loss) $ 13.5 $(12.1) $ 25.6 $ 29.5 $ 6.5 $ 23.0
------------------------------------------------------------------------
------------------------------------------------------------------------
Weighted
average
shares 89.969 89.969 68.110 68.110
Earnings per
share
Continuing
operations
per share $ 0.15 $ 0.28 $ 0.38 $ 0.34
Net
earnings
per share $ 0.15 $ 0.28 $ 0.44 $ 0.34
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) One-time item reflects the effect of lower future corporate tax
rates as a result of federal tax policy changes
Corporate tax expense rose $10.8
million quarter-over-quarter to $15.7 million and included $6
million that was recorded to reflect the effect of lower future
federal corporate tax rates. In the fourth quarter of 2005,
corporate taxes were $4.8 million.
There were no significant recoveries from discontinued
operations in the fourth quarter of fiscal 2006. Last year's
fourth quarter included a $3.8 million net recovery for a
previously held investment in hog production. The recovery
resulted from filings under the Canadian Agriculture Income
Stabilization (CAIS) program, a joint federal/provincial
business risk management program.
Net earnings before one-time items, for the final three months
of the year were $25.6 million, compared to $23 million in the
same period a year ago.
Net earnings in the fourth quarter of fiscal 2006 were $13.5
million compared to $29.5 million in the prior year's quarter.
Operating Results - Fourth Quarter
Grain Handling and Marketing Segment
Producer deliveries to the Pool's primary elevator network were
up 16.2% over last year's fourth quarter to 2.1 mmt. The larger
than average crop produced last year in Saskatchewan, the
Province where our operations are most concentrated, translated
into higher deliveries to our facilities in the fourth quarter
of fiscal 2006.
The Pool's total grain shipments rose to 2 mmt in the fourth
quarter of fiscal 2006, up 6.8% from the same quarter last year.
Non-Board shipments climbed 17.3% to 0.8 mmt, while CWB
shipments were unchanged at 1.2 mmt.
The Pool shipped 1.4 mmt through its Vancouver and Thunder Bay
export terminals in the final three months of fiscal 2006, 16.9%
above the 1.2 mmt shipped in the prior year period. The bulk of
this increase was achieved through the Pool's joint venture at
the Port of Vancouver, a key gateway to the Asia-Pacific market.
Table 3
------------------------------------------------------------------------
------------------------------------------------------------------------
Grain Handling and Marketing Volumes
For the quarter ended July 31
------------------------------------------------------------------------
('000s metric tonnes) 2006 2005 Increase
------------------------------------------------------------------------
Primary elevator receipts 2,146 1,847 16.2%
------------------------------------------------------------------------
Primary elevator shipments
CWB grains 1,191 1,187 0.3%
Non-Board grains and oilseeds 853 727 17.3%
------------------------------------------------------------------------
Total primary elevator shipments 2,044 1,914 6.8%
------------------------------------------------------------------------
Port terminal receipts
Vancouver 835 669 24.8%
Thunder Bay 520 490 6.1%
------------------------------------------------------------------------
1,355 1,159 16.9%
Share of Prince Rupert Grain 227 199 14.1%
------------------------------------------------------------------------
Total port terminal receipts 1,582 1,358 16.5%
------------------------------------------------------------------------
------------------------------------------------------------------------
The Pool calculates gross margin
for the Grain Handling and Marketing segment based on its wholly
owned assets, which excludes Prince Rupert Grain (PRG). Gross
margin rose to $21.90 per tonne in the fourth quarter from
$20.39 in the same period last year, which included $1.53 per
tonne in one-time items. Excluding these one-time items, the
$3.04 per tonne improvement stemmed mainly from higher wheat and
durum margins attained through stronger blending gains and
terminal margins, as well as increased grain-drying revenue.
These improvements were partially offset by lower malt barley
margins caused by a poor quality crop.
EBITDA generated by the Grain Handling and Marketing segment
climbed to $23.3 million versus $17.2 million. EBITDA before
one-time items for the final quarter improved to $18 million
from $14.3 million in the same period last year. The increase
resulted mainly from higher shipments and improved margins.
The Grain Handling and Marketing segment's EBIT was $20.4
million compared to $14.3 million in the final quarter of fiscal
2005. EBIT before one-time items rose 32.5% to $15.1 million in
the fourth quarter of fiscal 2006 from $11.4 million in the
comparable period last year.
Agri-products Segment
Sales for the Agri-product segment were $340.7 million in the
fourth quarter of fiscal 2006 compared to $320.3 million for the
same period last year. This improvement occurred despite
excessive moisture in northeastern Saskatchewan that delayed
seeding, reduced fertilizer application, and prevented producers
from seeding approximately 1.7 million acres. The increase, in
part, reflects sales that normally occur in the third quarter.
Table 4
------------------------------------------------------------------------
Agri-products Sales and Other Operating Revenues
For the quarter ended July 31
------------------------------------------------------------------------
(in millions) 2006 2005
------------------------------------------------------------------------
Fertilizer products $ 186.1 $ 176.7
Crop protection products 116.4 113.8
Other sales and operating revenues 38.2 29.8
------------------------------------------------------------------------
Total $ 340.7 $ 320.3
------------------------------------------------------------------------
------------------------------------------------------------------------
Fertilizer sales through our
retail operations increased 15.2% in the fiscal 2006 fourth
quarter from the same period last year, due to higher sales
volumes and prices. However, the Pool's proportionate share of
sales through WCFL was 7.3% below the level of the previous
year's quarter, mainly the result of decreased sales volumes.
EBITDA for the fourth quarter of fiscal 2006 was $31.8 million,
compared to $34.4 million in the same period last year. Our
retail operations contributed $21.3 million in EBITDA, up from
$18.3 million in the fourth quarter last year. WCFL contributed
$10.5 million to the segment's EBITDA compared to $16.1 million
in the previous year's quarter, a result of margin pressures in
fertilizer. Expenses for the Pool's retail operations in the
fourth quarter of fiscal 2006 were 8.5% lower than the same
period last year, primarily because of stronger collections of
outstanding accounts from the 2005 agri-products credit program.
EBIT for the operating segment in the final quarter of fiscal
2006 was $29 million, down from $31.8 million in the prior year
period. Correspondingly, EBIT from our retail operations was
$20.6 million compared to $17.6 million in last year's fourth
quarter, and WCFL's contribution to EBIT was $8.4 million versus
$14.2 million for the same respective periods.
Agri-food Processing Segment
In the Agri-food Processing segment, sales for the final quarter
were $32.2 million, 11.8% higher than the $28.8 million reported
in the same period of fiscal 2005. Prairie Malt's sales were
down 4.6% from the corresponding quarter last year. Can-Oat's
sales increased 18.8% period over period, based on higher
volumes of finished oat products, driven by strong demand for
whole grains from manufacturers of cereals and breakfast bars.
EBITDA rose to $4.1 million in the fourth quarter from $3.6
million in the same period last year. Can-Oat's EBITDA grew
45.8% due to improved margins from higher value products, which
resulted from increased sales volumes and greater production
yields. Prairie Malt's EBITDA declined as a result of ongoing
margin pressure related to higher processing and energy costs
and a stronger Canadian dollar. EBIT in the fiscal 2006 fourth
quarter improved to $2.8 million from $2.4 million in the same
period last year.
Highlights for the Year ended July 31, 2006
- The Pool's total shipments rose 15.5% year-over-year,
exceeding the 12.3% improvement posted by the industry as a
whole. Total shipments climbed to 7.9 mmt in fiscal 2006 from
6.9 mmt last year.
- Exports through the Pool's Vancouver port terminal climbed
37.9% during fiscal 2006 to 3.6 mmt, due to robust canola and
pea movement and greater efficiencies achieved through our joint
venture operations with James Richardson International Limited
(JRI).
- Segment EBITDA, was $105.9 million for fiscal 2006 versus
$92.8 million generated in the prior year.
- Net earnings for fiscal 2006 were $0.5 million compared to
$12.1 million in 2005. The decrease is primarily the result of
one-time items recorded in 2006 as outlined in Table 6.
Excluding these items, net earnings for the year reflected the
Pool's strong operating performance and rose to $16.8 million,
compared to the $1.6 million generated one year ago.
- In fiscal 2006, Can-Oat Milling began a $12.0 million
expansion to increase overall primary processing capacity at its
Portage la Prairie plant. Can-Oat also acquired an oat milling
facility in Barrhead, Alberta, in June 2006, which increased its
annual capacity to 375,000 mt.
- Cash flow from continuing operations for 2006 was $53.7
million compared to 2005 results of $46.7 million.
- Total debt declined by 22.4% to $143.0 million at July 31,
2006 from $184.3 million a year earlier.
- The debt-to-equity ratio at July 31, 2006 was 24:76, a
significant improvement from the 33:67 at July 31, 2005.
President and Chief Executive Officer Mayo Schmidt commented on
the year ahead, "Fundamentals in agriculture are improving. Crop
quality is excellent this year and the volumes are there to
support a robust export program. With the significant
improvements we have made to our balance sheet and our ability
to generate strong cash flows, the Pool is in a good position to
grow its business."
Annual Summary of Consolidated Results
Fiscal 2006 consolidated sales and other operating revenues were
$1.6 billion, up from $1.4 billion in the previous year. Sales
grew in all three segments with Grain Handling and Marketing
achieving the largest year-over-year increase at 21.5%, followed
by the Agri-products segment at 5.1% and the Agri-food
Processing segment at 3.2%.
The Pool's three operating segments generated $105.9 million in
EBITDA for fiscal 2006 compared to $92.8 million in 2005. A
solid performance from the Grain Handling and Marketing
accounted for 57.1% of the Pool's operating EBITDA, or $60.5
million.
EBITDA from the Agri-products segment was $27 million in fiscal
2006, down from $39.3 million in fiscal 2005 because of margin
pressures brought about by increased retail competition, a lack
of price appreciation of fertilizer prices, and more sales of
lower margin product.
Agri-food Processing produced $18.4 million of the Pool's
segment EBITDA in fiscal 2006, an improvement of 11.6% from
fiscal 2005 with Can-Oat's contribution up 24.5% over last year.
There were $7.7 million of one-time contributions included in
the Pool's segment EBITDA in fiscal 2006. Fiscal 2005 results
included $4.5 million of one-time items (see Table 5).
Segment EBITDA before one-time items was $98.2 million in fiscal
2006, up nearly $10 million from $88.3 million earned in the
prior year.
Table 5
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted
Results One- One-
time Adjusted time Adjusted
(in millions) 2006 items 2006 2005 items 2005
------------------------------------------------------------------------
Grain Handling
and Marketing
(1)(2) $ 60.5 $ 7.3 $ 53.2 $ 37.1 $ 4.5 $ 32.6
Agri-products (3) 27.0 0.4 26.6 39.3 - 39.3
Agri-food
Processing 18.4 - 18.4 16.4 - 16.4
------------------------------------------------------------------------
Segment EBITDA $105.9 $ 7.7 $ 98.2 $ 92.8 $ 4.5 $ 88.3
Corporate
expenses (23.4) - (23.4) (22.3) - (22.3)
Provision for
pension
settlement (15.0) (15.0) - - - -
------------------------------------------------------------------------
Consolidated
EBITDA $ 67.5 $ (7.3) $ 74.8 $ 70.5 $ 4.5 $ 66.0
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) A gain of $2 million from the sale of the Pool's 50% interest in
the Lloydminster joint venture was recorded in fiscal 2006 together
with a $5.3 million actuarial adjustment to the Hourly Employees'
Retirement Plan
(2) In fiscal 2005, an Ontario capital tax refund, a property tax
dispute settlement, and interest income on tax refunds were
recorded
(3) The Agri-products segment recorded its share of the gain from the
sale of the Lloydminster joint venture in fiscal 2006
Corporate expenses for fiscal 2006
were $23.4 million compared to $22.3 million last year. In
fiscal 2006, the Pool began funding the Western Farm Leadership
Co-operative's business plan and those costs, together with
regular salary increases, are the primary reasons for the slight
increase this year.
The Pool recorded a provision for pension settlement of $15
million in its final quarter of fiscal 2006 as previously
discussed. Table 5 illustrates the impact of this provision and
other one-time items on consolidated EBITDA for the year.
Table 6
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted
Results
(in millions One- One-
except per time Adjusted time Adjusted
share data) 2006 items 2006 2005 items 2005
------------------------------------------------------------------------
Consolidated
EBITDA $ 67.5 $ (7.3) $ 74.8 $ 70.5 $ 4.5 $ 66.0
Amortization(1) (27.8) - (27.8) (26.4) - (26.4)
------------------------------------------------------------------------
EBIT $ 39.7 $ (7.3) $ 47.0 $ 44.1 $ 4.5 $ 39.6
Interest expense (21.0) - (21.0) (37.1) - $ (37.1)
Expenses
associated
with the
redemption of
the Senior
Subordinated
Notes (11.2) (11.2) - - - -
------------------------------------------------------------------------
Consolidated
EBT $ 7.5 $ (18.5) $ 26.0 $ 7.0 $ 4.5 $ 2.5
Tax impact of
one-time items
and tax
recoveries - 6.7 (6.7) - 0.9 (0.9)
Corporate
taxes(2) (14.3) (11.8) (2.5) - - -
------------------------------------------------------------------------
Earnings (loss)
from continuing
Operations $ (6.8) $ (23.6) $ 16.8 $ 7.0 $ 5.4 $ 1.6
Discontinued
operations 7.3 7.3 - 5.1 5.1 -
------------------------------------------------------------------------
Net earnings
(loss) $ 0.5 $ (16.3) $ 16.8 $ 12.1 $ 10.5 $ 1.6
------------------------------------------------------------------------
------------------------------------------------------------------------
Weighted
average
shares 84.343 84.343 28.103 28.103
Earnings per
share
Continuing
operations
per share(3) $ (0.08) $ 0.20 $ (1.44) $ 0.06
Net earnings
per share(3) $ 0.01 $ 0.20 $ (1.26) $ 0.06
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) Rounded for the purpose of this table
(2) Reflects the effect of lower future corporate tax rates as a result
of federal and provincial tax policy changes
(3) The calculations in the adjusted 2005 column exclude the inducement
premium and accretions related to the equity component of the
Convertible Subordinated Notes
Consolidated EBITDA for the
twelve-month period was $67.5 million versus $70.5 million in
fiscal 2005.
Consolidated EBITDA before
one-time items for the year was $74.8 million up from $66
million last year.
Amortization of property, plant, and equipment and certain other
long-term assets was $27.7 million in fiscal 2006 compared to
$26.5 million in fiscal 2005. Higher amortization year-over-year
reflected ongoing investment in property, plant, and equipment.
EBIT in fiscal 2006 was $39.7 million versus $44.1 million in
fiscal 2005 and before one-time items was $47 million and $39.6
million respectively.
Financing expenses in fiscal 2006 included interest expense and
expenses associated with the redemption of the Senior
Subordinated Notes. Interest expense was $21 million compared to
$37.1 million in fiscal 2005.
The cash component of interest expense in fiscal 2006 was $17.5
million, down from $21.7 million in the prior year reflecting
both lower short-term borrowing levels and the reduction of
long-term debt. The non-cash interest expense for fiscal 2006
was $3.5 million, which included $1.8 million of accretion on
term debt and $1.7 million related to the amortization of
deferred financing costs. The non-cash interest expense in
fiscal 2005 was $15.4 million.
There was $11.2 million in fiscal 2006 financing expenses
associated with the redemption of previously outstanding Senior
Subordinated Notes. An early redemption premium of $3 million
was paid in cash. The remaining $8.2 million in non-cash charges
related to the adjustment of the carrying value of the Senior
Subordinated Notes to their $150 million face value.
Corporate taxes in fiscal 2006 rose $14.3 million from nil last
year. The increase included $11.8 million that the Pool recorded
to reflect the effect of lower future corporate tax rates as a
result of federal and provincial government tax policy changes.
Included in both years were after-tax recoveries from
discontinued operations related to the Pool's investment in hog
production of $7.3 million and $5.1 million respectively. The
recoveries in fiscal 2006 and $3.8 million of the recoveries in
fiscal 2005, relate to filings under the Canadian Agricultural
Income Stabilization Program (CAIS), a joint federal-provincial
risk management program.
Net earnings before one-time items were $16.8 million, a
significant increase from $1.6 million in fiscal 2005.
Net earnings in fiscal 2006 were $0.5 million compared to $12.1
million in the prior year.
Grain Handling and Marketing Segment
The Pool's total shipments rose 15.5% year-over-year, exceeding
the 12.3% improvement posted by the industry as a whole. Our
total shipments climbed to 7.9 mmt in fiscal 2006 from 6.9 mmt
last year. The main reason for the Pool's relative strength was
its success in marketing non-Board commodities. Our non-Board
shipments - mainly canola and peas - were 39% higher
year-over-year, compared to a 20.9% improvement for the industry
as a whole. At the same time, the Pool's CWB shipments increased
2% while total industry shipments were up 7%. CWB grains
represented just 56.3% of the Pool's total shipments in fiscal
2006 compared to 63.7% last year.
The combined volumes of the Pool's Vancouver and Thunder Bay
ports rose to 5.1 mmt in fiscal 2006 from 4.1 mmt last year.
Non-Board terminal handlings increased 57.9%, while CWB terminal
handlings were up just 3.2%, despite better quality and slightly
larger 2006 production of wheat and durum. Exports through our
Vancouver port terminal climbed 37.9% during fiscal 2006 to 3.6
mmt, due to robust canola and pea movement and greater
efficiencies achieved through our joint venture operations with
James Richardson International Limited (JRI).
Table 7
------------------------------------------------------------------------
------------------------------------------------------------------------
Grain Handling and Marketing Volumes
For the years ended July 31
------------------------------------------------------------------------
Increase
('000s metric tonnes) 2006 2005 (Decrease)
------------------------------------------------------------------------
Primary elevator receipts 7,721 6,813 13.3%
------------------------------------------------------------------------
Primary elevator shipments
CWB grains 4,452 4,363 2.0%
Non-Board grains and oilseeds 3,462 2,490 39.0%
------------------------------------------------------------------------
Total primary elevator shipments 7,914 6,853 15.5%
------------------------------------------------------------------------
Port terminal receipts
Vancouver 3,641 2,641 37.9%
Thunder Bay 1,463 1,493 (2.0%)
------------------------------------------------------------------------
5,104 4,134 23.5%
Share of Prince Rupert Grain 913 715 27.7%
------------------------------------------------------------------------
Total port terminal receipts 6,017 4,849 24.1%
------------------------------------------------------------------------
------------------------------------------------------------------------
On a full year basis, the Pool's
share of shipments through the Prince Rupert Grain (PRG)
terminal (owned by a consortium that includes the Pool, Agricore
United, Cargill, and JRI) was up 27.7% because of the CWB's
preference for shipping through that location.
Including one-time items of $0.25 per tonne and $0.65 per tonne
respectively, the gross margin for fiscal 2006 was up 8.3% to
$20.26 per tonne from $18.71 per tonne last year. The
improvement reflected higher canola margins; blending gains;
more efficient asset and pipeline utilization, particularly at
the Port of Vancouver; and additional drying revenue.
EBITDA rose to $60.5 million versus $37.1 million. EBITDA before
one-time items was $53.2 million in fiscal 2006, or 63.2% above
the $32.6 million recorded in fiscal 2005. EBIT was robust as
well rising to $48.9 million versus $25.8 million last year,
while EBIT before one-time items was $41.7 million versus $21.3
million in fiscal 2005. Higher shipments and improved margin
contributed to the increases.
From a cost perspective, expenses were up year-over-year.
However, a $5.3 million favourable actuarial adjustment to the
Hourly Employees' Retirement Plan offset an increase in
salaries, wages and benefits expense. During the year, the Pool
paid $3.2 million in grain volume insurance premiums. There was
no grain volume insurance expensed in fiscal 2005. In total, the
cost per tonne for grain handling and marketing in fiscal 2006
dropped to $12.86 per tonne from $13.46 per tonne a year
earlier.
Agri-products Segment
Agri-product sales rose 5.1% to $540.3 million in fiscal 2006
from $514.2 million in fiscal 2005. The Pool's retail sales were
7.8% higher than last year. Fertilizer and crop protection
products accounted for 81.7% of the sales from our retail
operations this year, about the same as last year. Retail
fertilizer sales were up 12.8% in fiscal 2006 due to higher
sales volume and prices. The Pool's proportionate share of
WCFL's sales decreased slightly in fiscal 2006, reflecting a
decrease in volumes by 7.6% that was offset by rising fertilizer
prices year-over-year.
Table 8
------------------------------------------------------------------------
------------------------------------------------------------------------
Agri-products Sales and Other Operating Revenues
For the year ended July 31
(in millions) 2006 2005
------------------------------------------------------------------------
Fertilizer products $ 336.7 $ 318.0
Crop protection products 133.7 130.2
Other sales and operating revenues 69.9 66.0
------------------------------------------------------------------------
Total $ 540.3 $ 514.2
------------------------------------------------------------------------
------------------------------------------------------------------------
EBITDA was $27.0 million in fiscal
2006, compared to $39.3 million in fiscal 2005. In our retail
operations, EBITDA was $9.2 million this year, compared to $14.1
million in fiscal 2005. WCFL contributed $17.8 million to the
segment EBITDA in fiscal 2006, down 29.4% from $25.2 million in
the previous year mainly a result of lower margins.
EBIT was $16 million in fiscal 2006 versus $29.3 million the
previous year. Retail operations had EBIT of $6.3 million down
from $11.6 in the previous fiscal year, while EBIT contributions
from WCFL were $9.7 million in fiscal 2006 compared to $17.7
million last year.
Agri-food Processing Segment
Agri-food Processing sales were up 3.2% at $122.3 million in
fiscal 2006 from $118.5 million last year. Wholly owned Can-Oat
Milling's sales rose 7.5% in fiscal 2005. Can-Oat's improvement
was driven by higher demand for finished products such as oat
flakes, bran and bran flour. Demand for these products by cereal
and breakfast bar manufacturers continues to grow, influenced by
the increasingly health-conscious whole grain consumer market.
The Pool's 42.4% share in Prairie Malt's sales fell 7.7% in
fiscal 2006 due to a stronger Canadian dollar and excess
capacity in the North American and European malt industries.
Segment EBITDA was $18.4 million for fiscal 2006, up from $16.4
million in the prior year. EBIT for the segment was $13.2
million in fiscal 2006 versus $11.3 million in fiscal 2005.
Can-Oat's EBITDA increased 24.5% over fiscal 2005. Higher sales
volumes combined with yield improvements drove Can-Oat's EBITDA
growth in fiscal 2006. Prairie Malt's EBITDA was down due to
pricing pressures related to excess capacity in the malt
industry, as well as higher processing costs.
Non-GAAP Measures
EBIT and EBITDA data
The EBIT and EBITDA data included in this news release is
intended to give further insight regarding the Company's
financial results, including its results on a segment-by-segment
basis, and to supplement information on its earnings (loss) as
determined in accordance with generally accepted accounting
principles (GAAP). The Pool's method of calculating EBIT and
EBITDA may not be comparable to other companies in the industry.
Therefore, EBIT should not be used as an alternative to net
earnings (loss) as determined in accordance with GAAP.
Similarly, EBITDA should not be used as an alternative to cash
provided by operating activities as determined in accordance
with GAAP. Also note that the Pool has provide EBITDA and EBIT
information before one-time items to assist readers in properly
assessing the financial performance of its operations.
One-time Items
One-time items are considered by their nature to be unusual or
non-recurring to normal operations of the Company. These items
should be considered when assessing the operational performance
of the Company on a segment-by-segment basis.
Full report:
http://cnrp.ccnmatthews.com/client/saskatchewan_wheat/release.jsp?actionFor=616232&releaseSeq=0&year=2006
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