BRAMPTON, ONTARIO--(CCNMatthews - Aug. 3, 2006) - In the release issued at 4:10PM ET Aug. 3, 2006, the stock symbol and exchange were incorrectly left off the release. Brampton Brick Limited is currently traded on the TSX under the symbol BBL.A. The complete and corrected release follows.
Brampton Brick Limited (TSX:BBL.A) today reported net income of $5,522,000, or $0.51 per share, for the second quarter ended June 30, 2006 compared to $6,450,000, or $0.59 per share, for the same period last year. The weighted average number of Class A Subordinate Voting Shares and Class B Multiple Voting Shares outstanding was 10,817,000 and 10,847,000 during each period, respectively.
Net sales for the quarter decreased by $5,486,000, or 14.7%, to $31,747,000 as a result of lower brick shipments and reduced volumes in the concrete products business segment. In the clay brick business segment, shipments in the second quarter were impacted by strong first quarter shipments, a decline in housing starts in the single, detached sector and weakness in the Michigan market related to economic factors affecting the automobile industry. Volumes in the concrete products business were also impacted by strong first quarter shipments and weakness in the Michigan market. The addition of the new Nova Scotia medical waste operations produced higher net sales in the waste processing business segment.
Gross margins in the clay brick business segment were higher in the second quarter of 2006 compared to the same period last year due to the positive impact of higher production volumes and improved selling prices.
Operating income, before interest and other items, was $8,744,000 compared to $10,104,000 last year. Net interest costs were much lower in 2006 as a result of a reduction in long-term debt and much higher interest income earned on short-term investment of cash balances.
The strengthening of the Canadian dollar versus the U.S. dollar produced a foreign currency exchange loss of $915,000 for the quarter, most of which was incurred in the concrete products business segment. In the second quarter of 2005, the Company reported a foreign currency exchange gain of $166,000.
As previously reported, on April 6, 2006 the Company sold its 38.2% interest in Richvale York Block Inc. This produced a gain of $462,000. Equity income recorded for the period of ownership in the second quarter of 2006 amounted to $31,000 compared to $375,000 for the entire second quarter of 2005.
For the six months ended June 30, 2006, net income was $6,685,000, or $0.62 per share, compared to $6,105,000, or $0.56 per share, for the same period in 2005. The weighted average number of shares outstanding was 10,813,000 and 10,847,000 for each period, respectively.
Net income generated by the clay brick business segment increased by $1,131,000 as a result of improved gross margins which, in turn, were achieved through a combination of higher production volumes and higher average selling prices.
In the concrete products business segment, the increase in the value of the Canadian dollar versus the U.S. dollar contributed to a nominal increase in the loss reported for the six month period.
Operating income before interest and other items was $10,304,000, representing an increase of $1,076,000 compared to $9,228,000 in 2005.
Net interest costs were also much lower for the six month period for the same reasons as noted above for the second quarter results. The foreign currency exchange loss for the six month period was $910,000 compared to an exchange gain of $170,000 recorded for the same period in 2005.
The sale of the Company's 38.2% interest in Richvale York Block Inc. also impacted the results for the six months ended June 30, 2006. The equity loss was $70,000 compared to equity income of $369,000 for the full six months to June 30, 2005.
During the first quarter of 2006, the Company outsourced its trucking requirements previously carried on by a subsidiary company, Roxy Construction Co. Limited ("Roxy"). The change in operating structure involved the sale of the entire fleet of trucks, trailers and mobile forklift equipment and, to facilitate the outsourcing, the acquisition of the remaining 20% non-controlling interest in Roxy for cash consideration of $893,000. The purchase price paid represented an excess of $484,000 over the fair value of the net assets acquired and, accordingly, the excess cost was written off. The loss on sale of assets and other incidental costs related to the outsourcing were not significant.
Cash flow from operations amounted to $6,972,000 for the second quarter of 2006 compared to $4,499,000 for the second quarter of last year. For the six month period, cash flow from operations was $3,863,000 compared to cash resources of $1,387,000 utilized in 2005.
A major factor contributing to the improvement in 2006 was a difference in the timing of sales and subsequent collections of accounts receivable in 2006 compared to 2005. In 2005, a significant portion of total sales for the quarter occurred in the month of June and thus were collected in the third quarter. In 2006, sales were more evenly spread throughout the quarter. Higher collections in 2006 were partially offset by lower earnings and a higher investment in inventories.
Cash requirements for the purchase of property, plant and equipment totaled $9,709,000 for the second quarter, including the acquisition of certain land, building and manufacturing equipment from Richvale York Block Inc. for cash consideration of $7,500,000, compared to $2,074,000 for 2005. For the six months ended June 30, 2006, purchases of property, plant and equipment totaled $10,853,000 compared to $3,821,000 for the same period last year.
The sale of the Company's 38.2% interest in Richvale for aggregate consideration of $9,046,000 produced cash proceeds of $7,695,000 to June 30, 2006. The balance of $1,351,000 is due over the next four months.
During the second quarter, the Company acquired a 50% joint venture interest in a start-up business called Universal Resource Recovery Inc. ("Universal"). On May 29, 2006, Universal acquired a 65 acre property, including two industrial buildings totaling approximately 600,000 square feet in Welland, Ontario, for cash consideration of $3,150,000. Subject to receipt of the necessary regulatory approvals, Universal intends to construct and operate a waste composting and material recycling facility on this site. Commercial operations are not expected to commence until 2007.
To June 30, 2006 the Company has advanced $1,706,000 to fund its 50% share of the acquisition and other expenditures. For consolidated financial statement purposes the Company's interest is accounted for using the proportionate consolidation method.
The sale of trucks, trailers and mobile forklift equipment in connection with the outsourcing of transportation requirements generated cash proceeds of $3,175,000. Related capital lease obligations in the amount of $700,000 were paid out from the proceeds of the sale.
A dividend payment of 10 cents per Class A Subordinate Voting Share and 10 cents per Class B Multiple Voting Share - $1,082,000 in the aggregate -- was paid on June 30.
Certain statements contained herein constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors but not limited to, those identified under "Risks and Uncertainties" in the Company's 2005 Annual Report, which may cause actual results, performance or achievements of the Company to be materially different from any future result, performance or achievements expressed or implied by such forward-looking statements.
Brampton Brick is Canada's second largest manufacturer of clay brick. Products are used for residential construction and for industrial commercial, and institutional building projects. Oaks Concrete Products Ltd., a 70% owned subsidiary, manufactures concrete paving stones, retaining walls and enviro products and sells related accessory products for residential use and for industrial, commercial and institutional building projects. Da Vinci Stone Craft Ltd., a 75% owned subsidiary of Oaks Concrete Products Ltd., manufactures fireplace surrounds and accessory products. Medical Waste Management Inc., a 65% owned subsidiary, operates a facility for the destruction of biomedical and pharmaceutical waste, including the only commercially operated medical waste incinerator in Ontario. To February 24, 2006 Roxy Construction Co. Limited transported raw materials and finished products for the Company and provided trucking services to third parties. To April 6, 2006 the Company held a 38.2% interest in Richvale York Block Inc., the largest producer of concrete block in Ontario.
Selected Financial Information
(Unaudited) (thousands of dollars, except per share amounts)
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Three months ended Six months ended
CONSOLIDATED STATEMENTS OF June 30 June 30
INCOME 2006 2005 2006 2005
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Net sales $ 31,747 $ 37,233 $ 53,234 $ 52,920
Cost of sales, selling,
general and
administrative expenses 20,575 24,434 37,951 38,323
Amortization 2,428 2,695 4,979 5,369
---------- -------- -------- ---------
23,003 27,129 42,930 43,692
Operating income before the
undernoted items 8,744 10,104 10,304 9,228
Interest on long-term debt (120) (268) (249) (512)
Interest income (expense) 83 (20) 156 (18)
Equity income (loss) from
Richvale York Block Inc. 31 375 (70) 369
Foreign currency exchange
gain (loss) (915) 166 (910) 170
Other income (expense) 57 (39) 18 (29)
---------- -------- -------- ---------
(864) 214 (1,055) (20)
Income before the following
items 7,880 10,318 9,249 9,208
Write-off of excess cost
paid on investment in
Roxy Construction Co.
Limited - - (484) -
Gain on sale of investment
in Richvale York Block Inc. 462 - 462 -
---------- -------- -------- ---------
Income before income taxes
and non-controlling
interests 8,342 10,318 9,227 9,208
Provision for income taxes (2,659) (3,510) (2,891) (3,220)
---------- -------- -------- ---------
Income before
non-controlling
interests 5,683 6,808 6,336 5,988
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Non-controlling interests (161) (358) 349 117
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Net income for the period $ 5,522 $ 6,450 $ 6,685 $ 6,105
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Net income per Class A and
Class B share $ 0.51 $ 0.59 $ 0.62 $ 0.56
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Weighted average Class A
and Class B shares
outstanding (000's) 10,817 10,847 10,813 10,847
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Selected Financial Information
(Unaudited) (thousands of dollars)
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Three months ended Six months ended
CONSOLIDATED STATEMENTS OF June 30 June 30
CASH FLOWS 2006 2005 2006 2005
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Cash provided by (used for)
Operating activities
Net income for the period $ 5,522 $ 6,450 $ 6,685 $ 6,105
Items not affecting cash
Amortization and accretion 2,437 2,706 4,999 5,390
Future income taxes 76 467 (1,867) (508)
Non-controlling interests 161 358 (349) (117)
Equity (income) loss from
Richvale York Block Inc. (31) (375) 70 (369)
Unrealized foreign currency
exchange loss (gain) 76 (63) 113 (63)
Write-off of excess cost
paid on investment in
Roxy Construction Co.
Limited - - 484 -
Gain on sale of investment
in Richvale York Block Inc. (462) - (462) -
(Loss) gain on disposal of
property, plant and
equipment 21 (95) 110 (107)
------- -------- ------ --------
7,800 9,448 9,783 10,331
Changes in non-cash
operating items
Accounts receivable (1,589) (11,320) (4,999) (13,406)
Inventories (349) 3,322 (1,563) (143)
Accounts payable and accrued
liabilities 633 2,297 1,093 2,641
Income taxes payable (net) 459 1,028 225 (458)
Other 18 (276) (676) (352)
------- -------- ------ --------
(828) (4,949) (5,920) (11,718)
Cash provided by (used for)
operations 6,972 4,499 3,863 (1,387)
Investing activities
Purchase of property, plant
and equipment (9,709) (2,074) (10,853) (3,821)
Increase in investment in
Roxy Construction Co.
Limited - - (893) -
Net proceeds on sale of
investment in Richvale
York Block Inc. 7,681 - 7,681 -
Dividend from Richvale York
Block Inc. - - - 763
Proceeds from disposal of
property, plant and
equipment - 287 3,212 303
------- -------- ------ --------
Cash used for investment (2,028) (1,787) (853) (2,755)
Financing activities
Increase (decrease) in bank
operating advances (4,426) 872 (1,277) 6,130
Repayment of term loans (317) (34) (412) (68)
Payments on obligations
under capital leases (247) (477) (1,241) (1,015)
Payment of dividends (1,082) (1,085) (1,082) (1,085)
Non-controlling interests'
advance to Oaks Concrete
Products Ltd. 1,500 - 1,500 -
Proceeds from exercise of
stock options 101 - 109 -
Class A Shares repurchased - (2) - (2)
------- -------- ------ --------
Cash provided by (used for)
financing (4,471) (726) (2,403) 3,960
Foreign exchange on cash
held in foreign currency (14) (6) (15) (7)
------- -------- ------ --------
Increase (decrease) in cash
and cash equivalents 459 1,980 592 (189)
Cash and cash equivalents -
Beginning of the period 19,441 11,402 19,308 13,571
------- -------- ------ --------
Cash and cash equivalents -
End of the period $ 19,900 $ 13,382 $ 19,900 $ 13,382
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Selected Financial Information
(thousands of dollars) (unaudited)
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June 30 December 31
CONSOLIDATED BALANCE SHEETS 2006 2005
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ASSETS
Current assets
Cash and cash equivalents $ 19,900 $ 19,308
Accounts receivable 18,082 11,925
Inventories 15,512 14,110
Income taxes recoverable 50 49
Future income taxes 7 36
Other current assets 2,486 1,656
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56,037 47,084
Property, plant and equipment (net) 101,830 101,063
Other assets
Goodwill 15,261 15,694
Future income taxes 3,646 2,538
Other 1,750 9,570
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20,657 27,802
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$ 178,524 $175,949
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LIABILITIES
Current liabilities
Bank operating advances $ 4,101 $ 5,378
Accounts payable and accrued
liabilities 12,454 12,916
Income taxes payable 556 331
Long-term debt, current portion 1,411 1,965
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18,522 20,590
Long-term debt, less current
portion 4,647 5,136
Future income taxes 9,773 10,675
Asset retirement obligation 979 957
----------- -----------
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33,921 37,358
Non-controlling interests 11,146 10,567
SHAREHOLDERS' EQUITY 133,457 128,024
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$178,524 $175,949
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FOR FURTHER INFORMATION PLEASE CONTACT:
Brampton Brick Limited
Ken Mondor
Vice-President, Finance
(905) 840-1011
(905) 840-1535 (FAX)
investor.relations@bramptonbrick.com
