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Winnipeg, Manitoba
March 15, 2001
UGG announced today that it achieved strong results in its
second quarter of fiscal 2001-with improved performance broadly based across the Company's main operating segments.
Net income was a second qua cash flow of $11 million.
"We have noted in previous reports that UGG's business momentum has been building", said Brian Hayward, UGG's
CEO. "We're now showing the bottom line evidence of that."
Crop Production Services' sales continued to advance from an already good first quarter. Farmers have been purchasing
earlier in the season to avoid expected price increases in fertilizer as higher natural gas prices work their way through
the system. Crop Production Services' gross profit grew by $6.1 million to $23.5 million through the first half of the fiscal
year, and the corresponding seasonal operating loss was reduced from $5.3 million to $1.4 million.
Grain Handling operations also posted a strong quarter as both volumes and net margins improved. UGG's consistent
strategy of consolidating its grain gathering network is continuing-grain business expense has, accordingly, continued its
trend downward, and is now more than $10 million lower on an annualized basis than it was five years ago. For the six
months ending January 2001, UGG's operating income from Grain Handling operations reached $13.4 million, the best
results for the same six month period since 1998.
Livestock Services' EBIT has extended its six quarter advance as economic conditions in the livestock industry
continue to rebound. Feed volumes are up 11%. UGG's new feed mill in Olds, Alberta is now operational and the Company's
investment in Puratone is achieving anticipated financial returns. Livestock Services' gross profit grew by $2.3 million
through the first six months of the fiscal year and operating income is up 18% to $4.8 million. In early February, UGG
completed its purchase of the mill assets of Pro Form Feeds of Chilliwack, British Columbia. This acquisition will boost
the Company's manufactured feed volumes by about 35%.
Earnings before interest, taxes, and depreciation (EBITDA) were $17.7 million for the quarter and $21.3 million for the
year to date-up $9.7 million from the first six months of last year. Net earnings of $8.3 million for the quarter and $3.1
million for the six months include a $4.7 million release of liability for future income taxes, made in accordance with new
regulatory guidelines. Cash flow for the first half of the year was $13.2 million-capital expenditure was $11.3 million. Cash
flow for the most recent twelve months ending January 31 was a record high $35.3 million.
UGG had earnings per share for the quarter of $0.48 (compared to a loss of $0.03 per share in the prior year) and six
month earnings per share of $0.15 (compared to a loss of $0.36 per share last year). Earnings per share for the quarter
and year to date include an increase of $0.28 per share representing the net impact of the release of the future income
tax liability.
Cash flow for the quarter was a second quarter record of $0.63 per share (compared to $0.33 in the prior year) and six
month cash flow per share was $0.75 (compared to $0.37 last year).
In early February, UGG and Scotiabank finalized an agreement to create UGG Financial, a strategic initiative that will
expand the range of financial services offered to farmers. This will also result in a long-term improvement in UGG's
balance sheet and leverage.
Prospects for the balance of the fiscal year will largely depend upon the level of Crop Production Services' sales, and
grain shipping volumes. Nevertheless, UGG's management team remains optimistic that results for the 2001 fiscal year
will represent a significant recovery from last fiscal year.
UGG is one of western Canada's largest agribusiness firms. Founded in 1906, the Winnipeg based company is
diversified into grain merchandising, crop input sales and distribution, livestock production services and farm business
communications. UGG is publicly traded on the Toronto Stock Exchange under the symbol "UGG". For further
information on UGG, contact company web sites at www.ugg.com
or www.ugginvestor.com
Company news release
N3390 |
