Regina, Saskatchewan
February 27, 2007
Saskatchewan Wheat Pool Inc. (“Pool”) today announced net
earnings of $7.9 million for the quarter ended January 31, 2007,
which compares to net earnings of $2.9 million for the same
quarter a year earlier. Excluding
one-time items, the Pool generated quarterly net earnings from
continuing operations of $8.7 million, up from a loss of $2.0
million in the previous year’s second quarter.
On a twelve-month trailing basis, the Pool's net earnings from
continuing operations excluding one-time items soared to $30.0
million at the end of January 2007, up $18.7 million from $11.3
million for the same period a
year earlier.
President and Chief Executive Officer Mayo Schmidt commented on
the Pool’s performance, “These are the type of industry leading
results that the market has come to expect from the Pool. Our
momentum continues. We are
illustrating to our stakeholders the efficiency of our superior
asset base, the value of proven management expertise and the
integrity of our operating model. It is this kind of performance
that we bring to the
table to drive long-term value for shareholders as we execute
strategies to grow the business and further strengthen our
position in the global marketplace.”
All three of the Pool’s core operations, including its Grain
Handling and Marketing segment, its Agri-products segment and
Can-Oat Milling reported higher contributions for the quarter
relative to the same period a year
ago. Highlights include:
· The Pool posted solid operating segment earnings from
continuing operations, before interest, taxes and amortization
(EBITDA) of $33.6 million for the quarter, nearly double the
$17.3 million achieved in the
second quarter of 2006.
· Its Grain Handling and Marketing segment drove the earnings
growth with quarterly EBITDA of $27.6 million compared to $12.1
million a year earlier.
· The Pool shipped 2.2 million tonnes for the quarter, up from
2.1 million tonnes last year and achieved gross margins per
tonne of $24.25 ($22.41 excluding one-time items) compared to
$17.68 last year.
· The Pool’s agri-products retail operations achieved sales of
$33.8 million for the quarter, up from $32.2 million last year.
· The Agri-products segment generated EBITDA of $1.3 million
compared to nil in the same period the previous year.
· Can-Oat Milling sales grew 24.1% for the quarter and its
EBITDA contribution grew 8.2%.
· Cash flow from continuing operations, prior to working capital
changes was $24.5 million for the quarter, nearly four times the
level of last year’s second quarter when the Pool generated $6.4
million of cash flow.
· The Pool’s net earnings for the second quarter rose to $7.9
million, up from $2.9 million last year. Included in last year’s
second quarter net earnings was $4.9 million in recoveries from
discontinued operations.
This is the second year that the Pool has achieved stronger
comparative financial results on a six-month basis. Building on
a successful first quarter, the Pool generated:
· Operating segment EBITDA for the six months of $42.0 million
compared to $22.9 million last year in the same period.
· Cash flow from continuing operations, prior to working capital
changes, in the first six months of $25.3 million compared to
$1.9 million for the same period a year ago.
· Net earnings on a year-to-date basis rose $7.5 million to $2.8
million, compared to a loss of $4.7 million (and a loss of $9.6
million prior to the recovery from discontinued operations) for
the same period last year.
The Pool’s balance sheet is strong and provides the financial
flexibility and stability to support long-term growth. Its debt
to equity ratio was 28:72 at January 31, 2007 compared to 34:66
at January 31, 2006.
On a twelve-month trailing basis, the Pool generated the
following results (all amounts exclude one-time items):
· EBITDA of $89.1 million for the period ending January 31,
2007, compared to $66.8 million for the same period one year
earlier.
· Cash flow from continuing operations, prior to working capital
changes of $76.3 million compared to $44.9 million.
The Pool signed a two-year supply
agreement with Terra Grain Fuels Inc., North America's largest
wheat-based ethanol facility currently under construction at
Belle Plaine, Saskatchewan. The Regina-based ethanol company
will require approximately 400,000 tonnes of feed quality wheat
per year and will produce 150 million litres of ethanol annually
and approximately 164,000 tonnes of dried distillers' grains
each year. The Pool will be a key supplier.
On February 26, 2007, the Pool announced its purchase of the key
assets of Gates Fertilizer Ltd., including leases on two retail
outlets located in Nipawin and Carrot River, Saskatchewan. This
acquisition will further complement the Pool's existing retail
network and enhance its ability to serve area customers. Both
locations will be fully operational, effective immediately, and
will offer a wide range of fertilizer, seed, and crop protection
products. Local customers will also enjoy the added benefit of
increased access to anhydrous ammonia.
The Pool renewed its grain volume insurance coverage for fiscal
2008. Coverage under the program was reduced from $30 million to
$26 million in response to the Pool's continued strengthening
financial position. Partial insurance payments will occur if
grain production declines by approximately 20%. The program is
weighted regionally to reflect the Pool's market share in each
province. The package also includes a small multi-year
component, which solidifies the Pool’s ongoing commitment to
this important risk management strategy.
“The Pool continues to focus on what we do best and
operationally we are maximizing our opportunities. Our farm
customers are eager to take advantage of industry fundamentals
and we have been working very closely with them to help position
them for success during the next growing season,” said Schmidt.
“At the same time, we remain focused on our bid for Agricore
United. The Pool’s commitment to this industry and its future as
a sustainable and profitable contributor to the Canadian economy
is paramount. Our governance model ensures we are representing
the interests of all stakeholders in this effort, including
western Canadian farmers who are an integral part of our
business. A Pool-Agricore combination delivers the best value
for all shareholders and we look forward to the opportunity to
entertain discussions with Agricore to fully explore the value
of our proposal for the benefit of the Canadian agricultural
industry.”
Saskatchewan Wheat Pool Inc. is a publicly traded
agribusiness headquartered in Regina, Saskatchewan. Anchored by
a Prairie-wide grain handling and agri-products marketing
network, the Pool channels Prairie production to end-use markets
in North America and around the world. These operations are
complemented by value-added businesses and strategic alliances,
which allow the Pool to leverage its pivotal position between
Prairie farmers and destination customers. The Pool’s common
shares are listed on the Toronto Stock Exchange under the symbol
SWP and its subscription receipts are listed under the symbol
SWP.R. |
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