Rougemont, Quebec – Lassonde Industries Inc. (TSX: LAS.A) (“Lassonde”) posted sales of $244.2 million in the first quarter of 2014, a 1.5% increase year over year. Profit attributable to the Company’s shareholders for this period totalled $7.1 million, up $1.2 million from the first quarter of 2013.

“We are pleased to be beginning 2014 on a positive note despite difficult market conditions. We have adjusted our mode of operation to maintain our competitive position and ensure sound operational flexibility. I am also pleased to report that the indebtedness of Clement Pappas was reduced to US$160.0 million as at March 29, 2014 from US$254.6 million as at August 13, 2011,” said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.

Financial results

The Company’s sales totalled $244.2 million in the first quarter of 2014, up $3.6 million or 1.5% from $240.6 million in the same period of 2013. This increase was primarily driven by a favourable foreign exchange impact partly offset by a slight decrease in the sales volume of national brands.

The Company’s operating profit for the first quarter of 2014 stood at $14.3 million, up $0.5 million or 3.4% from operating profit of $13.8 million in the same quarter last year. This increase was mostly due to an improvement in the profitability of CPC’s private label products, partly offset by increases in selling and administrative expenses attributable to organizational adjustments.

The Company’s financial expenses went from $6.4 million in the first quarter of 2013 to $5.2 million this quarter. This decrease was mostly attributable to a $1.3 million decrease in interest expense arising from a change in the interest rates applicable to CPC’s term loan as of July 2013 and a reduction in indebtedness.

“Other (gains) losses” went from a $0.3 million gain in the first quarter of 2013 to a $1.2 million gain in 2014, mainly due to higher foreign exchange gains in this quarter.

Profit before income taxes totalled $10.3 million for the first quarter of 2014, up $2.6 million from $7.7 million in the same quarter last year.

An income tax expense at an effective rate of 27.9% (24.0% in 2013) brought the 2014 first-quarter profit to $7.4 million, up $1.5 million from $5.9 million in the same quarter of 2013.

Profit attributable to the Company’s shareholders was $7.1 million, resulting in basic and diluted earnings per share of $1.01 for the first quarter of 2014. In the first quarter of 2013, profit attributable to the Company’s shareholders had totalled $5.9 million, resulting in basic and diluted earnings per share of $0.84.

Cash flows from operating activities generated $28.7 million in cash during the first quarter of 2014, while they had used $11.4 million in cash during the same period last year. Financing and investing activities used $14.0 million and $3.6 million, respectively, in cash in the first quarter of 2014, whereas they had used $4.0 million and $4.5 million in the same period last year. At the end of the first quarter of 2014, the Company reported a cash and cash equivalents balance of $31.7 million and a bank overdraft of $7.8 million compared to a cash and cash equivalents balance of $2.2 million at the end of the first quarter of 2013.

Outlook

Sales of North American fruit juice and drink manufacturers are still being affected by sluggish growth in demand. Recent acquisitions by major Canadian food retailers have also led to significant changes in the competitive landscape. In addition, product pricing is being affected by declining carbonated drink sales as the Company’s main competitors also operate in that sector. When combined, these factors have led to increased competitive activities resulting in unstable selling prices and high levels of trade spending.

Lassonde Industries Inc. is adjusting its mode of operation and expense level to maintain its competitive position and protect its profitability. The Company also intends to remain active in seeking potential consolidation opportunities in the North American fruit juice and drink industry. Barring any major external shocks, the Company remains optimistic about its ability to slightly increase its consolidated sales in 2014 compared to 2013.