Tri-White Corporation announces second quarter 2007
results and regular dividend of $0.06 per share
Friday August 10, 2:24 pm ET
Tri-White Corporation (TSX:
TWH)
Financial Highlights
<<
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Three months ended Six months ended
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(in thousands of dollars June 30, June 30, June 30, June 30,
except per share amounts) 2007 2006 2007 2006
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Revenue 44,314 14,532 44,424 14,650
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EBITDA(1) 18,089 7,836 15,390 5,261
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Interest and other
income (expense) (2,170) 103 (1,929) (282)
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Equity earnings (loss) (1,256) 9,950 (2,356) 8,772
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Provision for income taxes 6,278 4,644 5,293 3,913
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Non-controlling interest (1,323) - (1,323) -
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Net earnings 4,894 12,473 1,433 8,264
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Earnings per share $0.21 0.54 0.06 $0.36
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Weighted average shares
outstanding 22,827 22,933 22,875 22,932
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(1) EBITDA is not a recognized performance measure under Canadian GAAP.
EBITDA is defined as earnings before taxes, interest, depreciation,
amortization and earnings from equity accounted investments.
Management believes that in addition to net earnings, this measure is
useful supplemental information to provide investors with an
indication of income available prior to debt service, capital
expenditures and income taxes. Investors should be cautioned,
however, that this measure should not be construed as an alternative
to net earnings determined in accordance with GAAP as an indicator of
the Company.
TODAY, TRI-WHITE CORPORATION ANNOUNCED THE REGULAR DIVIDEND OF
$0.06 PER SHARE TO BE PAID ON SEPTEMBER 28TH TO SHAREHOLDERS OF
RECORD AS AT SEPTEMBER 10TH
>>
Second Quarter Operating Highlights
The tourist operations at White Pass & Yukon Route ("White Pass") and the golf operations of ClubLink Corporation ("ClubLink") are highly seasonal. The majority of the revenue and earnings from these businesses occur during the third quarter of the year. Accordingly, the earnings of the Company will fluctuate with those of the underlying business units.
On June 1st, 2007, the Company acquired an additional 6,635,300 shares of ClubLink Corporation ("ClubLink") (representing 39.0% of ClubLink's outstanding common shares) to increase its ownership interest to 70.7%. The purchase price of this additional interest, including transaction costs, was $88,018 and was funded through issuance of a one year unsecured note of $35,000 bearing interest at a rate of the greater of the Canadian prime lending rate and 6%, with the balance of $52,918 in cash. The acquisition has been accounted for under the purchase method of accounting. As part of the accounting treatment, the Company allocated the purchase price on the identifiable assets and liabilities acquired based on their estimated fair values at the time of acquisition. The earnings of ClubLink have been accounted for under the equity method to May 31st, 2007 and have been included in the consolidated statement of income and cash flow from June 1st, 2007.
The purchase price allocation is considered preliminary until the Company has obtained the necessary information to complete its allocations. As a result, the purchase price allocation may be adjusted later in 2007.
The Company's operating income originates from White Pass and ClubLink. White Pass is a wholly owned operating subsidiary. EBITDA from Alaska operations increased from US$7.2 million in 2006 to US$7.4 million for the second quarter of 2007. The results of the subsidiary, which is deemed self-sustaining, are translated into Canadian currency using average rates during the period. A change in average exchange rates can impact the net earnings of the Company.
White Pass' 2007 operating season commenced in May. Significant revenue is generated as cruise ship arrivals begin and the tourist traffic on the west coast accelerates.
EBITDA (defined as revenue less cost of sales and operating expenses) for the three months ended June 30, 2007 was $18,089 compared with $7,836 for the three months ended June 30, 2006. The positive variance of $10,253 over the same period last year is mainly due to the acquisition of ClubLink on June 1, 2007, and accordingly, Tri-White is consolidating the results of ClubLink for the one month period from June 1st to June 30th in the current quarter.
For the first two months of the quarter ended June 30, 2007 the Company recorded an equity loss of $974 compared to income of $75 during the three months ended June 30, 2006 on this ClubLink investment. This was based on a weighted average ownership of 31.5% for the two months ended May 31, 2007 and for the three months ended June 30, 2006, respectively. Commencing June 1st, 2007, the Company has reflected the earnings of ClubLink on a consolidated basis. The Company received $321 in dividends during the three months ended June 30, 2007 (June 30, 2006 - $268)
The Company also accounts for its investment in Renasant Financial Partners Ltd. ("Renasant") using the equity method. The Company's interest, as at June 30, 2007, stands at 36.5%. The equity loss recorded by Tri-White for the quarter ended June 30, 2007 was $(282), (2006 - equity income of $9,875). This was based on the operating results of Renasant for the three months ended March 31, 2007. The Company records its equity interest in Renasant on a three-month trailing basis. No dividends were received in the quarter ended June 30, 2007 (2006 - $309).
Long-term investments include 3.2 million shares of Renasant carried at $5,342. At June 30, 2007, the market value of these assets exceeds their carrying cost by $1,091 (December 31, 2006 - below market value by $1,478).
Corporate Developments
Cruise ship arrivals in Skagway, Alaska are expected to increase slightly this year, and with expanded service to Carcross this season, passenger counts are expected to rise from 2006 levels. White Pass is focused on a series of programs aimed at improving margins through cost control initiatives. Currency fluctuations will continue to impact reported results.
This quarter, ClubLink became a controlled subsidiary and the Chairman of Tri-White has been appointed Chief Executive Officer. Tri-White intends to build upon the success of the franchise and continue to provide best-in-class service to the more than 15,000 members in the ClubLink system. As with all investments, the primary objective of the Company is to build the underlying value of the enterprise, and over the long term, deliver enhanced returns.
The Company has been approved by the Toronto Stock Exchange to make a normal course issuer bid to purchase up to 1,146,711 common shares. The program expires September 19, 2007. During the three months ended June 30, 2007 the Company purchased 204,700 shares (June 30, 2006 - nil).
The Company continued with its regular quarterly dividend program and paid a dividend of $0.06 per share, or $1,365 on June 29th.
Tri-White Corporation holds a diverse merchant-banking portfolio and is publicly listed on the Toronto Stock Exchange. Tri-White controls approximately 70% of the outstanding common shares of ClubLink Corporation, Canada's leading owner, operator and developer of high quality member golf clubs, with 40, 18-hole equivalent properties in Canada. As well, Tri-White is the largest shareholder of Renasant Financial Partners Ltd., a financial services provider and equipment trading organization, operating throughout North America and Europe. In addition, Tri-White owns a 100% interest in the historic White Pass & Yukon Route Railway, with strategic holdings in the port operations and supporting excursions, based in Skagway, Alaska.
Financial statements are attached.
Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continue," "estimate," "expects," and "will" and words of similar import, constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; changes in business strategy or development/acquisition plans; environmental exposures, financing risk; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in the Company's filings with Canadian securities regulators. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update or revise any forward-looking statements.
Management's discussion and analysis, financial statements and other disclosure information relating to the Company is available through SEDAR and at www.sedar.com and on the Company website at www.tri-white.com.
TRI-WHITE CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
June 30, 2007
Tri-White Corporation
CONSOLIDATED BALANCE SHEETS
As at June 30, December 31,
2007 2006
(in thousands of dollars) $ $
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ASSETS
Current
Cash and cash equivalents 4,727 21,853
Accounts receivable 22,642 543
Mortgages and loans receivable 3,470 16,892
Inventories, materials and supplies 12,250 4,379
Prepaid expenses 6,043 560
Other assets 3,230 -
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52,362 44,227
Long-term investments 5,342 36,554
Mortgages and loans receivable 7,428 -
Other assets 3,766 -
Intangible assets 10,726 -
Goodwill 9,107 -
Capital assets 601,454 73,957
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Total assets 690,185 154,738
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 35,823 21,706
Non-revolving long-term debt 11,242 -
Notes payable 35,000 -
Loan payable 4,000 -
Capital lease obligations 5,069 -
Accounts payable and accrued liabilities 31,016 1,915
Development capital assets costs to complete 2,814 -
Prepaid annual dues and deposits 35,259 -
Convertible debentures 10,092 -
Income and other taxes payable 1,845 1,655
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172,160 25,276
Revolving long-term debt 45,080 -
Non-revolving long-term debt 241,842 -
Future income taxes 17,260 17,055
Capital lease obligations 9,710 -
Deferred membership fees 52,410 -
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Total liabilities 538,462 42,331
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Non-controlling interest 48,510 -
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Shareholders' equity
Share capital 60,753 61,278
Contributed surplus 222 191
Retained earnings 62,545 65,205
Accumulated other comprehensive income (20,307) (14,267)
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Total shareholders' equity 103,213 112,407
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Total liabilities and shareholders' equity 690,185 154,738
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Tri-White Corporation
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended Six months ended
June 30 June 30 June 30 June 30
For the 2007 2006 2007 2006
(in thousands of dollars,
except for per share amounts) $ $ $ $
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REVENUE
Operating revenue 43,086 14,532 43,196 14,650
Amortization of membership
fees 1,228 - 1,228 -
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44,314 14,532 44,424 14,650
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EXPENSES
Operating expenses 26,225 6,696 29,034 9,389
Amortization of capital assets 2,168 772 3,056 1,574
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Earnings before other income
(expense), income taxes and
non-controlling interest 15,921 7,064 12,334 3,687
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OTHER INCOME (EXPENSE)
Investment income 555 347 1,234 624
Interest expense (2,455) (427) (2,891) (1,033)
Land lease rent (400) - (400) -
Net gain on sale of
investments and capital
assets 7 - 7 -
Unrealized foreign exchange
gain 123 183 121 127
Income (loss) on equity
accounted investments
- ClubLink (974) 75 (2,096) (1,652)
Income (loss) on equity
accounted investments
- Renasant (282) 9,875 (260) 10,424
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(3,426) 10,053 (4,285) 8,490
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Earnings before income taxes
and non-controlling interest 12,495 17,117 8,049 12,177
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Provision for income taxes
Current 5,363 3,071 4,278 2,518
Future 915 1,573 1,015 1,395
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6,278 4,644 5,293 3,913
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Net earnings before non-
controlling interest 6,217 12,473 2,756 8,264
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Non-controlling interest (1,323) - (1,323) -
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Net earnings for the period 4,894 12,473 1,433 8,264
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Other comprehensive loss:
Unrealized foreign currency
translation loss (5,611) (2,935) (6,040) (3,170)
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Total comprehensive earnings
(loss) (717) 9,538 (4,607) 5,094
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Earnings per share
Basic 0.21 0.54 0.06 0.36
Diluted 0.21 0.54 0.06 0.36
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Tri-White Corporation
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Six months ended
June 30, June 30,
2007 2006
(in thousands of dollars) $ $
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Share Capital
Balance, beginning of period 61,278 61,216
Issuance of common shares 22 32
Repurchase of common shares (547) -
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Balance, end of period 60,753 61,248
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Contributed surplus
Balance, beginning of period 191 130
Stock compensation expense 31 30
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Balance, end of period 222 160
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Retained earnings
Balance, beginning of period 65,205 52,638
Net earnings for the period 1,433 8,264
Dividends (2,734) (2,752)
Excess of purchase price of common shares
over average carrying value (1,359) -
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Balance, end of period 62,545 58,150
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Accumulated other comprehensive income
Balance, beginning of period (14,267) (13,688)
Unrealized foreign currency translation loss (6,040) (3,170)
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Balance, end of period (20,307) (16,858)
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Shareholders' equity 103,213 102,700
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Tri-White Corporation
CONSOLIDATED STATEMENTS OF CASH FLOW
Three months ended Six months ended
June 30 June 30 June 30 June 30
For the 2007 2006 2007 2006
(in thousands of dollars) $ $ $ $
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OPERATING ACTIVITIES
Net earnings for the period 4,894 12,473 1,433 8,264
Items not affecting cash
Amortization 2,319 772 3,207 1,574
Future income taxes 915 1,573 1,015 1,395
Amortization of membership
fees (1,228) - (1,228) -
Net gain on sale of assets
and investments (7) - (7) -
(Income) loss of equity
accounted investment
- Renasant 282 (9,875) 260 (10,424)
(Income) loss of equity
accounted investment
- ClubLink 974 (75) 2,096 1,652
Non controlling interest
- ClubLink 1,323 - 1,323 -
Net unrealized foreign
exchange gain (123) (183) (121) (127)
Stock compensation expense 15 15 31 30
Distributions from equity
accounted investments 321 577 664 1,155
Collection of membership fee
installments 2,137 - 2,137 -
Net change in operating assets
and liabilities (11,271) 202 (15,676) (5,136)
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Cash provided by (used in)
operating activities 551 5,479 (4,866) (1,617)
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FINANCING ACTIVITIES
Promissory note - - - (11,935)
Proceeds on issue of
subsidiary common shares 16 - 16 -
Shares purchased for
cancellation (960) - (1,906) -
Dividends paid (1,352) (1,360) (2,712) (2,720)
Capital lease obligations 1,114 - 1,114 -
Deferred financing charges (95) - (95) -
Long-term debt 8,671 - 8,671 -
Proceeds from loan payable 4,000 - 4,000 -
Net proceeds from bank
indebtedness 13,686 (304) 14,117 6,201
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Cash provided by (used in)
financing activities 25,080 (1,664) 23,205 (8,454)
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INVESTING ACTIVITIES
Purchase of capital assets (10,437) (736) (11,503) (1,009)
Investments (52,918) - (52,918) -
Return of capital - - 9,480 -
Cash acquired by increasing
interest in ClubLink 1,603 - 1,603 -
Advances of loan receivable (439) - (5,204) -
Development capital asset
costs to complete 1,759 - 1,759 -
Repayment of loans receivable 12,929 - 22,114 -
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Cash used in investing
activities (47,503) (736) (34,669) (1,009)
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Net effect of currency
translation adjustment on
cash and cash equivalents (722) (792) (796) (657)
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Net increase (decrease) in
cash and cash equivalents
during the period (22,594) 2,287 (17,126) (11,737)
Cash and cash equivalents,
beginning of period 27,321 6,445 21,853 20,469
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Cash and cash equivalents,
end of period 4,727 8,732 4,727 8,732
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Represented by
Cash 4,727 8,732 4,727 8,732
Cash equivalents - - - -
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4,727 8,732 4,727 8,732
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For
further information
Mr. Donald Turple, Chief Financial Officer,
One University Avenue, Suite 1400 Toronto, Ontario, M5J 2P1
Phone: (416) 367-6877, Fax: (416) 367-6890, dturple@morguard.com |
