Ridley Inc. Reports Financial Results for Fiscal 2014 Third Quarter

Ridley Inc. Reports Financial Results for Fiscal 2014 Third Quarter 
MANKATO, MINNESOTA -- (Marketwired) -- 05/08/14 --   Ridley Inc.
(TSX: RCL) today reported its financial results for the three and
nine months ended March 31, 2014. All currency amounts are stated in
U.S. dollars unless otherwise noted. 
For the three months ended March 31, 2014, Ridley's earnings before
interest, taxes, depreciation and amortization (EBITDA) from
continuing operations were $12.5 million compared to $10.5 million
last year. Consolidated net income (after income taxes) for the
quarter was $8.0 million ($0.62 per share) compared to $5.4 million
($0.42 per share) last year. 
Ridley also reported today that it has declared a special cash
dividend on its common stock of CAD $2.00 per share payable on May
30, 2014 to shareholders of record on May 20, 2014. The special
dividend of approximately CAD $25.6 million is not indicative of any
intention at the present time to initiate a regular dividend payment
to shareholders. 
Ridley's results in the third quarter of fiscal 2014 reflect
increased tonnage volume, improved average unit margins from a
favorably trending product mix and reduced overhead expenses on lower
discretionary spending. Favourable weather conditions and good
producer economics contributed to the 5.5% increase in tonnage volume
in the third quarter despite lower volume in the beef sector relative
to last year. Product mix trended towards higher value-added
products, including feed supplement blocks, while unit margins
benefited from more favorable raw material positions relative to last
year. Despite higher manufacturing expenses relative to last year,
Ridley generated a 5.6% increase in gross profits from continuing
operations in the third quarter this year. 
Operating income of continuing operations (before income taxes)
increased by 21.7% in the third quarter of fiscal 2014 to $10.7
million. U.S. Feed Operations (USFO) reported a $0.4 million increase
in operating income for the period on volume growth in the dairy and
swine sectors and generally improved unit margins. Ridley Block
Operations (RBO) reported a $1.1 million increase in operating income
over last year, mainly from favourable market conditions including
extended winter conditions this quarter. Ridley Feed Ingredients
(RFI) reported operating income of $1.2 million in the third quarter
of fiscal 2014, a $0.5 million increase over last year resulting from
volume growth and improved unit margins. 
In the second quarter last year, Ridley merged its Canadian Feed
Operations with Masterfeeds Inc. to form Masterfeeds LP, the second
largest feed provider in Canada. Ridley's share of the operating
income of its interest in Masterfeeds LP improved to $0.4 million in
the third quarter this year from $0.3 million last year.  
MANAGEMENT'S DISCUSSION AND ANALYSIS 
This Management's Discussion and Analysis dated as at May 8, 2014 and
the accompanying interim consolidated financial statements for the
three and nine months ended March 31, 2014 have been prepared in
accordance with Canadian generally accepted accounting principles
("GAAP") which incorporate International Financial Reporting
Standards ("IFRS"). 
THIRD QUARTER RESULTS 
The following summary is presented to assist in understanding the
third quarter results of fiscal 2014. 


 
 
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Summary of Results of Operations   Three Months Ended    Nine Months Ended 
                                         March 31             March 31     
($000s except for EPS)                 2014       2013       2014      2013
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Continuing Operations (i)                                                  
Revenue                             147,581    144,571    434,037   444,697
Gross profit                         23,445     22,198     65,085    63,117
Operating income                     10,651      8,751     27,095    25,801
Net income before exceptions          7,972      5,539     18,228    16,363
Exceptions, net of income taxes                                            
 (ii)                                    (4)         -         98         -
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Net income from continuing                                                 
 operations                           7,968      5,539     18,326    16,363
Earnings per share (EPS), from                                             
 continuing operations                 0.62       0.43       1.43      1.28
EBITDA (iii)                         12,545     10,522     32,380    31,313
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Net income from discontinued                                               
 operations                               -       (126)         -       493
Net income for the period             7,968      5,413     18,326    16,856
Earnings per share (EPS), basic                                            
 and diluted                           0.62       0.42       1.43      1.32
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i.  Continuing Operations excludes the results of the Company's feed
    manufacturing operations in Canada previously reported as the Canadian
    Feed Operations (CFO) segment and now comprising discontinued
    operations. 
ii. Exceptions - In the preceding summary data, net income was reported
    before exceptions. Those exceptions in the nine months ended March 31,
    2014 were comprised of $0.3 million (net of income taxes) from the gain
    on the sale of a previously closed facility in Castleton, Indiana, and
    $0.2 million (net of income taxes) for the asset impairment loss and
    restructuring accrued for closure of the Chambersburg, Pennsylvania
    facility. There were no exceptions in the first nine months of last
    year. 
iii.EBITDA - Operating income before depreciation, amortization and
    exceptions. EBITDA does not have a standardized meaning prescribed by
    GAAP and, therefore, is not readily comparable to similar measures
    presented by other companies. However, management believes that this
    measure provides investors with useful supplemental information.

Consolidated Third Quarter Results 
Revenue from continuing operations was $147.6 million in the third
quarter of fiscal 2014, a 2.1% increase over the same period last
year. A comparison of revenue is not necessarily indicative of the
strength of Ridley's business because revenue is influenced by
fluctuating commodity prices. 
Overall sales volume, as measured in tons of feed products sold, was
5.5% higher in the third quarter this year reflecting favourable
market conditions, including extended winter conditions this quarter
and good producer economics. While tonnage volumes were lower in the
beef cattle sector from the easing of drought conditions that boosted
demand for feed supplementation last year, volumes were higher in
other animal species less affected by forage availability, including
dairy cattle, swine, poultry and equine. 
Consolidated gross profit from continuing operations in the third
quarter of fiscal 2014 was $23.4 million compared to $22.2 million in
the same period last year. The major part of the 5.6% increase in
gross profits in the third quarter was the result of the increase in
overall tonnage volumes combined with higher unit margins that
reflected a favourable product mix in most market segments and
improved raw material positions. Direct production costs and
manufacturing overheads, which are included in gross profits,
increased by 9.2% in the third quarter over last year. Utilities,
labor, repairs and maintenance expense, as well as higher volumes,
accounted for most of the increase in manufacturing costs in the
quarter. 
Operating expenses, which include technical services, selling,
administration and research and development, in continuing operations
were $12.8 million in the third quarter compared to $13.4 million
last year. Discretionary spending, which includes professional fees,
advertising, promotion and travel and other administrative expenses,
was generally lower in the quarter from last year. 
EBITDA is comprised of operating income of continuing operations
before depreciation, amortization and exceptions. For the three
months ended March 31, 2014, EBITDA was $12.5 million compared to
$10.5 million for the same period last year. The increase of $2.0
million in EBITDA is mainly comprised of the $1.2 million increase in
gross profit and the $0.7 million decrease in net overhead expenses.  
Net income from continuing operations, net of income tax expense, for
the third quarter of fiscal 2014 was $8.0 million ($0.62 per share)
compared to $5.5 million ($0.43 per share) in the same period of
fiscal 2013.  
Discontinued operations are comprised of the Company's feed
manufacturing business in Canada, previously reported as the Canadian
Feed Operations (CFO) segment, which was merged into a limited
partnership with Masterfeeds Inc. in the second quarter of fiscal
2013. Prior period results of CFO have been re-presented here as
discontinued operations. Net income from discontinued operations in
the third quarter of fiscal 2014 was nil compared to a net loss of
$0.1 million last year. 
The Company owns a non-controlling interest in the limited
partnership, Masterfeeds LP. Starting with the second quarter of
fiscal 2013, the Company's share of the earnings of Masterfeeds LP is
reported as share of net income of associate, which in the third
quarter of fiscal 2014 was $0.4 million compared to $0.3 million for
the same period last year.  
Including income from discontinued operations, the Company reported
net income after taxes for the three months ended March 31, 2014 of
$8.0 million ($0.62 per share) compared to $5.4 million ($0.42 per
share) in the same period last year. 
Consolidated Nine Months Results 
For the nine months ended March 31, 2014, revenue of $434.0 million
from continuing operations decreased $10.7 million, or 2.4%, from the
same period last year reflecting lower raw material prices this year,
partly offset by a 1.2% increase in overall tonnage volumes for the
period.  
Consolidated gross profit from continuing operations for the nine
months ended March 31, 2014 was $65.1 million compared to $63.1
million last year, the result of higher average unit margins and
increased sales volumes. Margins were improved by favourable product
mix in most market segments and lower unit costs of raw materials.
Direct production costs and manufacturing overheads, which are
included in gross profits, increased by 6.0% in the nine months of
fiscal 2014. 
Operating expenses of continuing operations in the nine months ended
March 31, 2014 were $38.0 million, a $0.7 million increase over last
year. Earnings exceptions, which are also included in operating
expenses, were related to the closure and sale of two facilities
earlier in the year.  
EBITDA from continuing operations in the first nine months of fiscal
2014 was $32.4 million compared to $31.3 million for the same period
last year. The increase of $1.1 million in EBITDA is comprised of the
$2.0 million increase in gross profit and a $0.1 million increase in
depreciation and amortization expense offset by a $0.8 million
increase in net overhead expenses. 
Net income from continuing operations for the nine months ended March
31, 2014 was $18.3 million (earnings per share of $1.43) compared to
$16.4 million (earnings per share of $1.28) in the same period last
year. Net income from discontinued operations was nil this year
compared to $0.5 million last year. Including income from
discontinued operations and share of income of associate, the Company
reported net income after taxes of $18.3 million (earnings per share
of $1.43) for the first nine months of fiscal 2014 compared to $16.9
million (earnings per share of $1.32) in the same period last year. 
The accompanying interim financial statements reflect the Company's
adoption of IAS 19r "Employee Benefits" which significantly changed
the recognition and measurement of defined benefit pension and
post-retirement expense, and the disclosure of all employee benefits.
Implementation of this standard in the Company's interim consolidated
financial statements required restatement of the fiscal 2013
comparative numbers. In summary, the effects of IAS 19r on previously
reported financial statements for the nine months ended March 31,
2013 were: (1) reclassification of $1.5 million from retained
earnings to accumulated other comprehensive income, and (2) a
reduction of net income by $0.6 million ($0.04 per share). The
accompanying notes to the financial statements more fully explain the
reporting changes caused by IAS19r and the retrospective effect on
the Company's previously reported results for fiscal 2013.  
The following table is a reconciliation of EBITDA to net income, the
most closely comparable GAAP measure to EBITDA: 


 
 
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EBITDA                           Three Months Ended     Nine Months Ended  
                                       March 31              March 31      
($000s)                              2014       2013       2014       2013 
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Net income for the period           7,968      5,413     18,326     16,856 
Net (income) loss from                                                     
 discontinued operations                -        126          -       (493)
Income tax expense                  2,870      3,396      8,820      9,551 
Share of net income of                                                     
 associate                           (396)      (280)      (732)      (461)
Finance expense                       234        359        766      1,142 
Finance income                        (25)      (263)       (85)      (794)
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Operating income                   10,651      8,751     27,095     25,801 
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Depreciation of property, plant                                            
 and equipment                      1,585      1,497      4,677      4,848 
Amortization of intangible                                                 
 assets                               303        274        770        664 
Gain on sale of facilities              -          -       (420)         - 
Asset impairment loss                   -          -        203          - 
Restructuring                           6          -         55          - 
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EBITDA of continuing operations    12,545     10,522     32,380     31,313 
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Ridley reports its financial results according to IFRS that have been
incorporated into the Handbook of the Canadian Institute of Chartered
Accountants ("CICA"). However, Ridley has included in its management
discussion and analysis certain non-IFRS financial measures and
ratios that its management believes provide useful information in
measuring the financial performance and financial condition of
Ridley. These measures and ratios do not have a standardized meaning
prescribed by IFRS and, therefore, may not be comparable to similar
measures presented by other public companies, nor should they be
construed as an alternative to other financial measures described by
IFRS. 
Operating income is defined as net income before finance expense,
finance income, income tax expense, share of net income or loss of
associate and net income or loss from discontinued operations.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") is defined as operating income of continuing operations
before depreciation and amortization, gain or loss on sale of
facilities, restructuring and asset impairment loss. 
Comprehensive Income 
Comprehensive income (loss) is the change in net assets that results
from transactions, events and circumstances from sources other than
investments by and/or distributions to shareholders. Other
comprehensive income (OCI) is comprised of unrealized gains and
losses on translation of financial statements of related entities
with foreign functional currency to U.S. dollar reporting currency,
the transition adjustment between retained earnings and accumulated
other comprehensive income related to the adoption of IAS19r and the
accumulated currency translation losses realized upon disposal of the
Canadian business unit. Comprehensive income in the third quarter of
fiscal 2014 was $7.1 million, which was comprised of net income of
$8.0 million, as reported above, less unrealized losses of $0.9
million on the translation of the financial statements of related
entities with foreign functional currency to U.S. dollar reporting
currency. Comprehensive income for the nine months ended March 31,
2014 was $17.1 million, which was comprised of net income of $18.3
million, as reported above, less unrealized losses of $1.2 million on
the translation of the financial statements of related entities with
foreign functional currency to U.S. dollar reporting currency. 
SEGMENT RESULTS 
In the second quarter of fiscal 2013, the Company modified its
reporting segments to eliminate the Canadian Feed Operations (CFO)
segment following the sale of substantially all of the net assets of
its Canadian operations to Masterfeeds LP. The following is a summary
of operating income (loss) of the reporting segments of the Company's
continuing operations for the third quarter and nine months
year-to-date of fiscal 2013 and 2014. "Corporate" in this
presentation includes the consolidating elimination of intersegment
sales and the total assets and property, plant and equipment
associated with discontinued operations. 


 
 
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Operating Income (Loss)          Three Months Ended     Nine Months Ended  
                                       March 31              March 31      
($000s)                              2014       2013       2014       2013 
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U.S. Feed Operations (USFO)         3,736      3,347     10,108      9,947 
Ridley Feed Ingredients (RFI)       1,172        695      2,631      1,756 
Ridley Block Operations (RBO)       6,668      5,574     16,837     16,369 
Corporate                            (925)      (865)    (2,481)    (2,271)
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Consolidated operating income                                              
 from continuing operations        10,651      8,751     27,095     25,801 
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U.S. Feed Operations (USFO) 
The USFO segment consists of twenty full-line production facilities,
operating in the United States as Hubbard Feeds. USFO plants derive
most of their business by manufacturing and marketing a broad range
of complete feeds, supplements and premixes to meat, milk and egg
producers, and owners of equine and companion animals located mostly
in the Midwestern United States. 
Tonnage volume increased by 2.0% in the third quarter of fiscal 2014
compared to last year. Beef feed volume last year reflected a
significant increase in demand for feed supplements due to the severe
drought throughout much of the United States. With the return to a
more normal level of demand in the beef sector, volumes for beef feed
supplements have trended lower than last year. However, USFO's total
volumes in the third quarter were higher relative to last year due to
strong sales in the dairy and swine sectors. Year-to-date volumes
were 1.8% lower than last year on reduced demand for beef feed
supplements relative to the prior year when demand was stimulated by
the severe drought. 
Gross profits in the third quarter this year were $11.7 million
compared to $11.5 million in the same period last year. Increased
volumes in the dairy sector combined with improved unit margins in
dairy and lifestyle products more than offset the reduced
contribution to gross profits from the beef sector. For the
year-to-date, improved unit margins in beef feed supplements and
increased volume of higher value-added dairy feed products
contributed to an increase of $0.6 million in gross profits from last
year. 
Operating expenses decreased by $0.3 million in the third quarter
this year, mainly the result of reduced discretionary spending and
workers' compensation claims. Year-to-date operating expenses
increased by $0.4 million, mainly in administrative costs. Operating
expenses this year-to-date included a $0.4 million gain on the sale
of the site of the Castleton, Indiana feed manufacturing facility and
$0.3 million for the asset impairment loss and restructuring expenses
related to the Chambersburg, Pennsylvania facility, which
discontinued feed manufacturing operations in the second quarter this
year. 
Operating income for the third quarter of fiscal 2014 was $3.7
million, a $0.4 million increase over last year. Year-to-date
operating income was $10.1 million compared to $9.9 million for the
same period last year. 
In the second quarter of fiscal 2014, the Company ceased feed
manufacturing operations at its Chambersburg, Pennsylvania facility.
Customer volumes previously served by Chambersburg have been
consolidated with the Company's equine-dedicated feed facility in
Versailles, Kentucky. 
Ridley Feed Ingredients (RFI) 
The RFI segment produces and distributes vitamin and trace mineral
premixes, small packaged specialty products, medicated and
non-medicated feed additives and micro feed ingredients to customers
throughout North America from its facility in Mendota, Illinois. 
Revenue in the third quarter of fiscal 2014, including intersegment
sales, increased by $3.0 million or 10.7% over the same period last
year as a result of broadly based growth in volumes across most
product categories and animal species. Year-to-date revenues
increased by 4.8%. Revenues earlier in the year declined from lower
volumes of redistributed feed ingredients, particularly feed-grade
vitamins and amino acids.  
Gross profit of $2.3 million in the third quarter increased $0.5
million over last year, mainly the result of increased volumes and
improved unit margins. Gross profit of $6.0 million for the nine
months year-to-date increased $1.3 million from last year.  
Operating expenses in the third quarter were not materially changed
from the prior year while expenses for the nine months year-to-date
increased by $0.4 million on generally higher selling and
administrative costs.  
Operating income for the third quarter was $1.2 million, a $0.5
million increase over last year reflecting the increase in gross
profit for the period. Year-to-date operating income was $2.6 million
compared to $1.8 million last year. 
Ridley Block Operations (RBO) 
The RBO segment manufactures a complete range of block supplements,
including low moisture, pressed, compressed, composite and poured
blocks, loose minerals and dried molasses from eight U.S. facilities. 
RBO's tonnage volume in the third quarter of fiscal 2014 increased by
5.2% over last year, mainly from favourable market conditions,
including extended winter conditions this quarter, and favourable
producer economics. Year-to-date volumes were 1.8% lower than last
year following a return to more normal conditions from the severe
drought last year. Volume last year was positively influenced by
drought conditions that increased demand for feed supplementation.
With the easing of drought conditions this year, volumes returned to
historically more normal levels, partly offset by the contribution to
volume from the acquisition of Stockade Brands in November 2012.  
Gross profits of $9.5 million in the third quarter this year
increased by $0.6 million or 6.7% over last year reflecting increased
overall sales volumes and improved unit margins due to a favourable
product mix. For the nine months year-to-date, gross profits
increased by $0.1 million from last year reflecting reduced volumes
in the first half this year relative to last year and increased
manufacturing costs.  
Operating expenses in the third quarter of fiscal 2014 decreased by
$0.5 million from last year and by $0.4 million for the year-to-date,
mainly the result of reduced discretionary spending.  
Operating income increased over last year by $1.1 million in the
third quarter in line with the increase in gross profits and reduced
operating expenses. Operating income for the nine months year-to-date
increased by $0.5 million from last year. The improvement in income
in the third quarter was partly offset by the lower volumes and gross
profits of the first half of this year relative to the strong
performance from drought-driven demand last year. 
LIQUIDITY, CAPITAL RESOURCES, AND CASH FLOW 
Ridley's net working capital and debt-to-equity positions are
summarized below. 


 
 
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Balances as of:           March   December  September       June      March
($000s)                 31 2014    31 2013    30 2013    30 2013    31 2013
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Net working capital                                                        
 (i)                    35,668     35,493     38,109     34,816     35,705 
Net debt (cash                                                             
 surplus) (ii)          (4,051)     5,152     14,607     15,931         85 
Equity                 138,073    131,004    124,516    120,924    138,905 
Debt to                                                                    
 capitalization                                                            
 ratio (iii)                 -%       3.5%      11.0%       9.0%       0.3%
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i.  Net working capital is defined as current assets (excluding cash and the
    current portion of loans receivable) less current liabilities (excluding
    outstanding cheques in excess of bank balances, short-term debt, and the
    current portion of long-term debt). 
ii. Net debt (cash surplus) is defined as bank obligations and outstanding
    cheques in excess of bank balances less cash and short-term deposits. 
iii.Capitalization is debt plus equity.

Net working capital balances increased by $0.2 million in the three
months between December 31, 2013 and March 31, 2014. Accounts
receivable were lower by $4.1 million from the prior quarter on
higher turnover rates while inventories increased $3.9 million due to
timing of raw materials purchases. Compared to the same point in time
a year ago, net working capital balances were not materially changed;
a $1.4 million reduction in accounts receivable and $3.6 million
increase in trade payables were largely offset by a $4.7 million
reduction in income taxes payable.  
The following table is a summary of cash generated or utilized by
business operations, net of capital expenditures on plant and
equipment and other intangibles, excluding business acquisitions. 


 
 
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Summary of Changes in Cash       Three Months Ended     Nine Months Ended  
Available ($000s)                      March 31              March 31      
 
                                     2014       2013       2014       2013 
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Cash flow from operating                                                   
 activities                         9,405      6,528     22,368     18,600 
Net change in non-cash working                                             
 capital balances                     762     (1,663)     1,909     (1,517)
(Increase) decrease in loans                                               
 receivable, net                      200        747       (134)       341 
Proceeds on disposal of                                                    
 property, plant and equipment         29         26        789         35 
Capital expenditures, including                                            
 purchase of intangible assets     (1,162)    (1,602)    (4,901)    (8,196)
Proceeds on disposal of                                                    
 discontinued operations                -          -          -      2,076 
Distributions from associate            -          -          -      7,944 
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Increase in cash available          9,234      4,036     20,031     19,283 
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For the third quarter of fiscal 2014, cash available from operations
net of capital expenditures and disposals (excluding business
acquisitions) increased by $9.2 million compared to a $4.0 million
increase in the same three-month period last year. For the nine
months year to-date, cash available increased by $20.0 million
compared to $19.3 million last year. Cash flows for the year to-date
last year included distributions from associate of $7.9 million
following the transfer of working capital assets of Canadian
operations to Masterfeeds LP and $2.1 million for the excess of
working capital contributed to the start-up of Masterfeeds LP.  
Subsequent to the end of the third quarter, the Company declared a
special dividend of CAD $2.00 per common share to shareholders of
record on May 20, 2014 payable on May 30, 2014. The special dividend
of approximately CAD $25.6 million is not indicative of any intention
at the present time to initiate a regular dividend payment to
shareholders. The Company intends to designate 100% of the special
dividend as "eligible dividends" for purposes of the Income Tax Act
(Canada). 
The Company's borrowing capacity under its loan agreement with U.S.
Bank National Association was unchanged at $50.0 million as at March
31, 2014. 
Capital Expenditures 
Capital expenditures on property, plant and equipment, and intangible
assets (software) in the third quarter of fiscal 2014 were $1.2
million, compared to $1.6 million in the same period a year ago.
Capital expenditures for the year-to-date were $4.9 million compared
to $8.2 million last year. Lower capital expenditures this year were
mainly due to the discontinuation of Canadian Feed Operations.  
Business acquisitions of $5.7 million last year reflect the net
purchase price for the assets of Stockade Brands Inc. 
Investment in Masterfeeds LP 
On November 30, 2012 the Company and Masterfeeds Inc., a wholly-owned
subsidiary of Ag Processing Inc., completed the merger of their
respective livestock and poultry feed and nutrition businesses in
Canada into a new limited partnership called Masterfeeds LP.
Masterfeeds Inc. and Ridley Inc. contributed essentially all of their
respective Canadian feed operating assets and liabilities in exchange
for relative unit holdings in Masterfeeds LP. Ridley retains a
non-controlling equity interest in Masterfeeds LP. 
Starting in the second quarter of fiscal 2013, results of the
Company's Canadian operations through November 30, 2012 are reported
as net income from discontinued operations. Pre-tax earnings from the
Company's investment in Masterfeeds LP are reported as share of net
income of associate under the equity method of accounting, which in
the third quarter of fiscal 2014 was $0.4 million. As a limited
partnership, Masterfeeds LP is not subject to income taxes - any
taxable income is allocated between the respective partners. The
Company's investment in Masterfeeds LP is reported as an investment
in associate, which was $17.1 million as at March 31, 2014.  
On December 18, 2013 a fire at the Humboldt, Saskatchewan feed plant
owned and operated by Masterfeeds LP caused significant damage to the
building structure and manufacturing equipment forcing the facility
to close while repairs are made. The cost of repairs and business
interruption expense are expected to be substantially covered by
insurance. 
Outstanding Share Data 
The Company's share capital consists of an unlimited number of common
shares, with no par value. On December 12, 2013, the Company received
approval from the Toronto Stock Exchange (the "TSX") to initiate a
normal course issuer bid for the Company's shares through the
facilities of the TSX. The shares repurchase program permits the
Company to purchase for cancellation up to 639,499 of its common
shares over the twelve-month period ending December 15, 2014. As at
May 8, 2014, the Company had not repurchased any shares under the
current normal course issuer bid. The number of shares outstanding as
at March 31, 2014 and as at May 8, 2014 was 12,789,978.  
SEASONALITY AND COMMODITY VARIABILITY 
The Company experiences seasonal variations in revenue. Historically,
revenue is strongest in the second and third fiscal quarters when
colder weather from October to March typically increases demand for
beef cattle feed. Other product lines are only marginally affected by
seasonal conditions. Certain of the raw materials comprising the
Company's products incorporate commodity-based products and the
by-products of commodity processing. Fluctuating commodity prices may
therefore influence revenues and associated cost of sales as the
Company's selling prices are adjusted to reflect current raw
materials markets. 
SELECTED QUARTERLY FINANCIAL INFORMATION 


 
 
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($000s except per share      Fiscal     First    Second     Third    Fourth
data)                          Year   Quarter   Quarter   Quarter   Quarter
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Revenue (i)                    2014   133,921   152,535   147,581          
 
                               2013   143,061   157,065   144,571   130,053
                               2012   126,954   146,258   136,528   118,260
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Net income before              2014     2,853     7,304     7,972          
 discontinued operations                                                   
 and exceptions (ii) net                                                   
 of income taxes                                                           
 
                               2013     5,135     5,689     5,539     1,561
                               2012     1,817     3,812     5,744       479
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Net income per share           2014      0.22      0.57      0.62          
 (EPS) before                                                              
 discontinued operations                                                   
 and exceptions (ii) net                                                   
 of income taxes                                                           
 
                               2013      0.40      0.45      0.43      0.12
                               2012      0.14      0.30      0.45      0.04
---------------------------------------------------------------------------
Net income (iii)               2014     3,070     7,288     7,968          
 
                               2013     5,073     6,370     5,413     1,647
                               2012       722     3,950     3,952       328
---------------------------------------------------------------------------
Net income per share           2014      0.24      0.57      0.62          
 (EPS)                                                                     
 
                               2013      0.40      0.50      0.42      0.12
                               2012      0.06      0.31      0.30      0.03
---------------------------------------------------------------------------
---------------------------------------------------------------------------
 
i.  Revenue in the current and prior quarters has been restated to exclude
    discontinued operations. 
ii. Exceptions include asset impairment loss, restructuring charges, and
    (gain) loss on sale of facilities. 
iii.Net income in fiscal 2013 and 2014 reflects the Company's adoption of
    IAS19r. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 
The Chief Executive Officer and Chief Financial Officer have each
signed form "52-109F2 - Certification of Interim Filings" and filed
it with the appropriate securities regulators in Canada in compliance
with National Instrument 52-109: Certification of Disclosure in
Issuers' Annual and Interim Filings issued by the Canadian Securities
Administrators. There has been no change in Ridley's internal
controls over financial reporting or disclosure controls and
procedures that occurred during the most recent interim period that
has materially affected, or is reasonably likely to materially
affect, Ridley's internal control over financial reporting. 
FORWARD-LOOKING INFORMATION 
This report contains "forward-looking" information. The
forward-looking information includes statements concerning Ridley's
outlook for the future, as well as other statements of beliefs, plans
and strategies or anticipated events, and similar expressions
concerning matters that are not historical facts. Forward-looking
information and statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed in, contemplated or implied by, such statements. These
risks and uncertainties include the ability to make effective
acquisitions and successfully integrate newly acquired businesses
into existing operations, the availability and prices of raw
materials and supplies, livestock disease, product pricing, the
competitive environment and related market conditions, operating
efficiencies, access to capital, the cost of compliance with
environmental and health standards and other regulatory requirements
affecting Ridley's business, adverse results from ongoing litigation,
and actions of domestic and foreign governments. Other risks are
outlined in the Risk Management section of the MD&A included in
Ridley's Annual Report. Unless otherwise required by applicable
securities law, Ridley disclaims any intention or obligation to
publicly update or revise this information, whether as a result of
new information, future events or otherwise. Ridley cautions readers
not to place undue reliance upon forward-looking statements. 
OUTLOOK 
The major external drivers of Ridley's animal nutrition business are
the prevailing economic conditions for producers of meat, milk and
egg products, as well as market dynamics for feed ingredients
purchased by producers or used as raw materials in the production of
feed products, and weather related factors that affect the
availability and quality of pastures and forages for livestock. In
the long run, the commercial feed industry will be positively
influenced by rising global demand for animal protein products, but
will be challenged by the consolidation of livestock and poultry
producers into larger and more integrated operations and, in North
America, the excess capacity of feed production facilities and
competition for fewer customers with consequential pressure on profit
margins. 
In response to this environment, Ridley has focused on developing its
higher value-added product mix, including feed supplements, block
products and premixes, and reaching new markets, including the
growing lifestyle segments. Ridley continues to improve its cost
competitiveness by managing overhead expenses and improving operating
efficiencies through consolidation of excess capacity, production
automation, adoption of lean manufacturing techniques, and better
utilization of information technology. 
Current economic conditions are generally favourable to most
producers of meat, milk and egg products and have been a positive
influence on Ridley's results this year. Feed ingredient costs, which
comprise the majority of expense in livestock and poultry production,
declined throughout the first half of the current fiscal year with a
corresponding improvement in producers' financial condition. The
contraction of herd populations during previous periods of high feed
costs and drought now provide support to producer prices in most
sectors of livestock and poultry production. 
Ridley's financial results last year were significantly impacted by
drought conditions that stimulated demand for feed supplementation in
the beef sector. With the easing of drought conditions this year,
market demand for Ridley's beef feed products has returned to a more
normal level. However, demand in other animal production sectors,
including dairy, poultry, swine and equine, has responded positively
this year to good producer economics. 
Ridley Inc., headquartered in Mankato, Minnesota, is one of North
America's leading commercial animal nutrition companies. Ridley
employs approximately 700 people in the manufacture, sales and
marketing of a full range of animal nutrition products under highly
regarded trade names. Ridley's common shares are listed on The
Toronto Stock Exchange (trading symbol: RCL). Additional information,
including the notes to the interim financial statements and Ridley's
Annual Information Form (AIF), are available at www.sedar.com. Visit
our website at www.ridleyinc.com. 
CONSOLIDATED BALANCE SHEETS 
(Expressed in thousands of U.S. dollars) (unaudited) 


 
 
                                               March 31   June 30  March 31
                                        Note       2014      2013      2013
---------------------------------------------------------------------------
---------------------------------------------------------------------------
ASSETS                                                                     
Current assets                                                             
  Cash                                           7,173        329     2,049
  Accounts receivable                           26,076     25,133    27,532
  Inventories                              7    43,493     41,978    42,848
  Income taxes recoverable                         124          -         -
  Prepaid and other current assets               1,345        841     1,347
  Current portion of loans receivable              410        355       738
---------------------------------------------------------------------------
Total current assets                            78,621     68,636    74,514
Non-current assets                                                         
  Loans receivable                                 143         64        65
  Assets-held-for-sale                     9       200        330       330
  Property, plant and equipment                 63,647     64,188    64,066
  Deferred income tax asset                      7,342      7,407     7,618
  Other assets                                      21          -         -
  Investment in associate                 12    17,086     17,218    17,533
  Intangible assets                              8,218      8,676     8,796
  Goodwill                                      38,928     38,928    38,928
---------------------------------------------------------------------------
Total non-current assets                       135,585    136,811   137,336
---------------------------------------------------------------------------
TOTAL ASSETS                                   214,206    205,447   211,850
---------------------------------------------------------------------------
---------------------------------------------------------------------------
 
LIABILITIES and SHAREHOLDERS' EQUITY                                       
Current liabilities                                                        
  Outstanding cheques in excess of bank                                    
   balances                                      3,122      4,234     1,666
  Accounts payable and accrued                                             
   liabilities                                  32,945     30,676    29,382
  Advances from customers                        2,227        667     1,761
  Income taxes payable                             198      1,793     4,879
  Current portion of long-term debt                  -          -        61
---------------------------------------------------------------------------
Total current liabilities                       38,492     37,370    37,749
Non-current liabilities                                                    
  Long-term debt                                     -     12,026       407
  Deferred income tax liability                 16,814     16,989    16,502
  Other accrued liabilities                      1,760      1,028     1,051
  Post-employment benefit obligations           19,067     17,110    17,236
---------------------------------------------------------------------------
Total non-current liabilities                   37,641     47,153    35,196
---------------------------------------------------------------------------
Total liabilities                               76,133     84,523    72,945
---------------------------------------------------------------------------
 
Shareholders' equity                                                       
Share capital                             14    53,159     53,159    53,159
 
Retained earnings                               85,223     66,897    84,294
Accumulated other comprehensive income                                     
 (loss)                                           (309)       868     1,452
---------------------------------------------------------------------------
                                                84,914     67,765    85,746
---------------------------------------------------------------------------
Total shareholders' equity                     138,073    120,924   138,905
---------------------------------------------------------------------------
TOTAL LIABILITIES and SHAREHOLDERS'                                        
 EQUITY                                        214,206    205,447   211,850
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Refer to accompanying notes to the interim consolidated financial
statements. Certain prior year figures have been restated as required
by IAS 19r - See Note 5. 
Approved by the Board of Directors 
(signed) B.P. Martin, Director 
(signed) W. Harden, Director  
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS 
(Expressed in thousands of U.S. dollars) (unaudited) 


 
 
                                 Three Months Ended     Nine Months Ended  
                                       March 31              March 31      
                               --------------------------------------------
                           Note      2014       2013       2014       2013 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue                           147,581    144,571    434,037    444,697 
Cost of sales                 7   124,136    122,373    368,952    381,580 
---------------------------------------------------------------------------
Gross profit                       23,445     22,198     65,085     63,117 
---------------------------------------------------------------------------
 
Operating (income)                                                         
 expenses                                                                  
Technical services,                                                        
 selling and                                                               
 administrative                    12,803     13,292     38,180     37,329 
Other expense (income)               (112)       (22)      (363)      (460)
Gain on sale of facilities    9         -          -       (420)         - 
Research and development               97        177        335        447 
Asset impairment              9         -          -        203          - 
Restructuring                           6          -         55          - 
---------------------------------------------------------------------------
Net operating expenses             12,794     13,447     37,990     37,316 
---------------------------------------------------------------------------
 
Operating income                   10,651      8,751     27,095     25,801 
Share of net income of                                                     
 associate                   12       396        280        732        461 
Finance expense                      (234)      (359)      (766)    (1,142)
Finance income                         25        263         85        794 
---------------------------------------------------------------------------
Income before income taxes         10,838      8,935     27,146     25,914 
 
Income tax expense           13     2,870      3,396      8,820      9,551 
---------------------------------------------------------------------------
Net income from continuing                                                 
 operations                         7,968      5,539     18,326     16,363 
 
Net income (loss) from                                                     
 discontinued operations     11         -       (126)         -        493 
 
Net income for the period           7,968      5,413     18,326     16,856 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
 
Retained earnings,                                                         
 beginning of period               77,255     78,881     66,897     67,438 
Net income for the period           7,968      5,413     18,326     16,856 
---------------------------------------------------------------------------
Retained earnings, end of                                                  
 period                            85,223     84,294     85,223     84,294 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
 
Net income per share from                                                  
 continuing operations,                                                    
 basic and diluted                   0.62       0.43       1.43       1.28 
 
Net income (loss) per                                                      
 share from discontinued                                                   
 operations, basic and                                                     
 diluted                                -      (0.01)         -       0.04 
 
Net income per share,                                                      
 basic and diluted                   0.62       0.42       1.43       1.32 
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Refer to accompanying notes to the interim consolidated financial
statements. Certain prior year figures have been restated as required
by IAS 19r - See Note 5. 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 
(Expressed in thousands of U.S. dollars) (unaudited) 


 
 
                                  Three Months Ended    Nine Months Ended  
                                        March 31             March 31      
                                -------------------------------------------
                            Note      2014       2013       2014       2013
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income for the period            7,968      5,413     18,326     16,856
Items that will not be                                                     
 reclassified to net                                                       
 income:                                                                   
Transition adjustment          5                                           
 related to the adoption of                                                
 IAS 19r                                 -        184          -        552
Items that may be                                                          
 reclassified to net                                                       
 income:                                                                   
Unrealized gain (loss) on                                                  
 translation of financial                                                  
 statements of related                                                     
 entities with foreign                                                     
 functional currency to                                                    
 U.S. dollar reporting                                                     
 currency                             (899)      (594)    (1,177)        33
Accumulated currency                                                       
 translation losses                                                        
 reclassified to net income                                                
 upon disposal of Canadian                                                 
 business unit                11         -          -          -      2,142
---------------------------------------------------------------------------
Other comprehensive income                                                 
 (loss) for the period                (899)      (594)    (1,177)     2,175
 
Comprehensive income for                                                   
 the period                          7,069      5,003     17,149     19,583
---------------------------------------------------------------------------
---------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 
(Expressed in thousands of U.S. dollars) (unaudited) 


 
 
                                                     Accumulated           
                                                           other           
                                 Share  Retained   comprehensive      Total
                        Note   capital  earnings   income (loss)     Equity
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Balance at June 30,                                                        
 2012                           53,159    67,438         (1,275)   119,322 
---------------------------------------------------------------------------
 
Change in currency                                                         
 translation                         -         -          2,175      2,175 
Net income for the                                                         
 period                              -    16,856              -     16,856 
Transition adjustment                                                      
 related to the                                                            
 adoption of IAS 19r       5         -         -            552        552 
---------------------------------------------------------------------------
Balance at March 31,                                                       
 2013                     14    53,159    84,294          1,452    138,905 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
 
                                                    Accumulated            
                                                          other            
                                 Share  Retained  comprehensive       Total
                        Note   capital  earnings  income (loss)      Equity
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Balance at June 30,                                                        
 2013                           53,159    66,897            868    120,924 
---------------------------------------------------------------------------
 
Change in currency                                                         
 translation                         -         -         (1,177)    (1,177)
Net income for the                                                         
 period                              -    18,326              -     18,326 
---------------------------------------------------------------------------
Balance at March 31,                                                       
 2014                     14    53,159    85,223           (309)   138,073 
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Accumulated other comprehensive income is comprised of the unrealized
loss on translation of financial statements of related entities with
foreign functional currency to U.S. dollar reporting currency and the
transition adjustment between retained earnings and accumulated other
comprehensive income related to the adoption of IAS19r (see Note 5). 
Refer to accompanying notes to the interim consolidated financial
statements. Certain prior year figures have been restated as required
by IAS 19r - See Note 5. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Expressed in thousands of U.S. dollars) (unaudited) 


 
 
                                 Three Months Ended     Nine Months Ended  
                                       March 31              March 31      
                               --------------------------------------------
                           Note      2014       2013       2014       2013 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash flow from operating                                                   
 activities                                                                
Net income for the period           7,968      5,413     18,326     16,856 
Add (deduct) items not                                                     
 affecting cash:                                                           
  Depreciation of                                                          
   property, plant and                                                     
   equipment                        1,585      1,497      4,677      4,848 
  Deferred income taxes               (56)      (401)      (487)       291 
  Asset impairment loss       9         -          -        203          - 
  Share of net income of                                                   
   associate                 12      (396)      (280)      (732)      (461)
  (Gain) loss on sale of                                                   
   property, plant and                                                     
   equipment                           (6)        (6)        11        184 
  Gain on sale of                                                          
   facilities                 9         -          -       (420)         - 
  Gain on disposal of                                                      
   Canadian business unit    11         -        (63)         -     (3,803)
  Other amortization                  303        274        770        664 
  Other items not                                                          
   affecting cash                       7         94         20         21 
---------------------------------------------------------------------------
                                    9,405      6,528     22,368     18,600 
Net change in non-cash                                                     
 working capital and other                                                 
 balances related to                                                       
 operations:                                                               
  Accounts receivable               4,105      3,498       (943)    (5,406)
  Inventories                 7    (3,936)       (45)    (1,515)    (3,053)
  Prepaid and other                                                        
   current assets                     233        287       (504)      (392)
  Accounts payable and                                                     
   accrued liabilities              2,676     (5,168)     5,030      3,007 
  Advances from customers            (722)    (2,528)     1,560        899 
  Income taxes payable and                                                 
   recoverable                     (1,594)     2,293     (1,719)     3,428 
---------------------------------------------------------------------------
                                      762     (1,663)     1,909     (1,517)
---------------------------------------------------------------------------
Net cash from operating                                                    
 activities                        10,167      4,865     24,277     17,083 
---------------------------------------------------------------------------
 
Cash flow from investing                                                   
 activities                                                                
  Proceeds on disposal of                                                  
   property, plant and                                                     
   equipment and                                                           
   facilities                          29         26        789         35 
  Proceeds on disposal of                                                  
   Canadian business unit    11         -          -          -      2,076 
  Purchase of property,                                                    
   plant and equipment               (900)    (1,521)    (4,589)    (7,986)
  Purchase of intangible                                                   
   assets                            (262)       (81)      (312)      (210)
  (Increase) decrease in                                                   
   loans receivable, net              200        747       (134)       341 
  Business acquisitions      10         -          -          -     (5,732)
  Distributions from                                                       
   associate                 12         -          -          -      7,944 
---------------------------------------------------------------------------
Net cash for investing                                                     
 activities                          (933)      (829)    (4,246)    (3,532)
 
Cash flow from financing                                                   
 activities                                                                
  Repayment of short- and                                                  
   long-term debt                  (4,781)   (12,810)   (17,434)   (21,434)
  Proceeds from short- and                                                 
   long-term debt                       -          -      5,367     10,859 
---------------------------------------------------------------------------
Net cash for financing                                                     
 activities                        (4,781)   (12,810)   (12,067)   (10,575)
 
Effect of exchange rate                                                    
 changes on cash                       (3)       (26)        (8)       (52)
Increase (decrease) in                                                     
 cash and cash equivalents          4,450     (8,800)     7,956      2,924 
Cash and cash equivalents                                                  
 - beginning of period               (399)     9,183     (3,905)    (2,541)
---------------------------------------------------------------------------
Cash and cash equivalents                                                  
 - end of period                    4,051        383      4,051        383 
Cash and cash equivalents                                                  
 are comprised of:                                                         
  Cash                              7,173      2,049      7,173      2,049 
  Outstanding cheques in                                                   
   excess of bank balances         (3,122)    (1,666)    (3,122)    (1,666)
---------------------------------------------------------------------------
                                    4,051        383      4,051        383 
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Refer to accompanying notes to the interim consolidated financial
statements. Certain prior year figures have been restated as required
by IAS 19r - See Note 5. 
Contacts:
Ridley Inc.
Steve VanRoekel
President & CEO
(507) 388-9400 
Ridley Inc.
Gordon Hildebrand
Chief Financial Officer
(507) 388-9400
www.ridleyinc.com
 
 
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