SYS-CON MEDIA Authors: Pat Romanski, Gary Arora, Zakia Bouachraoui, Yeshim Deniz, Liz McMillan

News Feed Item

Saputo Inc.: Financial Results for the Fiscal Year Ended March 31, 2018

Net earnings at $852.5 million, up 16.6%

MONTREAL, QUEBEC -- (Marketwired) -- 06/07/18 -- Saputo Inc. (TSX: SAP) (Saputo or the Company) reported today its financial results for fiscal 2018, which ended on March 31, 2018. All amounts in this news release are in Canadian dollars, unless otherwise indicated, and are presented according to International Financial Reporting Standards (IFRS).


FINANCIAL INFORMATION
(in millions of Canadian (CDN) dollars, except per share amounts)
----------------------------------------------------------------------------
                                                              For the years
(audited)                                                     ended March 31
                                                              2018      2017
----------------------------------------------------------------------------
Revenues                                                  11,542.5  11,162.6
Adjusted EBITDA(i)                                         1,264.7   1,289.5
Net earnings                                                 852.5     731.1
Adjusted net earnings(i)                                     704.2     731.1

Net earnings per share                                        2.21      1.86
Diluted net earnings per share                                2.18      1.84

Adjusted net earnings per share(i)                            1.82      1.86
Diluted adjusted net earnings per share(i)                    1.80      1.84
----------------------------------------------------------------------------
(i) Non-IFRS measures described in the "Glossary" section of the
Management's Discussion and Analysis on page 36 of the 2018 Annual Report.

--  Net earnings totalled $852.5 million, up 16.6%, as compared to last
    fiscal year.
--  Adjusted net earnings(i) totalled $704.2 million, down 3.7%, as compared
    to last fiscal year.
--  Earnings before interest, income taxes, depreciation, amortization,
    acquisition and restructuring costs (adjusted EBITDA(i)) totalled $1.265
    billion, down $24.8 million or 1.9%, as compared to last fiscal year.
--  Revenues reached $11.543 billion, up 3.4%, as compared to last fiscal
    year.
--  Net cash generated from operations totalled $809.1 million, down 24.6%,
    as compared to last fiscal year.
--  Consolidated revenues increased due to higher sales volumes in all
    sectors. The fluctuation of the average block market(ii) per pound of
    cheese and the average butter market(ii) price per pound resulted in an
    increase of revenues of approximately $97 million, while higher
    international selling prices of cheese and dairy ingredients increased
    revenues by approximately $90 million and impacted adjusted EBITDA
    favourably.
--  Higher warehousing and logistical expenses related to higher
    transportation costs of approximately $30 million and Enterprise
    Resource Planning (ERP) expenses of approximately $32 million negatively
    impacted consolidated adjusted EBITDA.
--  In the USA, market factors(ii) also negatively impacted adjusted EBITDA
    by approximately $25 million, as compared to last fiscal year. These
    decreases were partially offset by higher selling prices in both
    domestic and export markets and higher sales volumes.
--  As a result of decreases in certain market selling prices, inventory was
    written down by approximately $17 million, as compared to approximately
    $4 million last fiscal year.
--  The fluctuation of the Canadian dollar versus foreign currencies had a
    negative impact on revenues of approximately $211 million, as compared
    to last fiscal year. This fluctuation negatively impacted adjusted
    EBITDA by approximately $18 million, as compared to last fiscal year.
--  The acquisitions of the extended shelf-life dairy product activities of
    Southeast Milk, Inc. (SMI Acquisition) and Betin, Inc., doing business
    as Montchevre (Montchevre Acquisition), were completed on September 29,
    2017 and December 12, 2017, respectively.

(i)  Non-IFRS measures described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.

(ii) Refer to the "Glossary" section of the Management's Discussion and
     Analysis on page 36 of the 2018 Annual Report.

 FINANCIAL RESULTS FOR THE FOURTH QUARTER OF THE FISCAL YEAR ENDED MARCH 31,
                                     2018

                 Net earnings at $130.0 million, down 21.3%
             Adjusted net earnings at $135.3 million, down 18.1%
                     Revenues at $2.745 billion, up 0.9%


FINANCIAL INFORMATION
(in millions of Canadian (CDN) dollars, except per share amounts)
----------------------------------------------------------------------------
                                                For the three-month periods
(unaudited)                                                   ended March 31
                                                         2018           2017
----------------------------------------------------------------------------
Revenues                                              2,744.4        2,719.8
Adjusted EBITDA(i)                                      261.7          284.1
Net earnings                                            130.0          165.2
Adjusted net earnings(i)                                135.3          165.2

Net earnings per share                                   0.34           0.42
Diluted net earnings per share                           0.33           0.42

Adjusted net earnings per share(i)                       0.35           0.42
Diluted Adjusted net earnings per share(i)               0.35           0.42
----------------------------------------------------------------------------
(i)  Non-IFRS measures described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.

--  Net earnings totalled $130.0 million, down 21.3%, as compared to the
    same quarter last fiscal year.
--  Adjusted net earnings totalled $135.3 million, down 18.1%, as compared
    to the same quarter last fiscal year.
--  Adjusted EBITDA totalled $261.7 million, down $22.4 million or 7.9%, as
    compared to the same quarter last fiscal year.
--  Revenues reached $2.745 billion, up 0.9%, as compared to the same
    quarter last fiscal year.
--  Net cash generated from operations totalled $317.9 million, up 56.7%, as
    compared to the same quarter last fiscal year.
--  Consolidated revenues increased due to higher sales volumes in all
    sectors. The fluctuation of the average block market per pound of cheese
    and the average butter market price per pound and lower international
    selling prices of dairy ingredients negatively impacted revenues.
--  The combination of a higher cost of milk as raw material and lower
    selling prices in the export markets, including inventory write-downs,
    negatively impacted consolidated adjusted EBITDA by approximately $33
    million.
--  Higher warehousing and logistical expenses related to higher
    transportation costs, as well as higher ERP expenses negatively impacted
    adjusted EBITDA by approximately $15 million and $10 million,
    respectively.
--  In the USA, market factors also negatively impacted adjusted EBITDA by
    approximately $3 million, as compared to the same quarter last fiscal
    year. However, higher sales volumes positively impacted adjusted EBITDA.
--  The fluctuation of the Canadian dollar versus foreign currencies had a
    negative impact on revenues of approximately $93 million, as compared to
    the same quarter last fiscal year. This fluctuation negatively impacted
    adjusted EBITDA by approximately $5 million, as compared to the same
    quarter last fiscal year.
--  On May 1, 2018, the Company completed the acquisition of the activities
    of Murray Goulburn Co-Operative Co. Limited (Murray Goulburn or MG),
    based in Australia (Murray Goulburn Acquisition).
--  On May 23, 2018, the Company announced that it had entered into an
    agreement to acquire the activities of Shepherd Gourmet Dairy (Ontario)
    Inc. (Shepherd Gourmet Acquisition) located in St. Marys, Ontario
    (Canada) for a purchase price of $100 million. The transaction is
    expected to close in June 2018.
--  The Board of Directors approved a dividend of $0.16 per share payable on
    June 28, 2018 to common shareholders of record on June 19, 2018.

Additional Information

For more information on the results of fiscal 2018 and the fourth quarter of fiscal 2018, reference is made to the auditedconsolidated financial statements, the notes thereto and to the Management's Discussion and Analysis for the fiscal year ended March 31, 2018. These documents can be obtained on SEDAR at www.sedar.com and in the "Investors" section of the Company's website, at www.saputo.com.

Conference Call

A conference call to discuss the fourth quarter and year-end results for fiscal 2018 will be held on Thursday, June 7, 2018 at 2:30 p.m. Eastern Daylight Time. To participate in the conference call, dial 1-800-941-7616. To ensure your participation, please dial in approximately five minutes before the call.

To listen to this call on the Web, please enter http://www.gowebcasting.com/9280 in your Web browser.

For those unable to participate, a replay of the conference will be available until 11:59 p.m., Thursday, June 14, 2018. To access the replay, dial 1-800-558-5253, ID number 21889151. A webcast will also be archived on www.saputo.com, in the "Investors" section, under Newsroom.

About Saputo

Saputo produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. Saputo is one of the top ten dairy processors in the world, the largest cheese manufacturer and the leading fluid milk and cream processor in Canada, the top dairy processor in Australia and the second largest in Argentina. In the USA, Saputo ranks among the top three cheese producers and is one of the largest producers of extended shelf-life and cultured dairy products. Our products are sold in several countries under well-known brand names such as Saputo, Alexis de Portneuf, Armstrong, COON, Cracker Barrel(i), Dairyland, DairyStar, Devondale, Friendship Dairies, Frigo Cheese Heads, La Paulina, Milk2Go/Lait's Go, Montchevre, Murray Goulburn, Neilson, Nutrilait, Scotsburn(i), Stella, Sungold, Treasure Cave and Woolwich Dairy. Saputo Inc. is a publicly traded company and its shares are listed on the Toronto Stock Exchange under the symbol "SAP".

(i)Trademark used under licence.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements are based, among other things, on Saputo's assumptions, expectations, estimates, objectives, plans and intentions as of the date hereof regarding projected revenues and expenses, the economic, industry, competitive and regulatory environments in which the Company operates or which could affect its activities, its ability to attract and retain customers and consumers, as well as the availability and cost of milk and other raw materials and energy supplies, its operating costs and the pricing of its finished products on the various markets in which it carries on business.

These forward-looking statements include, among others, statements with respect to the Company's short and medium term objectives, outlook, business projects and strategies to achieve those objectives, as well as statements with respect to the Company's beliefs, plans, objectives and expectations. The words "may", "should", "will", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective", "continue", "propose" or "target", or the negative of these terms or variations of them, the use of conditional or future tense or words and expressions of similar nature, are intended to identify forward-looking statements.

By their nature, forward-looking statements are subject to a number of inherent risks and uncertainties. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking statements. As a result, the Company cannot guarantee that any forward-looking statements will materialize. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause actual results to differ materially from current expectations are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including the "Risks and Uncertainties" section of the Management's Discussion and Analysis included in the company's 2018 Annual Report.

Forward-looking statements are based on Management's current estimates, expectations and assumptions, which Management believes are reasonable as of the date hereof, and, accordingly, are subject to changes after such date. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date.

To the extent any forward-looking statement in this document constitutes financial outlook, within the meaning of applicable securities laws, such information is intended to provide shareholders with information regarding the Company, including its assessment of future financial plans, and may not be appropriate for other purposes. Financial outlook, as with forward-looking information generally, is based on current estimates, expectations and assumptions and is subject to inherent risks and uncertainties and other factors.

Except as required under applicable securities legislation, Saputo does not undertake to update or revise these forward-looking statements, whether written or verbal, that may be made from time to time by itself or on its behalf, whether as a result of new information, future events or otherwise.

OPERATING RESULTS

Consolidated revenues for the fourth quarter of fiscal 2018 totalled $2.745 billion, an increase of approximately $25 million or 0.9%, as compared to $2.720 billion for the same quarter last fiscal year. Higher sales volumes, as well as the inclusion of revenues derived from the SMI Acquisition and the Montchevre Acquisition, increased revenues by approximately $53 million, as compared to the same quarter last fiscal year. A lower average block market per pound of cheese, partially offset by a higher average butter market price per pound, decreased revenues by approximately $29 million as compared to the same quarter last fiscal year. Also, lower international selling prices of dairy ingredients negatively impacted revenues. Moreover, the fluctuation of the Canadian dollar versus foreign currencies decreased revenues by approximately $93 million.

Consolidated revenues totalled $11.543 billion in fiscal 2018, an increase of approximately $380 million or 3.4% in comparison to $11.163 billion in fiscal 2017. Higher sales volumes and higher selling prices of cheese and dairy ingredients in both domestic and export markets increased revenues, as compared to last fiscal year. The fluctuation of the average butter market price per pound and the average block market per pound of cheese increased revenues by approximately $97 million. Additionally, the inclusion of revenues from the SMI Acquisition and the Montchevre Acquisition positively impacted revenues by approximately $78 million. Conversely, the fluctuation of the Canadian dollar versus foreign currencies decreased revenues by approximately $211 million.

Consolidated adjusted EBITDA for the fourth quarter of fiscal 2018 totalled $261.7 million, a decrease of $22.4 million or 7.9% in comparison to $284.1 million for the same quarter last fiscal year. The combination of a higher cost of milk as raw material and lower selling prices in the export markets, including inventory write-downs, decreased adjusted EBITDA by approximately $33 million. Furthermore, higher warehousing and logistical costs related to additional external storage expenses and higher transportation costs of approximately $15 million, as well as higher administrative expenses to support future growth, mainly due to the ERP initiative, of approximately $10 million decreased adjusted EBITDA. In the USA, market factors negatively impacted adjusted EBITDA by approximately $3 million. These decreases were partially offset by higher sales volumes, operational efficiencies through raw material optimization, as well as the positive impact derived from the SMI Acquisition and the Montchevre Acquisition. Lastly, the fluctuation of the Canadian dollar versus foreign currencies had an unfavourable impact on adjusted EBITDA of approximately $5 million, as compared to the same quarter last fiscal year.

Consolidated adjusted EBITDA in fiscal 2018 totalled $1.265 billion, a decrease of approximately $25 million or 1.9%, as compared to $1.290 billion in fiscal 2017. Higher warehousing and logistical costs related to additional external storage expenses and higher transportation costs of approximately $30 million, as well as higher ERP expenses of approximately $32 million decreased adjusted EBITDA, as compared to last fiscal year. Additionally, in the USA, market factors decreased adjusted EBITDA by approximately $25 million. As a result of the decrease in certain market selling prices, inventory was written down by approximately $17 million during fiscal 2018, as compared to approximately $4 million for last fiscal year. These decreases were partially offset by operational efficiencies through raw material optimization and higher international selling prices of cheese and dairy ingredients. Higher sales volumes and a favourable product mix, as well as the inclusion of the SMI Acquisition and the Montchevre Acquisition positively impacted adjusted EBITDA. Finally, the fluctuation of the Canadian dollar versus foreign currencies had an unfavourable impact on adjusted EBITDA of approximately $18 million, as compared to last fiscal year.

The consolidated adjusted EBITDA margin decreased to 11.0% in fiscal 2018, as compared to 11.6% in fiscal 2017, resulting mainly due to lower adjusted EBITDA in the USA Sector as compared to the prior fiscal year.

OTHER CONSOLIDATED RESULT ITEMS

Depreciation and amortization for the fourth quarter of fiscal 2018 totalled $64.7 million, an increase of $7.8 million, in comparison to $56.9 million for the same quarter last fiscal year.

In fiscal 2018, depreciation and amortization expenses amounted to $226.3 million, an increase of $19.0 million, as compared to $207.3 million for fiscal 2017.

These increases are mainly attributed to additions to property, plant and equipment and intangibles related to the ERP initiative, increasing the depreciable base, as well as the additional depreciation and amortization expenses related to the SMI Acquisition and the Montchevre Acquisition.

Acquisition costs and restructuring costs amounted to $1.2 million and $40.6 million respectively for the three-month period ended March 31, 2018 and fiscal 2018. Acquisition costs are related to the SMI Acquisition, the Montchevre Acquisition and the Murray Goulburn Acquisition. In connection with the restructuring costs relating to a plant closure in Fond du Lac, Wisconsin, the Company incurred $23.1 million in severance and closure costs and $10.6 million in impairment charges to property, plant and equipment.

Net interest expense for the three-month period ended March 31, 2018 and fiscal 2018 increased by $3.8 million and $6.0 million respectively, in comparison to the same periods last fiscal year. These increases are mainly attributed to higher bank loans denominated in Argentine peso, which bear higher interest rates, and financing for the SMI Acquisition and the Montchevre Acquisition.

Income taxes for the three-month period ended March 31, 2018 and 2017 totalled $52.9 million, reflecting an effective tax rate of 28.9%, as compared to 24.3% for the same quarter last fiscal year. In fiscal 2018, income taxes totalled $97.4 million, compared to $309.2 million in fiscal 2017, reflecting an effective tax rate of 10.3%, compared to 29.7% last fiscal year. During the fiscal year, the Company recorded an income tax benefit of $178.9 million to adjust for future tax balances of $169.2 million and current fiscal year provisions of $9.7 million, due to the reduction of the US federal tax rate. Excluding the benefit of the US federal tax rate reduction, income tax expense in fiscal 2018 would have totalled $276.3 million, reflecting an effective tax rate of 29.1% compared to 29.7% for the previous fiscal year. This reduction is mainly due to an income tax recovery of $8.3 million following a positive settlement in a tax file. The income tax rate varies and could increase or decrease based on the amount and source of taxable income, amendments to tax legislations and income tax rates, changes in assumptions, as well as estimates used for tax assets and liabilities by the Company and its affiliates.

Net earnings for the three-month period ended March 31, 2018 totalled $130.0 million, a decrease of $35.2 million or 21.3% in comparison to $165.2 million for the same quarter last fiscal year.

In fiscal 2018, net earnings totalled $852.5 million, an increase of $121.4 million or 16.6%, as compared to $731.1 million last fiscal year.

The variations in net earnings are due to the above-mentioned factors.

Adjusted net earnings totalled $135.3 million for the three-month period ended March 31, 2018, as compared to $165.2 million for the same quarter last fiscal year.

In fiscal 2018, adjusted net earnings, totalled $704.2 million, as compared to $731.1 million last fiscal year.

These decreases are due to the above-mentioned factors.

INFORMATION BY SECTOR

For fiscal 2018, the Canada Sector includes national and export revenues of ingredients manufactured in Canada. The USA Sector includes national ingredient revenues, and export ingredient and cheese revenues of products manufactured in the USA. For fiscal 2017, these figures were presented in the Dairy Ingredients Division as part of the International Sector. Accordingly, certain prior year's figures have been reclassified to conform to the current presentation.


CANADA SECTOR
----------------------------------------------------------------------------

(in millions of CDN dollars)
----------------------------------------------------------------------------
                               For the three-month
                                     periods ended       For the years ended
                                          March 31                  March 31
                                 2018         2017         2018         2017
----------------------------------------------------------------------------
Revenues                        980.9        959.8      4,069.9      4,060.2
Adjusted EBITDA(i)              108.1        104.1        475.9        453.1
----------------------------------------------------------------------------
(i)  Non-IFRS measure described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.

The Canada Sector consists of the Dairy Division (Canada).


USA SECTOR
----------------------------------------------------------------------------

(in millions of CDN dollars)
----------------------------------------------------------------------------
                               For the three-month
                                    periods ended        For the years ended
                                          March 31                  March 31
                                 2018         2017         2018         2017
----------------------------------------------------------------------------
Revenues                      1,435.1      1,486.5      6,132.8      6,003.3
Adjusted EBITDA(i)              128.3        150.5        649.4        734.2
----------------------------------------------------------------------------
(i)  Non-IFRS measure described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.



Selected factors positively (negatively) affecting adjusted EBITDA and
 earnings before income taxes
(in millions of CDN dollars)
----------------------------------------------------------------------------
                              For the three-month
                                   periods ended        For the years ended
                                         March 31                  March 31
                                2018         2017         2018         2017
----------------------------------------------------------------------------
Market factors(i),(1)             (3)         (10)         (25)          (4)
Inventory write-down              (7)           -           (7)           -
US currency exchange(1)           (6)          (7)         (14)           1
----------------------------------------------------------------------------
(i)  Refer to the "Glossary" section of the Management's Discussion and
     Analysis on page 36 of the 2018 Annual Report.
(1)  As compared to same quarter of previous fiscal year for the three-month
     periods; as compared to the previous fiscal year for the year ended
     March 31.


Other pertinent information
(in US dollars, except for average exchange rate)
----------------------------------------------------------------------------
                               For the three-month
                                    periods ended        For the years ended
                                          March 31                  March 31
                                 2018         2017         2018         2017
----------------------------------------------------------------------------
Block market price(i)
Opening                         1.540        1.660        1.520        1.460
Closing                         1.530        1.520        1.530        1.520
Average                         1.524        1.580        1.597        1.605
Butter market price(i)
Opening                         2.208        2.268        2.108        1.955
Closing                         2.215        2.108        2.215        2.108
Average                         2.160        2.177        2.324        2.112
Average whey powder
 market price(i)                0.241        0.482        0.357        0.350
Spread(i)                       0.148        0.011        0.081        0.092
US average exchange rate
 to Canadian dollar(1)          1.268        1.324        1.288        1.312
----------------------------------------------------------------------------
(i)  Refer to the "Glossary" section of the Management's Discussion and
     Analysis on page 36 of the 2018 Annual Report.
(1)  Based on Bank of Canada published information.

The USA Sector consists of the Cheese Division (USA) and the Dairy Foods Division (USA).


INTERNATIONAL SECTOR
----------------------------------------------------------------------------

(in millions of CDN dollars)
----------------------------------------------------------------------------
                               For the three-month
                                    periods ended        For the years ended
                                          March 31                  March 31
                                 2018         2017         2018         2017
----------------------------------------------------------------------------
Revenues                        328.4        273.5      1,339.8      1,099.1
Adjusted EBITDA(i)               25.3         29.5        139.4        102.2
----------------------------------------------------------------------------
(i)  Non-IFRS measure described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.


Selected factors positively (negatively) affecting adjusted EBITDA and
 earnings before income taxes
(in millions of CDN dollars)
----------------------------------------------------------------------------
                              For the three-month       For the years ended
                           periods ended March 31            ended March 31
                                2018         2017         2018         2017
----------------------------------------------------------------------------
Inventory write-down              (4)          (2)         (10)          (4)
US currency exchange(1)            2           (1)          (2)           7
----------------------------------------------------------------------------
(1)  As compared to same quarter of previous fiscal year for the three-month
     periods; as compared to the previous fiscal year for the years ended
     March 31.

The International Sector consists of the Dairy Division (Argentina) and the Dairy Division (Australia).

OUTLOOK

Throughout fiscal 2018, the Company continued to strategically invest in capital projects, materialize acquisitions, expand its activities in existing markets and increase its dividend. In fiscal 2019, the strategic Murray Goulburn Acquisition, combined with our existing Australian platform allowed the Company to become the leading dairy processor in Australia. The Murray Goulburn Acquisition will provide opportunities in both domestic and export markets. In fiscal 2019, we will focus on integrating MG's operations and maximizing the asset base in addition to aligning it with our Company's operating model and business approach. Additionally, the SMI Acquisition and the Montchevre Acquisition integrations will continue in the USA, maximizing network infrastructure and distribution as well as increasing our presence in the specialty cheese category in the USA. The Company also benefits from a solid balance sheet and capital structure, supplemented by a high level of cash generated by operations. This financial flexibility allows the Company to continue to grow through targeted acquisitions and organically through strategic capital investments. Profitability enhancement and shareholder value creation remain the cornerstones of the Company's objectives. The Company has a long-standing commitment to manufacture quality products and will remain focused on operational efficiencies.

We intend to continue expanding and modernizing our plants, with investments in equipment and processes designed to increase efficiency. The Company tends to spend amounts of capital to a level which is equivalent to its depreciation and amortization expense, without considering capital expenditure amounts for strategic projects, such as plant capacity increases, capital expenditures necessary to build new infrastructure for rationalization programs, or the Company's ERP initiative. In fiscal 2019, the Company intends to spend $310.7 million in capital in addition to an amount of $54.8 million allocated for the continued implementation of the ERP initiative. Refer to the section entitled "Capital Expenditures" in the Annual Information Form of the Company dated June 7, 2018 for additional information on the Company's capital expenditure plan.

The Company will pursue planning, designing and implementation activities for the migration to a new ERP system. The implementation is progressing as planned. The new ERP system has been successfully implemented in Argentina and Australia. In fiscal 2019, the Company expects to complete the system implementation in the Dairy Foods Division (USA). Afterwards, the Company will proceed with the implementation in the Cheese Division (USA), which is expected in fiscal 2020. Implementation in the Dairy Division (Canada) will begin in fiscal 2020.

Canada Sector

We will continue to focus on reviewing overall activities to improve operational efficiency, in order to mitigate downward margin pressures, low growth and competitive market conditions. The Dairy Division (Canada) will undertake capital projects aimed at increasing efficiencies and maximizing its manufacturing footprint in order to maintain its leadership position. The Division also intends to capture market opportunities from the redesign of the Saputo brand and reaffirm its engagement to consumers from coast-to-coast as their preferred and trusted cheese brand through various promotions, advertising and innovative packaging. As part of the Company's capital expenditure plan, we intend to build a new facility for approximately $240 million, over the next three years, in Port-Coquitlam, British Columbia to better serve the market in Western Canada and benefit from a state-of-the-art facility to be commissioned in fiscal 2021. Consequently, the Company has entered into an agreement to sell its existing facility in Burnaby, British Columbia, which sale is expected to be completed in fiscal 2019, for an amount of $218 million, and will enter into a lease agreement for that same facility until the construction of the new facility is completed.

We expect to be in a position to complete the Shepherd Gourmet Acquisition in June 2018 and then proceed with the integration of the activities. The acquisition will enable the Dairy Division (Canada) to increase its presence in specialty cheese and expand its yogurt offering in Canada. The transaction remains subject to customary conditions.

The Dairy Division (Canada) will begin its preparation activities in fiscal 2019 in anticipation of its upcoming ERP system implementation in fiscal 2020.

USA Sector

The Cheese Division (USA) is focused on increasing operational efficiencies and controlling costs in order to mitigate the negative impact on adjusted EBITDA of the dairy commodity markets. During the upcoming quarters, the Division will benefit from the additional blue cheese manufacturing capabilities in its newly constructed facility in Almena, Wisconsin. This capital expenditure project allows the Division to strengthen its position within the blue cheese category. Also, the Cheese Division (USA) will pursue growth of cheese export sales volumes to the extent USA milk pricing is competitive with world prices.

The Division will close its cheese manufacturing facility in Fond du Lac, Wisconsin in the first quarter of fiscal 2019. In an effort to pursue additional efficiencies and decrease costs while strengthening its market presence, the production has been transferred into the Company's facility in Almena, Wisconsin.

The Division will focus on the integration of the Montchevre Acquisition which enables the Cheese Division (USA) to broaden its presence in specialty cheeses in the USA.

The Dairy Foods Division (USA) continues to focus on optimization and maximizing investments in its existing network in order to benefit from new capabilities in production, enable future growth, meet customer demand and bring new products to market. The Division has integrated the SMI Acquisition and will focus on maximizing its network infrastructure and distribution. The Division will keep investing to support production capabilities and strengthen its competitive cost position. More specifically, the Dairy Foods Division (USA) will focus on targeted capital expenditures aimed at increasing production capacity.

The dairy ingredient markets were depressed through the fourth quarter of fiscal 2018 and these prices are anticipated to remain low throughout the first half of fiscal 2019, which will continue to put downward pressure on the USA Sector's margins.

The implementation of the ERP system continues to progress. The implementation within the Dairy Foods Division (USA) will be completed in fiscal 2019 while the Cheese Division (USA) has started its preparation activities and implementation is expected to be completed in fiscal 2020.

International Sector

On May 1, 2018, the Company completed the Murray Goulburn Acquisition, which will add to and complement the activities of its Dairy Division (Australia). By acquiring a well-established industry player, the Company reinforces its commitment to strengthen its presence in the Australian market. The Company intends to grow milk intake, review Murray Goulburn operations and focus on maximizing the network at its disposal. MG produces a full range of high-quality dairy foods, including fluid milk, milk powder, cheese, butter and dairy beverages, as well as a range of dairy ingredient and nutritional products, such as infant formula. MG supplies the retail and foodservice industries globally with its flagship Devondale, Liddells and Murray Goulburn Ingredients brands. Saputo intends to continue to pursue growth, invest in its Australian platform, and contribute to the ongoing development of its domestic and international business. The Company has also initiated a sale process for the Koroit dairy plant, based in Victoria, Australia, acquired from MG, such divestiture being required pursuant to the undertaking entered into with the Australian Competition and Consumer Commission in connection with the Murray Goulburn Acquisition.

The International Sector will continue to pursue sales volumes growth in existing markets, as well as develop additional international markets. The Sector will continue to evaluate overall activities to improve efficiencies and aim to maximize its operational flexibility to mitigate volatility in market conditions. As volatility in dairy markets remains, we do not expect a significant recovery in the international cheese and dairy ingredient prices in the first half of fiscal 2019. As such, we will continue to focus on controlling costs and increasing operational efficiencies in order to mitigate their impact on adjusted EBITDA.


QUARTERLY FINANCIAL INFORMATION
(in millions of Canadian (CDN) dollars, except per share amounts)
----------------------------------------------------------------------------
Fiscal years                                          2018
(unaudited)                                 Q4       Q3         Q2        Q1
----------------------------------------------------------------------------
Revenues                               2,744.4  3,021.8    2,884.2   2,892.1
Adjusted EBITDA(i)                       261.7    318.0      329.8     355.2
Net earnings                             130.0    337.0      185.2     200.3
Acquisition and restructuring
 costs(1)                                  5.3     25.1        0.2         -
US Tax Reform(ii)                            -   (178.9)         -         -
                                    ----------------------------------------
Adjusted net earnings(i)                 135.3    183.2      185.4     200.3
                                    ----------------------------------------

Net earnings per share                    0.34     0.87       0.48      0.52
Diluted net earnings per share            0.33     0.86       0.47      0.51

Adjusted net earnings per share(i)        0.35     0.47       0.48      0.52
Diluted Adjusted net earnings per
 share(i)                                 0.35     0.47       0.47      0.51

Earnings coverage ratio(ii)              20.83    23.34      26.69     28.51
----------------------------------------------------------------------------


QUARTERLY FINANCIAL INFORMATION
(in millions of Canadian (CDN) dollars, except per share amounts)
----------------------------------------------------------------------------
Fiscal years                                          2017
(unaudited)                                 Q4        Q3        Q2        Q1
----------------------------------------------------------------------------
Revenues                               2,719.8   2,966.1   2,845.3   2,631.4
Adjusted EBITDA(i)                       284.1     346.6     340.6     318.2
Net earnings                             165.2     197.4     191.8     176.7
Acquisition and restructuring
 costs(1)                                    -         -         -         -
US Tax Reform(ii)                            -         -         -         -
                                    ----------------------------------------
Adjusted net earnings(i)                 165.2     197.4     191.8     176.7
                                    ----------------------------------------

Net earnings per share                    0.42      0.50      0.49      0.45
Diluted net earnings per share            0.42      0.49      0.48      0.44

Adjusted net earnings per share(i)        0.42      0.50      0.49      0.45
Diluted Adjusted net earnings per
 share(i)                                 0.42      0.49      0.48      0.44

Earnings coverage ratio(ii)              25.83     22.54     18.34     15.02
----------------------------------------------------------------------------
(i)  Non-IFRS measure described in the "Glossary" section of the
     Management's Discussion and Analysis on page 36 of the 2018 Annual
     Report.
(ii) Refer to the "Glossary" section of the Management's Discussion and
     Analysis on page 36 of the 2018 Annual Report.
1    Net of income taxes


Selected factors positively (negatively) affecting adjusted EBITDA and
 earnings before income taxes
(in millions of CDN dollars)
----------------------------------------------------------------------------
Fiscal year                                           2018
                                           Q4        Q3        Q2        Q1
----------------------------------------------------------------------------
Market factors(i),(1)                      (3)      (19)       (6)        3
Inventory write-down                      (11)       (2)       (3)       (1)
Foreign currency exchange(1,2)             (5)      (14)       (8)        9
----------------------------------------------------------------------------
(i)  Refer to the "Glossary" section of the Management's Discussion and
     Analysis on page 36 of the 2018 Annual Report.
(1)  As compared to same quarter of previous fiscal year.
(2)  Foreign currency exchange includes effect on adjusted EBITDA of
     conversion of US dollars, Australian dollars and Argentine pesos to
     Canadian dollars.


CONSOLIDATED STATEMENTS OF EARNINGS
(in millions of CDN dollars, except per share amounts)
----------------------------------------------------------------------------
                                   For the three-month
                                         periods ended   For the years ended
                                              March 31              March 31
                                           (unaudited)             (audited)
                                       2018       2017       2018       2017
----------------------------------------------------------------------------

Revenues                         $  2,744.4 $  2,719.8 $ 11,542.5 $ 11,162.6
Operating costs excluding
 depreciation, amortization,
 acquisition and restructuring
 costs                              2,482.7    2,435.7   10,277.8    9,873.1
----------------------------------------------------------------------------
Earnings before interest, income
 taxes, depreciation,
 amortization, acquisition and
 restructuring costs                  261.7      284.1    1,264.7    1,289.5
Depreciation and amortization          64.7       56.9      226.3      207.3
Acquisition and restructuring
 costs                                  1.2          -       40.6          -
Interest on long-term debt              8.3        8.3       33.8       36.9
Other financial charges                 4.6        0.8       14.1        5.0
----------------------------------------------------------------------------
Earnings before income taxes          182.9      218.1      949.9    1,040.3
Income taxes                           52.9       52.9       97.4      309.2
----------------------------------------------------------------------------
Net earnings                     $    130.0 $    165.2 $    852.5 $    731.1
----------------------------------------------------------------------------

Net earnings per share
    Basic                        $     0.34 $     0.42 $     2.21 $     1.86
    Diluted                      $     0.33 $     0.42 $     2.18 $     1.84
----------------------------------------------------------------------------

Note: These financial statements should be read in conjunction with the Company's audited consolidated financial statements, the notes thereto and with the Management's Discussion and Analysis for the fiscal year ended March 31, 2018, included in the Company's 2018 Annual Report. These documents can be obtained on SEDAR at www.sedar.com and in the "Investors" section of the Company's website, at www.saputo.com.


CONSOLIDATED BALANCE SHEETS
(in millions of CDN dollars)
(audited)
----------------------------------------------------------------------------

As at                                        March 31, 2018   March 31, 2017
----------------------------------------------------------------------------
ASSETS
Current assets
  Cash and cash equivalents                  $        122.2   $        250.5
  Receivables                                         944.9            863.2
  Inventories                                       1,234.5          1,172.5
  Income taxes receivable                              52.0             15.0
  Prepaid expenses and other assets                    68.8             79.3
----------------------------------------------------------------------------
                                                    2,422.4          2,380.5
Property, plant and equipment                       2,220.0          2,165.5
Goodwill                                            2,417.3          2,240.5
Intangible assets                                     823.1            662.3
Other assets                                           85.7             99.7
Deferred income taxes                                  34.5             48.1
----------------------------------------------------------------------------
Total assets                                 $      8,003.0   $      7,596.6
----------------------------------------------------------------------------

LIABILITIES
Current liabilities
  Bank loans                                 $        193.3   $         93.8
  Accounts payable and accrued liabilities          1,068.6          1,008.3
  Income taxes payable                                 26.5             91.3
  Current portion of long-term debt                     4.4                -
----------------------------------------------------------------------------
                                                    1,292.8          1,193.4
Long-term debt                                      1,420.9          1,500.0
Other liabilities                                      66.7             68.9
Deferred income taxes                                 424.9            511.4
----------------------------------------------------------------------------
Total liabilities                            $      3,205.3   $      3,273.7
----------------------------------------------------------------------------

EQUITY
  Share capital                                       918.9            871.1
  Reserves                                            662.4            812.7
  Retained earnings                                 3,216.4          2,639.1
----------------------------------------------------------------------------
Total equity                                 $      4,797.7   $      4,322.9
----------------------------------------------------------------------------
Total liabilities and equity                 $      8,003.0   $      7,596.6
----------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of CDN dollars)
----------------------------------------------------------------------------
                                                        For the three-month
                                                             periods ended
                                                                   March 31
                                                                (unaudited)
                                                            2018       2017
----------------------------------------------------------------------------

Cash flows related to the following activities:
  Operating
    Net earnings                                       $   130.0  $   165.2
    Adjustments for:
      Stock-based compensation                               9.6        9.9
      Interest and other financial charges                  12.9        9.1
      Income tax expense                                    52.9       52.9
      Depreciation and amortization                         64.7       56.9
      Loss (gain) on disposal of property, plant and
       equipment                                             0.3       (0.1)
      Restructuring charges related to plant closures          -          -
      Share of joint venture earnings, net of
       dividends received                                   (2.6)      (1.5)
      Under (Over)funding of employee plans in excess
       of costs                                              0.5       (0.2)
----------------------------------------------------------------------------
                                                           268.3      292.2
    Changes in non-cash operating working capital
     items                                                  89.8      (28.7)
----------------------------------------------------------------------------
    Cash generated from operating activities               358.1      263.5
    Interest and other financial charges paid               (7.4)      (4.6)
    Income taxes paid                                      (32.8)     (56.0)
----------------------------------------------------------------------------
    Net cash generated from operating activities           317.9      202.9
----------------------------------------------------------------------------

  Investing
    Business acquisitions                                  (14.7)         -
    Additions to property, plant and equipment             (65.3)     (76.4)
    Additions to intangible assets                         (10.7)     (24.4)
    Proceeds on disposal of property, plant and
     equipment                                               0.4        0.5
    Other                                                   (0.1)      (0.1)
----------------------------------------------------------------------------
                                                           (90.4)    (100.4)
----------------------------------------------------------------------------

  Financing
    Bank loans                                            (173.6)       6.9
    Proceeds from issuance of long-term debt                   -          -
    Repayment of long-term debt                             (1.0)         -
    Issuance of share capital                                7.6       10.6
    Repurchase of share capital                                -     (166.5)
    Dividends                                              (61.9)     (57.9)
    Acquisition of the remaining interest in a
     subsidiary                                                -      (87.0)
    Additional non-controlling interest arising from
     issuance of additional shares                             -       16.3
----------------------------------------------------------------------------
                                                          (228.9)    (277.6)
----------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents            (1.4)    (175.1)
Cash and cash equivalents, beginning of period             124.3      433.7
Effect of exchange rate changes on cash and cash
 equivalents                                                (0.7)      (8.1)
----------------------------------------------------------------------------
Cash and cash equivalents, end of period               $   122.2  $   250.5
----------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of CDN dollars)
----------------------------------------------------------------------------
                                                       For the years ended
                                                                   March 31
                                                                  (audited)
                                                            2018       2017
----------------------------------------------------------------------------

Cash flows related to the following activities:
  Operating
    Net earnings                                       $   852.5  $   731.1
    Adjustments for:
      Stock-based compensation                              34.3       34.0
      Interest and other financial charges                  47.9       41.9
      Income tax expense                                    97.4      309.2
      Depreciation and amortization                        226.3      207.3
      Loss (gain) on disposal of property, plant and
       equipment                                            (0.7)      (2.0)
      Restructuring charges related to plant closures       10.6          -
      Share of joint venture earnings, net of
       dividends received                                    0.9       (1.1)
      Under (Over)funding of employee plans in excess
       of costs                                              1.8        2.9
----------------------------------------------------------------------------
                                                         1,271.0    1,323.3
    Changes in non-cash operating working capital
     items                                                (115.2)       2.4
----------------------------------------------------------------------------
    Cash generated from operating activities             1,155.8    1,325.7
    Interest and other financial charges paid              (47.4)     (42.8)
    Income taxes paid                                     (299.3)    (209.3)
----------------------------------------------------------------------------
    Net cash generated from operating activities           809.1    1,073.6
----------------------------------------------------------------------------

  Investing
    Business acquisitions                                 (385.1)         -
    Additions to property, plant and equipment            (277.8)    (236.7)
    Additions to intangible assets                         (66.2)     (84.7)
    Proceeds on disposal of property, plant and
     equipment                                               6.6        4.7
    Other                                                   (0.4)      (1.1)
----------------------------------------------------------------------------
                                                          (722.9)    (317.8)
----------------------------------------------------------------------------

  Financing
    Bank loans                                             129.6      (82.1)
    Proceeds from issuance of long-term debt               300.0      600.0
    Repayment of long-term debt                           (402.2)    (552.2)
    Issuance of share capital                               41.0       57.6
    Repurchase of share capital                            (29.0)    (404.1)
    Dividends                                             (243.5)    (228.3)
    Acquisition of the remaining interest in a
     subsidiary                                                -      (87.0)
    Additional non-controlling interest arising from
     issuance of additional shares                             -       16.3
----------------------------------------------------------------------------
                                                          (204.1)    (679.8)
----------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents          (117.9)      76.0
Cash and cash equivalents, beginning of period             250.5      164.3
Effect of exchange rate changes on cash and cash
 equivalents                                               (10.4)      10.2
----------------------------------------------------------------------------
Cash and cash equivalents, end of period               $   122.2  $   250.5
----------------------------------------------------------------------------

Contacts:
Media Inquiries
1-514-328-3141 / 1-866-648-5902

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Every organization is facing their own Digital Transformation as they attempt to stay ahead of the competition, or worse, just keep up. Each new opportunity, whether embracing machine learning, IoT, or a cloud migration, seems to bring new development, deployment, and management models. The results are more diverse and federated computing models than any time in our history.
On-premise or off, you have powerful tools available to maximize the value of your infrastructure and you demand more visibility and operational control. Fortunately, data center management tools keep a vigil on memory contestation, power, thermal consumption, server health, and utilization, allowing better control no matter your cloud's shape. In this session, learn how Intel software tools enable real-time monitoring and precise management to lower operational costs and optimize infrastructure...
"Calligo is a cloud service provider with data privacy at the heart of what we do. We are a typical Infrastructure as a Service cloud provider but it's been designed around data privacy," explained Julian Box, CEO and co-founder of Calligo, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software with the simplicity and reach of the open web. With staff in 10 timezones, Isomorphic provides a global network of services related to our technology, with offerings ranging from turnkey application development to SLA-backed enterprise support. Leadin...
While a hybrid cloud can ease that transition, designing and deploy that hybrid cloud still offers challenges for organizations concerned about lack of available cloud skillsets within their organization. Managed service providers offer a unique opportunity to fill those gaps and get organizations of all sizes on a hybrid cloud that meets their comfort level, while delivering enhanced benefits for cost, efficiency, agility, mobility, and elasticity.
DevOps has long focused on reinventing the SDLC (e.g. with CI/CD, ARA, pipeline automation etc.), while reinvention of IT Ops has lagged. However, new approaches like Site Reliability Engineering, Observability, Containerization, Operations Analytics, and ML/AI are driving a resurgence of IT Ops. In this session our expert panel will focus on how these new ideas are [putting the Ops back in DevOps orbringing modern IT Ops to DevOps].
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understa...
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Most organizations are awash today in data and IT systems, yet they're still struggling mightily to use these invaluable assets to meet the rising demand for new digital solutions and customer experiences that drive innovation and growth. What's lacking are potent and effective ways to rapidly combine together on-premises IT and the numerous commercial clouds that the average organization has in place today into effective new business solutions.
Concerns about security, downtime and latency, budgets, and general unfamiliarity with cloud technologies continue to create hesitation for many organizations that truly need to be developing a cloud strategy. Hybrid cloud solutions are helping to elevate those concerns by enabling the combination or orchestration of two or more platforms, including on-premise infrastructure, private clouds and/or third-party, public cloud services. This gives organizations more comfort to begin their digital tr...
Keeping an application running at scale can be a daunting task. When do you need to add more capacity? Larger databases? Additional servers? These questions get harder as the complexity of your application grows. Microservice based architectures and cloud-based dynamic infrastructures are technologies that help you keep your application running with high availability, even during times of extreme scaling. But real cloud success, at scale, requires much more than a basic lift-and-shift migrati...
David Friend is the co-founder and CEO of Wasabi, the hot cloud storage company that delivers fast, low-cost, and reliable cloud storage. Prior to Wasabi, David co-founded Carbonite, one of the world's leading cloud backup companies. A successful tech entrepreneur for more than 30 years, David got his start at ARP Instruments, a manufacturer of synthesizers for rock bands, where he worked with leading musicians of the day like Stevie Wonder, Pete Townsend of The Who, and Led Zeppelin. David has ...
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understa...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Addteq is a leader in providing business solutions to Enterprise clients. Addteq has been in the business for more than 10 years. Through the use of DevOps automation, Addteq strives on creating innovative solutions to solve business processes. Clients depend on Addteq to modernize the software delivery process by providing Atlassian solutions, create custom add-ons, conduct training, offer hosting, perform DevOps services, and provide overall support services.