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Richards Packaging Income Fund's revenue increases 7.1% in Q2

Published 02 August 2017

Richards Packaging Income Fund said its second quarter performance exceeded its outlook as total revenue increased 7.1% because of organic revenue growth and a U.S./Cdn. 3.3¢ weakening of the dollar to 74¢, also down from 76¢ in the first quarter.

Gross profit and EBITDA as a percent of sales was slightly ahead of the first quarter at 17.7% and 13.6% respectively.EBITDA was up $1.0 million, or 9.9%, due to higher sales and the translation impact of Richards US. 

Net income increased $4.1 million, or 37.7¢, with higher EBITDA and no repeat of contingent consideration associated with the Healthmark acquisition offset by higher mark-to-market loss on the exchangeable shares and higher income taxes.

The $2.9 million of free cash flow2 generated in the second quarter in addition to $4.7 million cash on hand at the end of the first quarter was used to invest $2.5 million in working capital and $0.2 million of expansion capital, pay $1.6 million of income tax payable from the first quarter and pay$3.0 million of term debt.The Fund's leverage was reduced to 0.9x, from 1.0 at March 31, 2017.

The Fund paid monthly distributions of 11¢ per Unit during the second quarter, which represented an annualized yield of 4.4% on the June 30th closing price of $29.95 per Unit.

The payout ratio for the second quarter was 57% after an 18% increase in the monthly distribution rate from 9.35¢ per Unit.We expect the payout ratio to increase as the Canadian dollar strengthens and interest rates rise towards the levels outlined in our Distribution Policy of the annual report.

Source: Company Press Release