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[Nov 2006]
Brampton Brick Reports Third Quarter Results - Major US Expansion Plan Announced
Brampton Brick Ltd (Brampton, Ontario, Canada) has reported net income of $4.239 million for the third quarter ended 30 September 2006 compared to $4.781 million for the same period last year.
Lower sales volumes in both the clay brick and concrete products business segments resulted in a decline in net sales of $4.069 million or 12.3%. Brick shipments were affected primarily by a slowdown in residential construction activity in the company’s primary market areas. Sales volumes in the concrete products business segment were negatively impacted by a slowdown in the Michigan market and generally poorer weather conditions than in the third quarter of 2005. The addition of the new Nova Scotia medical waste operations contributed significantly to the $962,000 increase in net sales in the waste processing business segment.
As a result of the above noted factors, operating income before interest and other items decreased by $1.328 million, from $7.768 million in 2005 to $6.440 million in 2006. Interest on long-term debt decreased by $110,000 to $115,000 due to the repayment of a $12 million term loan in December 2005. Surplus cash available for short-term investments produced higher net interest income.
The value of the Canadian dollar versus the US dollar remained relatively stable through the third quarter of 2006 resulting in a foreign currency exchange gain of $23,000. In the third quarter of 2005 the company incurred a foreign currency exchange loss of $871,000.
As previously reported, in April the company sold its 38.2% interest in Richvale York Block Inc ("Richvale"). This produced a gain of $462,000 which was recorded in the second quarter. Accordingly, no equity income was recorded for the third quarter of 2006. Equity income of $306,000 was recorded in the third quarter of 2005.
Net income for the nine months ended 30 September 30 2006 was $10.924 million on net sales of $82.216 million compared to $10.886 million on net sales of $85.971 million for first the nine months of 2005. Sales volumes and net sales for the nine month period were impacted by substantially the same factors as outlined above for the third quarter. Improved margins in the clay brick business segment, a reduction in the loss incurred by the Da Vinci Stone Craft operations and the incremental operating income generated by the new Nova Scotia medical waste operations helped mitigate the negative impact of lower net sales. As a result, operating income before interest and other items decreased only marginally to $16.744 million in 2006 from $16.996 million in 2005.
The company also announced that the Board of Directors had approved a plan to expand the company’s clay brick operations through construction of a new manufacturing facility in the USA. The company has identified a 200 acre site located approximately 20 miles south of Terre Haute, Indiana which tests indicate contains sufficient high-quality clay reserves to sustain production at the proposed 100 million modular brick plant for over 40 years. Options to acquire all of the properties which comprise the site have been secured.
"This represents an exciting opportunity for Brampton Brick to capitalize on its existing customer base in the north-central U.S. and to increase capacity in order to service new customers," said Jeffrey Kerbel, President and CEO. "The site is strategically located in a very attractive brick market. It will not only allow the Company to reach new customers but will also provide expanded coverage to existing customers through increased capacity and a wider array of products."
Subject to completing the acquisition of the properties, finalisation of construction contracts and receipt of all requisite approvals, including environmental approvals, construction is expected to commence in the second quarter of 2007 and is anticipated to take approximately 18 months to complete. Aggregate costs are estimated at US$45 million.
www.bramptonbrick.com
ENDS