LAS.A Lassonde Industries Inc

ROUGEMONT, QC, Aug. 8, 2024 /CNW/ - Lassonde Industries Inc. (TSX: LAS.A) ("Lassonde" or the "Corporation") has completed, through a 90%-owned U.S. subsidiary, the acquisition of The Zidian Group, which operates Summer Garden Food Manufacturing ("Summer Garden"). Located in Boardman, Ohio, and employing approximately 200 people, Summer Garden develops, manufactures and markets a wide range of premium sauces and condiments, including tomato and cream-based pasta sauces, BBQ sauces, dipping sauces and dressings. Its portfolio consists of approximately 250 products sold through more than 20,000 locations under the Gia Russa and Little Italy in the Bronx brands and under the G Hughes brand, a leader in the U.S. sugar-free BBQ sauce segment. Summer Garden also acts as a co-packer for well-known brands. For the 12-month period ending in May 2024, Summer Garden generated sales of approximately US$148.0 million and adjusted EBITDA¹ of approximately US$27.9 million.

"We are delighted to welcome Summer Garden's employees and management to the Lassonde organization, and we look forward to leveraging our combined expertise," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc. "This acquisition marks an important step in the execution of our strategy by significantly expanding the scope of our North American specialty food business and creating a new growth platform for Lassonde." 

"This acquisition positions Lassonde as the specialty food manufacturer of choice for our customers, as we integrate high-quality assets into our network, including additional retort capabilities to further leverage our key capabilities," added Vince Timpano, President and Chief Operating Officer, Lassonde Industries Inc. "Through brands that hold growth potential in their categories, Summer Garden expands our core offering in pasta sauces and extends our reach into new adjacencies. Its product portfolio and capabilities will deliver an immediate path to growth at attractive and accretive margins."

The acquisition was for a cash consideration of US$237.2 million. This amount reflects US$2.2 million in preliminary adjustments related to working capital and could be subject to additional adjustments related to working capital and other items once the final value is established. Moreover, a contingent consideration of up to US$45.0 million may be payable in various instalments over the next three years, should certain financial targets be achieved, and other conditions met. Consistent with the ownership structure of the Corporation's U.S. subsidiaries in place since 2011, the Corporation owns a 90% equity interest in Summer Garden while 3346625 Canada Inc., an entity controlled by Mr. Pierre-Paul Lassonde, Chairman of the Corporation's Board of Directors, owns the remaining 10%.

At the close of the acquisition, an amount of US$241.0 million was paid to settle the Summer Garden acquisition cost and certain related charges. It was financed as follows: (i) US$224.5 million from the Canadian revolving operating credit facility, (ii) US$6.0 million from the Corporation's cash and cash equivalents, and (iii) US$10.5 million in equity from 3346625 Canada Inc. The acquisition-related costs should total approximately US$6.3 million.

The Corporation will recognize this business combination using the acquisition method in accordance with the provisions of IFRS 3 "Business Combinations". Therefore, the interim consolidated financial statements for the third quarter of 2024 will include the results of Summer Garden from August 8, 2024, certain acquisition-related transaction costs not already recorded and the effect of the purchase price allocation exercise.

For further details regarding Lassonde, Summer Garden, and the acquisition, please refer to the Corporation's management's discussion and analysis dated August 8, 2024.

Financial Measures Not in Accordance With IFRS

The financial measures further described below do not constitute standardized financial measures or ratios in accordance with the financial reporting framework used to prepare the Corporation's financial statements. These non-IFRS measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with IFRS. Comparing them to similar financial measures or ratios presented by other issuers may not be possible.

EBITDA and Adjusted EBITDA

EBITDA is a financial measure used by the Corporation and investors to assess the Corporation's capacity to generate future cash flows from operating activities and pay financial expenses. Adjusted EBITDA is a financial measure used by the Corporation to compare EBITDA between periods by excluding items impacting comparability. EBITDA consists of the sum of operating profit and of the "depreciation of property, plant and equipment and amortization of intangible assets" item and "(Gains) losses on capital assets" item, as shown in the Consolidated Statement of Cash Flows. Adjusted EBITDA is calculated by adjusting the EBITDA with items considered by management as impacting the comparability between periods.

About Lassonde

Lassonde Industries Inc. is a leader in the food and beverages industry in North America. The Corporation develops, manufactures, and markets a wide range of private label and national brand products, including ready-to-drink beverages, fruit-based snacks as well as frozen juice concentrates. It is also a leading producer of cranberry sauces and specialty food products such as pasta sauces, BBQ sauces, condiments, soups and fondue broths and sauces. The Corporation also produces, imports and markets selected wines from several countries of origin and produces and markets apple cider and cider-based drinks.

The Corporation is active in two market segments:

• Retail sales consist of sales to food retailers and wholesalers such as supermarket chains, independent grocers, superstores, warehouse clubs, major pharmacy chains; and
• Food service sales consist of sales to restaurants, hotels, hospitals, schools, and wholesalers serving these institutions.

The Corporation operates 19 plants located in Canada and the United States and produces its superior quality products through the expertise of over 2,900 full-time equivalent employees. To learn more, visit www.lassonde.com.

Caution Concerning Forward-Looking Statements

This document contains "forward-looking information" and the Corporation's oral and written public communications that do not constitute historical fact may be deemed to be "forward-looking information" within the meaning of applicable Canadian securities law. These forward-looking statements include, but are not limited to, statements on the Corporation's objectives and goals and are based on current expectations, projections, beliefs, judgments, and assumptions based on information available at the time the applicable forward-looking statement was made and considering the Corporation's experience combined with its perception of historical trends.

Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "could", "would", "believe", "plan", "intend", "design", "target", "objective", "strategy", "likely", "potential", "outlook", "aim", "goal", and similar expressions suggesting future events or future performance in addition to the negative forms of these terms or any variations thereof. All statements other than statements of historical fact included in this document may constitute a forward-looking statement.

Various factors or assumptions are applied by the Corporation in elaborating the forward‑looking statements. These factors and assumptions are based on information currently available to the Corporation, including information obtained by the Corporation from third parties. Readers are cautioned that the assumptions considered by the Corporation to support these forward-looking statements may prove to be incorrect in whole or in part.

The significant factors that could cause actual results to differ materially from the conclusions, forecasts or projections reflected in the forward-looking statements contained herein include, among other things, risks associated with the following: deterioration of general macroeconomic conditions, including international conflicts, which can lead to negative impacts on the Corporation's suppliers, customers, and operating costs; the availability of raw materials and packaging and related price variations (including the prices of orange juice and orange concentrates, key commodities for the Corporation, which have continued to trade above historical highs for the past several months and show no sign of favourable change); loss of key suppliers or supplier concentration; disruptions in or failures of the Corporation's information technology systems, as well as the development and performance of technology; cyber threats and other information-technology-related risks leading to business disruptions, confidentiality, data integrity, and business email compromise-related fraud; the successful deployment of the Corporation's multi-year strategy  (defined in Section 4 - "Multi-Year Strategy" of the Corporation's MD&A for the second quarter ended June 29, 2024); the Corporation's ability to effectively integrate any acquisitions; the Corporation's ability to maintain strong sourcing and manufacturing platforms and efficient distribution channels; fluctuations in the prices of inbound and outbound freight, the impact of oil prices (and derivatives thereof) on the Corporation's direct and indirect costs along with the Corporation's ability to transfer those increases through higher prices or other means, if any, to its customers in competitive market conditions and considering demand elasticity; climate change and disasters causing higher operating costs and capital expenditures and reduced production output, or impacting the availability, quality or price volatility of key commodities sourced by the Corporation; the scarcity of labour and the related impact on the hiring, training, developing, retaining and reliance of personnel together with their productivity, employment matters, compliance with employment laws across multiple jurisdictions, and the potential for work stoppages due to non-renewal of collective bargaining agreements or other reasons; the successful deployment of the Corporation's health and safety programs in compliance with applicable laws and regulations; serious injuries or fatalities, which could have a material impact on the Corporation's business continuity and reputation and lead to compliance-related costs; disputes with significant suppliers; the increasing concentration of customers in the food industry, providing them with significant bargaining power particularly on the Corporation's selling prices; the implementation, cost and impact of environmental sustainability initiatives as well as the cost of remediating environmental liabilities; changes made to laws and rules that affect the Corporation's activities, particularly in matters of tax and customs duties, as well as the interpretation thereof, and new positions adopted by relevant authorities; the ability to adapt to changes and developments affecting the Corporation's industry, including customer preferences, tastes, and buying patterns, market conditions and the activities of competitors and customers; failure to maintain the quality and safety of the Corporation's products, which could result in product recalls and product liability claims for misbranded, adulterated, contaminated, or spoiled food products, along with reputational damage; risks related to fluctuations in interest rates, currency exchange rates, liquidity and credit, stock price and pension obligations; the incurrence of restructuring, disposal, or other related charges together with the recognition of impairment charges on goodwill or long-lived assets; the sufficiency of insurance coverage; and the implications and outcome of potential legal actions, litigation or regulatory proceedings to which the Corporation may be a party. The Corporation cautions readers that the foregoing list of factors is not exhaustive.

The Corporation's ability to achieve its sustainability targets and goals is further subject to, among other factors, its ability to access and implement all technology necessary to achieve them as well as the development, deployment and performance of technology and environmental regulation. The Corporation's ability to achieve its environmental, social and governance risk commitments is further subject to, among other factors, its ability to leverage its supplier relationships.

The assumptions, expectations, and estimates involved in preparing forward-looking statements and risks and uncertainties that could cause actual results to differ materially from forward-looking statements are discussed in the Corporation's materials filed with the Canadian securities regulatory authorities from time to time, including information about risk factors that can be found in Section 19 - "Uncertainties and Principal Risk Factors" of the Corporation's MD&A for the year ended December 31, 2023. Readers should review this section in detail.

All forward-looking statements included herein speak only as of the date hereof. Unless required by law, the Corporation does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. All forward-looking statements contained herein are wholly and expressly qualified by this cautionary statement.

SOURCE Lassonde Industries Inc.