BRAMPTON, ONTARIO- (All amounts are stated in thousands of Canadian dollars, except per share amounts.)
Brampton Brick Limited (TSX:BBL.A) today reported a net income of $4,636, or $0.42 per Class A Subordinate Voting share and Class B Multiple Voting share, outstanding for the three month period ended September 30, 2016 compared to a net income of $4,324 or $0.39 per share, for the same period in 2015. The aggregate weighted average number of Class A Subordinate Voting shares and Class B Multiple Voting shares outstanding was 10,947,254 for the third quarter of each of 2016 and 2015, respectively.
DISCUSSION OF OPERATIONS Three months ended September 30, 2016
Revenues increased to $43,811 in the third quarter of 2016 from $40,465 for the corresponding quarter of 2015 due to higher shipments in both the Masonry Products and Landscape Products business segments. The pace of residential construction and the strength in the housing market during the first half of the year continued through the third quarter of 2016 and supported the growth in shipments of both the Masonry Products and Landscape Products business segments over the corresponding quarter in 2015.
Cost of sales for the third quarter ended September 30, 2016 increased to $31,683, from $28,788 for the corresponding period in 2015, primarily due to an increase in the volume of shipments. However, lower production volumes during the current quarter and the direct impact on per unit fixed manufacturing costs, as well as the timing of equipment modifications at the Farmersburg clay brick plant, increased cost of sales incurred during the quarter ended September 30, 2016 compared to the corresponding period in 2015.
Selling expenses for the third quarter of 2016 of $2,837 were consistent with expenses of $2,776, for the corresponding quarter of 2015.
General and administrative expenses increased to $2,142 for the third quarter ended September 30, 2016, from $1,849 for the corresponding period in 2015 due to a general increase in personnel-related expenses.
The loss on disposal of property, plant and equipment of $147 for the third quarter of 2016 relates to miscellaneous plant equipment replaced, primarily at the Brampton clay brick plant, in order to increase long-term operational efficiencies and reduce production costs. This compares to a gain on sale of assets of $14 in 2015.
Other expense decreased to $18 compared to $379 for the corresponding prior period due to comparatively lower fluctuations in the U.S. dollar currency exchange rates impacting operations during the third quarter of 2016. Other expense includes the net gains and losses on the translation of foreign currency transactions, converted into the functional currency using exchange rates prevailing at the dates of the transactions.
Operating income increased to $6,984 for the quarter ended September 30, 2016, from $6,687 for the same quarter of 2015.
Finance expense for the three months ended September 30, 2016 was $346, compared to $785 for the corresponding quarter in 2015. Excluding the change in the fair value of the interest rate swap which amounted to an unrealized gain of $50 (2015 - unrealized loss of $346), net interest expense for the current quarter decreased to $396 compared to $439 in the third quarter of 2015 on lower debt balances. The decrease in outstanding debt balances was due to scheduled repayments amounting to $2,500 and $1,500 made in the second half of 2015 and in the current quarter of 2016, respectively. Provision for income taxes totaled $2,002 for the third quarter of 2016 compared to $1,578 for the same period in 2015. The increase was due to the improvement in operating results from the Canadian operations in the third quarter of 2016 compared to the same period in 2015. The income tax provision in both periods relates to the pre-tax income of the Company's Canadian operations. The Company has not recorded a deferred tax asset with respect to the potential deferred tax benefit pertaining to losses incurred by its U.S. operations.