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Brampton Brick Limited recently reported a loss for the year ended December 31, 2008, of $6.7 million (Canadian, about $5.3 million U.S.), or $0.61 (~ $.49 U.S.) per class A subordinate voting share and class B multiple voting share outstanding, compared to consolidated net income of $3.5 million (~ $2.8 million U.S.), or $0.32 (~ $.26 U.S.) per class A share and class B share outstanding in 2007.
The loss for the year includes a loss from continuing operations of $6.3 million (~ $5.1 million U.S.), or $0.58 (~ $.46 U.S.) per share, and a loss from discontinued operations of $355,000 (~ $284,000 U.S.), or $0.03 (~ $.02 U.S.) per share. The major factors that impacted operating results from continuing operations in 2008 included a non-cash charge of $6.7 million (~ $5.4 million U.S.) to write off the remaining carrying value of goodwill that, net of the related tax benefit recorded of $720,000 (~ $575,000 U.S.), resulted in a net charge of $6.0 million (~ $4.8 million U.S.), or $0.55 (~ $.44 U.S.) per share; a valuation allowance of $1.9 million (~ $1.5 million U.S.), or $0.17 (~ $.14 U.S.) per share, recorded against future tax assets related to U.S. operations; and significantly lower production volumes in both the Masonry Products and Landscape Products business segments, which resulted in unabsorbed manufacturing expenses being charged against current period operations.
Net sales from continuing operations were $81.5 million (~ $65.1 million U.S.) in 2008, compared to $82.4 million (~ $65.8 million U.S.) in 2007. Net sales declined in the Masonry Products business segment by $966,000 (~ $772,000 U.S.), or 1.6%, due to lower clay brick volumes and a small decrease in average net selling prices. In the Landscape Products business segment, net sales declined by $773,000 (~ $618,000 U.S.), or 3.6%, primarily due to lower volumes.
The increase in cost of goods sold from $50.7 million (~ $40.5 million U.S.) in 2007 to $55.8 (~ $44.6 million U.S.) in 2008 reflected an increase in unabsorbed manufacturing expenses charged against operations as noted above; additional costs incurred in connection with the introduction of new concrete masonry products; and costs of the new waste composting operations, which accounted for $1.2 million (~ $957,000 U.S.) of the increase.
The increase in selling, general and administrative expenses over 2007 was primarily due to higher selling expenses incurred in relation to new products in the Masonry Products business segment. Costs were also incurred in streamlining the sales order processing procedures and reorganizing the sales administration departmental structure. As a result, operating income from continuing operations, before interest and other items, decreased from $10.6 million (~ $8.5 million U.S.) in 2007 to $3.4 million (~ $2.7 million U.S.) in 2008.
Net 2008 sales for Masonry Products were $60 million (~ $48 million U.S.), compared to $60.9 million (~ $48.7 million U.S.) in 2007, representing a decline of 1.6%. Lower clay brick shipments and a small decrease in average net selling prices caused the decrease in net sales. Sales volumes have been affected by the downturn in residential construction activity in both the Canadian and U.S. markets.
Operating income was $9.4 million (~ $7.5 million U.S.) in 2008 compared to $15.3 million (~ $12.2 million U.S.) in 2007. The negative impact of a 24% reduction in clay brick production volumes for the year ended December 31, 2008, compared to 2007 was the primary cause of the reduction in operating income. Lower production volumes resulted in a higher proportion of total manufacturing costs being charged against current period operations.
Production volumes were lowered in 2008 to reduce inventories in anticipation of lower demand due to current economic conditions. The company also incurred higher manufacturing costs in 2008 related to the testing and initial production of new concrete masonry products.
Higher distribution costs, due to an increase in trucking expenses and higher yard costs, also contributed to the decrease in operating income. Selling, general and administrative expenses increased over 2007 as a result of expenditures incurred in connection with the introduction of new concrete masonry products, such as stone veneer, window sills and concrete brick.
Net sales of the Landscape Products business segment were $20.6 million (~ $16.5 million U.S.) for the year ended December 31, 2008, compared to $21.4 million (~ $17.1 million U.S.) in 2007. The decline was due to lower sales in the U.S. caused by economic factors affecting the company’s U.S. market, primarily Michigan.
Significantly lower production volumes in 2008 to reduce inventories, along with higher distribution costs, resulted in an increase in cost of goods sold, which in turn resulted in a higher operating loss in the current period. A decrease in selling, general and administrative expenses partially offset the increase in cost of goods sold. For the year ended December 31, 2008, the Landscape Products business segment incurred an operating loss of $5.3 million (~ $4.2 million U.S.), compared to $4.2 million (~ $3.4 million U.S.) in 2007.
Additional details are available at www.bramptonbrick.com.