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Legumex Walker Reports Quarterly Loss

TORONTO - Aug 13/13 - SNS -- Legumex Walker Inc. reported a net loss of CDN $7.707 million on revenues of $112.098 million during the second quarter ending June 30, compared to a net profit $614,000 on revenues of $68.501 million during the same three-month period last year.

The increased the net loss for the first half of the current fiscal year to $13.681 million on revenues of $199.414 million, compared to a net loss of $1.749 million on revenues of $134.294 million during the same six-month period last year.

The company said a key reason for the loss was the final commissioning of the Pacific Coast Canola plant, which is currently operating one of two lines or approximately 50% capacity. The plant is expected to have both lines running this year.

Joel Horn, President and Chief Executive Officer, said, "It was another solid quarter our Special Crops business, which is contributing enough cash to cover the corporate expenses of our entire business. We realized growth in tonnage and revenue, while we continued to benefit from the increased diversification in our business.

"After normalizing for exceptionally high commodity margins in the second quarter of last year stemming from our St. Hilaire Seed acquisition, we saw meaningful year-over-year growth in profitability and cash flow. We are pleased with the performance of this segment in 2013 as we continue to leverage our platform for sales and margin opportunities while pursuing opportunities for efficiencies, utilization and lower operating costs."


Overall Tonnage Up

Consolidated revenue for the second quarter of 2013 increased by 64% to $112.1 million compared with $68.5 million for the second quarter of 2012. The increase is primarily the result of product mix and higher tonnage sold from the Special Crops segment and revenue generated by the Oilseed Processing segment, which sold and shipped 29,900 metric tons (MT) of oil and meal.

Adjusted gross profit for the second quarter of 2013 was $2.1 million compared with $6.3 million for the second quarter of 2012. The decrease reflects a $1.0 million decrease in contribution from the Special Crops segment, primarily due to the absence of exceptionally high Edible Bean margins realized in the second quarter of 2012 and a $3.2 million loss from the Oilseed Processing segment during the commissioning phase of the PCC Facility, offset by increased volumes and margin from sunflower, flax and birdfood sales.

The loss before interest, taxes, depreciation and amortization for the second quarter of 2013 was $3.2 million compared with EBITDA of $2.3 million in the second quarter of 2012. The loss for the second quarter of 2013 included a loss of $3.9 million for the Oilseed Processing segment during the final commissioning phase of the PCC Facility. Selling and administrative (S&A) expenses for the second quarter were $5.4 million compared with $4 million for the second quarter of 2012 adjusted for non-recurring items. S&A expenses included non-cash stock-based compensation expenses for the second quarter of 2013 of $0.4 million compared with $0.2 million for the second quarter of 2012. Corporate costs for the second quarter of 2013 were $1.9 million compared with $1.4 million for the second quarter of 2012.

Net loss attributable to shareholders for the second quarter of 2013 was $8.7 million, or $0.53 loss per share, compared with earnings attributable to shareholders of $250,000, or $0.02 per share, for the second quarter of 2012. The loss attributable to shareholders for the second quarter of 2013 includes a loss of $5.4 million, or $0.33 loss per share, during the commissioning of the PCC plant.


Special Crops Segment

Revenue for the Special Crops segment for the second quarter of 2013 increased 33% to $91.2 million compared with $68.5 million for the second quarter of 2012. The Company sold 104,400 MTof special crops in the second quarter of 2013, up 30% from 80,500 MTsold in the second quarter of 2012. The increase in volume was entirely attributable to the acquisition of Keystone Grain Limited in October, 2012.

Increased volumes contributed $2.3 million of incremental commodity profit in the second quarter of 2013, which was offset by a $1.7 million reduction from lower commodity margins. The second quarter of 2012 benefitted from exceptionally high Edible Beans margins reflecting the value of contracts executed at peak pricing in the prior year complemented by favourable carrying values on inventories assumed with the St. Hilaire Seed acquisition. Adjusted gross profit for the second quarter of 2013 was $5.3 million, compared with $6.3 million for the second quarter of 2012, and was impacted by an increase of $1.6 million in plant processing costs related to the acquisitions of Keystone Grain Limited in October, 2012.


Oilseed Processing Segment

Commissioning of the PCC plant continued as planned in the second quarter. Following quarter-end, in late July, the PCC plant completed commissioning, entered commercial production and is currently operating one of two operating lines or about 50% capacity, with full production expected this year.

Revenue for the Oilseed Processing segment for the second quarter of 2013 was $21.0 million, the result of the high quality of oil and meal produced during the commissioning phase of the PCC plant. Although the PCC Plant had not yet achieved commercial production levels during the quarter, the quality and proportion of oil and meal processed was generally consistent with expectations. Total canola seed crushed in the quarter was 31,500 MT of which 29,900 MTwas shipped.

Adjusted gross profit for the second quarter of 2013 was a loss of $3.2 million, as the commissioning of the PCC plant incurred costs of $1.9 million that were not fully recouped from the limited production and sale of canola oil and meal during the commissioning phase. The PCC plant generated a commodity loss due to the high value of 2012 canola seed stocks relative to the underlying market value of oil and meal which arose due to a disconnect between canola seed prices and the soy oil and meal complex.

Operating costs will continue to exceed revenues until the PCC plant is operating above breakeven production levels.

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