Mr. Joel Horn reports

LEGUMEX WALKER REPORTS SIGNIFICANTLY IMPROVED FINANCIAL RESULTS FOR FIRST QUARTER 2013

Legumex Walker Inc. has released its financial results for the three months ended March 31, 2013.

Highlights for the three months ended March 31, 2013 (all growth metrics reflect comparison with the three months ended March 31, 2012):

• Improved financial results from the special crops division:
  • Revenue increased 26 per cent to $83-million on an increase in tonnes shipped of 19 per cent to 97,500 tonnes.
  • Adjusted gross profit increased 61 per cent to $9.2-million with a commodity margin increase of 41 per cent to $144 per tonne, reflecting the success of the company's strategy to diversify into higher-margin products.
  • Earnings before interest, taxes, depreciation and amortization increased 62 per cent to $6.4-million, reflecting the success of the company's strategy to improve operating leverage.
  • Cash flow provided by operations improved to $3.3-million (net of corporate costs).
• Commissioning of the Pacific Coast Canola plant (PCC plant) progressed according to plan with PCC shipping its first food-grade canola oil in mid-March. The PCC plant remains on schedule to begin full production in the third quarter of 2013.
• Consolidated EBITDA was $200,000 compared with $2.2-million (including corporate costs that were consistent year over year), reflecting the expected loss generated by the oilseed seed division during commissioning.

"Our improved special crops results for the first quarter of 2013 are indicative of the underlying strength of that division as we began to realize the benefit of last year's substantial investment in facilities, technology and people, as well as improvements in demand in the marketplace," said Joel Horn, president and chief executive officer, Legumex Walker. "We are clearly seeing payoff from our acquisitions, diversification into higher margin products, and optimization of our processing facilities to achieve EBITDA and cash flow that were not previously available to us.

"The Pacific Coast Canola team is completing final commissioning of our canola processing facility, building canola seed inventories and lining up our customers to begin commercial-scale operations on schedule in the third quarter. Canola oil prices are rising as the new crop approaches and local planting, which benefits our profitability, is on track for another record year.

"Looking out to the remainder of 2013, we expect to continue to realize the value of last year's acquisitions and investments while leveraging our platform for organic growth opportunities that will be influenced by the new crop. In the back half of the year, we will see meaningful contribution from our canola business and will begin to take advantage of additional margin opportunities. By next year, both the special crops and oilseed processing divisions will be well positioned to deliver on the full potential of our efforts."

Results for the three months ended March 31, 2013

Consolidated revenue for the first quarter of 2013 increased by 33 per cent to $87.3-million compared with the same quarter last year reflecting higher volumes due to the annualized impact of the Keystone Grain Ltd. acquisition on Oct. 1, 2012. Adjusted gross profit of $5.6-million for the quarter was consistent with the same quarter last year as a $3.5-million increase for special crops from higher volumes and improved margins was largely offset by initial losses in oilseed processing during the commissioning phase of the PCC plant.

EBITDA for the first quarter of 2013 was $165,000 compared with $2.2-million for the same quarter last year. Normalized selling and administrative expenses increased $1.9-million due to increased activity at the PCC plant and the annualized effect of businesses acquired in February and October, 2012. Corporate costs remained consistent with the same quarter last year.

Net loss attributable to shareholders, after excluding the 15-per-cent non-controlling interest in Pacific Coast Canola, for the first quarter of 2013 was $5.8-million, or 36 cents per share, and the loss was entirely attributable to the oilseed processing division as commissioning of the PCC plant continued during the quarter.

Special crops

Revenue for the first quarter of 2013 increased 26 per cent to $83-million. The company sold 97,500 tonnes of special crops in the first quarter of 2013, an increase of 15,300 tonnes (19 per cent) over the same quarter last year. The increase in volume also represents an increase in diversification toward the higher-margin edible bean, and sunflower and flax divisions. Increased volumes contributed $1.6-million of incremental commodity profit complemented by $4.1-million from improved commodity margins and offset by a $2.2-million increase in plant costs. Adjusted gross profit for the first quarter of 2013 increased 61 per cent to $9.2-million from $5.7-million for the same quarter last year.

EBITDA for the first quarter of 2013 increased 64 per cent to $6.4-million from $3.9-million for the same quarter last year. Normalized selling and administrative costs increased $1.0-million to $2.8-million.

Oilseed processing

Construction of the PCC plant was substantially completed in February, 2013, and commissioning of the plant continues as planned with full production expected in the third quarter of this year.

The PCC plant generated revenue of $4.6-million as a result of the high quality of oil and meal produced during the commissioning phase. Although the PCC plant has not yet achieved commercial production levels, the proportion of oil and meal processed was generally consistent with expectations.

Adjusted gross profit was a loss of $3.6-million as the commissioning of the plant incurred costs of $1.8-million that were not fully recouped from the non-commercial level production, and sale of canola oil and meal during the commissioning phase.

Operating costs will continue to exceed revenues until commissioning is fully completed and the PCC plant is operating at full production. Loss before interest, taxes depreciation and amortization was $4.5-million. Selling and administrative expenses increased to $943,000 as operating activity increased to normal levels in preparation for full production this year.

Financial statements, and management's discussion and analysis

Legumex Walker's financial statements and MD&A for the period ended March 31, 2013, are available on the company's website in the investors section.

Conference call

Legumex Walker will host a conference call on Wednesday, May 15, 2013, at 8:30 a.m. ET to discuss its first quarter 2013 financial results. To access the conference call by telephone, dial 647-427-7450 or 888-231-8191. Please connect approximately 10 minutes prior to the start of the call to ensure access.

A recording of the conference call will be archived for replay by telephone until Wednesday, May 22, 2013, at midnight. To access the archived conference call, dial 1-855-859-2056 and enter reservation No. 59254757.

A live audio webcast of the conference call will be available. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

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