MANKATO, MINNESOTA and WINNIPEG, MANITOBA--(Marketwire - Feb. 9, 2012) - Ridley Inc. (TSX:RCL) today reported its financial results for the three and six months ended December 31, 2011. All currency amounts are stated in U.S. dollars unless otherwise noted.

For the three months ended December 31, 2011, Ridley's earnings before interest, taxes, depreciation and amortization (EBITDA (i)) were $8.3 million compared to $9.8 million last year. Net profit after income taxes (NPAT) was $4.0 million (31 cents per share) compared to $4.9 million (38 cents per share) last year.

Ridley's revenues grew by 11.3% to $177.2 million in the second quarter this year, primarily a result of an elevated level of raw material prices relative to the same period last year and a continuing shift in product mix towards higher value added products. Overall tonnage volumes were even with the same period last year as positive sales results under generally favourable economic conditions for livestock and poultry producers were offset by unseasonably mild weather. Gross profits decreased by 8.2% in the quarter to $20.1 million as average unit margins were pressured by the negative effect of declining commodity prices since the start of the current fiscal year on raw materials held in inventory. Operating expenses of $13.9 million were materially unchanged from last year. Operating income before interest and taxes of $6.2 million was lower by $1.7 million from the previous year.

Ridley Block Operations' $4.7 million in operating income in the second quarter of fiscal 2012 was unchanged from last year as unfavourable weather conditions offset stronger private label sales. U.S. Feed Operations contributed $1.8 million in the second quarter, compared to $2.4 million last year, as declining commodity prices and increased operating expenses more than offset growth in tonnage volumes. Ridley Feed Ingredients' contribution of $0.3 million in the quarter compared to $0.9 million last year reflects lower volume from a discontinued product, declining commodity prices and higher operating costs. Canadian Feed Operations contributed operating income of $0.2 million for the quarter compared to $0.8 million last year as product mix improvements and good cost controls were offset by lower volumes and declining commodity prices. Corporate overhead expenses were in line with the same period last year.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management Discussion and Analysis dated as at February 9, 2012 and the accompanying interim consolidated financial statements for the three and six months ended December 31, 2011 have been prepared to reflect the adoption of International Financial Reporting Standards ("IFRS") by the Company, with effect from July 1, 2010. Note 22 to the interim consolidated financial statements contains a detailed description of the Company's conversion to IFRS, including a line-by-line reconciliation of its consolidated financial statements previously prepared under Canadian GAAP to those prepared under IFRS for the three and six months ended December 31, 2010 and for the year ended June 30, 2011. Although the adoption of IFRS resulted in adjustments to Ridley's financial statements, it did not materially impact the underlying cash flows or profitability of the Company's operations.

For the fiscal year 2012, the Company has modified its reporting segments. Prior to fiscal 2012 Ridley Feed Operations (RFO) was comprised of Ridley's traditional Canadian and U.S. feed businesses. The RFO segment has now been divided into two reporting segments: Canadian Feed Operations (CFO) and U.S. Feed Operations (USFO). Prior to fiscal 2012, Ridley Nutrition Solutions (RNS) was a combination of Ridley's feed supplement block business and McCauley Bros., a premium equine feed business. Starting in fiscal 2012 the McCauley equine business is reported within the results of U.S. Feed Operations while the block business of RNS is renamed Ridley Block Operations (RBO). The Ridley Feed Ingredients (RFI) reporting segment, which produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients, is unchanged from prior years. Corporate overhead expenses were in line with the same period last year.

Consolidated Second Quarter Results

Revenue of $177.2 million in the second quarter of fiscal 2012 was higher by $18.0 million from the same period last year. A comparison of revenue is not necessarily indicative of the strength of Ridley's business because revenue is influenced by fluctuating commodity prices. Raw material prices were generally higher this year than the same period last year, which had the effect of increasing average unit selling prices for the Company's feed products. Overall sales volumes were not significantly changed from last year; consequently, the 11.3% increase in sales revenues in the second quarter was largely the result of higher raw material prices relative to last year and continually improving product mix.

Consolidated gross profit in the second quarter of fiscal 2012 was $20.1 million compared to $21.9 million in the same period last year. Gross profit is comprised of the margin of sales revenues over ingredient costs less the costs of manufacturing and delivery. Margins for feed products may be affected by inventory holding gains or losses realized during periods in which market prices for feed ingredients are rising or falling. Most of the $1.8 million reduction in consolidated gross profits was the result of declining feed ingredient prices since the start of the current fiscal year from elevated levels last year. In the second quarter last year the Company recorded a credit of $0.5 million to cost of goods sold for the market valuation of unrealized gains in the second quarter associated with open sales contracts with customers. Because of declining commodity prices this year, the unrealized gain on open sales contracts was less than $0.1 million. Increased manufacturing costs in the second quarter also reduced gross profits.

Operating expenses include selling, marketing and administration, as well as depreciation of property, plant and equipment. In the second quarter of fiscal 2012, operating expenses of $13.9 million were largely unchanged from last year. While selling and marketing expenses were even with last year, lower administration expenses reflected improved operating efficiencies.

EBITDA is comprised of operating income before depreciation, amortization and exceptions. For the three months ended December 31, 2011 EBITDA was $8.3 million compared to $9.8 million for the same period last year. There were no material exceptions in the second quarter of this year or the prior year.

Net earnings after taxes for the second quarter of fiscal 2012 were $4.0 million (earnings per share of $0.31) compared to $4.9 million (earnings per share of $0.38) in the same period of fiscal 2011.

Comprehensive income (loss) is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Other comprehensive income (OCI) is comprised primarily of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Comprehensive income in the second quarter of fiscal 2012 was $4.5 million which was comprised of net income of $4.0 million, as reported above, plus unrealized gains of $0.5 million on the translation of the financial statements of Canadian entities to U.S. currency.

Consolidated Six Months Results

For the six months ended December 31, 2011, revenue of $333.7 million was $46.9 million higher than the same period last year. Generally higher raw material prices this year had the effect of increasing average unit selling prices for the Company's feed products. As tonnage volumes this year were approximately even with last year, the 16.4% increase in sales revenues in the current year-to-date mostly reflects the higher level of raw material costs over last year and continued improvements in product mix. Factors bearing on tonnage volumes in the first half of fiscal 2012 included positive sales results under good economic conditions for livestock and poultry producers, combined with favourable weather conditions for block sales in the first quarter this year, which more than offset by unfavourable, unseasonably mild weather in the second quarter.

Consolidated gross profit of $36.1 million for the first half of fiscal 2012 was $1.2 million lower from the prior year due to generally declining prices for feed ingredients during fiscal 2012. Increased manufacturing costs in the first half this year also contributed to reduced gross profits.

Operating expenses in the first half of fiscal 2012 were $28.4 million, an increase of $1.7 million over last year. Selling and marketing expenses were higher by $0.7 million in the first half this year while administration expenses were higher by $0.5 million due to the reallocation of certain expenses from manufacturing overhead, and consulting fees related to the implementation of lean manufacturing initiatives. The loss on sale of facility of $0.3 million (before income taxes) recorded in the first quarter of fiscal 2012 related to the disposal of a previously closed facility in Syracuse, Indiana.

EBITDA in the first six months of fiscal 2012 was $12.1 million compared to $14.5 million for the same period last year. EBITDA is comprised of operating income before amortization and exceptions. Exceptions in fiscal 2012 consisted of the $0.2 million loss (net of income taxes) on the sale of a redundant facility recorded in the first quarter this year. There were no exceptions of material significance in the first six months of the prior year.

Net earnings after taxes for the six months ended December 31, 2011 were $4.7 million (earnings per share of $0.37) compared with net earnings after taxes of $6.6 million (earnings per share of $0.51) in the same period last year.

Comprehensive income of $3.3 million in the six months year-to-date of fiscal 2012 was comprised of net income of $4.7 million, as reported above, less unrealized losses of $1.3 million on the translation to U.S. currency of financial statements of Canadian entities.

International Financial Reporting Standards

The Canadian Accounting Standards Board (AcSB) requires all public companies to adopt International Financial Reporting Standards (IFRS) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Company has commenced reporting its financial results in accordance with IFRS for the year ended June 30, 2012 and its quarterly unaudited interim results starting with the quarter ending September 30, 2011. The notes accompanying the interim financial statements provide comparative data on an IFRS basis, including an opening balance sheet as at July 1, 2010.

Differences between Canadian GAAP and IFRS in the method for the determination of impairment of assets resulted in the Company realizing an impairment of certain assets in its conversion to IFRS. The impairment amount of $12.7 million is reflected as a decrease in property, plant and equipment in the opening transition balance sheet as at July 1, 2010. IFRS and Canadian GAAP also differ on the recognition of actuarial gains/losses associated with long-term employee obligations such as defined benefit pensions and post-retirement medical benefits. Canadian GAAP allows for deferral and subsequent amortization of actuarial gains/losses while IFRS recognize gains/losses immediately through comprehensive income. The opening transition entries include an increase in liabilities of $11.4 million associated with long-term employee benefits. Deferred tax benefits of $8.3 million are recorded under IFRS for the income tax effects of the aforementioned transition entries. Combined, these changes realized from the conversion to IFRS resulted in a net reduction to equity of $15.8 million in the opening transition balance sheet as at July 1, 2010.

The Company elected to reclassify all cumulative translation differences as of January 1, 2010 from a separate component of equity to retained earnings. The effect of this reclassification was a reduction in the balance sheet account of accumulated other comprehensive income, and an increase in retained earnings, of $11.2 million.

The Company has performed an evaluation of its financial information systems and the financial reporting impact of divergences identified to-date and concluded that transition to IFRS did not require material modifications to information and reporting systems. The Company concluded that its internal controls over financial reporting, disclosure controls and procedures are appropriately designed and properly functioning for an IFRS reporting environment. The design includes new controls over the transition accounting.

Reconciliation of Non-IFRS Financial Measures

The Company reports its financial results according to IFRS. However, included in this management discussion and analysis are certain non-IFRS financial measures and ratios which the Company's management believes provide useful information in measuring the financial performance and financial condition of the Company. These measures and ratios do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other public companies, nor should they be construed as an alternative to other financial measures described by IFRS.

The following table is a reconciliation of EBITDA to net earnings, the most closely comparable IFRS measure to EBITDA. For purposes of this table, operating income is defined as net earnings before finance costs, interest income and provision for income taxes. EBITDA is defined as operating income before depreciation, amortization and exceptions.

Canadian Feed Operations (CFO)

The Canadian Feed Operations (CFO) segment consists of eight full-line production facilities producing and marketing products for the core animal nutrition market. CFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Prairie Provinces and Ontario.

Approximately 70% of CFO's total volumes are of complete feed products which typically carry lower unit margins within the product mix. Although CFO's tonnage volumes in the second quarter of fiscal 2012 declined by 5.0% compared to last year, the decline was concentrated in lower margin complete swine feeds and, therefore, had a less proportionate impact on total margins. For the year-to-date, CFO volumes were lower by 5.5%, mainly in complete swine feeds.

CFO gross profits in the second quarter this year were $2.6 million compared to $3.3 million in the same period last year. Reduced complete feed volumes and declining feed ingredient prices were the primary drivers of the $0.7 million decline in gross profits in the second quarter compared to last year. For the six months year-to-date gross profit was lower by $1.3 million.

Operating expenses were higher by $0.5 million for the year-to-date, largely a result of first quarter investments in lean manufacturing improvements. Operating income for the quarter was $0.2 million, a decrease of $0.6 million over last year. For the year-to-date, CFO recorded an operating loss of $0.9 million compared to operating income of $1.0 million last year.

U.S. Feed Operations (USFO)

The U.S. Feed Operations (USFO) segment consists of twenty-one full-line production facilities producing and marketing products for the core animal nutrition market. USFO manufactures and markets a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Midwestern United States.

Tonnage volume was higher by 4.0% in the second quarter of fiscal 2012 compared to last year. For the year-to-date volumes were higher by 3.6% over last year. The increase in volumes in fiscal 2012 reflected a stronger performance in sales of higher value added supplements and generally favourable producer economics despite unseasonably mild winter conditions in the second quarter.

Gross profits in the second quarter this year were $8.8 million compared to $9.3 million in the same period last year. Average unit margins were slightly lower in fiscal 2012 as a consequence of declining feed ingredient prices, which more than offset improved product mix. Gross profits for the six months year-to-date were lower by $0.2 million. Operating expenses in the second quarter were higher by $0.2 million and were $0.9 million higher for the year-to-date. Operating income for the quarter was $1.8 million, a decrease of $0.7 million from last year. For the year-to-date operating income was $2.2 million compared to $3.3 million for the same period last year.

Ridley Feed Ingredients (RFI)

The Ridley Feed Ingredients (RFI) segment produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients to customers throughout North America from its production facility in Mendota, Illinois.

Tonnage volumes in the second quarter of fiscal 2012 were lower by 11.8% compared to last year, primarily as a result of the discontinuance of a private-label toll-milled product. For the same reason, tonnage volumes for the year-to-date were lower by 10.9%.

Gross profit in the second quarter was lower by $0.6 million or 34.8% from last year as a result of lower volumes and unit margins combined with higher manufacturing costs. Average unit margins in the second quarter were lower than last year but were slightly above last year for the first six months. Unit margins reflected declining market prices of ingredient this year. Variable production costs were lower in the first half of fiscal 2012 as plant staffing levels were adjusted to lower volumes; however, manufacturing overhead expenses in the second quarter were higher. For the year-to-date gross profit was lower by $0.5 million or 16.0%.

Operating expenses in the second quarter were even with the prior year but higher by $0.2 million for the year-to-date on increased consulting fees related to lean manufacturing initiatives. Operating income for the quarter was $0.3 million, a decrease of $0.6 million over last year. For the year-to-date, operating income was $0.9 million compared to $1.7 million last year.

Ridley Block Operations (RBO)

The Ridley Block Operations (RBO) segment manufactures and markets a complete range of block supplements, including low moisture, pressed, compressed, composite and poured blocks, and loose minerals from seven U.S. facilities. Tonnage volumes in the second quarter of fiscal 2012 were 4.2% lower relative to last year and reflected the unusually mild winter conditions this year, which were less favourable to cattle feed supplementation. For the year-to-date, RBO volumes were 5.6% ahead of last year as a result of a favourable beef cattle economy, growth in private label sales and drought in the south-central U.S. that supported higher tonnage volumes earlier in the current year.

Gross profits of $7.4 million in the second quarter this year were unchanged from last year as reduced volumes were offset by higher average unit margins resulting from continuing improvements in product mix. For the six months year-to-date, gross profits were ahead of last year by $0.9 million on increased tonnage volumes and improved average unit margins, which more than offset increased manufacturing expenses.

Operating expenses in the second quarter of fiscal 2012 were unchanged from $2.7 million last year. Six months year-to-date operating expenses increased by $0.3 million, which reflected a $0.3 million loss (before income taxes) on the sale of the previously closed facility in Syracuse, Indiana. Operating income for the quarter was $4.7 million, unchanged from last year, while operating income for the year-to-date of $7.0 million was ahead of last year by $0.5 million.

Working capital balances decreased by $0.4 million in the three months between September 30, 2011 and December 31, 2011. Increased accounts receivable and inventories, reflective of the seasonal increase in sales volumes, and a decrease in the amount of outstanding cheques were offset by a $5.3 million increase in advances from mainly U.S. customers who prepay their feed accounts for tax reasons. Working capital balances since the start of the current year were higher by $4.6 million as accounts receivable and inventory balances were higher by $6.3 million reflecting the seasonal increase in sales volumes. Turnover rates for accounts receivable and inventories were improved in the second quarter and for the year-to-date as the Company continues to focus on more efficient asset management.

Cash surplus of $2.6 million as at December 31, 2011 was comprised of $4.1 million of cash and short term deposits, less long term debt of $0.5 million and a $1.0 million balance in revolving credit. The Company funded all capital expenditures in the current year from operating cash flows.

The following is a summary of cash generated or utilized by business operations, net of capital expenditures on plant and equipment and other intangibles, excluding business acquisitions.

For the second quarter of fiscal 2012, cash flows from operations net of capital expenditures were $8.2 million compared to $7.3 million in the same three-month period last year. Cash flows from decreased working capital balances were $4.0 million in the second quarter of fiscal 2012. A $5.3 million increase in customer advances between September 30, 2011 and December 31, 2011 offset higher accounts receivable and inventory balances in the period.

Capital Expenditures

Capital expenditures in the second quarter of fiscal 2012 were $1.9 million compared to $1.8 million in the same period a year ago. Capital expenditures for the year-to-date were $4.0 million compared to $3.9 million last year. Capital expenditures in fiscal 2012 were mainly on a variety of routine equipment and facility upgrades and continuing automation projects.

Outstanding Share Data

Ridley's share capital consists of an unlimited number of common shares, with no par value. On December 12, 2011 Ridley received approval from the Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid for the Company's shares through the facilities of the TSX. The shares repurchase program permits the Company to purchase for cancellation up to 639,499 of its common shares over the twelve month period ending December 14, 2012. As at December 31, 2011 the Company had repurchased no shares under the current normal course issuer bid. The number of shares outstanding as at December 31, 2011 and as at February 9, 2012 was 12,789,978.

Seasonality and Commodity Variability

The Company experiences seasonal variations in volumes. Historically, volume is strongest in the second and third fiscal quarters when colder weather increases demand for feed. Certain of the raw materials comprising the Company's products incorporate commodities. Fluctuating commodity prices may therefore influence revenues and the associated cost of sales as the Company's selling prices are adjusted to reflect current commodity markets.

Internal Control Over Financial Reporting

The Chief Executive Officer and Chief Financial Officer have each signed form 52-109F2 - Certification of Interim Filings and filed it with the appropriate securities regulators in Canada in compliance with National Instrument 52-109: Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.

Forward-Looking Information

This report contains "forward-looking" information. The forward-looking information includes statements concerning Ridley's outlook for the future as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of the MD&A included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.

OUTLOOK

At the present time, most sectors of livestock and poultry production in North America, with the notable exception of the U.S. broiler industry, are operating profitably because of improved prices for meat, milk and eggs. Since 2008, high feed ingredient prices have limited herd and flock expansion. The potential for continuing volatility in feed ingredient prices will remain one of the more significant drivers for Ridley's results. Ridley's business will be sensitive to any changes in the economic environment for producers and herd or flock populations. Ridley's growing lifestyle markets and higher-value added products tend to be more stable in market demand. In the face of these external uncertainties, the Company continues to improve its cost competitiveness through a number of initiatives to improve operating efficiencies including additional manufacturing automation, using lean manufacturing techniques and better utilization of information technology.

Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg, Manitoba, is one of North America's leading commercial animal nutrition companies. Ridley employs more than 800 people in the United States and Canada in the manufacture, sales and marketing of a full range of animal nutrition products under highly regarded trade names. Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL). Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at [ www.sedar.com ]. Visit our website at [ www.ridleyinc.com ].