TICKER SYMBOL: IFX.A
MONTREAL, May 9 /CNW Telbec/ - Imaflex Inc. (the "Company") (TSX Venture
Exchange - IFX.A) announces results for the first quarter ended March 31,
2007.-------------------------------------------------------------------------
(unaudited)
(CDN $ thousands, except per share amounts) Q1 2007 Q1 2006
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Sales 12,028 11,800
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Cost of sales 10,292 10,048
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Gross profit ($) 1,736 1,752
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Gross profit (%) 14.4 14.8
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Expenses 1,870 1,657
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FX loss (gain) on translation (136) 68
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Income before income taxes and non-controlling
interest 2 27
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Provision for income taxes 81 200
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Non-controlling interest - (14)
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Net loss (79) (159)
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Basic and diluted loss per share (0.002) (0.004)
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EBITDA 903 761
-------------------------------------------------------------------------The results include those of Imaflex Inc. ("Imaflex") located in Montréal
(Québec) and its division Canguard Packaging ("Canguard") located in
Victoriaville (Québec), and its wholly owned subsidiaries, Imaflex USA, Inc.
("Imaflex USA") located in Thomasville (North Carolina) and Canslit Inc.
("Canslit") located in Victoriaville (Québec). Towards the end of the first
quarter, Canguard's installations were moved from Toronto (Ontario) to
Victoriaville (Québec)
Summary - Results of Operations
-------------------------------
The Company incurred a net loss of $79,000 for the three months ended
March 31, 2007, compared with a net loss of $159,000 for the same period in
2006. The Company's established operations (Imaflex and Canslit) generated
combined net income of $276,000 for the three months ended March 31, 2007,
compared with net income of $424,000 for the same period in 2006. Canguard
incurred a net loss of $105,000 for the three months ended March 31, 2007,
compared with a net loss of $34,000 for the same period in 2006. Furthermore
the current quarter's results were adversely impacted by losses at the
Company's U.S. facility of $386,000, compared with $481,000 for the same
period in 2006. Lastly, the Company incurred a foreign exchange gain on the
translation of the integrated subsidiary of $136,000, compared with a foreign
exchange loss of $68,000 for the same period in 2006. The Company continues to
face margin pressures at its established operations, as a result of
competitive pricing pressures in the plastics packaging industry. The
Company's U.S. and Canguard operations have not generated the appropriate
sales volume levels necessary to recover current operating costs.
Sales
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Sales for the three months ended March 31, 2007 totaled $12,028,000
compared with $11,800,000 for the same period in 2006. The increase of
$228,000 or 1.9% was driven primarily by volume growth, which was
significantly offset by a decrease in average selling prices, as a result of
lower raw material costs.
Gross profit margins
--------------------
Gross profit margin for the three months ended March 31, 2007 was 14.4%
of sales, compared with 14.8% for the same period in 2006. The gross profit
margin remains at levels we have historically not been accustomed to as a
result of competitive conditions in the domestic and export markets. In
addition, the Company experienced production inefficiencies and low sales
volume at the Company's U.S. and Canguard facilities.
Income taxes
------------
In 2007, the income tax provision reflects the taxes on the income
generated by the Company's Canadian operations. No future income tax benefits
have been recorded on Imaflex USA's operating losses.
In 2006, the income tax provision reflected the taxes on the income
generated by the Company's Canadian operations. No future income tax benefits
were recorded on Imaflex USA's and Canguard's operating losses.
Management Outlook
------------------
Market conditions in the plastics packaging industry are stabilizing.
Demand for our polyethylene products, though not at levels seen in the years
prior to 2006, has improved. The increased profitability at the Montreal
facility was realized because of greater volume. These conditions have allowed
management to once again concentrate on volume growth and on generating more
efficiency at this facility.
Now that most, if not all, of the equipment problems have been resolved,
management expects constant improvement during the course of the year at its
U.S. facility. As the fiscal year progresses, management is confident that as
sales volume increases, operating losses will be reduced, and by year end
small monthly operating profits will be achieved.
Management is trying to diversify its product line at Canslit's
Victoriaville facility, so as to not place undue reliance on a sole product
type to achieve its growth objective. The current quarter's results reflect
the seasonal nature of sales in the agricultural market. Management expects
improved results in the next quarter.
As described in our press release dated March 13, 2007, Canguard's move
from Ontario to Québec and its reorganization are proceeding as planned.
Safe Harbor Statement
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Certain statements and information included in this release constitute
"forward-looking statements". Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied in
such forward-looking statements. Additional discussion of factors that could
cause actual results to differ materially from management's projections,
estimates and expectations is contained in the Company's other public filings.
Unless otherwise required by the securities authorities, we do not undertake
to update any forward-looking statements that may be made from time to time by
us or on our behalf.
Non-GAAP Measure
----------------
The Company's management uses a non-GAAP measure in this press release,
namely EBITDA. Management wishes to specify that in the performance of the
Company's financial results, EBITDA is shown as "Earnings before interest,
taxes, non-controlling interest, depreciation and amortization". While EBITDA
is not a standard GAAP measure, management, analysts, investors and others use
it as an indicator of the Company's financial and operating management and
performance. EBITDA should not be construed as an alternative to net income
determined in accordance with GAAP as an indicator of the Company's
performance. The Company's method of calculating EBITDA may be different from
those used by other companies.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
%SEDAR: 00011834EF
For further information: Imaflex Inc.: Joseph Abbandonato, President and
C.E.O; Roberto Longo, CA, VP - Finance; (514) 935-5710, Fax: (514) 935-0264,
info@imaflex.com, www.imaflex.com
