TICKER SYMBOL: IFX.A
MONTREAL, April 1 /CNW Telbec/ - Imaflex Inc. (the "Company")
(TSX Venture Exchange - IFX.A) announces results for the fourth quarter ended
December 31, 2007.-------------------------------------------------------------------------
(unaudited)
(CDN $ thousands,
except per share amounts) Q4 2007 Q4 2006 2007 2006
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Sales 10,991 11,263 46,840 51,775
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Cost of sales 9,148 9,699 40,019 43,711
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Gross profit ($) 1,843 1,564 6,821 8,064
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Gross profit (%) 16.8 13.9 14.6 15.6
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Expenses 1,701 1,885 7,460 7,382
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FX loss (gain) on translation 82 564 (653) 176
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(Loss) income before income
taxes and non-controlling
interest 60 (885) 14 506
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Provision for income taxes (17) (100) 70 737
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Non-controlling interest - (29) - (100)
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Net (loss) income 77 (756) (56) (131)
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Basic and diluted (loss)
earnings per share 0.0020 (0.0200) (0.0015) (0.0030)
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EBITDA 1011 (90) 3,822 3,707
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-------------------------------------------------------------------------The results include those of Imaflex Inc. ("Imaflex") located in Montreal
(Quebec) and its division Canguard Packaging ("Canguard") located in
Victoriaville (Quebec) and its wholly owned subsidiaries, Imaflex USA, Inc.
("Imaflex USA") located in Thomasville (North Carolina) and Canslit Inc.
("Canslit") located in Victoriaville (Quebec). Canguard was incorporated in
2006 as a 70%-owned subsidiary. On December 29, 2006, Imaflex acquired the
non-controlling interest in Canguard for a nominal amount and transferred the
assets and operations into Imaflex.
Summary - Results of Operations
The Company earned a net income of $77,000 for the three months ended
December 31, 2007, compared with net loss of $ 756,000 for the same period in
2006. The Company continues to face significant pricing pressures due to
reduced demand and excess supply. Meanwhile, U.S. competitors continued to
penetrate aggressively the Company's local markets. As a result, the Company's
Quebec operations generated net income of $96,000 for the three months ended
December 31, 2007, compared with net income of $283,000 for the same period in
2006. The current quarter includes a future income tax recovery of $98,000,
resulting from recently enacted decreased federal corporate tax rates. The
previous year included a future income tax recovery of $75,000 resulting from
enacted decreased federal corporate tax rates.
Furthermore the current quarter's results were adversely impacted by
losses at the Company's U.S. facility of $470,000 (before reimbursement from
one of its equipment manufacturer of $425,000 reflected as a reduction of cost
of goods sold.), compared with 478,000 for the same period in 2006. Lastly,
the Company incurred a foreign exchange loss on the translation of the
integrated subsidiary of $82,000, as a result of an appreciation in the U.S.
dollar during the quarter, compared with a foreign exchange loss of $564,000
for the same period in 2006.
On a consolidated basis the Company incurred a net loss of $56,000 for
the year ended December 31, 2007, compared with net loss of $131,000 for the
same period in 2006. The Company continues to face margin pressures throughout
its operations, as a result of competitive pricing pressures in the plastics
packaging industry, which have resulted in notable sales volume decline.
Furthermore, the Company's US subsidiary and Canguard Division did not
generate the appropriate sales volume levels necessary to recover current
operating costs. As a result, the Company's Quebec operations generated a net
loss of $879,000 for the year ended December 31, 2007, compared with net
income of $2,062,000 for the same period in 2006. Furthermore, the current
period's results were adversely impacted by losses at the Company's U.S.
facility of $1,305,000, compared with $1,854,000 for the same period in 2006.
In addition, the Company incurred a foreign exchange gain on the translation
of the integrated subsidiary of $653,000, compared with a foreign exchange
loss of $176,000 for the same period of 2006.
Sales
Sales for the three months ended December 31, 2007 totaled $10,991,000
compared with $11,263,000 for the same period in 2006. Sales for the year
ended December 31, 2007 totaled $46,840,000 compared with $51,775,000 for the
same period in 2006.
Gross profit margins
Gross profit margin for the three months ended December 31, 2007 was
16.8% of sales, compared with 13.9% for the same period in 2006. Gross profit
margin for the year ended December 31, 2007 was 14.6% of sales, compared with
15.6% for the same period in 2006.
The increase in gross profit margin in the fourth quarter is due
primarily to the compensation received from an equipment supplier.
The decline in gross profit margin for the year is primarily due to
reduced margins as a result of competitive conditions. In addition, the
Company experienced production inefficiencies and lower than expected sales
volume at the Company's U.S. and Canguard division.
Income taxes
In 2007, the income tax provision reflects the taxes on the income
generated by the Company's Quebec operations. It also includes a future income
tax recovery of $98,000, resulting from enacted decreased federal corporate
tax rates. No future income tax benefits have been recorded on the Company's
losses at its U.S. location.
In 2006, the income tax provision reflects the taxes on the income
generated by the Company's Quebec operations. It also includes a future income
tax recovery of $75,000 resulting from enacted decreased federal corporate tax
rates and the recognition of loss carry forwards on the winding up of its
Ontario subsidiary the benefit of which was $123,000. No future income tax
benefits have been recorded on the Company's losses at its U.S. location.
Management Outlook
The year 2007 was a year of continuous adaptations to the realities of a
more competitive market. The balance between supply and demand saw a rapid
shift and became one of "over supply". This over capacity did not arise from
investment increases, but from the effects of a sluggish economy, and the
rapid rise of the Canadian dollar. The results of these dynamics, over the
last eighteen months, took a heavy toll on Imaflex's ability to maintain
shareholder value.
These realities have demanded patience, nerve, and of course, the
financial strength to weather the journey. We had all the components, and it
is management's view that we are finally positioned to begin the reversal of
this downward trend in 2008.
Our metallizing facilities, whose majority of polyethylene sales is
dependent on the U.S. market, will finally benefit from the extrusion of its
own materials. The extrusion lines commenced operations in the latter part of
the fourth quarter of 2007. This lower cost will permit our Company to
maintain our exports to the U.S., while improving the financial results.
In our U.S. operation, an agreement with our suppliers was concluded that
permits addressing the machinery woes in a permanent manner. We are on
schedule in resolving all those mechanical issues that have prevented us from
utilizing the equipment, and look forward to increase revenues in this entity
during the course of 2008 to dramatically lower the losses that we have been
incurring.
The Chairman of the Board of Directors wishes to inform its shareholders
of a change in Directors. Mr. Pierre Myrand has been a director since the
company became public and leaves the Board to pursue other objectives. We wish
him continued success and thank him for his contribution over the years as a
member of the Board and of the Audit Committee. This change takes effect
immediately.
The Chairman of the Board of Directors wishes to inform shareholders of
the nomination of Mr. Michel Baril as a Director and member of the Audit
Committee. Mr. Baril has over 30 years experience including senior VP
positions and the Presidency of a division of a multinational corporation.
Mr. Baril also sits on numerous other Boards of Directors. His nomination
takes effect immediately
Safe Harbor Statement
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 Financial Measures - EBITDA
EBITDA (earnings before interest, taxes, depreciation and amortization)
is not recognized under Canadian GAAP. The Company believes that in addition
to net income, EBITDA is a useful supplemental measure as it provides
investors with an indication of cash available prior to debt service, capital
expenditures and income taxes. Investors should be cautioned, however, that
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 differ from other companies, and,
accordingly EBITDA may not be comparable to measures 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; Robert Nagy, CMA., CIA Controller, (514) 935-5710, FAX: (514) 935-0264,
info@imaflex.com, www.imaflex.com
