NOVIK CONTINUES ITS SALES GROWTH

FIRST QUARTER 2011 HIGHLIGHTS

  • Record sales for a first quarter at $4.5M
  • 16% sales growth versus first quarter 2010
  • Increase in gross margin to 36% of sales
  • Adjusted EBITDA of $390,000 compared with $49,000
  • Net loss of $77,000 compared to $275,000

QUEBEC CITY, May 19 /CNW Telbec/ - Novik inc. (TSXV: NVK) releases today its results for the first quarter of fiscal year 2011. All amounts are expressed in Canadian dollars unless otherwise indicated.

 
NOVIK inc.            
for the periods ended March 31, 2011 and 2010 First First
(in thousands dollars, except for amounts per share) quarter quarter
        2011 2010
        $ $
Operating results        
           
Revenues       4,486 3,854
Gross margin       1,619 1,274
Income before depreciation, stock-based compensation, financial expenses and income taxes 390 49
Net loss     (77) (275)
Basic and diluted net income (loss) per share (0.002) (0.006)
           
           
NOVIK inc.          
        March 31, Dec. 31,
(in thousands dollars, except for amounts per share) 2011 2010
        $ $
Financial position        
           
Total assets       24,988 24,469
Working capital     2,516 2,186
Total long-term financial liabilities     9,553 8,960
Total liabilities       13,589 13,090
Shareholder's equity     11,308 11,379
Shareholder's equity per share   0.23 0.23
           
Number of shares outstanding   48,470,858 48,470,858

During the course of the first quarter of fiscal year 2011, Novik recorded revenues of $4.5 M, compared to $3.9 M during the same quarter of the previous fiscal year.  Mr. Gaudreau, Novik's CEO, points out "this level of sales is a record for Novik during a first quarter, surpassing that of last year.  It should be noted that for the last six quarters, Novik has had record sales for each of these periods."

This 16% growth in Novik sales in the first quarter compared to the same period of the previous fiscal year is localized in Europe and Mexico.  Stronger economic activity in certain European countries has allowed Novik to make more deliveries on this continent since the beginning of the year with distributors in place.  Greater sales of nearly $850,000 in the first quarter compared to the same period of the previous fiscal year suggest greater annual growth in 2011 compared to 2009 and 2010.  In the last two fiscal years, European sales totalled $1.9 M in 2009 and $2.4 M in 2010.  As for our Mexican sales, since the beginning of the year, a major distributor in this country has been given more construction projects using one of our roof coverings.  As of today, orders totalling more than $1,000,000 have been received from this customer in 2011, and most of them will be delivered in the next quarter.

At the Canadian level, sales remained stable in this first quarter compared to last year and despite the weather condition experienced in this period.  The late snowmelt, seen mainly in Quebec and the Maritimes, slowed down construction and renovation projects in these territories.

In the US, the decrease in sales of nearly $400,000 is also explained in part by the severe weather conditions seen in the northern United States, which has delayed renovation and residential construction projects. In addition, during the first quarter of last year, Novik had offered advantageous introductory discounts to new US distributors. This initiative had thus allowed Novik to generate sales figures greater than those observed in the current quarter but at lower profitability.

EARNINGS BEFORE INTEREST, STOCK-BASED COMPENSATION COSTS, TAXES, DEPRECIATION AND AMORTIZATION ("adjusted EBITDA")

Earnings before interest, stock-based compensation costs, taxes, depreciation, and amortization (adjusted EBITDA) is a measure that has no standardized meaning prescribed by International Financial Reporting Standards (IFRS).  It is therefore considered to be a non-IFRS measure.  Accordingly, the measure may not be comparable to similar measures presented by other issuers.  This measure is presented and described in this management report in order to provide shareholders and potential investors with additional information regarding the company's liquidity and ability to generate funds to finance its activities.

For the first quarter of fiscal year 2011, adjusted EBITDA is $390,000 compared to $49,000 for the same period of the previous fiscal year.

A higher level of sales of nearly $600,000 for the period compared to the previous year and lower levels of introductory discounts offered to new customers mainly explain this increase.  In order to encourage new distributors offering high potential volume to join Novik, favourable terms were granted to them last year to allow them to stock our products in their warehouses.  This measure promoted the receipt of large orders in the first quarter of the previous fiscal year in return for this introductory discount but had reduced gross margin on these sales.

NET LOSS

The company's net loss for the first quarter of fiscal year 2011 amounts to $77,000 compared to a net loss of $275,000 for the same quarter of the previous fiscal year.  The company generally shows a net loss in its first quarter of each fiscal year.  This situation is explained by cyclical fluctuations, as the first quarter is normally a quarter signifying a slow-down in sales compared to the second and third quarter.

This reduction in net loss is directly in line with the same elements previously explained: the increase in the sales volume combined with the decrease in introductory discounts offered to major customers last year.  These financial earnings are directly related to our desire to improve the company's profitability.

OUTLOOK

Novik's financial performance in the first quarter of the current year is encouraging; thanks to the growth of its sales, cost containment, and reduction of its net loss.  The posted results are directly in line with the objectives set at the beginning of the year: an increase in sales and better profitability compared to last year.

The current orders on hand and the current discussions with our Canadian, US, and international distributor allow us to remain positive about achieving our 2011 sales growth objective.  However, we must be vigilant in the coming months in order to reach our financial objective of obtaining better profitability than last year.  The significant increase in the cost of raw materials observed since the beginning of the fiscal year as well as the level of the Canadian dollar in relation to the US dollar bring external obstacles that must be addressed.

An increase in the price of our products already announced to our customer for May 2011, the search for and purchase of alternative materials at a lower cost without compromising the quality of our products, and the establishment of actions aiming to improve our production costs are measures already taken to react to these obstacles.  We are also making significant efforts with our team members to bring about additional actions necessary to lessen these negative trends.

OTHER

Following the annual general meeting held this morning, the directors have approved the grant of 1,175,000 stock options available to directors and certain officers at $0.36 a share.

About NOVIK

Novik (NVK) is a leader in the design, manufacturer and distribution of innovative polymer exterior siding, roofing coverings and accessories that replace traditional materials such as stone, brick or wood shingles.  These products target the world-wide residential and commercial construction industry.

Forward-looking statements contained in this press release involve  known and unknown risks, uncertainties or other factors that may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 

 

 

SOURCE Novik Inc.

For further information:

Source :  

Novik inc.

For further information:

Michel Gaudreau
President
Tel. : (418) 878-6161
E-mail : micgau@novik.com

Pascal Bouthot
Vice-President, Finances
Tel. : (418) 878-6161
E-mail : pasbou@novik.com

Profil de l'entreprise

Novik Inc.

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