CPI Plastics Group Ltd. announces results for the third quarter of 2007



    MISSISSAUGA, ON, Nov. 15 /CNW/ - CPI Plastics Group Ltd., ("CPI")
announced today its financial results for the three and nine months ended
September 30, 2007. A summary of those results is as follow:

    
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                                          Third Quarter       Year to Date
    (in thousands of dollars except       3 months ended     9 months ended
     per share amounts)                    September 30       September 30
                                           (unaudited)         (unaudited)
                                          2007      2006      2007     2006
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    Net Sales                           25,746    33,965    88,014   116,498
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    Operating Margin                      (132)    1,195     4,264    14,165
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    Net income (loss)                   (2,305)   (1,169)   (3,800)    3,326
    -------------------------------------------------------------------------
    Earnings (loss) per share:
    Basic                                (0.18)    (0.09)    (0.29)     0.25
    Diluted                              (0.18)    (0.09)    (0.29)     0.25
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    Consolidated net sales for the third quarter of 2007 were $25,746,000
which was down $8,219,000 or 24.2% from $33,965,000 in the third quarter of
2006. For the nine months ended September 30, 2007, consolidated sales were
$88,014,000 compared to $116,498,000 in the first nine months of 2006. The
ongoing downturn in the U.S. economy led by depressed U.S. housing markets
continued to adversely affect the entire building products sector across the
U.S. In particular, the home improvement segment remains well below the pace
of a year ago, which continued to negatively impact sales of the Company's
decking and fencing, window fashion products in the quarter and nine months
ended September 30, 2007.

    Sales for each business segment for the third quarter and first nine
months of 2007 were as follows:

    
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    Business Segment                      Third Quarter        Year to Date
                                         3 months ended       9 months ended
    (in thousands of dollars)             September 30         September 30
                                          (unaudited)          (unaudited)
                                         2007      2006      2007       2006
    -------------------------------------------------------------------------
    Outdoor Living Products             9,279    12,766    35,581     52,531
    Film Products                       7,482     8,634    23,250     25,676
    Custom Products                     8,985    12,565    29,183     38,291
                                        -----    ------    ------     ------
                                       25,746    33,965    88,014    116,498
                                       ------    ------    ------    -------
    -------------------------------------------------------------------------
    

    Operating margins in the third quarter of 2007 decreased $1,327,000 to
($132,000) from $1,195,000 in the third quarter of 2006 due primarily to the
lower sales in the third quarter of 2007. Operating margins as a percentage of
sales decreased to (0.5%) from 3.5% in the same period in 2006 due to plant
inefficiencies as a result of the lower sales and production volumes and the
impact of fixed overheads costs. For the nine months ended September 30, 2007
operating margins were $4,264,000 (4.8% of sales) compared to $14,165,000
(12.2% of sales) in the first nine months of 2006.
    The net loss in the third quarter of 2007 was $2,305,000 compared to net
loss of $1,169,000 in the third quarter of 2006. The net loss for the nine
months ended September 30, 2007, was $3,800,000 compared to net earnings of
$3,326,000 in the first nine months of 2006.
    The basic and diluted (loss) per share was ($0.18) and ($0.18),
respectively, for the third quarter of 2007 as compared to $(0.09) and
$(0.09), respectively, in the third quarter of 2006. Basic and diluted
earnings (loss) per share for the first nine months of 2007 was ($0.29) and
($0.29), respectively, as compared to $0.25 and $0.25, respectively, in the
first nine months of 2006.
    Under the lending agreements for the new debt facilities, the Company is
required to maintain certain restrictive financial covenants relating to debt
to earnings leverage and debt service coverage which are typical of such
lending arrangements. As a result of the lower earnings in the third quarter
of 2007 the Company was not in compliance with these financial covenants. The
Company's lenders have provided a waiver of the covenants at September 30,
2007 and amended the financial covenants under the lending agreements for the
period from September 30, 2007 to December 31, 2008. The waiver and amendments
have resolved the covenant violations at September 30, 2007 and have provided
additional room and flexibility to allow the company to operate within in the
amended covenants for the next twelve months. With the amendments, the Company
anticipates it will remain in compliance with all revised financial covenants
and terms of its lending agreements throughout the remainder of 2007 and 2008.

    CPI Plastics Group Ltd. is a Canadian-based plastics processor and a
recognized international leader in thermoplastics profile design, engineering,
processing and value added manufacturing. CPI is comprised of three key
divisions. CPI's Outdoor Living Products Group manufactures and markets eon(R)
Decking and Fencing Systems, as well as high value-added cladding and
accessory components to the outdoor hot tub industry. CPI's Film Products
Group manufactures and markets the Rack Sack(R) household refuse management
system and a wide range of branded and private label household and industrial
refuse bags. CPI's Custom Products Group supplies leading OEM manufacturers
with custom profile solutions to enhance quality, cost effectiveness and
process ability. Based in Mississauga, Ontario and Pleasant Prairie,
Wisconsin, CPI's dedicated team of over 600 employees currently manufactures
out of six plants occupying 530,000 square feet of manufacturing space and
housing over 135 extruders. To learn more about CPI, visit our website at
www.cpiplastics.com.

    The following presents the Unaudited Consolidated Balance Sheets,
Unaudited Consolidated Statements of Earnings and the Unaudited Consolidated
Statements of Cash Flows as at and for the three and nine months ending
September 30, 2007 and 2006.



    
    CPI Plastics Group Limited
    Consolidated Balance Sheets
    (in thousands of dollars)
    Unaudited
                                                 Sept 30,   Dec 31,  Sept 30,
    For the period ended                            2007      2006      2006
    -------------------------------------------------------------------------
    Assets
    Current assets
      Accounts receivable                       $ 13,732  $ 15,273  $ 19,879
      Inventories                                 11,983    14,274    11,847
      Prepaid expenses, deposits and sundry
       receivables                                 1,553     2,078     2,286
      Income taxes recoverable                     1,118       290         -
      Future income tax asset                         46       620       542
      Derivative financial instruments             1,712         -         -
    -------------------------------------------------------------------------
                                                  30,144    32,535    34,554
    -------------------------------------------------------------------------

    Property, plant and equipment                 51,608    55,302    56,177
    Goodwill                                       3,314     3,314     3,314
    Intangible assets                             16,023    16,941    17,247
    Other assets                                     490       800       893
    Future income tax asset                        2,636     1,052         -
    Deferred asset                                     -       245     2,408

    -------------------------------------------------------------------------
                                                $104,215  $110,189  $114,593
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' equity
    Current Liabilities
      Bank Indebtedness                         $      -  $ 14,359  $ 15,414
      Accounts payable and accrued liabilities    11,127    10,680    13,239
      Income tax payable                               -         -     1,727
      Future income tax liability                    531       107         -
      Term debt due within one year               12,358     9,184     8,311
    -------------------------------------------------------------------------
                                                  24,016    34,330    38,691
    -------------------------------------------------------------------------

    Long term debt                                23,273    17,673    15,307
    Future income tax liabilities                  9,160     9,733     8,691
    Other liabilities                              2,308     2,309     2,103
    Deferred credit                                    -       245     2,408
    Subordinated shareholder loan                  3,000         -         -
    Shareholders' equity
      Capital stock                               21,132    21,132    21,132
      Contributed surplus                          6,221     6,526     6,450
      Retained earnings                           15,972    20,075    21,645
      Accumulated other comprehensive loss          (867)   (1,834)   (1,834)
    -------------------------------------------------------------------------
                                                  15,105    18,241    19,811
    -------------------------------------------------------------------------
                                                  42,458    45,899    47,393
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                $104,215  $110,189  $114,593
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CPI Plastics Group Limited
    Consolidated Statements of Earnings
    (in thousands of dollars, except per share amounts)
    Unaudited

                                          3 months ended      9 months ended
                                       Sept 30,  Sept 30,  Sept 30,  Sept 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net Sales                         $ 25,746  $ 33,965  $ 88,014  $116,498
    Cost of sales and operating
     expenses                           25,878    32,770    83,750   102,333
    -------------------------------------------------------------------------
    Operating margin                      (132)    1,195     4,264    14,165
    Expenses:
      Amortization                       2,422     2,400     7,227     7,196
      Interest                             875       782     2,573     2,630
    -------------------------------------------------------------------------

    Earnings (loss) before
     income taxes                       (3,429)   (1,987)   (5,536)    4,339
    Income taxes                        (1,124)     (818)   (1,736)    1,013
    -------------------------------------------------------------------------
    Net earnings (loss)               $ (2,305)   (1,169) $ (3,800)    3,326
    -------------------------------------------------------------------------
    Earnings (loss) per share
      Basic                           $  (0.18) $  (0.09) $  (0.29) $   0.25
      Diluted                         $  (0.18) $  (0.09) $  (0.29) $   0.25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CPI Plastics Group Limited
    Consolidated Statement of Cash Flows
    (in thousands of dollars)
    Unaudited

                                          3 months ended      9 months ended
                                       Sept 30,  Sept 30,  Sept 30,  Sept 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
      Net earnings (loss)             $ (2,305) $ (1,169) $ (3,800) $  3,326
      Items not affecting cash
      Amortization                       2,422     2,400     7,227     7,196
      Loss on sale of assets                 -         -         -         3
      Amortization of deferred gain
       on sale                             (14)      (14)      (42)      (42)
      Future income taxes                  523      (947)   (1,395)   (2,612)
      Stock based compensation               8        76      (160)      218
      Unrealized foreign exchange gain    (143)        -      (870)        -
      Utilization of trade credits         103        97       208       143
      Debt extinguishment costs              -         -       148         -
      Other liabilities                     13        14        41       118
    -------------------------------------------------------------------------
                                           607       457     1,357     8,350
    Change in non-cash operating
     working capital                       (69)    3,865     3,836     4,977
    -------------------------------------------------------------------------
                                           538     4,322     5,193    13,327
    -------------------------------------------------------------------------
    Financing activities
      Change in operating debt          (1,815)        -    11,887         -
      Decrease in bank indebtedness          -    (1,915)  (14,359)   (3,761)
      Proceeds from term debt                -         -    20,000         -
      Proceeds from subordinated debt    3,000         -     8,000         -
      Repayment of term debt              (681)   (1,718)  (27,489)   (5,396)
      Financing costs                      (41)        -      (668)        -
      Redemption of First preferred
       shares                                -         -         -    (2,000)
      Issuance of common shares under
       employee share purchase plan          -         -         -        76
      Redemption of deferred share
       units                                 -         -       (53)        -
    -------------------------------------------------------------------------
                                           463    (3,633)   (2,682)  (11,081)
    -------------------------------------------------------------------------

    Investing activities
      Acquisition of property plant
       and equipment                    (1,001)     (689)   (2,510)   (2,426)
      Proceeds on disposal of assets         -         -         -       200
      Increase in other assets               -         -        (1)      (20)
    -------------------------------------------------------------------------
                                        (1,001)     (689)   (2,511)   (2,246)
    -------------------------------------------------------------------------
    Effect of exchange rate changes          -         -         -         -
    Cash beginning of period                 -         -         -         -
    -------------------------------------------------------------------------
    Cash end of period                       -         -         -         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information:
      Income taxes paid                    527       289       778       828
      Interest paid                        824       749     2,373     2,597
    -------------------------------------------------------------------------
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    %SEDAR: 00011090E




For further information:

For further information: Mr. J. David Wood, Executive Vice President and
Chief Financial Officer, (905) 795-5505

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CPI PLASTICS GROUP LIMITED

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