Imaflex Inc. announces results for the year ended December 31, 2008



    TICKER SYMBOL: IFX.A

    MONTREAL, April 21 /CNW Telbec/ - Imaflex Inc. (the "Company") (TSX
Venture Exchange - IFX.A) announces results for the year ended December 31,
2008.

    
    -------------------------------------------------------------------------
    (un-audited)
    (CDN $ thousands, except           Q4 2008   Q4 2007      2008      2007
     per share amounts)                -------   -------      ----      ----
    -------------------------------------------------------------------------
    Sales                               14,466    10,991    54,570    46,840
    -------------------------------------------------------------------------
    Cost of sales                       12,692     9,148    47,335    40,019
                                        ------     -----    ------    ------
    -------------------------------------------------------------------------
    Gross profit ($) (before
     amortization)                       1,774     1,843     7,235     6,821
    -------------------------------------------------------------------------
    Gross profit (%)(before
     amortization)                        12.3%     16.8%     13.3%     14.6%
    -------------------------------------------------------------------------
    Amortization of production
     equipment                             797       555     3,182     2,500
    -------------------------------------------------------------------------
    Gross Profit                           977     1,288     4,053     4,321
    -------------------------------------------------------------------------
    Gross profit (%)                       6.7%     11.7%      7.4%      9.2%
    -------------------------------------------------------------------------
    Expenses                             1,317     1,146     5,251     4,960
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    FX loss (gain)                          43        82       387      (653)
                                            --        --       ---      -----
    -------------------------------------------------------------------------
    Income (loss) before income taxes     (383)       60    (1,585)       14
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    Provision for income taxes             365       (17)      506        70
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    Net income (loss)                     (748)       77    (2,091)      (56)
                                          -----       --    -------      ----
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    Basic and diluted earnings
     per share                          (0.020)    0.002    (0.056)   (0.002)
                                        -------    -----    -------   -------
    -------------------------------------------------------------------------
    EBITDA                                 914     1,011     2,901     3,822
                                           ---     -----     -----     -----
    -------------------------------------------------------------------------

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    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).

    Summary - Results of Operations
    -------------------------------

    The Company incurred a consolidated net loss of $748,000 for the quarter
ended December 31, 2008 compared to net income of $77,000 over the same
quarter of 2007. The difference in the net loss is due primarily to the one
time compensation of $425,000 USD received from a supplier in 2007 and
increased depreciation expenses during the quarter resulting from the start up
of equipment. Furthermore, the Company's US subsidiary did not generate the
appropriate sales volume levels necessary to recover current operating costs.
The Company's Québec operations generated an operating income after taxes of
$167,000 for the three months ended December 31, 2008, compared with an
operating income before taxes of $96,000 for the same period in 2007.
    The Company incurred a consolidated net loss of $2,091,000 for the year
ended December 31, 2008 compared with net loss of $56,000 for the same period
in 2007. The net loss is the result of a foreign exchange loss of $387,000 in
2008 compared to a gain of $653,000 in 2007. Furthermore the net loss was
impacted by the timing between increases in raw material costs and the selling
price, the increase in depreciation expense of $752,000 and the increase in
selling and administrative expenses. The Company's US subsidiary did not
generate the appropriate sales volume levels necessary to recover current
operating costs. The Company's Québec operations generated an operating income
after taxes of $382,000 for the year ended December 31, 2008, compared with an
operating income before taxes of $319,000 for the same period in 2007. The
current period's results were impacted by losses at the Company's U.S.
facility of $1,918,000 USD compared with a net loss of $1,131,000 USD for the
same period in 2007. During 2008 the U.S. facility incurred an additional
depreciation expense of $500,000 USD following the start up of some of its
equipment compared to 2007 and during 2007 a $425,000 USD refund reduced
operating costs.

    Sales
    -----

    Sales for the quarter ended December 31, 2008 totaled $14,466,000
compared with $10,991,000 for the same period of 2007. The increase in sales
of $3,475,000 or 31.6 % is the result of increased sales volume and an
increase in the selling price due to an increase in the cost of raw material.
    Sales for the year ended December 31, 2008 totaled $54,570,000 compared
with $46,840,000 for the same period in 2007. The increase in sales of
$7,730,000 or 16.5 % is the result of increased sales volume and an increase
in the selling price due to an increase in the cost of raw material.

    Gross profit margin before amortization
    ---------------------------------------

    The gross margin percentage before amortization remained stable during
the quarter. The noted difference is due to a one time compensation of
$425,000 received from an equipment supplier in the fourth quarter of 2007.
    The slight decrease in the gross margin percentage before amortization
for the year ended December 31, 2008, is due to the delay in timing between
increases in raw material costs and the selling price and the above mentioned
compensation received from a supplier in 2007.

    Gross profit margin
    -------------------

    The gross margin percentage remained stable during the quarter. The noted
difference is due to a one time compensation of $425,000 received from an
equipment supplier in the fourth quarter of 2007 and the increase in
amortization of $242,000 during the quarter.
    The slight decrease in the gross margin percentage for the year ended
December 31, 2008, is due to the delay in timing between increases in raw
material costs and the selling price, the compensation of $425,000 received
from a supplier in 2007 and the increase in amortization of $682,000 during
the year.

    Income taxes
    ------------

    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.

    Outlook
    -------

    Management began 2008 with specific goals of rebuilding Imaflex's
Canadian sales base to replace sales formerly made to Canslit now that Canslit
has its own extrusion capacity, enhancing Canslit's profitability, and
improving overall performance in our U.S. operations. Most of what we set out
to do was achieved, and we are now looking forward to 2009 because the
operational impediments that have frustrated the company for so long finally
appear to be resolved. Clearly the greatest challenge facing management in
2009 will be to continue to build our operations in this new and unsettled
economic climate.
    Liquidity problems in the overall economy act as a barrier that impedes
growth. All companies whether it be Imaflex, our suppliers, or our customers,
need to concentrate their efforts on both managing cash and improving cash
flows but to do so in a manner that does not create conditions that will stunt
growth, or worse, jeopardize the company's viability in the process. In 2008
certain key decisions were made to enhance the profitability in all our
operations at a time when management didn't fully grasp the extent of the
financial meltdown and its potential impact on the economy in general.
Fortunately, these decisions will help Imaflex through the financial crisis
that is prevalent at the moment.
    The first such decision was to purchase equipment making it possible for
the company to recycle 10,000,000 pounds of polyethylene scrap annually into
reusable resin. The two machines were purchased, one for each of our U.S. and
Canadian operations. Both machines will be operational at the end of the 1st
quarter of 2009. The effect on profitability should be profound by allowing
the company to use readily available recycled materials for those sales where
prime resins are not required. Cost savings in raw materials could equate to
as much as 50% on the raw materials needed in those products. Although
recycling will entail certain costs, management believes that there will
remain additional savings which will ease pressures on liquidity. The greater
contribution to margin received from the 20% of our volume that uses the
recycled resins, should have a positive impact to our overall profitability.
    The second decision, made late in the last quarter of 2008, was to ensure
that we did indeed have sufficient liquidity to realize the full potential of
what has been put in place. Seeing the worsening market conditions management
deemed it to be prudent to raise a minimal amount of additional share capital
to buffer the company from the current market conditions. As such, the Company
raised $500,000 by way of a share offering at $ 0.25/share in mid-December to
one new shareholder.
    The company's U.S. operations, which have yet to turn a profit, and have
in fact been a drain on the company's overall liquidity, appear ready to
contribute to profitability in 2009. Although equipment problems which have
plagued the company's U.S. operations were resolved in 2008 leading management
to believe that it was possible to realize a dramatic improvement in the 2nd
half of 2008 the company unfortunately missed the "summer" planting season for
many of its clients. We were limited to preparing for the "winter" season and
we began to build inventory. Thus the positive results, expected in the third
quarter of 2008, were delayed to the first quarter of 2009.
    Nevertheless, and in spite of the fact that we did miss the summer
growing season, our overall operational performance at our US facility was
greatly improved when compared to our 2007 results. In 2008 we did not have
the benefit of a reduction in raw material costs of $425,000 due to the
agreement with our machinery supplier, had to absorb a depreciation cost of
$500,000 more, and our 2007 loss was not magnified by the value of the
Canadian dollar, which at that time was valued at $1.01, whereas in 2008 it
was $0.80, thereby increasing our loss by approximately 25% when reporting in
Canadian dollars. The company also had to deal with unprecedented fluctuations
in raw material prices brought about by market conditions. The volatility in
raw material prices and general market conditions has led to a number of
competitors declaring bankruptcy and closing their doors.
    Notwithstanding the current economic conditions management is cautiously
optimistic about the company's prospects for 2009. The reasons are many, but
here are a few;
    Firstly more than 60% of our products are used in the food related
sectors of the economy from packaging films or the films we produce for the
growers of food.
    The second is that the non-food related portion of our sales which are
more of the commodity type are very sensitive to price. We have worked to
integrate our operations and strive to have the cheapest cost of raw materials
due in part to the recycling machinery that was purchased. The benefits
derived from this new cost structure should allow us to be very competitive on
pricing and increase our volumes in these markets and still have similar or
greater margin on these sales.
    Thirdly, the recent decline in Canadian dollar's value will assist our
Canadian operations in two ways. It will act as a barrier against our US
competitors trying to enter the Canadian market, while simultaneously making
it easier for our Canadian operations to competitively export more products to
the U.S.
    Lastly, our customer base has grown such that no one customer accounts
for more than 12% of our volume.

    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 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.




For further information:

For further information: Joseph Abbandonato, President and C.E.O,
Imaflex Inc., (514) 935-5710, Fax: (514) 935-0264, info@imaflex.com; Robert
Nagy, CMA, CIA- Corporate Controller, Imaflex Inc., (514) 935-5710, Fax: (514)
935-0264, info@imaflex.com; www.imaflex.com


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