Norwall Group Inc. reports results for the third quarter and nine months ended September 28, 2007



    BRAMPTON, ON, Oct. 25 /CNW/ - Norwall Group Inc., one of North America's
largest manufacturers of residential wallcovering, announced the Corporation's
third quarter results today.
    The net loss, before foreign exchange (net of tax), for the nine months
ended September 28, 2007 was $1,344,000 on net sales of $29,907,000, compared
to a net loss, before foreign exchange (net of tax), of $1,545,000 on net
sales of $31,822,000 in the prior year. The net loss as reported was
$2,628,000 or 0.40 per weighted average common share for the nine months ended
September 29, 2007 as compared to $1,708,000 or 0.26 per common share in the
prior year.
    The net loss for the three months ended September 28, 2007 was $1,710,000
on net sales of $8,980,000 compared to a net loss $489,000 on net sales of
$9,155,000 for the same period in 2006. The basic and diluted loss per
weighted average common share was $0.26 for the third quarter of 2007,
compared to a loss of $0.08 per common share for the same quarter of 2006.
    The most significant event for the nine months ended September 28, 2007
was $938,000 of unrealized foreign exchange expense and $740,000 for the
quarter ending the same period. The EBITDA(1) for the nine months ended
September 28, 2007, before foreign exchange, was $779,000 as compared to
$537,000 for the same period last year.
    The appreciation of the Canadian dollar continues to impair our Canadian
manufacturing business along with all manufacturing in Canada. The
availability of consumer discretionary dollars and the tightening of credit
present significant challenges to overcome. The Corporation continues to
explore every opportunity to reduce costs and increase gross profit but when
the United States dollar has depreciated by more than 15% the negative
influences outweigh our best positive actions.

    Norwall Group (TSX:NGI) manufactures quality residential wallpapers and
borders and distributes them to thousands of home centres, specialty stores
and mass merchants in Canada and through its wholly-owned operating
subsidiary, Patton Wallcoverings, in the United States.

    This Press Release contains forward-looking statements reflecting
management's current expectations regarding future results of operations,
economic performance, financial conditions, and achievements of the
Corporation. Actual results may differ materially from those in such
statements. The Corporation wishes to caution the reader that those important
factors described elsewhere in the commentary could affect the Corporation's
actual results and could cause such results to materially differ from those
expressed in any forward-looking statement made by, or on behalf of, the
Corporation.

    (1) EBITA is not a recognized measure under Canadian generally accepted
    accounting principles (GAAP). Investors should be cautioned, however,
    that EBITA should not be construed as an alternative to net income (loss)
    determined in accordance with GAAP as an indicator of the Corporation's
    performance or to cash flows from operating, investing and financing
    activities as a measure of liquidity and cash flows. The Corporation's
    method of calculating EBITA may differ from other companies and,
    accordingly, EBITA may not be comparable to measures used by other
    companies. EBITDA is calculated as earnings before income taxes,
    depreciation, amortization.


    
                             NORWALL GROUP INC.
                    Consolidated Statements of Operations
         (In thousands of Canadian dollars, except per share amounts)

                                  FOR THE THREE MONTHS   FOR THE NINE MONTHS
                                          ENDED                 ENDED
                                  --------------------- ---------------------
                                  September  September  September  September
                                   28, 2007   29, 2006   28, 2007   29, 2006
                                  unaudited  unaudited  unaudited  unaudited
                                  --------------------- ---------------------
    Sales                             8,980      9,155     29,907     31,822
    Cost of goods sold                7,339      6,631     22,524     23,284
                                  --------------------- ---------------------
    Gross profit                      1,641      2,524      7,383      8,538
    Selling, general and
     administrative expenses          2,817      3,138      9,020     10,241

                                  --------------------- ---------------------
    Loss before the undernoted       (1,176)      (614)    (1,637)    (1,703)
    Severance and termination
     costs                                8         24         41        425
                                  --------------------- ---------------------
    Loss from operations before
     the following items             (1,184)      (638)    (1,678)    (2,128)
    Foreign exchange loss (gain)        892        (14)     1,462        213
    Interest expense                     77        101        266        344
                                  --------------------- ---------------------
    Loss before income taxes         (2,153)      (725)    (3,406)    (2,685)
    Recovery of income taxes           (443)      (236)      (778)      (977)
                                  --------------------- ---------------------
    Net loss for the period          (1,710)      (489)    (2,628)    (1,708)
                                  --------------------- ---------------------
    Basic and diluted loss
     per common share                 (0.26)     (0.08)     (0.40)     (0.26)

                                  -------------------------------------------
                                  -------------------------------------------
    Weighted and average
     number of common shares
     outstanding                  6,536,288  6,486,393  6,503,025  6,486,393
                                  -------------------------------------------
                                  -------------------------------------------



                              NORWALL GROUP INC
                         CONSOLIDATED BALANCE SHEETS
                     (in thousands of Canadian dollars)

                                                  September 28,  December 29,
                                                          2007          2006
                                                             $             $
                                                    (unaudited)
    Assets
    Current assets
    Cash                                                 1,299            29
    Accounts receivable                                  7,035         8,476
    Income taxes recoverable                                 -           456
    Inventories                                          8,527         9,776
    Merchandising supplies                                 763           882
    Prepaid expenses and other                             888           622
                                                  ---------------------------
                                                        18,512        20,241
    Property, plant and equipment                       16,953        18,882
    Other assets                                             -            78
    Future income taxes                                  2,241         2,943
    Goodwill                                             1,693         1,693
                                                  ---------------------------
                                                        39,399        43,837
                                                  ---------------------------
                                                  ---------------------------
    Liabilities
    Current liabilities
    Demand loan                                              -         1,091
    Accounts payable and accrued liabilities             4,246         4,666
    Current portion of long-term debt                      318           306
                                                  ---------------------------
                                                         4,564         6,063
    Mortgage                                             4,945         5,184
    Future income taxes                                    545         1,581
                                                  ---------------------------
                                                        10,054        12,828
                                                  ---------------------------
    Shareholders' Equity
    Share capital                                       33,134        32,336
    Accumulated other comprehensive (loss)                 147           (97)
    Retained earnings (deficit)                         (3,936)       (1,230)
                                                  ---------------------------
                                                        29,345        31,009
                                                  ---------------------------
                                                        39,399        43,837
                                                  ---------------------------
                                                  ---------------------------
    

    %SEDAR: 00002584E




For further information:

For further information: (905) 791-2700; James J. Patton, President and
Chief Executive Officer, jpatton@norwallgroup.com; Edward Diochon, Vice
President of Finance, ediochon@norwallgroup.com

Organization Profile

NORWALL GROUP INC.

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