Novik inc. - Third quarter highlights



    
    - Net income of $305,000 compared with $106,000
    - Revenue growth of 25% to $5.1 M
    - Gross margin increased from 34% to 40%
    - EBITDA increase in excess of 80%
    - Nine-month net income of $402,000 compared with net loss of $313,000
    - Nine-month EBITDA higher by over $1,000,000
    

    QUEBEC CITY, Oct. 29 /CNW Telbec/ - Novik inc. (NVK) releases today its
financial results for the third quarter for the period ended September 30,
2007. All amounts are expressed in Canadian dollars unless otherwise
indicated.

    
    -------------------------------------------------------------------------
    NOVIK inc.
    for the periods ended
     September 30, 2007 and 2006
    (in thousands dollars,            Third    Third     Year to     Year to
     except for amounts per share)  quarter  quarter        date        date
    -------------------------------------------------------------------------
                                       2007     2006        2007        2006
    -------------------------------------------------------------------------
                                          $        $           $           $
    Operating results

    Revenues                          5,056    4,052      11,882      10,361
    Gross margin                      2,014    1,393       4,659       3,601
    Income before depreciation,
     stock-based compensation,
     financial expenses and income
     taxes                            1,046      570       2,111       1,047
    Net income (loss)                   304      106         402        (313)
    Basic and diluted net income
     (loss) per share                 0.007    0.003       0.009      (0.008)
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    NOVIK inc.

    (in thousands dollars, except                   September 30,    Dec. 31,
     for amounts per share)                                 2007        2006
    -------------------------------------------------------------------------
                                                               $           $
    Financial position

    Total assets                                          17,361      16,442
    Working capital                                        2,487       2,203
    Total debt, net of cash and
     term deposit and excluding
     accounts payable and accrued                          5,612       6,055
    Total liability                                        8,220       7,793
    Shareholder's equity                                   9,141       8,649
    Shareholder's equity per share                         0.200       0.189
    -------------------------------------------------------------------------
    Number of shares outstanding                      45,799,429  45,799,429
    -------------------------------------------------------------------------
    

    During the third quarter of fiscal 2007, Novik recorded revenues of $5.1M
compared with $4.1M during the same quarter of the previous year. "We are
proud of these results showing a second consecutive record sales performance
for Novik," expressed Mr. Michel Gaudreau, Novik's President and CEO.
    This growth of 25% is related mainly to the success of our international
marketing. The European and Asian markets have brought Novik sales growth of
more than $1.5M. The increase in the number of deliveries to these markets has
allowed us to minimize the impact observed in the American market. However,
the Canadian market is continuing to grow with an increase in sales of more
than $200,000.
    Novik's sales for the nine-month period amounted to $11.9M compared with
$10.4M for the same period of the previous year. This 14% growth is explained
by the same aforementioned items. These sales over the nine-month period will
bring Novik's annual sales for fiscal year 2007 to a higher level than the
$12.2M realized in the previous fiscal year. Mr. Gaudreau added "We will
continue to put in the necessary efforts to maintain this rate of growth. We
have already begun to define some specific territory- and product-targeted
sales objectives and developed an action plan which should enable us to
sustain the same level of growth regardless of the current economic
conditions. Our existing product line stands out among some other competitive
products whose sales have become stagnant over the past few years. According
to industry experts, polymer-based products now represent the market of the
future given their high quality, esthetic appeal, ease of installation and
cost. We feel well-positioned in our ability to respond to the needs of the
market in the years to come".
    The company's gross earnings for the third quarter of the current fiscal
year amounted to $2.0M, or a gross margin of 39% compared with 34% for the
same period of the previous fiscal year. This improvement as a percentage of
gross earnings in relation to sales is directly linked to the success of our
cost-reduction program, which began during the second half of the previous
fiscal year. Reduced raw material, labor, and operating costs were an integral
part of our cost-reduction program. In addition, the introduction of new
innovative products such as our roof coverings brought higher margins because
of their uniqueness. The 5% improvement in the gross margin occurred despite
the appreciation of the Canadian dollar in relation to the American dollar of
approximately 7% for the third quarter compared with the same period of the
previous year.
    For the nine-month period ending September 30, 2007, gross earnings
amounted to $4.7M representing a gross margin of 39%, compared with 35% for
the same period of the previous fiscal year.
    The company's net earnings for the third quarter of fiscal year 2007
amounted to approximately $305,000 compared with $106,000 for the same quarter
of the previous fiscal year. These financial results stem mainly from the
increased sales and the improved gross margin. This improvement could have
been greater had it not been for the unrealized exchange loss of approximately
$150,000 recorded during the current quarter. The appreciation of the Canadian
dollar in relation to the American dollar of approximately 7% during the
quarter ended resulted in the exchange loss. Novik shows net monetary assets
of nearly $2.5M in American dollars as of September 30, 2007. The
re-evaluation in Canadian dollar of these net monetary assets as of
September 30, 2007 caused this unrealized exchange loss.
    For the nine-month period ended September 30, 2007, net earnings were
$402,000, compared with a net loss of $313,000 for the same period of the
previous fiscal year. Mr. Gaudreau added "Management is encouraged by the
improvement in profitability realized to date this year and in its outlook for
the full fiscal year 2007".

    About NOVIK

    Novik Inc. (NYK) is a leader in manufacturing and commercializing
innovative polymer exterior coverings that replace traditional materials such
as stone, brick or wood shingles. These products target the 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.

    Earnings before interest, stock-based compensation costs, taxes,
depreciation, and amortization (adjusted EBITDA) is a measure that has no
standardized meaning prescribed by Canadian generally accepted accounting
principles. It is therefore considered to be a non-GAAP measure in Canada.
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.
    %SEDAR: 00022807EF




For further information:

For further information: Michel Gaudreau, President, (418) 878-6161,
micgau@novik.com; Pascal Bouthot, CA, Vice-President, Finances, (418)
878-6161, pasbou@novik.com; Source: Novik inc.

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