Novik sales increase by 43% in third quarter



    
                        THIRD QUARTER 2008 HIGHLIGHTS

    - Sales increase by 43% to $7,239,000
    - Net income increase of 200% to $917,000 compared with $304,000
    - EBITDA increased by 65% to $1,731,000
    - Sixth consecutive year-over-year quarter of sales growth
    - Nine-month sales growth of 46% to $17,393,000
    - 2007 total sales exceeded after only nine months
    - 11% return on sales for the first nine months compared with 4%
    

    QUEBEC CITY, Oct. 30 /CNW Telbec/ - Novik inc. (NVK) releases today its
results for the third quarter of fiscal year 2008. All amounts are expressed
in Canadian dollars unless otherwise indicated.

    
    ------------------------------------------------------------------------
    NOVIK inc.
    for the periods ended
     September 30, 2008 and 2007
    (in thousands dollars,
     except for amounts per        Third       Third     Year to     Year to
     share)                      quarter     quarter        date        date
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
                                       $           $           $           $
    Operating results

    Revenues                       7,239       5,056      17,393      11,882
    Gross margin                   3,032       2,014       7,130       4,659
    Income before depreciation,
     stock-based compensation,
     financial expenses and
     income taxes                  1,729       1,045       3,908       2,111
    Net income                       917         304       1,833         402
    Basic and diluted net income
     per share                     0.020       0.007       0.040       0.009
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    NOVIK inc.
    (in thousands dollars,                              Sept. 30,    Dec. 31,
     except for amounts per share)                          2008        2007
    -------------------------------------------------------------------------
                                                               $           $
    Financial position

    Total assets                                          26,170      16,250
    Working capital                                        4,085       2,186
    Total debt                                            10,139       5,291
    Total liability                                       14,979       7,062
    Shareholder's equity                                  11,191       9,188
    Shareholder's equity per share                          0.24        0.20
    -------------------------------------------------------------------------
    Number of shares outstanding                      45,799,429  45,799,429
    -------------------------------------------------------------------------
    

    REVENUES

    During the course of the third quarter of fiscal year 2008, Novik
recorded $7.2M in revenue compared with $5.1M during the same quarter of the
previous fiscal year. Mr. Michel Gaudreau, President & CEO, stated that "this
is a new record for Novik for one quarter. This growth observed during the
third quarter of fiscal year 2008 has also allowed Novik to post a sixth
consecutive quarter with an increase in its sales in relation to the same
period of the previous fiscal year."
    Mr. Gaudreau emphasized that "this strong growth of 43% can be directly
attributed to the introduction of innovative products and Novik's
international success. In recent years, Novik has introduced value-added
products having little competition, such as our imitation slate and clay roof
coverings, thus allowing for the expansion of its potential customer base. The
introduction of these products has enabled us to offer a broader range of
products on the market with the ongoing objective of offering the market a
quality/price ratio that best meets consumer demand. In addition to selling
its products on the North American market, Novik has presented its products to
distributors on a global scale over the past few years. The advantages offered
by our products, such as easy installation, no maintenance, high quality, and
a pleasant look, have ensured Novik's great success in several countries."
    Mr. Gaudreau is proud to point out that "international shipments amounted
to nearly $3.3M during third quarter 2008, compared with $1.7M for the same
period of the previous fiscal year. These international sales were made with
distributors located on all continents, i.e. Europe, South America, and Asia.
Given Novik's current success on the international scene, the company is
continuing to explore new territories in order to maximize the potential of
its products on a global scale. Sales visits are also planned for this autumn
in Europe, Africa, and Asia to meet with potential partners who have already
shown an interest in our products."
    Mr. Gaudreau added that "despite the slowdown in the North American
construction sector, sales on the North American market increased by nearly
$700,000 during third quarter 2008, compared with the same quarter of the
previous fiscal year. This increase in sales demonstrates the potential of
Novik's products.
    Being part of an industry sector with a promising future, i.e. the
polymer sector, and being recognized as a company with expertise in this
sector justify our desire to invest in our North American sales and marketing
team. Novik is therefore continuing its efforts for better recognition on this
market. The primary objective is to increase Novik's popularity on this market
and therefore be ready when the market returns to an economic cycle of growth.
This is why Novik went ahead in 2008 with a strategic capital expenditure
valued at $7,000,000 including extension of our current facility, purchase of
new injection and painting equipments as well as molds. "
    Novik's cumulative sales for the nine-month period amounted to $17.4M,
compared with $11.9M for the same period of the previous year. This 46% growth
is explained by the aforementioned items. It is worth pointing out that Novik
has already surpassed its total sales for fiscal year 2007 in only nine
months. Sales for the first nine months of fiscal year 2008 have exceeded the
sales figure of $15.2M made over a twelve-month period. Achieving these sales
figures gives confidence in management's forecasts for 2008, which called for
growth of 40% compared with the previous year.

    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 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.
    For the third quarter of fiscal year 2008, adjusted EBITDA amounted to
$1.7M, compared with $1.0M for the same period of previous fiscal year. EBITDA
is around 65% greater than in third quarter 2007. This significant increase is
explained in large part by the growth in sales, allowing Novik to benefit from
a better distribution of its resources. A $2.2M increase in sales during the
third quarter compared with the same period of the previous fiscal year
brought about a $0.7M increase in adjusted EBITDA, i.e. a return of nearly 25%
on sales. This financial ratio indicates that the company can generate a great
deal of cash if the growth continues.
    For the nine-month period ended September 30, 2008, the adjusted EBITDA
amounted to $3.9M compared with $2.1M for the same period of previous fiscal
year, i.e. a return of more than 20% on sales. Despite the pressure generated
on the gross margin with the appreciation of the Canadian dollar in relation
to the American dollar and the increased cost of raw materials, Novik is
continuing to post impressive margins.

    NET INCOME

    The company's net income for the third quarter of fiscal year 2008
amounted to $917,000, compared with a net income of $304,000 for the same
quarter of the previous fiscal year. This significant improvement is directly
linked to the increased sales. A 13% return on sales after taxes is an
excellent result, especially in a more difficult North American industry.
    For the nine-month period ended September 30, 2008, net earnings were
$1,833,000, compared with net earnings of $402,000 for the same period of the
previous fiscal year. These earnings constitute an increase of more than
$1,400,000 compared with the same period of the previous year versus an
increase in sales of $5,500,000 by comparing the same periods. These financial
results are excellent and demonstrate the potential that Novik can offer in
the coming years if the sales growth objectives continue in the future.

    OUTLOOK

    These positive results achieved since the beginning of fiscal year 2008
demonstrate Novik's potential with its line of products despite a declining
industry on the North American market. Management is confident about reaching
its annual financial objectives by the end of the year and looks to continue
its growth in the coming years.
    The development of new products in progress, the continuation of our
business meetings on the global market, and the current discussions with major
distributors of the American market should allow Novik to continue to stand
out on the global market. Novik is continuing to put great sales efforts into
the North American market and other targeted countries in order to continue
its organic sales growth.

    About NOVIK

    Novik (NVK) is a leader in the design, manufacturer and distribution of
innovative polymer exterior siding and roofing coverings 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.
    %SEDAR: 00022807EF




For further information:

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

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