Panolam Reports Third Quarter 2007 Results



    SHELTON, CONN., December 13 /CNW/ - Panolam Industries International,
Inc. reported today its consolidated net sales for the three months ended
September 30, 2007 of $105.6 million, gross profit of $22.3 million and net
income of $1.1 million. In addition, it reported consolidated net sales for
the nine months ended September 30, 2007 of $329.8 million, gross profit of
$72.3 million and net income of $4.4 million. All financial information
presented is unaudited.

    Net sales were $105.6 million and $329.8 million in the three and nine
months ended September 30, 2007 compared to $127.7 million and $354.1 million
for the same periods in 2006, a decrease of approximately 17% in the third
quarter and 7% in the nine month period. Sales for the nine months ended
September 30, 2007 reflect Nevamar sales for the entire nine month period;
whereas for the nine months ended September 30, 2006, the operating results
for Nevamar, which was acquired on March 1, 2006, are included for the
post-acquisition period only. Including the Nevamar sales in 2006 through
March 1, 2006 with our 2006 sales would result in a number $33.1 million, or
approximately 15%, higher than our sales for the nine months ended September
30, 2007. The decrease in sales is primarily attributable to lower
Thermally-Fused Melamine ("TFM") sales resulting from the well-publicized
slowdown in the residential housing market and the closing of two Nevamar TFM
manufacturing facilities, one in Chino, California in June 2006 and one in
Tarboro, North Carolina in February 2007. In addition, in 2007 we have
experienced increased pricing pressure with respect to our TFM and HPL
products.

    Sales of decorative laminates were $93.9 million and $294.0 million in
the three and nine months ended September 30, 2007 compared to $115.2 million
and $315.8 million for the same periods in 2006. Sales of decorative
laminates, which includes both TFM and HPL (approximately 89% of net sales),
decreased approximately 19% and 7% in the three and nine month periods,
respectively. However, increasing our 2006 sales by the amount of Nevamar
sales for January and February 2006 would indicate that sales of decorative
laminates declined by approximately 16% in the nine months ended September 30,
2007 compared to the nine months ended September 30, 2006.

    Sales of other products, principally specialty resins, decorative overlay
papers and industrial laminates, were $11.7 million and $35.8 million in the
three and nine months ended September 30, 2007 compared to $12.5 million and
$38.3 million for the three and nine months ended September 30, 2006. Other
product sales (approximately 11% of net sales) decreased approximately 6% and
7% in the three and nine month periods, respectively. For the nine months
ended September 30, 2007, specialty resins accounted for approximately 5% of
our total sales, while industrial and other specialty laminates, and
decorative overlay papers accounted for approximately 3% and 1% of our sales,
respectively.

    Net income for the three months ended September 30, 2007 was $1.1 million
compared to $4.2 million for the three months ended September 30, 2006, a
decrease of approximately 74%. The decrease in net income is primarily
attributable to lower net sales in the three months ended September 30, 2007
compared to the three months ended September 30, 2006, which were partially
offset by decreases in the cost of goods sold, selling, general and
administrative expenses, interest expense and income taxes in the three months
ended September 30, 2007.

    Net income for the nine months ended September 30, 2007 was $4.4 million
compared to $10.1 million for the nine months ended September 30, 2006, a
decrease of approximately 56%. The decrease in net income is primarily
attributable to lower net sales and higher interest expense in the nine months
ended September 30, 2007 compared to the nine months ended September 30, 2006,
which were partially offset by decreases in the cost of goods sold and income
taxes in the nine months ended September 30, 2007.

    Commenting on the third quarter 2007 results, Chairman of the Board,
President and Chief Executive Officer, Robert J. Muller stated, "In light of a
difficult economy and the continued slowdown in the residential housing
market, I am relatively pleased with our financial results for the third
quarter of 2007. Our HPL business was essentially flat in the third quarter of
2007 as compared to 2006. Our TFM business is down; however indications
suggest that our decline is not as significant as that of our competitors and
the board industry in general. We continue to be very aggressive with cost
containment and the leveraging of both our purchasing power as well as our
diversity with regards to the geographic location of our manufacturing plants
and distribution centers. In addition, we have prepaid $20 million in term
debt borrowings through the eleven months ended November 30, 2007 and we have
invested approximately $5.0 million of operating cash flow through the same
eleven month period in our new Fiberglas Reinforced Plastic (FRP) plant in
Morristown, TN. This facility will bring us into new markets as well as the
building products market in 2008."

    Robert J. Muller, Jr., Panolam's Chairman, President and CEO, will host
the Company's third quarter 2007 conference call to discuss its financial
results on Tuesday, December 18, 2007 at 1:00 pm EST. The conference call will
be available to all interested parties by phone at (USA): (800) 762-6568 and
(International) (480) 248-5088. The pass code for the conference call is
Miceli.

    A replay of the Company's conference call will also be available
beginning at 8:00 pm EST on Tuesday, December 18, 2007 and will be available
through Friday, December 21, 2007. The numbers to call for the replay of the
conference call are (USA) (800) 475-6701 and (International) (320) 365-3844.
The access code for the replay of the conference is 642354.

    About Panolam Industries International, Inc.:

    Panolam (www.panolam.com) is a leading designer, manufacturer and
distributor of decorative and industrial laminates in North America. The
company's products, which are marketed under the widely recognized Panolam(R),
Pluswood(R), Pionite(R) and Nevamar(R) brand names, are used in a wide variety
of commercial and residential indoor surfacing applications, including kitchen
and bath cabinets, furniture, store fixtures and displays, and other specialty
applications. High pressure laminates (HPL), thermally-fused melamine (TFM),
fiber reinforced laminate (FRL(R)), Leatherlam(R), and Panolam's engineered
laminates are utilized as durable and economical alternatives for natural
surfacing materials such as wood, stone and ceramic. A typical customer or
end-user of decorative overlays might utilize TFM, HPL, FRL(R) or
Leatherlam(R) for different surfaces of the same project. Conolite(R) aircraft
laminates are typically used as cargo liner for commercial jet aircraft. As a
vertically integrated manufacturer, Panolam produces decorative surfaces that
offer unparalleled quality, variety and flexibility to customers worldwide.

    Forward-Looking Statements

    Statements included in this press release which are other than historical
facts are intended to be "forward-looking statements" within the meaning of
the Securities Exchange Act of 1934, the Private Securities Litigation Reform
Act of 1995 and other related laws. These forward-looking statements are made
based upon management's expectations and beliefs concerning future events
impacting Panolam Industries International, Inc. and therefore involve a
number of uncertainties and risks. While the Company believes such statements
are reasonable, the actual results and effects could differ materially from
those expressed or implied by the forward-looking statements. Please refer to
the Company's S-4 filed on October 1, 2007 and the Company's other filings
with the Securities and Exchange Commission, for some of the factors that
could cause the actual results to differ from estimates. In providing
forward-looking statements, the Company is not undertaking any duty or
obligation to update these statements publicly as a result of new information,
future events or otherwise.

    
                    PANOLAM INDUSTRIES INTERNATIONAL, INC.
                    Condensed Consolidated Balance Sheets
                            (Amounts in thousands)
                                 (Unaudited)

                                                       September December
                                                          30,       31,
                                                         2007      2006
                                                       --------- ---------
    ASSETS
    CURRENT ASSETS:
    Cash and cash equivalents.......................... $ 18,396 $ 10,849
    Accounts receivable, less allowances of $6,701 at
     September 30, 2007 and $7,252 at December 31, 2006   29,693   22,105
    Inventories........................................   66,834   61,859
    Other current assets...............................   14,698   16,632
                                                       --------- ---------
      Total current assets.............................  129,621  111,445
                                                       --------- ---------
    PROPERTY, PLANT AND EQUIPMENT--Net.................  269,824  264,751
    GOODWILL...........................................  102,222   98,064
    INTANGIBLE ASSETS--Net.............................   83,867   85,612
    DEBT ACQUISITION COSTS--Net........................    9,185   10,750
    OTHER ASSETS.......................................    1,309    1,120
                                                       --------- ---------
    TOTAL.............................................. $596,028 $571,742
                                                       --------- ---------
    LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT
     LIABILITIES:
    CURRENT LIABILITIES:...............................
    Accounts payable................................... $ 18,130 $ 11,387
    Accrued liabilities................................   33,318   32,609
    Current portion of long-term debt..................       21       30
    Other current liabilities..........................    1,944    4,331
                                                       --------- ---------
      Total current liabilities........................   53,413   48,357
                                                       --------- ---------
    LONG-TERM DEBT.....................................  331,865  339,784
    DEFERRED INCOME TAXES..............................   87,138   81,417
    DUE TO PANOLAM HOLDINGS CO.........................    5,511    5,198
    OTHER LIABILITIES..................................    7,674    8,045
                                                       --------- ---------
      Total liabilities................................  485,601  482,801
    STOCKHOLDER'S EQUITY:
    Common stock, $.01 par value--200 authorized, 200
     issued and outstanding............................       --       --
    Additional paid-in-capital.........................   80,916   80,555
    Accumulated earnings...............................   13,329    8,898
    Accumulated other comprehensive income (loss)......   16,182     (512)
                                                       --------- ---------
      Total stockholder's equity.......................  110,427   88,941
                                                       --------- ---------
    TOTAL.............................................. $596,028 $571,742
                                                       --------- ---------
    

    
                    PANOLAM INDUSTRIES INTERNATIONAL, INC.
               Condensed Consolidated Statements of Operations
                            (Amounts in thousands)
                                 (Unaudited)

                                      Three Months         Nine Months
                                   Ended September 30, Ended September 30,
                                   ------------------- -------------------
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------
    NET SALES                      $105,603  $127,692  $329,776  $354,072
    COST OF GOODS SOLD               83,336    98,856   257,491   275,796
                                   --------- --------- --------- ---------
    GROSS PROFIT                     22,267    28,836    72,285    78,276
    SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES         12,059    13,612    39,449    39,444
                                   --------- --------- --------- ---------
    INCOME FROM OPERATIONS           10,208    15,224    32,836    38,832
    INTEREST EXPENSE                  8,525     9,109    26,201    25,589
    INTEREST INCOME                    (149)     (221)     (456)     (519)
                                   --------- --------- --------- ---------
    INCOME BEFORE INCOME TAXES        1,832     6,336     7,091    13,762
    INCOME TAXES                        712     2,095     2,660     3,685
                                   --------- --------- --------- ---------
    NET INCOME                     $  1,120  $  4,241  $  4,431  $ 10,077
                                   --------- --------- --------- ---------
    

    
                    PANOLAM INDUSTRIES INTERNATIONAL, INC.
               Condensed Consolidated Statements of Cash Flows
                            (Amounts in thousands)
                                 (Unaudited)

                                                             For the
                                                        Nine Months Ended
                                                          September 30,
                                                        ------------------
                                                            2007      2006
                                                        -------- ---------
    CASH FLOW FROM OPERATING ACTIVITIES:
    Net income                                          $ 4,431  $ 10,077
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization                      20,427    18,635
      Deferred income taxes (benefit)                     3,813    (5,787)
      Amortization of debt acquisition costs              1,565     1,835
      Stock option expense                                  361       367
      Other                                                (148)   (1,418)
      Changes in operating assets and liabilities:
        Accounts receivable                              (7,347)     (986)
        Inventories                                      (3,541)   (2,922)
        Other current assets                              1,667       114
        Accounts payable and accrued liabilities          6,764     3,627
        Income taxes payable                             (4,337)    9,077
        Other                                              (807)     (807)
                                                        -------- ---------
        Net cash provided by operating activities        22,848    31,812
                                                        -------- ---------
    CASH FLOWS FROM INVESTING ACTIVITIES:
      Acquisition, net of acquired cash                      --   (77,690)
      Purchase of property, plant and equipment          (8,273)   (8,742)
                                                        -------- ---------
          Net cash used in investing activities          (8,273)  (86,432)
                                                        -------- ---------
    CASH FLOWS FROM FINANCING ACTIVITIES:
      Repayment of long-term debt                        (8,021)  (23,086)
      Proceeds from long-term debt                           --    80,000
      Proceeds from revolving credit facility                --     5,000
      Payment of debt acquisition costs                      --    (2,855)
                                                        -------- ---------
          Net cash (used in) provided by financing
           activities                                    (8,021)   59,059
                                                        -------- ---------
    EFFECT OF EXCHANGE RATE CHANGES ON CASH                 993        31
                                                        -------- ---------
    CHANGE IN CASH AND CASH EQUIVALENTS                   7,547     4,470
    CASH AND CASH EQUIVALENTS--Beginning of period       10,849     6,873
                                                        -------- ---------
    CASH AND CASH EQUIVALENTS--End of period            $18,396  $ 11,343
                                                        -------- ---------
    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash payments for interest                          $20,080  $ 19,529
                                                        -------- ---------
    Cash payments for income taxes, net of refunds      $ 3,184  $    395
                                                        -------- ---------
    




For further information:

For further information: Panolam Industries International, Inc. Vincent
S. Miceli, 203-925-1556 ext.2263 Chief Financial Officer

Organization Profile

PANOLAM INDUSTRIES INTERNATIONAL, INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890