RECORD ANNUAL SALES AND RETURN TO PROFITABILITY FOR 2010

  • Record annual sales at $23,776,000; 58% sales growth compared with 2009
  • Record sales for each quarterly period of 2010
  • Gross margin maintained at 38% despite an increase in the cost of raw materials
  • Significant increase in adjusted EBITDA from $520,000 to $2,947,000
  • $279,000 in net profit compared with a net loss of $776,000

QUEBEC CITY, Feb. 23 /CNW Telbec/ - Novik inc. (TSXV: NVK) releases today its results for the fourth quarter and the fiscal year ended December 31, 2010. All amounts are expressed in Canadian dollars unless otherwise indicated.

 
NOVIK inc.
for the fiscal years ended December 31, 2010 and 2009   12 months 12 months
(in thousands dollars, except for amounts per share)   period period
  2010 2009
  $ $
Operating results
             
Revenues 23,776 15,061
Earnings before depreciation, amortization, financial expenses,
stock-based compensation costs and income taxes 2,947 520
Net earnings (loss) 279 (776)
Basic and diluted net earnings (loss) per share 0.006 (0.016)
 
Financial position
 
Total assets 24,307 25,314
Working capital 2,186 1,457
Total long term financial liabilities 8,960 10,450
Total liabilities 13,093 14,496
Shareholders' equity 11,213 10,818
Shareholders' equity per share 0.23 0.22
     
Number of shares outstanding 48,470,858  48,470,858

Mr. Michel Gaudreau, President, is proud to announce annual financial results for fiscal year 2010 by outlining annual sales record for Novik.  Mr. Gaudreau points out "in the 2009 annual report, we presented a decrease in sales for the first time in Novik's history.  However, in this same document, we indicated that the 2009 annual financial results did not demonstrate the breakthroughs made on the North American market.  Novik's sales growth of nearly 60% in 2010 compared with 2009 justifies this comment.  Novik has managed to benefit from its competitors' weaknesses and introduce new unique products, thus allowing Novik to gain market shares in a relatively fragile industry.  In addition, Novik took appropriate measures to bring back profitability despite rise in cost of raw materials and current industry conditions."

REVENUES

During fiscal year 2010, the company generated $23.8 M in revenues compared with $15.1 M in 2009. Mr. Gaudreau explains "this 58% increase in sales is directly linked to the presence of new major distributors in Canada and the United States and the introduction of innovative covering products in 2009.  This significant growth in Novik's sales compared with the previous fiscal year is a great achievement, given our presence in an industry still facing significant challenges following the recent economic recession.  Our industry has grown calmly since last year but remains far from the thresholds seen in the mid-2000s; Novik is thus gaining market shares, given its greater pace of sales growth since the start of the current year.  The efforts in marketing and developing new products in recent years have allowed Novik to generate this sales growth and stand out in a market where the opportunities are at a slow pace.  This phenomenal growth in Novik's sales in a North American economic context considered very difficult positions the company advantageously in the face of a stronger economic recovery foreseen over the coming years."

North American sales in fiscal year 2010 were up by nearly $10 M compared with the same period of the previous fiscal year, an increase of 83%.  This growth in sales in this area is exclusively related to our exterior coverings introduced since fall 2009 and now sold to large distributors in this area.  As for Novik's exports on the European market, we have seen a 12% growth compared with the previous year. 

Revenues for fourth quarter 2010 totalled $4.4 M compared with $3.4 M in fourth quarter 2009.  This sales growth of nearly 30% is a record for a fourth quarter and ensures Novik's achievement of record sales for a fourth consecutive quarter.  The increase in sales on the North American market contributed to reaching this level of sales and also with the larger delivery of containers on the European continent.  Mr. Gaudreau adds "since the fall season, we have sensed a renewed level of economic activity in certain countries and are positive about seeing an increase in our sales on this market for the next fiscal year."

EARNINGS BEFORE DEPRECIATION, AMORTIZATION, FINANCIAL EXPENSES, STOCK-BASED COMPENSATION COSTS AND TAXES ("EBITDA adjusted")

EBITDA adjusted 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, this measure may not be comparable to similar measures presented by other issuers. This measure is presented 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 fiscal year ended December 31, 2010, adjusted EBITDA amounted to $2,947,000 compared with $520,000 for the previous fiscal year.

Novik's significant sales growth for fiscal year 2010 explains this important increase.  This level of adjusted EBITDA, given a ratio to sales of 13%, represents a more satisfying threshold than the one seen during the previous fiscal year.  This ratio demonstrates Novik's potential to generate attractive levels of liquidities in a context of profitability.

NET EARNINGS

The net profit for fiscal year 2010 was $279,000 compared with a net loss of $776,000 for the previous fiscal year.  It is important to note that the operating profit is significantly higher in 2010 because the recorded exchange gain of more than $1,000,000 had allowed Novik to minimize the operational losses experienced in 2009.

Novik generated an operating profit of $1,063,000 in 2010 compared with an operating loss of $1,385,000 in 2009.  This improvement of nearly $2,500,000 is directly linked to the company's significant sales growth. A marked increase can thus been seen in the company's profitability in only one year.

OUTLOOK

Mr. Gaudreau concludes "the sales growth observed in 2010 was an important success for Novik.  The current trends make us positive about continuing this sales growth for next year.  It may be difficult to expect that we will maintain the same pace, at nearly 60%, compared with the previous year, but we believe that the opportunities offered for next year remain positive.  Current discussions with our larger customers are very positive and all project an increase in the purchase of our products.  We are also continuing discussions with potential customers interested in offering our range of products, particularly stimulated by the new products offered since the end of 2009.

With regard to our marketing strategy, we want to pursue our goals of having closer relationships with decision-makers.  Participating in trade fairs and maintaining our Novexpert program have had a positive effect in reaching end consumers and thus creating our own demand.  We also want to build closer relationships with architects and real estate developers in 2011, as they are also players who could influence consumer decisions.  The hiring of technical representatives and the creation of new marketing tools will ensure that we maximize our opportunities with these players in the next fiscal year.

We will soon begin marketing a new range of colours aiming to represent a more natural state of our products.  The creation of six colours offered for all of our imitation cedar coverings is now stirring up interest from our current and potential customers.  The comments received on these new colours have been very positive, and we believe that this project will allow Novik to stand out more from the competition and solidify our competitive advantage on the market with our knowledge of painting techniques.  We also believe that this project will allow Novik to promote additional sales for the next fiscal year.

However, we must be vigilant in 2011 regarding the increase in our consumed raw materials. Already since the start of the fiscal year, we have experienced significant price increases by our main suppliers.  This situation negatively influences the company's profitability.  We are in discussions with our suppliers to reduce these increases as much as possible.  In addition, we are working hard with our various teams to maximize the opportunities to improve our manufacturing processes and do so cost-effectively.  We have established a committee to explore all of the opportunities communicated by our team members and to take action on projects offering good potential.  This formula is already a resounding success with our team members and is intended to maintain Novik's profitability for the next fiscal year and subsequent fiscal years. 

Our focus is therefore clear for 2011: we want to continue our growth in sales as well as the company's profitability."

About NOVIK

Novik (NVK) is a leader in the design, manufacturer and distribution of innovative polymer exterior siding, roofing coverings and accessories 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.

SOURCE Novik Inc.

For further information:

Source :

Novik inc.

For further information:

Michel Gaudreau
President
Tel. : (418) 878-6161
E-mail : micgau@novik.com

Pascal Bouthot
Vice-President, Finances
Tel. : (418) 878-6161
E-mail : pasbou@novik.com

Organization Profile

Novik Inc.

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