Second quarter 2009 highlights for Novik inc.



    
    - 38% decrease in sales to $4,172,000 as a result of the economic
      slowdown
    - 33% decrease in 6 months of 2009 sales to $6,817,000
    - 12% increase in 6 months of 2009 North American sales
    - $436,000 in net earnings compared with $811,000
    - Cumulative net loss of $192,000 compared with net earnings of $916,000
    

    QUEBEC CITY, Aug. 27 /CNW Telbec/ - Novik inc. (NVK) releases today its
results for the second quarter of fiscal year 2009. All amounts are expressed
in Canadian dollars unless otherwise indicated.

    
    -------------------------------------------------------------------------
    NOVIK inc.
    for the periods ended
     June 30, 2009 and 2008
    (in thousands dollars,
     except for amounts           Second      Second     Year to     Year to
     per share)                  quarter     quarter        date        date
    -------------------------------------------------------------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
                                       $           $           $           $
    Operating results

    Revenues                       4,172       6,772       6,817      10,154
    Gross margin                   1,535       2,868       2,500       4,098
    Income before depreciation,
     stock-based compensation,
     financial expenses and
     income taxes                      8       1,734          21       2,154
    Net income (loss)                436         811        (192)        916
    Basic and diluted net
     income (loss) per share       0.009       0.018      (0.004)      0.020
    -------------------------------------------------------------------------


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

    (in thousands dollars, except for                    June 30,    Dec. 31,
     amounts per share)                                     2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    Financial position

    Total assets                                          28,291      25,583
    Working capital                                        2,307       3,175
    Total debt                                            13,724      12,019
    Total liability                                       16,889      14,141
    Shareholder's equity                                  11,402      11,442
    Shareholder's equity per share                          0.24        0.24
    -------------------------------------------------------------------------
    Number of shares outstanding                      48,470,858  48,470,858
    -------------------------------------------------------------------------
    

    REVENUES

    During the course of the second quarter of fiscal year 2009, Novik
recorded $4.2M in revenue compared with $6.8M during the same quarter of the
previous fiscal year. Mr. Gaudreau, Novik's President & CEO, stated that "this
38% decrease in sales is directly related to the decrease of our international
deliveries to our distributors, given the current economic context. Our
distributors are facing a difficult construction market in their respective
countries, causing them to be safer in their inventory management, including
Novik products. These distributors are still positive about the future of
Novik products in their territories and directly attribute this decreased
demand to the current economic conditions."
    Mr. Gaudreau added that "our North American sales for the second quarter
of fiscal year 2009 are still nearly $700,000 higher than for the same period
of the previous fiscal year. This sales growth in this territory is positive
compared with most manufacturers in our industry, who have seen their revenues
drop anywhere from 30% to 50%. Our marketing efforts in this territory since
the start of the year, the financial difficulties of our competitors, and our
more diversified product line explain these results."
    Novik's cumulative sales for the six-month period amounted to $6.8M,
compared with $10.2M for the same period of the previous year. This 33%
decrease in sales is explained by the aforementioned items.

    
    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 second quarter of fiscal year 2009, adjusted EBITDA amounted to
$0M, compared with $1.7M for the same period of previous fiscal year. Adjusted
EBITDA is lower compared with the same period of the previous year, given the
lower business volume and Novik's higher selling expenses. Such higher selling
expenses are explained by intense marketing investments done since the
beginning of the current fiscal year. A larger sales team on the Canadian and
US markets since June 2008, greater marketing efforts, and the addition of
members to our marketing and customer service team to ensure that these
marketing efforts are working properly explain this increase. The goal in
deploying these efforts is clear: to allow Novik to take advantage of the
current opportunities on the market, given the openness of potential customers
to our new products and the financial difficulties of our competitors. The
signing of new major customers shows evidence of these actions. Once the
economy turns around, Novik believes that these actions will allow the company
to enjoy a greater business volume than in previous years.
    For the six-month period ended June 30, 2009, the adjusted EBITDA
amounted to $0M compared with $2.2M for the same period of previous fiscal
year.

    NET INCOME

    The company's net income for the second quarter of fiscal year 2009
amounted to $436,000, compared with a net income of $811,000 for the same
quarter of the previous fiscal year. A stronger appreciation of the Canadian
dollar in relation to the American dollar during this period than in the
previous year justified the recording of an unrealized foreign exchange gain
in the amount of $715,000 on our foreign exchange contracts during this period
and explained partially such profitability. The foreign exchange contracts not
expired as of June 30, 2009, amounting to more than $5M, have an average rate
of 1.26 compared with the current rate of nearly 1.13. Realized exchange gains
of $171,000 were also recorded after the foreign currency forward contracts
were exercised at a favourable rate compared with the market. Finally, the
recording of approximately $517,000 in unrealized foreign exchange gains on
monetary items denominated in US dollars is also explained by the appreciation
of the Canadian dollar in relation to the US dollar. Given that Novik is
currently in a net monetary liability position in US dollars, the appreciation
of the Canadian dollar during the second quarter ensured the recording of
these unrealized foreign exchange gains.
    For the six-month period ended June 30, 2009, the net loss was $192,000,
compared with net earnings of $916,000 for the same period of the previous
fiscal year.

    OUTLOOK

    Novik's presence on the global market has a direct impact on its current
sales level. The more difficult economic situation in certain territories,
especially in Europe, is causing the current situation. Nevertheless, Novik is
managing to grow in North America, while most of the industry suffers. This
result shows the openness of customers to the potential offered by the Novik
product line. Now is the right time to meet with our current distributors as
well as potential customers offering good business opportunities in order to
show them the advantages of our current products and those coming soon. The
marketing efforts made since the end of fiscal year 2008, combined with the
economic difficulties of some of our competitors, have allowed us to sign
important contracts for the future. Despite the fact that these new customers
have not generated a significant sales volume so far, Novik is looking forward
to the upcoming economic recovery in order to increase its sales with these
partners.
    In addition, the introduction of four new exterior siding products and a
roof covering during the third quarter should promote greater sales for the
second half of fiscal year 2009 compared with the previous fiscal year. In
fact, these products were announced last spring to our current and potential
distributors and received a warm welcome. These innovative products are now
even sought for future sales. They will allow Novik to continue to stand out
on the market and allow its distributors to offer quality products and do
business with a manufacturer offering a complete product line of exterior
sidings for homes.
    While continuing its marketing efforts in order to maximize current sales
in a more difficult economic context, Novik must continue to be vigilant in
controlling its costs. As such, certain projects have been delayed, the
approval of expenditures has been tightened, inventory management is
scrutinized more, and some working teams have been reorganized to ensure sound
financial management in the current situation. However, Novik's desire remains
clear: to be ready once the economy turns around in order to reach Novik's
full potential in the near future.

    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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