Imaflex Inc. earns $103,000



    TICKER SYMBOL:  IFX.A

    MONTREAL, Aug. 7 /CNW Telbec/ - Imaflex Inc. (the "Company") (TSX Venture
Exchange - IFX.A) announces results for the second quarter ended June 30,
2007.

    
    -------------------------------------------------------------------------
    (unaudited)

    (CDN $ thousands, except                                   YTD       YTD
     per share amounts)                Q2 2007   Q2 2006      2007      2006
    -------------------------------------------------------------------------
    Sales                               12,089    14,912    24,117    26,712
    -------------------------------------------------------------------------
    Cost of sales                       10,655    12,069    20,844    22,122
    -------------------------------------------------------------------------
    Gross profit ($)                     1,434     2,843     3,273     4,590
    -------------------------------------------------------------------------
    Gross profit (%)                      11.9      19.1      13.6      17.2
    -------------------------------------------------------------------------
    Expenses                             1,780     1,876     3,650     3,533
    -------------------------------------------------------------------------
    FX loss (gain)                        (451)      (62)     (484)        1
    -------------------------------------------------------------------------
    Income before income taxes
     and non-controlling interest          105     1,029       107     1,056
    -------------------------------------------------------------------------
    Provision for income taxes               2       350        83       550
    -------------------------------------------------------------------------
    Non-controlling interest                 -       (21)        -       (35)
    -------------------------------------------------------------------------
    Net income                             103       700        24       541
    -------------------------------------------------------------------------
    Basic and diluted earnings
     per share                           0.003     0.018     0.001     0.014
    -------------------------------------------------------------------------
    EBITDA                                 950     1,805     1,853     2,566
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The results include those of Imaflex Inc. ("Imaflex") located in Montréal
(Québec) and its division Canguard Packaging ("Canguard") located in
Victoriaville (Québec), and its wholly owned subsidiaries, Imaflex USA, Inc.
("Imaflex USA") located in Thomasville (North Carolina) and Canslit Inc.
("Canslit") located in Victoriaville (Québec). Towards the end of the first
quarter, Canguard's installations were moved from Toronto (Ontario) to
Victoriaville (Québec).

    Summary - Results of Operations
    -------------------------------

    The Company's Canadian operations incurred a combined net loss of
$730,000 for the three months ended June 30, 2007, compared with net income of
$698,000 for the same period in 2006. The net loss in 2007 of $730,000 is due
primarily to foreign exchange losses, with the operations only achieving
breakeven due to significant competitive pricing pressures in the plastics
packaging industry and notable sales volume decline. Furthermore, the current
quarter's results were adversely impacted by operational losses at the
Company's U.S. facility of $287,000, compared with $459,000 for the same
period in 2006. Lastly, the Company generated a significant foreign exchange
gain on the translation of the integrated subsidiary of $1,120,000, compared
with a foreign exchange gain of $461,000 for the same period in 2006. As a
result of the significant devaluation of the U.S. dollar during the quarter,
this had a favourable impact on the revaluation of its U.S. denominated
long-term debt with its U.S. lenders. The Company continues to face margin
pressures throughout its operations, as a result of competitive pricing
pressures in the plastics packaging industry. Furthermore, the Company's U.S.
and Canguard operations continue to not generate the appropriate sales volume
levels necessary to recover current operating costs.
    The Company's Canadian operations incurred a combined net loss of
$559,000 for the six months ended June 30, 2007, compared with net income of
$1,088,000 for the same period in 2006. The net loss in 2007 of $559,000
includes foreign exchange losses of $773,000, with the operations achieving
profitability in the first quarter of the current year. Furthermore, the
current quarter's results were adversely impacted by operational losses at the
Company's U.S. facility of $674,000, compared with $935,000 for the same
period in 2006. Lastly, the Company generated a significant foreign exchange
gain on the translation of the integrated subsidiary of $1,257,000, compared
with a foreign exchange gain of $388,000 for the same period in 2006.

    Sales
    -----

    Sales for the three months ended June 30, 2007 totaled $12,089,000
compared with $14,912,000 for the same period in 2006. The decrease of
$2,823,000 or 18.9% was due primarily to significant competitive pressures and
a decrease in average selling prices, as a result of lower raw material costs.
    Sales for the six months ended June 30, 2007 totaled $24,177,000 compared
with $26,712,000 for the same period in 2006. The decrease of $2,595,000 or
9.7% was due primarily to significant competitive pressures and to a
significant decrease in average selling prices, as a result of lower raw
material costs.

    Gross profit margins
    --------------------

    The gross profit margin remains at levels we have historically not been
accustomed to as a result of competitive conditions in the domestic and export
markets. In addition, the Company continues to experience production
inefficiencies and low sales volume at the Company's U.S. and Canguard
facilities.

    Income taxes
    ------------

    In 2007, the income tax provision reflects the taxes on the income
generated by the Company's Canadian operations. No future income tax benefits
have been recorded on Imaflex USA's operating losses.
    In 2006, the income tax provision reflected the taxes on the income
generated by the Company's Canadian operations. No future income tax benefits
were recorded on Imaflex USA's and Canguard's operating losses.

    Outlook
    -------

    Management's expectations in prior outlooks that market conditions had
stabilized were accurate in that quarterly sales volume is more predictable.
However, the plastics packaging industry is not experiencing the typical
annual growth that it has been accustomed to. This flat growth has created
excess capacity and supply in the industry. Just as our own Company made
decisions to expand its manufacturing capacity over the past years, so did
many of our competitors, which has led to this glut in supply. In effect most
extrusion companies find themselves with increased manufacturing capacity but
no market demand to accept it. As a result, our competitors in an attempt to
secure greater volume have lowered prices, and have caused tremendous
pressures on profitability.
    Management has no clear answer as to when these difficult market
conditions will reverse themselves. However, we did envision this scenario and
took decisions to position our Company to not only weather this storm, but
also emerge stronger. Our decision to convert our reprocessed raw materials to
finished goods was one. Our decision to have Canslit become an integrated
converting operation was another. The missing ingredient at the moment remains
sales volume, and we remain hopeful this can be realized very shortly.
    With respect to our U.S. facility, there have been substantial
improvements in our operations, and management expects this improvement to
continue. This expectation is irrespective of the dismal market conditions we
continue to face.
    As a result of the uncertainty of when market conditions will return to
historical levels, management has over the last six months devoted more time,
energy, and cash resources, to research and development activities. The
manufacturing of a compostable plastic film that completely degrades in ninety
to one hundred and twenty days is complete. Management is about to implement a
marketing plan that would take advantage of this development. There are
numerous others in various stages of completion. Should at least one come to
fruition in the near future it would almost immediately create the
profitability that we have historically been accustomed to.
    The proper words at this time for our many shareholders would be to state
that more patience is needed. Management's view is that its past decisions to
expand this Company have created enormous potential. This potential will soon
be attained, and once realized, will begin to reverse the setbacks that we
have experienced and endured in the current market conditions.

    Safe Harbor Statement
    ---------------------

    Certain statements and information included in this release constitute
"forward-looking statements". Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied in
such forward-looking statements. Additional discussion of factors that could
cause actual results to differ materially from management's projections,
estimates and expectations is contained in the Company's other public filings.
Unless otherwise required by the securities authorities, we do not undertake
to update any forward-looking statements that may be made from time to time by
us or on our behalf.

    Non-GAAP Measure
    ----------------

    The Company's management uses a non-GAAP measure in this press release,
namely EBITDA. Management wishes to specify that in the performance of the
Company's financial results, EBITDA is shown as "Earnings before interest,
taxes, non-controlling interest, depreciation and amortization". While EBITDA
is not a standard GAAP measure, management, analysts, investors and others use
it as an indicator of the Company's financial and operating management and
performance. EBITDA should not be construed as an alternative to net income
determined in accordance with GAAP as an indicator of the Company's
performance. The Company's method of calculating EBITDA may be different from
those used by other companies.

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.
    %SEDAR: 00011834EF




For further information:

For further information: Imaflex Inc.: Joseph Abbandonato, President and
C.E.O; Roberto Longo, CA, VP - Finance; (514) 935-5710, Fax: (514) 935-0264,
info@imaflex.com, www.imaflex.com


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