Norwall Group Inc. reports results for the second quarter and six months ended June 29, 2007



    BRAMPTON, ON, Aug. 3 /CNW/ - Norwall Group Inc., one of North America's
largest manufacturers of residential wallcovering, announced the Corporation's
second quarter results today. The ongoing decline of the wallpaper industry
and the strong Canadian dollar continued to have a negative impact on our
results.
    The net loss, before foreign exchange (net of tax), for the six months
ended June 29, 2007 was $447,000 on net sales of $20,927,000, compared to a
net loss, before foreign exchange (net of tax), of $1,051,000 on net sales of
$22,667,000 in the prior year. This represents a positive improvement despite
a decline in sales of 7.7% year over year. The net loss as reported was
$918,000 or 0.14 per common share for the six months ended June 29, 2007 as
compared to $1,219,000 or 0.19 per common share in the prior year.
    The net loss for the three months ended June 29, 2007 was $997,000 on net
sales of $9,389,000 compared to a net loss $910,000 on net sales of
$10,433,000 for the same period in 2006. The basic and diluted loss per common
share was $0.15 for the second quarter of 2007, compared to a loss of $0.14
per common share for the same quarter of 2006.
    The appreciation of the Canadian dollar continues to seriously impair our
Canadian manufacturing business along with all manufacturing in Canada. In
addition we are now facing the weakening of the retail market in North
America.
    Despite the above Norwall continues to reduce debt and have positive cash
flow. During the six months ended June 29, 2007 there was EBITA(1) of $575,000
($53,000 - 2006). Our focus continues to be improving our gross margin,
expansion outside of North American markets while continuing to maintain the
highest quality standards and on time performance to our customers.

    Norwall Group (TSX:NGI) manufactures quality residential wallpapers and
borders and distributes them to thousands of home centres, specialty stores
and mass merchants in Canada and through its wholly-owned operating
subsidiary, Patton Wallcoverings, in the United States.

    This Press Release contains forward-looking statements reflecting
management's current expectations regarding future results of operations,
economic performance, financial conditions, and achievements of the
Corporation. Actual results may differ materially from those in such
statements. The Corporation wishes to caution the reader that those important
factors described elsewhere in the commentary could affect the Corporation's
actual results and could cause such results to materially differ from those
expressed in any forward-looking statement made by, or on behalf of, the
Corporation.


    
                             NORWALL GROUP INC.
                    Consolidated Statements of Operations
         (In thousands of Canadian dollars, except per share amounts)

                                FOR THE THREE MONTHS      FOR THE SIX MONTHS
                                        ENDED                    ENDED
                              ----------------------- -----------------------
                                 June 29,    June 30,    June 29,    June 30,
                                    2007        2006        2007        2006
                               unaudited   unaudited   unaudited   unaudited
                              ----------------------- -----------------------
    Sales                          9,389      10,433      20,927      22,667
    Cost of goods sold             7,154       7,710      15,185      16,653
                              ----------------------- -----------------------
    Gross profit                   2,235       2,723       5,742       6,014
    Selling, general and
     administrative expenses       3,005       3,424       6,203       7,103

                              ----------------------- -----------------------
    Loss before the
     undernoted                     (770)       (701)       (461)     (1,089)
    Severance and
     termination costs                33         394          33         401
                              ----------------------- -----------------------
    Loss from operations
     before the following
     items                          (803)     (1,095)       (494)     (1,490)
    Foreign exchange loss            468         306         570         227
    Interest expense                  88         120         189         243
                              ----------------------- -----------------------
    Loss before income taxes      (1,359)     (1,521)     (1,253)     (1,960)
    Recovery of income taxes        (362)       (611)       (335)       (741)
                              ----------------------- -----------------------
    Net loss for the period         (997)       (910)       (918)     (1,219)
                              ----------------------- -----------------------
    Basic and diluted loss
     per common share              (0.15)      (0.14)      (0.14)      (0.19)

                              -----------------------------------------------
                              -----------------------------------------------
    Weighted and average
     number of common shares
     outstanding               6,486,393   6,486,393   6,486,393   6,486,393
                              -----------------------------------------------
                              -----------------------------------------------

    (1) EBITA is not a recognized measure under Canadian generally accepted
        accounting principles (GAAP). Investors should be cautioned, however,
        that EBITA should not be construed as an alternative to net income
        (loss) determined in accordance with GAAP as an indicator of the
        Corporation's performance or to cash flows from operating, investing
        and financing activities as a measure of liquidity and cash flows.
        The Corporation's method of calculating EBITA may differ from other
        companies and, accordingly, EBITA may not be comparable to measures
        used by other companies. EBITDA is calculated as earnings before
        income taxes, depreciation, amortization.



                              NORWALL GROUP INC
                         CONSOLIDATED BALANCE SHEETS
                     (in thousands of Canadian dollars)

                                                            June    December
                                                        29, 2007    29, 2006
                                                            $           $
                                                      (unaudited) (unaudited)
                                                      -----------------------
    Assets
    Current assets
    Cash                                                      26          29
    Accounts receivable                                    8,187       8,476
    Income taxes recoverable                                 136         456
    Inventories                                            9,751       9,776
    Merchandising supplies                                   864         882
    Prepaid expenses and other                               705         622
                                                      -----------------------
                                                          19,669      20,241
    Property, plant and equipment                         17,617      18,882
    Other assets                                               -          78
    Future income taxes                                    2,807       2,943
    Goodwill                                               1,693       1,693
                                                      -----------------------
                                                      -----------------------
                                                          41,786      43,837
                                                      -----------------------
                                                      -----------------------

    Liabilities
    Current liabilities
    Demand loan                                            1,005       1,091
    Accounts payable and accrued liabilities               4,144       4,666
    Current portion of long-term debt                        314         306
                                                      -----------------------
                                                      -----------------------
                                                           5,463       6,063
    Long-term debt                                         5,026       5,184
    Future income taxes                                    1,037       1,581
                                                      -----------------------
                                                      -----------------------
                                                          11,526      12,828
                                                      -----------------------
                                                      -----------------------
    Shareholders' Equity
    Share capital                                         32,336      32,336
    Accumulated other comprehensive (loss)                   150         (97)
    Retained earnings (deficit)                           (2,226)     (1,230)
                                                      -----------------------
                                                      -----------------------
                                                          30,260      31,009
                                                      -----------------------
                                                      -----------------------
                                                          41,786      43,837
                                                      -----------------------
                                                      -----------------------
    

    %SEDAR: 00002584E




For further information:

For further information: (905) 791-2700, James J. Patton, President and
Chief Executive Officer, jpatton@norwallgroup.com; Edward Diochon, Vice
President of Finance, ediochon@norwallgroup.com

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NORWALL GROUP INC.

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