Royal Laser Corp. Reports Financial Results for the Third Quarter and Announces a New $65 Million Credit Facility
Royal Laser Corp. (the “Company” or “Royal Laser”) (TSX: RLC) today reported its financial results for the third quarter of fiscal year 2008, ended December 31, 2007.
The summarized financial results for the three months ended December 31, 2007, as compared to three months ended December 31, 2006, were:
Q3 2008 Q3 2007 ——————————— ——————————— Revenues $ 57,406,481 $ 56,952,701 Cost of Sales $ 52,548,700 $ 50,738,814 Gross Margin $ 4,857,781 $ 6,213,887 EBITDA(i) $ (385,652) $ 2,715,334 EBITDA(i) per share $ nil $ 0.03 Net Earnings (Loss) $ (2,020,430) $ 255,397 EPS (Basic) $ (0.02) $ 0.00 EPS (Diluted) $ (0.02) $ 0.00
The summarized financial results for the nine months ended December 31, 2007, as compared to nine months ended December 31, 2006, were:
Q3 2008 YTD Q3 2007 YTD ——————————— ——————————— Revenues $ 181,262,792 $ 183,005,873 Cost of Sales $ 164,255,018 $ 161,371,416 Gross Margin $ 17,007,774 $ 21,634,457 EBITDA(i) $ 1,692,681 $ 8,641,374 EBITDA(i) per share $ 0.02 $ 0.11 Net Earnings (Loss) $ (3,923,721) $ (1,538,171) EPS (Basic) $ (0.04) $ (0.02) EPS (Diluted) $ (0.04) $ (0.02)
(i)Earnings (loss) before interest, taxes, depreciation and amortization and stock-based compensation charges.
HIGHLIGHTS:
– The Company’s revenues for Q3 FY 2008 increased to $57,406,481 representing increased sales volumes predominantly in the flat rolled steel processing business led by the recent Apogee Slitting Inc. (“ASI”) acquisition.
– Gross margin percentage for Q3 FY 2008 was 8% compared to 11% for Q3 FY 2007. The decrease of 3% is predominantly due to reduced steel selling prices which were not fully supported by lower purchasing prices for steel.
– Working Capital remains strong at $11,980,249 at the end of Q3 FY 2008 although decreased because of the following specific strategies relating to the Venture Steel Inc. (“VSI”) custom flat rolled steel processing business:
— The acquisition of ASI was funded in cash and shares. Total cash outlays relating to the ASI acquisition were $6,060,000. ASI provides expanded market coverage for VSI into the tubular, heavy gauge automotive, building products and general manufacturing markets. In addition, Apogee compliments our current operations by adding increased slitting capabilities (heavier gauges up to 0.5 inches) and increased storage capacity.
— As part of a calculated strategy to increase and enhance margins going forward, new management of VSI selectively bought inventory forward in anticipation of general price increases in the flat rolled steel market, and in anticipation of new business.
— As part of the strategy to increase sales volumes, and tonnage processed, the new management team of VSI inherited certain sales contracts that called for longer payment terms.
– EBITDA per share for Q3 FY 2008 year to date remains positive at $0.03 per share, although lower than $0.11 per share in Q3 FY 2007 year to date.
– Revenues derived from the United States market were 13% of sales. Transactions conducted in US dollars expose the Company to currency fluctuations that resulted in a foreign exchange loss of $314,968 for Q3 FY 2008.
Bill Iannaci, Royal Laser’s Chief Executive Officer, commenting on the results of the last quarter indicated: “The past quarter has been transitional for the Company. Although sales volumes increased, the operating margins suffered as a result of reduced selling prices for steel which in some cases were not fully supported by lower purchasing prices for steel. Our largest division, the flat rolled steel processing business, continues to execute on its transition plan. The new and experienced management team at Venture Steel Inc., combined with the synergies from the acquisition of Apogee Slitting Inc., will provide for better operating margins going forward. Our focus has been, and continues to be, on removing inefficiencies, increasing margins while focussing on sales growth. Our automotive division, led by a new management team, continue to win and are aggressively pursuing new contracts which will add to capacity utilization commencing in late calendar 2008 through 2009.
The benefits from focussing on efficiencies, have already begun to be realized and will reflect in improved margin performance during the fourth quarter and going forward. This, further exasperated by increased steel prices, making our investment in inventory that much more valuable, should bode well for future profitability.”
The Company also announces that with effect from February 12, 2008, the Company has closed a $65,000,000 consolidated credit facility with CIT Business Credit Canada Inc. for working capital and term loan purposes.
Bill Iannaci, Royal Laser’s Chief Executive Officer, commented: “This new facility allows us to leverage steel purchasing opportunities and thereby enhance our margin performance. I appreciate the confidence that CIT has shown in the Company, its management team, and in our prospects going forward.”
The Company’s unaudited financial statements for the interim period ended December 31, 2007, together with Management’s Discussion and Analysis have been filed on SEDAR and are available at www.sedar.com.
About CIT Business Credit Canada Inc.
CIT Business Credit Canada Inc. is the Canadian asset-based lending unit of CIBC and CIT Group Inc. based in Toronto and servicing all of Canada. CIT Business Credit Canada Inc. is a strategic initiative combining CIBC’s full-service commercial banking capability with CIT Group’s asset based lending platform, which has been customized to recognize Canada’s unique lending landscape. CIT Business Credit Canada Inc. offers secured working capital financing for a variety of purposes through all stages of the business cycle.
About Royal Laser Corp.
Royal Laser Corp., through its wholly-owned operating subsidiaries, services steel and manufactures custom wood and metal products targeted at the multi-billion dollar automotive, high-end retail in-store development industry, the OEM industrial products and construction industries, in Canada, the United States and overseas. Royal Laser Corp. employs state of the art industrial technology to process steel, fabricate custom and standardized wood and metal products, including robotic wood finishing lines, advanced laser-based computer-integrated manufacturing systems and advanced stamping presses. In addition to contract manufacturing services, Royal Laser provides value-added engineering and design services. The Corporation’s common shares trade on the Toronto Stock Exchange under the symbol “RLC” and there are approximately 100 million shares outstanding.
For further information on the Corporation, please visit SEDAR at www.sedar.com.
To receive Company news by email, please contact info@royallaser.com and specify “Royal Laser news” in the subject line.
Forward-Looking Statements
Certain statements contained in this press release include statements which contain words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “will”, “believe” and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and other factors, many of which are beyond our control, and are as discussed under the heading “Trends, Risks and Uncertainties” and in the Annual Information Form of Royal Laser dated June 27, 2007 and filed on SEDAR at www.sedar.com, as well as Royal Laser’s periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits will be derived therefrom. Except as required by law, Royal Laser Corp. disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained herein is expressly qualified by this cautionary statement.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
Contacts: Royal Laser Corp. Bill Iannaci Chief Executive Officer (416) 679-9474 Email: biannaci@royallaser.com Royal Laser Corp. Niral V. Merchant Chief Financial Officer (416) 679-9474 Email: nmerchant@royallaser.com
SOURCE: Royal Laser Corp.