-- Net income decreased to $1.2 million for the first quarter of
2006, down 23.2% from $1.5 million as compared to the same period
last year. CHICAGO HEIGHTS, Ill., May 4 /PRNewswire-FirstCall/ --
Worldwide holographic and specialty coated film manufacturer, CFC
International, Inc. (NASDAQ:CFCI) reported results for the first
quarter of 2006. Net sales for the first quarter 2006 decreased
2.5% to $22.4 million, compared to $23.0 million in the first
quarter of 2005. This decrease in sales is primarily due to lower
volumes of printed products as a result of customers ordering
higher volumes in the fourth quarter of 2005 to obtain product
before the Company's November 15, 2005 price increase. Lower sales
were also the result of a decrease in security products, primarily
due to weaker gift card volumes. In addition, a weakened Euro
adversely affected net sales by $600,000 in the first quarter of
2006. Net income decreased 23.2% to $1.2 million, or $0.25 cents
per share on a fully diluted basis for the first quarter of 2006,
compared to $1.5 million, or $0.33 cents per share on a fully
diluted basis, in the first quarter of 2005. The Company incurred
transaction expenses of $292,000 (after income taxes) associated
with the terminated merger with Quad-C Management during the first
quarter of 2006. Excluding the effects of these costs, the first
quarter of 2006 net income would have decreased 3.8% to $1.4
million, or $0.31 cents per share on a fully diluted basis,
compared to net income of $1.5 million, or $0.33 cents per share on
a fully diluted basis, in the first quarter of 2005. "In the first
quarter of 2006, operating results continued to be affected by
transaction expenses incurred as a result of the terminated merger
with Quad-C Management, as well as lower sales volumes in our
printed and security products," said Greg Jehlik, CFC's President
and Chief Executive Officer. "However, we are confident that by
continuing to focus on the fundamentals of our business and on
executing our strategic initiatives, along with driving further
improvements in our operations, that CFC will continue to deliver
profitable results and increased sales growth in 2006." Based upon
the Company's results and factoring in the current economic
outlook, the Company anticipates earning net income of $0.90 to
$1.00 cents per share on a fully diluted basis for 2006 utilizing a
35.5% tax rate. Headquartered in Chicago Heights, Illinois, CFC
International is a market leader in the design, manufacture and
marketing of holographics and specialty functional coatings that
add value to a wide variety of industrial and consumer products.
The Company operates facilities in Chicago Heights and Countryside,
Illinois; London, England; and Goppingen, Germany. A condensed
consolidated balance sheet and statement of operations is attached.
Statements made in this press release, including those relating to
expectations of future sales, net income and operating costs
reductions, estimated availability of additional equipment,
estimations of the market size for certain of the company's
products or the company's share of those markets and expectations
of increased sales attributable to various product lines, are
forward looking and are made pursuant to the safe harbor provisions
of the Securities Reform Act of 1995. Such statements involve risks
and uncertainties which may cause results to differ materially from
those set forth in those statements. Among other things, continued
unfavorable economic conditions may impact market growth trends or
otherwise impact the demand for the company's products and
services; competition from existing and new competitors and
producers of alternative products will impact the company's ability
to penetrate or expand its presence in new or growing markets;
uncertainties relating to the company's ability to develop and
distribute new proprietary products to respond to market needs in a
timely manner may impact the company's ability to exploit new or
growing markets; the Company's ability to successfully identify and
implement productivity improvements and cost reduction initiatives
may impact profitability; and risks inherent in international
operations, including possible economic, political or monetary
instability, may impact the level and profitability of the
company's foreign sales. In addition to the factors set forth in
this release, the economic, competitive, governmental,
technological and other factors identified in the company's filings
with the Securities and Exchange Commission, could affect the
forward looking statements contained in this press release. We have
no obligation to revise or update these forward-looking statements
to reflect events or circumstances that arise after the date of
this press release or to reflect the occurrence of anticipated
events. You may access additional information, including our
filings with the Securities and Exchange Commission and previous
press releases by visiting CFC International's Internet homepage at
http://www.cfcintl.com/ . CFC INTERNATIONAL, INC. Consolidated
Statements of Income (In Thousands, Except Earnings Per Share and
1st Quarter 1st Quarter Operating Income Percentage) 2006 2005 Net
Sales $22,419 $22,989 Cost of Goods (Excluding Depreciation and
Amortization Shown Below) 14,652 14,403 Operating Expenses 4,255
4,627 Depreciation and Amortization 1,193 1,174 Transaction
Expenses 453 - Operating Income 1,866 2,785 Operating Income % 8.3%
12.1% Interest Expense 272 279 Interest Income (39) (5) Interest
Rate Swap Valuation Benefit (9) (33) Rental Income / Other Expense
(5) (65) Foreign Currency Exchange (Gain)/Loss (138) 277 Income
Before Income Taxes 1,785 2,332 Provision for Income Taxes 634 832
Net Income $1,151 $1,500 Diluted Weighted Average Number of Shares
Outstanding 4,633 4,613 Diluted Earnings Per Share $0.25 $0.33
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Note 1) $3,512 $3,959 (In Thousands) 1st Quarter 1st
Quarter 2006 2005 International Net Sales $10,105 $10,629
International Net Sales 45.1% 46.2% NOTE 1: The Company believes
earnings before interest, taxes, depreciation and amortization,
rental income, foreign currency exchange (gain)/loss and
transaction expenses (adjusted EBITDA) is an appropriate
measurement for its business because its enterprise value is more
closely aligned with this measurement and because of the continual
investment the company makes in long-lived assets. Adjusted EBITDA
should not necessarily be considered as an alternative to net
income or cash flows from operating activities which are determined
in accordance with Generally Accepted Accounting Principles as an
indicator of operating performance or as a measure of liquidity.
The table that follows reconciles net income to adjusted EBITDA as
defined: 1st Quarter (In Thousands) 2006 2005 Net income $1,151
$1,500 Add back (subtract): Income taxes 634 832 Interest expense
272 279 Interest rate swap valuation (benefit) (9) (33) Rental
income (5) (65) Interest income (39) (5) Depreciation and
amortization 1,193 1,174 Foreign currency exchange (gain)/loss
(138) 277 Transaction expenses 453 - Adjusted EBITDA $3,512 $3,959
CFC INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2006 AND DECEMBER 31, 2005 March 31, December 31, 2006
2005 ASSETS Cash and cash equivalents $4,379,782 $5,013,772
Restricted cash 417,859 365,683 Accounts receivable, less allowance
for doubtful accounts 15,042,399 14,188,067 Inventories 16,863,975
17,319,347 Other current assets 2,057,475 2,014,790 Total current
assets 38,761,490 38,901,659 Property, plant and equipment, net
25,781,382 26,300,422 Deferred income taxes 2,135,029 2,129,417
Intangible assets, net 2,097,924 2,157,032 Other assets 214,194
214,194 Fair value of interest rate swap 119,593 110,950 Goodwill
1,029,462 1,029,462 Total assets $70,139,074 $70,843,136
LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term
debt $6,412,224 $6,412,224 Accounts payable and accrued expenses
11,236,374 13,695,493 Total current liabilities 17,648,598
20,107,717 Deferred income taxes 2,532,675 2,558,294 Long-term debt
12,739,576 12,824,896 Total liabilities 32,920,849 35,490,907
Stockholders' equity 37,218,225 35,352,229 Total liabilities and
stockholders' equity $70,139,074 $70,843,136 DATASOURCE: CFC
International, Inc. CONTACT: Dennis Lakomy, Chief Financial
Officer, of CFC International, +1-708-757-2803 Web site:
http://www.cfcintl.com/ Company News On-Call:
http://www.prnewswire.com/comp/110663.html
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