CFC International, Inc. Reports 2004 Second Quarter Results --
Earnings per share on a fully diluted basis increased 300% to $.12
for the second quarter of 2004, as compared to $.03 in the second
quarter of 2003. CHICAGO HEIGHTS, Ill., July 26
/PRNewswire-FirstCall/ -- Worldwide holographic and specialty
coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI),
today reported results for the second quarter of 2004. Sales for
the second quarter 2004 increased 16% to $19.4 million, compared to
$16.7 million in the second quarter of 2003. This increase in sales
was primarily due to an increase in printed pattern products sales
domestically, which was primarily the result of a major competitor
withdrawing from the market, and to the strong Euro, which
favorably affected sales by $300,000 for the second quarter of
2004. In addition, sales were positively affected by an increase in
the volume of gift card orders received earlier in the year as
compared to prior years, as retailers recognize that this
technology appeals to younger consumers, encourages return trips
into their stores and generates impulse sales by its customers. In
addition, the use of gift cards gives merchants the direct benefit
of an increase in their float, since customers prepay for the gift
card and any unused balance remains on the card. Second quarter
2004 net income increased 373% to $521,000 or $0.12 cents per share
on a fully diluted basis, compared to $110,000, or $0.03 cents per
share, in the second quarter of 2003. The increase in net income in
the second quarter of 2004 was due to increased sales in printed
products and gift cards, gross margin expansion resulting from
higher utilization of the Company's manufacturing capacity, and an
increase in the value of an interest swap agreement. "We are
pleased to report strong sales and earnings growth for the second
quarter of 2004," said Roger Hruby, CFC's Chairman and CEO. "Our
operating results have improved significantly over the same period
a year ago, as a direct result of the strategic business
initiatives that we put in place in 2003 and the projected increase
in the volume of orders in our printed products." Mr. Hruby further
stated, "The investments we made in terms of training employees and
the productivity improvements we have initiated, have allowed us to
leverage our manufacturing, increase our capacity, which is
currently running at approximately 75%, and improve our operating
efficiencies, and have solidly positioned us to deliver positive
earnings." Sales for the first half of 2004 totaled $40.2 million,
an increase of 24% from $32.4 million for the same period last
year. Sales for the first half of 2004 were positively affected by
increased holographic packaging and authenticity sales
domestically, security products (primarily the gift card business)
increasing by $1.0 million for the first half of 2004, as compared
to the same period a year ago, and higher printed products sales.
In addition, the Euro appreciated in value 11% compared to the U.S.
dollar, and as a result sales increased approximately $1.2 million
in the first half of 2004. Net income for the first half of 2004
increased by 363% to $1.6 million, or $0.37 per share on a fully
diluted basis, up from $356,000 or $0.08 cents per share on a fully
diluted basis for the same period last year. Net income in 2004 was
favorably affected by higher year-to-date sales and leveraging the
Company's printing press capacity to handle the influx of printed
products business. "We are extremely pleased with the solid results
we delivered for the first half of 2004," said Roger Hruby, CFC's
Chairman and CEO. "These results were driven by strong sales in our
holographic packaging, security and authenticity, printed patterned
products and gift cards, the continued strength of the economy in
the domestic sector and a reflection of our execution of our
strategic business plan." Mr. Hruby, added, "We are in an excellent
position to continue to deliver strong sales growth as a result of
the operating infrastructures we have put in place and the strong
volume of incoming orders. In addition, we continue to strengthen
our balance sheet, and we are beginning to see the benefits of our
investments in Europe as their performance seems to be finally
turning the corner, all positive trends." Based upon the Company's
results and the current economic outlook, the Company has increased
its previously stated net income projection of $.46 to $.50
earnings per share on a fully diluted basis for the full year of
2004, to $.48 to $.52 earnings per share on a fully diluted basis.
Recent Developments The company announced on May 27, 2004 the
addition of Mr. Matthew Shields as Vice President, Global
Marketing. Mr. Shields will lead the Company's marketing efforts on
a worldwide basis. CFC announced on May 21, 2004 the addition of
Mr. Jack Joyce as Vice President of Human Resources. Mr. Joyce will
be responsible for all human resource issues at the Company's
Chicago Heights and Countryside, Illinois facilities. The Company
announced on July 23, 2004 the launch of an improved corporate
website. The new website features holographic galleries for both
its packaging and authenticity, and allows registered users to
easily check inventory information on the Company's stocking
programs. The Company will be exhibiting at the International
Woodworking Machinery & Furniture Supply Fair 2004 (IWF 2004)
at the Georgia World Congress Center in Atlanta, Georgia in Booth
#4313 on August 26-29, 2004 where it will feature its printed
patterned products. The Company invites all interested parties to
listen to its second quarter conference call at 4:00 p.m. EDT (3:00
p.m. CDT) on Monday, July 26, 2004. The dial-in numbers for the
call are 800-299-8538 (U.S.), and 617-786-2902 (International). The
participant passcode for this call is 38670112. Participants are
asked to call the assigned number approximately 10 minutes before
the conference call begins. The call, which will last approximately
one hour, will be open to the public, but only investors and
financial analysts will be permitted to ask questions. The media
and all other participants will be in a listen-only mode. For those
unable to listen to the live call, a replay will be available from
approximately 6:00 p.m. EDT on July 26 until August 2, 2004. This
replay can be accessed by dialing 888-286-8010 (U.S.); 617-801-6888
(International). The passcode is 78100669. The call also will be
available as a webcast, both live and for replay, via the Internet
on the CFC International, Inc. website at http://www.cfcintl.com/
on the Investor Relations press releases and webcasts page.
Headquartered in Chicago Heights, Illinois, CFC International is a
market leader in the design, manufacture and marketing of
holography 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. Condensed consolidated
statements of income and balance sheets are attached. Statements
made in this press release, including those relating to
expectations of future sales, net income and operating costs
reductions, 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 Three Months Ended Six Months Ended and
operating income June 30, June 30, percentage) 2004 2003 2004 2003
Net sales $19,355 $16,690 $40,179 $32,400 Cost of goods (excluding
depreciation and amortization shown below) 13,063 10,967 26,087
21,147 Operating expenses 4,442 4,068 8,945 7,905 Depreciation and
amortization 1,016 1,084 2,355 2,163 Operating income 834 571 2,792
1,185 Operating income % 4% 3% 7% 4% Interest expense 288 242 586
509 Interest rate swap valuation (benefit) provision (163) 178 (96)
178 Rental (income), net (40) (7) (68) (15) Income before income
taxes 749 158 2,370 513 Provision for income taxes 228 48 723 157
Net income $521 $110 $1,647 $356 Diluted weighted average number of
shares outstanding 4,511 4,500 4,502 4,494 Diluted earnings per
share $0.12 $0.03 $0.37 $0.08 Earnings before interest, taxes,
depreciation and amortization (Note 1) $1,850 $1,655 $5,147 $3,348
SUMMARY OF INTERNATIONAL SALES (In thousands, except international
sales Three Months Ended Six Months Ended percentage) June 30, June
30, 2004 2003 2004 2003 International sales ($) $9,372 $9,274
$19,341 $17,703 International sales (%) 48% 56% 48% 55% NOTE 1: The
Company believes earnings before interest, taxes, depreciation and
amortization (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. 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 EBITDA as defined: Three Months
Ended Six Months Ended June 30, June 30, (In thousands) 2004 2003
2004 2003 Net income $521 $110 $1,647 $356 Add back (subtract):
Income taxes 228 48 723 157 Interest expense 288 242 586 509
Interest rate swap valuation (benefit) provision (163) 178 (96) 178
Rental (income), net (40) (7) (68) (15) Depreciation and
amortization 1,016 1,084 2,355 2,163 EBITDA $1,850 $1,655 $5,147
$3,348 CFC INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS AT JUNE 30, 2004 AND DECEMBER 31, 2003 June 30 December 31
2004 2003 ASSETS Cash and cash equivalents $7,161,467 $5,672,647
Accounts receivable, less allowance for doubtful accounts
11,737,485 9,821,047 Inventories 13,501,411 13,050,711 Other
current assets 2,133,517 1,771,646 Total current assets 34,533,880
30,316,051 Property, plant and equipment, net 27,692,396 28,116,892
Deferred income taxes 3,204,130 3,280,891 Intangible assets, net
3,554,164 3,695,899 Other assets 92,774 105,078 Fair value of
interest rate swap 48,639 - Total assets $69,125,983 $65,514,811
LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term
debt $10,880,006 $9,716,066 Accounts payable and accrued expenses
11,037,706 10,075,592 Total current liabilities 21,917,712
19,791,658 Deferred income taxes 2,680,247 2,680,247 Fair value of
interest rate swap - 47,783 Long-term debt 14,976,234 15,066,109
Total liabilities 39,574,193 37,585,797 Stockholders' equity
29,551,790 27,929,014 Total liabilities and stockholders' equity
$69,125,983 $65,514,811 DATASOURCE: CFC International, Inc.
CONTACT: Dennis Lakomy, Chief Financial Officer of CFC
International, Inc., +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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