MISSISSAUGA, ON, Dec. 8 /CNW/ - CPI Plastics Group Ltd., ("CPI" or "The
Company") announced today its financial results for the three and nine months
ended September 30, 2008. A summary of those results is as follow:
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Third Quarter Year to Date
3 months ended 9 months ended
(in thousands of dollars September 30 September 30
except per share amounts) (unaudited) (unaudited)
2008 2007 2008 2007
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Net Sales 22,848 25,746 73,435 88,014
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Operating Margin (620) (132) 772 4,264
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Net loss (10,197) (2,305) (14,956) (3,800)
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Loss per share:
Basic (0.78) (0.18) (1.14) (0.29)
Diluted (0.78) (0.18) (1.14) (0.29)
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Net loss before goodwill
and intangible asset
impairments and write-off
of financing costs(1) (3,430) (2,305) (8,189) (3,800)
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Loss per share before
goodwill and intangible
asset impairments and
write-off of financing
costs(2):
Basic (0.26) (0.18) (0.62) (0.29)
Diluted (0.26) (0.18) (0.62) (0.29)
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(1) Net loss before goodwill and intangible asset impairments and write-
off of financing costs is a non-GAAP measure and is determined by
taking the net loss for the applicable period, adding to it the
goodwill and intangible asset impairments and write-off of financing
costs and deducting provision for income taxes related to the
goodwill and intangible asset impairments and write-off of financing
costs to arrive at net loss before goodwill and intangible asset
impairments and write-off of financing costs.
(2) Basic and diluted loss per share before goodwill and intangible asset
impairments and write-off of financing costs, are non-GAAP measures
and are determined by taking net loss before goodwill and intangible
asset impairments and write-off of financing costs for the period and
dividing by the basic and diluted weighted average number of common
shares.
Consolidated net sales for the quarter ended September 30, 2008 were
$22,848,000 as compared to $25,746,000 in the third quarter of 2007,
representing a decrease of $2,898,000 or 11% over the same period in 2007.
Consolidated net sales for the nine months ended September 30, 2008 were
$73,435,000 which was down $14,579,000 or 17% from the first nine months of
2007. The recession in the U.S. led by the slump in the U.S. housing market
and weak consumer spending contributed to lower sales volumes across all
sectors. In addition, the strength of the Canadian dollar relative to the U.S.
dollar continued to negatively impact the Company's sales. Management
estimates that, after the mitigating effect of the Company's foreign currency
hedging strategy, the year over year increase in the value of the Canadian
dollar relative to the U.S. dollar resulted in a decline in sales of
approximately $0.5 million in the third quarter and $5.1 million for the first
nine months of the year. Excluding the impact of exchange rate changes, sales
would have decreased by approximately $2.4 million or 9% during the third
quarter and $9.5 million or 11% during the nine months ended September 30,
2008, as compared to the same periods in 2007.
Sales for each business segment for the third quarter and first nine
months of 2008 were as follows:
BUSINESS SEGMENT
Three months ended Nine Months ended
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(in thousands of Sept 30, Sept 30, % Sept 30, Sept 30, %
dollars) 2008 2007 Change 2008 2007 Change
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Outdoor Living
Products 7,858 9,279 (15%) 31,330 35,581 (12%)
Film Products 6,509 7,482 (13%) 19,356 23,250 (17%)
Custom Products 8,481 8,985 (6%) 22,749 29,183 (22%)
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Total 22,848 25,746 (20%) 73,435 88,014 (17%)
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Sales in the Outdoor Living Products segment were $7,858,000 in the third
quarter, which was down $1,421,000 or 15% from $9,279,000 in the third quarter
of 2007. For the nine months ended September 30, 2008, sales in the Outdoor
Living Products segment were $31,330,000 which was down $4,251,000 or 12% from
$35,581,000 in the first nine months of 2007. The ongoing weakness in the U.S.
economy, recession in housing markets and soft consumer spending, continued to
adversely affect the entire building products sector and home improvement
segment in particular. This negatively impacted sales of the Company's
decking, fencing and hot tub cladding products in 2008.
In addition to the weak home improvement sector, the entire market for
wood alternative decking and fencing has further suffered from competition
from pressure treated wood which has declined in price since 2007. Decking and
fencing system sales in the third quarter were $2,875,000, up from $1,648,000
in the third quarter of 2007. Year to date sales of decking and fencing
products were $10,224,000 which were essentially flat with $10,281,000 in the
first nine months of 2007.
Industry analysts estimate that the entire hot tub market in the U.S. is
off approximately 30% to 40% from a year ago. In addition, spa manufacturers
and dealers have been reducing inventory levels through the channel. This has
contributed to a significant decline in sales of the Company's hot tub
cladding products in 2008. Sales of hot tub cladding for the third quarter
were $4,310,000, which were down 44% from $7,631,000 in the third quarter of
2007 and year to date hot tub cladding sales were $18,354,000, down 28% from
$25,300,000 in the first nine months of 2007.
The Company introduced a new line of outdoor furniture for 2008 which is
being marketed through certain mass merchants, on-line retailers, as well as
select specialty retailers. Sales of this new line of outdoor furniture were
$673,000 in the third quarter and $2,752,000 for the nine months ended
September 30, 2008. The Company has expanded its outdoor furniture offering
for 2009 and 2010 and has secured several new retail customers for 2009 and is
working with several new mass merchant or big box retailers for placement for
the 2010 season. Management remains optimistic about its future sales growth
potential in outdoor furniture.
Sales of Film Products were $6,509,000 in the third quarter which was
down 13% from $7,482,000 in the third quarter of 2007. For the nine months
ended September 30, 2008 sales of Film Products were $19,356,000 compared to
$23,250,000 in the first nine months of 2007. The majority of the decline was
in industrial film products due primarily to the rationalization of certain
low margin business and customers. Sales of retail film products were
$5,394,000 and $15,109,000 in the third quarter and first nine months of 2008,
which was essentially flat with $5,390,000 and $15,521,000 in the comparable
periods a year ago.
Custom Products segment sales in the quarter were $8,481,000, which were
down $504,000 or 6% from $8,985,000 in third quarter of 2007.
