IAX Intl Absorbents

FERNDALE, Wash., Dec. 9 /PRNewswire-FirstCall/ -- International Absorbents Inc. (AMEX:IAX), a leading developer and producer of environmentally-friendly pet care and industrial products, today reported financial results for the third quarter and nine months ended October 31, 2005. Sales for the third quarter of fiscal year 2006 increased by 13% to a record $6,751,000, compared to $5,999,000 for the same period in the previous year. Sales for the nine months were $18,717,000 versus $16,995,000 for the same period last year, representing an increase of 10%. Net income for the third quarter of fiscal year 2006 decreased by 77% to $188,000, compared to $736,000 for the third quarter of the fiscal year 2005. For the nine months, net income was $402,000 versus $1,785,000 for the same nine months last year, representing a decrease of 79%. Gross profit for the third quarter of fiscal year 2006 was $1,909,000, a decrease of 23% compared to $2,431,000 for the third quarter a year ago. Gross profit for the nine months was $5,595,000 versus $6,923,000 for the prior nine months, representing a decrease of 20%. Gordon L. Ellis, Chairman of International Absorbents Inc., commented on the third quarter, "Sales growth continues with CareFRESH(R) Ultra and CareFRESH(R) Colors providing the strongest gains. Both products are doing very well throughout the pet specialty channel and are helping with the placement of complementary products including our new line of Healthy Pet cat litters. As previously reported, the decline in profit margin over the past year has been due to numerous factors including rising fuel costs, new manufacturing facility commissioning and new product introduction. Focus during the past quarter has been on implementing changes and countermeasures to recover profit margins. The recent commissioning of our new state-of-the- art cost control and overall financial/management software system (ERP) is beginning to assist in this regard. Initial steps have been implemented and minor improvements are already evident. Over the following months additional cost saving measures have been planned including the integration of an alternative energy system in our new Georgia facility. With this alternative energy source in place early next year we anticipate our per unit fuel costs to drop to levels we have not seen for seven to eight years. Overall, we have some challenges ahead but the future looks good." International Absorbents Inc. develops, manufactures and markets patented and proprietary, cost effective consumer and commercial products derived from recycled, renewable materials. These environmentally safe products outperform conventional products used in a broad range of consumer and industrial applications, including retail/commercial pet bedding and litter, oil and hazardous liquid spill cleanup and control, oil/water filtration, and packaging. Further information is available at http://www.absorbent.com/. FINANCIAL HIGHLIGHTS 3 Months Ended Oct. 31 9 Months Ended Oct. 31 2005 2004 2005 2004 Sales, net $6,751,000 $5,999,000 $18,717,000 $16,995,000 Gross profit 1,909,000 2,431,000 5,595,000 6,923,000 Net income before taxes 268,000 1,084,000 597,000 2,617,000 Net income 188,000 736,000 402,000 1,785,000 Basic earnings per share 0.03 0.12 0.06 0.30 Weighted average shares (basic) 6,261,000 6,011,000 6,258,000 5,915,000 As at Oct. 31 As at Jan. 31 2005 2005 Total assets $23,846,000 $23,477,000 Stockholders' equity 13,773,000 13,346,000 A number of the matters and subject areas discussed in this press release that are not historical or current facts deal with potential future circumstances and developments, including without limitation, statements referring to the Company's future growth strategies, prospects for the future, potential financial results, market and product line growth, abilities to enter new markets, ability to introduce new products, benefits from infrastructure improvements and the Company's competitiveness and profitability as a result of new sales and marketing programs, are forward- looking statements. The words "believe," "expect," "intend," "estimate," "assume" and "anticipate," variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and it is important to note that the Company's actual results could differ materially from those projected, due to various risk factors. Those risks include, but are not limited to delays related to commissioning a new manufacturing plant, contractor performance, newly installed equipment performance, consumer acceptance of the Company's products at a new location, competitor reactions and their ability to market and price their products, general economic conditions outside of the control of the Company, and the economic availability of sources of raw materials to meet demand rates necessary to sustain growth. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's reports filed with the SEC, including, but not limited to, the Company's annual report on Form 10-KSB for the fiscal year ended January 31, 2005 and its quarterly filings on Form 10-Q and 10-QSB. This press release speaks only as of its date, and the Company disclaims any duty to update the information herein. Contact: Charles (Chuck) Tait International Absorbents Inc. Toll Free: 866-514-6559 or 604-681-6181 DATASOURCE: International Absorbents Inc. CONTACT: Charles (Chuck) Tait of International Absorbents Inc., 1-866-514-6559 or +1-604-681-6181, or Web site: http://www.absorbent.com/

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