IAX Intl Absorbents

FERNDALE, Wash., Dec. 13 /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 second fiscal quarter ended October 31, 2007. Gordon L. Ellis, Chairman of International Absorbents Inc. commented, "Sales of our animal bedding products continue to grow as we surpassed quarterly sales of $9 million for the first time. Gross profit is down due to a combination of factors, including inefficiencies and commissioning related to the start up of our new manufacturing plant in Washington state and additional depreciation charges related to our new assets. With the commissioning behind us we have seen an improvement in our cash position as demonstrated by an 87% year-to-date increase in EBITDA over the same period of the prior year. With the completion of the last phase of our infrastructure build-out we are now focused on making our current production system as cost-effective and efficient as possible while optimizing quality and service. We anticipate that our improved cash flow will allow us the opportunity to direct resources at sales growth in new and existing markets." Sales for the third quarter of fiscal year 2008 increased by 5% to $9,028,000, versus $8,615,000 for the same period in fiscal year 2007. This is the first time sales have exceeded $9 million in one quarter. Sales for the nine months ended October 31, 2007 increased by 10% to $24,794,000, compared to $22,536,000 for same nine-month period in the prior fiscal year. Net income for the third quarter of fiscal year 2008 was $744,000. Although this is over ten times the $69,000 in net income generated for the same period during the prior fiscal year, the results are not directly comparable due to a one-time charge incurred during the third quarter of fiscal year 2007. Similarly, at $1,493,000, net income for the first nine months of fiscal year 2008 is more than three times the $473,000 in net income recorded for the same period during the last fiscal year, again reflecting the fact that the results for the first nine months of fiscal year 2007 were burdened by the one-time charge. Gross profit for the third quarter of fiscal year 2008 was $2,741,000 versus $3,069,000 for the comparable period in fiscal year 2007, representing a decrease of 11%. Gross profit for the first nine months of fiscal year 2008 increased by 4% to $7,544,000, as compared to $7,282,000 for the first nine months of the prior fiscal year. 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.internationalabsorbents.com/. FINANCIAL HIGHLIGHTS 3 Months Ended Oct. 31, 9 Months Ended Oct. 31, 2007 2006 2007 2006 Sales $9,028,000 $8,615,000 $24,794,000 $22,536,000 Gross profit 2,741,000 3,069,000 7,544,000 7,282,000 Net income before taxes 1,169,000 85,000 2,440,000 804,000 Net income 744,000 69,000 1,493,000 473,000 Basic earnings per share 0.12 0.01 0.23 0.07 Weighted average shares (basic) 6,410,000 6,410,000 6,410,000 6,402,000 As at Oct. 31, As at Jan. 31, 2007 2007 Total assets $28,217,000 $27,691,000 Stockholders' equity 17,071,000 15,390,000 Non-GAAP Financial Measures We believe that one of our key financial and operating performance metrics is Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). EBITDA is not a measure of financial performance under generally accepted accounting principles (GAAP) in the United States. Accordingly, it should not be considered a substitute for net income (loss), cash flow provided by operating activities, or other income or cash flow data prepared in accordance with GAAP. However, we believe that EBITDA may provide additional information with respect to our financial performance and our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating, and investment recommendations of companies. In addition, we use EBITDA as one of several factors when determining the compensation for our executive officers. Because EBITDA excludes some, but not all items that affect net income (loss) and may vary among companies, the EBITDA presented by us may not be comparable to similarly titled measures of other companies. The following schedule reconciles EBITDA to net income (loss) reported on our Condensed Consolidated Statement of Operations, which we believe is the most directly comparable GAAP measure: For the quarter ended (U.S. dollars in thousands) October 31, October 31, Percentage 2007 2006 Change Net Income (Loss) (as reported on Condensed Consolidated Statement of Operations) $744 $69 Interest expense 103 95 Interest income (18) (35) Income tax provision 425 16 Depreciation & amortization 475 365 EBITDA $1,729 $ 510 239% For the nine months ended (U.S. dollars in thousands) October 31, October 31, Percentage 2007 2006 Change Net Income (Loss) (as reported on Condensed Consolidated Statement of Operations) $1,493 $473 Interest expense 291 272 Interest income (65) (88) Income tax provision 947 331 Depreciation & amortization 1,254 1,108 EBITDA $3,920 $2,096 87% During the balance fiscal year 2008 management will continue to focus on EBITDA as a key performance indicator. Contact: Charles (Chuck) Tait International Absorbents Inc. Toll Free: 866-514-6559 or 604-681-6181 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 and sales results, ability to improve production capabilities and efficiencies, 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, risks related to commissioning a new manufacturing plant, newly installed equipment performance, consumer acceptance of the Company's products, competitor reactions, the Company's ability to market and price its products, general economic conditions outside of the control of the Company, fuel prices, 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-K for the fiscal year ended January 31, 2007 and its quarterly filings on Form 10-Q. This press release speaks only as of its date, and the Company disclaims any duty to update the information herein. DATASOURCE: International Absorbents Inc. CONTACT: Charles (Chuck) Tait of International Absorbents Inc., 1-866-514-6559, +1-604-681-6181, Web site: http://www.internationalabsorbents.com/

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