RW Packaging Ltd. (TSX VENTURE:RWP) -
The Board of Directors announced today the Company's unaudited financial results
for the three (3) and six (6) months ended June 30, 2007.
OVERALL PERFORMANCE
The Company reported net earnings for the three months ended June 30, 2007 of
$32,903 (or 0.5 cent per share) on sales of $2,742,775 compared to a net loss of
$31,537 (or 0.5 cent per share) on sales of $2,910,322 for the same period in
2006.
The principal factor for the 5.8 per cent decrease in comparative sales for the
quarter was due primarily to; a reduction in U.S. sales resulting from a shift
in order patterns from one of the Company's U.S. customers.
- Domestic sales - increased 2.9 per cent to $2,134,394 (2006 - $2,074,991).
- U.S. sales - decreased 27.2 per cent to $608,381 (2006 - $835,331). Prior to
conversion into Canadian dollars, the Company's reporting currency; sales to the
U.S. decreased 27.6 per cent.
The principal factors for the increase in comparative net earnings for the
quarter were:
- An improvement in comparable gross profit of 22.9 per cent (2006 - 19.4 per
cent), a 3.5 percentage point increase; and
- A decrease in amortization expense of 17.7 per cent compared to the prior
year; and
- A decrease in bank charges and interest expense of 47.5 per cent compared to
the prior year due to lower borrowing costs from mortgage(s) financed June 30,
2006.
The Company reported net earnings for the six months ended June 30, 2007 of
$180,431 (or 2.7 cents per share) on sales of $5,856,272 compared to a net loss
of $24,896 (or 0.4 cent per share) on sales of $5,605,621 for the same period in
2006.
The principal factors for the 4.5 per cent increase in overall comparative sales
for the six months year-to-date were due primarily to; an 11.2 per cent increase
in sales of the Company's Over-the-Counter ("OTC") pharmaceutical and natural
health products, which more than offset a decrease in sales of household and
seasonal products. Sales of the Company's new "Protecten" medicated skin cream,
which commenced in January, 2007, and selling price adjustments also contributed
to the double-digit growth in OTC products.
- Domestic sales - increased 6.2 per cent to $4,692,695 (2006 - $4,420,449).
- U.S. sales - decreased 1.8 per cent to $1,163,577 (2006 - $1,185,172). Prior
to conversion into Canadian dollars, the Company's reporting currency; sales to
the U.S. decreased 3.9 per cent.
The principal factors for the increase in comparative net earnings for the six
months year-to-date were:
- The 4.5 per cent increase in sales; and
- A shift in product mix and selling price adjustments, which resulted in
comparable gross profit of 24.1 per cent (2006 - 20.1 per cent), a 4.0
percentage point increase; and
- A decrease in amortization expense of 7.6 per cent compared to the prior year; and
- A decrease in bank charges and interest expense of 37.1 per cent compared to
the prior year due to lower borrowing costs from mortgage(s) financed June 30,
2006.
Barring any unforeseen events, the Company's management is maintaining its
expectation for continued growth in both sales and earnings for 2007.
RESULTS OF OPERATIONS
Sales for the quarter ended June 30, 2007 were $2,742,775 (2006 - $2,910,322), a
decrease of 5.8 per cent and for the six months year-to-date were $5,856,272
(2006 - $5,605,621), an increase of 4.5 per cent.
Gross profit for the quarter ended June 30, 2007 was $627,954 (2006 - $564,207),
an increase of 11.3 per cent. Gross profit expressed as a percentage of sales
was 22.9% (2006 - 19.4%), an increase of 3.5 percentage points. A shift in
product mix and selling price adjustments were the primary factors for the
increase in gross profit. Gross profit during the second quarter of last year
was also negatively impacted by a product recall, which reduced gross profit in
that period by 0.5 percentage points. Gross profit for the six months ended June
30, 2007 was $1,411,189 (2006 - $1,127,139), an increase of 25.2 per cent. Gross
profit expressed as a percentage of sales was 24.1% (2006 - 20.1%), an increase
of 4.0 percentage points.
Warehouse, selling and administrative expenses were $448,503 (2006 - $402,355)
for the three months ended June 30, 2007, an increase of 11.5 per cent.
Increases in; selling, general and administrative expenses, wages and public
company administration were the primary causes for the overall increase compared
to the year prior. Warehouse, selling and administrative expenses when expressed
as a percentage of sales were 16.4 per cent (2006 - 13.8 per cent) for the
quarter ended June 30, 2007. Warehouse, selling and administrative expenses for
the six months ended June 30, 2007 were $892,272 (2006 - $817,866), an increase
of 9.1 per cent. Increases in general and administrative expenses, wages and
public company administration were the primary causes for the overall increase
for the six months year-to-date. Warehouse, selling and administrative expenses
when expressed as a percentage of sales were 15.2 per cent (2006 - 14.6 per
cent) for the six months ended June 30, 2007.
EBITA (Earnings before Interest, Taxes and Amortization) for the quarter
increased 10.9 percent to $179,451 (2006 - $161,852). EBITA when expressed as a
percentage of sales was 6.5 per cent (2006 - 5.6 per cent) for the quarter ended
June 30, 2007. EBITA for the six months year-to-date has increased $209,644 or
67.8 percent to $518,917 (2006 - $309,273). EBITA as a percentage of sales for
the six months year-to-date, was 8.9 per cent (2006 - 5.5 per cent).
Amortization expense was $70,115 (2006 - $85,186) for the quarter ended June 30,
2007, a decrease of 17.7 per cent. Amortization expense was $140,273 (2006 -
$151,803) for the six months year-to-date, a decrease of 7.6 per cent. Property,
plant & equipment amortization increased due to; a change in estimate adopted
during the first quarter of 2007 for computer equipment. Amortization of
trademark rights increased due to; a change in estimate adopted during the first
quarter of 2007. The comparative decrease in amortization expense overall is due
to; the elimination of deferred finance expenses last year relating to the
Company's previous financing agreement.
Bank charges and interest expense for the quarter decreased 47.5 per cent to
$54,833 (2006 - $104,503) due to lower borrowing costs from mortgage(s) financed
June 30, 2006. Bank charges and interest expense for the six months year-to-date
have decreased 37.1 per cent to $109,913 (2006 - $174,866).
Income taxes that would otherwise have been payable of $18,800 (2006 - $3,700)
were used to reduce the Company's future income tax benefit for the quarter. A
change in estimate of the Company's future income tax benefit for the quarter of
$2,800 (2006 - $NIL) resulted from changes to projected future earnings. The
adjustment decreased earnings by $2,800 for the quarter ended June 30, 2007.
Income taxes that would otherwise have been payable of $93,000 (2006 - $7,500)
for the six months year-to-date were used to reduce the Company's future income
tax benefit. A change in estimate of the Company's future income tax benefit for
the year-to-date of $4,700 (2006 - $NIL) resulted from the Company's improved
financial performance for the year-to-date. The adjustment increased earnings by
$4,700 for the year-to-date. As with all estimates, it is possible that changes
in future conditions could require further changes in the recognized amounts for
income taxes. Should a change be required it would be accounted for in the
period in which those amounts became known. The Company follows the liability
method of accounting for income taxes, and has a future income tax benefit
arising from undepreciated capital cost (UCC) in excess of net book value (NBV),
amounts deductible for tax purposes in future periods and losses available to be
carried forward to the extent they are likely to be realized that reduce any
taxes, which would otherwise be payable. Accordingly, management believes that
EBITA, earnings before tax, and cash flow from operations are more useful
measures of the Company's financial performance, however investors should be
cautioned that these measures should not be construed as an alternative to net
income determined in accordance with cGAAP.
Normal Course Issuer Bid
Between January 1, 2007 and May 18, 2007, the Company purchased 267,718 shares
at an average cost of $0.42 per share plus fees, for a total cost of $115,817,
resulting in the Company's normal course issuer bid now being complete. The
shares had a stated value of $49,863, resulting in a charge to retained earnings
of $65,954. The normal course issuer bid was funded from cash from operations.
For the quarter ended June 30, 2007, shareholder's equity increased to 49.14
cents per share from 46.74 cents per share at the end of 2006, an increase of
5.13 per cent on a per share basis.
RW Packaging Ltd.
Statement of Operations and Retained Earnings
---------------------------------------------
Three (3) months ended Six (6) months ended
June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
Revenue $ 2,742,775 $ 2,910,322 $5,856,272 $5,605,621
Manufacturing
& Operating
Costs $ 2,563,324 $ 2,748,470 $5,337,355 $5,296,348
----------- ----------- ---------- ----------
EBITA $ 179,451 $ 161,852 $ 518,917 $ 309,273
Amortization $ 70,115 $ 85,186 $ 140,273 $ 151,803
----------- ----------- ---------- ----------
EBIT $ 109,336 $ 76,666 $ 378,644 $ 157,470
Bank Charges
and
Interest $ 54,833 $ 104,503 $ 109,913 $ 174,866
----------- ----------- ---------- ----------
Earnings
(Loss)
Before Tax $ 54,503 ($ 27,837) $ 268,731 ($ 17,396)
Future
Income Tax
Benefit $ 18,800 $ 3,700 $ 93,000 $ 7,500
Change in
Estimate
of FIT $ 2,800 $ 0 ($ 4,700) $ 0
----------- ----------- ---------- ----------
Net Earnings
(Loss) for
the Period $ 32,903 ($ 31,537) $ 180,431 ($ 24,896)
Change in
Accounting
Policies $ 0 $ 0 ($ 31,287) $ 0
Excess
Consideration
on Shares
Purchased
for
Cancell-
ation ($ 45,935) $ 0 ($ 65,954) $ 0
Retained
Earnings,
Beginning
of Period $ 2,023,314 $ 1,970,333 $1,927,092 $1,963,692
Retained
Earnings,
End of
Period $ 2,010,282 $ 1,938,796 $2,010,282 $1,938,796
Net Earnings
(loss) per
Share -
Basic and
fully
diluted 0.5 cent/share (0.5 cent/share) 2.7 cents/share (0.4 cent/share)
(expressed
in cents
per share)
Cash Flow
from
Operations $ 193,508 $ 43,273 $ 340,793 $ 264,233
Shareholders
Equity
per Share 49.1 cents/share 46.6 cents/share
(expressed
in cents
per share)
Issued and
Outstanding
Common Shares 6,587,680 6,934,398
RW is GMP licensed and ISO 9001 registered. The Company blends and packages
liquid and powder private brand consumer products for major retailers and
national brand marketers across North America.
Additional information relating to the Company is available online at
www.sedar.com or the Company's website at www.rwpackaging.com.
Shares Issued 6,587,680
2007-08-23 Close $0.355
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