WINNIPEG, MANITOBA -
The Board of Directors announced today the Company's unaudited
financial results for the three (3) and nine (9) months ended
September 30, 2007.
OVERALL PERFORMANCE
The Company reported net earnings for the three months ended
September 30, 2007 of $23,856 (or 0.4 cent per share) on sales of
$2,582,360 compared to net earnings of $46,724 (or 0.7 cent per
share) on sales of $2,226,997 for the same period in 2006. Sales
for the period grew 16.0% compared to the prior year. The principal
factors for the decrease in comparative net earnings for the
quarter were; a decrease in comparative gross profit of 23.3 per
cent (2006 - 25.8 per cent), and an increase in warehouse, selling
and administrative expense compared to the prior year.
For the nine months completed year-to-date, net earnings were
$204,287 (or 3.1 cents per share) on sales of $8,438,632 compared
to net earnings of $21,828 (or 0.3 cent per share) on sales of
$7,832,619 in 2006. The principal factors for the increase in
comparative net earnings for the nine months year-to-date were; the
7.7 per cent increase in sales; a shift in product mix and selling
price adjustments, which resulted in comparative gross profit of
23.9 per cent (2006 - 21.7 per cent), a 2.2 percentage point
increase; and a decrease in bank charges and interest expense of
28.6 per cent compared to the prior year.
The Company's management is maintaining its expectation for
continued growth in both sales and earnings for the remainder of
2007. Unshipped orders at September 30, 2007 increased 68.2 per
cent compared to the month prior, and were 165.6 per cent greater
than at the same time last year.
RESULTS OF OPERATIONS
A summary breakdown of the Company's sales by geographic and
product segment is as follows:
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Three (3) Nine (9)
Months ended Sept. 30 Months ended Sept. 30
---------------------------------------------------------------
2007 2006 % Change 2007 2006 % Change
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O.T.C.
- Pharma. $1,697,051 $1,538,452 +10.3% $4,997,859 $4,507,393 +10.9%
---------------------------------------------------------------------------
Household $ 595,022 $ 552,556 +7.7% $1,479,411 $1,460,421 +1.3%
---------------------------------------------------------------------------
Seasonal $ 71,613 $ 55,910 +28.1% $ 579,111 $ 599,554 (3.4%)
---------------------------------------------------------------------------
Total
Canada $2,363,686 $2,146,918 +10.1% $7,056,381 $6,567,368 +7.4%
---------------------------------------------------------------------------
U.S. $ 218,674 $ 80,079 +173.1% $1,382,251 $1,265,251 9.2%
---------------------------------------------------------------------------
Total
Sales $2,582,360 $2,226,997 +16.0% $8,438,632 $7,832,619 +7.7%
---------------------------------------------------------------------------
Gross profit for the quarter ended September 30, 2007 was
$602,884 (2006 - $574,555), an increase of 4.9 per cent. Gross
profit expressed as a percentage of sales was 23.3% (2006 - 25.8%),
a decrease of 2.5 percentage points. Gross profit for the nine
months ended September 30, 2007 was $2,014,073 (2006 - $1,701,694),
an increase of 18.4 per cent. Gross profit expressed as a
percentage of sales was 23.9% (2006 - 21.7%), an increase of 2.2
percentage points. A shift in product mix, selling price
adjustments and production variances were the primary factors for
the change in comparative percentage gross profit for the quarter
and year-to-date.
A summary breakdown of the Company's warehouse, selling and
administrative expenses is as follows:
---------------------------------------------------------------------------
Three (3) Nine (9)
Months ended Sept. 30 Months ended Sept. 30
---------------------------------------------------------------
2007 2006 % Change 2007 2006 % Change
---------------------------------------------------------------------------
Warehouse $ 132,945 $ 121,359 +9.5% $ 434,509 $ 420,755 +3.3%
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Selling $ 61,563 $ 54,851 +12.2% $ 186,390 $ 174,896 +6.6%
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General
& Adminis
-tration $ 57,680 $ 51,770 +11.4% $ 169,754 $ 147,228 +15.3%
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Head
Office $ 155,951 $ 125,383 +24.4% $ 452,467 $ 395,044 +14.5%
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Public
Company
Adminis
-tration $ 30,488 $ 35,119 (13.2%) $ 87,779 $ 68,425 +28.3%
---------------------------------------------------------------------------
Total
Expenses $ 438,627 $ 388,482 +12.9% $1,330,899 $1,206,348 +10.3%
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Warehouse, selling and administrative expenses when expressed as
a percentage of sales were 17.0 per cent (2006 - 17.4 per cent) for
the quarter ended September 30, 2007, and 15.8 per cent (2006 -
15.4 per cent) for the nine months year-to-date. Increases in
R&D and lab expenses, sales development expenses, recruitment,
travel, wages and accrued incentives, and public company
administration were the primary causes for the overall increase for
the nine months year-to-date.
EBITA (Earnings before Interest, Taxes and Amortization) for the
quarter decreased 11.7 percent to $164,257 (2006 - $186,073) due to
the reduction in percentage gross profit and increase in warehouse,
selling and administrative expense. EBITA when expressed as a
percentage of sales was 6.4 per cent (2006 - 8.4 per cent) for the
quarter ended September 30, 2007. EBITA for the nine months
year-to-date has increased $187,828 or 37.9 percent to $683,174
(2006 - $495,346). EBITA as a percentage of sales for the nine
months year-to-date, was 8.1 per cent (2006 - 6.3 per cent).
Amortization expense was $70,151 (2006 - $65,368) for the
quarter ended September 30, 2007, an increase of 7.3 per cent.
Amortization expense was $210,424 (2006 - $217,171) for the nine
months year-to-date, a decrease of 3.1 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 were $54,450
(2006 - $55,181). Bank charges and interest expense for the nine
months year-to-date decreased 28.6 per cent to $164,363 (2006 -
$230,047) compared to the prior year due to lower borrowing costs
from mortgage(s) financed June 30, 2006.
Income taxes that would otherwise have been payable of $13,700
(2006 - $18,800) for the quarter, and $106,700 (2006 - $26,300) for
the nine 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 quarter of $2,100 (2006 - $NIL)
resulted from changes to projected future earnings. The adjustment
decreased earnings by $2,100 for the quarter ended September 30,
2007. A change in estimate of the Company's future income tax
benefit for the year-to-date of $2,600 (2006 - $NIL) resulted from
the Company's improved financial performance for the year-to-date.
The adjustment increased earnings by $2,600 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.
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 September 30, 2007, shareholder's equity
increased to 49.50 cents per share from 46.74 cents per share at
the end of 2006, an increase of 5.91 per cent on a per share
basis.
RW Packaging Ltd.
Statement of Operations and Retained Earnings
---------------------------------------------
Three (3) months ended Nine (9) months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2007 2006 2007 2006
Revenue $ 2,582,360 $ 2,226,997 $8,438,632 $7,832,619
Manufacturing &
Operating Costs $ 2,418,103 $ 2,040,924 $7,755,458 $7,337,273
----------- ----------- ---------- ----------
EBITA $ 164,257 $ 186,073 $ 683,174 $ 495,346
Amortization $ 70,151 $ 65,368 $ 210,424 $ 217,171
----------- ----------- ---------- ----------
EBIT $ 94,106 $ 120,705 $ 472,750 $ 278,175
Bank Charges
and Interest $ 54,450 $ 55,181 $ 164,363 $ 230,047
----------- ----------- ---------- ----------
Earnings Before Tax $ 39,656 $ 65,524 $ 308,387 $ 48,128
Future Income Tax
Benefit $ 13,700 $ 18,800 $ 106,700 $ 26,300
Change in Estimate
of FIT $ 2,100 $ 0 ($ 2,600) $ 0
----------- ----------- ---------- ----------
Net Earnings for
the Period $ 23,856 $ 46,724 $ 204,287 $ 21,828
Change in
Accounting Policies $ 0 $ 0 ($ 31,287) $ 0
Excess Consideration
on Shares Purchased
for Cancellation $ 0 $ 0 ($ 65,954) $ 0
Retained Earnings,
Beginning of Period $ 2,010,282 $ 1,938,796 $1,927,092 $1,963,692
Retained Earnings,
End of Period $ 2,034,138 $ 1,985,520 $2,034,138 $1,985,520
Net Earnings per
Share - Basic and
fully diluted
(expressed in cents 0.4 cent 0.7 cent 3.1 cents 0.3 cent
per share) /share /share /share /share
Cash Flow from
Operations $ 54,381 ($ 88,480) $ 386,774 $ 134,785
Shareholders Equity
per Share (expressed 49.5 cents 47.3 cents
in cents per share) /share /share
Issued and Outstanding
Common Shares 6,587,680 6,934,398
On September 27, 2007 the Company announced its intention to
proceed with a plan to "go private". The intention is to conduct a
substantial issuer bid (the "Issuer Bid") for the outstanding
common shares of the Company ("Shares") and following the
completion of the Issuer Bid; to make an application to the TSX
Venture Exchange Inc. (the "TSXV") to delist the Shares and an
application to applicable securities regulatory authorities for an
order declaring that the Company no longer has the status of a
"reporting issuer" under applicable securities laws.
The "going private" plan is subject to certain conditions,
including receipt of regulatory approvals, arranging adequate
financing and receipt of a formal valuation of the Company. The
Company has formed a special committee comprised of its independent
directors who will be responsible for overseeing the going private
process, including overseeing the preparation of the formal
valuation and approving an offering price for the Shares under the
Issuer Bid.
The Issuer Bid will provide shareholders of the Company with an
opportunity to sell their Shares prior to the Shares being delisted
from the TSXV. Certain major shareholders ("Non-Tendering
Shareholders") of the Company holding an aggregate of 4,790,834
Shares or approximately 72.7 per cent of the outstanding common
shares, have agreed not to tender to the Issuer Bid and to support
the applications to the TSX and securities regulators such that
they will remain shareholders of the Company following the
completion of the Issuer Bid and the delisting of the Shares from
the TSXV.
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
2007-11-14 Close $0.40
The TSX Venture Exchange (TSX Venture) has not reviewed, and
does not accept responsibility for, the adequacy or accuracy of
this release.
Contacts: RW Packaging Ltd. Mr. Henry De Ruiter President and
CEO Toll Free: 1-800-284-6338 Email: rwp@rwpackaging.com Website:
www.rwpackaging.com
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