WINNIPEG, MANITOBA -
The Board of Directors announced today the Company's unaudited
financial results for the fourth quarter, and audited annual
financial results for the year ended December 31, 2007.
OVERALL PERFORMANCE
The Company reported net earnings for the year ended December
31, 2007 of $205,242 (or 3.1 cents per share) on sales of
$10,868,138 compared to a net loss of $16,466 (or 0.2 cent per
share) on sales of $10,393,794 in 2006.
The principal factors that caused the 4.6 per cent increase in
overall comparative sales for the year were:
- Domestic sales - increased 3.6 per cent to $9,415,545 (2006 -
$9,086,311) due to; an 8.8 per cent increase in sales of O.T.C.
pharmaceutical product's offset by a 13.3 per cent decrease in
seasonal products and 0.2 per cent decrease in sales of household
products.
- U.S. sales - increased 11.1 per cent to $1,452,593 (2006 -
$1,307,483). Prior to conversion into Canadian dollars, the
Company's reporting currency; sales to the U.S. increased 9.6 per
cent.
The principal factors that caused the increase in comparative
net earnings for the year were:
- the 4.6 per cent increase in sales;
- an increase in gross profit of 14.2 per cent or $325,688 due
to a shift in product sales mix (a greater percentage of sales
generated from O.T.C. pharmaceutical product's resulted in overall
percentage gross profit for the year being 24.1 per cent compared
to 22.0 per cent the year prior), and;
- a reduction in bank charges and interest expense of 23.9 per
cent compared to the prior year.
RESULTS OF OPERATIONS
The Company reported net earnings for the three months ended
December 31, 2007 of $955 (or 0.0 cent per share) on sales of
$2,429,506 compared to a net loss of $38,294 (or 0.5 cent per
share) on sales of $2,561,176 for the same period in 2006. Sales
for the period decreased 5.1 per cent compared to the prior year.
Domestic sales decreased 6.3 per cent to $2,359,164 (2006 -
$2,518,644) primarily due to lower sales of seasonal and household
products. Weather and a reduction in promotional activity by
customer's negatively impacted sales of seasonal products,
particularly Windshield Washer Fluid. U.S sales increased 66.6 per
cent to $70,342 (2006 - $42,232), during the period.
Gross profit for the quarter of $601,797 (2006 - $588,488)
increased 1.8 percentage points, to 24.8 per cent of sales compared
to 23.0 per cent of sales for the same period in 2006. A shift in
product mix and a reduction in comparable cost-of-goods were the
primary factors for the increase in gross profit for the
period.
Gross profit for the year ended December 31, 2007 of $2,615,870
(2006 - $2,290,182) increased 2.1 percentage points, to 24.1 per
cent of sales, compared to 22.0 per cent of sales in 2006. The
increase in gross profit of 14.2 per cent or $325,688 was due
primarily to a shift in product mix with a greater percentage of
sales generated from O.T.C. pharmaceutical products, which
typically provide the Company higher gross profit.
Warehouse, selling and administrative expenses were $461,793
(2006 - $448,218) for the three months ended December 31, 2007, an
increase of 3.0 per cent. Warehouse, selling and administrative
expenses for the year ended December 31, 2007 were $1,792,692 (2006
- $1,654,566), an increase of 8.3 per cent. Increases in equipment
repairs & maintenance, warehouse supplies, R&D and lab
expenses, artwork development, recruitment, travel, and wages &
accrued incentives, 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 19.0 per cent (2006 - 17.5 per cent) for the quarter, and 16.5
per cent (2006 - 15.9 per cent) for the year ended December 31,
2007.
EBITA (Earnings before Interest, Taxes and Amortization) for the
quarter decreased 0.2 percent to $140,004 (2006 - $140,270) due to
the reduction in sales and increase in warehouse, selling and
administrative expense. EBITA when expressed as a percentage of
sales was 5.8 per cent (2006 - 5.5 per cent) for the quarter ended
December 31, 2007. EBITA for the year ended December 31, 2007
increased $187,562 or 29.5 percent to $823,178 (2006 - $635,616).
EBITA as a percentage of sales for the year, was 7.6 per cent (2006
- 6.1 per cent).
Amortization expense was $70,151 (2006 - $65,372) for the
quarter, and 280,574 (2005 - $282,543) for the year ended December
31, 2007, respectively, a decrease of 0.7 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 5.1
per cent to $53,798 (2006 - $56,692). Bank charges and interest
expense for the year ended December 31, 2007 decreased 23.9 per
cent, to $218,162 (2006 - $286,739) due to lower borrowing costs
from new mortgage(s) completed June 30, 2006.
The Company's statutory tax rate for 2007 was 34.9 per cent
(2006 - 35.2%) however; the effective rate in 2007 was 34.2 per
cent (2006 - 37.1%), due to the effect of items that are not
deductible for tax purposes. Income taxes that would otherwise have
been payable of $4,400 (2006 - a gain of $1,700) for the quarter,
and $111,100 (2006 - $24,600) for the year ended December 31, 2007
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 $10,700 (2006 - $58,200) resulted from; changes to
projected future earnings and changes in Federal and Provincial
income taxes and rates announced during the year that are
considered to have been substantively enacted. The adjustment
decreased earnings by $10,700 (2006 - $58,200) for the quarter
ended December 31, 2007. A change in estimate of the Company's
future income tax benefit for the year of $8,100 (2006 - $58,200)
resulted from; changes to projected future earnings and changes in
Federal and Provincial income taxes and rates announced during the
year that are considered to have been substantively enacted. The
adjustment decreased earnings by $8,100 (2006 - $58,200) for the
year ended December 31, 2007. 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 brokerage
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 year ended December 31, 2007, shareholder's equity
increased to 49.5 cents per share from 46.7 cents per share at the
end of 2006, an increase of 6.0 per cent on a per share basis.
RW Packaging Ltd.
Statement of Operations and Retained Earnings
---------------------------------------------
Three (3) months ended Twelve (12) months ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006
Revenue $ 2,429,506 $ 2,561,176 $10,868,138 $10,393,794
Manufacturing &
Operating Costs $ 2,289,502 $ 2,420,906 $10,044,960 $ 9,758,178
----------- ----------- ----------- -----------
EBITA $ 140,004 $ 140,270 $ 823,178 $ 635,616
Amortization $ 70,151 $ 65,372 $ 280,574 $ 282,543
----------- ----------- ----------- -----------
EBIT $ 69,853 $ 74,898 $ 542,604 $ 353,073
Bank Charges
and Interest $ 53,798 $ 56,692 $ 218,162 $ 286,739
----------- ----------- ----------- -----------
Earnings
Before Tax $ 16,055 $ 18,206 $ 324,442 $ 66,334
Future Income
Tax Benefit $ 4,400 ($ 1,700) $ 111,100 $ 24,600
Change in
Estimate
of FIT $ 10,700 $ 58,200 $ 8,100 $ 58,200
----------- ----------- ----------- -----------
Net Earnings
(loss) for
the Period $ 955 ($ 38,294) $ 205,242 ($ 16,466)
Change in
Accounting
Policies $ 0 $ 0 ($ 31,287) $ 0
Excess
Consideration
on Shares
Purchased for
Cancellation $ 0 ($ 20,134) ($ 65,954) ($ 20,134)
Retained
Earnings,
Beginning
of Period $ 2,034,138 $ 1,985,520 $ 1,927,092 $ 1,963,692
Retained
Earnings,
End of Period $ 2,035,093 $ 1,927,092 $ 2,035,093 $ 1,927,092
Net Earnings
(loss) per
Share -
Basic and fully 0.0 cents (0.5 cents 3.1 cents (0.2 cents
diluted /share /share) /share) /share)
(expressed
in cents
per share)
Cash Flow from
Operations $ 6,640 $ 251,742 $ 393,413 $ 386,527
Shareholders
Equity 49.5 cents 46.7 cents
per Share /share /share
(expressed in
cents
per share)
Issued and Outstanding
Common Shares 6,587,680 6,855,398
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
2008-03-13 Close $0.65
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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