Royal Laser Corp.
TSX : RLC

Royal Laser Corp.

June 22, 2009 18:15 ET

Royal Laser Corp. Reports Financial Results for the Fourth Quarter and Audited Financial Results for the Year Ended March 31, 2009 and Management Realignment Plan for Fiscal 2010

TORONTO, ONTARIO--(Marketwire - June 22, 2009) - Royal Laser Corp. (the "Company" or "Royal Laser") (TSX:RLC) today reported its financial results for the fourth quarter ended March 31, 2009 ("Q4 Fiscal 2009") and fiscal year ended March 31, 2009.

As previously disclosed, during the quarter ended December 31, 2008, the Board of Directors of the Company determined that the ongoing focus of the Company should be the steel processing and distribution business, Venture Steel Inc. ("VSI"), and was therefore pursuing strategic and operational opportunities, including a sale transaction, relating to the non-core businesses, those comprising the Custom and OEM Wood and Metal manufacturing businesses (the "disposal group"). As a result, the assets and liabilities of the disposal group have been segregated and presented separately as discontinued on the consolidated balance sheets as at March 31, 2009 and 2008 and the results of operations and cash flows of the disposal group have been segregated and presented separately as discontinued in the consolidated statements of income and cash flows for the year ended March 31, 2009 and 2008.

Subsequent to March 31, 2009, the Board of Directors of the Company decided, citing poor market conditions for a sale-type transaction, to no longer hold the disposal group as assets held for sale. As a result, the disposal group, going forward, will be presented as part of continuing operations.

Simultaneously to this decision, the Board of Directors has approved a plan whereby the Company will be managed in two separate operating segments: the Steel Division: VSI, TT and SMI, and the Industrial & Environmental Division: RLM, WAM and EZ. The rationale for this segmentation is based upon operational and customer synergies, as well as opportunities for cost savings and supply chain integration. Included in this plan is the rationalization of management of each segment, and customer cross-selling opportunities.

Notwithstanding the decision to not proceed with a disposal transaction of the non-core business, the Company is clearly committed to the development of its core steel business including, but not limited to; expanding geographically, diversifying our product lines and pursuing vertical integration opportunities. The Company believes that there are materially undervalued opportunities that can be exploited with the right management focus and team. With this clear focus on the steel industry, the Company announces changes to its management and board structure, such changes to take effect immediately.

Beric Sykes, currently President of the Company's Venture Steel Division, will be promoted to act as co-CEO with the Company's founder and current CEO Bill Iannaci. In addition to managing the Company's steel business, Beric will be responsible for investor relations and corporate functions. Bill will also assist in the development of the steel strategy and will manage the Industrial & Environmental Divisions.

Bill Iannaci, said, "I believe that the board and management of the Company have been distracted in the last many months by issues that did not help grow the Company in any way. Beric and I are very focussed on growing this business. I believe that Beric and I will work well together in leading the Company through these difficult times."

Beric Sykes said, "As a whole, I believe that the Company has made the right management decisions to compete in these recessionary times and strategically there are broader opportunities in the steel marketplace that our company will pursue. I also believe that as part of my new responsibilities that we will improve the communication of our performance and strategies to existing and potential shareholders. I look forward to working with Bill in this new role."

Joining the Board will be Beric Sykes and Vic Alboini. Vic is the Chairman of Jaguar Financial, an 18% shareholder of the Company. We expect that Vic will add value to the Company in strategic and financial matters. We welcome both of them to the board. Joseph Mimran and Greg Van Staveren have been on the Board of the Company since its inception and have resigned. We thank Joe and Greg for their contribution to the Company, especially over this last year when the Company's Board has had to deal with many issues. The Company will be looking to add an additional board member with significant senior steel industry experience in the near future.

The summarized financial results for the three months ended March 31, 2009, as compared to three months ended March 31, 2008, for continuing operations only, were:



----------------------------------------------------------------------------
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Q4 Fiscal 2009 Q4 Fiscal 2008
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Revenues $ 49,297,948 $ 61,069,868
Cost of Sales $ 46,095,751 $ 54,413,304
Gross Margin $ 3,202,197 $ 6,656,564
Adjusted EBITDA(i) $ 1,604,066 $ 2,413,418
Adjusted EBITDA(i) per share $ 0.02 $ 0.03
Net Earnings (Loss) $ 43,752 $ 322,869
EPS (Basic) $ 0.00 $ 0.00
EPS (Diluted) $ 0.00 $ 0.00
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(i)Adjusted EBITDA refers to earnings (loss) before interest, taxes,
depreciation/amortization, stock-based compensation, and unusual items; See
reconciliation of this non-GAAP measurement below.


The summarized financial results for the year ended March, 31 2009 as
compared to year ended March 31, 2008, for continuing operations only, were:

----------------------------------------------------------------------------
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Fiscal 2009 Fiscal 2008
----------------------------------------------------------------------------
Revenues $ 243,607,029 $ 195,197,496
Cost of Sales $ 206,731,440 $ 182,102,395
Gross Margin $ 36,875,589 $ 13,095,101
Adjusted EBITDA(i) $ 24,684,005 $ 370,272
Adjusted EBITDA(i) per share $ 0.26 $ 0.00
Net Earnings (Loss) $ 7,677,963 $ (3,515,203)
EPS (Basic) $ 0.08 $ (0.04)
EPS (Diluted) $ 0.08 $ (0.04)
----------------------------------------------------------------------------

(i)Adjusted EBITDA refers to earnings (loss) before interest, taxes,
depreciation/amortization, stock-based compensation, and unusual items; See
reconciliation of this non-GAAP measurement below.


HIGHLIGHTS:

- The Company's revenues for Q4 Fiscal 2009 decreased to $49,297,948 as a result of a decline in the market price for steel, as well as a decrease in demand caused by the global recession.

- The Company's revenues for the Fiscal year 2009 increased to $243,607,029 as a result of a year-over-year increase in the price of steel, while steel volumes remained relatively flat.

- Gross margin percentage for Q4 Fiscal 2009 was 6% and was lower as a result of selling inventory that was acquired when market prices for steel were higher.

- Working Capital remains strong at $46,223,794, with the revolving credit facility being drawn down to $33,971,971.

- Adjusted EBITDA from continuing operations remains positive at $1,644,066 for Q4 Fiscal 2009 and at $24,684,005 for Fiscal 2009

- Earnings per share, from continuing operations, were nil for Q4 Fiscal 2009, and remains strong for Fiscal 2009, at $0.08 per share.

The Company's audited financial statements for the year ended March 31, 2009, together with Management's Discussion and Analysis have been filed on SEDAR and are available at www.sedar.com.

The following table reconciles EBITDA to net income (loss) and comprehensive income (loss) in the three and twelve months ended March 31, 2009 and 2008, from continuing operations only:



----------------------------------------------------------------------------
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Three Months Ended Years Ended
March 31, March 31,
2009 2008 2009 2008
----------------------------------------------------------------------------

Adjusted EBITDA: $1,604,066 $2,413,418 $24,684,005 $ 370,272
Deduct:
Income taxes (recovery) 158,656 (102,053) 5,581,161 (2,769,842)
Interest expense, net 256,511 781,601 1,976,660 2,250,851
Depreciation/amortization 697,503 1,005,612 2,756,846 3,295,722
Depreciation/amortization
- included in cost of
sales 268,791 - 1,063,423 -
Stock-based compensation 134,757 405,389 897,052 1,108,744
Unusual items:
Litigation expense 44,096 - 4,252,220 -
Take-over bid related
expenses - - 478,680 -

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Net income (loss) and
comprehensive income (loss) $ 43,752 $322,869 $ 7,677,963 $(3,515,203)
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About Royal Laser Corp.

Royal Laser Corp., through its operations, services and distributes flat-rolled steel targeted at the multi-billion dollar automotive OEM, automotive after-market, and custom fabricates products for the industrial, environmental, automotive and construction industries in Canada, the United States and recently Mexico. The Company's common shares trade on the Toronto Stock Exchange under the symbol "RLC" and there are approximately 97 million shares outstanding.

For further information on the Corporation, please visit SEDAR at www.sedar.com.

To receive Company news by email, please contact info@royallaser.com and specify "Royal Laser news" in the subject line.

Forward-Looking Statements

Certain statements contained in this press release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and other factors, many of which are beyond our control, and are as discussed under the heading "Trends, Risks and Uncertainties" and in the Annual Information Form of Royal Laser dated June 27, 2008 and filed on SEDAR at www.sedar.com, as well as Royal Laser's periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits will be derived therefrom. Except as required by law, Royal Laser Corp. disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained herein is expressly qualified by this cautionary statement.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Royal Laser Corp.
    Beric Sykes
    Co - Chief Executive Officer
    (416) 798-9396
    or
    Royal Laser Corp.
    Niral Merchant
    Chief Financial Officer
    (416) 798-9396