MTI Global Inc.
TSX : MTI

MTI Global Inc.

August 10, 2005 17:24 ET

MTI Global Reports Financial Results for Q2 Fiscal 2005 Reporting Period

MISSISSAUGA, ONTARIO--(CCNMatthews - Aug. 10, 2005) -

Company has record-setting three and six month results

MTI Global Inc. (TSX:MTI) today reported financial results for the three months and year to date ended June 30, 2005.

Q2 Highlights

- Total sales increased 22% to $31,093,000 in the first six months of the fiscal year, with substantial increases across most business lines

- Sales for the second quarter, ended June 30, 2005, are up 29% to $16,453,000

- Reported net income for the six months ended June 30, 2005 of $1,386,000 or 6 cents per share year-to-date (4 cents per share in the second quarter)

- Generated business momentum that will carry through to the next quarter

"The second quarter of fiscal 2005 was highly successful for MTI Global," said Bill Neill, MTI President and CEO. "As we noted in our first quarter, a mixture of factors delayed some projects from being implemented, especially in our Aerospace PolyFab division. We are pleased that we were able to meet all regulatory requirements and to begin work on those and other projects this quarter, with the result that we have recorded our best three and six month performance in three years."

Financial Results

Net income for the six month period ended June 30, 2005 stood at $1,386,000, which represents a 94% increase over the same period last year, when net income was $753,000. On a quarterly basis, MTI's net income for the three month period ended June 30 2005 rose 177% to $1,162,000, compared with $419,000 in the same period in 2004.

"We're delighted by the strong financial showing of MTI for the three and six month period ended June 30, 2005," said Bill Neill. "It was particularly encouraging to see strong growth in our silicone businesses, as well as our other divisions. Solid results in Bremen, Germany and Virginia have reinforced our view that the silicone business is finally on track. In addition aerospace orders are buoyant at all of our customers".

MTI has no debt in Canada and has reduced its total debt, due partially to the strong flow of business coming through the company and partially because of $11,146,000 raised early in the second quarter of 2005 through a private placement.

MTI operates three major business segments, operational details of which appear below:

MTI Polyfab (Canada)

Aerospace sales for the second quarter of fiscal 2005 were $6,365,000, which is 4.3% over the same period in 2004. Retrofit orders for the quarter also exceeded expectations. Fabricated Products' sales continued to be lower than previous years, due mostly to weakness in the automotive sector. However, management had expected this and sales, which were $1,770,000, were above budget for the quarter. MTI is actively exploring business building opportunities in the industrial and sporting goods sectors for this unit, in order to overcome softening demand in traditional markets.

N.A. Silicone

Sales in both plants of this division beat projections, with second quarter revenues for N.A. Silicones at $5,510,000. MTI Groendyk was at 111% of plan, while MTI Specialty Silicones was at 117% of plan. Specialty Silicones increase was due to increased business in transit seating.

MTI Leewood

Sales were especially strong at MTI Leewood in Bremen, Germany where a record quarter was achieved with sales of $2,808,000 or 9.9% ahead of last year.

Outlook

Work on MTI's cost reduction program continued and yielded results, however, the acquisition of Groendyk and growth in MTI's sales activities have spurred additional, worthwhile expenditures.

"Our company continues to win new business and management believes that our current momentum will continue into the next quarter," added Mr. Neill. "While our results will be subject to some seasonality, most of our plants are operating through the traditional third quarter shutdown this summer. We have every reason to believe that MTI will meet our budget projections for the year."



Sales

3 Months 6 Months

June 2005 June 2004 June 2005 June 2004
--------- --------- --------- ---------
Aerospace $ 6,365 $ 6,103 $ 11,512 $ 12,075
N.A. Silicone 5,510 2,160 10,797 4,388
Leewood 2,808 2,555 5,089 4,847
Fabricated Products 1,770 1,962 3,695 4,171
----- ----- ----- -----
Total $ 16,453 $ 12,780 $ 31,093 $ 25,481
-------- -------- -------- --------

Income Before Taxes

3 Months 6 Months

June 2005 June 2004 June 2005 June 2004
--------- --------- --------- ---------
MTI PolyFab $ 1,043 $ 762 $ 1,532 $ 1,669
N.A. Silicone 620 (10) 824 80
Leewood (41) (43) (305) (276)
---- ---- ----- -----
Total $ 1,622 $ 709 $ 2,051 $ 1,473
------- ----- ------- -------


About the Company

MTI Global Inc., formerly Magnifoam Technology International Inc., designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The Company serves a variety of specialty markets focused on three main product categories: Silicone, Aerospace and Fabricated Products. MTI's manufacturing divisions develop and produce silicone foam using patented technology. The Company designs and fabricates energy management systems from a variety of flexible, cellular materials. MTI also produces and distributes specialty silicone elastomer products. MTI's primary markets are aerospace and mass transit. Secondary markets include sporting goods, automotive, industrial, institutional, medical and electronics markets. MTI's head office and Canadian manufacturing operations are located in Mississauga, Ontario, with international manufacturing operations located in Richmond and Buchanan, Virginia, and Bremen, Germany. The Company also has sales operations in England and Sweden, and an engineering support centre in Brazil.

The foregoing press release contains forward-looking statements and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that could cause results or events to differ from current expectations include the impact of price and product competition, general industry and market conditions and growth rates and reliance on key customers. For additional information with respect to these and other factors, see the reports filed by MTI Global Inc. with the Ontario Securities Commission. MTI Global Inc. disclaims any intention or obligation to update or revise any forward-looking statements.



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MTI Global Inc. (Formerly Magnifoam Technology International Inc.)

Interim Consolidated Balance Sheets (Unaudited)

(In thousands of As at As at
Canadian dollars) June 30, 2005 December 31, 2004
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Assets
Current assets
Cash and cash equivalents $ 7,414 $ 505
Cash deposited as collateral 689 689
Accounts receivable 11,804 9,525
Income taxes recoverable 319 275
Inventories 7,490 6,190
Prepaid expenses and deposits 726 503
-----------------------------------
28,442 17,687

Property, plant & equipment 13,455 14,208

Goodwill 12,142 12,647

Deferred charges 8,117 7,357
-----------------------------------
$ 62,156 $ 51,899
-----------------------------------

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Liabilities and Shareholders'
Equity
Current liabilities
Bank indebtedness $ 1,458 $ 3,969
Accounts payable and accrued
expenses 6,012 5,251
Current portion of long-term debt 727 784
-----------------------------------
8,197 10,004
-----------------------------------
Long-term liabilities
Long-term debt 4,213 4,334
Due to related parties - 350
Future income tax liability 1,289 535
-----------------------------------
5,502 5,219
-----------------------------------
Commitments and contingencies
Shareholders' equity
Share capital 54,773 43,484
Contributed surplus 703 755
Cumulative translation adjustment (1,819) (958)
Deficit (5,200) (6,605)
-----------------------------------
48,457 36,676
-----------------------------------

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$ 62,156 $ 51,899
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MTI Global Inc. (Formerly Magnifoam Technology International Inc.)
Interim Consolidated Statement of Deficit (Unaudited)

(In thousands of Canadian dollars) Six months Six months
ended ended
June 30, June 30,
2005 2004
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Deficit, beginning of period $ (6,605) $ (5,662)

Adjustment for stock based compensation 19 (802)

Net income for the period 1,162 753
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Deficit, end of period $ (5,200) $ (5,711)

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MTI Global Inc. (Formerly Magnifoam Technology International Inc.)
Interim Consolidated Statements of Operations (Unaudited)

Three Six Three Six
(In thousands of months months months months
Canadian dollars, ended ended ended ended
except per June 30, June 30, June 30, June 30,
share amounts 2005 2005 2004 2004
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--------------------------------------------
Sales $ 16,453 $ 31,093 $ 12,780 $ 25,481
--------------------------------------------

Cost of Sales 9,620 18,662 7,495 14,749

--------------------------------------------
Gross Margin 6,833 12,431 5,285 10,732
--------------------------------------------

Operating Expenses
Plant and laboratory 1,758 3,483 1,529 2,999
Sales and marketing 1,142 2,227 1,061 2,061
Administrative 1,559 3,091 1,326 2,661
--------------------------------------------
4,459 8,801 3,916 7,721
--------------------------------------------

Operating income before
the following items 2,374 3,630 1,369 3,011

Amortization of property,
plant and equipment 386 763 357 744
Amortization of deferred
charges 327 627 382 741
--------------------------------------------
713 1,390 739 1,485
--------------------------------------------

Income before other items 1,661 2,240 630 1,526

Other Items
Interest on long-term
debt 77 156 81 163
Other interest expense 31 102 28 55
Interest and
other income (24) (33) (19) (22)
Foreign exchange gain (45) (36) (169) (143)
--------------------------------------------
39 189 (79) 53
--------------------------------------------

Income before income
taxes 1,622 2,051 709 1,473

Income taxes
Current income taxes 306 430 290 447
Future income tax expense 154 235 - 273
--------------------------------------------
460 665 290 720
--------------------------------------------

Net income for the
period $ 1,162 $ 1,386 $ 419 $ 753
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Earnings per share
- Basic $ 0.04 $ 0.06 $ 0.02 $ 0.03
- Diluted $ 0.04 $ 0.06 $ 0.02 $ 0.03
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MTI Global Inc. (Formerly Magnifoam Technology International Inc.)

Interim Consolidated Statements of Cash Flows (Unaudited)

Three Six Three Six
months months months months
ended ended ended ended
(In thousands of June 30, June 30, June 30, June 30,
Canadian dollars, 2005 2005 2004 2004
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Cash flows from
operating activities
Net income for
the period $ 1,162 $ 1,386 $ 419 $ 753
Adjustments for
non-cash items
Amortization 713 1,390 739 1,485
Future income tax
expense 133 214 - 268
Unrealized foreign
exchange
Gain (loss) (9) (16) 97 (151)
Stock based
compensation 16 33 15 15
------------------------------------------
2,015 3,007 1,270 2,370

Net change in non-cash
working capital balances (1,907) (3,064) (284) 222
------------------------------------------
Cash provided by (used in)
operating activities 108 (57) 986 2,592
------------------------------------------

Cash flows from
investing activities
Purchase of property,
plant and equipment (223) (352) (163) (316)
Deferred charges
capitalized (826) (1,618) (707) (1,386)
------------------------------------------
Cash used in
investing activities (1,049) (1,970) (870) (1,702)
------------------------------------------

Cash flows from financing
activities
Advances of long
term debt 471 471 738 738
Repayments of
long-term debt (34) (357) (37) (337)
Decrease in bank
Indebtedness (3,878) (2,362) (733) (279)
Proceeds from shares
held in trust - - 557 382
Proceeds from share
issuance, net 11,146 11,146 - -
Proceeds from stock
options exercised 7 78 187 197
Cash deposited as
collateral - - (689) (689)
------------------------------------------
Cash provided by
financing activities 7,712 8,976 23 12
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Foreign exchange on
foreign cash and
cash equivalents (16) (40) (13) (146)
------------------------------------------
Net increase of cash
during the period 6,755 6,909 126 756

Cash and cash
equivalents,
beginning of period 659 505 2,328 1,698
------------------------------------------

Cash and cash
equivalents,
end of period $ 7,414 $ 7,414 $ 2,454 $ 2,454
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Other information
Cash paid for
interest $ 108 $ 258 $ 109 $ 216
Cash paid for
income taxes $ 69 $ 88 $ - $ 29
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Contact Information

  • Magnifoam Technology International
    John Boots
    Chief Financial Officer
    (905) 564-9700
    (905) 564-8886 (FAX)
    mti@magnifoam.ca
    www.magnifoam.com
    or
    Fleishman-Hillard Canada
    Aaron Boles
    (416) 214-0701