Polyair Inter Pack Inc.

Polyair Inter Pack Inc.

June 17, 2005 19:04 ET

Polyair Inter Pack Inc. Announces 2005 Second Quarter Results And Amendment Of Financial Covenants

TORONTO, ONTARIO--(CCNMatthews - June 17, 2005) - Polyair Inter Pack Inc. (TSX:PPK)(AMEX:PPK) reported a net loss of $1.6 million or $0.25 per diluted share on sales of $58.1 million for the quarter ended April 30, 2005, compared with net income of $1.5 million or $0.21 per diluted share on sales of $56.4 million for the second quarter of 2004. Losses incurred in the quarter have resulted in the Company not being in compliance with its debt and interest service covenants. The Company's lenders have amended these covenants as at April 30, 2005 so that the Company is not in default, and the Company is in discussions with its lenders to extend the amendments on a going forward basis to enable the Company to remain in compliance.

All amounts are expressed in thousands of U.S. dollars, except
for number of shares outstanding and per share amounts.

3 Months Ended 6 Months Ended
April 30 May 1 % April 30 May 1 %
2005 2004 Change 2005 2004 Change
------------------ -------------------
Products $28,215 $25,268 12% $57,551 $48,643 18%
Pool Products 29,836 31,172 -4% 42,532 42,886 -1%
------------------ -------------------
Total Sales 58,051 56,440 3% 100,083 91,529 9%

Earnings (loss)
before Interest, 1,008 4,477 (805) 4,584
Taxes, Depreciation
and Amortization

Net (loss) ($1,601) $1,522 ($4,413) $409

Weighted average
number of shares
(in milions)
- Basic 6.5 6.1 6.5 6.1
- Diluted 7.2 7.2 7.3 7.2

Net (loss) per share
- Basic ($0.25) $0.24 ($0.68) $0.05
- Diluted ($0.25) $0.21 ($0.68) $0.05

(i) EBITDA is not a recognized measure under Canadian Generally
Accepted Accounting Principles and readers are cautioned that EBITDA
should not be considered as an alternative to net income or loss or
cash from operating activities as an indicator of the Company's
performance or cash flows. EBITDA, as calculated by the Company, is
net income or loss before extraordinary items, net interest expenses
and other, depreciation and amortization, and income taxes. Full
interim financial statements along with Management's Discussion and
Analysis can be obtained from SEDAR (www.sedar.com) and the
Company's web site at www.polyair.com

Commenting on the Company's position, Henry Schnurbach, President and Chief Executive Officer stated: " The accumulated losses in the pool division have resulted in the Company having had to advise its operating lender syndicate that it was not in compliance with its minimum debt and interest service covenants as at April 30, 2005. The Company has obtained an amendment of these covenants so that it is no longer in default and it is renegotiating its financial covenants for the upcoming quarters during the term of the existing loan agreement, which is due for renewal on November 1, 2005. The Company is also considering additional financing options as a means to assure the availability of capital to grow and operate its business.

The Packaging Group's revenues benefited from the growth in demand for its XPAK mailers and insulation products. Increases in selling prices that were announced to offset higher raw material costs also raised revenues and helped offset lower sales volumes in some product categories. We are pleased to note that notwithstanding a very competitive market, we are making progress in adjusting to the higher raw material and freight costs.

The Pool Division did not achieve the expected growth in sales revenues as a result of competitive pressures and excess inventories at our customer's facilities. The disappointing sales and competitive price pressures have negatively affected the division's gross margins, as we were not in a position to recover the full impact of increases in raw material prices and we did not ship sufficient product to recover our overhead burden. Management is undertaking a program of further cost reductions in all areas including product refinements, material cost reductions and a reduction in overhead costs with a view to restoring this division to profitability.

We believe that the Company's cost reduction and efficiency initiatives together with the stabilization of commodity prices will help the Company achieve improved results. The integration of the Atlantic/Jacuzzi business with our Cantar Pool Division has challenged the Company's financial resources, and management is addressing the financing of Polyair to offset the impact of the losses incurred this year and to ensure that it is adequately capitalized to achieve its business objectives"

Conference Call

The Company will host a conference call on Monday, June 20, 2005 at 4:00pm (Eastern Daylight Time) to review the operating results. Polyair invites all those interested in hearing management's discussion of the results to join the call by dialing 1-800-259-2693 in the U.S. and Canada. International participants may access the call by dialing 1-913-981-5575. A replay will be available for one week following the call by dialing 1-888-203-1112 (U.S. and Canada) or 1-719-457-0820 (International) and entering access code 4707729 when prompted.

Polyair Inter Pack Inc. (www. Polyair.com) in its Polyair Packaging and Cantar Pool Products divisions manufactures and distributes a wide range of protective packaging products and swimming pool products. These products are sold to distributors and retailers across North America. The company operates eleven manufacturing facilities, seven of which are in the US where it generates the majority of its sales. The shares are listed on both the Toronto Stock Exchange and the American Stock Exchange under the symbol "PPK".

Certain information included in this news release contains statements that are forward-looking, such as statements relating to anticipated future revenues of the company and the success of current product offerings. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Polyair Inter Pack Inc. In addition, Polyair Inter Pack Inc. expressly disclaims any obligation to publicly update or alter its previously issued forward-looking statements.

Contact Information

  • Polyair Inter Pack Inc.
    Wendy Smith
    Shareholder Administrator
    (416) 679-6591