Polyair Inter Pack Inc.

Polyair Inter Pack Inc.

June 09, 2008 18:57 ET

Polyair Inter Pack Inc. Announces 2008 Second Quarter Results and Plant Rationalization Plan

TORONTO, ONTARIO--(Marketwire - June 9, 2008) - Polyair Inter Pack Inc. (TSX:PPK) announced a loss from continuing operations of $1.5 million in the second quarter of 2008 compared to a loss of $0.7 million for the same period last year.

Sales in the second quarter declined against the comparable 2007 period by $2.2 million, principally as a result of weaker customer demand across all sectors of the Company's business. The lower sales level combined with substantial increases in freight and polyethylene costs, the Company's primary raw material, resulted in a $2.6 million reduction in gross profit. The stronger Canadian dollar also increased selling, general and administrative costs that are largely incurred at the Company's Canadian head office. Interest costs in the quarter were significantly lower as the Company's bank and equipment loans decreased from $23.6 million during the second quarter of 2008 to $19.4 million in the current quarter.

3 Months Ended 6 Months Ended
In 000s USD, except for per 26-Apr 28-Apr 26-Apr 28-Apr
share amounts. 2008 2007 2008 2007
------------------- -------------------

Sales from continuing operations $ 28,802 $ 30,981 $ 56,025 $ 58,383

Earnings from continuing
operations before interest,
taxes, depreciation and
amortization (EBITDA)(i) ($ 187) $ 2,839 $ 724 $ 4,134

(Loss) from continuing
operations ($ 1,523) ($ 731) ($ 2,048) ($ 1,900)

Income / (loss) from
discontinued operations ($ 82) ($ 14) ($ 224) $ 4,614

Net income / (loss) ($1,605) ($745) ($ 2,272) $ 2,714

Net (loss) per share from
continuing operations
- Basic ($0.22) ($0.11) ($0.29) ($0.28)
- Diluted ($0.22) ($0.11) ($0.29) ($0.28)

Net income / (loss) per share
- Basic ($0.23) ($0.11) ($0.32) $0.40
- Diluted ($0.23) ($0.11) ($0.32) $0.40


Weighted average number of
shares outstanding (in millions)
- Basic 7.0 6.8 7.0 6.8
- Diluted 7.0 6.8 7.0 6.8


Prior period amounts have been reclassified from statements previously presented to conform to the presentation of the 2008 consolidated Interim Financial Statements.

(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 from continuing operations before interest, other income and expenses, depreciation and amortization, and income taxes. Full financial statements along with Management's Discussion and Analysis can be obtained from SEDAR a www.sedar.com and the Company's web site at www.polyair.com

The Company is responding to the decline in profitability by implementing price increases to recover higher fuel and polyethylene costs. Price increases implemented in mid April and one announced for July should assist in recovering higher fuel and polyethylene costs that were the principal reason for the loss in the second quarter of 2008. The Company also announced a two-part rationalization plan that is projected to result in annual savings of $3 million. First, to respond to the rise in the Canadian dollar and the high cost of freight the operations of the Toronto plant will be reduced and products destined for US markets will be manufactured in the Company's various US facilities. Second, to respond to weaker demand, the Company will reduce personnel in selling and administrative functions throughout the organization. In implementing this plan, the Company expects to incur one-time severance costs of approximately $0.8 million. Additionally, changes relating to the manufacturing facilities will require capital expenditures of approximately $1.0 million. This plan will be implemented by the end of calendar 2008.

The Company also announced that it has been evaluating various alternatives for raising additional capital in the near term. The Company has engaged Genuity Capital Markets to provide financial advisory services, and management has commenced discussions with the Company's majority shareholder with a view to securing its support and participation in a financing.

In announcing the Company's results and rationalization plan, Victor D'Souza, CEO stated: "While we have made good progress over the last six months in procuring new business and improving our operational efficiency, the economic slowdown and the stronger Canadian dollar has required us to make significant changes in our operations. Mr. D'Souza also stated that the Company is committed to raise its prices to offset higher fuel and resin costs."

Polyair Inter Pack Inc. (www.polyair.com) manufactures and distributes a wide range of protective packaging products and swimming pool covers in North America. The Company operates eight manufacturing facilities, seven of which are in the USA where it generates the majority of its sales. All figures reported above are in US dollars, unless otherwise noted.

Certain information included in this news release contains statements that are forward-looking, such as statements relating to anticipated future revenues and profitability of the Company. 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.

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