Premier Tech
TSX : PTL.A

Premier Tech

January 08, 2007 15:53 ET

Premier Tech Releases its Second-Quarter Results

RIVIERE-DU-LOUP, QUEBEC--(CCNMatthews - Jan. 8, 2007) - PREMIER TECH (TSX:PTL.A) released its consolidated results for the three-month period ended December 2, 2006. All amounts are expressed in Canadian dollars unless otherwise indicated.

THREE-MONTH PERIOD ENDED DECEMBER 2, 2006

Consolidated sales for the three-month period ended December 2, 2006, reached $61.3 million, down 2.2% from the second quarter of the previous year, which reached $62.7 million. The decline in the Company's sales is attributable to decreased shipments from the Industrial Equipment Group (IEG), down 14.6% during the second quarter compared with the same period of the previous year. However, this decrease is due only to timing issues since IEG's current order book is in excellent shape. Sales for the Horticulture and Agriculture Group (GHA) and the Environmental Technologies Group (ETG) grew by 2.9% and 21%, respectively, compared with the same period a year ago.

Operating expenses amounted to $53.8 million, or 87.7% of sales, compared with $56.9 million, or 90.6% of sales, representing a decline of 2.9% of operating expenses as a percentage of sales and a decrease of $3.1 million, over the second quarter of the previous year. By the same token, earnings before other items, such as depreciation and amortization, scientific research expenses, interest, bank charges, special item and income taxes, rose $1.7 million to $7.6 million, or 12.3% of sales, for the period ended December 2, 2006, compared with $5.9 million, or 9.4% of sales, for the same period of the previous year.

During the three-month period ended December 2, 2006, the Company posted earnings before taxes of $3.3 million, compared with a loss before taxes of $1.9 million, for the quarter ended November 26, 2005. Finally, net earnings of the three-month period ended December 2, 2006, totaled $1.8 million, or $0.11 per share, that is, $0.8 million more than the net earnings of $1 million, or $0.06 per share, for the corresponding period a year earlier.

SIX-MONTH PERIOD ENDED DECEMBER 2, 2006

For the six-month period ended December 2, 2006, consolidated sales stood at $110.9 million, a decline of 4.3% from the $115.9 million in sales for the same period of the previous fiscal year. The reduction stems primarily from reduced shipments by GHA, which were partially offset by an increase in shipments by IEG and ETG.

For the six-month period ended December 2, 2006, consolidated operating expenses stood at $99.5 million, or 89.7% of sales, compared with $105.8 million, or 91.2% of sales, for the same period of the previous fiscal year. Earnings before other items were $11.4 million, or 10.3% of sales, for the first half of the fiscal year, compared with $10.2 million, or 8.8% of sales, for the same period of the previous fiscal year.

For the six-month period ended December 2, 2006, earnings before taxes stood at $6.5 million, compared with $1.5 million for the same period of the previous fiscal year. It should be noted that, in the first quarter of fiscal year 2007, the Company realized a non-recurring gain of $4.1 million, which explains over 80% of the increase in earnings before taxes during the first six months of the fiscal year.

SPECIAL ITEM

On June 19, 2006, the Company entered into a partnership agreement consisting in cooperation and technology transfers with multiple deliverables, which will be carried out during the next five fiscal years. As part of this agreement, the Company received US$4 million in consideration of deliverables realized to date, which resulted in a non-recurring gain of $4.1 million.

SEGMENTED RESULTS

In accordance with the restructuring of the activities of its various business areas announced in its quarterly report for the period ended November 27, 2004, and in its 2005 Annual Report, from now on, the Company presents and analyzes its activities under its new organizational structure.

The Horticulture and Agriculture Group (GHA) posted sales of $31.9 million in the second quarter, that is, an increase of 2.9%, compared with $31 million for the second quarter of the previous year. This represents a sales volume that is considered normal for a fall quarter. During the same period a year earlier, GHA's sales decreased by 3.7% compared with the corresponding quarter of the previous year. This decrease followed a quarter with 25% growth, and was partially due to advance orders for the fall, mainly in the professional market, while price increases coming into effect in September 2005 had already been announced in July of that same year.

For the six-month period ended December 2, 2006, GHA's sales stood at $54.2 million, compared with $61 million for the same period the previous fiscal year. This growth in sales during the first six months can be explained by an increase in sale prices, compared with the corresponding period of the previous year, which was more than offset by a lower volume of product shipments.

During the second quarter, GHA's segmented earnings stood at $2.8 million, or 8.9% of sales, compared with $2.3 million, or 7.3% of sales, for the same period of the previous year. The increase in segmented earnings is primarily a reflection of higher sales and better management of production and logistics costs, which resulted in a higher gross margin in percentage of sales and in dollars, as well as a smaller weighting of sales and administration costs as a percentage of sales.

For the six-month period ended December 2, 2006, GHA's segmented earnings amounted to $3 million, representing 5.6% of sales, compared with $3.9 million, or 6.5% of sales, for the first half of the previous fiscal year. During this period, the appreciation of the Canadian dollar against the US currency had a $1.4 -million negative impact on segmented earnings.

Sales for the Industrial Equipment Group (IEG) stood at $20.9 million for the three-month period ended December 2, 2006, compared with $24.5 million for the second quarter of the previous year. These sales include $1.8 million that can be attributed to the acquisition of Les Machineries Verville inc. As such, the balance of the decrease in sales amounts to $5.4 million, and results from a decrease in equipment deliveries in North America, as well as in Europe and Asia, during the second quarter of fiscal year 2007, compared with the same period a year earlier. However, at the end of the second quarter, IEG's order book for these territories showed sharp growth compared with results as at June 3, 2006, supporting the statement that the lower second-quarter sales figures are only due to timing issues.

For the six-month period ended December 2, 2006, sales for IEG totaled $41 million, compared with $40.8 million for the same period of the previous fiscal year, representing a certain amount of stability.

In the second quarter, IEG posted segmented earnings of $0.8 million, or 3.7% of sales, compared with $0.3 million, or 1.2% of sales, for the second quarter of the previous year. This increase in segmented earnings stems from an improvement in the gross margins and a reduction in sales and administration costs compared with the same period a year earlier.

For the six-month period ended December 2, 2006, IEG posted segmented earnings of $4.3 million, compared with a segmented loss of $1 million for the first half of the previous fiscal year. This improvement in segmented earnings is attributable to a non-recurring gain of $3.4 million as the result of a partnership and technology transfer agreement. Apart from this gain, IEG's segmented earnings from operations rose by $1.9 million, from a segmented loss of $1 million, to segmented earnings of $0.9 million, or 2.2% of sales. The reasons for this improvement in segmented earnings are the same as those for the three-month period ended on this date.

The Environmental Technologies Group (ETG) posted sales of $9.4 million in the second quarter, an increase of 21%, compared with $7.8 million during the second quarter a year earlier. For the six-month period ended December 2, 2006, ETG's sales totaled $17.3 million, a $1.4 -million, or 8.9%, increase compared with the $15.9 million posted for the first half of the previous fiscal year.

During the second quarter, ETG's segmented earnings stood at $1.5 million, or 15.3% of sales, compared with $0.7 million, or 9.1% of sales, for the second quarter of the previous year. The $0.8 -million increase is attributable primarily to higher sales and to a reduction in sales and administration costs as a percentage of sales, compared with the corresponding period of the previous year.

For the six-month period ended December 2, 2006, segmented earnings totaled $2 million, representing 11.4% of sales, compared with $1.8 million, or 11% of sales, for the first half of the previous fiscal year. The reasons for the higher segmented earnings are the same as those for the three-month period ended on this same date.



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PREMIER TECH LTD Six-month periods ended Twelve-month
(in thousands of dollars, December 2, November 26, period ended
except per share amounts) 2006 2005 June 2006
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$ $ $
Operation
Sales 110,927 115,936 267,367
Earnings before taxes and
extraordinary item 6,511 1,454 9,824
Net earnings before
extraordinary item 4,793 367 6,065
Net earnings per share 0.29 0.02 0.37
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Financial position
Total assets 205,772 193,996 187,266
Working capital 39,499 43,016 44,158
Long-term debt 35,007 39,788 37,115
Debt-bearing interest 70,330 75,557 53,668
Total liabilities 148,146 147,421 134,692
Shareholders' equity 57,626 46,575 52,574
Shareholders' equity per
share 3.53 2.85 2.83
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Number of shares
outstanding 16,342,195 16,342,195 16,342,195
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PRIVATIZATION

On May 10, 2006, Gestion Bernard Belanger ltee, a company controlled by Bernard Belanger, Chairman of the Board and Chief Executive Officer of Premier Tech Ltd, advised Premier Tech Ltd that it was taking steps to obtain the financing required to privatize Premier Tech Ltd, in which it holds majority shares.

These steps towards privatization were subject to certain conditions, all of which have been met. As such, the proxy circular and the notice of meeting were sent to all Premier Tech Ltd shareholders on November 6, 2006, in preparation for the Special Shareholders' Meeting held last December 1. At this meeting, more than 99% of the votes cast by the minority shareholders were in favor of the merger. Approval of the merger by the Premier Tech Ltd shareholders was the main condition to be met before completing the privatization of Premier Tech Ltd. The merger is planned for February 26, 2007, and completion of the privatization transaction is expected to occur on or around March 1, 2007.

CORPORATE PROFILE

For more than 80 years, Premier Tech has been building its know-how and reputation on the various technology-oriented opportunities offered by sphagnum peat moss, an abundant natural resource in Canada. Its seven business units, gathered in three groups - Horticulture and Agriculture, Industrial Equipment and Environmental Technologies - have the mission to become technological and commercial leaders in their respective fields of expertise. Buoyed by a multidisciplinary team of over 1 500 people based in America, Europe and Asia, Premier Tech is building on the development of its personnel, on innovation, research and development, and on the introduction of value-added products. Its strategic approach is supported by ongoing worldwide market development efforts. Premier Tech shares are listed on the Toronto Stock Exchange, in Canada, under the symbol PTL.A.

Contact Information

  • Source: Premier Tech
    Mr. Martin Noel, CA, CBV
    Senior Vice-President/Chief Financial Officer
    418-867-8883 Ext. 6438
    418-867-8297 (FAX)
    noem@premiertech.com