Royal Laser Corp.
TSX : RLC

Royal Laser Corp.

August 11, 2008 08:09 ET

Royal Laser Corp. Reports Financial Results for the First Quarter of Fiscal 2009 Ended June 30, 2008

TORONTO, ONTARIO--(Marketwire - Aug. 11, 2008) - Royal Laser Corp. (the "Company" or "Royal Laser") (TSX:RLC) today reported its financial results for the first quarter ended June 30, 2008 ("Q1 Fiscal 2009").

The summarized financial results for the three months ended June 30, 2008, as compared to three months ended June 30, 2007, were:



Q1 Fiscal 2009 Q1 Fiscal 2008
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Revenues $ 92,293,842 $ 61,762,154
Cost of Sales $ 75,308,741 $ 55,734,966
Gross Margin $ 16,985,101 $ 6,027,188
EBITDA(i) $ 10,465,886 $ 1,196,010
EBITDA(i) per share $ 0.11 $ 0.01
Net Earnings before taxes $ 7,713,971 $ (879,015)
Net Earnings (Loss) $ 5,263,104 $ (638,300)
EPS (Basic) $ 0.06 $ (0.01)
EPS (Diluted) $ 0.06 $ (0.01)

(i)Earnings (loss) before interest, taxes, depreciation and amortization
and stock-based compensation charges; See reconciliation of this non-GAAP
measurement below.


HIGHLIGHTS:

- The Company's revenues for Q1 Fiscal 2009 increased to $92,293,842 representing increased sales volumes predominantly in the Venture Steel Inc. flat rolled steel processing business ("VSI"). Sales at VSI increased 60% in volume and 5% due to price, when compared to the same quarter last year.
Sales were relatively consistent in the custom and OEM metal and wood manufacturing segment.

- Gross margin percentage for Q1 Fiscal 2009 was 18% compared to 10% for Q1 Fiscal 2008. The increase of 8% is predominantly due to improved margins in the VSI business and were a direct result of better management of supply chain, inventory and customer relations and improved margins on spot market sales.

- Working Capital increased to $16,827,303 and remains strong at the end of Q1 Fiscal 2009 compared to $11,233,950 at the end of Q4 of Fiscal 2008 and increased predominantly because of the following relating to the VSI business:

-- Increased margins and profitability provided additional working capital.

-- Realization of additional synergies on the integration of Winston Steel Inc. through the elimination of duplicated fixed operating costs.

-- As the market price for steel increased from the producing mills throughout this quarter, the Company benefited on margin enhancement into the spot market and did not experience any margin erosion on supply agreement business secured in late Fiscal 2008.

Commenting on the results of this quarter, Bill Iannaci, Royal Laser's Chief Executive Officer, noted: "The past quarter has been very positive for the Company. VSI has become one of the strongest flat rolled steel processors in our marketplace. The completion of the integration of recent acquisitions, and the resulting reduction of certain occupancy and employee costs, have provided for increased margins in the VSI business. The Company is pleased with the positive improvements in our VSI business, and looks forward to continued positive results."

Commenting on the performance of Venture Steel Inc, Beric Sykes, President of Venture Steel Inc., noted: "Notwithstanding the negative market sentiment due to the slowdown in the automotive industry, our business has continued to grow in volume and profitability. We expect that the synergies from our recent acquisitions, together with increased steel prices and success in signing up additional long-term sales contracts, will continue to provide healthy margin performance into the second quarter of Fiscal 2009."

Commenting on the results of the OEM and custom metal and wood manufacturing business segment, Bill Iannaci noted: "Given the macro-economic issues in the automotive and retail sectors, this has been a retooling quarter for our manufacturing businesses, whereby we have made cost adjustments to allow us to remain competitive in a difficult marketplace. Our efforts will bode well for future expected growth, and will also allow us to ramp up our operations with very minimal capital expenditures."

The Company's unaudited financial statements for quarter ended June 30, 2008, together with Management's Discussion and Analysis have been filed on SEDAR and are available at www.sedar.com.



Royal Laser Corp.
Consolidated Balance Sheets

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As at As at
June 30, March 31,
2008 2008
(Unaudited)
Assets

Current Assets

Cash and cash equivalents $ 1,792,075 $ 1,823,396
Restricted cash 1,400,000 1,400,000
Accounts receivable 49,732,265 47,746,058
Income taxes recoverable - 1,809,502
Inventories 48,215,979 44,330,955
Prepaid expenses and deposits 2,158,908 2,563,752
Future income tax assets 2,672,576 2,428,809
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105,971,803 102,102,472

Plant and Equipment 38,215,096 38,156,365
Intangible Assets 17,240,790 17,731,630
Goodwill 34,010,459 34,010,459

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$195,438,148 $192,000,926

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As at As at
June 30, March 31,
2008 2008
(Unaudited)
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Liabilities and Shareholders' Equity

Current Liabilities

Bank indebtedness $ 44,677,798 $ 54,954,852
Accounts payable and accrued liabilities 41,046,687 30,191,877
Income taxes payable 124,147 -
Current portion of long-term debt 1,788,210 2,728,931
Current portion of obligations under
capital leases 1,422,370 1,325,986
Derivative financial instruments 37,510 187,900
Unearned revenue 172,474 1,478,976
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89,269,196 90,868,522

Long-term Debt 3,826,098 4,196,846
Obligations Under Capital Leases 3,738,856 4,158,860
Debenture - 1,000,000
Future Income Tax Liabilities 10,654,976 9,455,112

Shareholders' Equity

Share Capital 82,849,208 82,801,726

Contributed Surplus 6,941,577 6,696,002

Deficit (1,841,763) (7,176,142)
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87,949,022 82,321,586

Subsequent events

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$195,438,148 $192,000,926

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Royal Laser Corp.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)

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Three Months Ended
June 30,
2008 2007
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Sales $ 92,293,842 $ 61,762,154

Cost of Sales 75,308,741 55,734,966
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Gross Profit 16,985,101 6,027,188
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Expenses
Selling, administrative and general 6,773,773 4,312,698
Amortization 975,738 1,456,912
Stock-based compensation 293,057 113,455
Foreign exchange loss (gain) (179,947) 522,980
Interest expense, net 852,169 504,658
Relocation costs 557,051 -
Gain on sale of plant and equipment (711) (4,500)
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9,271,130 6,906,203
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Income (Loss) before Income Taxes 7,713,971 (879,015)
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Income taxes expense (recovery)
Current 1,494,770 (115,491)
Future 956,097 (125,224)
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2,450,867 (240,715)
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Net Income (Loss) and
Comprehensive Income (Loss) $ 5,263,104 $ (638,300)
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Earnings (Loss) per Share

Basic $ 0.06 $ (0.01)
Diluted $ 0.06 $ (0.01)
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Weighted Average Number of Shares
Outstanding:

Basic 93,554,016 92,902,140
Diluted 93,990,781 92,902,140
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Royal Laser Corp.
Consolidated Statements of Shareholders' Equity
As at June 30, 2008 (unaudited) with comparative figures for March 31, 2008

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Number of
Shares Capital Stock
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Balance, March 31, 2007 92,902,140 $80,853,739
Stock-based compensation - -
Issued on business acquisition 4,142,028 4,142,028
Shares held in escrow for
cancellation 1,857,972 -
Share compensation 1,500,000 305,959
Shares held in escrow for
cancellation - (2,500,000)
Loss for the year ended
March 31, 2008 - -

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Balance, March 31, 2008 (as
previously reported) 100,402,140 $82,801,726
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Change in accounting policy - $ -

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Balance, as restated,
April 1, 2008 100,402,140 $82,801,726
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Stock-based compensation - $ -
Share compensation - 47,482
Share cancellation (1,515,152) -
Net income for the quarter
ended June 30, 2008 - -

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Balance, June 30, 2008 98,886,988 $82,849,208
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Total
Contributed Shareholder's
Surplus Deficit Equity
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Balance, March 31, 2007 $5,893,217 $(5,014,853) $81,732,103
Stock-based compensation 802,785 - 802,785
Issued on business acquisition - - 4,142,028
Shares held in escrow for
cancellation - - -
Share compensation - - 305,959
Shares held in escrow for
cancellation - - (2,500,000)
Loss for the year ended
March 31, 2008 - (2,161,289) (2,161,289)

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Balance, March 31, 2008 (as
previously reported) $6,696,002 $(7,176,142) $82,321,586
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Change in accounting policy $ - $ 71,275 $ 71,275

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Balance, as restated,
April 1, 2008 $6,696,002 $(7,104,867) $82,392,861
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Stock-based compensation $ 245,575 $ - $ 245,575
Share compensation - - 47,482
Share cancellation - - -
Net income for the quarter
ended June 30, 2008 - 5,263,104 5,263,104

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Balance, June 30, 2008 $6,941,577 $(1,841,763) $87,949,022
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Royal Laser Corp.
Consolidated Statement of Cash Flows
(Unaudited)

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Three Months Ended
June 30,
2008 2007
Cash Provided by (used in)

Operating Activities

Net Income (loss) $5,263,104 $(638,300)
Items not involving cash:
Amortization of plant and
equipment 1,115,849 1,048,703
Amortization of intangible assets 490,840 406,569
Amortization of finance charges 1,640 1,640
Future income tax expense (recovery) 956,097 (125,224)
Stock-based compensation 293,057 113,455
Unrealized loss on derivative
financial instruments (15,540) -
Gain on sale of plant and equipment (711) (4,500)
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8,104,336 802,343
Changes in non-cash operating
elements of working capital 6,036,632 (3,311,895)
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14,140,968 (2,509,552)
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Financing Activities

Increase (decrease) in bank
indebtedness, net (10,277,054) 2,440,311
Payments on obligations under
capital leases (323,620) (247,629)
Repayment of long-term debt (1,313,109) (958,888)
Repayment of debentures (1,000,000) -
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(12,913,783) 1,233,794
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Investing Activities
Proceeds from sale of plant and equipment 1,700 4,500
Settlement of holdback payable due on
WSI acquisition (84,637) -
Acquisition of plant and equipment (1,175,569) (522,934)
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(1,258,506) (518,434)
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Increase (Decrease) in Cash and Cash
Equivalents (31,321) (1,794,192)

Cash and Cash Equivalents
Beginning of Period 1,823,396 12,672,425
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Cash and cash equivalents consists of:
Cash 1,504,977 8,220,468
Short term investments 287,098 2,657,765

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End of Period $1,792,075 $10,878,233
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The following table reconciles EBITDA to Net Income (Loss) and Comprehensive Income (Loss) for each of the following periods:



Q1FY09 Q1FY08
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EBITDA: $10,465,886 $1,196,010
Deduct:
Income taxes (recovery) $2,450,867 $(240,715)
Interest expense, net 852,169 504,658
Depreciation/Amortization 975,738 1,456,912
Depreciation/Amortization included in COGS 630,951 -
Stock-based compensation 293,057 113,455
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Net Income (Loss) and Comprehensive Income
(Loss): $5,263,104 $(638,300)
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About Royal Laser Corp.

Royal Laser Corp., through its wholly-owned operating subsidiaries, services steel and manufactures custom wood and metal products targeted at the multi-billion dollar automotive, high-end retail in-store development, the OEM industrial products and construction industries, in Canada, the United States and overseas. Royal Laser Corp. employs state of the art industrial technology to process steel, fabricate custom and standardized wood and metal products, including robotic wood finishing lines, advanced laser-based computer-integrated manufacturing systems and advanced stamping presses. In addition to contract manufacturing services, Royal Laser provides value-added engineering and design services. The Corporation's common shares trade on the Toronto Stock Exchange under the symbol "RLC" and there are approximately 100 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