Royal Laser Corp.
TSX : RLC

Royal Laser Corp.

August 14, 2007 16:49 ET

Royal Laser Corp. Reports Financial Results for the First Quarter

TORONTO, ONTARIO--(Marketwire - Aug. 14, 2007) - Royal Laser Corp. (TSX:RLC) today reported its financial results for the first quarter of fiscal year 2008, ended June 30, 2007.

The summarized financial results for the three months ended June 30, 2007, as compared to three months ended June 30, 2006, were:



Q1 2008 Q1 2007
------- -------
Revenues $ 61,762,154 $ 57,404,738
Cost of Sales $ 55,734,966 $ 50,219,496
Gross Margin $ 6,027,188 $ 7,185,242
EBITDA(i) $ 1,196,310 $ 2,890,242
EBITDA(i) per share $ 0.01 $ 0.04
Net Earnings (Loss) $ (638,300) $ (2,260,034)
EPS (Basic) $ (0.01) $ (0.03)
EPS (Diluted) $ (0.01) $ (0.03)

(i)Earnings (loss) before interest, taxes, depreciation and amortization
and stock-based compensation charges.


HIGHLIGHTS:

- The Company's revenues for Q1 FY 2008 increased to $61,762,154 over Q1 FY 2007 revenues of $57,404,738 and Q4 FY 2007 revenues of $57,300,314. The increase is a result of increased industrial and store fixturing sales, notwithstanding the continued weakness in the North American domestic automotive markets and reduced steel prices.

- Gross margin percentage for Q1 FY 2008 was 9.8% compared to 12.5% for Q1 FY 2006. The decrease of 2.7% reflects the change in business mix, as well as conditions of the market for certain Company products that have demanded price reductions which have eroded margins.

- Working Capital remains strong at $23,790,563 at the end of Q1 FY 2008 as compared to $24,513,847 for Q4 FY 2007.

- EBITDA per share for Q1 FY 2008 remains positive at $0.01 per share, although lower than $0.04 per share in Q1 FY 2007.

- Stock-based compensation for Q1 FY 2008 was significantly reduced to $113,455 from $3,169,484 in Q1 FY 2007 since the earlier period included the previously disclosed one-time issuance of stock options and a non-interest bearing loan to the Company's newly appointed Chairman.

- Cash position at the end of Q1 FY 2008 remains healthy at $10,878,233 as compared to $14,066,077 at the end of Q4 FY 2007.

- The Company, through its positive working capital and access to operating credit facilities, has the ability to meet its working capital requirements in the short to medium term.

- Revenues derived from the United States market were 15% and less than 1% were from European markets during Q1 2008 compared to 11% and less than 1% respectively during the Q1 2007. The increase in sales to the US market was driven by increased sales to certain US-based customers, particularly in the store fixture industry. Transactions conducted in US dollars expose the Company to currency fluctuations that resulted in a foreign exchange gain of $522,980 for Q1 2008. However, during the first quarter, the Canadian dollar appreciated overall against the US dollar, resulting in an overall diminishment of margins for the Company's portion of US dollar sales contracts.

- The Company continues to take steps to increase market share and customer penetration in the industrial and store fixturing markets, in order to neutralize the negative impact of the weaker North American domestic automotive industry on sales.

- The level of sales for VSI, the Company's flat rolled steel processing segment, was lower than management had forecasted at the time of the VSI acquisition a year ago primarily due to three basic market influences: (i) reduced volumes from North American domestic automotive customers; (ii) decreased steel prices; and (iii) supply chain optimization initiatives by certain customers that included them shifting some of their business offshore/Mexico and/or buying their materials directly from the mills.

- Since its acquisition last year in Q1 2007, VSI has reduced operational costs in order to offset the negative impact from the volatile North American domestic automotive market.

Bill Iannaci, Royal Laser's Chief Executive Officer, commenting on the results of the last quarter indicated: "The current environment for our products and services continues to be difficult both in Canada and in our US markets, given the general slow down in the North American domestic automotive industry and the impact of the strong Canadian dollar. We continue to focus on the expansion of our sales channels and obtaining new customers and growing current customers, using our core strategy of being a one-stop shop solution provider - while streamlining our operations and cost containment and are confident that we will be able to execute on our business plan to deliver and grow our profitability going forward."

The Company's unaudited financial statements for the year ended June 30, 2007, together with Management's Discussion and Analysis have been filed on SEDAR and are available at www.sedar.com.

About Royal Laser Corp.

Royal Laser Corp., through its wholly-owned operating subsidiaries, processes and distributes flat rolled steel, manufactures custom wood and metal products targeted at the multi-billion dollar high-end retail in-store development industry, the OEM industrial products, automotive and construction industries, in Canada, the United States and overseas. Royal Laser Corp. employs state of the art industrial technology to 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 93 million shares outstanding basic and fully diluted.

For further information on the Corporation, please visit SEDAR at www.sedar.com.

To receive Company news by email, please contact catarina@chfir.com and specify "Royal Laser news" in the subject line. The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

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 29, 2006 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.

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