Royal Laser Corp.
TSX : RLC

Royal Laser Corp.

June 17, 2008 16:13 ET

Royal Laser Corp. Reports Financial Results for the Fourth Quarter and Audited Financial Results for the Year Ended March 31, 2008

TORONTO, ONTARIO--(Marketwire - June 17, 2008) - Royal Laser Corp. (the "Company" or "Royal Laser") (TSX:RLC) today reported its financial results for the fourth quarter ("Q4 Fiscal 2008") and Fiscal year 2008 ended March 31, 2008.

The summarized financial results for the three months ended March 31, 2008, as compared to three months ended March 31, 2007, were:



Q4 Fiscal 2008 Q4 Fiscal 2007
---------------- ------------------
Revenues $ 74,792,238 $ 57,300,314
Cost of Sales $ 64,610,191 $ 51,928,159
Gross Margin $ 10,182,047 $ 5,372,155
EBITDA(i) $ 3,990,704 $ (1,180,190)
EBITDA(i) per share $ 0.04 $ (0.01)
Net Earnings (Loss) $ 975,833 $ (2,347,561)
EPS (Basic) $ 0.01 $ (0.03)
EPS (Diluted) $ 0.01 $ (0.03)

The summarized financial results for the year ended March,
31 2008, as compared to year ended March 31, 2008 were:


Fiscal 2008 Fiscal 2007
---------------- ------------------
Revenues $ 256,055,030 $ 240,306,187
Cost of Sales $ 228,865,209 $ 213,299,575
Gross Margin $ 27,189,821 $ 27,006,612
EBITDA(i) $ 5,683,385 $ 7,461,184
EBITDA(i) per share $ 0.06 $ 0.09
Net Earnings (Loss) $ (2,161,289) $ (3,885,732)
EPS (Basic) $ (0.02) $ (0.05)
EPS (Diluted) $ (0.02) $ (0.05)

(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 Q4 Fiscal 2008 increased to $74,792,238 representing increased sales volumes predominantly in the flat rolled steel processing business.

- Gross margin percentage for Q4 Fiscal 2008 was 14% compared to 9% for Q4 Fiscal 2007 and 8% for Q3 Fiscal 2008 respectively. The increase of 5% between Q4 Fiscal 2008 and Q4 Fiscal 2007 and 6% between Q4 Fiscal 2008 and Q3 Fiscal 2007 is predominantly due to improved margins in the flat rolled steel processing business and were a direct result of better management of supply chain, inventory and customer relations and improved margins with spot market sales.

- Working Capital remains strong at $11,233,950 at the end of Q4 Fiscal 2008 compared to $24,513,847 at the end of Q4 of Fiscal 2007 and decreased because of the following strategies relating to the Venture Steel Inc. ("VSI") custom flat rolled steel processing business:

- The acquisition of ASI was funded in cash and shares and the acquisition of WSI was funded in cash. Total cash outlays relating to the ASI acquisition were $6,060,000 and to the WSI acquisition were $6,975,556. Both ASI and WSI, which continue to be integrated into the Venture Steel Inc. business ("VSI") provide for expanded market coverage for VSI into the tubular, heavy gauge automotive, building products and general manufacturing markets. In addition, Apogee compliments our current operations by adding increased slitting capabilities (heavier gauges up to 0.5 inches) and decreased dependence on outside storage requirements.

- As part of an overall inventory strategy, management purchased forward material to support sales transactions commencing in Q4 Fiscal 2008.

Bill Iannaci, Royal Laser's Chief Executive Officer, commented: "The past quarter has been very active for the Company. The ongoing integration of ASI and acquisition of WSI during the quarter, and the subsequent 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 the VSI business during the quarter, and will continue to focus on pursuing growth opportunities in the various markets within which it operates --including the environmental products, store fixturing and industrial product manufacturing. Our focus has been, and continues to be, on removing inefficiencies, increasing margins while focussing on sales growth.

The benefits from focussing on efficiencies have already begun to be realized and are demonstrated in improved margin performance during the fourth quarter. These efficiencies, together with increased steel prices, making our investment in inventory that much more valuable, should bode well for future profitability."

The Company's audited financial statements for year ended March 31, 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
March 31, 2008 and 2007

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2008 2007
Assets

Current Assets

Cash and cash equivalents $ 1,823,396 $ 12,138,520
Restricted cash 1,400,000 533,905
Accounts receivable 47,746,058 31,729,330
Income taxes recoverable 1,809,502 1,862,788
Inventories 44,330,955 30,680,962
Prepaid expenses and deposits 2,563,752 1,301,037
Future income tax assets 2,428,809 1,570,012
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102,102,472 79,816,554

Plant and Equipment 38,156,365 37,078,821
Intangible Assets 17,731,630 14,224,134
Goodwill 34,010,459 27,600,413

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$ 192,000,926 $ 158,719,922
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2008 2007
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Liabilities and Shareholders' Equity

Current Liabilities

Bank indebtedness $ 54,954,852 $ 17,257,932
Accounts payable and accrued liabilities 30,191,877 32,758,749
Current portion of long-term debt 2,728,931 4,155,156
Current portion of obligations under
capital leases 1,325,986 1,130,870
Derivative Financial Instruments 187,900 -
Unearned revenue 1,478,976 -
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90,868,522 55,302,707

Long-term Debt 4,196,846 6,133,497
Obligations Under Capital Leases 4,158,860 5,484,832
Debenture 1,000,000 1,000,000
Future Income Tax Liabilities 9,455,112 9,066,783

Shareholders' Equity
Share Capital 82,801,726 80,853,739
Contributed Surplus 6,696,002 5,893,217
Deficit (7,176,142) (5,014,853)
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82,321,586 81,732,103

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$ 192,000,926 $ 158,719,922
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On behalf of the Board:

Greg van Staveren, Director

William Iannaci, Director

Royal Laser Corp.
Consolidated Statements of Operations and
Comprehensive Loss
Years ended March 31, 2008 and 2007
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2008 2007
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Sales $ 256,055,030 $ 240,306,187

Cost of Sales 228,865,209 213,299,575
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Gross Profit 27,189,821 27,006,612
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Expenses
Selling, administrative and general 20,213,470 19,790,518
Amortization 6,019,109 5,382,475
Stock-based compensation 1,108,744 4,548,163
Foreign exchange loss (gain) 1,189,180 (452,675)
Interest expense, net 2,955,932 1,594,879
Loss on sale of plant and equipment 103,786 207,585
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31,590,221 31,070,945
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Loss Before Income Taxes (4,400,400) (4,064,333)
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Income taxes (recovery)
Current (24,177) (244,487)
Future (2,214,934) 65,886
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(2,239,111) (178,601)
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Net Loss and Comprehensive Loss $ (2,161,289) $ (3,885,732)
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Loss per Share

Basic $ (0.02) $ (0.05)
Diluted (0.02) (0.05)
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Weighted Average Number of
Shares Outstanding:
Basic 96,251,455 84,030,721
Diluted 96,251,455 84,030,721
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Royal Laser Corp.
Consolidated Statements of Shareholders' Equity
Years ended March 31, 2008 and 2007

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Number of Contributed
Shares Capital Stock Surplus
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Balance, March 31, 2006 35,257,521 $ 15,471,849 $ 928,093
Exercise of stock options 425,041 519,505 (138,216)
Exercise of warrants 1,553,540 1,702,068 -
Cancellation of warrants - - 554,777
Stock-based compensation - - 4,548,163
Purchase of shares by Director 2,350,000 3,619,000 -
Deduct share purchase loan
outstanding - (3,619,000) -
Issued on business acquisition 1,515,152 2,500,000 -
Conversion of convertible
debenture 6,190,451 6,266,231 -
Issued on private placement 44,000,000 51,467,871 -
Issued on note repayment 1,630,435 1,500,000 -
Normal course issuer bid share
repurchase (20,000) (17,200) 400
Tax benefit of share issue costs - 1,443,415 -
Loss for the year ended March
31, 2007 - - -

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Balance, March 31, 2007 92,902,140 $ 80,853,739 $ 5,893,217
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Balance, March 31, 2007 92,902,140 $ 80,853,739 $ 5,893,217
Stock-based compensation - - 802,785
Issued on business acquisition 4,142,028 4,142,028 -
Share compensation 1,500,000 305,959 -
Shares held in escrow for
cancellation 1,857,972 - -
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 100,402,140 $ 82,801,726 $ 6,696,002
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Equity Portion Total
of Convertible Shareholder's
Warrants Debentures Deficit Equity
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Balance, March 31,
2006 $ 822,127 $ 1,140,329 $ (1,129,121) $ 17,233,277
Exercise of stock
options - - - 381,289
Exercise of warrants (267,350) - - 1,434,718
Cancellation of
warrants (554,777) - - -
Stock-based
compensation - - - 4,548,163
Purchase of shares
by Director - - - 3,619,000
Deduct share
purchase loan
outstanding - - - (3,619,000)
Issued on business
acquisition - - - 2,500,000
Conversion of
convertible
debenture - (1,140,329) - 5,125,902
Issued on private
placement - - - 51,467,871
Issued on note
repayment - - - 1,500,000
Normal course
issuer bid share
repurchase - - - (16,800)
Tax benefit of
share issue costs - - - 1,443,415
Loss for the year
ended March - - (3,885,732) (3,885,732)
31, 2007

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Balance, March 31,
2007 $ - $ - $ (5,014,853) $ 81,732,103
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Balance, March 31,
2007 $ - $ - $ (5,014,853) $ 81,732,103
Stock-based
compensation - - - 802,785
Issued on business
acquisition - - - 4,142,028
Share compensation - - - 305,959
Shares held in
escrow for
cancellation - - - -
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 $ - $ - $ (7,176,142) $ 82,321,586
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Royal Laser Corp.
Consolidated Statement of Cash Flows
Years ended March 31, 2008 and 2007

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2008 2007
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Cash Provided by (used in)
Operating Activities
Net loss $ (2,161,289) $ (3,885,732)

Items not involving cash:
Amortization of plant and equipment 4,313,492 4,040,017
Amortization of intangible assets 1,705,617 1,335,898
Amortization of finance charges 6,560 6,560
Future income tax recovery (2,214,934) 65,886
Stock-based compensation 1,108,744 4,548,163
Unrealized loss on derivative financial
instruments 187,900
Loss on sale of plant and equipment 103,786 207,585
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3,049,876 6,318,377

Changes in non-cash operating elements
of working capital (29,570,681) 2,625,937
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(26,520,805) 8,944,314
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Financing Activities

Increase (decrease) of bank indebtedness,
net 37,696,920 (7,173,707)
Payments on obligations under capital leases (1,130,856) (1,348,673)
Repayment of long-term debt (3,369,436) (3,574,979)
Repurchase of common shares - (16,800)
Proceeds received from exercise of stock
options - 381,289
Proceeds received from exercise of warrants - 1,434,718
Repayment of shareholder's loan - (1,957,555)
Proceeds from private placement - 51,467,871
Payment received on advances to former
shareholders of Venture Steel Inc. - 458,652
Payments received on advances to companies
formerly under common control - 2,337,732
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33,196,628 42,008,548
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Investing Activities

Proceeds from sale of plant and equipment 17,464 502,480
Acquisition of plant and equipment (1,771,686) (1,024,581)
Acquisition of Apogee Slitting Inc. (6,060,000) -
Acquisition of Winston Steel Inc. (6,975,556) -
Acquisition of Venture Steel Inc. - (41,175,000)
Acquisition of intangible assets (8,940) (31,273)
Repurchase of common shares (1,326,134)
Increase in restricted cash (866,095) (533,905)
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(16,990,947) (42,262,279)
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Increase (Decrease) in Cash and Cash
Equivalents (10,315,124) 8,690,583
Cash and Cash Equivalents
Beginning of Year 12,138,520 3,447,937
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Cash and cash equivalents consists of:
Cash 1,383,863 2,519,147
Short term investments 439,533 9,619,373

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End of Year $ 1,823,396 $ 12,138,520
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The following table reconciles Earnings from Operations/EBITDA to Net Loss
and Comprehensive Loss for each of the following periods:

Fiscal 2008 Fiscal 2007 Q4 Fiscal 2008 Q4 Fiscal 2007
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Earnings from
Operations
/EBITDA: $ 5,683,385 $ 7,461,184 $ 3,990,704 $ (1,180,190)
Deduct:
Income taxes
(recovery) $ (2,239,111) $ (178,601) $ (58,542) $ (1,151,955)
Interest
expense,
net $ 2,955,932 $ 1,594,879 $ 974,324 $ 364,384
Depreciation
/Amorti-
zation $ 6,019,109 $ 5,382,475 $ 1,693,700 $ 1,349,249
Stock-
based
compen-
sation $ 1,108,744 $ 4,548,163 $ 405,389 $ 605,693
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Net Loss and
Comprehensive
Loss $ (2,161,289) $ (3,885,732) $ 975,833 $ (2,347,561)
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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 industry, 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.

To receive Company news by email, please contact info@royallaser.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 27, 2007 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.

Contact Information