Royal Laser Corp.
TSX : RLC

Royal Laser Corp.

February 17, 2009 07:00 ET

Royal Laser Corp. Reports Financial Results for the Third Quarter of Fiscal 2009 Ended December 31, 2008

TORONTO, ONTARIO--(Marketwire - Feb. 17, 2009) - Royal Laser Corp. (the "Company" or "Royal Laser") (TSX:RLC) today reported its financial results for the third quarter ended December 31, 2008 ("Q3 Fiscal 2009").

During the quarter ended December 31, 2008, the Board of Directors of the Company determined that the ongoing focus of the Company should be the steel processing and distribution business, Venture Steel Inc. ("VSI"), and is therefore pursuing strategic and operational opportunities, including a sale transaction, relating to the non-core businesses, those comprising the Custom and OEM Wood and Metal manufacturing businesses (the "disposal group").

As a result, the assets and liabilities of the disposal group have been segregated and presented separately as discontinued on the consolidated balance sheets as at December 31, 2008 and March 31, 2008 and the results of operations and cash flows of the disposal group have been segregated and presented separately as discontinued in the consolidated statements of income and cash flows for the three and nine months ended December 31, 2008 and 2007.

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



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Three Months Ended Nine Months Ended
December 31, December 31,
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2008 2007 2008 2007

Revenues $ 45,161,345 $ 44,741,252 $ 194,309,081 $ 137,693,294
Cost of Sales $ 39,320,437 $ 43,251,239 $ 160,635,689 $ 131,254,757
Gross Margin $ 5,840,908 $ 1,490,013 $ 33,673,392 $ 6,438,537
Adjusted EBITDA(i) $ 3,072,252 $ (1,490,900) $ 23,079,940 $ (2,043,146)
Adjusted EBITDA(i)
per share $ 0.03 $ (0.02) $ 0.25 $ (0.02)
Net Earnings
before taxes -
continuing
operations $ (2,701,949) $ (2,867,314) $ 13,056,716 $ (6,505,861)
Net Earnings
(Loss) -
continuing
operations $ (3,232,935) $ (1,093,706) $ 7,634,211 $ (3,838,072)
EPS (Basic) -
continuing
operations $ (0.03) $ (0.01) $ 0.08 $ (0.04)
EPS (Diluted) -
continuing
operations $ (0.03) $ (0.01) $ 0.08 $ (0.04)

Net Earnings
(Loss) -
discontinued
operations $ (8,654,075) $ (140,127) $ (9,182,462) $ 700,949
EPS (Basic) -
discontinued
operations $ (0.09) $ (0.00) $ (0.10) $ 0.01
EPS (Diluted) -
discontinued
operations $ (0.09) $ (0.00) $ (0.10) $ 0.01
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As At December 31 As At
2008 March 31 2008
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Working Capital $ 16,528,874 $ 11,233,950
Shareholder's Equity $ 81,581,106 $ 82,321,586
Book Value Per Share (ii) $ 0.84 $ 0.82
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(i) Adjusted EBITDA refers to earnings (loss) before interest, taxes,
depreciation/amortization, stock-based compensation, and unusual items;
See reconciliation of this non-GAAP measurement below.

(ii) Book Value Per Share is defined as Shareholder's Equity divided by the
number of shares outstanding.


HIGHLIGHTS:

- The Company's revenues for the three months ended December 31, 2008 increased to $45,161,345, compared to $44,741,252 for the three months ended December 31, 2007 representing increased revenue in the VSI flat-rolled steel processing business. Sales experienced a 21% decline in tons processed, compared to same quarter in the previous year, consistent with the sharp decline in overall business conditions, and the extended seasonal shutdowns at many of its customers.

- The Company's revenues for the nine months ended December 31, 2008 increased to $194,309,081 from $137,693,294 for the nine months ended December 31, 2008 representing increased sales in the VSI business. Sales were impacted by a 7% volume increase, consistent with the Company's ability to increase overall market share during the first nine months of the year, and by changes in the market prices for steel.

- Gross margin percentage for the three months ended December 31, 2008 was 13% compared to 3% for the three months ended December 31, 2007. The increase of 10% reflects a return to more normalized margins in the steel processing and distributions business. The increase from the same quarter last year is due to better management of supply chain, inventory and customer relations.

- As previously disclosed, the outcome of a litigation matter with a former shareholder of VSI, resulted in an unusual item, litigation expense, in the amount of $4,008,164 for the three months ended December 31, 2008 and $4,208,124 for the nine months ended December 31, 2008. The outcome of this matter is under appeal, and simultaneously a counter-suit has been launched against the former owner of VSI.

- Working Capital increased to $16,528,874 and remains strong at December 31, 2008 compared to $11,233,950 at March 31, 2008 and increased predominantly because of increased profitability in the VSI business.

- Adjusted EBITDA was $3,072,252 for the three months ended December 31, 2008 and $23,079,940 for the nine months ended December 31, 2008.

- Earnings per share, from continuing operations, remains strong for the nine months ended December 31, 2008, at $0.08 per share.

- Discontinued operations were negatively impacted by the general economic downturn. Negative operating results for the three and nine months ended December 31, 2008 were further impacted by a $5,747,699 write-down in goodwill and write-down on capital equipment of $3,925,990, both due to fair value accounting rules, resulting in a loss for the three and nine months ended December 31, 2008 of $8,654,075 and $9,182,462.

The Company's unaudited financial statements for the quarter ended December 31, 2008, together with Management's Discussion and Analysis have been filed on SEDAR and are available at www.sedar.com.

The following table reconciles Adjusted EBITDA to net income (loss) and comprehensive income (loss) in the three and nine months ended December 31, 2008 and 2007:



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Three Months Ended Nine Months Ended
December 31, December 31,
2008 2007 2008 2007
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Adjusted EBITDA: $ 3,072,252 $ (1,490,900) $ 23,079,940 $ (2,043,146)
Deduct:
Income taxes
(recovery) 530,986 (1,773,608) 5,422,505 (2,667,789)
Interest expense,
net 402,758 512,946 1,720,149 1,469,250
Depreciation/
amortization 954,890 768,969 2,853,975 2,290,110
Stock-based
compensation 140,369 94,499 762,296 703,355
Unusual items:
Litigation
expense 4,008,164 - 4,208,124 -
Take-over bid
related expenses 268,020 - 478,680 -

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Net income (loss)
and comprehensive $ (3,232,935) $ (1,093,706) $ 7,634,211 $ (3,838,072)
income (loss)
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About Royal Laser Corp.

Royal Laser Corp., through its continuing operations, services and distributes flat-rolled steel targeted at the multi-billion dollar automotive OEM, automotive after-market, industrial products and construction industries in Canada, the United States and recently Mexico. The Company's common shares trade on the Toronto Stock Exchange under the symbol "RLC" and there are approximately 97 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.

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