Cfc (NASDAQ:CFCI)
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CFC International, Inc. Reports 2004 Second Quarter Results
-- Earnings per share on a fully diluted basis increased 300% to $.12 for the
second quarter of 2004, as compared to $.03 in the second quarter of 2003.
CHICAGO HEIGHTS, Ill., July 26 /PRNewswire-FirstCall/ -- Worldwide holographic
and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI),
today reported results for the second quarter of 2004. Sales for the second
quarter 2004 increased 16% to $19.4 million, compared to $16.7 million in the
second quarter of 2003. This increase in sales was primarily due to an increase
in printed pattern products sales domestically, which was primarily the result
of a major competitor withdrawing from the market, and to the strong Euro,
which favorably affected sales by $300,000 for the second quarter of 2004. In
addition, sales were positively affected by an increase in the volume of gift
card orders received earlier in the year as compared to prior years, as
retailers recognize that this technology appeals to younger consumers,
encourages return trips into their stores and generates impulse sales by its
customers. In addition, the use of gift cards gives merchants the direct
benefit of an increase in their float, since customers prepay for the gift card
and any unused balance remains on the card.
Second quarter 2004 net income increased 373% to $521,000 or $0.12 cents per
share on a fully diluted basis, compared to $110,000, or $0.03 cents per share,
in the second quarter of 2003. The increase in net income in the second
quarter of 2004 was due to increased sales in printed products and gift cards,
gross margin expansion resulting from higher utilization of the Company's
manufacturing capacity, and an increase in the value of an interest swap
agreement.
"We are pleased to report strong sales and earnings growth for the second
quarter of 2004," said Roger Hruby, CFC's Chairman and CEO. "Our operating
results have improved significantly over the same period a year ago, as a
direct result of the strategic business initiatives that we put in place in
2003 and the projected increase in the volume of orders in our printed
products." Mr. Hruby further stated, "The investments we made in terms of
training employees and the productivity improvements we have initiated, have
allowed us to leverage our manufacturing, increase our capacity, which is
currently running at approximately 75%, and improve our operating efficiencies,
and have solidly positioned us to deliver positive earnings."
Sales for the first half of 2004 totaled $40.2 million, an increase of 24% from
$32.4 million for the same period last year. Sales for the first half of 2004
were positively affected by increased holographic packaging and authenticity
sales domestically, security products (primarily the gift card business)
increasing by $1.0 million for the first half of 2004, as compared to the same
period a year ago, and higher printed products sales. In addition, the Euro
appreciated in value 11% compared to the U.S. dollar, and as a result sales
increased approximately $1.2 million in the first half of 2004. Net income for
the first half of 2004 increased by 363% to $1.6 million, or $0.37 per share on
a fully diluted basis, up from $356,000 or $0.08 cents per share on a fully
diluted basis for the same period last year. Net income in 2004 was favorably
affected by higher year-to-date sales and leveraging the Company's printing
press capacity to handle the influx of printed products business.
"We are extremely pleased with the solid results we delivered for the first
half of 2004," said Roger Hruby, CFC's Chairman and CEO. "These results were
driven by strong sales in our holographic packaging, security and authenticity,
printed patterned products and gift cards, the continued strength of the
economy in the domestic sector and a reflection of our execution of our
strategic business plan." Mr. Hruby, added, "We are in an excellent position
to continue to deliver strong sales growth as a result of the operating
infrastructures we have put in place and the strong volume of incoming orders.
In addition, we continue to strengthen our balance sheet, and we are beginning
to see the benefits of our investments in Europe as their performance seems to
be finally turning the corner, all positive trends."
Based upon the Company's results and the current economic outlook, the Company
has increased its previously stated net income projection of $.46 to $.50
earnings per share on a fully diluted basis for the full year of 2004, to $.48
to $.52 earnings per share on a fully diluted basis.
Recent Developments
The company announced on May 27, 2004 the addition of Mr. Matthew Shields as
Vice President, Global Marketing. Mr. Shields will lead the Company's
marketing efforts on a worldwide basis.
CFC announced on May 21, 2004 the addition of Mr. Jack Joyce as Vice President
of Human Resources. Mr. Joyce will be responsible for all human resource
issues at the Company's Chicago Heights and Countryside, Illinois facilities.
The Company announced on July 23, 2004 the launch of an improved corporate
website. The new website features holographic galleries for both its packaging
and authenticity, and allows registered users to easily check inventory
information on the Company's stocking programs.
The Company will be exhibiting at the International Woodworking Machinery &
Furniture Supply Fair 2004 (IWF 2004) at the Georgia World Congress Center in
Atlanta, Georgia in Booth #4313 on August 26-29, 2004 where it will feature its
printed patterned products.
The Company invites all interested parties to listen to its second quarter
conference call at 4:00 p.m. EDT (3:00 p.m. CDT) on Monday, July 26, 2004. The
dial-in numbers for the call are 800-299-8538 (U.S.), and 617-786-2902
(International). The participant passcode for this call is 38670112.
Participants are asked to call the assigned number approximately 10 minutes
before the conference call begins. The call, which will last approximately one
hour, will be open to the public, but only investors and financial analysts
will be permitted to ask questions. The media and all other participants will
be in a listen-only mode.
For those unable to listen to the live call, a replay will be available from
approximately 6:00 p.m. EDT on July 26 until August 2, 2004. This replay can
be accessed by dialing 888-286-8010 (U.S.); 617-801-6888 (International). The
passcode is 78100669. The call also will be available as a webcast, both live
and for replay, via the Internet on the CFC International, Inc. website at
http://www.cfcintl.com/ on the Investor Relations press releases and webcasts
page.
Headquartered in Chicago Heights, Illinois, CFC International is a market
leader in the design, manufacture and marketing of holography and specialty
functional coatings that add value to a wide variety of industrial and consumer
products. The Company operates facilities in Chicago Heights and Countryside,
Illinois; London, England; and Goppingen, Germany.
Condensed consolidated statements of income and balance sheets are attached.
Statements made in this press release, including those relating to expectations
of future sales, net income and operating costs reductions, estimations of the
market size for certain of the company's products or the company's share of
those markets and expectations of increased sales attributable to various
product lines, are forward looking and are made pursuant to the safe harbor
provisions of the Securities Reform Act of 1995. Such statements involve risks
and uncertainties which may cause results to differ materially from those set
forth in those statements. Among other things, continued unfavorable economic
conditions may impact market growth trends or otherwise impact the demand for
the company's products and services; competition from existing and new
competitors and producers of alternative products will impact the company's
ability to penetrate or expand its presence in new or growing markets;
uncertainties relating to the company's ability to develop and distribute new
proprietary products to respond to market needs in a timely manner may impact
the company's ability to exploit new or growing markets; the company's ability
to successfully identify and implement productivity improvements and cost
reduction initiatives may impact profitability; and risks inherent in
international operations, including possible economic, political or monetary
instability, may impact the level and profitability of the company's foreign
sales. In addition to the factors set forth in this release, the economic,
competitive, governmental, technological and other factors identified in the
company's filings with the Securities and Exchange Commission, could affect the
forward looking statements contained in this press release. We have no
obligation to revise or update these forward- looking statements to reflect
events or circumstances that arise after the date of this press release or to
reflect the occurrence of anticipated events.
You may access additional information, including our filings with the
Securities and Exchange Commission and previous press releases by visiting CFC
International's Internet homepage at http://www.cfcintl.com/ .
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except
earnings per share Three Months Ended Six Months Ended
and operating income June 30, June 30,
percentage) 2004 2003 2004 2003
Net sales $19,355 $16,690 $40,179 $32,400
Cost of goods (excluding
depreciation and
amortization
shown below) 13,063 10,967 26,087 21,147
Operating expenses 4,442 4,068 8,945 7,905
Depreciation and
amortization 1,016 1,084 2,355 2,163
Operating income 834 571 2,792 1,185
Operating income % 4% 3% 7% 4%
Interest expense 288 242 586 509
Interest rate swap
valuation (benefit)
provision (163) 178 (96) 178
Rental (income), net (40) (7) (68) (15)
Income before
income taxes 749 158 2,370 513
Provision for
income taxes 228 48 723 157
Net income $521 $110 $1,647 $356
Diluted weighted average
number of shares
outstanding 4,511 4,500 4,502 4,494
Diluted earnings
per share $0.12 $0.03 $0.37 $0.08
Earnings before interest,
taxes, depreciation and
amortization (Note 1) $1,850 $1,655 $5,147 $3,348
SUMMARY OF INTERNATIONAL SALES
(In thousands, except
international sales Three Months Ended Six Months Ended
percentage) June 30, June 30,
2004 2003 2004 2003
International sales ($) $9,372 $9,274 $19,341 $17,703
International sales (%) 48% 56% 48% 55%
NOTE 1: The Company believes earnings before interest, taxes,
depreciation and amortization (EBITDA) is an appropriate measurement for
its business because its enterprise value is more closely aligned with
this measurement and because of the continual investment the company makes
in long-lived assets. EBITDA should not necessarily be considered as an
alternative to net income or cash flows from operating activities which
are determined in accordance with Generally Accepted Accounting Principles
as an indicator of operating performance or as a measure of liquidity.
The table that follows reconciles net income to EBITDA as defined:
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2004 2003 2004 2003
Net income $521 $110 $1,647 $356
Add back (subtract):
Income taxes 228 48 723 157
Interest expense 288 242 586 509
Interest rate swap
valuation (benefit)
provision (163) 178 (96) 178
Rental (income), net (40) (7) (68) (15)
Depreciation and
amortization 1,016 1,084 2,355 2,163
EBITDA $1,850 $1,655 $5,147 $3,348
CFC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AT
JUNE 30, 2004 AND DECEMBER 31, 2003
June 30 December 31
2004 2003
ASSETS
Cash and cash equivalents $7,161,467 $5,672,647
Accounts receivable, less allowance
for doubtful accounts 11,737,485 9,821,047
Inventories 13,501,411 13,050,711
Other current assets 2,133,517 1,771,646
Total current assets 34,533,880 30,316,051
Property, plant and equipment, net 27,692,396 28,116,892
Deferred income taxes 3,204,130 3,280,891
Intangible assets, net 3,554,164 3,695,899
Other assets 92,774 105,078
Fair value of interest rate swap 48,639 -
Total assets $69,125,983 $65,514,811
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $10,880,006 $9,716,066
Accounts payable and accrued expenses 11,037,706 10,075,592
Total current liabilities 21,917,712 19,791,658
Deferred income taxes 2,680,247 2,680,247
Fair value of interest rate swap - 47,783
Long-term debt 14,976,234 15,066,109
Total liabilities 39,574,193 37,585,797
Stockholders' equity 29,551,790 27,929,014
Total liabilities and
stockholders' equity $69,125,983 $65,514,811
DATASOURCE: CFC International, Inc.
CONTACT: Dennis Lakomy, Chief Financial Officer of CFC International,
Inc., +1-708-757-2803
Web site: http://www.cfcintl.com/
Company News On-Call: http://www.prnewswire.com/comp/110663.html