Cfc (NASDAQ:CFCI)
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CFC International, Inc. Reports 2004 Third Quarter Results
-- Fully diluted earnings per share increased to $0.29 for the third quarter of
2004, versus ($0.07) in the third quarter last year.
CHICAGO HEIGHTS, Ill., Oct. 25 /PRNewswire-FirstCall/ -- Worldwide holographic
and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI)
today reported results for the third quarter of 2004. Sales in the third
quarter of 2004 increased 44.1 percent to $21.7 million compared to $15.1
million in the third quarter of 2003. The third quarter 2004 increase in sales
was primarily due to an increase in printed pattern products sales, solid
holographic sales and a favorable currency translation of $390,000.
Third quarter 2004 net income increased to $1.3 million, or $0.29 cents per
share on a fully diluted basis, compared to a net loss for the third quarter of
2003 of ($316,000) or ($0.07) cents per share on a fully diluted basis. This
increase in net income was primarily due to higher sales and improved
productivity.
"This was the biggest single quarter in the history of CFC," said Greg Jehlik,
CFC's President and Chief Executive Officer. "We delivered record sales and
produced solid financial results for the third quarter of 2004. These
impressive results demonstrate our ability to successfully execute the
strategic initiatives set forth in our annual operating plan, including
effectively increasing our capacity in order to assimilate the increased volume
of orders in our printed patterned products, strong holographic sales, and
strengthening our balance sheet by improving our cash flow. Additionally,
early trends and feedback that we have received during the quarter regarding
our new holographic full-face laminate for transaction cards, HoloLam Plus(TM),
has been positive and we expect HoloLam Plus to further strengthen our sales
growth for the remainder of 2004 and into 2005."
Operating income before depreciation and amortization of intangibles was $3.4
million in the third quarter of 2004, an increase of 290.1 percent compared
with $0.9 million in the third quarter of 2003. This increase was primarily
due to the benefits of improved operating results during the third quarter of
2004.
Sales for the first nine months of 2004 totaled $61.9 million, an increase of
30.4 percent from $47.5 million for the same period last year. Sales for the
first nine months of 2004 reflected higher sales volume in printed patterned
products, security products and holographics, in packaging, security and
authenticity, and a strong Euro which positively affected sales by $1.6 million
for the first nine months of 2004. Net income for the first nine months of
2004 increased to $2.9 million, or $0.66 per share on a fully diluted basis,
from $40,000 or $0.01 per share on a fully diluted basis for the same period
last year. Net income for the first nine months of 2004 were favorably
affected by higher sales, and the company leveraging its manufacturing costs as
its production volume substantially increased. Operating income before
depreciation and amortization of intangibles for the first nine months of 2004
increased 102.8 percent to $8.6 million from $4.2 million in the first nine
months of 2004 for the reasons described above.
"CFC's financial results for the first nine months of the year are a direct
result of our worldwide employees' hard work and determination to achieve the
goals we set at the beginning of this fiscal year," said Mr. Roger Hruby, CFC's
Chairman. "We have experienced meaningful growth thus far, and we are
confident that with the volume of orders we have going into the fourth quarter
and our strategic initiatives in place, that we will deliver positive results
for the balance of the year and into the future. We are specifically
encouraged by sales growth in our patterned products, holography and our gift
card services, as well as, the positive response we've had on our new card
product, HoloLam Plus, all of which continue to build momentum and provide us
with further growth opportunities moving forward."
Based upon the company's results and factoring in the current economic outlook,
the company has increased its previously stated 2004 fully diluted earnings
guidance to $0.72 cents to $0.76 cents, from $0.48 cents to $0.52 cents.
Recent Developments
The company announced on October 15, 2004 the launch of a new card product,
HoloLam Plus(TM) (patent pending). HoloLam Plus is a full face holographic
patterned laminate for transaction cards including credit cards, debit cards,
ATM cards, gift cards, security cards and identification cards.
The company announced on October 1, 2004 that it had named Mr. Gregory Jehlik
its Chief Executive Officer. Jehlik joined CFC in June 2002, and was named a
Director of the company in July 2002. In addition, Mr. Jehlik will continue to
serve as the company's President and Chief Operating Officer.
The company reports that on September 1, 2004, Mr. Haroun Malik joined CFC's
European office in Goppingen, Germany as its European Export Manager.
The company announced on August 27, 2004 the addition of Dr. Andreas Brans as
European Sales Director. Dr. Brans will be responsible for CFC's European
sales activities and is located at the company's European headquarters in
Goppingen, Germany.
The company will be exhibiting at the upcoming Cartes 2004 show at the
Paris-Nord Villepinte in Paris, France, November 2-4, 2004 in Booth #3 C 22,
where it will feature its card products, such as HoloLam Plus, magnetic stripe,
signature panel, security holograms, scratch-off foils and tipping foils for
transaction cards.
The company will be exhibiting at the upcoming Pack Expo 2004 show at McCormick
Place in Chicago, IL, November 7-11, 2004 in Booth #9243 and Booth #M-10 in the
Pack Expo Packaging Security Resource Center. CFC will feature its holographic
solutions for packaging, security and authentication.
The company invites all interested parties to listen to its second quarter
conference call at 9:00 a.m. EDT (8:00 a.m. CDT) on Tuesday, October 26, 2004.
The dial-in numbers for the call are 800-706-7745 (U.S.), and 617-614-3472
(International). The participant passcode for this call is 30237905.
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 10:00 a.m. EDT on October 26 until November 2, 2004. This replay
can be accessed by dialing 888-286-8010 (U.S.); 617-801-6888 (International).
The passcode is 52010559. 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 holographics 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.
A condensed consolidated balance sheet and statement of operations is 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 OPERATIONS
(In Thousands, Except Three Months Ended Nine Months Ended
Earnings Per Share and September 30, September 30,
Operating Income 2004 2003 2004 2003
Percentage)
Net Sales $21,718 $15,074 $61,897 $47,473
Cost of Goods
(Excluding
Depreciation and
Amortization Shown
Below) 13,842 10,467 39,929 31,614
Operating Expenses 4,459 3,731 13,404 11,636
Depreciation and
Amortization 1,238 1,094 3,593 3,256
Operating Income (Loss) 2,179 (218) 4,971 967
Operating Income
(Loss)% 10.0% (1.4%) 8.0% 2.0%
Interest Expense 308 314 894 823
Interest Rate Swap
Valuation (Provision)
Benefit 49 (71) (47) 107
Rental Income (50) (6) (118) (21)
Income (Loss) Before
Income Taxes 1,872 (455) 4,242 58
Provision (Benefit)
for Income Taxes 571 (139) 1,294 18
Net Income (Loss)
(Note 1) $1,301 ($316) $2,948 $40
Diluted Weighted
Average Number of
Shares Outstanding 4,488 4,486 4,499 4,491
Diluted Earnings (Loss)
Per Share (Note 1) $0.29 ($0.07) $0.66 $0.01
Earnings Before Interest,
Taxes, Depreciation and
Amortization (Note 2) $3,417 $876 $8,564 $4,223
SUMMARY OF INTERNATIONAL SALES
(In Thousands, Except Three Months Ended Nine Months Ended
International Sales September 30, September 30,
Percentage) 2004 2003 2004 2003
International Sales ($) $9,961 $7,796 $29,294 $25,499
International Sales (%) 45.9% 51.7% 47.3% 53.7%
NOTE 1: The following is a reconciliation of net income and diluted earnings
per share as reported to adjusted amounts which give affect to the elimination
of the changes in the value of the interest swap arrangement:
Three Months Ended Nine Months Ended
September 30, 2004 September 30, 2004
Diluted
Earnings Diluted
(Loss) Earnings
Net Income Per Per
(Loss) Share Net Income Share
Amounts as reported
under GAAP $1,301 $0.29 $2,948 $0.66
Elimination of interest
rate swap provision
(benefit), on an after
tax basis 34 0.01 (33) (0.01)
Amounts as adjusted $1,335 $0.30 $2,915 $0.65
NOTE 2: 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 Nine Months Ended
September 30, September 30,
(In Thousands) 2004 2003 2004 2003
Net income (loss) $1,301 ($316) $2,948 $40
Add back (subtract):
Income taxes 571 (139) 1,294 18
Interest expense 308 314 894 823
Interest rate swap
valuation provision
(benefit) 49 (71) (47) 107
Rental income (50) (6) (118) (21)
Depreciation and
amortization 1,238 1,094 3,593 3,256
EBITDA $3,417 $876 $8,564 $4,223
CFC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AT
SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
September 30, December 31,
2004 2003
ASSETS
Cash and cash equivalents $9,145,438 $5,555,025
Restricted cash 306,072 117,622
Accounts receivable, less allowance for
doubtful accounts 13,190,921 9,821,047
Inventories 14,169,011 13,050,711
Other current assets 2,113,363 1,771,646
Total current assets 38,924,805 30,316,051
Property, plant and equipment, net 27,130,714 28,116,892
Deferred income taxes 3,204,130 3,280,891
Intangible assets, net 3,483,298 3,695,899
Other assets 239,339 105,078
Total assets $72,982,286 $65,514,811
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 11,471,939 $9,716,066
Accounts payable and accrued expenses 13,455,709 10,075,592
Total current liabilities 24,927,648 19,791,658
Deferred income taxes 2,605,288 2,680,247
Fair value of interest rate swap 435 47,783
Long-term debt 14,298,906 15,066,109
Total liabilities 41,832,277 37,585,797
Stockholders' equity 31,150,009 27,929,014
Total liabilities and stockholders'
equity $72,982,286 $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