Cfc (NASDAQ:CFCI)
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-- Net sales increased to $22.2 million for the second quarter of 2005, up 14.8% from $19.4 million for the second quarter in 2004. Net sales for the first half of 2005 were up 12.5% to $45.2 million, up from $40.1 million for the same period last year.
CHICAGO HEIGHTS, Ill., Aug. 15 /PRNewswire-FirstCall/ -- Worldwide holographic and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI), today reported results for the second quarter of 2005. Net sales for the second quarter 2005 increased 14.8% to $22.2 million, compared to $19.4 million in the second quarter of 2004. This increase in sales is due to growth on a worldwide basis of the Company's printed pattern products and pharmaceutical products, and strong domestic holographic sales, resulting from the introduction of a new holographic security product used on transaction cards.
Net income decreased 12.2% to $498,000, or $0.11 cents per share on a fully diluted basis for the second quarter of 2005, compared to $567,000 or $0.13 cents per share on a fully diluted basis, in the second quarter of 2004. The Company incurred a foreign currency exchange loss of $488,000 ($314,000 net of income taxes) due to the decline in the value of the Euro to the dollar compared with the preceding quarter end, and transaction expenses in connection with the possible sale of the Company of $434,000 ($279,000 net of income taxes).
The Company reports that net income excluding the negative currency translation and transaction fees incurred in connection with the possible sale of the Company, would have increased 132.9% to $1.2 million or $0.25 cents per share on a fully diluted basis for the second quarter of 2005, compared to $567,000 or $0.13 cents per share on a fully diluted basis for the second quarter of 2004.
"In the second quarter of 2005, CFC once again delivered solid sales growth," said Greg Jehlik, CFC's Chief Executive Officer and President. "Our second quarter results reflect increased sales in our long-standing markets, that we are focused on our strategic initiatives and that we are well- positioned to leverage future opportunities with new products such as our recently launched HoloLam Plus(TM) for the transaction card industry."
Sales for the first half of 2005 totaled $45.2 million, an increase of 12.5% from $40.2 million for the same period last year. Sales for the first half of 2005 were positively affected by increased sales of the Company's printed pattern products and pharmaceutical products on a worldwide basis, and strong domestic holographic sales, resulting from the introduction of a new holographic security product used on transaction cards.
Net income for the first half of 2005 increased 16.1% to $2.0 million, or $0.43 per share on a fully diluted basis, compared to net income of $1.7 million or $0.39 per share on a fully diluted basis for the first half of 2004. Net income in 2005 was adversely affected by the decline of the Euro from the end of last year, resulting in foreign currency exchange loss of $765,000 ($492,000 net of income taxes), and transaction expenses in connection with the possible sale of the Company in the amount of $434,000 ($279,000 net of income taxes).
Net income for the first half of 2005, without the negative currency translation and transaction expenses would have increased 60.8% to $2.8 million, or $0.60 per share on a fully diluted basis compared to net income of $1.7 million, or $0.39 per share on a fully diluted basis, for the six months ended June 30, 2004.
"We are very pleased with the positive results that we have delivered for the first half of 2005," said Roger Hruby, CFC's Chairman. "We achieved increases in both total net income and net sales for the first half of 2005, as compared to the same period a year ago, and we are well positioned to continue to deliver profit growth and strong sales as we move into the second half of 2005."
The Company also announced today that the letter of intent with Audax Group of the proposed acquisition of CFC has been terminated. Roger F. Hruby, CFC's Chairman, said, "As our negotiations with Audax progressed, it became clear that we would be unable to complete an agreement at this time that our Board could recommend to our shareholders, and accordingly we and they agreed to terminate the letter of intent. As we move forward, we will continue to pursue and evaluate all strategic alternatives."
Recent Developments
The Company will be exhibiting at the Pack Expo 2005 Show at the Las Vegas Convention Center in Las Vegas, Nevada in Booth #9123 on September 26-28, 2005 where it will feature its holographic packaging and holographic security and authentication solutions.
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 INCOME
(In thousands, except earnings per share and
operating income percentage)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Net sales $22,228 $19,355 $45,216 $40,179
Cost of goods
(excluding
depreciation and
amortization
shown below) 14,549 13,063 28,952 26,087
Operating expenses 4,550 4,419 9,176 8,853
Depreciation and
amortization 1,169 1,016 2,344 2,355
Transaction expenses 434 - 434 -
Operating income 1,526 857 4,310 2,884
Operating income% 7% 4% 9% 7%
Interest expense 269 288 548 586
Interest income (4) - (9) (1)
Interest rate swap
valuation (benefit)
provision 34 (163) (32) (96)
Rental (income), net (35) (40) (68) (68)
Foreign currency
exchange loss (gain) 488 (52) 765 (27)
Income before income
taxes 774 824 3,106 2,490
Provision for income
taxes 276 257 1,108 768
Net income $498 $567 $1,998 $1,722
Diluted weighted
average number
of shares
outstanding 4,634 4,514 4,629 4,503
Diluted earnings
per share $0.11 $0.13 $0.43 $0.39
Adjusted earnings
before interest, taxes,
depreciation and
amortization (Note 1) $3,129 $1,873 $7,088 $5,239
SUMMARY OF INTERNATIONAL SALES
(In thousands, except
international sales
percentage) Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
International sales($) $10,091 $9,364 $20,720 $19,333
International sales(%) 45% 48% 46% 48%
NOTE 1: The Company believes earnings before interest, taxes, depreciation and amortization and other items (adjusted 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. Adjusted 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 adjusted EBITDA as defined:
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2005 2004 2005 2004
Net income $498 $567 $1,998 $1,722
Add back (subtract):
Transaction expenses 434 - 434 -
Income taxes 276 257 1,108 768
Interest expense 269 288 548 586
Interest income (4) - (9) (1)
Interest rate swap
valuation (benefit)
provision 34 (163) (32) (96)
Rental (income), net (35) (40) (68) (68)
Foreign currency
exchange loss (gain) 488 (52) 765 (27)
Depreciation and
amortization 1,169 1,016 2,344 2,355
Adjusted EBITDA $3,129 $1,873 $7,088 $5,239
CFC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AT
JUNE 30, 2005 AND DECEMBER 31, 2004
June 30, December 31,
2005 2004
ASSETS
Cash and cash equivalents $4,205,555 $4,554,699
Restricted cash 306,579 306,271
Accounts receivable, less allowance
for doubtful accounts 12,400,167 12,547,380
Inventories 17,204,649 17,709,138
Other current assets 1,306,868 1,389,790
Total current assets 35,423,818 36,507,278
Property, plant and equipment, net 26,511,532 28,602,311
Deferred income taxes 3,517,612 3,528,686
Intangible assets, net 2,274,730 2,393,466
Other assets 251,852 266,806
Goodwill 1,029,462 1,029,462
Fair value of interest rate swap 71,139 39,553
Total assets $69,080,145 $72,367,562
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $5,000,387 $5,625,085
Accounts payable and accrued expenses 12,353,967 15,314,782
Total current liabilities 17,354,354 20,939,867
Deferred income taxes 3,221,756 3,229,584
Long-term debt 14,093,068 15,698,791
Total liabilities 34,669,178 39,868,242
Stockholders' equity 34,410,967 32,499,320
Total liabilities and stockholders' equity $69,080,145 $72,367,562
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