Cfc (NASDAQ:CFCI)
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-- Net income decreased to $1.2 million for the first quarter of 2006, down 23.2% from $1.5 million as compared to the same period last year.
CHICAGO HEIGHTS, Ill., May 4 /PRNewswire-FirstCall/ -- Worldwide holographic and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI) reported results for the first quarter of 2006. Net sales for the first quarter 2006 decreased 2.5% to $22.4 million, compared to $23.0 million in the first quarter of 2005. This decrease in sales is primarily due to lower volumes of printed products as a result of customers ordering higher volumes in the fourth quarter of 2005 to obtain product before the Company's November 15, 2005 price increase. Lower sales were also the result of a decrease in security products, primarily due to weaker gift card volumes. In addition, a weakened Euro adversely affected net sales by $600,000 in the first quarter of 2006.
Net income decreased 23.2% to $1.2 million, or $0.25 cents per share on a fully diluted basis for the first quarter of 2006, compared to $1.5 million, or $0.33 cents per share on a fully diluted basis, in the first quarter of 2005. The Company incurred transaction expenses of $292,000 (after income taxes) associated with the terminated merger with Quad-C Management during the first quarter of 2006. Excluding the effects of these costs, the first quarter of 2006 net income would have decreased 3.8% to $1.4 million, or $0.31 cents per share on a fully diluted basis, compared to net income of $1.5 million, or $0.33 cents per share on a fully diluted basis, in the first quarter of 2005.
"In the first quarter of 2006, operating results continued to be affected by transaction expenses incurred as a result of the terminated merger with Quad-C Management, as well as lower sales volumes in our printed and security products," said Greg Jehlik, CFC's President and Chief Executive Officer. "However, we are confident that by continuing to focus on the fundamentals of our business and on executing our strategic initiatives, along with driving further improvements in our operations, that CFC will continue to deliver profitable results and increased sales growth in 2006."
Based upon the Company's results and factoring in the current economic outlook, the Company anticipates earning net income of $0.90 to $1.00 cents per share on a fully diluted basis for 2006 utilizing a 35.5% tax rate.
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, estimated availability of additional equipment, 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 1st Quarter 1st Quarter
Operating Income Percentage) 2006 2005
Net Sales $22,419 $22,989
Cost of Goods (Excluding Depreciation and
Amortization Shown Below) 14,652 14,403
Operating Expenses 4,255 4,627
Depreciation and Amortization 1,193 1,174
Transaction Expenses 453 -
Operating Income 1,866 2,785
Operating Income % 8.3% 12.1%
Interest Expense 272 279
Interest Income (39) (5)
Interest Rate Swap Valuation Benefit (9) (33)
Rental Income / Other Expense (5) (65)
Foreign Currency Exchange (Gain)/Loss (138) 277
Income Before Income Taxes 1,785 2,332
Provision for Income Taxes 634 832
Net Income $1,151 $1,500
Diluted Weighted Average Number
of Shares Outstanding 4,633 4,613
Diluted Earnings Per Share $0.25 $0.33
Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (Note 1) $3,512 $3,959
(In Thousands) 1st Quarter 1st Quarter
2006 2005
International Net Sales $10,105 $10,629
International Net Sales 45.1% 46.2%
NOTE 1: The Company believes earnings before interest, taxes,
depreciation and amortization, rental income, foreign currency exchange
(gain)/loss and transaction expenses (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:
1st Quarter
(In Thousands) 2006 2005
Net income $1,151 $1,500
Add back (subtract):
Income taxes 634 832
Interest expense 272 279
Interest rate swap valuation (benefit) (9) (33)
Rental income (5) (65)
Interest income (39) (5)
Depreciation and amortization 1,193 1,174
Foreign currency exchange (gain)/loss (138) 277
Transaction expenses 453 -
Adjusted EBITDA $3,512 $3,959
CFC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2006 AND DECEMBER 31, 2005
March 31, December 31,
2006 2005
ASSETS
Cash and cash equivalents $4,379,782 $5,013,772
Restricted cash 417,859 365,683
Accounts receivable, less allowance
for doubtful accounts 15,042,399 14,188,067
Inventories 16,863,975 17,319,347
Other current assets 2,057,475 2,014,790
Total current assets 38,761,490 38,901,659
Property, plant and equipment, net 25,781,382 26,300,422
Deferred income taxes 2,135,029 2,129,417
Intangible assets, net 2,097,924 2,157,032
Other assets 214,194 214,194
Fair value of interest rate swap 119,593 110,950
Goodwill 1,029,462 1,029,462
Total assets $70,139,074 $70,843,136
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $6,412,224 $6,412,224
Accounts payable and accrued expenses 11,236,374 13,695,493
Total current liabilities 17,648,598 20,107,717
Deferred income taxes 2,532,675 2,558,294
Long-term debt 12,739,576 12,824,896
Total liabilities 32,920,849 35,490,907
Stockholders' equity 37,218,225 35,352,229
Total liabilities and stockholders'
equity $70,139,074 $70,843,136
DATASOURCE: CFC International, Inc.
CONTACT: Dennis Lakomy, Chief Financial Officer, of CFC International,
+1-708-757-2803
Web site: http://www.cfcintl.com/
Company News On-Call: http://www.prnewswire.com/comp/110663.html