Royal Tech (NYSE:RYG)
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From May 2019 to May 2024
- New segmented reporting reflects restructured business - Previously announced charges related to restructuring recorded in fourth quarter - Net earnings realized in fiscal 2005, excluding discontinued operations and restructuring related charges - Fourth quarter reported sales increase 12.6% from Q4 2004 - Raw material cost increases in fourth quarter fully recovered via price increases - Sale process proceeds to final stage with potential bidders receiving 2005 financial statements
TORONTO, May 1 /PRNewswire-FirstCall/ -- Royal Group Technologies Limited (RYG - TSX; NYSE) today announced audited financial results for the year ended December 31, 2005. During fiscal 2004, Royal Group changed its fiscal year from September 30 to December 31, reporting audited results for the 15-month period ended December 31, 2004. To provide meaningful analysis of comparative results with 2005, Royal Group has also presented its unaudited results for the 12-month period ended December 31, 2004.
On a reported basis, in accordance with Canadian Generally Accepted Accounting Principles (GAAP), Royal Group reported a net loss of $270.4 million in fiscal 2005. On a reported basis, in accordance with GAAP, Royal Group reported a net loss of $271.1 million for the 3-month period ended December 31, 2005.
New Segmented Reporting and Restructuring Charges
On July 15, 2005 Royal Group announced that its Board of Directors had approved a four-part Management Improvement Plan, involving:
I. Business unit portfolio restructuring;
II. Cost and margin improvement initiatives;
III. Strategies to unlock the potential of the seven core businesses;
and,
IV. Financing alternatives that capitalize on the strength of Royal
Group's balance sheet.
As Royal Group has previously stated, its Management Improvement Plan aims to enhance shareholder value, whether the company is sold or remains a public entity.
As a result of the implementation of the Management Improvement Plan, Royal Group has changed the reporting of its segments to better reflect how management now views the operations of the Company going forward. Detailed segmented financial results are contained in Royal Group's Financial Statements and Management's Discussion and Analysis, which were filed via SEDAR and posted on Royal Group's web site concurrent with the issuance of this news release. The Company's new segmented financial presentation, reflecting its core businesses going forward, is outlined in the following table:
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Reportable Segments Core Product Divisions
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Custom Profiles & Custom Window Profiles Division and Interior &
Mouldings Exterior Mouldings Division
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Building Products Exterior Cladding Division
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Construction Products Pipe and Fittings Division and Building Systems
Division
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Home Improvement Deck, Fence and Railing Division and Outdoor
Products Storage Division
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Window Covering Window Coverings Division
Products
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Materials Materials Division
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Support Real Estate Division
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Royal Group has previously announced significant progress with its business unit portfolio restructuring initiative, with a series of divestitures completed and others being pursued. Statements of earnings for all comparative prior periods have been restated to reflect the required accounting treatment for discontinued operations in accordance with GAAP.
In fiscal 2005, Royal Group incurred a number of significant unusual and primarily non-cash restructuring charges, totaling $226.4 million after tax. The write-downs are consistent with Royal Group's announcement made on December 21, 2005, wherein it stated that it expected to record fourth-quarter charges of approximately $210 million to $250 million related to its planned divestitures of non-core businesses and restructuring charges.
Royal Group has presented its comparative year-end and fourth quarter 2005 results on a GAAP basis, as well as a normalized basis to allow investors to assess the Company's financial performance on an on-going basis. The normalized basis summarizes and clarifies a complex set of transactions. The normalized presentation reflects results excluding adjustments related to restructuring and other charges, with this presentation being for information purposes only.
For the 12-month period ended December 31, 2005, adjustments related to restructuring and other charges totaled $278.7 million after tax (Footnote (8) page 3), compared to $24.6 million after tax of other charges for the 12-month period ended December 31, 2004. For the 3-month period ended December 31, 2005, adjustments related to restructuring and other charges totalled $275.0 million after tax (Footnote (8) page 5), compared with $22.2 million after tax of other charges for the 3-month period ended December 31, 2004.
Fiscal 2005 Financial Results
The following table outlines both GAAP and normalized financial results for the 12-month period ended December 31, 2005 and 2004, with the normalized presentation being for information purposes only as it does not conform to GAAP:
Consolidated Statement of Earnings
(in thousands of Canadian dollars, except percentage amounts)
-------------------------------------------------
Reported Normalized
12 months Adjustments Other 12 months
ended for Unusual ended
Dec. 31/05 Write-downs Charges Dec. 31/05
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(audited) (unaudited)
(A)
Net sales $1,696,353 $ - $ - $1,696,353
Cost of sales 1,298,090 (12,023)(1) 1,286,067
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Gross profit 398,263 12,023 410,286
Operating expenses 444,202 (52,266)(2) (33,558)(7) 358,378
Other costs 29,589 (29,589)(3) -
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Operating earnings
(loss) (75,528) 93,878 33,558 51,908
Interest and
financing charges 25,441 1,076 (7) 26,517
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Earnings (loss)
from continuing
operations before
income taxes and
minority interest (100,969) 93,878 32,482 25,391
Income taxes
(recovery) 8,461 19,462 (4) (19,756)(6) 8,167
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Earnings (loss)
from continuing
operations before
minority interest (109,430) 74,416 52,238 17,224
Minority interest 584 161 745
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Earnings (loss)
from continuing
operations (108,846) 74,577 52,238 17,969
Discontinued
operations, net
of income tax
Loss from
discontinued
operations (9,740) (9,740)
Loss from
write-down
of businesses (151,856) 151,856 (5) -
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Loss from
discontinued
operations (161,596) 151,856 (9,740)
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Net earnings
(loss) $ (270,442) $226,433 (8) $52,238 (8) $ 8,229
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Normalized
12 months
ended Dec. 31/05
vs. Dec. 31/04
Reported Normalized ------------------
12 months Other 12 months Per-
ended Unusual ended Dollar centage
Dec. 31/04 Charges Dec. 31/04 Change Change
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(unaudited) (unaudited)
(B) (A) - (B)
Net sales $1,664,661 $ - $1,664,661 $ 31,692 1.9%
Cost of sales 1,207,710 (12,936)(7) 1,194,774 91,293 7.6%
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Gross profit 456,951 12,936 469,887 (59,601) -12.7%
Operating expenses 339,252 1,762 (7) 341,014 17,364 5.1%
Other costs -
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Operating earnings
(loss) 117,699 11,174 128,873 (76,965) -59.7%
Interest and
financing charges 26,150 26,150 367 1.4%
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Earnings (loss)
from continuing
operations before
income taxes and
minority interest 91,549 11,174 102,723 (77,332) -75.3%
Income taxes
(recovery) 17,576 4,080 (7) 21,656 (13,489) -62.3%
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Earnings (loss)
from continuing
operations before
minority interest 73,973 7,094 81,067 (63,843) -78.8%
Minority interest (285) (285) 1,030 -361.4%
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Earnings (loss)
from continuing
operations 73,688 7,094 80,782 (62,813) -77.8%
Discontinued
operations, net
of income tax
Loss from
discontinued
operations (40,565) 17,523 (7) (23,042) 13,302 -57.7%
Loss from
write-down
of businesses -
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Loss from
discontinued
operations (40,565) 17,523 (23,042) 13,302 -57.7%
Net earnings
(loss) $ 33,123 $24,617 $ 57,740 $(49,511) -85.7%
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(1) Cost of Sales predominately relates to a write-down for inventory to
net realized value relating to discontinued operations and
restructuring activities.
(2) Operating expenses includes a write-down for redundant fixed assets.
(3) Other cost includes a write-down primarily related to the Company's
equity investments including Royal Building Systems Philippines,
Royal Building Systems Hawaii and Aristoea.
(4) There was a net income tax recovery as a result of the above
mentioned transactions.
(5) Loss from write-down of businesses reflects a net after tax
write-down of the Company's investment in its non-core and
non-performing operations. These businesses are identified in Note 4
of the audited Consolidated Financial Statements.
(6) The tax adjustment includes a future tax valuation allowance of
$26,002 booked in Q4 of 2005.
(7) For further detail on the remaining items see the "Details of
Write-downs and Unusual Charges" section of this MD&A.
(8) Adjustments for Write-downs and Unusual Charges totals $278.7 million
after tax, comprised of write-downs of $226.4 million and unusual
charges of $52.2 million.
Net sales, excluding discontinued operations that Royal Group had designated for sale as at December 31, 2005, were $1,696.4 million in fiscal 2005, up slightly from net sales of $1,664.7 million recorded in the same period in 2004. The sales increase was primarily driven by price increases initiated in the fourth quarter, with volume increases occurring throughout the year in certain business segments. The price and volume increases were partially offset by the impact of the weakening US dollar on sales exported from Canada to the US.
On a GAAP basis, fiscal 2005 gross profit declined by $58.7 million from the same period in the prior year. Royal Group's normalized gross profit declined by $59.6 million, primarily as a result of escalating raw material costs experienced throughout the year, with raw material cost increases incurred during the first nine months of 2005 substantially not recovered via finished product price increases. The average cost of Poly Vinyl Chloride (PVC), which is the Company's primary raw material, increased by approximately 24 percent from the comparative 12- month period in 2004. The Company experienced a rise in normalized operating expenses of $17.4 million, as a result of rising transportation, energy and fuel charges, increased staffing, higher marketing expenses, initial implementation of a new enterprise management system, professional fees and compliance costs related to the Sarbanes-Oxley Act.
Royal Group reported a net loss for 2005 of $270.4 million on a GAAP basis, including a net loss of $161.6 million from discontinued operations. During the same period in 2004, the Company's net profit on a GAAP basis was $33.1 million, inclusive of a loss from discontinued operations of $40.6 million. On a normalized basis, Royal Group recorded net earnings in 2005 of $8.2 million, compared with a normalized net profit in 2004 of $57.7 million.
Among the more significant charges taken in 2005 were $226.4 million after tax of write-downs and restructuring charges, mainly comprised of $151.9 million for write-downs of discontinued businesses; $52.3 million before tax for certain operating expenses related to the restructuring, including a write-down for redundant fixed assets no longer being used; $29.6 million before tax for other costs, including a write-down primarily related to the company's equity investments in several offshore locations; and $12.0 million before tax mainly for the write-down of inventory to net realized value. These charges were partially offset by a $19.5 million recovery of income taxes. In addition, the Company recognized $52.2 million after tax of other unusual charges, inclusive of a $26.0 million US tax loss valuation allowance, as well as continuing costs principally related to the sale process and investigations. In 2004, the Company's normalized financial results include $24.6 million after tax of other non-operating charges.
Fourth Quarter 2005 Financial Results
The following table outlines both GAAP and normalized financial results for the 3-month period ended December 31, 2005 and 2004, with the normalized presentation being for information purposes only as it does not conform to GAAP:
Consolidated Statement of Earnings
(in thousands of Canadian dollars, except percentage amounts)
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Reported Normalized
3 months Adjustments Other 3 months
ended for Unusual ended
Dec. 31/05 Write-downs Charges Dec. 31/05
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(audited) (unaudited)
(A)
Net sales $ 404,408 $ - $ - $ 404,408
Cost of sales 323,018 (12,023)(1) 310,995
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Gross profit 81,390 12,023 93,413
Operating expenses 160,705 (52,266)(2) (18,921)(7) 89,518
Other costs 29,589 (29,589)(3) -
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Operating earnings
(loss) (108,904) 93,878 18,921 3,895
Interest and
financing
charges 3,183 3,183
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Earnings (loss)
from continuing
operations before
income taxes and
minority interest (112,087) 93,878 18,921 712
Income taxes
(recovery) 5,680 19,462 (4) (29,678)(6) (4,536)
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Earnings (loss)
from continuing
operations before
minority interest (117,767) 74,416 48,599 5,248
Minority interest 1,084 161 1,245
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Earnings (loss)
from continuing
operations (116,683) 74,577 48,599 6,493
Discontinued
operations, net
of income tax
Loss from
discontinued
operations (2,588) (2,588)
Loss from
write-down of
businesses (151,856) 151,856 (5) -
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Loss from
discontinued
operations (154,444) 151,856 (2,588)
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Net earnings (loss) $(271,127) $226,433 (8) $48,599 (8) $ 3,905
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Normalized
3 months
ended Dec. 31/05
vs. Dec. 31/04
Reported Normalized ------------------
3 months Other 3 months Per-
ended Unusual ended Dollar centage
Dec. 31/04 Charges Dec. 31/04 Change Change
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(unaudited) (unaudited)
(B) (A) - (B)
Net sales $ 359,035 $ - $ 359,035 $ 45,373 12.6%
Cost of sales 290,860 (12,936)(7) 277,924 33,071 11.9%
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Gross profit 68,175 12,936 81,111 12,302 15.2%
Operating expenses 81,613 5,125 (7) 86,738 2,780 3.2%
Other costs -
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Operating earnings
(loss) (13,438) 7,811 (5,627) 9,522 -169.2%
Interest and
financing
charges 5,328 5,328 (2,145) -40.3%
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Earnings (loss)
from continuing
operations before
income taxes and
minority interest (18,766) 7,811 (10,955) 11,667 -106.5%
Income taxes
(recovery) (9,862) 3,107 (7) (6,755) 2,219 -32.8%
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Earnings (loss)
from continuing
operations before
minority interest (8,904) 4,704 (4,200) 9,448 -224.9%
Minority interest (370) (370) 1,615 -436.5%
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Earnings (loss)
from continuing
operations (9,274) 4,704 (4,570) 11,063 -242.1%
Discontinued
operations, net
of income tax
Loss from
discontinued
operations (26,916) 17,523 (7) (9,393) 6,805 -72.4%
Loss from
write-down of
businesses -
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Loss from
discontinued
operations (26,916) 17,523 (9,393) 6,805 -72.4%
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Net earnings
(loss) $ (36,190) $22,227 $(13,963) $ 17,868 -128.0%
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(1) Cost of Sales predominately relates to a write-down for inventory to
net realized value relating to discontinued operations and
restructuring activities.
(2) Operating expenses includes a write-down for redundant fixed assets.
(3) Other cost includes a write-down primarily related to the Company's
equity investments including Royal Building Systems Philippines,
Royal Building Systems Hawaii and Aristoea.
(4) There was a net income tax recovery as a result of the above
mentioned transactions.
(5) Loss from write-down of businesses reflects a net after tax
write-down of the Company's investment in its non-core and
non-performing operations. These businesses are identified
in Note 4 of the audited Consolidated Financial Statements.
(6) The tax adjustment includes a future tax valuation allowance of
$26,002 booked in Q4 of 2005.
(7) For further detail on the remaining items see the "Details of
Write-downs and Unusual Charges" section of this MD&A.
(8) Adjustments for Write-downs and Unusual Charges totals $275.0 million
after tax, comprised of write-downs of $226.4 million and unusual
charges of $48.6 million.
For the 3-month period ended December 31, 2005, Royal Group's net sales excluding discontinued operations that Royal Group had designated for sale as at December 31, 2005, on both a GAAP and normalized basis, were $404.4 million, representing a 12.6 percent increase from the same period in 2004. Double-digit sales growth was primarily a result of selling price increases, with volume increases being recorded in certain business segments. The selling price and volume increases were partially offset by the impact of a weakening US dollar on sales exported from Canada to the US.
On a GAAP basis, Royal Group's gross profit increased $13.2 million. On a normalized basis, gross profit increased $12.3 million. The increase in gross profit is attributable to volume increases, with selling price increases entirely offsetting higher raw material costs during the fourth quarter of 2005. An increase in normalized operating expenses of $2.8 million was due to an increase in staffing, higher marketing costs, implementation of a new enterprise management system, professional fees and compliance costs.
The majority of the write-downs and other charges related to the Company's restructuring were recorded in the fourth quarter of 2005. These write-downs and charges contributed to a GAAP net loss of $271.1 million for the fourth quarter. On a normalized basis, Royal Group recorded a net profit of $3.9 million during the 3-month period ended December 31, 2005, compared to a normalized net loss of $14.0 million during the same quarter in the previous year.
Included in the net loss of $271.1 million on a GAAP basis is the write-down of $226.4 million, noted earlier in the 12-month period December 31, 2005 discussion. In addition, of the $52.2 million of other charges presented in fiscal 2005, $48.6 million were recorded in the fourth quarter.
"Royal Group began to make significant progress in 2005, taking decisive actions that aim to enable the Company to prosper in the years ahead," said Lawrence J. Blanford, who was appointed the Company's President and Chief Executive Officer in May 2005. "Our increased sales in the fourth quarter, full recovery of Hurricane Katrina related raw material cost increases via finished product price increases and progress with divestitures are just three encouraging signs that we are now heading in the right direction," added Mr. Blanford.
"During 2005, we greatly enhanced our corporate governance, adding five new independent directors and converting to a single class of common voting shares. We bolstered our senior management team, with the new team developing and commencing implementation of a comprehensive four-part Management Improvement Plan. Executing our Plan has required some up-front expenditures, as well as some write-downs related to the planned divestitures of our non-core businesses. These expenditures and write-downs had a significant impact on our 2005 financial results, particularly in the fourth quarter as we moved ahead with our Plan. As we move through 2006, we expect to increasingly realize the benefits of our comprehensive Management Improvement Plan," concluded Mr. Blanford.
Sale Process
With respect to the previously announced sale process, it is expected that the due diligence with a few select prospective bidders will continue for a short period following the release of the 2005 annual audited financial statements. No offer for shares of Royal Group has yet been made and there is no assurance that an offer will be made or a transaction concluded.
Royal Group Technologies Limited
Royal Group Technologies is a leading producer of innovative, attractive, durable, and low-maintenance home improvement and building products, which are primarily utilized in both the renovation and new construction sectors of the North American construction industry. Royal Group is the recipient of several industry awards for product innovation. The company has manufacturing operations located throughout North America in order to provide industry-leading service to its extensive customer network. Additional investment information is available on Royal Group's web site at http://www.royalgrouptech.com/ under the "Investor Relations" section.
The information in this document contains certain forward-looking statements with respect to Royal Group Technologies Limited, its subsidiaries and affiliates. These statements are often, but not always made through the use of words or phrases such as "expect", "should continue", "continue", "believe", "anticipate", "suggest", "estimate", "contemplate", "target", "plan", "budget", "may", "will", "schedule" and "intend" or similar formulations. By their nature, these forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant, known and unknown, business, economic, competitive and other risks, uncertainties and other factors affecting Royal specifically or its industry generally that could cause actual performance, achievements and financial results to differ materially from those contemplated by the forward-looking statements. These risks and uncertainties include the ongoing shareholder value maximization process and its outcome; the ongoing internal review and investigations by the Audit Committee of the Board of Directors and its outcome; the negative impact that may be caused by the delay in filing of Royal Group's 2005 financial statements, including, without limitation, a breach by Royal Group of its banking agreement, an adverse effect on Royal Group's business and the market price of its publicly traded securities, and a breach by Royal Group of the continued listing requirements of the New York Stock Exchange and Toronto Stock Exchange; fluctuations in the level of renovation, remodelling and construction activity; changes in product costs and pricing; an inability to achieve or delays in achieving savings related to the cost reductions or increases in revenues related to sales price increases; the sufficiency of our restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring activities compared to the estimated costs of such actions; the ability to recruit and retain qualified employees; the level of outstanding debt and our current debt ratings; Royal's ability to maintain adequate liquidity and refinance its debt structure by December 31, 2006, the expiry date of its current bank credit facility; the ability to meet the financial covenants in our credit facilities; changes in product mix; the growth rate of the markets into which Royal Group's products are sold; market acceptance and demand for Royal Group's products; changes in availability or prices for raw materials; pricing pressures resulting from competition; difficulty in developing and introducing new products; failure to penetrate new markets effectively; the effect on foreign operations of currency fluctuations, tariffs, nationalization, exchange controls, limitations on foreign investment in local business and other political, economic and regulatory risks; difficulty in preserving proprietary technology; adverse resolution of any litigation, investigations, administrative and regulatory matters, intellectual property disputes, or similar matters; changes in securities or environmental laws, rules and regulations; currency risk exposure and other risks described from time to time in publicly filed disclosure documents and securities commission reports of Royal Group Technologies Limited and its subsidiaries and affiliates. In view of these uncertainties we caution readers not to place undue reliance on these forward-looking statements. Statements made in this document are made as of May 1, 2006 and Royal Group disclaims any intention or obligation to update or revise any statements made herein, whether as a result of new information, future events or otherwise.
ROYAL GROUP TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
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Dec. 31/05 Dec. 31/04
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(audited) (audited)
ASSETS
Current assets:
Cash $ - $ 112,088
Accounts receivable 228,584 257,346
Inventories 346,887 456,339
Prepaid expenses 15,461 13,893
Current assets held for sale 174,593 -
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765,525 839,666
Property, plant and equipment 981,037 1,324,549
Future income tax assets - 16,561
Goodwill 194,355 213,620
Other assets 11,348 44,525
Long-term assets held for sale 83,988 6,051
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$ 2,036,253 $ 2,444,972
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 158,789 $ -
Accounts payable and accrued liabilities 274,746 268,348
Term bank loan - 324,836
Term debt due within one year 46,902 18,303
Current liabilities held for sale 119,026 -
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599,463 611,487
Term debt 250,721 303,214
Future income tax liabilities 74,910 149,049
Minority interest 856 15,761
Shareholders' equity:
Capital stock 634,866 633,754
Contributed surplus 8,020 3,703
Retained earnings 599,637 878,779
Currency translation adjustment (132,220) (150,775)
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1,110,303 1,365,461
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$ 2,036,253 $ 2,444,972
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ROYAL GROUP TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of Canadian dollars, except per share amounts)
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3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
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(unaudited) (unaudited) (audited) (unaudited)
Net sales $ 404,408 $ 359,035 $ 1,696,353 $ 1,664,661
Cost of sales 323,018 290,860 1,298,090 1,207,710
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Gross profit 81,390 68,175 398,263 456,951
Operating expenses 160,705 81,613 444,202 339,252
Other costs 29,589 - 29,589 -
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Operating earnings
(loss) (108,904) (13,438) (75,528) 117,699
Interest and
financing charges 3,183 5,328 25,441 26,150
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Earnings (loss) from
continuing operations
before income taxes
and minority interest (112,087) (18,766) (100,969) 91,549
Income tax expense
(recovery) 5,680 (9,862) 8,461 17,576
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Earnings (loss) from
continuing operations
before minority
interest (117,767) (8,904) (109,430) 73,973
Minority interest 1,084 (370) 584 (285)
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Earnings (loss) from
continuing operations (116,683) (9,274) (108,846) 73,688
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Discontinued operations,
net of income taxes:
Loss from operations (2,588) (26,916) (9,740) (40,565)
Loss on write-down
of businesses (151,856) - (151,856) -
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Loss from discontinued
operations (154,444) (26,916) (161,596) (40,565)
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Net earnings (loss) $ (271,127) $ (36,190) $ (270,442) $ 33,123
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Basic Earnings
(loss) per share:
Earnings (loss)
per share from
continuing
operations $ (1.25) $ (0.10) $ (1.16) $ 0.79
Earnings (loss)
per share from
discontinued
operations $ (1.65) $ (0.29) $ (1.73) $ (0.43)
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Earnings (loss)
per share $ (2.90) $ (0.39) $ (2.89) $ 0.35
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Diluted Earnings
(loss) per share:
Earnings (loss)
per share from
continuing
operations $ (1.25) $ (0.10) $ (1.16) $ 0.78
Earnings (loss)
per share from
discontinued
operations $ (1.65) $ (0.29) $ (1.73) $ (0.43)
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Earnings (loss)
per share $ (2.90) $ (0.39) $ (2.89) $ 0.35
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
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(unaudited) (unaudited) (audited) (unaudited)
Retained earnings,
beginning of period $ 870,764 $ 914,969 $ 878,779 $ 845,656
Net earnings (loss) (271,127) (36,190) (270,442) 33,123
Premium on conversion
of multiple voting
shares - - (8,700) -
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Retained earnings,
end of period $ 599,637 $ 878,779 $ 599,637 $ 878,779
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ROYAL GROUP TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
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(unaudited) (unaudited) (audited) (unaudited)
Cash provided by
(used in):
Operating activities:
Net earnings (loss) $ (271,127) $ (36,190) $ (270,442) $ 33,123
Loss from
discontinued
operations 154,444 26,916 161,596 40,565
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Earnings (loss) from
continuing operations (116,683) (9,274) (108,846) 73,688
Items not affecting
cash (bank
indebtedness) of
continuing operations 90,736 39,920 189,661 147,601
Change in non-cash
working capital 89,537 41,006 31,332 15,426
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63,590 71,652 112,147 236,715
Financing activities:
Repayment of term
bank loan - (1,129) (324,836) (175,164)
Repayment of term debt (64) (69) (18,725) (53,217)
Proceeds from issuance
of shares under stock
option plan - - - 145
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(64) (1,198) (343,561) (228,236)
Investing activities:
Acquisition of
property, plant and
equipment (12,995) (20,778) (66,440) (83,673)
Proceeds from the
sale of
non-strategic assets 153 22,227 7,905 31,934
Change in investments (141) 1,320 (272) (2,014)
Change in other assets 2,901 (261) 2,813 (1,088)
Change in
minority interest 635 1,216 (1,120) 1,092
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(9,447) 3,724 (57,114) (53,749)
Discontinued operations:
Operating activities 1,240 (26,916) (5,912) (40,565)
Investing activities (6,462) - (6,462) -
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(5,222) (26,916) (12,374) (40,565)
Effect of foreign
exchange rate changes
on cash 1,180 (6) (5) (656)
-------------------------------------------------------------------------
Increase (decrease)
in cash 50,037 47,256 (300,907) (86,491)
Cash (bank
indebtedness),
beginning of period (238,856) 64,832 112,088 198,579
-------------------------------------------------------------------------
Cash (bank
indebtedness), end
of period $ (188,819) $ 112,088 $ (188,819) $ 112,088
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consists of:
Cash (bank
indebtedness) of
continuing
operations (158,789) 112,088 (158,789) 112,088
Cash (bank
indebtedness) of
discontinued
operations (30,030) - (30,030) -
-------------------------------------------------------------------------
Cash (bank
indebtedness), end
of period $ (188,819) $ 112,088 $ (188,819) $ 112,088
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ROYAL GROUP TECHNOLOGIES LIMITED
Additional Financial Information (unaudited)
(in thousands of Canadian dollars, except percentages)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31/05 Dec. 31/04(i) Dec. 31/05 Dec. 31/04(i)
-------------------------------------------------------------------------
Net Sales by Segment
Custom Profiles &
Mouldings $ 181,935 $ 164,812 $ 727,248 $ 743,990
Building Products 78,655 67,280 324,948 314,966
Construction Products 87,328 66,918 332,627 287,722
Home Improvement Products 21,933 21,782 155,791 148,957
Window Covering Products 30,226 33,630 136,078 149,256
Materials 4,120 4,102 16,345 17,643
Support 211 511 3,316 2,127
---------------------------------------------------
Consolidated
Net Sales $ 404,408 $ 359,035 $ 1,696,353 $ 1,664,661
---------------------------------------------------
---------------------------------------------------
Net Sales by
Geographic Region
Canada 36% 39% 36% 35%
US 62% 59% 62% 63%
Foreign 2% 2% 2% 2%
---------------------------------------------------
Consolidated Net Sales 100% 100% 100% 100%
---------------------------------------------------
---------------------------------------------------
Percentage of
Sales Analysis
Gross profit 20.1% 19.0% 23.5% 27.5%
EBITDA -12.8% 4.8% 4.3% 14.2%
Cost of sales 79.9% 81.0% 76.5% 72.5%
Selling expenses 14.1% 15.7% 14.4% 13.8%
G&A expenses 25.6% 7.0% 11.8% 6.6%
Other
Net Funded Debt as
a percentage of
Total Capitalization 29.1% 27.9% 29.1% 27.9%
Free Cash Flow $ 49,370 $ 26,493 $ 44,851 $ 111,535
(i) Certain percentages for the three month and twelve month periods
ended December 31, 2004 have been reclassified to reflect the current
presentation adopted in fiscal 2005.
DATASOURCE: Royal Group Technologies Limited
CONTACT: Mark Badger, Vice President of Marketing and Corporate
Communications, Royal Group Technologies Limited, Phone: (905) 264-0701