EXHIBIT 99.1
20 Progress Drive, Shelton, CT 06484
PHONE: (203) 925-1556 – FAX (203) 225-0050
Panolam Reports Third Quarter 2008 Results
Shelton, Connecticut (November 25, 2008) – On Friday, November 14, 2008, Panolam Industries International, Inc. reported its consolidated financial results for the three and nine months ended September 30, 2008. All financial information presented below is unaudited.
Net sales were $96.4 million and $296.9 million in the three and nine months ended September 30, 2008 compared to $105.6 million and $329.8 million for the three and nine months ended September 30, 2007, a decrease of approximately 9% in the third quarter and approximately 10% in the nine month period. In local currencies, net sales for 2008 declined approximately 9% and 11%, respectively in the third quarter and nine month period. The decrease in sales in the three and nine months ended September 30, 2008 as compared to the three and nine months ended September 30, 2007 is primarily attributable to lower high pressure laminate, or HPL, sales which declined approximately 8% and 10% during the respective periods and thermally-fused melamine, or TFM, sales which declined approximately 16% and 15% during the respective periods. The sales declines in both HPL and TFM for the nine months ended September 30, 2008 were partially offset by a $5.9 million increase in industrial laminate sales related to our new fiber reinforced plastic, or FRP, products. Due to the appreciation of the Canadian dollar against the U.S. dollar, currency translation as it relates to our Canadian operation had the effect of increasing sales in the three and nine months ended September 30, 2008 by approximately $0.1 million and $4.8 million when compared to foreign exchange translations for the comparable 2007 periods.
Sales of decorative laminates were $83.5 million and $257.3 million in the three and nine months ended September 30, 2008 compared to $92.6 million and $290.5 million for the same periods in 2007. Sales of decorative laminates, which includes both TFM and HPL (approximately 87% of net sales), decreased approximately 10% and 11%, respectively in the three and nine month periods ended September 30, 2008 as compared to 2007.
Sales of other products, net of the intercompany sales eliminations, principally specialty resins, decorative overlay papers and industrial laminates, were $12.9 million and $39.6 million in the three and nine months ended September 30, 2008 compared to $13.0 million and $39.3 million for the three and nine months ended September 30, 2007. Other product sales (approximately 13% of net sales) remained relatively flat in the three and nine months ended September 30, 2008 as compared to the same periods in 2007. For the nine months ended September 30, 2008, specialty resins accounted for approximately 5.4% of our total sales, while industrial and other specialty laminates, and decorative overlay papers accounted for approximately 5% and 1% of our sales, respectively.
Net loss for the three months ended September 30, 2008 was $1.2 million compared to net income of $1.1 million for the three months ended September 30, 2007, a decrease of approximately $2.3 million. The decrease in net income is primarily attributable to lower net sales in the three months ended September 30, 2008 compared to the three months ended September 30, 2007, which were partially offset by decreases in the total cost of goods sold due to lower sales volume, as well as decreases in selling, general and administrative expenses, interest expense and income taxes in the three months ended September 30, 2008.
Net loss for the nine months ended September 30, 2008 was $2.1 million compared to net income of $4.4 million for the nine months ended September 30, 2007, a decrease of approximately $6.5 million. The decrease in net income is primarily attributable to lower net sales in the nine months ended September 30,
2008 compared to the nine months ended September 30, 2007, which were partially offset by decreases in the total cost of goods sold due to lower sales volume, as well as decreases in selling, general and administrative expenses, interest expense and income taxes in the nine months ended September 30, 2008.
Commenting on the third quarter 2008 results, Chairman of the Board, President and Chief Executive Officer, Robert J. Muller stated, “Our net sales for the three and nine month periods ended September 30, 2008 were adversely impacted by weakness in the U.S. economy and by the sharp slowdown in residential and commercial construction, particularly the residential housing and credit markets. Our HPL and TFM products were most affected by these adverse market conditions”.
Robert J. Muller, Jr., Panolam’s Chairman, President and CEO, will host the Company’s third quarter 2008 conference call to discuss its financial results on Wednesday, December 3, 2008 at 1:00 pm EDT. The conference call will be available to all interested parties by phone at (USA): (800) 762-6085 and (International) (480) 629-9025. The pass code for the conference call is miceli.
A replay of the Company’s conference call will also be available beginning at 8:00 pm EDT on Wednesday, December 3, 2008 and will be available through Monday, December 8, 2008. The numbers to call for the replay of the conference call are (USA) (800) 475-6701 and (International) (320) 365-3844. The access code for the replay of the conference is 972200.
About Panolam Industries International, Inc.:
Panolam (www.panolam.com) is a leading designer, manufacturer and distributor of decorative and industrial laminates in North America. The company’s products, which are marketed under the widely recognized Panolam®, Pluswood®, Pionite® and Nevamar® brand names, are used in a wide variety of commercial and residential indoor surfacing applications, including kitchen and bath cabinets, furniture, store fixtures and displays, and other specialty applications. High pressure laminates (HPL), thermally-fused melamine (TFM), fiber reinforced laminate (FRL®), Leatherlam®, and Panolam’s engineered laminates are utilized as durable and economical alternatives for natural surfacing materials such as wood, stone and ceramic. A typical customer or end-user of decorative overlays might utilize TFM, HPL, FRL® or Leatherlam® for different surfaces of the same project. Conolite® aircraft laminates are typically used as cargo liner for commercial jet aircraft. As a vertically integrated manufacturer, Panolam produces decorative surfaces that offer unparalleled quality, variety and flexibility to customers worldwide.
Forward-Looking Statements
Statements included in this press release which are other than historical facts are intended to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. These forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting Panolam Industries International, Inc. and therefore involve a number of uncertainties and risks. While the Company believes such statements are reasonable, the actual results and effects could differ materially from those expressed or implied by the forward-looking statements. Please refer to the Company’s 2007 Annual Report on Form 10-K filed on March 31, 2008 and the Company’s other filings with the Securities and Exchange Commission, for some of the factors that could cause the actual results to differ from estimates. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise.
CONTACT: | Panolam Industries International, Inc. |
| Vincent S. Miceli |
| Chief Financial Officer |
| (203) 925-1556 ext.2263 |
PANOLAM INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(Unaudited)
|
| September |
| December |
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|
| 2008 |
| 2007 |
| ||
ASSETS |
|
|
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|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 28,204 |
| $ | 10,744 |
|
Accounts receivable, less allowances of $7,082 at September 30, 2008 and $7,048 at December 31, 2007 |
| 24,149 |
| 19,269 |
| ||
Inventories |
| 58,146 |
| 58,151 |
| ||
Other current assets |
| 12,391 |
| 18,920 |
| ||
Total current assets |
| 122,890 |
| 107,084 |
| ||
PROPERTY, PLANT AND EQUIPMENT – Net |
| 241,358 |
| 265,045 |
| ||
GOODWILL |
| 100,502 |
| 102,460 |
| ||
INTANGIBLE ASSETS – Net |
| 79,212 |
| 82,921 |
| ||
DEBT ACQUISITION COSTS – Net |
| 7,482 |
| 8,814 |
| ||
OTHER ASSETS |
| 69 |
| 35 |
| ||
|
|
|
|
|
| ||
TOTAL |
| $ | 551,513 |
| $ | 566,359 |
|
|
|
|
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LIABILITIES AND STOCKHOLDER’S EQUITY |
|
|
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|
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CURRENT LIABILITIES: |
|
|
|
|
| ||
Accounts payable |
| $ | 12,605 |
| $ | 11,780 |
|
Accrued liabilities |
| 25,716 |
| 25,667 |
| ||
Current portion of long-term debt |
| 23 |
| 47 |
| ||
Other current liabilities |
| 319 |
| 1,313 |
| ||
Total current liabilities |
| 38,663 |
| 38,807 |
| ||
|
|
|
|
|
| ||
LONG-TERM DEBT, LESS CURRENT PORTION |
| 322,981 |
| 319,894 |
| ||
DEFERRED INCOME TAXES |
| 76,038 |
| 81,229 |
| ||
DUE TO PANOLAM HOLDINGS CO |
| — |
| 5,619 |
| ||
OTHER LIABILITIES |
| 7,436 |
| 4,848 |
| ||
Total liabilities |
| 445,118 |
| 450,397 |
| ||
|
|
|
|
|
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STOCKHOLDER’S EQUITY: |
|
|
|
|
| ||
Common stock, $0.01 par value – 200 shares authorized, 200 shares issued and outstanding |
| — |
| — |
| ||
Additional paid-in capital |
| 81,405 |
| 81,038 |
| ||
Accumulated earnings |
| 15,110 |
| 17,222 |
| ||
Accumulated other comprehensive income |
| 9,880 |
| 17,702 |
| ||
Total stockholder’s equity |
| 106,395 |
| 115,962 |
| ||
|
|
|
|
|
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TOTAL |
| $ | 551,513 |
| $ | 566,359 |
|
PANOLAM INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)
|
| Three Months |
| Nine Months |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
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|
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|
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NET SALES |
| $ | 96,392 |
| $ | 105,603 |
| $ | 296,905 |
| $ | 329,776 |
|
|
|
|
|
|
|
|
|
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| ||||
COST OF GOODS SOLD |
| 80,022 |
| 83,336 |
| 241,046 |
| 257,491 |
| ||||
|
|
|
|
|
|
|
|
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| ||||
GROSS PROFIT |
| 16,370 |
| 22,267 |
| 55,859 |
| 72,285 |
| ||||
|
|
|
|
|
|
|
|
|
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
| 11,327 |
| 12,059 |
| 37,354 |
| 39,449 |
| ||||
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|
|
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|
|
|
|
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INCOME FROM OPERATIONS |
| 5,043 |
| 10,208 |
| 18,505 |
| 32,836 |
| ||||
|
|
|
|
|
|
|
|
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| ||||
INTEREST EXPENSE |
| 7,030 |
| 8,525 |
| 21,829 |
| 26,201 |
| ||||
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|
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INTEREST INCOME |
| (114 | ) | (149 | ) | (286 | ) | (456 | ) | ||||
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(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE |
| (1,873 | ) | 1,832 |
| (3,038 | ) | 7,091 |
| ||||
|
|
|
|
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|
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INCOME TAX (BENEFIT) EXPENSE |
| (634 | ) | 712 |
| (926 | ) | 2,660 |
| ||||
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NET (LOSS) INCOME |
| $ | (1,239 | ) | $ | 1,120 |
| $ | (2,112 | ) | $ | 4,431 |
|
PANOLAM INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
|
| For the Nine Months Ended |
| ||||
|
| 2008 |
| 2007 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net (loss) income |
| $ | (2,112 | ) | $ | 4,431 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 23,118 |
| 20,427 |
| ||
Deferred income tax (benefit) expense |
| (3,210 | ) | 3,813 |
| ||
Amortization of debt acquisition costs |
| 1,332 |
| 1,565 |
| ||
Stock based compensation expense |
| 367 |
| 361 |
| ||
Other |
| 225 |
| (148 | ) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| (5,026 | ) | (7,347 | ) | ||
Inventories |
| (408 | ) | (3,541 | ) | ||
Other current assets |
| 2,358 |
| 1,667 |
| ||
Accounts payable and accrued liabilities |
| (1,293 | ) | 6,764 |
| ||
Income taxes payable |
| 5,624 |
| (4,337 | ) | ||
Other |
| (600 | ) | (807 | ) | ||
Net cash provided by operating activities |
| 20,375 |
| 22,848 |
| ||
|
|
|
|
|
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CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of property, plant and equipment |
| (3,126 | ) | (8,273 | ) | ||
Net cash used in investing activities |
| (3,126 | ) | (8,273 | ) | ||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Repayment of long-term debt |
| (2,030 | ) | (8,021 | ) | ||
Borrowings under revolving credit facility |
| 5,000 |
| — |
| ||
Settlement of amount due to Panolam Holdings Co |
| (2,482 | ) | — |
| ||
Net cash provided by (used in) financing activities |
| 488 |
| (8,021 | ) | ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
| (277 | ) | 993 |
| ||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
| 17,460 |
| 7,547 |
| ||
CASH AND CASH EQUIVALENTS - Beginning of period |
| 10,744 |
| 10,849 |
| ||
CASH AND CASH EQUIVALENTS - End of period |
| $ | 28,204 |
| $ | 18,396 |
|
|
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
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Cash payments for interest |
| $ | 16,565 |
| $ | 20,080 |
|
Cash payments for income taxes, net of refunds |
| (3,339 | ) | 3,184 |
| ||