Contact: Dennis Lakomy Release Date: Immediate
Chief Financial Officer
(708) 757-2803
CFC INTERNATIONAL, INC. REPORTS 2004 THIRD QUARTER RESULTS
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- Fully diluted earnings per share increased to $0.29 for the third
quarter of 2004, versus ($0.07) in the third quarter last year.
- 44% sales growth fundamentally underpins earnings growth.
- Raising full year 2004 fully diluted earnings per share estimate to
a range of $0.72 to $0.76, from the prior estimate of $0.48 cents
to $0.52.
Chicago Heights, Illinois, October 25, 2004 - 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."
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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.
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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 www.cfcintl.com.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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(In Thousands, Except Earnings
Per Share and Operating Three Months Ended Nine Months Ended
Income Percentage) September 30, September 30,
------------------- -----------------
2004 2003 2004 2003
---- ---- ---- ----
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
International Sales Three Months Ended Nine Months Ended
Percentage) September 30, September 30,
------------------ -----------------
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 Net Per
(Loss) Share 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
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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
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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
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