Contact: Dennis Lakomy Release Date: Immediate
Chief Financial Officer
(708) 757-2803
CFC INTERNATIONAL, INC. REPORTS 2005 THIRD QUARTER RESULTS
- - Net sales increased to $23.1 million for the third quarter of 2005, up
6.5% from $21.7 million for the third quarter in 2004.
- - Net sales for the first nine months of 2005 were up 10.4% to $68.3
million, up from $61.9 million for the same period last year.
- - Net income increased to $1.5 million for the third quarter of 2005, up
2.5% from $1.4 million for the third quarter in 2004, while earnings
per share for the third quarter of 2005 and 2004 stayed the same at
$0.32 cents per share on a fully diluted basis.
- - Net income for the first nine months of 2005 rose 9.9% to $3.5 million,
or $0.75 cents per share on a fully diluted basis, up from $3.2 million,
or $0.71 cents per share on a fully diluted basis for the same period
last year.
- - Operating income excluding depreciation and amortization increased 7.1%
to $3.6 million in the third quarter of 2005, from $3.4 million for the
third quarter in 2004.
- - Operating income excluding depreciation and amortization for the first
nine months increased 19.2% to $10.3 million, from $8.6 million for the
same period last year.
Chicago Heights, Illinois, October 26, 2005 - Worldwide holographic and
specialty coated film manufacturer, CFC International, Inc. (Nasdaq: CFCI) today
reported results for the third quarter of 2005. Sales in the third quarter of
2005 increased 6.5 percent to $23.1 million compared to $21.7 million in the
third quarter of 2004. The third quarter 2005 increase in sales was primarily
due to solid holographic security sales.
Third quarter 2005 net income increased to $1.5 million, or $0.32 cents per
share on a fully diluted basis, compared to a net income of $1.4 million or
$0.32 cents per share on a fully diluted basis for the third quarter of 2004.
This increase in net income was primarily due to higher sales. Earnings per
share in the third quarter of 2005 stayed the same because on a fully diluted
basis there were more options in the money, and as a result included in the
shares outstanding as compared to the third quarter of 2004.
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"Once again, we have delivered another solid quarter," said Greg Jehlik,
CFC's President and Chief Executive Officer. "Sales of our holographic, security
and pharmaceutical products continue to grow, as we gain market share by
offering our customers innovative solutions that help them combat counterfeiting
and provide them with unique technologies. Our European operation's sales
volumes have increased, and we are producing profits over the previous year. We
continue to make strides in Asia, and have recently added personnel to further
strengthen our sales and marketing efforts in that area. Additionally, the
Company continues to make capital investments that allow us to expand our
capacity and capabilities. These investments will allow us to deliver positive
results for the balance of the year and achieve sustainable growth over the
long-term." Jehlik further added, "Like most other businesses, we are
experiencing higher energy and raw material costs due to the recent hurricanes
in the U.S. However, we remain confident that we are well positioned for
continued growth, and we are encouraged by the opportunities that we see in
front of us."
Operating income excluding depreciation and amortization was $3.6 million
in the third quarter of 2005, an increase of 7.1 percent compared with $3.4
million in the third quarter of 2004. This increase was primarily due to higher
sales and leveraging operating expenses in the third quarter of 2005.
Sales for the first nine months of 2005 totaled $68.3 million, an increase
of 10.4 percent from $61.9 million for the same period last year. Sales for the
first nine months of 2005 reflected higher sales volumes in holographic security
and authenticity products and pharmaceutical products sales worldwide. In
addition, a strong Euro positively affected sales by $640,000 for the first nine
months of 2005. Net income for the first nine months of 2005 increased to $3.5
million, or $0.75 cents per share on a fully diluted basis, from $3.2 million or
$0.71 cents per share on a fully diluted basis for the same period last year.
Net income for the first nine months of 2005, were favorably affected by higher
sales and by leveraging operating expenses, and unfavorably affected by higher
material prices, scrap, transaction costs and foreign currency exchange losses
due to the strength of the U.S. dollar against the Euro. Operating income
excluding depreciation and amortization for the first nine months of 2005
increased 19.2 percent to $10.3 million from $8.6 million in the first nine
months of 2005 for the reasons described above.
"We are pleased with the positive financial results that CFC has produced
for the first nine months of 2005," said Roger Hruby, CFC's Chairman. "These
results reflect robust sales of our holographic security products and solid
growth in most of our core businesses, both domestically and internationally."
Recent Developments
- -------------------
The Company reports the addition of Mr. Tommy Chiu as Business Development
Manager, Asia. Mr. Chiu has more than 7 years of international sales experience,
and will lead the Company's marketing efforts in Asia.
The Company reports that it has developed an interactive card design
program, CardCAD(TM), that allows users to visualize how its full face
holographic laminate HoloLam Plus(TM) patterns look on transaction cards. The
program was recently introduced at the International Card Manufacturers
Association conference held in Miami, FL on October 16-19, 2005.
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The Company will be exhibiting at the upcoming Cartes 2005 show at the
Paris-Nord Villepinte in Paris, France, November 15-17, 2005 in Booth #4 L 066,
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.
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
- -------------------------------------
(In Thousands, Except Earnings Three Months Ended Nine Months Ended
Per Share and Operating Income September 30, September 30,
Percentage) ------------------ -----------------
2005 2004 2005 2004
---- ---- ---- ----
Net Sales $23,124 $21,718 $68,341 $61,897
------- ------- ------- -------
Cost of Goods (Excluding
Depreciation and Amortization
Shown Below) 15,155 13,842 44,107 39,929
Operating Expenses 4,291 4,512 13,467 13,365
Depreciation and Amortization 1,162 1,238 3,506 3,593
Transaction fees 74 - 508 -
------- ------- ------- -------
Operating Income 2,442 2,126 6,753 5,010
Operating Income % 10.6% 9.8% 9.9% 8.1%
Interest Expense 276 308 823 894
Interest Income (28) - (37) (1)
Interest Rate Swap Valuation
(Benefit) Provision (35) 49 (66) (47)
Rental Income (46) (50) (114) (118)
Foreign Currency Exchange
Loss (Gain) 9 (263) 775 (290)
------- ------- ------- -------
Income Before Income Taxes 2,266 2,082 5,372 4,572
Provision for Income Taxes 800 651 1,907 1,419
------- ------- ------- -------
Net Income (Note 1) $1,466 $1,431 $3,465 $3,153
====== ====== ======= =======
Diluted Weighted Average Number
of Shares Outstanding 4,620 4,488 4,626 4,498
Diluted Earnings Per Share $0.32 $0.32 $0.75 $0.71
Adjusted Earnings Before
Interest, Taxes, Depreciation
and Amortization (Note 1) $3,678 $3,364 $10,767 $8,603
SUMMARY OF INTERNATIONAL SALES
- ------------------------------
(In Thousands, Except Three Months Ended Nine Months Ended
International Sales Percentage) September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
---- ---- ---- ----
International Sales ($) $10,064 $9,961 $30,784 $29,294
International Sales (%) 43.5% 45.9% 45.0% 47.3%
NOTE 1: The Company believes earnings before interest, taxes, depreciation and
amortization (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:
(In thousands) Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
---- ---- ---- ----
Net income $1,466 $1,431 $3,465 $3,153
Add back (subtract):
Transaction expenses 74 - 508 -
Income taxes 800 651 1,907 1,419
Interest expense 276 308 823 894
Interest income (28) - (37) (1)
Interest rate swap valuation
(benefit) provision (35) 49 (66) (47)
Rental income (46) (50) (114) (118)
Foreign currency exchange
loss (gain) 9 (263) 775 (290)
Depreciation and amortization 1,162 1,238 3,506 3,593
------ ------ ------ ------
Adjusted EBITDA $3,678 $3,364 $10,767 $8,603
====== ====== ======= ======
CFC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AT
SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
September 30, December 31,
2005 2004
---- ----
ASSETS
Cash and cash equivalents .................... $ 6,264,526 $ 4,554,699
Restricted cash .............................. 311,587 306,271
Accounts receivable, less allowance
for doubtful accounts ...................... 14,861,225 12,547,380
Inventories .................................. 16,900,556 17,709,138
Other current assets ......................... 1,449,734 1,389,790
----------- -----------
Total current assets ....................... 39,787,628 36,507,278
----------- -----------
Property, plant and equipment, net ........... 26,852,183 28,602,311
Deferred income taxes ........................ 3,517,612 3,528,686
Intangible assets, net ....................... 2,215,463 2,393,466
Other assets ................................. 251,852 266,806
Goodwill ..................................... 1,029,462 1,029,462
Fair value of interest rate swap ............. 105,888 39,553
----------- -----------
Total assets ................................. $73,760,088 $72,367,562
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt ............ $ 6,086,581 $ 5,625,085
Accounts payable and accrued expenses ........ 14,520,829 15,314,782
----------- -----------
Total current liabilities .................. 20,607,410 20,939,867
----------- -----------
Deferred income taxes ........................ 3,221,756 3,229,584
Long-term debt ............................... 14,124,763 15,698,791
----------- -----------
Total liabilities .......................... 37,953,929 39,868,242
----------- -----------
Stockholders' equity ......................... 35,806,159 32,499,320
----------- -----------
Total liabilities and
stockholders' equity ..................... $73,760,088 $72,367,562
=========== ===========