Imaflex Inc. (TSX Venture Exchange - IFX.A) announces results for the second quarter ended June 30, 2008.
Summary - Results of Operations
The Company's Canadian operations generated combined net income of $114,000 for the three months ended June 30, 2008, compared with net loss $730,000 for the same period in 2007. The consolidated net loss in the second quarter of 2008 of $281,000 is due primarily to the loss on foreign exchange of $488,000 and the increase in amortization of $241,000 over the same period of 2007.
The Company's Canadian operations generated a combined net income of $564,000 for the six months ended June 30, 2008, compared with net loss of $559,000 for the same period in 2007. The consolidated net loss for the period ending June 30, 2008 of $757,000 is due primarily to the loss on foreign exchange of $621,000 and the increase in amortization of $426,000 over the same period of 2007.
Sales
Sales for the three months ended June 30, 2008 totaled $14,014,000 compared with $12,089,000 for the same period of 2007. The increase of $1,925,000 or 15.9 % was due primarily to pricing increases as a result of higher raw material costs. Sales for the six months ended June 30, 2008 totaled $26,128,000 compared with $24,117,000 for the same period in 2007. The increase of $2,011,000 or 8.3% was due primarily to pricing increases as a result of higher raw material costs.
Gross profit margins
The gross profit margin for the quarter increased primarily due to a better mix of higher margin sales and the integration of our Victoriaville facilities.
Income taxes
The income tax provision reflects the taxes on the income generated by the Company's Canadian operations. No future income tax benefits have been recorded on Imaflex USA's operating losses.
Outlook
During this quarter our industry saw monthly increases in raw materials, increased costs in transportation, and manufacturing, with many surcharges activated at a moments notice. In spite of this, or maybe due to this, the industry has reacted in a positive manner that actually bodes well for the near future. Competitors, worried about market share retention, and so for almost two years kept prices depressed, can no longer, will no longer, absorb any increases in costs, and so costs are now being passed on to our customers. The effect, and this mostly due to timing, has not yet trickled down to our bottom line, but soon will.
As to our own results and expectations, management is pleased to report the following. Though part of Imaflex, and therefore not an entity to report on, it is nevertheless important that the shareholder know that Canguard has turned the corner. Management is pleased to report that whereas, for the same six months last year Canguard had losses of $254,000, this year for the same period it eked out a profit of $5,000.
As for Imaflex Inc., management's priority has been to replace the $5,000,000 of revenues which it was making to its own affiliates in 2007, but not this year. Management is pleased to report that we have recouped most of those revenues selling to third parties.
Canslit's integration has begun to contribute in the manner that was envisioned. Its results permit management to pursue those other opportunities that it could not contemplate prior to the cost savings achieved by the integration.
As to Imaflex USA, losses have increased when comparing them to last year's. Management wishes to remind the reader that these increased losses are strictly due to the increase in depreciation costs. Also, due to timing, revenues are flat, however, and as has been reported in past management outlooks, management has every reason to believe that revenues will increase in the next two quarters. The sales force that was put in place has been very active during this quarter. This activity will increase revenues in the coming quarters, and will, as has been stated in the prior outlook, dramatically decrease our losses during the next two quarters.
Lastly management wishes to state that these results, achieved in the harshest business climate that one could imagine, coupled with the new mind set of our industry, which has finally woken up to the fact that the strategy of protecting market share has not worked, encourages us to believe that the worst is over. We are of the opinion that it will take some time yet to attain the stellar results that were attained prior to our expansion, but at last we have reason to believe that we have finally begun a new phase which will allow us to once again achieve results that will contribute to increase shareholder value. -- www.cnxmarketlink.com
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