NOVIK ANNOUNCES RECORD QUARTERLY SALES
November 10 2010 - 4:00PM
PR Newswire (Canada)
QUEBEC CITY, Nov. 10 /CNW/ -- THIRD QUARTER 2010 HIGHLIGHTS -- Net
earnings of $693,000 compared to $93,000 last year -- Consecutive
record quarterly sales at $7.8 M -- 61% increase in sales during
the quarter -- 66% sales growth for the first nine months -- 446%
improvement in adjusted EBITDA for the first nine months --
Quarterly operating profit of $1,043,000 compared to $128,000 last
year QUEBEC CITY, Nov. 10 /CNW Telbec/ - Novik inc. (NVK) releases
today its results for the third quarter of fiscal year 2010. All
amounts are expressed in Canadian dollars unless otherwise
indicated. NOVIK inc. for the periods ended September Third Third
Year to Year to 30, 2010 and 2009 (in thousands dollars, except
quarter quarter date date for amounts per share) 2010 2009 2010
2009 $ $ $ $ Operating results Revenues 7,839 4,872 19,384 11,688
Gross 3,257 1,993 7,387 4,493 margin Earnings before depreciation,
1,637 442 2,687 492 stock-based compensation, financial expenses
and income taxes Net earnings (loss) 693 93 432 (99) Basic and
diluted net earnings 0.014 0.002 0.009 (0.002) (loss) per share
NOVIK inc. Sept. 30, Dec. 31, (in thousands dollars, except 2010
2009 for amounts per share) $ $ Financial position Total 26,287
25,314 assets Working capital 962 1,457 Total long-term 9,519
10,450 financial liabilities Total 14,921 14,496 liabilities
Shareholder's 11,366 10,818 equity Shareholder's equity 0.23 0.22
per share Number of shares 48,470,858 48,470,858 outstanding Mr.
Gaudreau, Novik's president, is proud to announce positive
financial results for the third quarter of current fiscal
year. He points out that "during the previous quarter, Novik
had announced a record quarter in its sales with disappointing
profitability. The high cost of raw materials combined with
introductory discounts offered to large North American distributors
explained this lower profitability. The current quarter
presents better financial results. Novik has again set a new
sales record but with much greater operational
profitability. The increase in the price of our products, a
decrease in the price of raw materials on the market, the
significant decrease in introductory discounts offered, as well as
tighter monitoring of our operating costs contributed to these more
positive financial results." Revenue During the course of the third
quarter of fiscal year 2010, Novik recorded revenues of $7.8 M,
compared to $4.9 M during the same quarter of the previous fiscal
year. This level is a new quarterly sales record for Novik,
surpassing the quarterly sales record of $7.7 M during the previous
quarter. Novik has thus achieved two consecutive quarters of
record sales. Mr. Gaudreau explains that "Novik's 61% sales growth
in the third quarter compared to the same period of last fiscal
year is still a great achievement, given our presence in an
industry still facing significant challenges following the latest
economic recession. Our industry has grown marginally since
last year and remains far from the thresholds seen in the
mid-2000s; Novik is thus gaining market share, given its greater
pace of sales growth since the start of the current year." Mr.
Gaudreau adds that "the sales growth remains mainly in Canada and
the United States. Just like the previous quarters of the current
fiscal year, the presence of new large distributors in these two
countries and especially the introduction of innovative covering
products in 2009 explain this growth. Sales increased by
nearly $3 M in the North American territory for the third quarter,
a 76% increase compared to the same period of the previous year.
The same surge in sales growth was observed on this market during
the previous quarter. The efforts in marketing and developing
new products in recent years have allowed Novik to generate this
sales growth and stand out in a market where the opportunities are
at a slow pace. This phenomenal growth in Novik's sales in a
North American economic context considered very difficult,
positions the company advantageously in the face of a stronger
economic recovery foreseen over the coming years." On the other
hand, Mr. Gaudreau ends by outlining that "European deliveries are
constant compared to the last quarter. Access to credit for
our distributors remains the main obstacle to bringing back the
sales volumes seen in 2008, of nearly $9 M. It is difficult
for us to predict the volume of sales for the coming year, but we
know that Novik products still remain a viable, desired option on
this continent. We are thus continuing discussions with our
current distributors in order to maximize the opportunities offered
on this continent." Novik's cumulative sales, for the first nine
months of 2010, total $19.4 M compared to $11.7 M for the same
period of the previous year. This strong 66% increase in sales
is also explained by the items mentioned above. EARNINGS BEFORE
INTEREST, STOCK-BASED COMPENSATION COSTS, TAXES, DEPRECIATION AND
AMORTIZATION ("adjusted EBITDA") Earnings before interest,
stock-based compensation costs, taxes, depreciation, and
amortization (adjusted EBITDA) is a measure that has no
standardized meaning prescribed by Canadian generally accepted
accounting principles. It is therefore considered to be a
non-GAAP measure in Canada. Accordingly, the measure may not
be comparable to similar measures presented by other
issuers. This measure is presented and described in this
management report in order to provide shareholders and potential
investors with additional information regarding the company's
liquidity and ability to generate funds to finance its activities.
For the third quarter of fiscal year 2010, adjusted EBITDA is
$1,637,000 compared to $442,000 for the same period of the previous
fiscal year. Novik's large sales growth during the third quarter
explains this increase. This level of adjusted EBITDA, with a
ratio of 21% on sales, represents a threshold more comparable to
that seen in fiscal year 2008, when Novik had generated an annual
return of 20%. This ratio demonstrates Novik's potential to
generate attractive levels of liquidities in a context of
profitability. For the nine-month period ended on September 30,
2010, adjusted EBITDA totals $2,687,000 compared to $492,000 for
the same period of the previous fiscal year. It is important
for Novik to post a suitable adjusted EBITDA threshold during the
second and third quarters, given that the next two quarters will be
periods of lower sales combined with the production of Novik
products in order to respond to strong sales during second quarter
next year. NET PROFIT The company's net profit for the third
quarter of fiscal year 2010 amounts to $693,000, compared to a net
profit of $93,000 for the same quarter of the previous fiscal
year. It is important to understand that the net profit
generated during the second quarter of the previous fiscal year was
made possible through the recording of an exchange gain of $300,000
as explained above. Considering the level of earnings coming
from operations, Novik shows an operating profit of $1,128,000 in
the current third quarter compared to an operating profit of
$27,000. Novik's large sales growth in this third quarter made
this significant improvement possible. In addition, the net profit
for the third quarter improved greatly compared to the previous
quarter. The net profit for the previous quarter was
$51,000. Despite a comparable level of sales, this
profitability was improved thanks to the increase in the gross
margin as a percentage of sales and better monitoring of selling
expenses. For the nine-month period ended on September 30, 2010,
the net profit is $432,000 compared to a net loss of $99,000 for
the same period of the previous fiscal year. Novik generated
an operating profit of $1,187,000 after the first nine months of
2010 compared to an operating loss of $956,000 last year. A
marked increase can thus been seen in the company's profitability
in only one year. OUTLOOK Achieving profitability in 2010 remains
an important focus for Management by the end of the fiscal
year. Despite a more difficult fiscal year in 2009, Management
insisted on, and still insists, on action plans in order to
encourage this return to profitability. The level of orders
and current discussions with customers encourages us to maintain
focus in order to achieve this profitability goal. We are also
preparing the goals for next fiscal year. Having already
received the support of most of our large North American
distributors for 2011, we are building the foundation of our
marketing strategy with regard to Novik's various markets and
products. We have already put forward certain projects to
improve our products and our range of colours, bringing a strong
positive view from of our distributors. We are thus working
internally to ensure that these opportunities are ready for the
first quarter of fiscal year 2011. We are also aiming to
continue our organizational agility in our manufacturing operations
in order to be ready to adequately support the growth foreseen for
the coming years. About NOVIK Novik (NVK) is a leader in the
design, manufacturer and distribution of innovative polymer
exterior siding, roofing coverings and accessories that replace
traditional materials such as stone, brick or wood
shingles. These products target the world-wide residential and
commercial construction industry. Forward-looking statements
contained in this press release involve known and unknown
risks, uncertainties or other factors that may cause actual
results, performance or achievements of the company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. %SEDAR: 00022807EF pbSource : /b /p pNovik
inc./p pbFor further information/b:/p pMichel Gaudreaubr/
Presidentbr/ Tel. : (418) 878-6161br/ E-mail : a
href="mailto:micgau@novik.com"
font-style="italic"micgau@novik.com/a/p pPascal Bouthotbr/
Vice-President, Financesbr/ Tel. : (418) 878-6161br/ E-mail :
a href="mailto:pasbou@novik.com"
font-style="italic"pasbou@novik.com/a/p
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