CFM Corporation Announces Record Sales for The 2nd Quarter of Fiscal Year 2004.News Editors/Business Editors MISSISSAUGA Mississauga (mĭsĭsaw`gə), city (1991 pop. 463,388), S Ont., Canada, 12 mi (20 km) W of Toronto on Lake Ontario. A residential suburb of Toronto and a growing transportation and industrial center, it is one of Canada's fastest-growing , Ontario--(BUSINESS WIRE)--April 28, 2004 CFM (Cubic Feet per Minute) The measurement of air flow. Cooling fans are rated in CFM. Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CFM): - CONFIRMS ANNUAL GUIDANCE - ON TRACK WITH RESTRUCTURING restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). CFM Corporation ("CFM" or the "Company") (TSX:CFM) announced today its financial results for the second quarter and six months ended March 27, 2004. - Sales up 11% to $109.6 million for the quarter - Hearth product sales up 40% - Net Income before restructuring costs of $4.3 million or $0.11 per share - Restructuring activities on schedule and on budget Change in Reporting Currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. As previously announced, effective fiscal 2004, the Company has changed its financial reporting currency from the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents to the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of dollar (U.S. dollar). With a significant portion of the Company's operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , reporting in Canadian dollars has resulted in significant variability in the Company's reported results caused by fluctuations in the value of the Canadian dollar relative to the U.S. dollar. Reporting in U.S. dollars will provide the Company's investors and other users of its financial statements with more relevant and useful information. All amounts presented in this press release are in U.S. dollars unless otherwise noted. Financial Highlights
Three Months Ended Six Months Ended
($millions, except per March 27, March 29, March 27, March 29,
share amounts) 2004 2003 2004 2003
---------------------------------------
Net Sales 109.6 98.4 228.7 212.9
Gross Profit 28.3 24.9 59.0 61.3
Net Income 0.3 2.9 4.3 13.4
Earnings per share 0.01 0.07 0.11 0.33
Earnings per share before
restructuring costs(i) 0.11 0.07 0.22 0.33
EBITDA before restructuring
costs (see enclosed definition) 11.4 7.8 23.0 27.7
(i)Net income before restructuring costs has been determined by taking net income for the applicable period, adding to it the restructuring costs, deducting provision for income taxes applicable to the restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. to arrive at net income before restructuring costs for the applicable period. Earnings per share before restructuring costs has been determined by dividing net income before restructuring costs by the average number of shares outstanding during such period. Net income before restructuring costs and earnings per share before restructuring costs, are presented as a measure of the normal operating performance of the Company. A reconciliation of net income before restructuring costs and earnings per share before restructuring costs to net income and earnings per share is as follows:
Three Months Ended Three Months Ended
March 27, 2004 March 29, 2003
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Earnings EPS Earnings EPS
Net Income 0.3 0.01 2.9 0.07
Restructuring cost 6.7 0.17 - -
Income tax related to
restructuring costs (2.7) (0.07) - -
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Net Income before
restructuring costs 4.3 0.11 2.9 0.07
---------------------------------------
Net income before restructuring costs and earnings per share before restructuring costs are not recognized as measures for financial statement presentation under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). Non-GAAP measures (such as net income before restructuring costs and earnings per share before restructuring costs) do not have any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning and are therefore unlikely to be comparable to similar measures presented by other issuers. Investors are encouraged to consider these financial measures in the context of CFM's GAAP results, as provided in the attached financial statements. Operating Highlights Sales for the second quarter increased 11% to $109.6 million from $98.4 million in the second quarter last year. This brings year to date sales for the six months ended March 27, 2004 to $228.7 million, which is up 7% from $212.9 million in the first six months of fiscal 2003. Net income before restructuring costs(i) was $4.3 million for the quarter or $0.11 per share, an increase of $1.4 million or $0.04 per share over the corresponding period in fiscal 2003. Restructuring costs incurred in the quarter reduced this to a net income of $0.3 million or an earning per share Noun 1. earning per share - the portion of a company's profit allocated to each outstanding share of common stock net income, net profit, profit, profits, earnings, lucre, net - the excess of revenues over outlays in a given period of time (including depreciation of $0.01 down from net income of $2.9 million or earnings per share ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") of $0.07 in last year's second quarter. For the six months ended March 27, 2004, net income was $4.3 million ($0.11 per share) compared to $13.4 million ($0.33 per share) in the first half of 2003. Net income before restructuring costs was $9.0 million ($0.22 per share) in the first six months of fiscal 2004. "We are pleased with our improved sales and earnings performance in the second quarter, especially in the face of the continued negative effect that the strong Canadian dollar is having on our results", said Colin Col´in n. 1. (Zool.) The American quail or bobwhite. The name is also applied to other related species. See Bobwhite. Adamson “Adamson” redirects here. For other uses, see Adamson (disambiguation).
The Adamson was an English car manufactured in Enfield, Middlesex, from 1912 to 1925. , Chairman and Chief Executive Officer. "Our restructuring initiatives are on track and we are confident that we will begin to realize the benefits of these initiatives in the second half of the year and into 2005". Sales by Product Category
Three Months Ended Six Months Ended
($millions) March 27, March 29, March 27, March 29,
2004 2003 2004 2003
---------------------------------------
Hearth and Heating Products 65,766 46,955 167,896 145,091
Barbeque and Outdoor Products 42,156 50,572 55,368 64,620
Water Products 1,675 836 5,433 3,186
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109,597 98,363 228,697 212,897
---------------------------------------
---------------------------------------
Sales of hearth and heating products were $65.8 million in the quarter, an increase of $18.8 million or 40% from the second quarter of the prior year. Strong sales to the new home construction sector plus some early season shipments to specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. retail dealers and distributors, and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales of fireplaces and stoves from the recent acquisitions of Temco Fireplace fireplace Opening made in the base of a chimney to hold an open fire. The opening is framed, usually ornamentally, by a mantel (or mantelpiece). A medieval development that replaced the open central hearth for heating and cooking, the fireplace was sometimes large enough to Products and Century Heating Products, contributed to the strong sales performance. In addition, a lower level of excess, end of season product returns from certain mass merchant retail customers than was experienced in the second quarter of fiscal 2003, also contributed to the year over year increase. For the six months ended March 27, 2004, hearth and heating sales were $167.9 million, an increase of 16% or $22.8 million from the first six months of fiscal 2003. Sales of barbecue barbecue [West Indian or South American], in the United States, traditionally an open-air gathering, political or social, in which meats are roasted whole over a pit of embers and food and drink are liberally enjoyed. and outdoor products were $42.1 million in the quarter, a decrease of $8.5 million or 17% from the second quarter of last year due to reduced sales of some mid and low-priced barbeques at certain mass merchant retailers. On a year to date basis, sales of barbeque and outdoor products were $55.4 million compared to $64.6 million in the first half of the prior year. Sales of water products were $1.7 million in the quarter, double the sales in the same quarter a year ago. Sales of water products for the six months ended March 27, 2003 were $5.4 million, up 70% from the first half of fiscal 2003. Gross Profit Gross profit for the quarter ended March 27, 2004 was $28.3 million, an increase of $3.4 million or 14% from $24.9 million in the second quarter of 2003. As a percentage of sales, gross profit was 25.8%. The strong Canadian dollar relative to the U.S. dollar resulted in higher Canadian manufacturing costs in the quarter compared to the prior year, which depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. gross profit by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.2 million or 2% of sales. In real terms, before the currency fluctuations gross profit was approximately $30.5 million or 28.0% of sales, which compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with 25.3% in the second quarter of prior year. On a year to date basis, gross profit was $59.0 million, or 25.8%, compared to $61.3 million, or 28.8%, in the first half of the prior year. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become before restructuring costs(ii) Earnings before restructuring costs, interest, taxes and amortization ("EBITDA before restructuring costs") for the quarter were $11.4 million versus $7.8 million in the corresponding period in the prior year. EBITDA before restructuring costs, as a percentage of sales, increased to 10.4% from 7.9% in the second quarter last year. For the six months to date, EBITDA before restructuring costs was $23.0 million compared to $27.7 million in the corresponding period last year. (ii)EBITDA before restructuring costs is defined as earnings before the taking of any deductions in respect of interest, taxes, amortization and restructuring costs. EBITDA before restructuring costs is presented before deductions for interest expense, tax expense, amortization and restructuring costs as this is a widely accepted measure of a company's normal operating performance. EBITDA before restructuring costs has been determined by taking net income for the period from the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statement of Operations See Income statement. and adding to it interest expense, amortization and income taxes and restructuring costs which are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). as individual line items within the Consolidated Statement of Operation as follows:
Three Months Ended Six Months Ended
($ millions) March 27, March 29, March 27, March 29,
2004 2003 2004 2003
---------------------------------------
Net income for the period 0.3 2.9 4.3 13.4
Restructuring costs 6.7 7.9 -
Amortization 3.0 2.8 5.9 5.4
Interest income (0.1) (0.1) (0.2) (0.1)
Interest expense 2.3 1.4 4.2 2.6
Income taxes (0.8) 0.8 0.9 6.4
---------------------------------------
EBITDA before
restructuring costs 11.4 7.8 23.0 27.7
---------------------------------------
EBITDA before restructuring costs are not recognized measures for financial statement presentation under GAAP. Non-GAAP measures (such as EBITDA before restructuring costs) do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other issuers. Investors are encouraged to consider these financial measures in the context of CFM's GAAP results, as provided in the attached financial statements. Restructuring Costs In connection with the Company's previously announced restructuring, the Company incurred $6.7 million in restructuring costs during the quarter. Interest Expense Net interest expense was $2.2 million for the second quarter, which was $0.9 million higher when compared to the corresponding period in the prior year, due to the higher fixed interest rate on the Company's recently issued senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes. Cash Flows Provided by Operating Activities Cash flows used in operating activities in the quarter were $9.6 million, an improvement of $14.5 million from the $24.1 million used in the second quarter of 2003. Cash flow provided from operating activities for the first six months was $16.7 million compared to $20.5 million in the corresponding period last year due principally to lower net income. Net Bank Debt(iii) Net bank debt increased in the quarter to $119.8 million, up $18.1 million from December December: see month. 27, 2003 due primarily to higher working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . (iii)Net bank debt is defined as bank debt (current and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. ), plus bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , plus senior unsecured notes payable less cash. This measure is widely accepted by the financial markets as a measure of credit availability. Net bank debt is not a recognized measure for financial statement presentation under GAAP. Non-GAAP financial measures (such as net bank debt) do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other issuers. Investors are encouraged to consider this financial measure in the context of CFM's GAAP results, as provided in the attached summary financial statements. Weighted Average Shares Outstanding The weighted average shares outstanding during the quarter ended March 27, 2004 increased by 307,000 shares to 40,270,000 as compared to 39,963,000 shares outstanding during the second quarter of fiscal 2003. The increase is primarily a result of the full year effect of shares issued in fiscal 2003 in connection with the first deferred payment on the acquisition of Greenway Home Products and shares issued on the exercise of stock options net of stock purchases under the Normal Course Issuer Bid ("NCIB NCIB National Charities Information Bureau (now part of Wise Giving Alliance) NCIB National Collection of Industrial Bacteria (Edinburgh, Scotland) "). On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, 693,400 shares have been purchased under the Normal Course Issuer Bid at an average price of $7.73 (Cdn $10.28). 2004 Outlook CFM is continuing with its restructuring plans as announced on October October: see month. 23, 2003. Before these restructuring costs, CFM continues to expect EPS for fiscal 2004 to be in the range of $0.74 to $0.81. CFM continues to expect EPS for fiscal 2004 in the range of $0.41 to $0.56 when the restructuring costs are taken into account. This press release contains forward looking statements that involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward looking statements. Important factors that could affect these statements include, without limitation, general economic conditions, consumer confidence and the level of housing starts, demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , CFM's ability to develop new products, patent protection, weather and related customer buying patterns and manufacturing issues, industry capacity, product liability, availability of gas and gas prices, mass merchant consolidation, credit and collections, supply and cost of raw materials, purchased parts and labor, costs of certain employee benefits, the inability to increase selling prices as costs increase, competition, foreign currency fluctuations and government regulation. These factors and other risks and uncertainties are discussed in detail in CFM's Annual Information Form dated February February: see month. 9, 2004 and in the reports and disclosure documents filed by CFM with Canadian and U.S. securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities and commissions. Statements made in this press release are made as of April 28, 2004 and CFM disclaims any intention or obligation to update or revise any statements made herein, whether as a result of new information, future events or otherwise. CFM is a leading integrated manufacturer of home products and related accessories in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and the United Kingdom. CFM designs, develops, manufactures and distributes a complete line of hearth and heating products, barbeque and outdoor products and water and air purification purification, in religion, the ceremonial removal of what the religion deems unclean. The usual agents of purification are water (as in baptism), bodily alteration (as in circumcision), and fire. products. CFM maintains an ongoing program of research and development aimed at continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. improving the quality, design, features and efficiency of its products.
CFM CORPORATION
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(In thousands of dollars, unaudited)
March 27, March 29, Sept. 27,
2004 2003 2003
$ $ $
ASSETS
Current
Cash and cash equivalents 13,815 1,114 13,386
Accounts receivable 78,014 73,948 106,520
Inventory 87,558 97,130 79,602
Prepaid and other expenses 4,109 3,427 1,946
Income taxes Recoverable 5,028 3,825
Future income taxes 12,638 9,001 13,057
-----------------------------
Total current assets 201,162 188,445 214,511
-----------------------------
Capital assets, net 76,459 76,104 75,228
Other assets 5,543 4,048 5,310
Goodwill, net 166,297 151,168 160,888
Intangible assets 5,306 5,173 5,399
Future income taxes 644 372 749
-----------------------------
Total assets 455,411 425,310 462,085
-----------------------------
-----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 289 8,198 10,548
Accounts payable and accrued liabilities 50,790 52,146 61,657
Current portion of long-term debt 10,240 8,198
Current portion of note payable 2,143 8,409 4,944
Income taxes payable 2,288
Future income taxes 1,497 (9) 1,462
-----------------------------
Total current liabilities 54,719 78,984 89,097
-----------------------------
Long-term debt 133,346 99,035 107,424
Note payable 2,143 2,101
Future income taxes 19,239 19,717 18,652
-----------------------------
Total liabilities 209,447 197,736 217,274
Minority interest 27 29
Shareholders' equity
Share capital 104,326 103,253 106,204
Contributed surplus 45 - -
Retained earnings 123,824 112,023 122,786
Cumulative translation adjustment 17,769 12,271 15,792
-----------------------------
Total shareholders' equity 245,964 227,547 244,782
-----------------------------
Total liabilities and
shareholders' equity 455,411 425,310 462,085
-----------------------------
-----------------------------
CFM CORPORATION
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(In thousands of dollars except for earnings per share, unaudited)
Three Months Ended Six Months Ended
March 27, March 29, March 27, March 29,
2004 2003 2004 2003
---------------------------------------
$ $ $ $
Sales 109,597 98,363 228,697 212,897
Cost of sales 81,339 73,499 169,715 151,610
---------------------------------------
Gross profit 28,258 24,864 58,982 61,287
Expenses
Selling and administrative,
research and development 16,845 17,059 35,969 33,612
Amortization 3,033 2,788 5,907 5,391
Interest income (85) (65) (145) (91)
Interest expense 2,270 1,348 4,192 2,614
Restructuring costs 6,684 7,885
---------------------------------------
28,747 21,130 53,808 41,526
---------------------------------------
Income before income taxes (489) 3,734 5,174 19,761
Income taxes (804) 803 885 6,360
---------------------------------------
Net income for the period 315 2,931 4,289 13,401
---------------------------------------
---------------------------------------
Retained earnings,
beginning of period 126,760 110,246 122,786 102,060
Premium on repurchased common
shares (3,251) (1,154) (3,251) (3,438)
---------------------------------------
Retained earnings, end of
period 123,824 112,023 123,824 112,023
---------------------------------------
---------------------------------------
Earnings per share 0.01 0.07 0.11 0.33
Earnings per share before
restructuring costs 0.11 0.07 0.22 0.33
Diluted earnings per share 0.01 0.07 0.11 0.32
CFM CORPORATION
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands of dollars, unaudited)
Three Months Ended Six Months Ended
March 27, March 29, March 27, March 29,
2004 2003 2004 2003
---------------------------------------
$ $
Cash flows from operating
activities
Net income for the period 315 2,931 4,289 13,401
Add (deduct) items not
involving cash
Amortization 3,033 2,788 5,907 5,391
Future income taxes 1,264 (139) 1,477 (154)
Minority interest 3 20
(Gain)/Loss on disposal of
capital assets (5) 1 11 10
Non-cash stock compensation 28 - 28 -
Non-cash interest on Keanall
note payable 54 12 117
Restructuring costs 2,360 2,774
---------------------------------------
6,995 5,638 14,498 18,785
Change in non-cash working
capital (16,604) (29,717) 2,247 1,728
---------------------------------------
Cash flows provided by
(used in) operating activities (9,609) (24,079) 16,745 20,513
Cash flows from investing
activities
Acquisitions, net of cash
acquired (188) (232) (7,615) (230)
Purchase of capital assets (1,982) (2,902) (3,993) (5,262)
Development costs (14) (8) (27) (196)
Proceeds on disposal of
capital assets 9 15 9 26
---------------------------------------
Cash flows used in
investing activities (2,175) (3,127) (11,626) (5,662)
Cash flows from financing
activities
Proceeds from private
placement debt 65,000
Repayment of non-revolving
term facility (2,424) (8,494)
Revolving term facility, net (777) 29,795 (49,149) 1,423
Bank indebtedness (5,939) (8,152) (10,391) (4,910)
Repayment of note payable (944) (2,478) (3,789) (4,866)
Deferred financing costs (413) (916)
Repurchase of common shares (5,361) (1,724) (5,361) (5,184)
Issuance of common shares 102 346 230 415
---------------------------------------
Cash flows provided by
(used in) financing
activities (13,332) 15,363 (4,376) (21,616)
Effect of foreign currency
translation on cash
and cash equivalents 201 335 (314) 449
---------------------------------------
Net increase (decrease) in
cash and cash equivalents
during the period (24,915) (11,508) 429 (6,316)
Cash and cash equivalents,
beginning of period 38,730 12,622 13,386 7,430
---------------------------------------
Cash and cash equivalents,
end of period 13,815 1,114 13,815 1,114
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