CFM Corporation Announces Results for the First Quarter of Fiscal Year 2005.MISSISSAUGA, Ontario For the First Nation, see . Mississauga (pronounced: [ˌmɪsɪˈsɑgə] listen -- 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) ("CFM" or the "Company") announced today its financial results for the three month period ended January January: see month. 1, 2005. All currency amounts are in U.S. dollars.
Financial Highlights
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(US$ millions, except Three Months Ended
per share amounts) January 1, 2005 December 27, 2003
--------------- -----------------
Net Sales 133.0 119.1
Gross Profit 14.8 30.7
Net Income (loss) (16.8) 4.0
Earnings (loss) per share ("EPS") (0.42) 0.10
EPS before restructuring costs,
refinancing costs, loss on sale
of assets of water products
business and deferred tax
valuation allowance(a) (0.20) 0.12
EBITDA before restructuring
costs, refinancing costs and
loss on sale of assets of
water products business(b) (8.9) 11.6
(a)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. before 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). costs, refinancing Refinancing An extension and/or increase in amount of existing debt. costs, loss on sale of assets of water products business and deferred tax valuation allowance has been determined by taking net income for the applicable period, adding to it the restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation allowance, deducting provision for income taxes applicable to the restructuring costs, refinancing costs and loss on sale of assets of water products business to arrive at net income (loss) before restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation allowance for the applicable period and dividing net income (loss) before restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation allowance by the average number of shares outstanding during such period. EPS before restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation allowance is presented as a measure of the normal operating performance of the Company. A reconciliation of EPS before restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation adjustment to earnings (loss) per share is as follows:
For the three For the three
months ended months ended
(US$ millions) January 1, 2005 December 27, 2003
---------------------------------------
Earnings EPS Earnings EPS
Net Income (loss) (16.8) (0.42) 4.0 0.10
Restructuring costs -- -- 1.2 0.03
Income tax related to
restructuring costs -- -- (0.5) (0.01)
Refinancing costs 2.3 0.06 -- --
Income tax related to
refinancing costs (0.9) (0.02) -- --
Loss on sale of assets of
water products business 3.0 0.07 -- --
Income tax related to loss
on sale of assets of
water products business (1.1) (0.02) -- --
Deferred tax valuation allowance 5.4 0.13 -- --
---------------------------------------
Net Income (loss) before
restructuring costs,
refinancing costs and loss
on sale of Greenway (8.1) (0.20) 4.7 0.12
---------------------------------------
---------------------------------------
EPS before restructuring costs, refinancing costs, loss on sale of water products business and deferred tax valuation allowance is not a recognized measure 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 EPS before restructuring costs, refinancing costs, loss on sale of water products business and deferred tax valuation allowance) 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 first quarter increased 12% to $133.0 million from $119.1 million in the first quarter last year. Net income (loss) for the quarter decreased to ($16.8) million or ($0.42) per share, down from $4.0 million or $0.10 per share in the first quarter of fiscal 2004. EPS before restructuring costs, refinancing costs, loss on sale of assets of water products business and deferred tax valuation allowance(a) was ($0.20) for the quarter, compared to $0.12 in the first quarter of the prior year. The Company's earnings were lower compared to the prior year principally due to a higher proportion of lower margin barbeque sales, lower margins on electric fireplaces An electric fireplace is a fireplace powered by electricity rather than traditional fuel sources such as coal, wood, peat, or natural gas. Many enjoy electric fireplaces for budget, safety, and convenience concerns. , increases in steel and other raw material costs, higher distribution costs distribution costs distribute npl → Vertriebskosten pl and the strengthening of 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 as compared to the U.S. dollar.
Sales by Product Category
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Three Months Ended
(US $millions) January 1, 2005 December 27, 2003
--------------- -----------------
Hearth and Heating Products 101.6 102.1
Barbeque and Outdoor Products 28.0 13.2
Water Products 3.4 3.8
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133.0 119.1
--------------- -----------------
Sales of hearth hearth symbol of home life. [Folklore: Jobes, 738] See : Domesticity and heating products were $101.6 million in the quarter, a decrease of 0.5% from the first quarter of the prior year. 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 $28.0 million in the quarter, an increase of $14.8 million or 112% from the first quarter of fiscal 2004. Sales of water products were $3.4 million, a decrease of $0.4 million compared to the same quarter a year ago. Gross Profit Gross profit for the quarter ended January 1, 2005 was $14.8 million, down $15.9 million or 52% from $30.7 million in the first quarter of 2004. As a percentage of sales, gross profit was 11.1%, down from 25.8% in the first quarter of the prior year. Expenses Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , excluding the impact of currency fluctuations, increased by $3.5 million or 18% from the first quarter 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, refinancing costs, and loss on sale of assets of water products business(b) Earnings (loss) before restructuring costs, refinancing costs, loss on sale of assets of water products business, interest, taxes and amortization ("EBITDA before restructuring costs, refinancing costs and loss on sale of assets of water products business") for the quarter were ($8.9) million versus $11.6 million in the corresponding period in the prior year. (b) EBITDA before restructuring costs, refinancing costs, and loss on sale of assets of water products business is defined as earnings (loss) before the taking of any deductions in respect of interest, taxes, amortization, restructuring costs, refinancing costs and loss on sale of assets of water products business. EBITDA before restructuring costs, refinancing costs and loss on sale of assets of water products business is presented before deductions for interest expense, tax expense, amortization and restructuring costs, refinancing costs and loss on sale of assets of water products business as a measure of a company's normal operating performance. EBITDA before restructuring costs, refinancing costs, and loss on sale of assets of water products business has been determined by taking net income for the period from the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statement of Operations See Income statement. and adding to it interest expense, amortization, income taxes, restructuring costs, refinancing costs and loss on sale of assets of water products business which are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). as individual line items within the Consolidated Statement of Operation as follows:
Three Months Ended
($millions) January 1, 2005 December 27, 2003
------------------------------------
Net income (loss) for the period (16.8) 4.0
Restructuring costs -- 1.2
Refinancing costs 2.3 --
Loss on sale of assets of water
products business 3.0 --
Amortization 2.9 2.9
Interest income -- (0.1)
Interest expense 2.6 1.9
Income taxes (2.9) 1.7
------------------------------------
EBITDA before restructuring
costs, refinancing costs
and loss on sale of assets of
water products business (8.9) 11.6
------------------------------------
------------------------------------
EBITDA before restructuring costs, refinancing costs, loss on sale of assets of water products business are not recognized measures for financial statement presentation under GAAP. Non-GAAP measures (such as EBITDA before restructuring costs, refinancing costs and loss on sale of assets of water products business) 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. Refinancing Costs As previously announced, the Company undertook a strategic process to review long-term financing Long-term financing Liabilities repayable in more than one year plus equity. alternatives and other strategic options during the first quarter of 2005. Costs incurred during the quarter relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this process were $2.3 million. Restructuring Costs During 2004, the Company undertook a restructuring of its mass merchant operations. This restructuring was completed by the end of the fourth quarter of 2004, and no further costs have been incurred or are anticipated. Restructuring costs in the first quarter of the prior year were $1.2 million. Interest Expenses Net interest expense was $2.6 million for the quarter, which was $0.7 million higher than in the first quarter last year, due primarily to higher interest rates on the Company's senior notes. Cash Flows Provided by Operating Activities Cash flows generated by (used in) operating activities in the quarter were ($5.6) million, compared to $26.4 million of cash generated in the first quarter of 2004. Net Bank Debt(c) Net bank debt decreased in the quarter to $124.1 million, down $4.6 million from October October: see month. 2, 2004 due primarily to lower working capital. CFM was capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. (c) as at January 1, 2005 with net bank debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. of 58%, as compared with 55% as at October 2, 2004. (c) 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 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 payable less cash. This measure is widely accepted by the financial markets as a measure of credit availability. Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. is defined as net bank debt plus shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . Capitalization is presented as a measure of the Company's total financing structure. 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 number of shares outstanding during the quarter ended January 1, 2005 decreased by 373,000 shares to 40,031,000 as compared to 40,404,000 shares outstanding during the first quarter of fiscal 2004. The Company did not repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. any common shares in the quarter under its normal course issuer bid. 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, the level of housing starts and 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, steel availability and pricing, purchased parts and personnel, 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 March 11, 2005 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 March 29, 2005 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 pace heating products, barbecue 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 U.S. dollars, unaudited)
As at Jan. 1, 2005 Dec. 27, 2003 Oct. 2, 2004
$ $ $
ASSETS
Current
Cash and cash equivalents 17,754 38,730 6,750
Accounts receivable 79,713 78,414 103,846
Inventory 121,678 84,357 110,836
Prepaid and other expenses 5,405 4,833 4,374
Income taxes recoverable 13,625 -- 12,672
Future income taxes -- 13,719 --
-------------------------------------------
Total current assets 238,175 220,053 238,478
-------------------------------------------
Capital assets, net 61,949 77,038 69,696
Other assets 2,550 5,667 2,654
Goodwill, net 45,431 166,619 44,420
Intangible assets 1,816 5,224 1,799
Future income taxes -- 717 --
-------------------------------------------
Total assets 349,921 475,318 357,047
-------------------------------------------
-------------------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current
Bank indebtedness 7,262 6,405 2,289
Accounts payable and
accrued liabilities 105,171 56,183 102,778
Current portion of
long-term debt 131,331 -- 130,036
Current portion of note
payable 6,513 3,117 5,903
Income taxes payable -- 1,034 2,516
Deferred gain on sale of
assets - current portion 718 -- 513
Future income taxes -- 1,156 --
-------------------------------------------
Total current liabilities 250,995 67,895 244,035
-------------------------------------------
Deferred gain on sale of
assets 6,292 -- 4,618
Long-term debt 3,229 134,001 3,141
Note payable -- 2,161 1,650
Future income taxes -- 19,485 --
-------------------------------------------
Total liabilities 260,516 223,542 253,444
Shareholders' equity
Share capital 105,657 106,333 105,635
Contributed surplus 438 -- 233
Retained earnings (deficit) (39,674) 126,760 (22,880)
Cumulative translation
adjustment 22,984 18,683 20,615
-------------------------------------------
Total shareholders' equity 89,405 251,776 103,603
-------------------------------------------
Total liabilities and
shareholders' equity 349,921 475,318 357,047
-------------------------------------------
-------------------------------------------
CFM CORPORATION
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(DEFICIT)
(In thousands of U.S. dollars except for earnings (loss) per
share, unaudited)
Three Months Ended
January 1, 2005 December 27, 2003
-------------------------------------
$ $
Sales 133,022 119,100
Cost of sales 118,265 88,376
-------------------------------------
Gross profit 14,757 30,724
Expenses
Selling and administrative,
research and development 23,654 19,124
Amortization 2,963 2,874
Interest income (36) (60)
Interest expense 2,634 1,922
Refinancing costs 2,311 --
Loss on sale of assets of water
products business 2,969 --
Restructuring costs -- 1,201
-------------------------------------
34,495 25,061
-------------------------------------
Income (loss) before income
taxes (19,738) 5,663
Income taxes (recovery) (2,944) 1,689
-------------------------------------
Net income (loss) for the period (16,794) 3,974
-------------------------------------
-------------------------------------
Retained earnings (deficit),
beginning of period (22,880) 122,786
-------------------------------------
Retained earnings (deficit),
end of period (39,674) 126,760
-------------------------------------
-------------------------------------
Earnings (loss) per share (0.42) 0.10
Earnings (loss) per share before
restructuring costs,
refinancing costs, loss on
sale of assets of water
products business and deferred
tax valuation allowance (0.21) 0.12
Diluted earnings (loss) per share (0.42) 0.10
CFM CORPORATION
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars, unaudited)
Three Months Ended
January 1, 2005 December 27, 2003
-------------------------------------
$ $
Cash flows from operating
activities
Net income (loss) for the period (16,794) 3,974
Add (deduct) items not
involving cash
Amortization 2,963 2,874
Future income taxes (1,072) 213
Loss on disposal of capital
assets -- 16
Loss on sale of assets of
water products business 2,969 --
Non-cash stock compensation
expense 205 --
Non-cash interest on note
payable 74 12
Restructuring costs -- 414
-------------------------------------
(11,655) 7,503
Change in non-cash working
capital 6,069 18,851
-------------------------------------
Cash flows provided by (used
in) operating activities (5,586) 26,354
Cash flows from investing
activities
Acquisitions, net of cash
acquired -- (7,427)
Purchase of capital assets (2,263) (2,011)
Development costs -- (13)
Proceeds on sale of assets
of water products business 4,085 --
Proceeds on disposal of
capital assets 10,193 --
Deferred gain on sale of assets (173) --
-------------------------------------
Cash flows provided by (used in)
investing activities 11,842 (9,451)
Cash flows from financing
activities
Proceeds from private placement
debt -- 65,000
Revolving term facility, net 863 (48,372)
Bank indebtedness 4,449 (4,452)
Repayment of note payable (1,106) (2,845)
Deferred financing costs -- (503)
Issuance of common shares 22 128
-------------------------------------
Cash flows provided by financing
activities 4,228 8,956
Effect of foreign currency
translation on cash
and cash equivalents 520 (515)
-------------------------------------
Net increase in cash and cash
equivalents during the period 11,004 25,344
Cash and cash equivalents,
beginning of period 6,750 13,386
-------------------------------------
Cash and cash equivalents,
end of period 17,754 38,730
-------------------------------------
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CFM Corporation (TSX:CFM) |
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