Constar International Inc. Announces First Quarter 2006 Results.PHILADELPHIA Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. -- Constar International Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CNST CNST Clinical Negligence Scheme for Trusts (UK) CNST Certified Network Systems Technician ) today announced its financial results for the first quarter of 2006. Highlights when compared to the first quarter of 2005 include: --Net sales of $230.7 million up 4.3 percent. --Custom unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. increased 40.5 percent. --Gross profit percentage improved to 5.5 percent from 2.9 percent. --Operating income of $3.6 million improved versus a loss of $11.3 million. --Credit Agreement 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 of $12.1 million, up 7.6 percent. --Net loss reduced by $13.7 million to $6.3 million. "In the quarter we grew custom unit sales by 40.5%, further improved US operating performance, and significantly abated Abated, an ancient technical term applied in masonry and metal work to those portions which are sunk beneath the surface, as in inscriptions where the ground is sunk round the letters so as to leave the letters or ornament in relief. From 1911 Encyclopædia Britannica price erosion through our strategic pricing initiative," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Hoffman, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and President of Constar. He added, "Improved results were accomplished despite higher energy costs net of customer surcharges, and despite higher administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. incurred during the quarter to enhance internal controls. We are pleased with our financial performance in the quarter." Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 4.3 percent in the first quarter of 2006 to $230.7 million compared to $221.3 million in the first quarter of 2005. This increase primarily reflects increased shipments of custom products, partially offset by unfavorable foreign currency translation. Gross profit in the first quarter of 2006 of $12.8 million increased to 5.5 percent of net sales from 2.9 percent in the first quarter of 2005. Depreciation of $8.2 million was $3.1 million lower in the quarter compared to the first quarter of 2005 principally because of a lower asset base, partially related to a 2005 third quarter non-cash asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge. Net of depreciation, gross profit in the first quarter of 2006 was up $3.3 million compared to the first quarter of 2005. The increase was primarily due to higher unit sales, improved product mix and better operating efficiencies in the U.S. business, partially offset by higher utility costs. Selling and administrative and research and technology expenses of $8.9 million increased $1.3 million in the first quarter of 2006 from $7.6 million in the first quarter of 2005. The increase was primarily the result of a $0.9 million increase in audit costs, higher legal fees and higher compensation expenses in the first quarter of 2006. Interest expense in the first quarter of 2006 of $10.2 million increased 5.6 percent, compared to $9.6 million in the prior year period as a result of higher average borrowings and a higher effective interest rate. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $3.6 million for the first quarter of 2006 improved from the first quarter of 2005 operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $11.3 million because of the enhanced operating performance outlined above and the absence in 2006 of the $10.0 million write off of deferred financing costs recorded in the first quarter of 2005. The Company reported a net loss in the first quarter of $6.3 million, or $0.52 loss per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $20.0, million or $1.65 loss per basic and diluted share in the first quarter of 2005. The net loss was lower in the first quarter of 2006 primarily because of the same factors which lead to the improvement in operating income described above. Credit Agreement EBITDA in the first quarter increased by 7.6 percent to $12.1 million from $11.3 million in the first quarter of 2005. This increase was primarily due to higher gross profit excluding depreciation expense, partially offset by increased 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. . EBITDA is defined by the Company as net income (loss) before interest expense, provision for income taxes, depreciation and amortization. The Company's Credit Agreement adjusts EBITDA for certain items. In the first quarter of 2006, these adjustments amounted to less than $0.1 million. In the first quarter of 2005, these adjustments were $10.9 million, which included the write off of deferred financing costs of $10.0 million. Credit Agreement EBITDA is not a GAAP-defined measure and may not be comparable to adjusted EBITDA as defined by other companies. Management believes that investors, analysts and other interested parties view our ability to generate Credit Agreement EBITDA as an important indicator of our operating performance. Management also believes that Credit Agreement EBITDA is a useful measure in understanding trends because it eliminates various non-operational and non-recurring items. In addition, Credit Agreement EBITDA facilitates comparisons to operating performance in prior periods, and is used by the Company in setting incentive plan targets. Investors are urged to take into account GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures in evaluating the Company, and to review the reconciliation of Credit Agreement EBITDA to net income (loss) in the attached unaudited consolidated statements of operations. Conference Call, Web Cast Information The Company will hold a conference call on Monday Monday: see week. May 15, 2006, at 9:00 a.m. ET to discuss this news release. Forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and other material information will be discussed on this conference call. The dial-in numbers for the conference call are (800) 810-0924 (domestic callers) or (913) 981-4900 (international callers). The conference call will also be broadcast live over the internet and can be accessed via the Company's website: www.constar.net. Please log on approximately 15 minutes prior to the call to register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any necessary audio software. A replay of the broadcast will be available from 1:00 p.m. ET that day until midnight on Monday, May 22, 2006 and can be accessed via telephone by dialing (888) 203-1112 (domestic callers) or (719) 457-0820 (international callers) and entering passcode 5437569, or via the web at www.constar.net where it will be archived. Cautionary Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for historical information, all information in this news release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors, which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the statements made in this news release or the actual results of operations or financial condition of the Company to differ include the success of the Company's strategic pricing initiative, the Company's ability to expand sales of custom products and to improve the operating performance of its European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business. Other important factors are discussed under the caption "Risk Factors" in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. Annual Report for the year ended December 31, 2005 and in subsequent filings with the Securities and Exchange Commission made prior to, on or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company does not intend to review or revise any particular forward-looking statement in light of future events. About Constar Philadelphia-based Constar is a leading global producer of PET (polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n terephthalate Ter`eph´tha`late n. 1. (Chem.) A salt of terephthalic acid. ) plastic containers for food, soft drinks and water. The Company provides full-service packaging solutions, from product design and engineering, to ongoing customer support. Its customers include many of the world's leading branded consumer products companies.
CONSTAR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS COMPARISON
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2006 2005
---------- ----------
Net customer sales $ 229,735 $ 220,245
Net sales to affiliates 957 1,034
---------- ----------
Net sales 230,692 221,279
---------- ----------
Cost of products sold, excluding
depreciation 209,727 203,607
Depreciation 8,183 11,301
---------- ----------
Gross profit 12,782 6,371
---------- ----------
Selling and administrative expense 7,589 6,144
Research and technology expense 1,338 1,474
Write off deferred financing costs and
other fees - 10,025
Provision for restructuring 210 59
---------- ----------
Total operating expenses 9,137 17,702
---------- ----------
Operating income (loss) 3,645 (11,331)
Interest expense 10,186 9,645
Other income, net (311) (415)
---------- ----------
Loss before taxes and minority interest (6,230) (20,561)
(Provision) benefit for income taxes (94) 522
Minority interests (19) (9)
---------- ----------
Net loss $ (6,343) $ (20,048)
========== ==========
Per common share data:
Basic and diluted
Net loss $ (0.52) $ (1.65)
Weighted average common shares
outstanding:
Basic and diluted shares 12,197 12,119
Reconciliation of net income (loss) to
Credit Agreement EBITDA:
Net loss $ (6,343) $ (20,048)
Add back:
Interest expense 10,186 9,645
Taxes 94 (522)
Depreciation 8,183 11,301
---------- ----------
EBITDA 12,120 376
Other adjustments under Credit Agreement 14 10,898
---------- ----------
Credit Agreement EBITDA $ 12,134 $ 11,274
========== ==========
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SELECTED BALANCE SHEET DATA
---------------------------
March 31, 2006
--------------
Cash and cash equivalents $ 7,922
Debt:
Revolver Loan $ 25,588
Senior Notes $ 220,000
Senior Subordinated Notes $ 175,000
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