IPEC Holdings Inc. Reports First Quarter 2005 Financial Results
11 May 2005 - 11:10PM
PR Newswire (US)
IPEC Holdings Inc. Reports First Quarter 2005 Financial Results NEW
CASTLE, Pa., May 11 /PRNewswire-FirstCall/ -- IPEC Holdings Inc.
("IPEC" or the "Company") (OTC:IPEC) (BULLETIN BOARD: IPEC) today
announced its results for the first quarter ended March 31, 2005.
(Logo: http://www.ereleases.com/pr/2005-ipec-logo.jpg) 2005 FIRST
QUARTER FINANCIAL HIGHLIGHTS: -- The Company reported net income of
$468,040 or $0.04 per diluted common share, compared to $151,849 or
$0.01 per diluted common share in the first quarter of 2004. The
increase in net income of $316,191 is primarily attributable to the
continued expansion of the Company's customer base, along with the
implementation and execution of certain cost containment and
process improvement initiatives that the Company commenced during
2004. -- Operating income for the first quarter of 2005 was
$808,840; $432,166 higher than the operating income of $376,674
recorded by the Company for the first quarter of 2004. -- Sales
increased to $5.3 million compared to $4.4 million for the
comparable 2004 quarter, representing a 21% increase. -- The
Company generated free cash flow of $0.4 million (computed as net
cash provided by operating activities of $0.5 million less capital
expenditures of $0.1 million) compared to ($0.8) million used in
the comparable 2004 quarter (computed as net cash used by operating
activities of ($0.1) million less capital expenditures of $0.7
million). The increase in free cash flow combined with enhanced
financial flexibility obtained through the Company's debt
refinancing package consummated during the quarter permitted the
Company to retire $0.6 million of debt. -- The Company remains
financially sound with borrowing capacity plus cash on hand at over
$3.0 million. CAPITAL SPENDING Capital spending for continuing
operations totaled $0.1 million for the quarter ended March 31,
2005, as compared to $0.7 million for the quarter ended March 31,
2004, when the Company made significant expenditures related to a
30,000-square-foot warehouse addition to the Company's Alabama
production facility. The Company's first quarter 2005 capital
spending consisted primarily of additional plant machinery. For the
remainder of fiscal 2005, the Company projects maintenance-related
capital spending to be $0.6 million with an additional $0.9 million
for growth-related activities. Growth-related capital spending will
ultimately be driven based on the Company's assessment of available
market opportunities and their projected return on investment. DEBT
REFINANCING On February 18, 2005 the Company acted in the capacity
of Guarantor to consummate a debt refinancing package between its
wholly owned operating subsidiary, International Plastics and
Equipment Corp., and Citizens Bank. The consummation of this
transaction reduced the average interest rate from that of the
refinanced debt; decreased required term principal debt payments by
approximately $0.6 million over the subsequent twelve-month period,
thus providing the Company additional flexibility in the use of its
cash flows from operations for potential new product market entry
opportunities; and removed the obligation of the Company to fund
$0.4 million to a reserve fund over a sixty-month period as
security against the Company's $1.8 million letter of credit. The
Company estimates that it will save approximately $0.1 million in
interest expense during fiscal 2005 as a result of the refinancing
assuming the existing capitalization structure of the Company
remains unchanged. COMPANY COMMENTS "Significant productivity
improvements achieved through our corporate initiatives combined
with solid unit sales growth primarily in our 38mm closure product
lines helped us deliver higher earnings results during the
quarter," commented Joseph Giordano, Jr., the Company's President.
"Looking ahead, we expect to continue sustaining favorable organic
growth rates while keeping our commitment to develop stronger
relationships with, and deliver added value to, our customers."
EARNINGS PROJECTIONS The Company reaffirms its earnings guidance
for 2005. For the year, the Company expects earnings per diluted
common share to be in the range of $0.20 to $0.23 per share,
barring the occurrence of any unforeseen or unusual conditions
affecting the industry or IPEC. Given consideration to various
short-term factors including volatility in customer ordering
patterns, the Company believes that annual projections are a more
reliable indicator of projected financial results. Accordingly, the
Company does not intend to issue quarterly earnings projections in
the foreseeable future. ABOUT IPEC HOLDINGS INC.: IPEC Holdings
Inc. manufactures and sells tamper-evident plastic closures through
its wholly owned operating subsidiary, International Plastics and
Equipment Corp. These closures are predominantly used in the
bottling of non- carbonated beverages including bottled water, milk
and fruit and sports drinks. The Company also designs and
manufactures equipment for the bottling industry. IPEC's customer
base primarily consists of dairy and bottled water manufacturers
both domestically and internationally. The Company's two principal
manufacturing facilities are located in Pennsylvania and Alabama.
FOR ADDITIONAL INFORMATION CONTACT: Shawn C. Fabry Chief Financial
Officer 185 Northgate Circle New Castle, PA 16105 Website:
http://www.ipec.biz/ Phone: (724) 658-3004 x235 Fax: (724) 658-3054
FORWARD-LOOKING STATEMENTS: This release may be deemed to contain
forward-looking statements, which are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, among other things,
statements regarding future events and the future financial
performance of IPEC that involve risks and uncertainties. Any
statements that refer to the expectations or other
characterizations of future events or circumstances are
forward-looking statements. Readers are cautioned that these
forward-looking statements are only predictions and may differ
materially from actual future events or results due to a variety of
factors, including: volatile price or shortage of resin supply,
credit risk, consolidation in our customer accounts, lack of
synergies or perceived benefits in any future acquisitions,
uninsured operating conditions, adverse weather patterns, volatile
and low trading volume in Company stock, loss of key personnel,
debt service and compliance concerns, competitor or industry
technological developments, contamination or defects with our
products and other factors discussed in IPEC's most recent reports
on Form 10-KSB, 10-QSB and 8-K. The financial information contained
in this release should be read in conjunction with the consolidated
financial statements and notes thereto included in IPEC's most
recent reports on Form 10-KSB and Form 10-QSB, each as it may be
amended from time to time. Any projections in this release are
based on limited information currently available to IPEC, which is
subject to change. Although such projections and the factors
influencing them will likely change, IPEC will not necessarily
update the information, since IPEC will only provide guidance at
certain points during the year. Such information speaks only as of
the date of this release. IPEC HOLDINGS INC. UNAUDITED FINANCIAL
RESULTS Q1 05 Q1 04 Sales $5,317,409 $4,406,690 Operating expenses:
Cost of goods sold 3,788,013 3,327,099 Selling and service 229,642
232,661 General and administrative 490,914 470,256 Operating
expenses 4,508,569 4,030,016 Operating income 808,840 376,674
Non-operating expense (income): Interest expense 82,457 125,653
Other income (28,520) (1,828) Non-operating expenses 53,937 123,825
Income before taxes 754,903 252,849 Income taxes 286,863 101,000
Net income $468,040 $151,849 Average Shares of Common Stock - Basic
9,972,912 9,972,912 Average Shares of Common Stock - Diluted
10,499,586 10,206,900 Basic Income Per Share $0.05 $0.02 Diluted
Income Per Share $0.04 $0.01 NON-GAAP MEASURES EBITDA (a) (b): Net
Income 468,040 151,849 Interest Expense 82,457 125,653 Income Taxes
286,863 101,000 Dep. & amortization expense 447,442 447,069
EBITDA (a) (b) $1,284,802 $825,571 EBITDA as a % of Sales (a) (b)
24% 19% Free Cash Flow (c): Net cash provided by operating
activities 524,984 (88,744) Purchase of property, plant and
equipment (94,548) (667,962) Free Cash Flow (c) $430,436 $(756,706)
(a) EBITDA represents, for any relevant period, income (loss)
before income taxes, depreciation of property, plant and equipment,
interest expense (including amortization of debt issuance costs)
and amortization of intangible assets. (b) EBITDA is not intended
to represent and should not be considered more meaningful than, or
an alternative to, net income (loss), cash flow or other measures
of performance in accordance with generally accepted accounting
principles. EBITDA data is included because the Company understands
that such information is used by certain investors and Company
analysts. (c) The Company defines free cash flow as net cash
provided by operating activities less purchases of property, plant
and equipment. It should not be inferred that the entire free cash
flow amount is available for discretionary expenditures. The
Company believes that free cash flow is a useful measure of
performance and uses this measure as an indication of the strength
of the Company and its ability to generate cash. This release was
issued through eReleases(TM). For more information, visit
http://www.ereleases.com/. DATASOURCE: IPEC Holdings Inc. CONTACT:
Shawn C. Fabry, Chief Financial Officer, IPEC Holdings,
+1-724-658-3004 x235, Fax: +1-724-658-3054 Web site:
http://www.ipec.biz/
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