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COPYRIGHT 2003 Business Wire
Business Editors
TORONTO--(BUSINESS WIRE)--July 31, 2003
Royal Group Technologies Limited (RYG: TSX, NYSE) announced financial results today for the third quarter of fiscal 2003, ended June 30, 2003. Net sales for the quarter were $525 million, compared to $579 million recorded during the same period in fiscal 2002. During the quarter, Royal Group recorded a $45.5 million pre-tax charge and a $3.3 million recovery of executive bonuses, resulting in net losses of $1.6 million or $0.02 per share on a diluted basis. Excluding these items and normalizing the tax rate, Royal recorded net earnings of $28 million or $0.30 per share on a diluted basis. For the third quarter of fiscal 2002, Royal recorded net earnings of $57 million or $0.60 per share on a diluted basis.
The change in sales from the previous year can be primarily attributed to US dollar denominated sales being recorded at a lesser exchange rate, as well as reductions in window coverings and pipe sales. Excluding the change in exchange rate, sales would have been about $560 million, down by approximately 3% from last year.
Royal generated 57% of its sales in the United States compared to 62% last year, 37% in Canada compared to 32% last year, and 6% internationally, unchanged from last year. Absolute sales in Canada increased, whereas the volume of sales in the United States and the converted amount to Canadian dollars decreased relative to previous quarters, largely as a result of a stronger economy in Canada than the United States in recent months.
A pre-tax charge of $29 million was recorded during the third quarter, relating to the write down of tangible assets, primarily being inventories and promotional materials associated with the exit from certain retail window covering programs. An additional pre-tax charge of $5 million is anticipated to be recorded in the fourth quarter relating to remaining severance, lease terminations and other exit costs in the window coverings division. Royal Group had previously announced that it expected to incur a total pre-tax charge of approximately $35 million relating to exits from certain retail window covering programs. Additionally in the quarter, Royal Group recorded a pre-tax charge of $16.5 million, primarily related to reduced valuation of various inventories.
Including the items noted above, EBITDA was $40 million. EBITDA would have been $86 million without the above noted items, compared to $124 million last year. During the third quarter of fiscal 2003, the Products Segment reported EBITDA of $7 million, including charges of $43.5 million, while the Support Segment reported $33 million, inclusive of charges of $2.0 million. EBITDA margins were 7.7% as a percentage of sales, but were 16.3% excluding the above noted items compared to 21.4% last year.
Furthermore, with...
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