Royal Group advises on third-quarter financial results
November 02 2005 - 5:18PM
PR Newswire (US)
TORONTO, Nov. 2 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG-TSX; RYG-NYSE) today advised that its 2005
third-quarter financial results were adversely affected by a number
of factors. As a result, the company expects that it will report a
decline in sales compared with the 2004 period, with a net loss in
the range of $0.05 per share to $0.10 per share. Excluding the one
time adjustments of $0.13 per share, earnings are expected to be
approximately $0.03 to $0.08 per share in the third quarter. Royal
Group reported earnings per share of $0.38 during the same quarter
in the previous year. The decline in sales reflects reduced demand
for Outdoor Products, and the products of certain non-core
businesses slated for disposition. EBITDA is expected to be $40 to
$45 million less than in the same quarter in the previous year.
Approximately $17 million of the EBITDA decline results from
expenses related to the engagement of consultants to assist with
development of the management improvement plan, other expenses
related to the sale process, expenses related to on-going
regulatory investigations, executive search costs, accruals for
retention bonuses and a write-down of the accounts receivable from
the former Mexican subsidiary divested of during the second quarter
of 2005. Approximately $15 million of the EBITDA decline can be
attributed to raw material cost increases net of selling price
increases, with approximately $9 million of the decline related to
unfavourable currency exchange. The decline in EBITDA may result in
the Company being marginally offside on one of the covenants of its
revolving credit facility. As a result, the Company has approached
its bank group for an amendment or waiver in order to ensure that
it continues to comply with the terms of the facility. Management
believes that the amendment or waiver will be granted prior to the
Company's release of its third quarter earnings. "Our third quarter
results continue to underscore the need for change, which our
recently announced 'Management Improvement Plan' will drive," said
Lawrence J. Blanford, who was appointed President and Chief
Executive Officer of Royal Group near the end of the second
quarter. On September 22, 2005, Royal Group announced that its
board had approved a comprehensive management plan involving
business unit portfolio restructuring, actions to improve profits
and strategic initiatives aimed at attaining the full potential of
its core products. Mr. Blanford noted that "improvement initiatives
are now being aggressively implemented, which we believe will
generate improved financial results over time." Royal Group expects
to report its third quarter earnings on November 14, 2005. The
company will host a conference call pertaining to its financial
results at 9:00 a.m. on November 14, which will be webcast
simultaneously and in its entirety. The webcast can be accessed
though the company's web site at http://www.royalgrouptech.com/.
Royal Group Technologies is a manufacturer of innovative,
polymer-based home improvement, consumer, and construction
products. The company has extensive vertical integration, with
operations dedicated to provision of materials, machinery, tooling,
real estate, and transportation services to its plants producing
finished products. Royal Group's manufacturing facilities are
primarily located throughout North America, with international
operations in South America, Europe, and Asia. Additional
investment information is available on Royal Group's web site at
http://www.royalgrouptech.com/ under the "Investor Relations"
section. The information in this document contains certain
forward-looking statements with respect to Royal Group Technologies
Limited, its subsidiaries and affiliates. These statements are
often, but not always made through the use of words or phrases such
as "expect", "should continue", "continue", "believe",
"anticipate", "suggest", "estimate", "contemplate", "target",
"plan", "budget", "may", "will", "schedule" and "intend" or similar
formulations. By their nature, these forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant, known and unknown, business, economic, competitive
and other risks, uncertainties and other factors affecting Royal
specifically or its industry generally that could cause actual
performance, achievements and financial results to differ
materially from those contemplated by the forward-looking
statements. These risks and uncertainties include the ongoing
shareholder value maximization process and its outcome; the ongoing
internal review and investigations by the Special Committee of the
Board of Directors and its outcome; the outcome of the ongoing
assessment and review of the Royal Building System's compliance
with the smoke generated elements of the US building code and the
safety of buildings constructed with the Royal Building System;
fluctuations in the level of renovation, remodelling and
construction activity; changes in product costs and pricing; an
inability to achieve or delays in achieving savings related to the
cost reductions or increases in revenues related to sales price
increases; the sufficiency of our restructuring activities,
including the potential for higher actual costs to be incurred in
connection with restructuring activities compared to the estimated
costs of such actions; the ability to recruit and retain qualified
employees; the level of outstanding debt and our current debt
ratings; Royal's ability to maintain adequate liquidity and
refinance its debt structure by April 30, 2006, the expiry date of
its current bank credit facility; the ability to meet the financial
covenants in our credit facilities; changes in product mix; the
growth rate of the markets into which Royal's products are sold;
market acceptance and demand for Royal's products; changes in
availability or prices for raw materials; pricing pressures
resulting from competition; difficulty in developing and
introducing new products; failure to penetrate new markets
effectively; the effect on foreign operations of currency
fluctuations, tariffs, nationalization, exchange controls,
limitations on foreign investment in local business and other
political, economic and regulatory risks; difficulty in preserving
proprietary technology; adverse resolution of any litigation,
investigations, administrative and regulatory matters, intellectual
property disputes, or similar matters; changes in securities or
environmental laws, rules and regulations; currency risk exposure
and other risks described from time to time in publicly filed
disclosure documents and securities commission reports of Royal
Group Technologies Limited and its subsidiaries and affiliates. In
view of these uncertainties we caution readers not to place undue
reliance on these forward-looking statements. Statements made in
this document are made as of November 2, 2005 and Royal disclaims
any intention or obligation to update or revise any statements made
herein, whether as a result of new information, future events or
otherwise. DATASOURCE: Royal Group Technologies Limited CONTACT:
Mark Badger, Vice President of Marketing and Corporate
Communications, Royal Group Technologies Limited, Phone (905)
264-0701
Copyright