Innovative Composites Reports Q1 FY2012 Financial Results

- Record revenue driven by sales growth of non-housing products -

TORONTO, March 30, 2012 /CNW/ - Innovative Composites International Inc. ("ICI" or the "Company"), (TSXV: IC) (OTCQX: ICIZF), a producer of patented protected composite products targeting the multi-billion dollar prefabricated modular housing and transportation markets, reported today its financial results for the three-month period ended December 31, 2011.  All figures are in U.S. dollars unless otherwise stated.

Beginning with the first fiscal quarter of FY2012, ICI reported its financial results in accordance with International Financial Reporting Standards (IFRS), as required for public companies in Canada.  Previously, the Company reported its financial results under Canadian Generally Accepted Accounting Standards (GAAP). Financial results for the corresponding period in FY2011 have been restated to reflect the adoption of IFRS.

"The first quarter of fiscal 2012 was busy and productive, as we continued to build on the momentum established in fiscal 2011 in the form of revenue growth and important sales agreements," said Terry Ball, President and CEO of ICI.  "The significant growth in revenue was a result of the ramping up of manufacturing at our Michigan plant which is focused on our non-housing products segment."

Q1 FY2012 Financial and Operational Highlights

• Revenue of approximately $907,000 for Q1 FY2012, the largest in company history and nearly double all of the previous year's revenue
• Completed the acquisition of the assets of Eleison Composites LLC, a manufacturer of fiber reinforced thermoplastic skin material utilized in ICI's products
• Completed a bought deal public offering for gross proceeds of CDN$10.1 million
• Signed an agreement to supply EcoScape^TM modular homes for large housing projects in Brazil.
• Signed an agreement with Fence-Crete Holdings to make use of ICI's StructureLite^TM panels in highway fencing applications in Canada on an exclusive basis.
• Received, and subsequent to quarter-end, shipped an order from Subway® restaurant owner/operator Liberty Eagle Holdings, based in Tanzania
• Successfully completed transition from Canadian GAAP to IFRS

Highlights Subsequent to Quarter-end

• Commenced operations at its flagship Orangeburg, South Carolina ("SC") facility on time and on budget
• Strengthened executive team by adding Rubens Roque as COO and Allan Landosky as Director of Engineering
• Began trading on the OTCQX under the symbol ICIZF for the purposes of providing additional liquidity and increased access for US based investors
• Signed an agreement with RedLeaf Homes Ltd. to distribute ICI prefabricated homes and shelters within northern and rural Canada
• Introduced new Rapid Tactical Emergency Relief Module called the "RapTER" to target the emergency response and military agency markets

Financial Performance
ICI had approximate revenue of $907,000, an increase of approximately $876,000, for the three-month period ended December 31, 2011 compared to approximately $31,000 for the Q1 FY2011. The record revenue for the period was a result of the beginning of market acceptance for its products, primarily in its non-housing segments, and the beginning transition from a development stage company to a commercially active company during the fiscal year.  The Company expects fluctuations in its revenue initially as more products are introduced to the market place and the Company begins to ramp up its SC facility.

Cost of sales for the first quarter of fiscal 2012 was approximately $860,000, up approximately $777,000 compared to the same period in fiscal 2011.  On a percentage basis, cost of sales was approximately 95% of sales during the three-month ended December 31, 2011 versus approximately 250% for the three-months ended December 31, 2011. Without the impact of IFRS related accounting changes, the cost of sales for the quarter ended December 31, 2011 was 86.7% of sales compared to 69% for the quarter ended December 31, 2010.

The decrease in gross profit margin for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010, is largely attributed to the higher than normal scrap rates and associated write-downs typical for the ramp up stage of new product manufacturing. In addition, pricing of certain products formerly manufactured at Eleison resulted in gross margins that were lower than gross margins associated with ICI products. ICI management is taking steps to increase gross margins on former Eleison products through implementation of manufacturing efficiencies and selling price adjustments.

ICI expects continued improvements in its gross profit margin through continued strengthened relationships with suppliers, vertical integration, and achieving certain economies of scale through increased sales and capacity utilization.

Total expenses for the three-months ended December 31, 2011 were $2.2 million, an increase of approximately $1.5 million compared to $0.7 million for the same period last year.  The increase in expenses were the result of the overall growth and expansion of the Company, specifically relating to an increase in sales initiatives, expansion of the manufacturing facility in Michigan, ramping up the new manufacturing facility in South Carolina, and the acquisition and integration of the Eleison assets into the Company's activities.

ICI recorded a net loss for the first quarter of fiscal 2012 of $1.7 million or $0.03 per share.  These compare to a net loss of $3.9 million, or $0.08 per share, for the first quarter of fiscal 2011. Cash flow used in operating activities for Q1 fiscal 2012 were $1.7 million, an increase of $1.2 million compared to $0.5 million for Q1 fiscal 2011. The increase is primarily due to increasing expenses as described above.

At December 31, 2011, ICI had working capital of $12.3 million, including cash and cash equivalents of $11.5 million, compared to $7.2 million and $6.6 million, respectively, as of September 30, 2011.

ICI has filed its financial statements for the three-months ended December 31, 2011 and related Management's Discussion and Analysis (MD&A) with securities regulatory authorities.  ICI' financial statements, MD&A and related documents are available via SEDAR as well as through the Company's website, www.innovativecompositesinc.com.

Outlook
"Fiscal 2012 has started off strong with important sales agreements, significant strengthening of our balance sheet through the completed financing, and the recent announcement that our flagship SC facility has commenced initial operations on time and on budget," said Mr. Ball.  "We expect to start delivering homes from the SC facility in the near future and to continue converting opportunities in our project pipeline into sales agreements."

Conference Call
ICI will host a conference call to discuss its 2012 first quarter financial results on Monday, April 2, 2012 at 10:00 a.m. ET.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. A question and answer session for analysts and institutional investors will follow management's presentation.

A taped replay of the conference call will also be available to listeners until 12:00 a.m. Monday, April 9, 2012.  To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 65594194, followed by the number sign.

About Innovative Composites International Inc.
Headquartered in Toronto, Canada,  Innovative Composite International Inc. (TSXV: IC) (OTCQX: ICIZF) is a high-tech engineering and manufacturing company that is successfully commercializing a patent protected line of state-of-the-art composite products targeted at the multi-billion dollar transportation and prefabricated modular housing markets.

Led by a team of commercialization experts ICI has adopted a tier two business model:  It designs and manufactures game-changing products and partners with established companies in its target markets to utilize their sales channels for faster product roll-out.

This strategy and the superior characteristics of the products have resulted in rapidly growing sales and opened up opportunities that could lead to large scale contracts on an ongoing basis.

To find out more about ICI please visit our website at: www.innovativecompositesinc.com.

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Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

"Statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for ICI's products and the availability of funding. These forward-looking statements are made as of the date hereof and ICI does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from ICI's expectations and projections." 

Contact Information:

Ilja Troitschanski
Chief Financial Officer
[phone]
[email protected]        

or

Philip Dale
TMX Equicom
[phone] ext 253
[email protected]