Imaflex Inc. announces results for the quarter ended June 30, 2010

TICKER SYMBOL: IFX.A

MONTREAL, Aug. 25 /CNW Telbec/ - Imaflex Inc. (the "Company") (TSX Venture Exchange - IFX.A) announces results for the quarter ended June 30, 2010.

    
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    (un-audited)

    (CDN $ thousands, except per       Q2 2010   Q2 2009  YTD 2010  YTD 2009
     share amounts)                    -------   -------  --------  --------
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    Sales                               11,747    12,384    23,790    26,195
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    Cost of sales                       10,320    10,229    20,352    21,300
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    Gross profit ($) (before
     amortization)                       1,427     2,155     3,438     4,895
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    Gross profit (%) (before
     amortization)                        12.1%     17.4%     14.5%     18.7%
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    Amortization of production
     equipment                             259       715       538     1,450
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    Gross Profit                         1,168     1,440     2,900     3,445
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    Gross profit (%)                       9.9%     11.6%     12.2%     13.2%
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    Expenses                             1,445       892     2,811     2,022
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    FX loss (gain)                        (180)      260       (83)      247
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    Income (loss) before income taxes      (97)      288       172     1,176
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    Provision for income taxes              (8)      209       117       453
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    Net Income (loss)                      (89)       79        55       723
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    Basic and diluted earnings (loss)
     per share                          (0.002)    0.002     0.001     0.018
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    EBITDA                                 392     1,162     1,160     2,995
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The results include those of Imaflex Inc. ("Imaflex") located in Montréal (Québec) and its divisions Canguard Packaging ("Canguard") and Canslit ("Canslit") located in Victoriaville (Québec), and its wholly owned subsidiary, Imaflex USA, Inc. ("Imaflex USA") located in Thomasville (North Carolina).

    
    Summary - Results of Operations
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For the six months ended June 30, 2010, consolidated net income decreased by $ 668,000 to a profit of $ 55,000 compared with a net income of $723,000 for the same period in 2009.

The decline is primarily due to decreased sales volume and higher selling and administrative costs.

    
    Sales
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For the three and six month periods ending June 30, 2010 the decrease in sales is the result of the decision by management to cease selling mulch film products through distributors. Management is continuing to build its sales force to sell direct.

    
    Gross profit margin
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The gross profit before amortization of production equipment for the three and six month period ending June 30, 2010 declined when compared to the same period in 2009. The decrease is mainly because of the decrease in sales for our Canslit division for products which generate a higher contribution margin. The decrease in amortization is due to a change in accounting policy from 10 and 15 years to 20 years.

    
    Income taxes
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The income tax provision reflects the taxes on the income generated by the Company's Canadian operations. No income tax expense has been recorded on Imaflex USA's operating income due to the loss carry forward.

    
    Outlook
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As reported in our Q1 outlook, management's decision to change the sales model in Canslit's reflective mulch film operations is the sole reason for the decline in revenues and profitability when one compares the first half of 2010 with the first half of 2009.

Management expected these results. We are confident that our decision will benefit our shareholders in the near future. The direct sales model will not only make it possible to regain those sales we temporarily gave up, but will finally make possible the realization of our full revenue and earnings potential in this division. The distributor model we chose to change, despite our many efforts to build on it, never created the conditions whereby more than 50% of our capacity was utilized. We will now have the opportunity to achieve the full capacity that was always available, but never utilized.

All other operations are contributing to the profitability levels that management expected. We are confident that these results will be maintained, if not improved on, for the remainder of the year.

    
    Safe Harbor Statement
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Certain statements and information included in this release constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, estimates and expectations is contained in the Company's other public filings. Unless otherwise required by the securities authorities, we do not undertake to update any forward-looking statements that may be made from time to time by us or on our behalf.

    
    Non-GAAP Measure
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The Company's management uses a non-GAAP measure in this press release, namely EBITDA. Management wishes to specify that in the performance of the Company's financial results, EBITDA is shown as "Earnings before interest, taxes, non-controlling interest, depreciation and amortization". While EBITDA is not a standard GAAP measure, management, analysts, investors and others use it as an indicator of the Company's financial and operating management and performance. EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's performance. The Company's method of calculating EBITDA may be different from those used by other companies.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

For further information: Imaflex Inc.: Joseph Abbandonato, President and C.E.O; Robert Nagy, CMA, CIA - Corporate Controller, Tel: [phone], Fax: [phone], e-mail: [email protected]; Website: www.imaflex.com