IPEC Holdings Inc. Reports Fourth Quarter 2004 Results; Strong Cash
Flow Enabled Debt Reduction of $1.0 Million for the Quarter The
Company has completed a debt refinancing package with Citizens Bank
resulting in the formation of a $3.5 million Revolving Credit
Facility, $1.5 million Term Loan and $1.0 million Multi-Draw Term
Loan. NEW CASTLE, Pa., March 2 /PRNewswire-FirstCall/ -- IPEC
Holdings Inc. ("IPEC" or the "Company") (OTC:IPEC) (BULLETIN BOARD:
IPEC) today announced its results for the fourth quarter and fiscal
year ended December 31, 2004. Net income available to common
shareholders for the fourth quarter and fiscal year ended December
31, 2004 was $0.04 and $0.17 per common share, respectively. 2004
FOURTH QUARTER FINANCIAL HIGHLIGHTS: -- Net income available to
common shareholders for the fourth quarter of 2004 increased
significantly to $391,990 or $0.04 per common share from a net loss
of ($192,699) or ($0.02) in the fourth quarter of 2003. The
increase is primarily attributable to a growing customer base and
the implementation of certain Company cost containment initiatives
in the beginning of 2004. -- Operating income for the fourth
quarter of 2004 was $709,471, $881,450 higher than the operating
loss of ($171,979) recorded for the fourth quarter of 2003. --
Sales increased to $5.3 million versus $4.3 million for the
comparable 2003 quarter, representing a 23% increase. -- Strong
quarterly free cash flow of $1.1 million (computed as cash flow
from operations of $1.3 million less capital spending of $0.2
million) permitted the Company to retire $1.0 million of Company
debt. -- The Company remains financially sound with borrowing
capacity plus cash on hand at over $3.1 million. CAPITAL SPENDING
Capital spending for continuing operations totaled $1.8 million for
each of the full years 2004 and 2003. The Company's capital
spending consists primarily of additional molds, presses and
customer conversion equipment. In 2004, $0.9 million of the capital
spending related to the construction of a 30,000-square-foot
warehouse addition to the Company's Alabama production facility.
For fiscal 2005, the Company projects maintenance-related capital
spending to be $0.8 million with an additional $1.0 million for
growth-related activities. Growth-related capital spending will
ultimately be driven based on the Company's prudent assessment of
available market opportunities. 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 Joseph Giordano, Jr., President of the Company, commented
on the Company's results by stating, "We are pleased by the
positive execution of our key priorities in 2004 as demonstrated by
our financial progress in nearly all key dimensions of our
business. Going into 2005, we remain committed to positioning the
Company to achieve further progress in our primary goal of
increasing market share while providing industry-leading service to
our customer base. We believe that increasing sales among our
product lines, accompanied with a continued focus on operational
performance and customer satisfaction, should continue to deliver
earnings growth to our shareholders while building stronger
relationships and bringing added value to the customers we serve."
EARNINGS PROJECTIONS The Company projects 2005 fiscal earnings per
common share to be between $0.20 - $0.23 cents per common share,
barring the occurrence of any unforeseen or unusual conditions
affecting the industry or IPEC. 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 future acquisitions, uninsured
operating conditions, adverse weather patterns, volatile and low
trading volume 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 Q4
04 Q4 03 YTD 04 YTD 03 Sales $5,268,181 $4,270,399 $22,381,157
$16,395,664 Operating expenses: Cost of goods sold 3,587,568
3,592,353 15,749,399 12,645,784 Selling 237,397 336,004 1,180,884
1,386,030 General and administrative 733,745 514,021 2,225,971
1,651,530 Operating expenses 4,558,710 4,442,378 19,156,254
15,683,344 Operating income 709,471 (171,979) 3,224,903 712,320
Non-operating expense: Interest expense 78,882 144,579 414,167
598,922 Other expense (income) (22,684) (13,163) 12,812 (35,868)
Non-operating expenses 56,198 131,416 426,979 563,054 Income (loss)
before taxes 653,273 (303,395) 2,797,924 149,266 Income taxes
261,283 (110,696) 1,119,144 62,195 Net income (loss) $391,990
$(192,699) $1,678,780 $87,071 Average Shares of Common Stock -
Basic 9,972,912 9,972,912 9,972,912 9,972,912 Average Shares of
Common Stock - Diluted 10,371,253 10,272,147 10,230,486 10,242,459
Basic Income (loss) Per Share $0.04 $(0.02) $0.17 $0.01 Diluted
Income (loss) Per Share $0.04 $(0.02) $0.16 $0.01 Net Income Plus:
Interest Expense 78,882 144,579 414,167 598,922 Income Taxes
261,283 (110,696) 1,119,144 62,195 Dep. & amortization expense
440,945 452,990 1,767,990 1,738,371 EBITDA (a) (b) $1,173,100
$294,174 $4,980,081 $2,486,559 EBITDA as a % of Sales (a) (b) 22%
7% 22% 15% (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. 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 Inc.,
+1-724-658-3004 x235, Fax: +1-724-658-3054 Web site:
http://www.ipec.biz/
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