Tuesday, MTI Global Inc. (MTI.TO), a Canada-based manufacturer of custom-engineered products with silicone and other cellular materials, reported a wider net loss for its fourth quarter, despite a double-digit growth in revenues. Further, MTI Global said it agreed to sell certain Silicone assets to Rogers Corp. (ROG) for US$7.4 million, and added that it plans an orderly exit from the silicone business.
Fourth-quarter net loss widened to C$6.1 million or C$0.23 per share from a net loss of C$5.2 million or C$0.19 per share in the prior year.
Quarterly revenue rose 13.9% year-over-year to C$18.0 million. In the Polyfab segment, Aerospace sales surged 47.2% from last year to C$7.7 million, mainly due to the higher U.S. dollar. Meanwhile, Fabricated Products' sales in the fourth quarter fell about 58.5% to C$0.6 million, primarily due to greater than anticipated decline in sales to the automotive and sporting goods markets.
In the Silicone segment, N.A. Silicone sales declined 3.2% to C$5.3 million due to the slowdown in U.S. automotive sales, despite impact of higher U.S. dollar, while Leewood sales rose to C$2.8 million, and Sterne sales increased to C$1.6 million.
For the fiscal year 2008, MTI Global's net loss was C$18.06 million or C$0.65 per share, wider than loss of C$8.06 million or C$0.29 per share a year ago.
According to the company, the profitability was impacted by significant non-cash charges, including goodwill impairment, long-lived asset impairment, and subordinated debt financing and warrant repricing charges. MTI Global said it took a long-lived asset impairment charge of C$4.1 million at Leewood.
Annual sales grew 11.9% to C$71.20 million from prior year's C$63.61 million.
Aerospace sales rose 24.3% year-over-year to C$27.98 million, and N.A. Silicone sales grew 12.6% to C$22.2 million in fiscal 2008. Of total 2008 sales, Aerospace accounted for 39.3%, N.A. Silicone for 31.1%, Leewood 17.6%, Sterne 7.4%, and Fabricated Products accounted for 4.6% of total sales.
Commenting on the results, President and Chief Executive Officer, Bill Neill, said, MTI Global's results for 2008 were below expectations. While we achieved revenue improvements across all divisions, primarily, due to an increase in volume in Aerospace, more favourable exchange rates, and the acquisition of Mold-Ex, nevertheless profitability was adversely affected by significant non-cash charges.
Further, MTI Global said it entered into a binding asset purchase and sale agreement with Connecticut-based Rogers Corp. to sell the majority of the assets of Leewood and the N.A. Silicone Richmond, Virginia plant for US$7.4 million. Subject to a number of customary conditions, the deal is expected to close within 30 days.
According to Neill, This sale was a very difficult decision to make, but it is absolutely the right one for the Company. In the face of continuing economic challenges, MTI's management and Board are committed to reducing the Company's debt obligations and stem ongoing losses. This sale will generate capital to reduce debt and allow the Company to re-focus on its primary business.
In addition, the company said it intends to divest itself of the remaining silicone assets in Milton, Florida and Cavaillon, France (Sterne) at an appropriate opportunity, and the planned further disposition of assets will ensure a complete and orderly exit from the silicone business.
MTI Global said it will focus on Aerospace as its core line of business.
Looking ahead to fiscal 2009, MTI Global said that it will be a transformed company with a major focus on the aerospace market. Based on the operational changes in the aerospace market, the company said it remains cautiously optimistic that it will report improving results into 2009. At Sterne, the company expects sales to continue to grow in 2009 and the division to remain profitable.
The 2009 outlook is predicated on the successful closing of the deal to sell the majority of the assets of Leewood and the N.A. Silicone Richmond, Virginia plant.
The company noted that the disposition of these assets will allow it to reduce its debt obligations and improve the health of its balance sheet.
MTI.TO last traded on Friday, March 20 at C$0.10.
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