Cymat Reports Q4 and 2011 Year-End Results

Jul. 20, 2011 (Canada NewsWire Group) --

Listing: TSX
Symbol: CYM

TORONTO, July 20, 2011 /CNW/ - Cymat Technologies Ltd., a materials technology company focused on the military, automotive and architectural industries, announced its results for the quarter and the year ending April 30, 2011.

Fourth Quarter and Fiscal 2011 - Key Financial Metrics

• Revenue totalled $1,175,000 for the fourth quarter (2010 - $238,000) and $1,852,000 for fiscal 2011 (2010 - $837,000).
• Plant operating costs totalled $584,000 for the fourth quarter (2010 - $255,000) and $1.4 million for fiscal 2011 (2010 - $1.3 million).
• SG&A expenses (excluding stock-based compensation expense) totalled $430,000 for the fourth quarter (2010 - $746,000) and $2.2 million for fiscal 2011 (2010 - $2.3 million)
• Net loss totalled $210,000 for the fourth quarter (2010 - $1,171,000) and $4.0 million for fiscal 2011 (2010 - $5.1 million).
• Operating activities for the fourth quarter generated cash of $100,000 (2010 - used cash of $369,000) and used cash of $2.6 million for fiscal 2011 (2010 - $2.7 million).

Revenue

Revenue for the final quarter of 2011 was $1,175,000, an increase of $937,000 from $238,000 for the same quarter of 2010.  The quarterly increase in revenue is primarily the result of the Alusion™ revenue for the 9/11 Memorial and the Mallorca Congress Center projects.

Annual revenue for fiscal 2011 was $1,852,000, an increase of $1,015,000 over revenue for the prior year of $837,000. Revenue from architectural sales increased by $1,088,000 on a year-over-year basis.  Revenue from the high profile 9/11 Memorial and Mallorca projects was the primary source of the architectural sales increase.  On an annual basis, revenue from SmartMetal™ sales declined by $72,000 from fiscal 2010 to fiscal 2011.  The United States military is a significant target market for SmartMetal™.   In fiscal 2011, the military budget was a particularly contentious issue within the US government, creating delays and uncertainty regarding US military orders.

Expenses

Plant operating costs for the fourth quarter of 2011 were $584,000, an increase of $329,000 from the same costs of $255,000 for the last quarter of 2010.  The quarterly increase in plant operating costs for 2011 resulted from the production costs regarding the 9/11 Memorial and Mallorca Congress Center projects.

Annual plant operating costs for fiscal 2011 were $1.4 million, an increase of $0.1 million over similar costs for the prior year of $1.3 million.  Plant operating costs includes the direct operating costs of labour, material, consumables and maintenance, freight and changes in inventory.  For fiscal 2011 these direct operating costs were $968,000, an increase of $42,000 over similar costs for fiscal 2010 of $926,000.  Although annual sales increased by 121% for fiscal 2011, the direct operating costs increased by only 5%.  The relative savings achieved in direct operating costs were primarily the result of developments in the foaming process design and of improvements in labour efficiencies.  Plant operating costs also includes factory overhead costs such as rent and utilities and royalties.  These costs totalled $470,000 for fiscal 2011 as compared to similar costs of $417,000 for fiscal 2010.

Selling, general and administration ("SG&A") expenses, excluding stock-based compensation expenses, for the fourth quarter of 2011 totalled $430,000, a decrease of $316,000 from SG&A of $746,000 for the last quarter of 2010. This improvement included lower salary expenses due to timing of bonus accruals, lower stock-based compensation expense, lower legal expenses primarily relating to patent protection costs and lower travel expenses.

SG&A expenses for fiscal 2011 totalled $2.2 million compared to $2.3 for 2010. Decreased expenses include lower salary, consulting and travel expenses as the result of management reorganization and cost containment measures.

Net Loss

The net loss for the last quarter of 2011 was $210,000, a $961,000 decrease from a net loss of $1,171,000 for the corresponding quarter of 2010.  The net loss for the fourth quarter includes non-cash items of depreciation and amortization of $399,000 (2010 - $388,000) and a stock-based compensation expense recovery of $75,000 (2010 -  expense of $32,000).

For fiscal 2011 the net loss was $4.0 million, a $1.1 million decrease from a net loss of $5.1 million in the prior fiscal year. The fiscal 2011 net loss includes non-cash items of depreciation and amortization of $1.6 million (2010 - $1.6 million) and stock-based compensation expense of $0.6 million (2010 - $0.6 million).

Cash Flow from Operating Activities

The Company achieved positive cash flow from operating activities in the fourth quarter of 2011 of $100,000, compared to $369,000 of cash used by operations in the last quarter of 2010.

Operations for fiscal 2011 used cash of $2.6 million as compared to the use of cash of $2.7 million for fiscal 2010.

Outlook

The Company had a strong fourth quarter, recognizing sales revenue from both the September 11 Memorial Museum project at the World Trade Center site in New York City and the Congress Center project in Mallorca Spain.

Michael Liik, Executive Chairman of Cymat noted that "Cymat reached an historic milestone in the fourth quarter by generating material positive quarterly operating cash flow for the first time." He went on to say that "Strong growth in our Alusion division combined with plant operating efficiencies position us well for the coming year in our quest to reach profitability."

Although the pace of Alusion™ sales has slowed somewhat in the first quarter of fiscal 2012 due to a delay in construction at the Congress Center site in Spain, the recently announced Alusion ™ order for the external cladding of a downtown Tbilisi, Georgia, reflects the continued success of Cymat in the architecture market. The Company expects to further benefit from the exposure that the high profile 9/11 Memorial and Congress Center installations will create for Alusion™.  Cymat anticipates that continued expansion of its international network of agents and distributors of Alusion™, such as the recently announced US distributorship with Stone Source LLC, will result in increased sales opportunities.

On the automotive front, Cymat continues to work with its Georg Fischer relationship to investigate the efficacy of SmartMetal™ applications in automotive design.  The material's light weight and recyclability appear to fit the increasing focus of the automotive industry on Green design.

SmartMetal™ continues to be evaluated by several OEMs in various military vehicle platforms for next generation and retrofit vehicles. As sales of this nature generally have long timelines, require deep relationships and require the ability to design and engineer customized solutions, Cymat will continue to focus its internal resources on development of this market.  SmartMetal™ is included in proposed designs submitted for consideration in the US military's Humvee retrofit program.  The Company expects that the finalist bidders for the Humvee retrofit award will be chosen in fiscal 2012.

Cymat's management is optimistic that 2012 will continue to build upon the success of fiscal 2011.

About Cymat:

Cymat develops innovative materials for industry. The company has worldwide rights, through patents and licenses, for producing Stabilized Aluminum Foam. The ultra-light metallic foam is manufactured by bubbling gas through molten alloyed aluminum containing a dispersion of fine ceramic particles and can be produced as either Near-net Shapes or Flat Panels. The result is a revolutionary material with a wide array of features including very low density, mechanical energy absorption, thermal and acoustic insulation, is recyclable, time and temperature insensitive and has a relatively low cost of production. Cymat is collaborating with a number of partners spanning the automotive, architectural and blast mitigation industries. For further information, visit the Web site www.cymat.com.

The foregoing press release contains forward-looking statements relating to the development of markets, development programs, future revenues and improvements in technology, which are subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include the availability of funding, existing and future relationships with suppliers and manufacturers, the results of research and development activities, risks of technological breakthroughs that make Cymat stabilized aluminum foam less attractive, risks relating to the breadth, scope and enforceability of intellectual property rights, general industry and market conditions, availability of qualified personnel, and reliance on co-development partners. For additional information with respect to these and other factors, see the reports filed by Cymat Technologies Ltd. with the Ontario Securities Commission. Cymat Technologies Ltd. disclaims any intention or obligation to update or revise any forward-looking statements.

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