TICKER SYMBOL: IFX
MONTREAL, April 21, 2015 /CNW Telbec/ - Imaflex Inc. (the
"Company") (TSXV: IFX) announces results for the year ended
December 31, 2014.
(unaudited)
(CDN $ thousands,
except per share amounts)
|
Q4 2014
|
Q4 2013
|
YTD 2014
|
YTD 2013
|
Sales
|
15,857
|
13,866
|
60,861
|
56,052
|
Cost of sales
(excluding amortization)
|
13,918
|
12,450
|
54,013
|
49,159
|
Gross profit ($)
(before amortization)
|
1,939
|
1,416
|
6,848
|
6,893
|
Gross profit
(%)(before amortization)
|
12.2%
|
10.2%
|
11.3%
|
12.3%
|
Amortization of
production equipment
|
358
|
305
|
1,284
|
1,130
|
Gross
Profit
|
1,581
|
1,111
|
5,564
|
5,763
|
Gross profit
(%)
|
10.0%
|
8.0%
|
9.1%
|
10.3%
|
Sales and
administrative expenses
|
1,210
|
1,316
|
5,165
|
5,035
|
Other
expenses
|
164
|
146
|
618
|
581
|
FX gain
|
(404)
|
(302)
|
(894)
|
(529)
|
Profit (loss) before
income taxes
|
611
|
(49)
|
675
|
676
|
Provision for income
taxes
|
380
|
135
|
682
|
469
|
Profit
(loss)
|
231
|
(184)
|
(7)
|
207
|
Basic and diluted
earnings (loss) per share
|
0.005
|
(0.004)
|
(0.0002)
|
0.005
|
EBITDA
|
1,218
|
397
|
2,668
|
2,332
|
The results include those of Imaflex Inc. ("Imaflex") located in
Montréal (Québec), 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).
Sales
Sales increased $ 1,991,000 in the fourth quarter of 2014
compared to the fourth quarter of 2013, an increase of 14.4%,
mainly due to the increase in packaging film sales in both the US
and the Canadian operations as well as the increase in sales of
garbage bags. The higher foreign exchange rate throughout the
quarter also had a positive impact on sales denominated in USD. The
Company has commercialized a new product destined to the citrus
industry and increases in the sales of this product will be a
growth factor in 2015.
Sales increased by $ 4,809,000 or 8.6% in 2014 compared to
2013. This increase is mainly explained by the higher average
selling price of film, due to the product mix sold and the
appreciation of the USD against the CAD over the year. Despite
considerably lower mulch film sales for the 2014 spring season, the
Company was able to recover and complete the year on a positive
trend. Management is focusing on properly communicating the
advantages of its mulch films in order to further increase sales
for these products.
Gross profit margin
Gross profit before amortization of production equipment
increased by $ 523,000, or 36.9%, in the fourth quarter of
2014 compared to 2013 and, as a percentage of sales, the gross
margin increased from 10.2% to 12.2%. This improvement is
attributable to an increase in sales and the increased efficiency
in the US operations. Management believes there are additional
improvements to achieve, however the initial efforts were
successful and the possibility of increasing production without
sacrificing profitability should lead to further improvements in
2015. Due to investments in assets over the course of the year, the
amortization of production equipment also increased, generating a
net increase in gross profit of $ 470,000 and, as a percentage
of sales, from 8.0% to 10.0%.
The gross margin as a percentage of sales decreased from 12.3%
in 2013 to 11.3% in 2014. During the year, the Company continually
faced increasing raw material costs due to the appreciation of the
USD against the CAD and the decreases of polyethylene resin prices
at the end of the year negatively impacted sales produced with
inventory from previous months. Despite this, management managed to
keep its gross profit relatively stable by improving efficiency in
its operations and focusing marketing strategies on key products.
Due to the investment in capital assets throughout the year, the
amortization of production equipment increased by $ 154,000
and the gross profit consequently decreased by $ 199,000 or,
as a percentage of sales, from 10.3% to 9.1%.
Selling and administrative
Selling and administrative expenses decreased by $ 106,000
during the fourth quarter of 2014 compared to 2013 and, as a
percentage of sales, from 9.5% of sales to 7.6%. Part of this
decrease is due to the timing of certain expenses that were
incurred earlier in the year compared to the fourth quarter of
2013. However, the current cost structure can support the current
level of production and management believes that further growth can
be achieved without the need to increase administrative expenses,
although certain projects may require a one-time increase in
expenses. For the year 2014, selling and administrative expenses
increased compared to 2013, from $ 5,035,000 to
$ 5,165,000 but decreased from 9.0% of sales to 8.5% in 2014.
The appreciation of the USD against the CAD increased costs
denominated in USD and the increase in sales led to an increase in
commission expenses, however the cost structure remained similar
from one year to the other.
Net income
Net income increased in the fourth quarter of 2014 compared to
2013 mainly due to the improvement of the efficiency of the
operations as well as a reduction of the administrative and selling
expenses and the positive impact of foreign exchange movements.
Results were, however, negatively impacted by the income tax
expense as well as the increase in finance costs. Management is
focusing on improving profitability following the encouraging
results that were achieved in the fourth quarter of 2014.
Over the year, net income decreased, mainly as a result of
higher amortization of production equipment, selling and
administrative expenses, finance costs and income taxes. The
increase in these expenses was partially offset by the positive
impact of foreign exchange movements. The Company has managed to
keep its income before taxes stable despite a difficult first
quarter and continuous movements in raw material costs. As raw
material costs stabilize and growth is achieved in the US
operations while maintaining productivity, management believes that
results can further improve.
Capital Resources
The Company has an operating line of credit with its bankers to
a maximum of $ 8,500,000 bearing interest at a rate of prime
plus 1.25%. The line of credit is secured by trade receivables and
inventories. As at December 31, 2014, the Company had drawn
$ 5,154,870 on its line of credit ($ 7,438,682 as at
December 31, 2013). The Company's
working capital was $ 5,493,261 as at December 31, 2014 compared to $ 143,234 as
at December 31, 2013, mainly because
the long term borrowings were classified as current and
non-current. During the year, the Company obtained new financing by
entering into two new long term borrowing arrangements, the first
consisting in refinancing a debt in the first quarter of 2014 and
the second by entering into a new financing agreement in the fourth
quarter of 2014. Moreover, on December 31,
2014, the Company closed a private placement obtaining net
proceeds of $ 1,689,672. This was completed with the goals of
strengthening the Company's liquidity position and providing
capital to fund the Company's future growth. During the course of
the year, the Company also repaid the balance of purchase price of
the business acquisition.
Management Outlook
The fourth quarter proved that the efforts made by management
over the last few years should materialize into results. The
productivity of the operations increased, but mostly products that
were several years in the making have begun being commercialized.
This speaks loudly of Imaflex's capacity to find innovative
solutions to problems that our customers and partners are faced
with.
As early as the summer of 2015, Imaflex will introduce a new
product on the agricultural market after several years of
investments, while the Company has already started selling, in the
fourth quarter of 2014, the film for the citrus industry. The
Company can now also rely on its legacy business to maintain a
strong position in the market which is waiting for these new
products to be adopted in large quantities.
Safe Harbor Statement
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-IFRS Measure
The Company's management uses a non-IFRS measure in this press
release, namely EBITDA. Management wishes to specify that in
the performance of the Company's financial results, EBITDA is
calculated as "Earnings before finance expenses, taxes, the change
in fair value of the derivative financial instrument, depreciation
and amortization". While EBITDA is not a standard IFRS
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 IFRS 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.
SOURCE Imaflex Inc.