TICKER SYMBOL: IFX
MONTREAL, May 26, 2015 /CNW Telbec/ - Imaflex Inc. (the
"Company") (TSXV: IFX) announces results for the quarter
ended March 31, 2015.
(unaudited)
(CDN $ thousands,
except per share amounts)
|
Q1 2015
|
Q1 2014
|
Sales
|
15,910
|
14,423
|
Cost of sales
(excluding amortization)
|
14,633
|
13,044
|
Gross profit ($)
(before amortization)
|
1,277
|
1,379
|
Gross profit
(%)(before amortization)
|
8.0%
|
9.6%
|
Amortization of
production equipment
|
361
|
312
|
Gross
Profit
|
916
|
1,067
|
Gross profit
(%)
|
5.8%
|
7.4%
|
Sales and
administrative expenses
|
1,467
|
1,310
|
FX gain
|
(673)
|
(404)
|
Other
expenses
|
195
|
128
|
Profit (loss) before
income taxes
|
(73)
|
33
|
Provision for income
taxes
|
220
|
90
|
Profit
(loss)
|
(293)
|
(57)
|
Basic and diluted
earnings (loss) per share
|
(0.006)
|
(0.001)
|
EBITDA
|
512
|
476
|
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).
The Company's accounting policies under IFRS have not changed
since the Company's last annual financial statements and have been
applied consistently to the the interim condensed consolidated
financial statements for the periods ended March 31, 2015 and
2014. As of the 1st of January
2015, a portion of the Parent Company's advances to the
foreign subsidiary are being accounted for as forming part of the
net investment in the foreign subsidiary for the purposes of
foreign exchange accounting and the foreign exchange gains and
losses arising on these advances are recognized as Accumulated
foreign currency translation within Reserves.
Sales
Sales increased by $ 1,487,000 in the first quarter of 2015
compared to 2014, due to the increased volume of sales for certain
products as a result of business development efforts in 2014 that
continue to positively impact the top line. Part of the increase is
also explained by the important appreciation of the USD, positively
impacting sales denominated in USD. The Company focused efforts on
increasing overall capacity usage and market development.
Gross profit margin
The increase in sales did not translate into an increase in the
Company's gross margin and also contributed to the decrease in the
gross profit margin. Improvements were achieved in many
departments, including packaging film and agricultural metallized
film, where a very difficult first quarter of 2014 had a negative
impact on the Company's profitability. The improvements however
were offset by several challenges that negatively impacted results.
Firstly, the decreasing resin prices led to an immediate decrease
in the sales price, which had a negative impact on sales produced
with older inventory. Also, the increase in sales of garbage bags
did not generate immediate profitability given the Company is
preparing for an increase in capacity. In the first quarter of
2015, the additional sales were produced via a more expensive
route. However, management believed it was necessary to first
secure the additional business before investing in additional
capacity in order to ensure that the investments would bring
returns in the shortest amount of time possible. Finally, the US
operations also improved sales but they were negatively impacted by
the decreases in resin costs, some higher inventory levels held at
the beginning of the period as well as increases in labour and
repair expenses.
Selling and administrative
Selling and administrative expenses increased by $ 157,000
in the first quarter of 2015 compared to 2014, mainly following
research and development efforts in order to produce and test
samples of the new agricultural products that are intended to be
sent out to growers in the summer of 2015. These expenses are aimed
at ensuring that the products deliver the intended results and that
they meet all regulatory requirements before being
commercialized.
Net income
The Company did not generate the gross margin it was expecting
following the increase in sales due to currency fluctuations that
erased the decrease in resin prices. Moreover, the selling price
was lower than expected due to the decrease in the price of
polyethylene resin, further negatively impacting profitability.
However, increased production capacity that is expected to be
available in the second quarter of 2015 will lead to a more
streamlined process for certain products and should generate
increased production efficiency. Management believes that the
encouraging top line trends are showing that the business is headed
in the right direction.
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 March 31, 2015, the Company had drawn
$ 4,538,371 on its line of credit ($ 5,154,870 as at
December 31, 2014). The Company's
working capital was $ 5,021,124 as at March 31, 2015 compared to $ 5,493,261 as at
December 31, 2014. In 2014, the
Company obtained new financing by entering into two new long term
borrowing arrangements and closed a private placement in December.
During the first quarter of 2015, the Company issued 1,381,695
shares after warrants were exercised generating inflows of
$ 621,763. Although a portion of the debt financing obtained
in 2014 was used to purchase equipment that is aimed at generating
increased profitability, these financings mostly improved the
Company's liquidity and will enable the Company to finance the
growth in 2015.
Management Outlook
During the quarter, management maintained its focus on the
objectives of developing and testing its new products, increasing
sales in strategic markets through its sales force and improving
production efficiency in the US operations. Management made headway
in its plans and believes that the Company is growing and is headed
in the right direction.
The results however do not fully reflect the improvements that
were achieved. Firstly, the appreciation of the USD increased the
cost of raw material which offset the decrease in resin costs.
Secondly, the falling prices of polyethylene had a negative impact
on sales throughout the quarter and sales stabilized only in
March.
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.