TICKER SYMBOL: IFX
MONTREAL, Aug. 26, 2015 /CNW Telbec/ - Imaflex Inc. (the
"Company") (TSXV: IFX) announces results for the quarter
ended June 30, 2015.
(unaudited)
(CDN $ thousands,
except per share amounts)
|
Q2 2015
|
Q2 2014
|
YTD 2015
|
YTD 2014
|
Revenue
|
18,716
|
15,267
|
34,626
|
29,690
|
Cost of sales
(excluding amortization)
|
15,915
|
13,297
|
30,548
|
26,341
|
Gross profit ($)
(before amortization)
|
2,801
|
1,970
|
4,078
|
3,349
|
Gross profit
(%)(before amortization)
|
15.0%
|
12.9%
|
11.8%
|
11.3%
|
Amortization of
production equipment
|
356
|
307
|
717
|
619
|
Gross
Profit
|
2,445
|
1,663
|
3,361
|
2,730
|
Gross profit
(%)
|
13.1%
|
10.9%
|
9.7%
|
9.2%
|
Sales and
administrative expenses
|
1,673
|
1,318
|
3,140
|
2,628
|
FX loss
(gain)
|
122
|
475
|
(551)
|
71
|
Other
expenses
|
154
|
160
|
349
|
288
|
Profit (loss) before
income taxes
|
496
|
(290)
|
423
|
(257)
|
Provision for income
taxes
|
151
|
65
|
371
|
155
|
Profit
(loss)
|
345
|
(355)
|
52
|
(412)
|
Basic and diluted
earnings (loss) per share
|
0.007
|
(0.008)
|
0.001
|
(0.009)
|
EBITDA
|
1,062
|
184
|
1,574
|
660
|
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).
Management Outlook
In this quarter the shareholders begin to see the results of
management's focus to improve the legacy business's performance to
pre-US expansion levels.
This quarter's results are a glimpse of what consolidated net
profit should look like as the US operations perform better than
breakeven: having finally achieved breakeven, management expects
that our US operations will contribute to our consolidated earnings
in the coming quarters. These improvements were attained in spite
of the continued expenses for the research and development of our
proprietary products.
Sales
The $ 3,449,000 increase in sales in the second quarter of
2015 compared to the same period in 2014 was driven by improvements
in the Company's US operations as the expected additional business
successfully materialized and contributed to improving the
Company's top line. The Company also improved sales in garbage bags
and metallized film, while maintaining the volume for other
packaging film products. Moreover, the stronger USD throughout the
period had a positive impact on sales denominated in USD.
The growth in the second quarter added to the growth achieved in
the first quarter of 2015 for a total increase in sales of
$ 4,936,000 over the six-month period in 2015 compared to
2014. The materialization of sales efforts for key products pursued
throughout 2015 led to the important improvement over the six-month
period, which was further impacted by favorable foreign currency
movements. Management expects to realize continued growth in volume
for the remainder of the year as the new business will continue to
fuel growth in coming months although the impact of foreign
exchange will become less important given the appreciation of the
USD at the end of 2014.
Gross profit margin
The increase in the Company's gross profit is largely
attributable to the improvements in the US operations, as increased
production and sales improved overall profitability, bringing the
gross margin from 12.9% in the second quarter of 2014 to 15.0% in
the second quarter of 2015. The Canadian operations also generated
more profitability in the second quarter of 2015 compared to the
second quarter of 2014 following the stabilization of resin prices
and an increase in sales of metallized film as well as improved
efficiency in the use of the Company's recycled material. The
foreign currency movements were also less drastic in the second
quarter of 2015, therefore decreasing the volatility in the
Company's profitability. Following investments in capital assets at
the end of 2014 and the first six months of 2015, the amortization
of production equipment increased from $ 307,000 to
$ 356,000.
Over the six-month period, the gross profit and gross profit
margin increased as second quarter results offset the difficulties
encountered in the first quarter caused by the decreasing resin
prices and the important foreign exchange movements. Overall, the
increase in sales led to the expected increase in profitability as
management focused on improving the efficiency of the US operations
and optimizing the usage of its capacity with a slight improvement
in the gross profit margin.
Selling and administrative
The $ 355,000 increase in selling and administrative
expenses in the first quarter of 2015 compared to the first quarter
of 2014 is mainly due to the costs incurred to register the
Company's patents as well as various research and development
costs. These expenses are consistent with the levels established in
recent quarters following the acquisition of the patent from Bayer
AG. The increase in sales and the appreciation of the USD against
the CAD also had an impact on the increase in administrative and
sales expenses. As a percentage of sales, selling and
administrative expenses remained comparable at 8.9% in the second
quarter of 2015 compared to 8.6% in 2014.
Selling and administrative expenses increased for the six-month
period due to the increase in research and development costs
required to prepare the launch of the new products and the fees
required to maintain the internally-developed patents and manage
the patents acquired from Bayer late in 2014. The appreciation of
the USD and the increase in sales also contributed to the increase
in selling and administrative expenses in 2015. As a percentage of
sales however, these expenses increased only slightly, from 8.9% in
2014 to 9.1% in 2015.
Net income
The Company's profitability increased first and foremost due to
the increase in sales that management was pursuing throughout the
year. The materialization of these sales contributed to improving
the gross margin and the performance of the Company. The Company
was also less negatively impacted by foreign exchange movements.
This more than offset the increase in selling and administrative
expenses and the income tax expense also increased due to improved
profitability. Similar trends impacted the Company over the
six-month period, but to a lesser extent given the difficulties
experienced in the first quarter.
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 June 30, 2015, the Company was using
$ 6,225,603 on its line of credit ($ 5,154,870 as at
December 31, 2014). The Company's
working capital decreased slightly from $ 5,493,261 as at
December 31, 2014 to $ 5,147,339
on June 30, 2015. The second quarter
saw an impressive growth in sales and since the 2014 year end the
USD further appreciated against the CAD. Management believes that
the encouraging results prove that the Company now has sufficient
capital to successfully realize its growth objectives and
management currently does not believe it is necessary to raise
additional funds. However it will be important to appropriately
manage liquidity based on future foreign currency movements.
Critical Accounting Policies
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 June 30, 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.
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.