Profitability strengthens; all plants
remain fully operational
- Q1 2020 net income of $3.1
million or $0.06 per share,
versus $0.6 million and $0.01 per share in 2019
- Q1 EBITDA1 of $4.7 million, up 162.3% from $1.8 million in 2019
- EBITDA of $3.0 million
excluding foreign exchange, up 41.6% from $2.2 million in Q1 2019
- Gross margin of 19.2%, up from 14.0% in Q1 2019
- Packaging film sales volumes up approximately 4.0% over 2019
on a poundage basis
- Operating cash flows remain strong
MONTREAL, May 27, 2020 /CNW Telbec/ - Imaflex Inc.
("Imaflex" or the "Corporation") (TSXV: IFX), announces its
consolidated financial results for the first quarter (Q1) ended
March 31, 2020 and provides a
business update. All amounts are in Canadian dollars.
"We are pleased with our start to 2020, delivering very
respectable first quarter results and achieving notable milestones
with ADVASEAL®," highlighted Mr.
Joe Abbandonato, President and Chief
Executive Officer of Imaflex. "Despite the clear challenges
of COVID-19, our team has done a solid job navigating the new
reality. All of our business units have remained open and
operating at normal business levels, with packaging film volumes up
approximately 4.0% year-over-year on a poundage basis.
Movements in foreign exchange (FX) also worked in our favour
during the current quarter. This said, we also did well on a
constant currency basis, with EBITDA increasing 42% over the first
quarter of 2019. We look forward to providing further updates
on ADVASEAL® and our overall business as we
move forward."
Consolidated
Financial Highlights (unaudited)
|
|
|
|
Three months ended
March 31,
|
CDN $ thousands,
except per share amounts
(or otherwise indicated)
|
2020
|
2019
|
% Change
|
Revenues
|
21,031
|
21,867
|
(3.8)%
|
Gross
Profit
|
4,029
|
3,072
|
31.2 %
|
Selling & admin.
expenses
|
1,896
|
1,691
|
12.1 %
|
Foreign exchange
(gains) losses
|
(1,682)
|
349
|
(581.9)%
|
Net income
|
3,092
|
558
|
454.1 %
|
Basic EPS
|
0.06
|
0.01
|
500.0 %
|
Diluted
EPS
|
0.06
|
0.01
|
500.0 %
|
Gross
margin
|
19.2%
|
14.0%
|
5.2
pp
|
Selling & admin.
expenses as % of revenues
|
9.0%
|
7.7%
|
1.3
pp
|
EBITDA (Excluding
FX)
|
3,048
|
2,152
|
41.6 %
|
EBITDA
|
4,730
|
1,803
|
162.3 %
|
EBITDA
margin
|
22.5%
|
8.2%
|
14.3
pp
|
|
|
|
|
_________________________________
|
1
|
EBITDA: Earnings
Before Interest, Taxes, Depreciation, and Amortization. See
"Caution Regarding Non-IFRS Financial Measures" which
follows.
|
Financial Review: Quarter ended March
31
Revenues
Revenues were $21.0
million for the first quarter of 2020, down 3.8% from
$21.9 million in 2019. The
decrease reflects the impact on product pricing resulting from
competitive pressures and lower resin prices. As well, citrus
film sales were nil for the quarter versus $0.4 million in the prior year. Excluding citrus
film sales, revenues were down approximately 2% year-over-year and
on a poundage basis, packaging film volumes were up about 4.0%
versus 2019.
Gross Profit
The quarterly gross profit was up
materially over 2019, coming in at $4.0
million or 19.2% of sales for the current quarter as
compared to $3.1 million and 14.0% of
sales in 2019. The improvement was driven by the higher sales
volumes, favourable fluctuations in foreign exchange and heightened
control of the Corporation's variable costs.
Operating Expenses
Selling and administrative expenses
were $1.9 million or 9.0% of sales in
the first quarter of 2020, versus $1.7
million and 7.7% of sales respectively in the prior
year. The year-over-year increase was mainly due to higher
sales commissions resulting from the better sales volumes on a
poundage basis and other miscellaneous expenses.
Due to favourable currency fluctuations, namely the appreciation
of the US dollar against the Canadian dollar, Imaflex recorded a
foreign exchange gain of $1.7 million
for the current quarter. Conversely, in the first quarter of
2019, unfavourable currency fluctuations resulted in a $0.3 million foreign exchange loss. As a
result, the Corporation generated a positive year-over-year
variance of $2.0 million. The
majority of the Corporation's foreign exchange gains and losses are
non-cash impacting and largely relate to intercompany balances for
which Imaflex can control the time of settlement.
Net Income and EBITDA
Net income stood at
$3.1 million for the current quarter,
up approximately 454% from $0.6
million in 2019. The $2.5
million improvement was largely due to positive movements in
foreign exchange and the improved quarterly gross
profit.
EBITDA was $4.7 million or 22.5%
of sales in the first quarter of 2020, versus $1.8 million and 8.2% of sales in 2019.
Excluding the impact of foreign exchange, EBITDA was $3.0 million or 14.5% of sales in the current
quarter, up from $2.2 million and
9.8% of sales in 2019.
Liquidity and Capital Resources
Cash flows generated
by operating activities, before movements in working capital and
taxes paid, stood at $3.1 million for
the first quarter of 2020, up from $2.2
million in Q1 2019. Including movements in working
capital and taxes paid, net cash generated by operating activities
was $2.0 million for the current
quarter, versus $3.1 million in
2019. The resulting year-over-year decrease was driven by
higher receivables, stemming from better sales volumes in the
current quarter and an increase in income taxes paid.
As at March 31, 2020, Imaflex had
approximately $8.5 million of cash
available for operating activities, including the unused portion
under its $12.0 million revolving
line of credit.
Impact of COVID-19 – All plants remain open, fully
operational and running at normal levels
To date, COVID-19
has not materially impacted Imaflex's operations. All three plants
in Canada and the U.S.A. remain open, fully operational and
running at normal business levels. The Corporation is
considered an essential vendor in both countries due to the
important role its products play in protecting and preserving food
and consumer products. Presently, all manufacturing
facilities have the ability to take on more volume should it be
required due to business interruption at another plant or
heightened order flow.
Furthermore, Imaflex is not experiencing any delays with its
suppliers or distribution channels. The Corporation believes
it has sufficient capital to fund and grow its operations, assuming
business fundamentals remain the same, and to date no material
capital projects have been halted. Despite this, Imaflex has
and will utilize any available capital payment moratoriums on
long-term debt payments to maximize cash flows throughout the
crisis.
Imaflex has taken strong preventative measures to minimize the
risk of COVID-19 transmission at the workplace. Amongst
others, this includes regularly informing employees of the need to
stay vigilant, requesting staff to work from home wherever
possible, requiring hand sanitizing at all entry points, wearing
face masks, disinfecting common areas multiple times a day,
staggering lunch hours, taking extra precautions in allowing
visitors to enter the workplace, rescheduling non-critical service
calls, and requiring any employee to self-quarantine if they or
anyone in their home has travelled.
"The Corporation is monitoring developments closely and taking
all necessary steps to inform and protect its employees, customers
and business," said Mr. Abbandonato. "I am very proud of the
commitment and flexibility our team has shown during this time and
I would like to thank them once again for their ongoing efforts
during this difficult time. Our thoughts also go out to all
those families and businesses negatively impacted by this
devastating virus."
Outlook
"Looking forward, the impact of
COVID-19 on our business, financial situation and financial results
remains unclear and cannot be predicted," said Mr.
Abbandonato. "Any outbreak at one of our plants, deferrals in
purchases or payments from customers, or supply and distribution
delays could impact us. This said, we view these risks as
temporary and believe we have a solid foundation, a strong balance
sheet and a dynamic team that can and will adapt to any challenges
ahead."
"Operationally, we continue to do business in a dynamic pricing
environment, while resin prices also remain lower than historical
levels. This said, our overall strategy is unchanged and with
an impressive product portfolio and a new extruder, we are well
positioned for growth. We will continue to differentiate
ourselves in advanced extrusion and innovative crop protection
films, building out our addressable markets with innovative
products."
"Longer term, our next generation agriculture film,
ADVASEAL®, offers some exciting
opportunities for growth. We have achieved some notable
successes in recent months with our Efficacy Trial and we are
increasingly confident of ADVASEAL®'s
potential for growers, the environment and shareholders."
Annual General Meeting
Due to the ongoing public
health concerns regarding COVID-19, Imaflex will hold its 2020
Annual General Meeting on Tuesday June 23,
2020 at 9:30 a.m. (Montréal
time) via live audio webcast only.
All shareholders will be able to attend the live virtual
meeting. Information on how to attend can be found in
Imaflex's Management Information Circular dated May 27, 2020 which will be available the same day
at www.imaflex.com ("news & events/events & presentations")
and under Imaflex's profile at www.sedar.com.
Caution Regarding Non-IFRS Financial Measures
The
Company's management uses a non-IFRS measure in this press release,
namely EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) and EBITDA excluding foreign
exchange.
While EBITDA is not a standard International Financial Reporting
Standards (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 and accordingly it should not be considered
in
isolation.
About Imaflex Inc.
Founded in 1994, Imaflex is
focused on the development and manufacturing of innovative
solutions for the flexible packaging space. Concurrently, the
Corporation develops and manufactures films for the agriculture
industry. The Corporation's products consist primarily of
polyethylene (plastic) film and bags, including metalized plastic
film, for the industrial, agricultural and consumer
markets. Headquartered in Montreal, Quebec, Imaflex has manufacturing
facilities in Canada and the
United States. The Corporation's common stock is listed on
the TSX Venture Exchange under the ticker symbol IFX.
Additional information is available at www.imaflex.com.
Cautionary Statement on Forward Looking
Information
Certain information included in this press
release constitutes "forward-looking" statements within the meaning
of Canadian securities laws. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by the management of the Corporation,
are inherently subject to significant business, economic and
competitive uncertainties, risks and contingencies. The
Corporation cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual financial results, performance or
achievements of Imaflex to be materially different from the
Corporation's estimated future results, performance or achievements
expressed or implied by those forward-looking statements and that
the forward-looking statements are not guarantees of future
performance. These statements are also based on certain
factors and assumptions. For more details on these estimates,
risks, assumptions and factors, see the Corporation's most recent
Management Discussion and Analysis filed on SEDAR at www.sedar.com
and on the investor section of the Corporation's website at
www.imaflex.com. The Corporation disclaims any obligation to
update or revise any forward-looking statements, whether as a
result of new information, events or otherwise, except as expressly
required by law. Readers are cautioned not to put undue
reliance on these forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Imaflex Inc.