Announces Record Profitability for Fiscal
2020
- Q4 2020 revenues of $21.9
million, up 17.1% over 2019; FY 2020 up 6.9% to $86.7 million
- Gross margins up materially over 2019, coming in at 20.6%
for Q4 2020 and 19.1% for FY 2020
- Q4 2020 EBITDA1 was $2.8 million, up 91.7% over 2019; FY 2020 up
96.9% to $12.3 million
- Q4 net income of $1.7 million,
up approximately 454% over 2019
- Record FY 2020 net income of $6.3
million ($0.13 per
share2), versus $1.5
million ($0.03 per share) in
2019
- Cash flow generation remains robust; ended the quarter with
over $3.2 million of cash and no debt
on short term credit facility
MONTREAL, April 15, 2021 /CNW Telbec/ - Imaflex Inc.
("Imaflex" or the "Corporation") (TSXV: IFX), announces strong
consolidated financial results for the fourth quarter (Q4) and
fiscal year (FY) ended December 31,
2020 and provides a business update. All amounts are in
Canadian dollars.
"It was a pivotal year for Imaflex, with the Corporation
achieving record profitability, largely due to our capital
investments permitting revenue growth at a higher contribution than
historical norms," said Mr. Joe
Abbandonato, President and Chief Executive Officer of
Imaflex. "This trend should continue in 2021 as there remains
additional production capacity on these investments, which we are
poised to exploit during the year. With this solid foundation,
and an impressive product line-up, we are well positioned to drive
continued profitable growth."
Consolidated Financial Highlights (unaudited)
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Three months ended
December 31,
|
Years ended December
31,
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CDN $ thousands,
except per share amounts
(or otherwise
indicated)
|
2020
|
2019
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% Change
|
2020
|
2019
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%
Change
|
Revenues
|
21,940
|
18,740
|
17.1 %
|
86,682
|
81,071
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6.9 %
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Gross
Profit
|
4,511
|
2,647
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70.4 %
|
16,566
|
10,952
|
51.3 %
|
Selling & admin.
expenses
|
1,452
|
1,676
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(13.4)%
|
7,149
|
7,042
|
1.5 %
|
Foreign exchange
& other losses
|
965
|
374
|
158.0 %
|
533
|
872
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(38.9)%
|
Net income
|
1,679
|
303
|
454.1 %
|
6,349
|
1,536
|
313.3 %
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Basic EPS
|
0.03
|
0.01
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200.0 %
|
0.13
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0.03
|
333.0 %
|
Diluted
EPS
|
0.03
|
0.01
|
200.0 %
|
0.12
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0.03
|
300.0 %
|
Gross
margin
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20.6%
|
14.1%
|
6.5
pp
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19.1%
|
13.5%
|
5.6
pp
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Selling & admin.
expenses as % of revenues
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6.6%
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8.9%
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(2.3)
pp
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8.2%
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8.7%
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(0.5)
pp
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EBITDA (Excluding
FX)
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3,658
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1,837
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99.1 %
|
12,768
|
7,144
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78.7 %
|
EBITDA
|
2,807
|
1,464
|
91.7 %
|
12,349
|
6,273
|
96.9 %
|
EBITDA
margin
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12.8%
|
7.8%
|
5.0
pp
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14.2%
|
7.7%
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6.5
pp
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_________________
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1
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EBITDA: Earnings
Before Interest, Taxes, Depreciation, and Amortization. See
"Caution Regarding Non-IFRS Financial Measures" which
follows.
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2
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Basic earnings per
share (EPS)
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Financial Review: Quarter and Year Ended December 31
Revenues
Revenues
were up 17.1% over the fourth quarter of 2019, reaching
$21.9 million. Growth was driven by
product mix, including heightened sales of 5-layer and metalized
agriculture films. As well, sales of converted products were
up materially over 2019. During the quarter, product pricing
gradually firmed-up over 2019 levels as resin costs continued to
rise above the market bottom reached earlier in 2020. As Imaflex
has no long-term customer contracts, it is able to adjust product
pricing in accordance with resin input costs, although there is
usually a 30-day lag between a resin price increase and when
customer pricing can be revised.
Revenues came in at $86.7 million
for fiscal 2020, up 6.9% over 2019, while overall extruded film
sales volumes on a poundage basis were up 9%
year-over-year. Growth was driven by robust flexible packaging
sales volumes, along with heightened sales of agricultural films
and converted products, partially offset by the lower pricing
environment caused by on-going competitive pressures and lower
resin prices.
Gross Profit
The quarterly gross profit
remained well above prior-year levels, coming in at $4.5 million or 20.6% of sales as compared to
$2.6 million and 14.1% of sales in
2019. The improvement was largely driven by the positive
impact of scale on the business, whereby incremental revenues have
a fairly meaningful effect on margins due to the diminished impact
of labor and overhead costs relative to
sales.
The gross profit for fiscal 2020 was also notably higher,
reaching $16.6 million or 19.1% of
sales, versus $11.0 million and 13.5%
of sales in 2019. The increase was driven by the same factors
outlined for the quarter. As well, during the front end of
2020 Imaflex benefited from favourable fluctuations in foreign
exchange.
Operating Expenses
Selling and administrative expenses
were $1.5 million for the fourth
quarter of 2020, down 13.4% from $1.7
million in 2019, due largely to a decrease in administrative
expenses. This, combined with the higher revenue base for the
current quarter, also generated lower year-over-year selling and
administrative expenses as a percent of sales, which came in at
6.6% for the fourth quarter of 2020, versus 8.9% in the prior
year.
For calendar 2020, selling and administrative expenses were
$7.1 million, up slightly from
$7.0 million in 2019 due to increased
sales commissions resulting from stronger revenues year-over-year.
As a result of the higher revenue base for fiscal 2020, selling and
administrative expenses as a percentage of sales were down versus
2019, coming in at 8.2% for calendar 2020 versus 8.7% in
2019.
Due essentially to the depreciation of the US dollar against the
Canadian dollar, Imaflex recorded a foreign exchange & other
loss of $1.0 million in the fourth
quarter of 2020, compared to a loss of $0.4
million in 2019. This created an unfavourable year-over-year
variance of $0.6 million. A
one-time loss of $0.1 million is
included in the current quarter relating to the disposition of
assets.
For fiscal 2020, Imaflex recorded a foreign exchange & other
loss of $0.5 million, down from a
loss of $0.9 million in 2019,
culminating in a favourable year-over-year variance. A
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 came in
at $1.7 million for the fourth
quarter of 2020, up 454.1% over the $0.3
million realized in the prior year. The year-over-year
improvement was largely due to the higher gross profit and lower
administrative expenses in the current quarter, partially offset by
the higher foreign exchange and other losses versus 2019.
For fiscal 2020, net income was $6.3
million, up 313.3% over the prior year. The increase was
driven by the higher gross profit and lower foreign exchange losses
in 2019.
EBITDA stood at $2.8 million or
12.8% of sales for the current quarter, up materially from
$1.5 million and 7.8% of sales in
2019. On a constant currency basis, EBITDA came in at
$3.7 million (16.7% of sales) for the
fourth quarter of 2020, up 99.1% from $1.8
million (9.8% of sales) in 2019.
For fiscal 2020, EBITDA came in at $12.3
million or 14.2% of sales, up from $6.3 million and 7.7% of sales in 2019. Excluding
the impact of foreign exchange, EBITDA was $12.8 million (14.7% of sales) for calendar 2020,
up 78.7% from $7.1 million (8.8% of
sales) in 2019.
Liquidity and Capital Resources
Cash flows from
operating activities, before movements in working capital and
income taxes, stood at $3.8 million
for the fourth quarter of 2020, up from $1.8
million in the prior year. Including movements in
working capital and taxes paid, net cash generated by operating
activities was $2.2 million for the
current quarter, versus $2.7 million
in 2019. The decrease over 2019 was largely driven by
movements in trade and other receivables and
inventories.
For fiscal 2020, cash flows from operating activities, before
movements in working capital and income taxes, stood at
$12.8 million, up from $7.2 million in 2019. Including movements in
working capital and taxes paid, net cash generated by operating
activities stood at $12.0 million for
calendar 2020, versus $9.7 million in
the prior year.
As at December 31, 2020, Imaflex
had approximately $15.2 million of
cash available for operating activities, including $3.2 million of cash and the full $12.0 million available under its revolving line
of credit.
ADVASEAL® Update
As previously announced, Imaflex has
one remaining step before submitting the registration package for
EPA approval of ADVASEAL® as a new physical pesticide
formulation. Four of the five active ingredients ("active
ingredients" or "TGAI"3) used on
ADVASEAL® come from Asia and
are not yet registered in the U.S.A. To simplify their
registration as generic pesticides Imaflex has mandated a lab to
prove their equivalence with TGAIs already registered and marketed
in the U.S.A. Going forward, holding our own TGAI registration
should provide us with greater autonomy as we commercialize
ADVASEAL®, while also making us less reliant on a particular
supplier. The work is progressing well and Imaflex remains on track
to submit the TGAI and ADVASEAL registration package around summer
2021.
____________________
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3
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A technical
grade active ingredient ("TGAI") is used for the
manufacturing of pesticide end-use products and contains, in
addition to the pure active ingredient, minor amounts of
impurities.
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Impact of COVID-19 – All plants remain fully operational and
running at normal levels
COVID-19 continues to have no
significant impact on operations, nor is the Corporation
experiencing any material issues with customer receivables or
delays with suppliers and distribution channels. Imaflex is
considered an essential vendor due to the important role its
products play in protecting and preserving the integrity of
products, particularly within the food and packaging industry.
All plants remain fully operational and running at normal
business levels, while no material capital project has been halted.
Each plant has the ability to take on more volume should it
be required due to business interruption at another location or
heightened order flow. The Corporation is monitoring
developments closely and taking strong preventative measures to
protect its employees, customers and business.
Outlook
"Looking ahead, the impact of COVID-19 on our
business, financial situation and results remains unclear and
cannot be predicted," said Mr. Abbandonato. "Any outbreak at
one of our plants, deferrals in purchases, payment issues with
customers, or supply and distribution delays could impact
performance. However, these risks are considered temporary and
with a strong balance sheet and dynamic team the Corporation is
well positioned to meet any challenges ahead."
"Imaflex operates in a competitive pricing
environment. This said, we believe our diversified customer
base and multi-year investments in growth and innovation put us in
a strong position, as reflected in the solid financials seen
throughout 2020. The benefit and impact of our increasing
scale should also continue, whereby incremental sales fall fairly
meaningfully to the bottom line. Going forward, our sound
balance sheet and strong cash flows also provides us with the
financial flexibility to more readily purchase capital assets and
look at possible acquisitions."
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.