Business momentum continues
with solid top and bottom line performance
Q1 2021 Highlights
- Revenues of $24.9 million, up
18.5% over $21.0 million in
2020
- Gross profit came in at $4.6
million (18.4% of sales), up 13.9% from $4.0 million (19.2% of sales) in 2020
- EBITDA1of $3.5
million, down 26.9% year-over-year due to impact of foreign
exchange
- Excluding foreign exchange EBITDA was $3.8 million, up 23.2% over 2020
- Net income of $2.0 million
($0.04 per share2),
versus $3.1 million ($0.06 per share2) in
prior year
- Closed quarter with $5.5
million of cash ($0.11 per
share2), up from $3.2
million at the end of 2020
MONTREAL, May 26, 2021 /CNW Telbec/ - Imaflex Inc.
("Imaflex" or the "Corporation") (TSXV: IFX), announces strong
consolidated financial results for the first quarter (Q1) ended
March 31, 2021 and provides a
business update. All amounts are in Canadian dollars.
"The positive momentum seen throughout 2020 continued into the
first quarter of 2021, with Imaflex once again delivering
impressive results," said Mr. Joe
Abbandonato, President and Chief Executive Officer of
Imaflex. "We expect this trend to continue as we remain well
positioned to capitalize on our multi-year efforts to build out the
business, supported by our long-term customer
partnerships."
______________
|
1
|
EBITDA: Earnings
Before Interest, Taxes, Depreciation, and Amortization. See
"Caution Regarding Non-IFRS Financial Measures" which
follows.
|
2
|
Basic and diluted
earnings per share (EPS)
|
Consolidated Financial Highlights (unaudited)
|
|
|
Three months ended
March 31,
|
CDN $ thousands,
except per share amounts
(or otherwise
indicated)
|
2021
|
2020
|
% Change
|
|
|
|
|
Revenues
|
24,920
|
21,031
|
18.5 %
|
Gross
Profit
|
4,590
|
4,029
|
13.9 %
|
Selling & admin.
expenses
|
1,718
|
1,896
|
(9.4)%
|
Foreign exchange
(gains) losses
|
298
|
(1,682)
|
(117.7)%
|
Net income
|
1,952
|
3,092
|
(36.9)%
|
Basic EPS
|
0.04
|
0.06
|
(33.3)%
|
Diluted
EPS
|
0.04
|
0.06
|
(33.3)%
|
Gross
margin
|
18.4%
|
19.2%
|
(0.8)
pp
|
Selling & admin.
expenses as % of revenues
|
6.9%
|
9.0%
|
(2.1)
pp
|
EBITDA (Excluding
FX)
|
3,754
|
3,048
|
23.2 %
|
EBITDA
|
3,456
|
4,730
|
(26.9)%
|
EBITDA
margin
|
13.9%
|
22.5%
|
(8.6)
pp
|
Financial Review: Quarter Ended March
31
Revenues
Revenues were $24.9 million for the quarter, up 18.5% over the
prior year. Growth was largely driven by product pricing,
which continued to firm up in-line with increased resin
costs. Sales volumes also grew, particularly for converted
products, although this was partially offset by unfavourable
movements in foreign exchange.
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.
Gross Profit
The quarterly gross profit
remained strong, coming in at $4.6
million or 18.4% of sales versus $4.0
million and 19.2% of sales in 2020. Margins for the
current quarter were impacted by the higher revenue base. In
addition, foreign exchange fluctuations were unfavourable, while
they were favorable in the first quarter of 2020.
Since the beginning of 2020, Imaflex has been consistently
generating stronger than historical margins. This has been
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.
Operating Expenses
Selling and Administrative expenses
remained controlled, coming in at $1.7
million for the quarter versus
$1.9 million in the prior year.
As a result of the lower expenses and higher revenue base for the
current quarter, selling and administrative expenses as a percent
of sales came in at 6.9%, down from 9.0% in
2020.
Due to the depreciation of the US dollar against the Canadian
dollar, Imaflex recorded a foreign exchange loss of $0.3 million in the first quarter of 2021,
compared to a $1.7 million gain in
2020. This resulted in a $2.0
million unfavourable 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 stood at
$2.0 million for the current quarter,
down 36.9% from $3.1 million in
2020. The decrease was largely due to the aforesaid impact of
foreign exchange on the business, partially offset by the higher
gross profit and lower selling and administrative expenses in
2021.
EBITDA stood at $3.5 million or
13.9% of sales for the current quarter, compared to $4.7 million and 22.5% of sales in 2020. On
a constant currency basis, EBITDA came in at $3.8 million (15.1% of sales) for the first
quarter of 2021, up 23.2% from $3.0
million (14.5% of sales) in the corresponding quarter of
2020.
Liquidity and Capital Resources
Net cash generated by
operating activities was $2.8 million
for the first quarter of 2021, up 34.9% from $2.0 million in the prior year. The
year-over-year increase was largely driven by non-cash movements in
foreign exchange, along with movements in trade and other payables,
partially offset by the lower quarterly profit versus 2020 and by
movements in inventories.
As at March 31, 2021, Imaflex had
approximately $16.7 million of cash
available for operating activities, including $5.5 million of cash outstanding ($3.2 million as at December 31, 2020) and $11.2 million available under its $12.0 million revolving line of credit.
The strength of Imaflex's balance sheet has been
growing consistently, significantly enhancing the Corporation's
financial flexibility.
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. Imaflex continues
to target around summer 2021 for submission of the TGAI and
ADVASEAL® registration
package.
_______________
|
3
|
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.
|
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
Imaflex operates in a competitive pricing
environment. "This said, we have been able to deliver strong
results over the past five quarters and we see solid long-term
opportunity and growth potential ahead," said Mr.
Abbandonato. "We are encouraged by the interest and demand
for our traditional and new products and believe this, combined
with our healthy balance sheet and growing scale, will continue to
have a positive impact on our business."
The impact of COVID-19 on Imaflex's business, financial
situation and results remains unclear and cannot be predicted.
Any outbreak at one of the Corporation's 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.
Annual General Meeting
Due to ongoing public health
concerns regarding COVID-19 Imaflex will be holding a live
virtual-only Annual General Meeting. It will be held on
Wednesday June 16, 2021 at
11:00 a.m. (Montréal time) via live
audio webcast only.
All shareholders will be able to attend the meeting.
Information on how to participate can be found in Imaflex's
Management Information Circular dated May
19, 2021, or on Imaflex's website 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.