Reports record revenues and net income for
FY 2021
- Q4 2021 revenues of $25.7
million, up 17.2% over 2020; FY 2021 up 24.0% to
$107.5 million
- Record FY 2021 net income of $8.4
million, up 31.8% from $6.3
million in 2020
- Generated FY 2021 free cash flow1 of
$5.6 million & closed year with
$8.5 million of cash ($0.17 per share2)
- Balance sheet strong, further enhancing financial
flexibility and capacity to fund future growth
MONTRÉAL, April 14,
2022 /CNW Telbec/ - Imaflex Inc. ("Imaflex" or
the "Corporation") (TSXV: IFX) reports strong consolidated
financial results for the fourth quarter (Q4) and fiscal year (FY)
ended December 31, 2021 and provides
a business update. All amounts are in Canadian dollars.
"Imaflex continued to demonstrate the consistency and
dependability of its business model in 2021," highlighted Mr.
Joe Abbandonato, President and Chief
Executive Officer of Imaflex. "Despite the historic impact of the
pandemic and a competitive operating environment, we reported our
second consecutive year of record net income and cash flow
generation remained solid. Both our Canadian and U.S.
operations delivered strong results, reflecting the depth of our
products and customer base, our growing scale and disciplined
capital allocation strategy. As I reflect on the past few years, I
am extremely proud of what our team achieved, both individually and
collectively."
Consolidated Financial Highlights (unaudited)
|
Three months ended
December 31,
|
Years ended December
31,
|
CDN $ thousands,
except per share amounts
(or otherwise indicated)
|
2021
|
2020
|
% Change
|
2021
|
2020
|
% Change
|
Revenues
|
25,707
|
21,940
|
17.2 %
|
107,477
|
86,682
|
24.0 %
|
Gross Profit
|
3,903
|
4,511
|
(13.5)%
|
17,401
|
16,566
|
5.0 %
|
Selling & admin.
expenses
|
1,673
|
1,452
|
15.2 %
|
6,940
|
7,149
|
(2.9)%
|
Foreign exchange &
other losses
|
68
|
965
|
(93.0)%
|
165
|
533
|
(69.0)%
|
Net income
|
1,640
|
1,679
|
(2.3)%
|
8,365
|
6,349
|
31.8 %
|
Basic EPS
|
0.03
|
0.03
|
0.0 %
|
0.17
|
0.13
|
30.8 %
|
Diluted EPS
|
0.03
|
0.03
|
0.0 %
|
0.16
|
0.13
|
23.1 %
|
Gross margin
|
15.2%
|
20.6%
|
(5.4)
pp
|
16.2%
|
19.1%
|
(2.9)
pp
|
Selling & admin.
expenses as % of revenues
|
6.5%
|
6.6%
|
(0.1)
pp
|
6.5%
|
8.2%
|
(1.7)
pp
|
EBITDA1
(Excluding FX)
|
3,289
|
3,658
|
(10.1)%
|
14,186
|
12,768
|
11.1 %
|
EBITDA
|
3,221
|
2,807
|
14.7 %
|
14,021
|
12,349
|
13.5 %
|
EBITDA
margin
|
12.5%
|
12.8%
|
(0.3)
pp
|
13.0%
|
14.2%
|
(1.2)
pp
|
_________________________
1
|
See header titled
"Caution Regarding non-IFRS Financial Measures" which follows.
Free Cash Flow: net cash generated by operating activities less net
cash used in investing activities.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and
Amortization
|
2
|
Based on basic weighted
shares outstanding
|
Financial Review: Quarter and Year
Ended December 31
Revenues
Revenues were $25.7
million for the current quarter, up 17.2% over 2020.
Growth was driven by product pricing, which rose in-line with
higher year-over-year resin costs, partially offset by unfavourable
movements in foreign exchange. Overall sales volumes were down
modestly year-over-year due mainly to timing differences. The
Corporation expects first quarter 2022 sales volumes to surpass
levels reached in the fourth quarter of 2021.
For calendar 2021, sales were up 24% to $107.5 million, driven by product pricing and
stronger sales volumes for higher margin products and garbage bags,
partially offset by unfavourable movements in foreign exchange.
Imaflex has successfully built-out sales for its multi-layer films
in recent years and the Corporation's U.S. operations, where most
of the coextrusion lines are located, is becoming an increasingly
important revenue contributor.
As Imaflex has no long-term customer contracts, it is able to
adjust product pricing in accordance with resin input costs.
However, there is usually a 30-day lag between a resin price
increase and when customer pass-through adjustments are made. This
can temporarily impact margins, particularly in a rising raw
material pricing environment.
Gross Profit
Gross profit for the fourth
quarter of 2021 came in at $3.9
million or 15.2% of sales, compared to $4.5 million and 20.6% of sales in 2020.
For fiscal year 2021, the gross profit was $17.4 million (16.2% of sales), versus
$16.6 million (19.1% of sales) in
2020.
During 2021, the gross margin was impacted by the rapid rise in
resin input costs, which resulted in a higher revenue base due to
the associated increases in product pricing. In addition, foreign
exchange fluctuations were unfavourable year-over-year. This said,
margins remained stronger than historical norms, reflecting the
sale of higher value added products. Imaflex is also
benefitting from its increasing scale, whereby incremental revenues
lessen the impact of labor and overhead costs relative to
sales.
Operating Expenses
Selling and Administrative expenses
came in at $1.7 million for the
current quarter, up slightly from $1.5
million in 2020. However, as a percentage of sales
they were essentially the same in both years, coming in at 6.5% in
the fourth quarter of 2021, versus 6.6% in 2020. For fiscal 2021,
Selling and Administrative expenses came in at $6.9 million (6.5% of sales) down from
$7.1 million (8.2% of sales) in 2020.
The higher revenue base for the current quarter and year, along
with ongoing cost controls, reduced the impact of SG&A expenses
as a percent of sales in 2021.
Due to the depreciation of the US dollar against the Canadian
dollar, Imaflex recorded a foreign exchange loss of $0.1 million in the fourth quarter of 2021. This
compares to a loss of $1.0 million in
2020 resulting from movements in foreign exchange and the
disposition of assets. Collectively, this resulted in a
$0.9 million favourable
year-over-year variance. For calendar 2021, Imaflex had a foreign
exchange loss of $0.2 million, down
from a $0.5 million loss in the prior
year, resulting in a $0.3 million
favourable 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
$1.6 million for the fourth quarter
of 2021, relatively unchanged from the $1.7
million recorded in the prior year. For fiscal 2021, net
income came in at $8.4 million, up
31.8% over the $6.3 million achieved
in calendar 2020. The increase was largely due to the higher gross
profit and lower foreign exchange loss in 2021, along with lower
selling and administrative and finance
expenses.
EBITDA came in at $3.2 million or
12.5% of sales for the current quarter, versus $2.8 million and 12.8% of sales in 2020. On a
constant currency basis, EBITDA came in at $3.3 million (12.8% of sales) for the current
quarter, compared to $3.7 million
(16.7% of sales) in 2020.
For fiscal 2021, EBITDA came in at $14.0
million (13.0% of sales), versus $12.3 million (14.2% of sales) in the
corresponding prior-year period. Excluding the impact of foreign
exchange, EBITDA came in at $14.2
million (13.2% of sales) for the current year, up 11.1% from
$12.8 million (14.7% of sales) in
2020. The EBITDA margin for 2021 was impacted by the higher revenue
base, which rose in part due to product pricing adjustments
resulting from higher resin input costs.
Liquidity and Capital Resources
Cash flows generated
by operating activities, before movements in working capital and
taxes paid, stood at $3.4 million for
the fourth quarter of 2021, down modestly from $3.8 million in 2020. Including movements
in working capital and taxes paid, net cash generated by operating
activities was $1.4 million for the
current quarter, versus $2.2 million
in 2020. The year-over-year decrease for the quarter was largely
due to movements in inventories, foreign exchange and income taxes
paid, partially offset by movements in trade and other
receivables.
For calendar 2021, cash flows generated by operating activities,
before movements in working capital and taxes paid, stood at
$14.2 million, up from $12.8 million at the end of 2020, due largely to
the heightened profitability in 2021. Including movements in
working capital and taxes paid, net cash generated by operating
activities stood at $8.0 million for
the current year, down from $12.0
million in 2020. The decrease was largely driven by
movements in trade & other receivables resulting from higher
product pricing and stronger sales volumes in 2021. Inventory
levels also fluctuated versus 2020, reflecting higher resin input
costs and additional raw material purchases to accommodate stronger
customer orders and ensure resin inventory in a tight market. As
well, income taxes paid in 2021 were higher. This was partially
offset by the aforesaid profit increase in 2021, along with
movements in trade and other payables.
As at December 31, 2021, cash
available for operating activities totaled $18.0 million, including a cash balance of
$8.5 million ($3.2 million as at December 31, 2020) and another $9.5 million under Imaflex's $12.0 million revolving line of credit. Working
capital stood at $24.4 million, up
from $16.8 million at the end of
2020. Imaflex is maintaining a sound balance sheet, which further
enhances its financial flexibility and capacity to fund future
growth.
ADVASEAL Update
As previously announced, four of the
five active ingredients used on ADVASEAL® are not yet registered in
the U.S. To simplify their registration as generic pesticides
Imaflex has mandated a lab to prove their equivalence with active
ingredients ("active ingredients" or "TGAI"3) already
registered and marketed in the U.S. Although the lab has
made important progress in recent quarters, it has been slower than
originally anticipated and there remains additional work.
Imaflex is working closely with the lab to ensure the process is
completed as soon as reasonably possible and the Corporation
remains focused on submitting the ADVASEAL® registration
package to the U.S. Environmental Protection Agency ("EPA").
_________________________
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.
|
Outlook
"Although market forces remain competitive,
we are well positioned to deliver continued profitable growth,"
said Mr. Abbandonato. "Customer demand remains solid and we
expect first quarter 2022 sales volumes to surpass levels reached
in the fourth quarter of 2021. In turn, our strong financial
underpinning and cash flow generation provides a solid backbone to
further build out the business, thus assuring continued
success. Barring any unforeseen events, we believe Imaflex is
in the early stages of a multi-year growth cycle. This is an
exciting time for the Corporation and its shareholders."
To date, the impact of COVID-19 and geopolitical unrest on
Imaflex's operations, financial situation and results has not been
material. This said, any viral outbreaks, raw material supply
constraints or resin pricing pressures could affect the
business. Fortunately, the Corporation has no long-term
contracts and as such it is able to adjust product pricing, helping
to mitigate business risks. Furthermore, with a strong balance
sheet and dynamic team it is well positioned to meet any challenges
ahead.
Caution Regarding Non-IFRS
Financial Measures
The Company's management uses non-IFRS measures in this press
release, namely EBITDA (Earnings Before Interest, Taxes,
Depreciation, and Amortization), EBITDA excluding foreign exchange
and Free Cash Flow.
While EBITDA and Free Cash Flow are not standard International
Financial Reporting Standards (IFRS) measures, management,
analysts, investors and others use them 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 and Free
Cash Flow may be different from those used by other companies and
accordingly they 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.