Consistency and dependability of business
model continues
Q1 2022 Highlights
- Revenues of $31.1 million, up
24.7% over Q1 2021
- Net income of $2.1 million
($0.04 cents per
share1), up 6.7% from $2.0
million in prior year
- Liquidity remains strong. Free cash
flow2 of $1.3
million, despite equipment related investments of
$2.0 million
- Cash available for operating activities totaled
$18.4 million at quarter end,
including a cash balance of $7.4
million ($0.14 per
share1) and another $11.0
million under Imaflex's $12.0
million revolving line of credit.
MONTRÉAL, May 25,
2022 /CNW Telbec/ - Imaflex Inc. ("Imaflex" or the
"Corporation") (TSXV: IFX) reports strong consolidated financial
results for the first quarter (Q1) ended March 31, 2022 and provides a business
update. All amounts are in Canadian dollars.
"The positive momentum seen over the last two years continued
into the first quarter of 2022, with Imaflex reporting solid
year-over-year increases in revenues and net income," highlighted
Mr. Joe Abbandonato, President and
Chief Executive Officer of Imaflex. "As we expected, overall
sales volumes were up over Q4 2021, while also surpassing levels
achieved in Q1 2021, with growth coming from both our Canadian and
U.S. operations. Recently, we further enhanced our production
capacity and capabilities, ordering ancillary flexible packaging
equipment, including a metallizer, to replace aging assets.
No additional financing is required to fund the
purchases. These investments are on top of our major
April 2022 announcement regarding the
purchase of three multi-layer extruders ("extruders"). They
help secure future growth at a higher contribution than historical
norms."
Consolidated Financial Highlights
(unaudited)
|
Three months ended
March 31,
|
CDN $ thousands,
except per share amounts
(or otherwise
indicated)
|
2022
|
2021
|
% Change
|
Revenues
|
31,064
|
24,920
|
24.7 %
|
Gross Profit
|
4,770
|
4,590
|
3.9 %
|
Selling & admin.
expenses
|
1,927
|
1,718
|
12.2 %
|
Foreign exchange
losses
|
293
|
298
|
(1.7)%
|
Net income
|
2,083
|
1,952
|
6.7 %
|
Basic EPS
|
0.04
|
0.04
|
0.0 %
|
Diluted EPS
|
0.04
|
0.04
|
0.0 %
|
Gross margin
|
15.4%
|
18.4%
|
(3.0)
pp
|
Selling & admin.
expenses as % of revenues
|
6.2%
|
6.9%
|
(0.7)
pp
|
EBITDA2
(Excluding FX)
|
3,828
|
3,754
|
2.0 %
|
EBITDA
|
3,535
|
3,456
|
2.3 %
|
EBITDA
margin
|
11.4%
|
13.9%
|
(2.5)
pp
|
Financial Review: Quarter Ended
March 31
Revenues
Revenues were $31.1 million for
the current quarter, up 24.7% over 2021. Growth was driven by
product pricing, which rose in-line with increased resin costs, and
higher sales volumes in both Canada and the
U.S.
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 came in at $4.8
million, up 3.9% over $4.6
million in the corresponding prior-year period. However, the
gross margin as a percentage of sales was 15.4%, versus 18.4% in
2021. The gross margin for the current quarter was impacted
by a rapid rise in resin input costs, along with elevated shipping
fees, including fuel surcharges from carriers and some suppliers
and higher product packaging and other costs. Although the
flexible packaging industry has been cautious to react to the
heightened pricing environment, steps have recently been taken to
implement price increases to recover the additional expenses being
incurred.
Operating Expenses
Selling and Administrative expenses came in at $1.9 million for the first quarter of 2022, up
from $1.7 million in the prior
year. The increase was largely due to higher administrative
fees, including some non-recurring expenses. Due to the higher
revenue base in the current quarter and ongoing cost controls,
Selling and Administrative expenses as a percentage of sales were
down versus 2021, coming in at 6.2%, versus 6.9% last
year.
Following a depreciation of the US dollar against the Canadian
dollar, Imaflex recorded a foreign exchange loss of $0.3 million in the first quarter of 2022,
essentially in line with the prior year. 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 was $2.1 million for
the current quarter, up 6.7% from $2.0
million in 2021. The increase was largely due to the
higher gross profit, partially offset by higher selling and
administrative and finance expenses.
EBITDA came in at $3.5 million or
11.4% of sales, versus $3.5 million
an 13.9% of sales in the first quarter of 2021. On a constant
currency basis, EBITDA came in at $3.8
million (12.3% of sales), compared to $3.8 million (15.1% of sales) in 2021. The EBITDA
margin for 2022 was impacted by the aforementioned higher revenue
base.
Liquidity and Capital
Resources
Net cash flows generated by operating activities, before
movements in working capital and taxes paid, stood at $3.9 million for the current quarter, up slightly
from $3.8 million in 2021.
Including movements in working capital and taxes paid, net cash
generated by operating activities stood at $3.3 million, up $0.6
million from $2.8 million at
the end of the first quarter of 2021. The increase was driven
by movements in inventories, partially offset by movements in trade
and other receivables and trade and other payables.
As at March 31, 2022, cash
available for operating activities totaled $18.4 million, including a cash balance of
$7.4 million and another $11.0 million under Imaflex's $12.0 million revolving line of credit.
With a strong balance sheet and excellent liquidity, Imaflex is
well positioned to drive profitable growth.
ADVASEAL Update
Imaflex continues to work closely with the independent lab
mandated to prove the equivalence of the active ingredients coated
on ADAVSEAL® ("active ingredients" or "TGAI"3) with
those already registered and marketed in the U.S.
Progress continues to be made and the Corporation remains focused
on submitting the registration package to the U.S. Environmental
Protection Agency ("EPA") as soon as possible.
Outlook
"Going forward, the Corporation remains well positioned to drive
sustainable growth," said Mr. Abbandonato. "Our
recent asset purchases will significantly increase our production
capacity, capabilities and market reach. The extruders, which
will begin to arrive later this year, should bring the greatest
impact as they will double our higher margin multi-layer production
capacity and increase our overall extrusion output by approximately
20%. Although Imaflex operates in a competitive and
ever-changing environment, the strength of our business continues
to grow."
Annual General Meeting
Due to ongoing public health concerns regarding COVID-19,
Imaflex will be holding a live virtual-only Annual General Meeting
this year. It will be held on Thursday
June 16, 2022 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, 2022, 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 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.
_______________________________________________
1
|
Based on basic and
diluted weighted shares outstanding
|
2
|
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
|
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.
|
SOURCE Imaflex Inc.