Reports record quarterly net
income
Q2 2022 Highlights
- Accelerated growth driven by solid performance across the
business and geographies
- Revenues of $32.1 million, up
17.3% over Q2 2021
- Gross profit of $5.6 million
(17.4% of sales), up 24.1% from $4.5
million (16.5% of sales) in 2021
- Q2 net income up 71.0% to $3.4
million (EPS1 of $0.07), versus $2.0
million (EPS: $0.04) in
2021
- YTD net income up 39.3% to $5.5
million (EPS: $0.11), versus
$4.0M (EPS: $0.08) in 2021
- Cash available for operating activities totaled
$15.6 million at quarter end,
including a cash balance of
$5.6 million and another $10.0 million under Imaflex's $12.0 million revolving line of credit.
MONTRÉAL, Aug. 23,
2022 /CNW/ - Imaflex Inc. ("Imaflex" or the
"Corporation") (TSXV: IFX) reports solid consolidated financial
results for the second quarter (Q2) ended June 30, 2022 and provides a business
update. All amounts are in Canadian dollars.
"Imaflex had another strong quarter, with net income coming in
at record levels, including and excluding the impact of foreign
exchange gains," highlighted Mr. Joe
Abbandonato, President and Chief Executive Officer of
Imaflex. "This impressive performance is due to the strength and
diversification of our business model. Furthermore, our
ongoing shift to higher value offerings, better positions Imaflex
to meet clients' needs, while enhancing customer loyalty and
profitability. We have successfully attained close to maximum
production capacity on our multi-layer lines. As such, we
await delivery and installation of the major equipment purchases
announced in Q2 2022. The first of three multi-layer
extruders will arrive later this year. We look forward to the
opportunities ahead as we continue to scale the business and
further enhance our capabilities."
Consolidated Financial Highlights
(unaudited)
|
Three months ended June 30,
|
Six months ended June 30,
|
CDN $ thousands,
except per share amounts
(or otherwise indicated)
|
2022
|
2021
|
% Change
|
2022
|
2021
|
% Change
|
|
|
|
|
|
|
|
Revenues
|
32,123
|
27,391
|
17.3 %
|
63,187
|
52,311
|
20.8 %
|
Gross Profit
|
5,598
|
4,512
|
24.1 %
|
10,368
|
9,102
|
13.9 %
|
Selling & admin.
expenses
|
2,105
|
1,743
|
20.8 %
|
4,032
|
3,461
|
16.5 %
|
Foreign exchange
(gains) losses
|
(644)
|
379
|
(269.9) %
|
(351)
|
677
|
(151.8) %
|
Net income
|
3,419
|
1,999
|
71.0 %
|
5,502
|
3,951
|
39.3 %
|
Basic EPS
|
0.07
|
0.04
|
75.0 %
|
0.11
|
0.08
|
37.5 %
|
Diluted EPS
|
0.07
|
0.04
|
75.0 %
|
0.11
|
0.08
|
37.5 %
|
Gross margin
|
17.4 %
|
16.5 %
|
0.9 pp
|
16.4 %
|
17.4 %
|
(1.0)
pp
|
Selling & admin.
expenses as % of revenues
|
6.6 %
|
6.4 %
|
0.2 pp
|
6.4 %
|
6.6 %
|
(0.2)
pp
|
______________________________
|
1
|
Earnings Per
Share: based on basic and diluted weighted shares
outstanding
|
|
Three months ended June
30,
|
Six months ended June
30,
|
CDN $ thousands,
except per share amounts
(or otherwise indicated)
|
2022
|
2021
|
%
Change
|
2022
|
2021
|
%
Change
|
EBITDA2
(Excluding FX)
|
4,479
|
3,653
|
22.6 %
|
8,307
|
7,407
|
12.2 %
|
EBITDA
|
5,123
|
3,274
|
56.5 %
|
8,658
|
6,730
|
28.6 %
|
EBITDA
margin
|
15.9 %
|
12.0 %
|
3.9 pp
|
13.7 %
|
12.9 %
|
0.8 pp
|
Financial Review: Quarter Ended
June 30
Revenues
Revenues were $32.1 million for
the current quarter, up 17.3% over 2021. Growth was driven by
product pricing, which rose in line with increased sales of higher
margin offerings and additional costs for some resins. Sale of
metalized films were particularly robust this quarter, reflecting
the strength of Imaflex's diversified product portfolio. The
Corporation also benefited from favourable year-over-year movements
in foreign exchange and gains in overall sales volumes. As Imaflex
has no long-term customer contracts, it is able to adjust product
pricing in accordance with resin input costs.
Revenues came in at $63.2 million
for the first six months of 2022, up 20.8% over the corresponding
period of 2021. Growth was driven by the same factors outlined for
the quarter.
Gross Profit
Gross profit was up 24.1% versus 2021, coming in at $5.6 million or 17.4% of sales, up from
$4.5 million and 16.5% of sales in
2021. For the first six months of 2022, the gross profit was
$10.4 million (16.4% of sales), up
13.9% from $9.1 million (17.4% of
sales) in 2021.
Gross profit for the current quarter and year-to-date was
positively impacted by Imaflex's continuing shift to higher value
business segments and favourable year-over-year movements in
foreign exchange. In addition, the Corporation benefited from
its ongoing initiatives to drive operating efficiencies and enhance
production capabilities throughout the business. This was partially
offset by additional costs for some resins and inflationary
pressures, such as fuel surcharges from carriers and some suppliers
and higher product packaging and other costs.
Operating Expenses
Selling and Administrative expenses came in at $2.1 million for the quarter, up from
$1.7 million in the prior year.
The increase was largely due to new employee hires, including
the new operations managers, and some salary increases to remain
competitive in the current market. Due to the higher revenue base
in the current quarter and ongoing cost controls, Selling and
Administrative expenses as a percentage of sales were essentially
in line year-over-year coming in at 6.6% for the current quarter
versus 6.4% in 2021.
For the first half of 2022, Selling and Administrative expenses
came in at $4.0 million (6.4% of
sales) versus $3.5 million (6.6% of
sales) in 2021. The expense increase is largely due to the same
factors outlined for the quarter, along with some non-recurring
expenses incurred in the first quarter of 2022.
Due to the appreciation of the US dollar against the Canadian
dollar, Imaflex recorded a foreign exchange gain of $0.6 million in the current quarter, versus a
loss of $0.4 million in 2021,
resulting in a $1.0 million
favourable year-over-year variance. For 2022 year-to-date, Imaflex
had a foreign exchange gain of $0.4
million, versus a loss of $0.7
million in 2021. 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.
____________________________
|
2
|
See header titled
"Caution Regarding non-IFRS Financial Measures" which follows.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and
Amortization
Free Cash Flow: net cash generated by operating activities less net
cash used in investing activities.
|
Net Income and EBITDA
Net income was $3.4 million for
the current quarter, up 71.0% from $2.0
million in the prior year. For the first six months of
2022, net income came in at $5.5
million, up 39.3% from $4.0
million in 2021. The year-over-year increases for both
periods were largely due to the greater gross profit and foreign
exchange gains, partially offset by higher selling and
administrative expenses.
EBITDA came in at $5.1 million
(15.9% of sales) for the current quarter, up 56.5% from
$3.3 million (12.0% of sales) in
2021. On a constant currency basis, EBITDA came in at
$4.5 million (13.9% of sales),
compared to
$3.7 million (13.3% of sales) in
2021.
Liquidity and Capital
Resources
Net cash flows generated by operating activities, before
movements in working capital and taxes paid, stood at $4.6 million for the current quarter, up 26.1%
from $3.6 million in 2021. The
increase was driven by the higher profit for the current
quarter. Including movements in working capital and taxes
paid, net cash generated by operating activities stood at
$3.7 million, up significantly from
$0.2 million in the corresponding
prior-year period. The increase over 2021 was driven by
movements in trade and other receivables, with receivables
decreasing in the current quarter versus a notable increase in
2021. This was partially offset by movements in trade and other
payables, with the Company recording a greater year-over-year
reduction in payables during the current quarter.
For the year-to-date, cash flows generated by operating
activities, before movements in working capital and taxes paid,
stood at $8.4 million, up from
$7.4 million in the corresponding
prior-year period. Growth was driven by the higher profit in
2022. Including movements in working capital and taxes paid,
net cash generated by operating activities stood at $7.0 million for 2022 year-to-date, up
significantly from $3.0 million in
2021. The increase was largely driven by movements in inventories
and trade & other receivables, partially offset by movements in
trade and other payables.
As at June 30, 2022, cash
available for operating activities totaled $15.6 million, including a cash balance of
$5.6 million and another $10.0 million under Imaflex's $12.0 million revolving line of credit. This
strong position was achieved despite $5.7
million of asset payments in the quarter, namely towards the
major equipment purchases announced in Q2 2022, including new
extrusion equipment, a metallizer and other ancillary flexible
packaging equipment. These investments further enhance the
Company's production capacity and capabilities in order to heighten
sales and profitability. Free cash flow2 came in at
negative $2.0 million for the second
quarter of 2022 as a result of the aforesaid investing
activities.
Submission of
ADVASEAL® Registration Package Targeted for Q4
2022
As previously disclosed, Imaflex has engaged an independent lab
to prove the equivalence of certain active ingredients coated on
ADAVSEAL® ("active ingredients" or "TGAI"3) with
those already registered and marketed in the U.S. Important
progress has been made and based on recent positive feedback from
the lab, the Corporation now expects to be in a position to submit
the registration package to the U.S. Environmental Protection
Agency ("EPA") in the fourth quarter of 2022. With patents in the
top 20 major vegetable and fruit producing countries worldwide, and
a heightened global move towards more sustainable practices,
ADVASEAL® offers considerable market opportunity.
______________________________
|
2 See header
titled "Caution Regarding non-IFRS Financial Measures" which
follows.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and
Amortization
Free Cash Flow: net cash generated by operating activities less net
cash used in investing activities.
|
|
|
|
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
"Looking at our performance over the last several years, we
consistently generated solid profits and strong, stable cash
flows," said Mr. Abbandonato. "Furthermore, Imaflex continues
to evolve, with a growing portfolio of higher margin offerings, a
more efficient cost structure and improved productivity.
Although, parts of our business are reaching maximum production
capacity, we've invested to capture future growth and the
Corporation remains on track to receive the first of three
multi-layer extruders later this year, barring any supply chain
issues. With a strong balance sheet and excellent liquidity,
we are well positioned to drive profitable growth." As usual, third
quarter 2022 results will be impacted by Québec's annual
construction holiday, which results in temporary plant closures
across the province, including Imaflex's Montréal and Victoriaville plants.
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.