Imaflex considered an essential vendor; all
plants remain fully operational
- Strong 2019 performance on constant currency basis,
particularly given dynamic pricing environment and reduced high
margin citrus film sales versus prior year
- Q4 2019 revenues of $18.7
million, versus $22.5 million
in 2018; FY 2019 down 6.1% to $81.1
million, primarily due to pricing
- Q4 and FY 2019 gross margins strengthen over 2018
- Excluding foreign exchange, Q4 and FY 2019
EBITDA1 up year-over-year
- Q4 net income of $0.3 million,
compared to $0.6 million in
2018
- FY 2019 net income of $1.5
million or $0.03 per share,
versus $3.6 million and $0.07 per share in 2018
2
- Q4 and FY 2019 operating cash flows remain strong
MONTREAL, April 17, 2020 /CNW Telbec/ - Imaflex Inc.
("Imaflex" or the "Corporation") (TSXV: IFX), announces its
consolidated financial results for the fourth quarter (Q4) and
fiscal year (FY) ended December 31,
2019 and provides a business update. All amounts are in
Canadian dollars.
"During 2019 our solid line-up of innovative products allowed us
to attract and retain customers, albeit at lower than historical
sales prices, due to a competitive pricing environment and
decreased resin costs," highlighted Mr. Joe
Abbandonato, President and Chief Executive Officer of
Imaflex. "Despite this, our revenues, profitability and cash
flows remained more than respectable, particularly given the impact
of currency on 2019 profitability and the fact that there were very
few sales of our high margin citrus
film."
Consolidated
Financial Highlights (unaudited)
|
|
|
|
|
Three months ended
December 31,
|
Year ended December
31,
|
CDN $ thousands,
except per share amounts
(or otherwise indicated)
|
2019
|
2018
|
% Change
|
2019
|
2018
|
% Change
|
Revenues
|
18,740
|
22,472
|
(16.6)%
|
81,071
|
86,332
|
(6.1)%
|
Gross
Profit
|
2,647
|
1,772
|
49.4%
|
10,952
|
10,764
|
1.7%
|
Selling & admin.
expenses
|
1,676
|
1,490
|
12.5%
|
7,042
|
6,493
|
8.5%
|
Foreign exchange
(gains) losses
|
374
|
(886)
|
(142.1)%
|
872
|
(1,340)
|
(165.1)%
|
Net income
|
303
|
556
|
(45.5)%
|
1,536
|
3,550
|
(56.7)%
|
Basic EPS
|
0.01
|
0.01
|
0.0%
|
0.03
|
0.07
|
(57.1)%
|
Diluted
EPS
|
0.01
|
0.01
|
0.0%
|
0.03
|
0.07
|
(57.1)%
|
Gross
margin
|
14.1%
|
7.9%
|
6.2
pp
|
13.5%
|
12.5%
|
1.0
pp
|
Selling & admin.
expenses as % of revenues
|
8.9%
|
6.6%
|
2.3
pp
|
8.7%
|
7.5%
|
1.2
pp
|
EBITDA (Excluding
FX)
|
1,837
|
908
|
102.3%
|
7,144
|
6,459
|
10.6%
|
EBITDA
|
1,464
|
1,794
|
(18.4)%
|
6,273
|
7,799
|
(19.6)%
|
EBITDA
margin
|
7.8%
|
8.0%
|
(0.2)
pp
|
7.7%
|
9.0%
|
(1.3)
pp
|
__________________________
|
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)
|
Financial Review: Quarter and Year ended December 31
Revenues
Revenues were $18.7
million for the fourth quarter of 2019, down 16.6% from
$22.5 million in 2018. The
decrease largely reflects the impact on product pricing resulting
from competitive pressures and lower resin prices. As well,
sales of the Corporation's high margin citrus film were $nil for
the current quarter, versus $1.4
million in 2018. Excluding citrus film sales, revenues were
down 11.1% versus 2018.
Fiscal 2019 sales totaled $81.1
million, down 6.1% from $86.3
million in the prior year. The decrease from 2018 was
mainly due to the same variables outlined for the quarter,
partially offset by favourable movements in foreign
exchange. Citrus film sales totaled $0.9 million in 2019, down from $2.8 million in 2018. Excluding citrus film
sales, revenues were down 4.0% year-over-year.
Gross Profit
The quarterly gross profit was up
year-over-year, coming in at $2.6
million or 14.1% of sales in the fourth quarter of 2019,
versus $1.8 million and 7.9% of sales
in 2018. A year-over-year decrease in certain variable costs,
such as transportation, had a positive impact on the gross profit
for the current quarter. As well, in the fourth quarter of
2018, the gross profit was particularly impacted by resin price
fluctuations. Resin price decreases are normally reflected
immediately in product pricing for Imaflex's customers, while
increases usually take about 30 days to be priced in. As such
the effect of a resin price decrease is that an immediate
opportunity loss is incurred with respect to resin inventory
previously purchased when resin prices were
higher.
For fiscal 2019, the gross profit was $11.0 million or 13.5% of sales, versus
$10.8 million and 12.5% of sales in
2018. The improvement over 2018 was largely driven by the
aforementioned variance explanation relating to resin price
fluctuations.
Operating Expenses
Selling and administrative expenses
were $1.7 million or 8.9% of sales in
the fourth quarter of 2019, up from $1.5
million and 6.6% of sales in 2018. Fiscal 2019
expenses came in at $7.0 million or
8.7% of sales, compared to $6.5
million and 7.5% of sales in the corresponding prior-year
period. The year-over-year increases for the quarter and
year-to-date were mainly driven by an expanded sales team to
stimulate demand for Imaflex's products and new production
equipment, namely the five-layer extruder.
Due to unfavourable currency fluctuations, Imaflex recorded a
foreign exchange loss of $0.4 million
in the fourth quarter of 2019, versus a $0.9
million gain in 2018. This resulted in a negative
$1.3 million year-over-year variance.
For fiscal 2019, the Corporation similarly recorded a foreign
exchange loss of $0.9 million, versus
a gain of $1.3 million in
2018. This generated a $2.2
million negative year-over-year variance. The 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
The Company recorded
net income of $0.3 million in the
fourth quarter of 2019, versus $0.6
million in the corresponding prior-year quarter. The
decrease was largely due to unfavourable movements in foreign
exchange and higher 2019 selling and administrative expenses,
partially offset by the improved quarterly gross profit.
For calendar 2019, net income stood at $1.5 million, down from $3.6 million in the prior year. The
$2.1 million decrease was largely due
to unfavourable year-over-year movements in foreign exchange and
higher 2019 selling and administrative expenses, partially offset
by the higher gross profits in 2019 and lower income taxes versus
2018.
EBITDA was $1.5 million
($1.2 million excluding the impact of
IFRS 16) or 7.8% of sales in the fourth quarter of 2019, versus
$1.8 million and 8.0% of sales in
2018. Excluding the impact of foreign exchange, EBITDA was
$1.8 million or 9.8% of sales for the
current quarter, up from $0.9 million
and 4.0% of sales in 2018.
For fiscal 2019, EBITDA came in at $6.3
million ($5.1 million
excluding the impact of IFRS 16) or 7.7% of sales as compared to
$7.8 million and 9.0% of sales in
2018. Excluding foreign exchange, EBITDA was $7.1 million or 8.8% of sales, up from
$6.5 million and 7.5% of sales in
2018.
Liquidity and Capital Resources
Net cash generated by
operating activities stood at $2.7
million for the fourth quarter of 2019, as compared to
$0.6 million in the prior
year. The year-over-year improvement was largely driven by
movements in working capital and foreign exchange.
For calendar 2019, net cash generated by operating activities
totaled $9.7 million, up from
$1.1 million in 2018. The improvement
was driven by the same factors outlined for the quarter, along with
movements in depreciation and a decrease in 2019 income taxes paid,
partially offset by the lower net income recorded versus 2018.
As at December 31, 2019, Imaflex
had approximately $7.6 million of
cash available for operating activities, including the unused
portion under its $12.0 million
revolving line of credit.
Impact of Coronavirus (COVID-19) – Imaflex considered an
essential vendor
To date, Imaflex's three plants in
Canada and the U.S.A. have remained open, fully operational
and running at normal business levels. The Corporation is
considered an essential vendor in both countries due to the
important role its products play in protecting and preserving food
and consumer products. Presently, all manufacturing
facilities have the ability to take on more volume should it be
required due to business interruption at another plant or
heightened order flow. Furthermore, Imaflex is not
experiencing any delays with its suppliers. The Corporation
believes it has sufficient capital to fund its operations and grow
the business, assuming business levels remain the same.
Despite this, Imaflex has and will utilize any available capital
payment moratoriums on long term debt payments to maximize cash
flows throughout the crisis. "We are monitoring developments
closely and taking all necessary steps to protect our employees,
customers and business," highlighted Mr. Abbandonato. "I would
like to thank all of our employees who have continued to work with
dedication during this difficult time. Our thoughts also go
out to all those families and businesses negatively impacted by
this devastating virus."
Outlook
"We continue to operate in a dynamic
pricing environment, while resin prices also remain lower than
historical levels," said Mr. Abbandonato. "This said, our
strategy remains the same. We will continue to differentiate
ourselves in advanced extrusion and innovative crop protection
films, building out our addressable markets with innovative
products. With the investments in new production equipment
brought online in 2019, most notably the five-layer extruder, we
are well positioned to do better in 2020.
Longer term, our next generation agriculture film,
ADVASEAL® , offers some exciting
opportunities for growth. We achieved some important
milestones in recent months, including positive interim results for
our Efficacy Trial. This said, some key milestones remain and
I thank shareholders for their on-going support and patience. If
successful, the benefits of
ADVASEAL® for growers, the environment
and shareholders, should justify the wait.
We operate in an ever changing business environment, but we are
well positioned to drive profitable growth and are excited about
our future potential. I look forward to providing updates on
ADVASEAL® and our overall business as we
progress throughout the year."
Changes to Critical Accounting Policies
Effective
January 1, 2019, Imaflex adopted
IFRS 16, Leases. Under IFRS 16, lessees are required to
account for leases on their balance sheet by recognizing a "right
of use" asset and a lease liability, essentially removing the
distinction between an operating and finance lease. Certain
exemptions exist for short-term leases and leases of low value
assets. Imaflex applied the modified retrospective method of
application and as such comparative prior-year information has not
been restated.
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.