Intertape Polymer Group Reports Improved 2012 Fourth Quarter and Annual Results
2012 Adjusted EBITDA of $87.9 million increased 37.4% over last year
(firmenpresse) - MONTREAL, QUEBEC and BRADENTON, FLORIDA -- (Marketwire) -- 03/07/13 -- Intertape Polymer Group Inc. (TSX: ITP) ("Intertape" or the "Company") today released results for the fourth quarter and year ended December 31, 2012. All dollar amounts are US denominated unless otherwise indicated.
Fiscal Year 2012 Highlights:
Other Announcements:
"Our focus for the past few years has been on margin improvement by implementing manufacturing cost reductions and driving favourable product mix changes," stated Intertape President and Chief Executive Officer, Greg Yull. "For the year, we achieved a gross margin of 18.0% and adjusted EBITDA of $87.9 million, representing an increase of 37.4% from 2011. Furthermore, during the year, we increased our gross margin goal range to 18% to 20% from 18% to 19%.
"During the year, we launched 35 new products. Since ramping up product innovation in 2009, we have introduced more than 135 new products. In 2012, new products introduced over the past five years accounted for over 15% of Intertape's total revenue, up from over 10% in 2011.
"We continued to deleverage our balance sheet with debt reduction of $43.0 million and also considerably reduced the average cost of debt with the redemption of $80 million of Notes. At the end of 2012, the debt to trailing 12-month adjusted EBITDA ratio was 1.7 compared to 3.0 at the end of 2011.
"During 2012, we invested $21.6 million in projects primarily related to operational efficiencies. This represented an increase of $8 million from 2011. Even with this increased investment, free cash flows for the year increased to $62.9 million from $34.7 million in 2011.
"We recently commenced an initiative to invest $26 million to relocate and modernize our Columbia, South Carolina manufacturing operations. The new facility will include state-of-the-art equipment and annual savings from productivity gains and energy efficiencies are projected to be more than $13 million starting in the first half of 2015 with the first full year effects in 2016," concluded Mr. Yull.
The Company declared a dividend, in the amount of US$0.08, under the semi-annual dividend policy adopted in 2012. The dividend will be paid on April 10, 2013 to shareholders of record at the close of business on March 25, 2013. This dividend to be paid by the Company is an "eligible dividend" as per the Income Tax Act (Canada).
Revenue for the year ended December 31, 2012 decreased 0.3% to $784.4 million compared to $786.7 million in 2011. After adjusting for the closure of the Brantford facility in the second quarter of 2011, revenue increased 0.3% in 2012 from $781.7 million in 2011. The adjusted selling prices, including the impact of product mix, increased approximately 3% partially offset by the adjusted sales volume decrease of approximately 3%. An improved pricing environment that began in 2011 as well as the reduction in sales of low-margin products were the primary reasons for the increase in selling prices including the impact of product mix. The decrease in sales volume was primarily due to the progress the Company made toward reducing sales of low-margin products partially offset by an increase in sales of new products.
Fourth quarter revenue increased 3.4% to $189.3 million, compared to $183.0 million in 2011 and decreased 4.6% sequentially from $198.5 million for the third quarter of 2012.
Sales volume for the fourth quarter of 2012 increased approximately 6% compared to the fourth quarter of 2011 primarily due to increased demand for tape products. The decrease in the sales volume of approximately 3% when compared to the third quarter of 2012 largely reflects normal seasonality.
Selling prices, including the impact of product mix, decreased approximately 3% in the fourth quarter of 2012 compared to the fourth quarter of 2011 primarily due to a shift in the mix of products sold. When compared to the third quarter of 2012, selling prices, including the impact of product mix, decreased by approximately 2% primarily due to a shift in the mix of products sold.
Gross profit totalled $141.0 million for 2012, an increase of 23.2% from 2011. Gross margin was 18.0% in 2012 and 14.6% in 2011. The increase in gross profit in 2012 compared to 2011 was primarily due to an improved pricing environment, manufacturing cost reductions, increase in sales of higher margin products and the closure of the Brantford, Ontario manufacturing facility in 2011 partially offset by lower sales volumes. The increase in gross margin in 2012 compared to 2011 was primarily due to manufacturing cost reductions, an increase in sales of higher margin products, an improved pricing environment and the progress made toward reducing sales of low-margin products.
Gross profit totalled $35.3 million in the fourth quarter of 2012, an increase of 28.0% from $27.6 million in the fourth quarter of 2011 and a decrease of 2.3% from $36.2 million in the third quarter of 2012. Gross margin was 18.7%, 15.1% and 18.2% in the fourth quarter of 2012, the fourth quarter of 2011 and the third quarter of 2012, respectively.
As compared to the fourth quarter of 2011, gross profit and gross margin increased primarily due to an improved pricing environment and manufacturing cost reductions. Compared to the third quarter of 2012, gross profit decreased slightly due to lower revenue partially offset by higher gross margin.
Selling, general and administrative expenses ("SG&A") for the year ended December 31, 2012 was $79.1 million compared to $77.0 million for 2011. As a percentage of revenue, SG&A was 10.1% and 9.8% for 2012 and 2011, respectively. The increase of $2.2 million in 2012 compared to 2011 was primarily the result of higher variable compensation expense related to higher profitability, higher stock-based compensation expense and increased professional fees, partially offset by the non-recurrence of the settlement of a lawsuit.
SG&A totalled $20.8 million for the fourth quarter of 2012 compared to $18.4 million for the fourth quarter of 2011 and $19.3 million for the third quarter of 2012. As a percentage of revenue, SG&A was 11.0%, 10.1% and 9.7% for the fourth quarter of 2012, the fourth quarter of 2011 and the third quarter of 2012, respectively. SG&A was $2.4 million greater in the fourth quarter of 2012 compared to the fourth quarter of 2011 primarily due to higher stock-based compensation, severance and professional fees related to managerial reporting enhancements. Compared to the third quarter of 2012, SG&A increased $1.6 million primarily due to increased severance and higher professional fees.
Adjusted EBITDA totalled $87.9 million for the year ended December 31, 2012 compared to an adjusted EBITDA of $64.0 million for 2011. Adjusted EBITDA was $23.9 million or 37.4% higher compared to 2011 primarily due to increased gross margin, as discussed above.
Adjusted EBITDA was $21.5 million for the fourth quarter of 2012 as compared to an adjusted EBITDA of $15.5 million for the fourth quarter of 2011 and an adjusted EBITDA of $23.5 million for the third quarter of 2012. The $5.9 million adjusted EBITDA increase compared to the fourth quarter of 2011 is primarily due to higher revenue and gross margin in the fourth quarter of 2012. Compared to the third quarter of 2012, the $2.1 million decrease in adjusted EBITDA was primarily due to lower revenue and higher SG&A partially offset by higher gross margin.
Net earnings for the year ended December 31, 2012 totalled $22.5 million compared to net earnings of $9.0 million for 2011. The increase in net earnings from 2011 to 2012 was primarily due to an increase in gross profit partially offset by an increase in manufacturing facility closure costs, restructuring and other related charges previously discussed.
Adjusted net earnings were $41.7 million for the year ended December 31, 2012 compared to adjusted net earnings of $13.6 million for 2011. Adjusted net earnings were $28.1 million higher in 2012 compared to 2011 primarily due to higher gross profit, lower finance costs and lower income tax expense.
Adjusted net earnings were $10.0 million for the fourth quarter of 2012 as compared to adjusted net earnings of $2.9 million for the fourth quarter of 2011 and to adjusted net earnings of $13.0 million for the third quarter of 2012. The increase in adjusted net earnings of $7.1 million compared to the fourth quarter of 2011 was primarily due to higher revenue, increased gross profit and reduced interest expense. The decrease in adjusted net earnings of $2.9 million compared to the third quarter of 2012 was primarily due to lower revenue, gross profit and increased SG&A.
Adjusted fully diluted earnings per share for the year ended December 31, 2012 was $0.69 ($0.37 unadjusted) compared to adjusted fully diluted earnings per share of $0.23 ($0.15 unadjusted) for 2011.
Adjusted fully diluted earnings per share for the fourth quarter of 2012 was $0.16 ($0.09 unadjusted) compared to adjusted fully diluted earnings per share of $0.05 ($0.04 unadjusted) for the fourth quarter of 2011 and adjusted fully diluted earnings per share of $0.21 ($0.20 unadjusted) for the third quarter of 2012.
For a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, see the Non-GAAP Financial Measures section below.
Cash flows from operations before changes in working capital items increased in 2012 by $24.5 million to $78.7 million from $54.2 million in 2011. The 2012 increase was primarily due to increased gross profit partially offset by an increase in SG&A.
Cash flows from operations before changes in working capital items increased in the fourth quarter of 2012 by $4.5 million to $19.4 million from $14.9 million in the fourth quarter of 2011. The increase in cash flows from operations before changes in working capital for the fourth quarter of 2012 compared to the fourth quarter of 2011 was primarily due to increased gross profit derived from higher revenue partially offset by an increase in cash costs associated with manufacturing facility closures, restructuring and other related charges.
The Company had total cash and loan availability under its Asset-Based Loan ("ABL") facility totalling $54.7 million as of December 31, 2012. Cash flows from operations combined with two new financing arrangements and the extension of the ABL facility allowed the Company to fund the redemptions of the Notes at par value in the aggregate amount of $80.0 million. The Company had cash and loan availability under its ABL facility exceeding $71 million as of March 6, 2013.
Outlook
The Company will continue to focus on developing and selling higher margin products, reducing variable manufacturing costs, executing manufacturing plant rationalization initiatives and optimizing its debt structure. As a result, the Company anticipates the following:
Assuming stable or improving macro-economic conditions, the Company expects to achieve quarterly gross margin in the range of 18% to 20% during 2013.
Non-GAAP Financial Measures
EBITDA, adjusted EBITDA, free cash flows, adjusted net earnings (loss) and adjusted earnings (loss) per share are not generally accepted accounting principle ("GAAP") measures. The non-GAAP financial measures do not have any standardized meanings prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Whenever Intertape uses such non-GAAP financial measures, it provides reconciliations to the most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP financial measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The Company has included these non-GAAP financial measures because it believes that it permits investors to make a more meaningful comparison of the Company's performance between periods presented. In addition, EBITDA and adjusted EBITDA are used by Management and the Company's lenders in evaluating the Company's performance.
EBITDA
A reconciliation of the Company's EBITDA, a non-GAAP financial measure, to GAAP net earnings (loss) is set out in the EBITDA reconciliation table below. EBITDA should not be construed as earnings (loss) before income taxes, net earnings (loss) or cash flows from operating activities as determined by GAAP. The Company defines EBITDA as net earnings (loss) before (i) interest and other (income) expense; (ii) income tax expense (benefit); (iii) refinancing expense, net of amortization; (iv) amortization of debt issue expenses; (v) amortization of intangible assets; and (vi) depreciation of property, plant and equipment. Adjusted EBITDA is defined as EBITDA before (i) manufacturing facility closures, restructuring and other related charges; (ii) stock-based compensation expense; (iii) impairment of goodwill; (iv) impairment of long-lived assets and other assets; (v) write-down on assets classified as held-for-sale; and (vi) other items as disclosed
Adjusted Net Earnings
A reconciliation of the Company's adjusted net earnings (loss), a non-GAAP financial measure, to GAAP net earnings (loss) is set out in the adjusted net earnings (loss) reconciliation table below. Adjusted net earnings (loss) should not be construed as net earnings (loss) as determined by GAAP. The Company defines adjusted net earnings (loss) as net earnings (loss) before (i) manufacturing facility closures, restructuring, and other related charges; (ii) stock-based compensation expense; (iii) impairment of goodwill; (iv) impairment of long-lived assets and other assets; (v) write-down on assets classified as held-for-sale; (vi) other items as disclosed; and (vii) income tax effect of these items.
Adjusted earnings (loss) per share is also presented in the following table and is a non-GAAP financial measure. The Company defines adjusted earnings (loss) per share as adjusted net earnings (loss) divided by the weighted average number of common shares outstanding, both basic and diluted.
Free Cash Flows
A reconciliation of free cash flows to cash flows from operating activities, the most directly comparable GAAP measure, is set forth below.
Conference Call
A conference call to discuss Intertape's 2012 fourth quarter and annual results will be held Thursday, March 7th, 2013, at 10 A.M. Eastern Time. Participants may dial 800-926-5093 (U.S. and Canada) and 1-212-231-2915 (International).
You may access a replay of the call by dialing 800-633-8284 (U.S. and Canada) or 1-402-977-9140 (International) and entering the Access Code 21650092. The recording will be available from March 7, 2013 at 12:00 P.M. until April 6, 2013 at 11:59 P.M. Eastern Time.
About Intertape Polymer Group Inc.
Intertape Polymer Group Inc. is a recognized leader in the development, manufacture and sale of a variety of paper and film-based pressure sensitive and water activated tapes, specialized polyolefin films, woven fabrics and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Bradenton, Florida, the Company employs approximately 1,800 employees with operations in 16 locations, including 10 manufacturing facilities in North America and one in Europe.
Safe Harbor Statement
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of United States federal securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical facts included in this press release, including statements regarding the Company's industry and prospects, plans, financial position and business strategy may constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates as well as beliefs and assumptions made by the Company's management. Such statements include, in particular, statements about the Company's plans, prospects, financial position and business strategies. Words such as "may," "will," "expect," "continue," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "seek" or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: the Company's anticipated business strategies; anticipated trends in the Company's business; anticipated cash flows from the Company's operations; availability of funds under the Company's Asset-Based Loan facility; and the Company's ability to continue to control costs. The Company can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. For additional information regarding some important factors that could cause actual results to differ materially from those expressed in these forward-looking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read "Item 3. Key Information - Risk Factors" as well as statements located elsewhere in the Company's annual report on Form 20-F for the year ended December 31, 2012 and the other factors contained in the Company's filings with the Canadian securities regulators and the US Securities and Exchange Commission. Each of these forward-looking statements speaks only as of the date of this press release. The Company will not update these statements unless applicable securities laws require it to do so.
Contacts:
MaisonBrison Communications
Rick Leckner/Pierre Boucher
514-731-0000
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Datum: 07.03.2013 - 07:00 Uhr
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