TICKER SYMBOL: IFX
MONTREAL, Nov. 26, 2015 /CNW Telbec/ - Imaflex Inc.
(the "Company") (TSXV: IFX) announces results for the
quarter ended September 30, 2015.
(unaudited)
(CDN $ thousands,
except per share amounts)
|
Q3 2015
|
Q3 2014
|
YTD 2015
|
YTD 2014
|
Revenue
|
17,441
|
15,314
|
52,067
|
45,004
|
Cost of sales
(excluding amortization)
|
15,703
|
13,754
|
46,251
|
40,095
|
Gross profit ($)
(before amortization)
|
1,738
|
1,560
|
5,816
|
4,909
|
Gross profit
(%)(before amortization)
|
10.0%
|
10.2%
|
11.2%
|
10.9%
|
Amortization of
production equipment
|
363
|
307
|
1,080
|
926
|
Gross
Profit
|
1,375
|
1,253
|
4,736
|
3,983
|
Gross profit
(%)
|
7.9%
|
8.2%
|
9.1%
|
8.9%
|
Sales and
administrative expenses
|
1,596
|
1,327
|
4,736
|
3,955
|
Gain on foreign
exchange
|
(869)
|
(561)
|
(1,420)
|
(490)
|
Other
expenses
|
157
|
166
|
506
|
454
|
Profit before income
taxes
|
491
|
321
|
914
|
64
|
Provision for income
taxes
|
47
|
147
|
418
|
302
|
Profit
(loss)
|
444
|
174
|
496
|
(238)
|
Basic and diluted
earnings (loss) per share
|
0.009
|
0.004
|
0.010
|
(0.005)
|
EBITDA
|
1,078
|
790
|
2,652
|
1,450
|
The results include those of Imaflex Inc. ("Imaflex") located in
Montréal (Québec), its divisions Canguard Packaging ("Canguard")
and Canslit ("Canslit") located in Victoriaville (Québec), and its wholly owned
subsidiary, Imaflex USA Inc.
("Imaflex USA") located in
Thomasville (North Carolina).
Management Outlook
Management is pleased to report that this quarter's results
confirm that our US operations, which began contributing to EBITDA
last quarter, have continued their positive trend and management
believes this entity will continue improving going forward.
This quarter also saw the launch of ADVASEAL, our proprietary
agricultural film formulation for controlled release of plant
protection products. During the quarter Imaflex supplied a
select group of leading growers in the US with samples of
ADVASEAL. Management expects feedback from these growers in
the coming months, and that initial commercial orders for ADVASEAL
should be placed in time for the 2016 summer growing season.
In management's view, it is normal that growers take a
progressive approach towards the adoption of new technology like
ADVASEAL. As such, management's expectations are that it will take
a few seasons for growers, accustomed to spraying chemicals and
then immediately applying the mulch film, to adopt the ADVASEAL
technology for their total acreage.
Management is also very optimistic regarding the commercial
adoption of its other proprietary agricultural film, SHINE N' RIPE
XL. Imaflex has previously received commercial orders for
this metalized film from a leading citrus producer.
Management expects additional commercial orders for SHINE N' RIPE
XL in the coming months, and much like ADVASEAL, is anticipating a
measured but steady pace of adoption by growers.
Management remains focused on growing its legacy business and
returning its EBITDA margins to those attained prior to the US
expansion. Management expects that in the coming years both
ADVASEAL and SHINE N' RIPE XL will create important contributions
to sales growth and increased profitability for Imaflex.
Sales
Sales increased in the third quarter of 2015 by $ 2,127,000
compared to the same period in 2014 as a result of the growth in
the US operations following successful efforts to develop new
business and gain market share in products that management
considers strategic. These improvements were further aided by the
impact of the appreciation in the USD on sales denominated in USD.
The combined effect of these factors led to improvements in sales,
despite the decreases in resin prices.
Sales over the nine-month period increased by $ 7,063,000 in 2015 compared to the same period
in 2014, continuing the positive trend started in the first quarter
of 2015. This improvement was largely attributable to the US
operations and to favorable foreign exchange movements on sales
denominated in US dollars. Management is working on continuing to
develop additional markets and to gain market-share in existing
markets. Management has also worked hard on improving the sales
volume of the Canadian operations, but additional efforts need to
be made in order to fully reflect the improvements achieved.
Gross profit margin
The third quarter gross profit increased by $ 178,000,
versus the same period in 2014, due to the increased volume of
sales, namely in the US operations. The gross profit margin however
was negatively impacted by decreases in resin prices, the
continuous appreciation of the US dollar that negatively impacted
the cost of our raw material and by the launch of our new ADVASEAL
product. The decreases in resin prices were passed on to our
customers before having used the totality of the inventory bought
at higher prices. The gross profit margin therefore decreased
slightly from 10.2% in the third quarter of 2014 to 10.0% in the
third quarter of 2015. The increase in the amortization of
production equipment further negatively impacted our gross profit
and gross profit margin.
Over the nine-month period, the gross profit margin increased
from 10.9% in 2014 to 11.2% in 2015. Despite the difficulties
encountered in the first quarter, during which the growth achieved
came at the cost of production efficiency, and the distribution of
samples of our ADVASEAL product in the third quarter, the gross
margin improved over 2014 as production efficiency returned to
historical levels. Throughout the first nine months of 2015, the
gross profit margin was negatively impacted by the appreciation of
the USD, which has a direct impact on the Company's raw material
costs, and the decreases in resin prices, which led to decreased
profitability in the short run until prices stabilize and
profitability returns to historical levels. Management dealt with
this market dynamic as best it could in order to maintain
profitability at optimal levels.
Selling and administrative
Selling and administrative expenses increased by $ 269,000 due to: firstly the foreign exchange
movements that contributed to increasing all expenses denominated
in USD, secondly the patent maintenance and registration costs that
were incurred in order to record our patents in additional
countries, and finally the costs related to the issuance of share
purchase options late in the second quarter of 2015. As a
percentage of sales, selling and administrative expenses only
increased from 8.7% to 9.2%.
Over the nine-month period, selling and administrative expenses
increased by $ 781,000, but increased only slightly as a
percentage of sales, from 8.8% in 2014 to 9.1% in 2015. The
increase is largely attributable to foreign exchange, to patent
registration and maintenance costs as well as an increase in
selling and administrative salaries. Expenses related to the
Company's patents will continue to be incurred; however these
should decrease once the patents are registered in all the
countries where management wants to obtain protection against
infringement.
Net income
The Company's profitability increased in the third quarter of
2015 compared to the same period in 2014, due to the increase in
the gross profit and foreign exchange gain. Selling and
administrative expenses increased, mainly due to expenses related
to the Company's patents as well as foreign exchange movements, as
did the finance costs.
Over the nine-month period, the increase in net income is also
explained by favourable movements in foreign exchange, but also by
the increase in gross profit, which was partially offset by the
increase in selling and administrative expenses as well as
increased finance expenses. The Company is spending what is
necessary to accomplish long-term product development objectives
while maintaining lean and efficient operations and focusing on
continued sales growth.
Capital Resources
The Company has an operating line of credit with its bankers to
a maximum of $ 10,000,000 bearing interest at a rate of prime
plus 1.15%. The line of credit is secured by trade receivables and
inventories. As at September 30, 2015, the Company was using
$ 4,654,042 on its line of credit ($ 5,154,870 as at
December 31, 2014). The Company's
working capital decreased slightly from $ 5,493,261 as at
December 31, 2014 to $ 4,984,646
on September 30, 2015. Growth may put
additional pressure on working capital and may result in an
increased usage of the line of credit. Recent foreign exchange
movements have also had an impact on the Company's debt denominated
in USD and on its working capital. Management believes that the
funds at its disposition are sufficient to support the growth that
is expected in the medium term and will permit the steady growth
expected in the next year. Continued profitability should also
generate the cash flow that is required to support the Company's
operations.
Critical Accounting Policies
The Company's accounting policies under IFRS have not changed
since the Company's last annual financial statements and have been
applied consistently to the the interim condensed consolidated
financial statements for the periods ended September 30, 2015
and 2014. As of the 1st of January 2015, a portion of the Parent Company's
advances to the foreign subsidiary are being accounted for as
forming part of the net investment in the foreign subsidiary for
the purposes of foreign exchange accounting and the foreign
exchange gains and losses arising on these advances are recognized
as Accumulated foreign currency translation within Reserves.
Safe Harbor Statement
Certain statements and information included in this release
constitute "forward-looking statements". Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied in
such forward-looking statements. Additional discussion of
factors that could cause actual results to differ materially from
management's projections, estimates and expectations is contained
in the Company's other public filings. Unless otherwise
required by the securities authorities, we do not undertake to
update any forward-looking statements that may be made from time to
time by us or on our behalf.
Non-IFRS Measure
The Company's management uses a non-IFRS measure in this press
release, namely EBITDA. Management wishes to specify that in
the performance of the Company's financial results, EBITDA is
calculated as "Earnings before finance expenses, taxes, the change
in fair value of the derivative financial instrument, depreciation
and amortization". While EBITDA is not a standard 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.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
SOURCE Imaflex Inc.