IPL Inc.
TSX : IPI.A

IPL Inc.

December 10, 2009 07:00 ET

IPL Reports Its Fiscal 2009 Year-End and Fourth Quarter Results

SAINT-DAMIEN, QUEBEC--(Marketwire - Dec. 10, 2009) - IPL Inc. (TSX:IPI.A)

- Consolidated sales of $197.9 million compared with $189.4 million in 2008

- EBITDA margin of 11.1% compared with an EBITDA margin of 6.8%

- Net earnings of $0.29 per share as opposed to a net loss of $0.17

- Declaration of a quarterly dividend of $0.03 per share

IPL Inc. (TSX:IPI.A), one of North America's leading manufacturers of plastic products, announced the results for its fiscal 2009 year-end and fourth quarter ended October 3, 2009.



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Financial highlights
(thousands of dollars
except per share data) Year ended Three months ended
(audited) (unaudited)
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October 3, September 27, October 3, September 27,
2009 2008 2009 2008
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Sales 197,923 189,365 44,833 55,166
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Earnings before
interest, taxes,
depreciation and.
amortization
(EBITDA) 21,908 12,816 5,230 1,148
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Earnings (loss)
before income
taxes (EBT) 5,992 (4,418) 1,487 (3,020)
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Net earnings (loss) 4,131 (2,421) 1,025 (2,454)
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Net earnings (loss)
per share, fully
diluted 0.29 (0.17) 0.07 (0.17)
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Results for the Fiscal Year

In fiscal 2009, which spanned 53 weeks compared to 52 weeks in 2008, consolidated sales totalled $197.9 million, up 4.5% from sales of $189.4 million in 2008. Sales on the American market amounted to $79.5 million or 40.2% of total sales, compared with $76.8 million or 40.6% of total sales a year earlier. The change in the average exchange rate for the period from September 28, 2008, to October 3, 2009, compared to the average exchange rate for the 2008 fiscal year had a positive impact of $14.0 million on the value of sales in 2009.

For the twelve-month period ended October 3, 2009, EBITDA amounted to $21.9 million or 11.1% of sales, compared with $12.8 million or 6.8% of sales for the same period a year earlier ($17.1 million or 9.0% of sales before non-recurring items). Net earnings totalled $4.1 million or $0.29 per share, fully diluted, compared with a net loss of $2.4 million or $0.17 per share, fully diluted, in 2008 (net earnings of $0.7 million or $0.05 per share, fully diluted, before non-recurring expenses). Finally, cash flow from operating activities before changes in non-cash operating items amounted to $18.6 million, up 35.8% from $13.7 million in fiscal 2008.

As its balance sheet shows, IPL closed the year in excellent financial shape, with cash of $9.5 million and long-term debt of $34.0 million, including the current portion. Consequently, the ratio of total net debt to shareholders' equity was 0.31 at October 3, 2009, down from 0.52 at the end of fiscal 2008. The ratio of total net debt to shareholders' equity is defined as long-term debt, including the current portion, plus bank loans and minus cash, over shareholders' equity.

Fourth Quarter Results

Consolidated sales for the three-month period ended October 3, 2009, were $44.8 million compared with $55.2 million a year earlier. The 18.7% decline in sales was essentially attributable to the $5.9-million contribution, in the fourth quarter of 2008, of an important contract in the Environment sector, the economic slowdown and a reduction in the average selling price to reflect lower resin prices. The latter factors had a greater impact in the Canadian market, as sales on the American market totalled $22.0 million or 49.0% of sales, compared with $21.7 million or 39.4% of sales last year. Finally, the change in the average exchange rate from July 3 to October 3, 2009, compared to the average exchange rate for the fourth quarter of 2008, had a positive impact of $1.9 million on the value of sales.

Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $5.2 million or 11.7% of sales compared with $1.1 million or 2.1% of sales a year earlier. It should be noted that non-recurring expenses of $4.3 million were recognized in the fourth quarter of fiscal 2008, to reflect asset writedowns in relation to the Company's decision to withdraw from the Automotive sector ($3.4 million) and the old production facility in Windsor, Ontario ($0.9 million). Excluding these non-recurring expenses, EBITDA for the fourth quarter of 2008 was $5.5 million or 9.9% of sales.

In the quarter ended October 3, 2009, the Company generated net earnings of $1.0 million or $0.07 per share, fully diluted, compared with a net loss of $2.5 million or $0.17 per share, fully diluted, in the fourth quarter of 2008 (net earnings of $0.7 million or $0.05 per share, fully diluted, before non-recurring items).

"Despite the difficult economy, the fourth quarter tracked the positive trend witnessed throughout the year," said Serge Bragdon, President and Chief Executive Officer. "Efforts to reduce operating costs and optimize return on assets had a positive effect on margins and liquidity. In combination with product line enhancements, improvements to the cost structure gave the Company the flexibility it needed to compete with the best in the industry, and to proceed with the targeted, systematic development of its activities."

Segmented Results

In the quarter ended October 3, 2009, packaging product sales totalled $24.1 million, down 14.1% from $28.0 million in the fourth quarter of 2008. Sales were generally reined in by a reduction of the average selling price to reflect lower raw materials prices and the weak economic activity in North America, which particularly reduced shipments in the Bulk Packaging sector. These factors were partially offset by steady progress in Retail Packaging. The change in the Canadian/US dollar exchange rate in the fourth quarter of 2009 had a positive impact of $1.1 million on the value of sales on the American market. For the twelve-month period ended October 3, 2009, packaging product sales totalled $97.9 million, down 3.7% from $101.7 million in fiscal 2008.

In the fourth quarter of 2009, EBITDA for the packaging products segment was $3.7 million, up 24.5% from $2.9 million for the same period a year earlier. EBITDA was 15.2% of sales in the fourth quarter of 2009 compared with 10.5% in the same period last year. This improvement in the EBITDA margin was attributable to lower resin prices, favourable variations in foreign exchange and steady progress in terms of operating efficiency. For fiscal 2009 overall, EBITDA grew by 18.2% to $12.1 million or 12.3% of sales, compared with $10.2 million or 10.0% of sales in 2008.

Sales of industrial products totalled $20.8 million in the fourth quarter of 2009, down 23.5% from $27.2 million in the fourth quarter of 2008. The difference in sales for the two comparison periods was in part due to the $5.9-million contribution in the fourth quarter of 2008 of a large contract to supply wheeled carts to the city of Calgary. In addition, economic uncertainty once again had a negative effect on shipments in sectors more sensitive to economic cycles, particularly Engineered Products. Finally, sales price reductions reflecting lower raw materials prices also pulled down overall segment sales. In contrast, the change in the Canadian/US dollar exchange rate in the fourth quarter had a positive impact of $0.8 million on the value of sales to American customers. For the twelve months ended October 3, 2009, industrial product sales totalled $100.0 million, up 14.1% from $87.7 million in fiscal 2008.

In the fourth quarter of 2009, EBITDA for the industrial products segment amounted to $1.6 million or 7.5% of sales. In the fourth quarter of 2008, EBITDA was negative $1.8 million for a negative EBITDA margin of 6.6%, although it was $2.5 million or 9.2% of sales excluding the non-recurring items mentioned above. Steady progress in terms of operating efficiency and favourable exchange rate fluctuations helped offset the impact of slowing activities on profitability in the fourth quarter of 2009. For the twelve-month period ended October 3, 2009, EBITDA totalled $9.8 million or 9.8% of sales, compared with $2.6 million or 3.0% of sales for the 2008 fiscal year ($6.9 million or 7.9% of sales before non-recurring expenses).

Dividend declaration

The Company's Board of directors declared a quarterly dividend of $0.03 per multiple voting share of IPL. The dividend is payable on January 22, 2010 to shareholders of record at the close of business on December 23, 2009.

Outlook

"Although the economy continues to be uncertain, IPL is accelerating its efforts to stimulate organic sales growth, with sustained emphasis on innovation and new product development expected to trigger greater penetration of growth market segments. In combination with its solid financial and operating foundation, this will reaffirm IPL's position as a leader in the North American plastics industry," concluded Serge Bragdon.

Conference Call

IPL Inc. will hold a conference call to present its results on Thursday, December 10, 2009 at 11:00 a.m. (Eastern Standard Time). Those interested should call 1-888-231-8191 (Montreal, North America and overseas). The call can also be accessed via a direct broadcast site at the following address: www.cnw.ca.

Those unable to participate can hear a recording of the call by dialling 1-800-642-1687 and entering the code 42535600 on the telephone keypad. This recording will be accessible from 2:00 p.m. (Eastern Standard Time) on Thursday, December 10, until 11:59 p.m. (Eastern Standard Time) on Thursday, December 17, 2009.

Non-GAAP Measures

Company management uses a non-GAAP measure in this press release, namely earnings before interest, taxes, depreciation and amortization ("EBITDA"). However, management wishes to note that for earnings presentation purposes, EBITDA cannot be formally identified in the financial statements, and corresponds to the line preceding "Financial expenses". The reader may refer to the table reconciling the EBITDA used by the Company and net earnings, provided in a section entitled "Non-GAAP Measures" in the management discussion and analysis for the 2009 financial year ended October 3, 2009.

While EBITDA is not a standard GAAP measure, management, analysts, investors and others use it as an indicator of the Company's financial and operating management and performance. The Company's method of calculating EBITDA may be different from those used by other companies.

About IPL

IPL Inc. is one of the leading North American producers of injection- and extrusion-moulded plastic products for various industrial manufacturing sectors. IPL employs about 900 people in its four plants located in Saint-Damien, Saint-Lazare and Lawrenceville (Quebec), and Edmundston (New Brunswick). The Company manufactures and markets over 400 products for packaging and materials handling. IPL also provides highly technical value-added custom moulding services for the automotive and transport industries, as well as for various industrial uses. Additional information on IPL is available at www.ipl-plastics.com.

Forward-looking statements

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Company. These statements are based on assumptions, uncertainty and management's best possible evaluation of future events. The factors apt to cause variances in the results include, among others, any fluctuations in quarterly results, any change in customer demand for the Company's services, any impact of competition on prices and the market in general, and any events that could have an impact on the economy. As a result, readers are advised that actual results may differ from expected results.

Notice to readers: The unaudited consolidated financial statements and management discussion and analysis for the fourth quarter of fiscal 2009 ended October 3, 2009, can be found on IPL's website at www.ipl-plastics.com.

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