INTERTAPE POLYMER GROUP INC.
NYSE : ITP
TSX : ITP

INTERTAPE POLYMER GROUP INC.

July 29, 2009 16:01 ET

Intertape Polymer Group Reports Second Quarter 2009 Results

MONTREAL, QUEBEC and BRADENTON, FLORIDA--(Marketwire - July 29, 2009) - Intertape Polymer Group Inc. (TSX:ITP) (NYSE:ITP) ("Intertape" or the "Company") today released results for the three months and six months ended June 30, 2009. All dollar amounts are US denominated unless otherwise indicated.

"While Intertape sales continue to be affected by the global economic situation, various initiatives undertaken by the Company over the last two quarters, including cost reduction measures, opening of new market channels and new product commercializations, have enabled the Company to somewhat mitigate the impact of external factors. The industry challenges we have faced persist and we must continue to deal proactively with this reality," stated Intertape Chairman, Eric E. Baker.

Net loss for the second quarter of 2009 was $1.2 million or $0.02 per share, both basic and diluted, compared to net earnings of $4.6 million or $0.08 per share both basic and diluted for the same period last year. Both of the Company's Divisions experienced declines, however, the Engineered Coated Products ("ECP") Division was harder hit as demand in its largest market, the North American residential housing market, continued to be soft. Net loss for the first six months of 2009 totaled $7.8 million ($0.13 per share, basic and diluted) compared to net earnings of $2.8 million ($0.05 per share, basic and diluted) for the same period in 2008.

Second quarter sales were down 23.1% to $151.9 million, compared to sales of $197.5 million in the second quarter of 2008, reflecting a 20.3% decrease in sales for the Tapes & Films ("T&F") Division and a 34.6% reduction for the ECP Division. Sales for the first six months of 2009 were $291.0 million compared to $382.0 million for the same period in 2008, a decrease of 23.8%.

Gross profit for the second quarter totaled $21.5 million, compared to $26.4 million a year ago, reflecting decreases in both the T&F and ECP Divisions. The gross margin increased to 14.2%, from 13.3% in the second quarter of 2008, reflecting an increase in the gross margin of the T&F Division, partially offset by a decline in the ECP Division's gross margin. Gross profit and gross margin for the first six months of 2009 were $36.3 million and 12.5% respectively, compared to $54.5 million and 14.3% for the first six months of 2008.

Selling, general and administrative ("SG&A") expenses totaled $16.6 million for the second quarter of 2009, $0.6 million lower than the $17.2 million for the second quarter of 2008. For the first six months of 2009, SG&A expenses were $32.0 million compared to $34.8 million for the same period in 2008. SG&A expenses for 2009 reflect the cost reduction initiatives implemented by the Company in the fourth quarter of 2008 and the first quarter of 2009.

Second quarter 2009 EBITDA was $12.4 million compared to $16.0 million for the second quarter in 2008. For the first six months of 2009, EBITDA was $19.1 million compared to $33.5 million for the same period in 2008. Reduced sales, resulting in lower gross profits in both Divisions were the main reason for lower EBITDA in both the second quarter and first six months of 2009.

The Company generated cash flows from operating activities in the second quarter of 2009 of $8.8 million compared to $2.3 million in the second quarter of 2008. The higher level of cash generation in 2009 was due to lower raw material inventory costs and an increased focus on cash management. For the first six months of 2009, the Company generated cash flows from operating activities of $20.7 million compared to cash usage of $0.6 million for the same period of 2008.

Over the quarter, the Company reduced its outstanding debt by $3.6 million, for a total debt reduction of $19.1 million over the first six months of 2009. The ABL has one financial covenant, a fixed charge ratio, the target for which is 1.0 to 1.0. The financial covenant becomes effective only when unused availability drops below $25.0 million. While the Company did not meet the ratio as at June 30, 2009, this covenant was not in effect as unused availability was in excess of $25.0 million and measured at $42.4 million. To date in the third quarter of 2009, the Company has maintained availability in excess of $25.0 million. It is the Company's intention to remain above the $25.0 million threshold of unused availability during the remainder of 2009.

Segmented Information

Tapes & Films ("T&F") Division

Sales for the T&F Division for the second quarter were $127.0 million, representing a 20.3% decrease compared to $159.5 million for the second quarter of 2008. Sales volumes decreased 16.1% mainly due to the impact of the global economic downturn that began in the fourth quarter of 2008 and continues. The lower sales volumes have been mitigated in part by the growth in new products and markets. Selling prices for the second quarter of 2009 were 4.3% lower than in the second quarter of 2008 as selling prices have tracked the decline in resin-based raw material costs. Sales for the T&F Division for the first six months of 2009 totaled $242.4 million compared to $308.2 million for the first six months of 2008, a 21.4% decrease. Sales volumes for the first six months of 2009 declined 17.0% compared to the first six months of 2008.

Second quarter gross profits for the T&F Division totaled $20.6 million compared to $22.8 million for the second quarter of 2008 primarily due to lower sales volumes, offset partially by cost reductions resulting from Company initiatives implemented in the fourth quarter of 2008 and the first quarter of 2009. Gross margins increased to 16.2% from 14.3% a year ago as 2009 selling prices were at levels that better reflected costs than in 2008 when there was a rapid unprecedented increase in resin-based raw material costs, which the Division could not fully recover. T&F Division gross profits and gross margins for the first six months of 2009 and 2008 were $33.3 million (13.7%) and $46.6 million (15.1%) respectively.

T&F Division's EBITDA for the second quarter was $13.6 million compared to $15.2 million for the comparable period a year ago. For the first six months of 2009 and 2008, the T&F Division's EBITDA was $20.2 million and $31.3 million respectively.



Tapes and Films Division EBITDA Reconciliation to Net Earnings (Loss)
(in millions of US dollars)

Three months Six months
--------------------------------------------------------------------------
For the periods ended June 30, 2009 2008 2009 2008
--------------------------------------------------------------------------
$ $ $ $

Divisional net earnings (loss)
before income taxes 6.1 8.0 5.4 16.7
Depreciation and amortization 7.5 7.2 14.8 14.6
--------------------------------------------------------------------------
EBITDA 13.6 15.2 20.2 31.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
EBITDA margin 10.7% 9.5% 8.3% 10.2%
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Engineered Coated Products ("ECP") Division

Sales for the ECP Division for the second quarter were $24.9 million, representing a 34.6% decrease compared to $38.0 million for the second quarter a year ago. Year-over-year sales volumes decreased 27.1%. The volume decline was accompanied by selling price decreases due to the decline in resin-based raw material costs and competitive pressures within the markets served. Product demand was significantly impacted by the continued weakness in the residential housing market. The supply chain supporting this market is carrying significant excess inventories. Consequently, there continues to be destocking of on-hand inventories by customers within the Division's largest market. New product sales growth within the residential construction market has helped to mitigate some of the decline in existing product sales. Six month sales for the ECP Division totaled $48.6 million compared to $73.9 million for the same period of 2008, a 34.2% decrease. Sales volumes for the first six months of 2009 declined 20.1% compared to the first six months of 2008.

Gross profits for the ECP Division for the second quarter totaled $1.0 million, representing a gross margin of 3.8%, compared to $3.5 million and a gross margin of 9.2% for the second quarter of 2008. The gross profit and gross margin decreases are the result of declining trading margins, as depressed customer demand in the current environment limits the Division's ability to maintain selling prices. ECP Division gross profits and gross margins for the first six months of 2009 and 2008 were $3.0 million (6.2%) and $7.9 million (10.7%) respectively.

ECP Division EBITDA for the second quarter was negative $0.3 million compared to $1.5 million for the same quarter of 2008. For the first six months of 2009 and 2008, the ECP Division's EBITDA was $0.6 million and $3.7 million, respectively.



ECP Division EBITDA Reconciliation to Net Earnings (Loss)
(in millions of US dollars)

Three months Six months
--------------------------------------------------------------------------
For the periods ended June 30, 2009 2008 2009 2008
--------------------------------------------------------------------------
$ $ $ $

Divisional net earnings (loss)
before income taxes (1.9) 0.0 (2.5) 0.8
Depreciation and amortization 1.6 1.5 3.1 2.9
--------------------------------------------------------------------------
EBITDA (0.3) 1.5 0.6 3.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
EBITDA margin (1.2)% 3.9% 1.2% 5.0%
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Outlook

"Sales are down due to the weak economy; however, our new products are beginning to attract attention in the market. Our focus continues to be on the things we can control, in particular cash management, which is of utmost importance in this difficult economy," concluded Intertape Executive Director, Melbourne F. Yull.

Non-GAAP Information

This release contains a non-GAAP financial measure, EBITDA. The Company believes the inclusion of such a non-GAAP financial measure improves the transparency of the Company's disclosure, and is used by management and the Company's investors in evaluating the Company's performance. The Company has provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure.

A reconciliation of the Company's EBITDA to GAAP net earnings (loss) is set out in the EBITDA reconciliation table below. EBITDA should not be construed as net 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) income taxes (recovery); (ii) financial expenses, net of amortization; (iii) refinancing expenses net of amortization; (iv) amortization of other intangibles and capitalized software costs; and (v) depreciation. Other companies in our industry may calculate EBITDA differently than we do.

EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or as an alternative to net earnings (loss) as indicators of the Company's operating performance or any other measure of performance derived in accordance with GAAP. The Company has included this non-GAAP financial measure because it is used by management in evaluating the Company's performance.



EBITDA Reconciliation to Net Earnings (Loss)
(in millions of US dollars)

Three months Six months
--------------------------------------------------------------------------
For the periods ended June 30, 2009 2008 2009 2008
--------------------------------------------------------------------------
$ $ $ $

Net earnings (loss) - as reported (1.2) 4.6 (7.8) 2.8
Add back (deduct):
Financial expenses,
net of amortization 4.2 3.4 8.5 8.3
Refinancing expenses,
net of amortization 2.9
Income taxes (recovery) 0.1 (1.0) (0.1) (1.8)
Depreciation and amortization 9.3 9.0 18.5 21.3
--------------------------------------------------------------------------
EBITDA 12.4 16.0 19.1 33.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Conference Call

A conference call to discuss Intertape's 2009 second quarter results will be held tomorrow, July 30, 2009, at 10 A.M. Eastern Time. Participants may dial 1-800-288-9626 (U.S. and Canada) and 1-612-332-0228 (International).

You may access a replay of the call by dialing 1-800-475-6701 (U.S. and Canada), or 1-320-365-3844 (International), and entering the Access Code 107787. The recording will be available from Thursday, July 30, 2009 at 12:00 P.M. until Sunday, August 30, 2009 at 11:59 P.M., Eastern Time.

About Intertape Polymer Group

Intertape Polymer Group is a recognized leader in the development and manufacture of specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the Company employs approximately 2,100 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe.

Safe Harbor Statement

Certain statements and information included in this press release constitute forward-looking information within the meaning of applicable Canadian securities legislation and the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to the Company's future outlook and anticipated events, the Company's business, its operations, financial condition or results. Particularly, statements about the Company's objectives and strategies to achieve those objectives are forward-looking statements and are identified by terms such as "believe", "expect", "intend" "anticipate" and similar expressions. While these statements are based on certain factors and assumptions which management considers to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information involves 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. The risks include, but are not limited to, exchange rate risk, deteriorating economic conditions, fluctuations in the amount of available funds under the Company's ABL, ability to meet debt service obligations, cost and availability of raw materials, timing and market acceptance of new products, competition, international operations, compliance with environmental regulations and protection of intellectual property. A discussion of risk factors is also contained in the Company's filings with the Canadian securities regulators and the U.S. Securities and Exchange Commission ("SEC"). Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This press release contains a non-GAAP financial measure as defined under SEC rules. The Company believes such a non-GAAP financial measure improves the transparency of the Company's disclosures, and improves the period-to-period comparability of the Company's results from its core business operations. As required by SEC rules, the Company has provided a reconciliation of the measure to the most directly comparable GAAP measure.



Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended June 30,
(In thousands of US dollars, except per share amounts)
(Unaudited)
-------------------------------------------------------------------
Three months Six months
-------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------
$ $ $ $

Sales 151,912 197,534 290,980 382,035
Cost of sales 130,379 171,184 254,631 327,508
-------------------------------------------------------------------
Gross profit 21,533 26,350 36,349 54,527
-------------------------------------------------------------------

Selling, general
and administrative
expenses 16,601 17,196 32,017 34,825
Stock-based
compensation expense 254 329 512 750
Research and
development expenses 1,295 1,528 2,668 2,969
Financial expenses
Interest 3,970 4,339 8,055 10,323
Other 536 (681) 1,030 (1,329)
Refinancing 6,031
-------------------------------------------------------------------
22,656 22,711 44,282 53,569
-------------------------------------------------------------------
Earnings (loss)
before income taxes (1,123) 3,639 (7,933) 958
Income taxes
(recovery) 72 (999) (86) (1,817)
-------------------------------------------------------------------
Net earnings (loss) (1,195) 4,638 (7,847) 2,775
-------------------------------------------------------------------
-------------------------------------------------------------------

Earnings (loss)
per share
Basic (0.02) 0.08 (0.13) 0.05
-------------------------------------------------------------------
-------------------------------------------------------------------
Diluted (0.02) 0.08 (0.13) 0.05
-------------------------------------------------------------------
-------------------------------------------------------------------



Intertape Polymer Group Inc.
Consolidated Deficit
Periods ended June 30,
(In thousands of US dollars)
(Unaudited)
--------------------------------------------------------------------
Three months Six months
--------------------------------------------------------------------
2009 2008 2009 2008
--------------------------------------------------------------------
$ $ $ $

Balance, beginning
of period (167,185) (69,597) (160,533) (67,482)
Cummulative impact
of accounting
changes relating to
inventories (252)
--------------------------------------------------------------------
Balance, beginning
of period, as
restated (167,185) (69,597) (160,533) (67,734)
Net earnings (loss) (1,195) 4,638 (7,847) 2,775
Repurchase of
common shares 13 13
--------------------------------------------------------------------
Balance, end
of period (168,367) (64,959) (168,367) (64,959)
--------------------------------------------------------------------
--------------------------------------------------------------------


Weighted average number of common shares outstanding

Basic 58,951,050 58,956,350 58,951,050 58,956,350
Diluted 58,951,050 58,956,350 58,951,050 58,956,350



Intertape Polymer Group Inc.
Consolidated Comprehensive Income (Loss)
Periods ended June 30,
(In thousands of US dollars)
(Unaudited)
--------------------------------------------------------------------
Three months Six months
--------------------------------------------------------------------
2009 2008 2009 2008
--------------------------------------------------------------------
$ $ $ $

Net earnings (loss) (1,195) 4,638 (7,847) 2,775
--------------------------------------------------------------------

Other comprehensive
income (loss):
Changes in fair
value of interest
rate swap
agreements,
designated as
cash flow hedges
(net of future
income taxes of
nil for the three
and six months ended
June 30, 2009, nil
and $785 for the
three and six months
ended June 30, 2008,
respectively) 599 (240) (1,337)
Settlement of interest
rate swap
agreements, recorded
in the consolidated
earnings (net of
income taxes of
$1,080) 1,840
Changes in fair value
of investment in
publicly traded
securities
designated as
available-for-sale 1,065 1,065
Changes in fair value
of forward foreign
exchange rate
contracts, designated
as cash flow hedges
(net of future income
taxes of nil for the
three and six months
ended June 30,
2009) 2,162 1,422
Settlement of forward
foreign exchange
rate contracts,
recorded in the
consolidated earnings
(net of income taxes
of nil for the
three and six months
ended June 30, 2009) 16 70
Gain on forward
foreign exchange
rate contracts
recorded in the
consolidated
earnings pursuant
to recognition of
the hedged item
in cost of sales (453) (453)
Reduction in net
investment in a
foreign subsidiary (1,143) (125) (1,143)
Changes in
accumulated
currency
translation
adjustments 9,638 1,340 5,163 (2,955)
--------------------------------------------------------------------
Other comprehensive
income (loss) 13,027 197 6,902 (3,595)
--------------------------------------------------------------------
Comprehensive income
(loss) for the
period 11,832 4,835 (945) (820)
--------------------------------------------------------------------
--------------------------------------------------------------------



Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended June 30,
(In thousands of US dollars)
(Unaudited)
--------------------------------------------------------------------
Three months Six months
--------------------------------------------------------------------
2009 2008 2009 2008
--------------------------------------------------------------------
$ $ $ $

OPERATING ACTIVITIES
Net earnings (loss) (1,195) 4,638 (7,847) 2,775
Non-cash items
Depreciation and
amortization 9,329 8,961 18,494 18,225
Loss (gain) on
disposal of
property, plant
and equipment 304 66 323 (97)
Write-off of debt
issue expenses
in connection with
debt refinancing 3,111
Write-down of
inventories 163 264
Reversal of a
portion of
write-down of
inventories (84) (1,692)
Future income taxes (313) (1,082) (480) (2,143)
Stock-based
compensation
expense 254 329 512 750
Pension and
post-retirement
benefits
funding in excess
of amounts
expensed 321 (701) 793 (900)
Gain on forward
foreign exchange
rate contracts (453) (453)
Change in fair value
of forward foreign
exchange rate
contracts 110 110
Unrealized foreign
exchange loss 120 54
Foreign exchange
gain resulting
from reduction in net
investment in a
foreign subsidiary (125)
Other (39) (78)
--------------------------------------------------------------------
Cash flows from
operations before
changes in working
capital items 8,517 12,211 9,875 21,721
--------------------------------------------------------------------
Changes in working
capital items
Trade receivables (8,038) (8,868) (5,086) (13,249)
Other receivables 572 618 1,139 (691)
Inventories (423) (7,740) 13,688 (11,330)
Parts and supplies (213) (115) (411) (355)
Prepaid expenses (16) 96 (872) 287
Accounts payable
and accrued
liabilities 8,375 6,079 2,372 3,060
--------------------------------------------------------------------
257 (9,930) 10,830 (22,278)
--------------------------------------------------------------------
Cash flows from
operating
activities 8,774 2,281 20,705 (557)
--------------------------------------------------------------------

INVESTING ACTIVITIES
Property, plant
and equipment (2,174) (4,744) (7,260) (8,992)
Proceeds on the
disposal of
property, plant
and equipment 3,114
Other assets (317) (424)
Intangible assets (632) (933)
--------------------------------------------------------------------
Cash flows from
investing
activities (2,806) (5,061) (8,193) (6,302)
--------------------------------------------------------------------

FINANCING ACTIVITIES
Long-term debt 4,609 7,822 4,609 126,589
Debt issue expenses (478) (2,643)
Repayment of
long-term debt (8,216) (4,688) (23,746) (121,812)
Repurchase
of common shares (18) (18)
--------------------------------------------------------------------
Cash flows from
financing
activities (3,625) 2,656 (19,155) 2,134
--------------------------------------------------------------------
Net increase
(decrease) in cash 2,343 (124) (6,643) (4,725)
Effect of foreign
currency
translation
adjustments 574 66 160 (11)
Cash, beginning
of period 5,990 10,851 15,390 15,529
--------------------------------------------------------------------
Cash, end of period 8,907 10,793 8,907 10,793
--------------------------------------------------------------------
--------------------------------------------------------------------



Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)
----------------------------------------------------------------
June 30, 2009 December 31, 2008
(Unaudited) (Audited)
----------------------------------------------------------------
$ $

ASSETS
Current assets
Cash 8,907 15,390
Trade receivables 81,170 75,467
Other receivables 3,036 4,093
Other assets 1,065
Inventories 79,933 90,846
Parts and supplies 14,645 14,119
Prepaid expenses 3,927 3,037
Derivative financial
instruments 1,125
Future income taxes 9,127 9,064
----------------------------------------------------------------
202,935 212,016
Property, plant
and equipment 281,811 289,763
Other assets 21,619 22,364
Intangible assets 3,730 3,956
Future income taxes 47,783 47,067
----------------------------------------------------------------
557,878 575,166
----------------------------------------------------------------
----------------------------------------------------------------

LIABILITIES
Current liabilities
Accounts payable and
accrued liabilities 80,526 78,249
Installments on
long-term debt 706 623
----------------------------------------------------------------
81,232 78,872
Long-term debt 231,817 250,802
Pension and
post-retirement benefits 9,419 9,206
Derivative financial instruments 1,853 2,969
Other liabilities 691
----------------------------------------------------------------
325,012 341,849
SHAREHOLDERS' EQUITY
Capital stock 348,143 348,174
Contributed surplus 13,636 13,124

Deficit (168,367) (160,533)
Accumulated other
comprehensive income 39,454 32,552
----------------------------------------------------------------
(128,913) (127,981)
----------------------------------------------------------------
232,866 233,317
----------------------------------------------------------------
557,878 575,166
----------------------------------------------------------------
----------------------------------------------------------------

Contact Information

  • MaisonBrison
    Rick Leckner
    514-731-0000