AirBoss of America Corp.
TSX : BOS

AirBoss of America Corp.

November 13, 2013 16:29 ET

AirBoss Announces 3rd Quarter 2013 Results

Highlights:

- Negotiated agreement to acquire Flexible Products Inc.

- Obtained grants and tax credits to help finance $668 thousand in Defense initiatives

NEWMARKET, ONTARIO--(Marketwired - Nov. 13, 2013) - AirBoss of America Corp. (TSX:BOS) -

Three months ended
September 30
Nine months ended
September 30
(US $thousands, except shares and per share amounts) 2013 2012 2013 2012
Net Sales 52,040 57,901 166,058 194,584
Gross margin 6,138 5,776 20,726 19,801
Earnings before interest, tax and amortization from operations (EBITDA) (Note 1) 3,925 3,793 14,257 12,233
Interest expense 212 243 606 788
Net income 2,024 1,507 7,130 5,415
Net income per share
- Basic 0.09 0.07 0.31 0.24
- Diluted 0.09 0.06 0.31 0.23
Common shares outstanding (millions)
- Basic 22.7 23.0 22.7 23.0
- Diluted 22.7 23.2 22.7 23.2

Earnings were up on lower sales. Sales dollars were affected by significantly lower raw material prices. Compounding volumes were weak in July but recovered towards the end of the quarter.

A number of positive factors suggest higher near term volumes for Rubber Compounding are achievable: Five months of US manufacturing growth should result in higher demand for rubber compounds; a full quarter of higher tolling volumes that commenced late in the third quarter; and belting customers indicating higher requirements relative to the previous year. There has been an increase in product development and requests for quotations in many industry sectors; new business currently in the qualification and quoting stage, including oil and gas related products, should support volume increases in the fourth quarter. Equipment enhancements made in the third quarter to provide strip capabilities in North Carolina for the retread and tire markets will support productivity improvements from shift optimizations. Raw material price reductions are expected to impact the fourth quarter and reduce both compound pricing and working capital funding requirements.

Defense sales are expected to decrease in Q4 and remain soft for the first part of 2014 due to ongoing low funding within the US DoD; being partially offset by increasing offshore defense sales. The new low burden mask development continues on schedule with expected initial sales in Q4 2014. New business opportunities continue to be developed in overseas markets.

Preliminary indications suggest that volumes relating to industrial tracks, belting and retread segments are expected to be higher in the fourth quarter. Development continues regarding calandering prospects. A production cost savings initiative is currently being investigated.

Subsequent to the quarter end, AirBoss announced the successful completion of its acquisition of all the shares of Flexible Products Co., a privately-owned U.S. company that is a leading supplier of innovative and cost-effective anti-vibration solutions to the North American automotive market. As well, the Company announced that it has entered into a new long-term debt facility with a syndicate of banks led by its existing banker to refinance all existing loans of the Company, for the acquisition of Flexible Products and associated transaction costs, and for general corporate purposes, thereby improving AirBoss' capital structure and providing greater flexibility to support the execution of its growth strategy.

Flexible is expected to contribute significantly in 2014. Sales should be at least $100 million with EBITDA of at least $9 million. The contribution to the fourth quarter of 2013 will be offset by transaction and financing costs which will be expensed in the quarter.

The Company continues to evaluate complementary opportunities to leverage its capabilities and the financing flexibility.

AirBoss of America Corp. develops, manufactures, and sells high quality, proprietary rubber-based products offering enhanced performance to military and industrial markets. The Company is a world leader in the development and production of CBRN protective wear. With a capacity to supply 250 million pounds of rubber annually to a diverse group of rubber manufacturers, AirBoss is also one of North America's largest custom rubber compounding companies. The Company's shares trade on the TSX under the symbol BOS. Visit www.airbossofamerica.com.

A conference call to discuss the quarterly results is scheduled for 9:00 a.m. EDT Thursday, November 14, 2013. Please follow the link on our website or at www.marketwired.com under webcasts or dial in to the following numbers: 416-340-2218 or Toll Free: 866-225-0198. Direct Replay Access number: 1-800-408-3053.

Note 1:

Three months ended
September 30
Nine months ended
September 30
($thousands) 2013 2012 2013 2012
Net income 2,024 1,507 7,130 5,415
Interest expense 212 243 606 788
Amortization 1,467 1,503 4,438 4,148
Provision for income taxes 222 540 2,083 1,882
EBITDA 3,925 3,793 14,257 12,233

AIRBOSS FORWARD-LOOKING STATEMENT DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management's expectations or estimates of future developments or AirBoss' future performance, constitute "forward-looking statements" within the meaning of applicable securities laws, and can generally be identified by words such as "will", "may", "could" "expects", "believes", "antici pates", "forecasts", "plans", "intends" or similar expressions. These statements are not historical facts but instead represent management's expectations, estimates and projections regarding future events and performance.

Forward-looking statements are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking statements involve known and unknown contingencies, uncertainties and other risks that may cause AirBoss' actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation: impact of general economic conditions; its dependence on key customers; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss' ability to maintain existing customers or develop new customers in light of increased competition; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws and potential litigation; ability to obtain financing on acceptable terms; environmental damage caused by it and non-compliance with environmental laws and regulations; potential product liability and warranty claims and equipment malfunction. This list is not exhaustive of the factors that may affect any of AirBoss' forward-looking statements.

All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly these forward-looking statements except as required by applicable laws. Risks and uncertainties about AirBoss's business are more fully discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2012 Annual Report to Shareholders under the heading "Risk Factors".

Contact Information

  • AirBoss of America Corp.
    R.L. Hagerman
    CEO
    (905) 751-1188
    (905) 751-1101 (FAX)

    AirBoss of America Corp.
    Stephen Richards
    CFO
    (905) 751-1188
    (905) 751-1101 (FAX)
    www.airbossofamerica.com