IPL Inc.
TSX : IPI.A

IPL Inc.

May 07, 2008 16:30 ET

IPL Reports its Results for the Second Quarter of Fiscal 2008

· Consolidated sales of $40.6 million compared to $48.1 million in the second quarter of 2007 - EBITDA of $3.0 million compared to $5.8 million in the second quarter of 2007 - Net loss of $0.06 per share compared to net earnings of $0.05 per share in the second quarter of 2007

SAINT-DAMIEN, QUEBEC--(Marketwire - May 7, 2008) - IPL Inc. (TSX:IPI.A), one of North America's leading manufacturers of plastic products, announced its results today for the second quarter of its 2008 financial year ended March 27, 2008.





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Financial highlights Three months ended Six months ended
(in thousands of dollars ---------------------------------------
except per share data)
unaudited March 27, March 29, March 27, March 29,
2008 2007 2008 2007
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Sales 40,613 48,068 83,804 101,598
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Earnings before financial expenses,
depreciation, amortization
and income taxes (EBITDA) 3,010 5,766 6,108 11,246
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EBITDA margin 7.4% 12.0% 7.3% 11.1%
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Earnings (loss) before income
taxes (EBT) (1,333) 1,020 (2,599) 1,543
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Net earnings (loss) (921) 679 (792) 1,029
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Net earnings (loss) per share,
fully diluted (0.06) 0.05 (0.05) 0.07
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IPL's consolidated sales for the quarter ended March 27, 2008 totalled $40.6 million compared to $48.1 million for the corresponding three-month period ended March 29, 2007. Packaging product sales amounted to $22.1 million in the second quarter of 2008, down 13.5% from sales of $25.6 million for the second quarter of 2007, while industrial product sales totalled $18.5 million, 17.7% lower than sales of $22.4 million for the corresponding three-month period ended March 29, 2007.

The decline in consolidated sales for the second quarter of 2008 was essentially attributable to market conditions, which remained difficult in key areas of the economy like the construction and automotive sectors, reduced selling prices for certain products amplified by more intense competitive pricing pressures in the Company's target markets, lower shipments arising in part from the reorientation of the product line, and the effect of converting US sales into Canadian dollars.

The difference between the average CAN/US exchange rate for the period from December 28, 2007 and March 27, 2008 and the average exchange rate for the second quarter of the previous year had a negative impact of $3.4 million on consolidated sales for the second quarter of 2008.

Consolidated sales for the first six months of 2008 totalled $83.8 million, down 17.5% from $101.6 million for the first half of fiscal 2007.

In the second quarter of 2008, earnings before financial expenses, depreciation, amortization and income taxes (EBITDA) totalled $3.0 million, for a 47.8% decrease compared to $5.8 million in the same period a year earlier. EBITDA represented 7.4% of sales compared to 12.0% in the second quarter of fiscal 2007. For the six-month period ended March 27, 2008, EBITDA was $6.1 million or 7.3% of consolidated sales, compared to $11.2 million or 11.1% of consolidated sales for the corresponding six-month period ended March 29, 2007.

For the quarter ended March 27, 2008, the net loss amounted to $921,000 or $0.06 per share, fully diluted. In the corresponding period a year earlier, the Company posted net earnings of $679,000 or $0.05 per share, fully diluted. In the first half of fiscal 2008, the Company reported a net loss of $792,000 or $0.05 per share, fully diluted, compared to net earnings of $1.0 million or $0.07 per share, fully diluted, for the first six months of fiscal 2007.

The decline in net profitability had a negative impact on cash flow from operating activities before changes in non-cash working capital items, which fell 64.7% in the second quarter of 2008 to $1.8 million from $5.0 million in the same quarter a year earlier. For the first six months of fiscal 2008, cash flow from operating activities before changes in non-cash working capital items amounted to $4.9 million, compared to $10.1 million in the first half of fiscal 2007.

"For the second consecutive quarter, IPL felt the effects of the economic slowdown in the United States," stated Serge Bragdon, President and Chief Executive Officer. "Heightened competition as well as higher raw materials and energy prices once again reduced profitability. Furthermore, the sustained strength of the Canadian dollar hampered the Company's exports and its competitiveness on the US market. However, efforts taken to reduce operating costs and optimize production had a positive effect on EBITDA, which was up slightly from the first quarter. Overall, despite economic uncertainty, IPL was able to manage its activities to take full advantage of growth opportunities that arose."




The Company's US sales data is shown in the following table:
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US sales Three months ended Six months ended
------------------------------------------------
unaudited March 27, March 29, March 27, March 29,
2008 2007 2008 2007
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Thousands of Canadian $ 16,271 22,854 32,926 47,519
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% of consolidated sales 40.1 47.5 39.3 46.8
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In the second quarter of 2008, US sales in US dollars totalled US$15.9 million, down 14.9% from US$18.7 million in the same period a year earlier. As in the preceding quarter, this decline essentially reflected the 30.4% decline in US dollar sales of industrial products caused by the economic slowdown in the United States. The sustained strength of the Canadian dollar against the US currency and the gradual reorientation of the product line toward higher value-added, highly-engineered products also impacted sales of the Company's industrial products on the American market. In the same vein, US dollar sales of packaging product in the United States fell by 7.6% in the second quarter to US$11.7 million from US$12.7 million in the same quarter of 2007. Overall, sales on the American market dropped 28.8% to $16.3 million or 40.1% of the Company's consolidated second quarter sales for 2008 from $22.9 million or 47.5% of consolidated sales in the second quarter of the previous year.

For the six months ended March 27, 2008, US dollar sales in the United States totalled US$32.2 million, down 18.3% from US$39.4 million in the first six months of fiscal 2007. After conversion into Canadian dollars, sales on the US market declined by 30.7% to $32.9 million from $47.5 million for the comparison period a year earlier.

Segmented Results

Packaging Products

In the second quarter of fiscal 2008, packaging product sales fell by 13.5% to $22.1 million from $25.6 million for the three-month period ended March 29, 2007. Factors behind this sales decrease included the weak US economy and the decline of the American currency against the Canadian dollar. Heightened competition on the North American market also had an adverse effect on second quarter sales, pushing down selling prices for some product lines. For the first six months of 2008, packaging product sales totalled $44.7 million, down 13.7% from $51.7 million in the first half of the previous year.

In the second quarter of 2008, profitability for the packaging products segment showed a similar trend as in the first quarter. For the three-month period ended March 27, 2008, EBITDA was $1.9 million or 8.6% of segment sales, compared to $4.0 million or 15.7% of second quarter sales last year. This decline in EBITDA both on a monetary basis and as a percentage of sales in large part reflects the negative effects of greater competitive pressures on profitability. For the first six months of fiscal 2008, EBITDA totalled $3.9 million for an EBITDA margin of 8.8%, compared to $7.1 million with an EBITDA margin of 13.7% for the corresponding six-month period ended March 29, 2007.

Industrial Products

Industrial product segment sales for the three-month period ended March 27, 2008, totalled $18.5 million, compared to $22.4 million in the second quarter of fiscal 2007. This 17.7% year-over-year decline in sales arose primarily from weakness in the US economy, which was first felt in the Automotive, Engineered Products and Extrusion sectors. At the same time, sales for the Waste Handling sector grew substantially, although unfavourable weather conditions in some regions of Quebec pushed deliveries out to the beginning of the third quarter. For the first six months of fiscal 2008, industrial product sales totalled $39.2 million, down 21.5% from $49.9 million for the same period a year earlier.

For the three-month period ended March 27, 2008, EBITDA amounted to $1.1 million or 5.9% of segment sales, compared to $1.7 million or 7.8% of sales in the second quarter of fiscal 2007. This decline in profitability resulted both from lower sales, particularly in the Automotive sector, and from greater pressure from foreign competition on the North American market. For the first six months of fiscal 2008, EBITDA was $2.2 million, for an EBITDA margin of 5.5%, compared to $4.1 million or an EBITDA margin of 8.3% for the corresponding six-month period ended March 29, 2007.

Non-GAAP Measures

Company management uses a non-GAAP measure in this press release, namely earnings before financial expenses, amortization and income taxes ("EBITDA"). However, management wishes to note that for earnings presentations 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 three-month period ended March 27, 2008.

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.

Outlook

"The first half of the year was difficult for the Company. Competition on the North American market once again squeezed sales and profit margins. We are currently pursuing our efforts to optimize our operations, and will be introducing supplementary cost reduction measures to improve profitability. In order to fully achieve our strategic plan, we are undertaking a revitalization of our sales force combined with a comprehensive renewal of our marketing efforts. At the same time, we want to emphasize our efforts to innovate more than ever, so as to stand out with higher value-added, highly-engineered products. Despite a variety of negative external factors, our financial situation remains healthy, and we are well positioned to continue growing steadily on the North American market," concluded Serge Bragdon.

Conference Call

IPL Inc. will hold a conference call to present its results on May 8 at 11:00 a.m. (Eastern Daylight Time). Those interested should call 1-800-796-7558 (Montreal, North America or overseas). The call can also be accessed via a direct broadcast site at the following addresses: www.cnw.ca and www.q1234.com.

Those unable to participate can hear a recording of the call by dialling 1-877-289-8525 and entering the code 21270006# on the telephone keypad. This recording will be accessible from 1:00 p.m. on Thursday, May 8, 2008 until 11:59 p.m. on Thursday, May 15, 2008.

About IPL

IPL Inc. is one of the leading North American producers of moulded plastic products through injection and extrusion for various industrial manufacturing sectors. IPL employs more than 1,000 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. Further information about IPL is available at www.ipl-plastics.com.

Forward-looking statements

Except for historical information provided herein, this press release may contain statements of a forward-looking nature concerning the future performance of the Company. These statements are based on management's best possible evaluation of future events, and as such involve a number of risks and uncertainties. The factors apt to cause variances in the results include, among others, any fluctuations in quarterly results, any change in demand for the Company's products and 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 Company's unaudited consolidated financial statements and management discussion and analysis for the quarter ended March 27, 2008 can be found on IPL's website at www.ipl-plastics.com.

Contact Information

  • IPL Inc.
    Serge Bragdon
    President and Chief Executive Officer
    418-789-2880
    1-800-463-7083 (Canada)/1-800-463-4755 (U.S.)
    sbragdon@ipl-plastics.com
    or
    Maison Brison
    Martin Goulet, CFA
    514-731-0000