IPL Inc.
TSX : IPI.A

IPL Inc.

May 11, 2009 07:00 ET

IPL Reports its Results for the Second Quarter of Fiscal 2009

SAINT-DAMIEN, QUEBEC--(Marketwire - May 11, 2009) - IPL Inc. (TSX:IPI.A)

- Consolidated sales up 13.9% to $46.3 million from $40.6 million in the second quarter of 2008

- EBITDA 57.8% higher at $4.8 million compared to $3.0 million

- EBITDA margin of 10.3% compared to 7.4%

- Net earnings of $0.04 per share compared to $0.06

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 2009 fiscal year ended April 2, 2009.



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Financial highlights Three months ended Six months ended
(thousands of dollars (unaudited) (unaudited)
except per share data) April 2, March 27, April 2, March 27,
2009 2008 2009 2008
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Sales 46,268 40,613 102,199 83,804
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Earnings before interest,
taxes, depreciation and
amortization (EBITDA) 4,750 3,010 9,728 6,108
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Earnings (loss) before
income taxes (EBT) 788 (1,333) 1,704 (2,599)
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Net earnings (loss) 544 (921) 1,174 (792)
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Net earnings (loss) per share,
fully diluted 0.04 (0.06) 0.08 (0.05)
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Second Quarter Results

For the three-month period ended April 2, 2009, consolidated sales totalled $46.3 million compared with $40.6 million a year earlier. This 13.9% increase was essentially due to the growth in domestic sales, particularly in the Environment and Food Packaging sectors. Sales in the US market totalled $17.1 million or 37.0% of sales, compared with $16.3 million or 40.1% of sales a year earlier. Finally, the change in the average Canadian-US dollar exchange rate for the period from January 2 to April 2, 2009, compared to the average exchange rate for the second quarter of 2008 increased sales by $4.2 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 57.8% to $4.8 million or 10.3% of sales, from $3.0 million or 7.4% of sales a year earlier. As in the previous quarter, the increase in EBITDA, both on a monetary basis and as a percentage of sales, generally reflects the positive impact on profitability of lower raw material prices, better exchange rates and improvements to operating performance and operating cost control, as well as optimization of the product line. These elements helped neutralize the negative impact of competitive pressures and the economic slowdown on the Company's performance.

In the three-month period ended April 2, 2009, the Company generated net earnings of $0.5 million or $0.04 per share, fully diluted, compared with a net loss of $0.9 million or $0.06 per share, fully diluted, for the same period a year earlier.

Driven by improved profitability, cash flow from operating activities before changes in non-cash operating working capital items rose 163% in the second quarter of 2009 to $4.7 million, compared with $1.8 million for the same period in 2008.

"Despite the more difficult economy, the Company managed to maintain or improve its position in a number of target markets," said Serge Bragdon, President and Chief Executive Officer. "The Environment sector continued on the same pace as in the first quarter, posting a solid performance that largely offset the weakness in other sectors more closely linked to the economy. We once again made steady progress in terms of reducing costs and optimizing operations, which led to improved profitability and stronger financial conditions."

First Half Results

In the first half of 2009, which spanned 27 weeks versus 26 weeks in the first half of 2008, consolidated sales totalled $102.2 million, up 22.0% from $83.8 million for the first six months of fiscal 2008. Sales in the United States were $38.4 million or 37.5% of sales, compared with $32.9 million or 39.3% of sales a year earlier. Finally, the change in the average exchange rate for the period from September 28, 2008 to April 2, 2009, compared to the average exchange rate for the first half of 2008 increased sales by $8.7 million.

For the first six months of fiscal 2009, EBITDA amounted to $9.7 million or 9.5% of sales, compared with $6.1 million or 7.3% of sales for the first half of 2008. The Company generated net earnings of $1.2 million or $0.08 per share, fully diluted, compared with a net loss of $0.8 million or $0.05 per share for the corresponding period a year earlier. Finally, cash flow from operating activities before changes in non-cash operating working capital items totalled $8.8 million, up 81.5% from $4.9 million in the first half of fiscal 2008.

Segmented Results

In the second quarter of 2009, packaging product sales grew 7.9% to $23.9 million from $22.1 million in the second quarter of 2008. This improvement reflects the strong performance of the Food Packaging sector, which compensated for a decline in Industrial Packaging sales and lower selling prices resulting from lower resin prices. In addition, the change in the Canadian/US exchange rate in the second quarter added $2.8 million to the value of sales in the US market. For the six-month period ended April 2, 2009, packaging product sales totalled $49.2 million, up 10.1% from $44.7 million in the first half of 2008.

EBITDA for the packaging products segment was $2.5 million in the second quarter of 2009, up 31.6% from $1.9 million in the corresponding period a year earlier. EBITDA for the most recent quarter represented 10.5% of sales compared with 8.6% in the second quarter of 2008. There were four factors behind the increase in EBITDA: higher sales, lower resin prices, the positive change in exchange rates and improved operating efficiency. These elements helped neutralize the negative effect on profitability of lower selling prices and greater competitive pressure. For the first six months of 2009, EBITDA grew 16.2% to $4.6 million or 9.3% of sales, compared with $3.9 million or 8.8% of sales in 2008.

In the second quarter of 2009, industrial product sales climbed 21.1% to $22.4 million from $18.5 million in the second quarter of 2008. This increase reflects the strength of the Environment sector due to the many contracts signed by the Company in the past year. Sales for other sectors, particularly Engineered Products, fell in the wake of the slowing economy. The decline in selling prices caused by lower resin prices also slowed sales growth in this segment. The change in the second quarter Canadian/US exchange rate added $1.4 million to the value of sales in the US market. For the first six months of 2009, industrial product sales amounted to $53.0 million, up 35.4% from $39.2 million in the first half of 2008.

In the second quarter of 2009, EBITDA for the industrial products segment was $2.2 million or 10.0% of sales, versus $1.1 or 5.9% of sales for the second quarter of 2008. Higher sales for the Environment sector, the positive change in exchange rates and progress in terms of operating efficiency counteracted the impact on profitability of the slowdown in other sectors. For the first six months of 2009, EBITDA rose 137.2% to $5.2 million or 9.7% of sales, compared with $2.2 million or 5.5% of sales in 2008.

Outlook

"For the time being, our efforts will remain focused on improving the competitive edge of our products, reducing our costs and optimizing our operations to further improve our performance. Despite the many challenges that remain with this global economic crisis, we are confident that we can make further strides in our target markets," concluded Serge Bragdon.

Conference Call

IPL Inc. will hold a conference call to present its results on Wednesday, May 11, 2009 at 10:00 a.m. (Eastern Time). Those interested should call 1-800-733-7560 (Montreal, North America and 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 21303926# on the telephone keypad. This recording will be accessible from 1:00 p.m. (Eastern Time) on May 11, 2009, until 11:59 p.m. (Eastern Time) on May 18, 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 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 April 2, 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 moulded plastic products through injection and extrusion for various industrial manufacturing sectors. IPL employs close to 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. 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 consolidated financial statements for the quarter ended April 2, 2009, can be found on IPL's website at www.ipl-plastics.com.

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