IPL Inc.
TSX : IPI.A

IPL Inc.

August 13, 2009 07:00 ET

IPL Reports its Results for the Third Quarter of Fiscal 2009

SAINT-DAMIEN, QUEBEC,--(Marketwire - Aug. 13, 2009) -

  • Consolidated sales of $50.9 million compared with $51.3 million in the third quarter of 2008
  • EBITDA increased 21.3% to $6.7 million versus $5.6 million
  • EBITDA margin up to 13.2% from 10.8%
  • Net earnings of $0.13 per share compared with $0.06

IPL Inc. (TSX: IPI.A), one of North America's leading manufacturers of plastic products, announced its results today for the third quarter of its 2009 fiscal year ended July 2, 2009.

Financial highlights
(thousands of dollars except per share data)
Three months ended
(unaudited)
Nine months ended
(unaudited)
 
July 2, 2009June 26, 2008July 2, 2009June 26, 2008 
Sales50,89151,259153,090135,063 
Earnings before interest, taxes, depreciation and amortization (EBITDA)6,7435,56016,47111,668 
Earnings (loss) before income taxes (EBT)2,8011,2014,505(1,398)
Net earnings1,9328253,10633 
Net earnings per share, fully diluted0.130.060.210.00 

Third Quarter Results

Consolidated sales for the three-month period ended July 2, 2009, totalled $50.9 million compared with $51.3 million a year earlier. The 0.7% decrease was essentially due to a 16.5% reduction in packaging product sales, which was largely offset by a 20.8% increase in sales of industrial products. Sales on the US market represented $19.2 million or 37.7% of sales compared with $22.2 million or 43.2% of sales a year earlier. Finally, the difference between the average Canadian-US dollar exchange rate for the period from April 3 to July 2, 2009 and the average exchange rate for the third quarter of fiscal 2008 increased sales by $3.4 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 21.3% to $6.7 million or 13.2% of consolidated sales, from $5.6 million or 10.8% of sales a year earlier. As in the first half of the year, the increase in EBITDA, both on a monetary basis and as a percentage of sales, reflects the positive impact on profitability of lower raw material prices, better exchange rates and improvements to operating performance, operating cost control and optimization of the product line. These elements helped neutralize the negative impact of competitive pressures and the North American economic slowdown on the Company's financial performance.

In the three-month period ended July 2, 2009, the Company generated net earnings of $1.9 million or $0.13 per share, fully diluted, compared with $825,000 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 34.3% in the third quarter of 2009 to $6.0 million, up from $4.5 million for the same period in 2008.

"We are pleased with the results achieved in the third quarter, which indicate the development potential of our business model, even in difficult economic times," said Serge Bragdon, President and Chief Executive Officer. "As in the first half of the year, the Environment sector turned in an outstanding delivery performance, helping to compensate for much of the weakness seen in other sectors more closely linked to the economy. Finally, the measures we have taken to reduce operating costs and optimize return on assets continued to generate results, leading to substantially improved profitability in the last quarter."

Results for the First Nine Months

In the first nine months of fiscal 2009, which spanned 40 weeks compared to 39 weeks in 2008, consolidated sales totalled $153.1 million, up 13.3% from $135.1 million for the first nine months of 2008. Sales on the US market were $57.5 million or 37.6% of sales compared with $55.1 million or 40.8% of sales a year earlier. The difference between the average Canadian-US dollar exchange rate for the period from September 28, 2008 to July 2, 2009, and the average exchange rate for the first nine months of fiscal 2008 increased sales by $12.1 million.

For the first nine months of fiscal 2009, EBITDA totalled $16.5 million or 10.8% of sales, compared with $11.7 million or 8.6% of sales for the same period a year earlier. Net earnings were $3.1 million or $0.21 per share, fully diluted, compared with $33,000 or $0.00 per share, fully diluted, for the first nine months of fiscal 2008. Finally, cash flow from operating activities before changes in non-cash working capital items totalled $14.8 million, up 58.9% from $9.3 million for the first three quarters of fiscal 2008.

Segmented Results

In the three-month period ended July 2, 2009, packaging product sales totalled $24.7 million compared with $29.6 million in the third quarter of 2008. This 16.5% decline in sales can be explained by two factors: 1-) lower industrial packaging shipments arising from the slow North American economy; and 2-) lower average selling prices due to falling resin prices. However, volume in the food packaging sector remained stable in the last quarter. In addition, the change in the Canadian/US exchange rate in the third quarter of 2009 added $2.3 million to the value of sales on the US market. For the nine-month period ended July 2, 2009, packaging product sales totalled $73.8 million, down 0.5% from $74.2 million in the first nine months of fiscal 2008.

EBITDA for the packaging products segment was $3.8 million in the third quarter of 2009, up 15.0% from $3.3 million in the corresponding period a year earlier. EBITDA for the most recent quarter represented 15.6% of sales compared with 11.3% in the third quarter of 2008. The increase in the EBITDA margin resulted from lower resin prices, the positive change in exchange rates and ongoing improvements in operating efficiency. For the first nine months of 2009, EBITDA grew 15.7% to $8.4 million or 11.4% of sales, compared with $7.3 million or 9.8% of sales in 2008.

In the third quarter of 2009, sales of industrial products increased 20.8% to $26.2 million from $21.7 million in the third quarter of 2008. This increase reflects the strength of the Environment sector due to many contracts signed by the Company in the past twelve months. The slowing economy once again restricted shipments for other sectors, particularly Engineered Products. The selling price reductions resulting from lower resin prices also reduced sales for this segment in general. However, the change in the Canada-US exchange rate in the third quarter of fiscal 2009 had a positive impact of $1.1 million on industrial product sales in the US market. For the first nine months of fiscal 2009, industrial product sales amounted to $79.2 million, up 30.2% from $60.8 million in the first nine months of the previous year.

In the third quarter of 2009, EBITDA for the industrial products segment was $2.9 million or 11.1% of sales, versus $2.2 million or 10.2% of sales for the third quarter of 2008. Together, higher sales for the Environment sector, the positive variation in exchange rates and continued progress in operating efficiency more than counteracted the negative impact on profitability of the slowdown in other sectors. EBITDA for the first nine months of 2009 rose 83.4% to $8.1 million or 10.2% of sales from $4.4 million or 7.2% of sales for the same period in 2008.

Outlook

"In light of results achieved to date, we are confident that fiscal 2009 will close on a positive note, despite the difficult economic climate. For the time being, the focus remains on organic and targeted revenue growth as well as further improving our profitability and financial position. The implementation of structuring initiatives aimed at honing our product line, controlling our costs and optimizing our operations will be key to our success in meeting this objective," concluded Serge Bragdon.

Conference Call

IPL Inc. will hold a conference call to present its results on Thursday, August 13, 2009 at 10:00 a.m. (Eastern Time). Those interested should call 1-800-587-1893 (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 21311866# on the telephone keypad. This recording will be accessible from 1:00 p.m. (Eastern Time) on August 13, 2009, until 11:59 p.m. (Eastern Time) on August 20, 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 July 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 the packaging, materials handling and environment sectors. IPL also provides highly technical value-added custom moulding services for the transport industry, 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 July 2, 2009, can be found on IPL's website at www.ipl-plastics.com.

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