In­ter­tape Poly­mer earns $19.24-mil­lion (U.S.) in Q3

Stockwatch Daily - - FRONT PAGE - Mr. Greg Yull re­ports

IN­TER­TAPE POLY­MER Group Inc. has re­leased re­sults for its third quar­ter ended Sept. 30, 2017 (in U.S. dol­lars un­less oth­er­wise in­di­cated).

“We are pleased by our third quar­ter re­sults with ad­justed EBITDA of $32.4-mil­lion and rev­enue growth of 18 per cent. Our ac­qui­si­tions proved to be im­por­tant con­trib­u­tors to rev­enue growth, and their con­tri­bu­tion to ad­justed EBITDA is an­tic­i­pated to grad­u­ally in­crease over the next few quar­ters,” said Greg Yull, pres­i­dent and chief ex­ec­u­tive of­fi­cer.

“Dur­ing the third quar­ter, we are happy to an­nounce that we started com­mer­cial pro­duc­tion of wa­ter-ac­ti­vated tapes at our new man­u­fac­tur­ing fa­cil­ity in Mid­land, N.C. This ma­jor project of ap­prox­i­mately $46-mil­lion will be sub­stan­tially com­pleted on time and on bud­get by the end of 2017. We are ramp­ing up to tar­get op­er­at­ing lev­els in the fourth quar­ter as planned. Given the suc­cess of this project to date and pos­i­tive out­look in de­mand for the as­so­ci­ated prod­ucts, we are planning to fur­ther in­crease man­u­fac­tur­ing ca­pac­ity at this site in early 2019.

“On a less pleas­ing note, the ma­jor storms that hit the South­ern United States in the quar­ter have dis­rupted the sup­ply chain of some key raw ma­te­ri­als and caused sharp in­creases in prices. To off­set the rise in in­put costs, we have an­nounced price in­creases to our cus­tomers. At this time, we don’t ex­pect any ma­te­rial im­pact on 2017 re­sults . ...

“We have re­vised our 2017 ad­justed EBITDA out­look to re­flect changes in the cal­cu­la­tion to ex­clude the im­pact of M&A costs, a com­mon prac­tice for many pub­lic com­pa­nies. As we ac­cel­er­ate our ac­qui­si­tion pro­gram and as a re­sult of com­plet­ing sev­eral trans­ac­tions in 2017, the as­so­ci­ated ex­penses in­creased sig­nif­i­cantly and have ex­ceeded $5-mil­lion in the first nine months of 2017. Con­se­quently, the re­vised ad­justed EBITDA range of $126[-mil­lion] to $130-mil­lion has in­creased from the pre­vi­ous range of $120[-mil­lion] to $127-mil­lion.”

Third quar­ter 2017 highlights (as com­pared with third quar­ter 2016):

• Rev­enue in­creased 17.9 per cent to $243.4-mil­lion, pri­mar­ily due to ad­di­tional rev­enue from the Can­tech and Power­band Ac­qui­si­tions, among other things.

• Gross mar­gin de­creased to 20.9 per cent from 21.7 per cent.

• Net earn­ings at­trib­ut­able to the com­pany share­hold­ers (IPG net earn­ings) in­creased $13.0-mil­lion to $19.2-mil­lion.

• Ad­justed EBITDA in­creased 15.9 per cent to $32.4-mil­lion.

• Cash flows from op­er­at­ing ac­tiv­i­ties in­creased $4.0-mil­lion to $24.1-mil­lion.

• Free cash flows de­creased by $12.3-mil­lion to neg­a­tive $4.7-mil­lion, pri­mar­ily due to an in­crease in cap­i­tal ex­pen­di­tures.

(See ITP Ta­ble 1 on page 29)

Out­look

The com­pany’s ex­pec­ta­tions for the fis­cal year 2017 in­clude:

• Fis­cal year 2017 gross mar­gin is now ex­pected to be be­tween 22 per cent to 22.5 per cent, lower than the

pre­vi­ously stated range of 22.5 per cent to 23 per cent.

• Fis­cal year 2017 ad­justed EBITDA has been re­vised to be be­tween $126-mil­lion to $130-mil­lion from the pre­vi­ously stated range of $120-mil­lion to $127-mil­lion.

• Fis­cal year 2017 man­u­fac­tur­ing cost re­duc­tions are now ex­pected to ex­ceed the pre­vi­ously stated range of $10-mil­lion to $12-mil­lion.

• Due pri­mar­ily to the progress on the Cap­stone green­field project, fis­cal year 2017 cap­i­tal ex­pen­di­tures are now ex­pected to be be­tween $85-mil­lion and $90-mil­lion, an in­crease from the pre­vi­ously stated range of $75-mil­lion to $85-mil­lion.

Div­i­dend

On Nov. 10, 2017, the board of di­rec­tors de­clared a quar­terly cash div­i­dend of 14 cents per com­mon share, payable on Dec. 29, 2017, to share­hold­ers of record at the close of busi­ness on Dec. 15, 2017.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

Robert M Beil, Ge­orge J Bunze, Frank Di To­masso, Robert John Foster, James Pan­te­lidis, Jorge Nel­son Quin­tas, Mary Pat Salomone, Gre­gory A C Yull, Mel­bourne F Yull

(ITP) Shares: 58,871,710

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