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• Revenue increased more than 17% to $1,053.0 million for the year ended December 31, 2018
• IPG Net Earnings decreased $17.5 million to $46.8 million for the year ended December 31, 2018
• IPG Adjusted Net Earnings decreased $1.5 million to $62.2 million for the year ended December 31, 2018
• Adjusted EBITDA increased 9% to $140.9 million for the year ended December 31, 2018
Intertape Polymer Group Inc. (TSX:ITP) (the
“Company”) today released results for its fourth quarter and year ended December 31, 2018. All amounts in this press release are denominated in US dollars unless otherwise indicated and all percentages are calculated on unrounded numbers. For more information, you may refer to the Company’s management’s discussion and analysis and audited consolidated financial statements and notes thereto as of December 31, 2018 and 2017 and for the three-year period ended December 31, 2018 (“Financial Statements”).
“We delivered solid results in 2018, growing our revenue and adjusted EBITDA both organically and with acquisitions, and met our guidance for the year,” said Greg Yull, President and CEO of IPG. “More importantly, we have put in place what we believe are key elements to deliver sustainable growth and performance moving forward. We have deployed more than $160 million in an extensive capital program in the past two years, including approximately $63 million in three new greenfield facilities, including the second line at the Midland, North Carolina facility for water-activated tapes and in India at our carton sealing tapes and woven products facilities. Capital that will make a more meaningful contribution to our results in the second half of calendar 2019. This capital deployment was part of our strategy to build a world-class, competitive, low-cost, manufacturing base. On the acquisition front, we strengthened our product bundle with the addition of protective packaging solutions from the Polyair acquisition and expanded our geographic and competitive footprint with the acquisition of Maiweave. As we move into 2019, we are actively integrating these businesses, as well as delivering on the synergies from the prior acquisitions of Cantech and Airtrax. Our main priorities in 2019 are commissioning the two Indian facilities on time and on budget by mid-year, scaling production at those facilities and the second Midland production line, and driving cost and revenue synergies in Cantech, Polyair and Maiweave.”
Fourth Quarter 2018 Highlights (as compared to fourth quarter 2017):
• Revenue increased 21.2% to $287.7 million primarily due to additional revenue from the Polyair(1) and Airtrax(2) acquisitions, an increase in average selling price, including the impact of product mix, and an increase in sales volume.
• Gross margin decreased to 19.7% from 22.8% primarily due to an unfavourable product mix and the dilutive gross margins of the Polyair and Airtrax acquisitions, partially offset by a decrease in certain plant-related operating costs.
• Selling, general and administrative expenses (“SG&A”) decreased 7.8% to $31.5 million primarily due to a decrease in share-based compensation of $6.0 million mainly driven by a decrease in the fair value of cash-settled awards and a decrease in employee related costs mainly related to discretionary employee benefit contributions, partially offset by additional SG&A from the Polyair acquisition.
• Income tax expense increased $3.2 million to $0.8 million primarily due to the non-recurrence of a favourable adjustment in the fourth quarter of 2017, partially offset by the lower US corporate tax rate effective in 2018 both related to new US tax reform legislation.
• Net earnings attributable to the Company’s shareholders (“IPG Net Earnings”) decreased $10.7 million to $10.6 million. The decrease was primarily due to (i) foreign exchange losses in the fourth quarter of 2018, (ii) an increase in interest expense and (iii) an increase in income tax expense, partially offset by a decrease in SG&A and an increase in gross profit.
Fiscal Year 2018 Highlights (as compared to fiscal year 2017):
• Revenue increased 17.2% to $1,053.0 million primarily due to additional revenue from the Cantech(4), Polyair, and Airtrax acquisitions and an increase in average selling price, including the impact of product mix.
• Gross margin decreased to 20.8% from 22.4% primarily due to the dilutive gross margins of the Cantech and Polyair acquisitions, unfavourable product mix, and an increase in medical costs partially offset by a decrease in certain plantrelated operating costs.
• SG&A increased 13.8% to $122.5 million primarily due to (i) additional SG&A from the Polyair, Cantech and Airtrax acquisitions, (ii) an increase in employee-related costs to support growth initiatives in the business and (iii) an increase in variable compensation, partially offset by a decrease in share-based compensation mainly driven by a decrease in the fair value of cash-settled awards.
• Income tax expense decreased $3.2 million to $9.8 million primarily due to the lower US corporate tax rate provided under US tax reform legislation and a net tax benefit recognized for a discretionary pension contribution(5), partially offset by the non-recurrence of a favourable adjustment in the fourth quarter of 2017 related to new US tax reform legislation.
• IPG Net Earnings decreased $17.5 million to $46.8 million primarily due to (i) an increase in SG&A, (ii) an increase in interest expense resulting from higher average debt outstanding and higher average cost of debt, including the impact of the Senior Unsecured Notes(6) , (iii) foreign exchange losses in 2018 and (iv) an increase in manufacturing facility closures, restructuring and other related charges mainly related to non-cash impairment charges from the closure of the Johnson City, Tennessee manufacturing facility. These unfavourable impacts were partially offset by an increase in gross profit.
• Adjusted net earnings decreased $1.5 million to $62.2 million primarily due to (i) an increase in interest expense, (ii) foreign exchange losses in 2018 and (iii) an increase in SG&A, partially offset by a decrease in income tax expense and an increase in gross profit.
more detail at: https://www.itape.com/investor%20relations/press%20releases%20and%20reports