Quarter 1 - 2020 Results Earnings Conference Call
Disclaimer
General
All references are to U.S. dollars unless stated otherwise. Any graphs, tables or other information in this presentation demonstrating the historical performance of IPLP or any other entity contained in this presentation are intended only to illustrate past performance of such entities and are not necessarily indicative of future performance of us or such other entities.
Forward-looking Information
This presentation may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements include all matters that are not historical facts. Specifically, forward- looking statements in this presentation include, but are not limited to, statements regarding expectations of the Company with respect to the outbreak of the coronavirus (COVID-19) and its possible impact on the Company's revenue and Adjusted EBITDA, the expected completion dates of certain of the Company's capital projects, the Company's ability to pass through material price input change to customers, the Company's expectations regarding resin and freight costs and the results from the Company's response thereto including the impact on gross margin and Adjusted EBITDA margin for Fiscal 2020, expectations regarding securing labor, labor cost inflation, our expected cash outflows for Fiscal 2020, and the Company's expectations with respect to foreign currency volatility and its impact on revenue and Adjusted EBITDA. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events
or intentions.
In addition, our assessments of, and outlook for Fiscal 2020 are considered forward-looking information. See "Outlook" for additional information concerning our strategies, assumptions and market outlook in relation to these assessments
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Such information reflects IPLP's then current views with respect to future events based on certain material facts and assumptions and are subject to certain risks and uncertainties.
Forward-looking information is based on certain key expectations, opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances.
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Although IPLP believes that the expectations, opinions, assumptions and estimates on which such forward-looking information is based are reasonable, such forward-looking information should not be unduly relied upon since there can be no assurance that such expectations, opinions, assumptions and estimates will prove to be correct.
Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward- looking statements, including, without limitation, the following factors, which are discussed in greater detail in the "Risk Factors" section of the MD&A filed by the Company on May 13 2020: the impact of the Coronavirus (COVID-19) outbreak on our business and operations; our ability to successfully implement our business strategy; our highly competitive marketplace; a disruption in the overall economy and the financial market which may affect consumer demand; risks relating to Canada - U.S. trade; price volatility or a shortage of some of the raw materials we purchase; our results of operations may be impacted by different financial risks; our dependence on our manufacturing facilities and equipment, which require a high degree of capital expenditures to maintain or replace; changes in laws, regulations and related interpretations as well as changes in consumer trends; the loss of any key customers or a decrease in customer demand; our exposure to food industry risks; risks relating to our brand and reputation; brand and reputational risks associated with actions taken by our subcontractors; competition for acquisition candidates; our ability to execute our growth strategy being dependent on our ability to identify and acquire desirable candidates; our ability to successfully integrate recent acquisitions or future acquisitions; risks associated with our acquisition diligence procedures; failure to adapt to technological changes or the inability to continue to enhance existing products and develop and market new products that respond to customer needs and preferences; our ability to recruit and retain senior management and qualified personnel; failure to maintain good employee relations; increases in transportation costs; increases in energy costs; industry consolidation risk; potential exposure to product liability claims arising from the manufacture of faulty or contaminated products; failure to protect our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others; failure to comply with applicable laws and regulations; risks relating to environmental and health and safety laws and regulations; risks of downward pressure on pricing of our products; the inability to obtain appropriate funding; interest rate fluctuations;
failure in internal controls; risks relating to information technology interruptions or breaches; litigation risk; potential indemnification obligations relating to divestments; counterparty credit risks; risks relating to future write-offs of our goodwill and other intangible assets; changes in applicable tax legislation; future sales of our securities by existing shareholders or by us could cause the market price for our common shares to fall; CDPQ having significant influence with respect to matters put before the shareholders; our dependence on our subsidiaries for cash to fund our operations and expenses; our dividend policy; difficulties enforcing judgments against the Company's directors and officers who are not resident in Canada; risks relating to claims for indemnification by our directors and officers; risks relating to our forum selection by law; and the forward looking statements contained in this presentation proving to be incorrect.
The above-mentioned factors should not be construed as exhaustive. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that may" cause results not to be as anticipated, estimated or intended.
All of the forward-looking information contained in this presentation are qualified by the foregoing cautionary statements and there can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Unless otherwise noted or the context otherwise indicates, the forward- looking information contained in this presentation is provided as of the date of this presentation and the Company does not undertake to update or amend any forward-looking information contained herein whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Readers are also cautioned that outlook information contained in this presentation should not be used for purposes other than for which it is disclosed herein.
Non-IFRS Measures
This presentation uses certain non-IFRS financial measures and ratios. Management uses these non-IFRS financial measures for purposes of comparison to prior periods, to prepare annual operating budgets, and for the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing our financial condition, business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS..
We use non-IFRS financial measures to provide supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures The financial measures applied include Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted Net Income, Adjusted Basic Earnings per Share, Adjusted Diluted Earnings per Share, and Adjusted Diluted Earnings per Share, Net Debt, Financial Leverage, and Adjusted Free Cash Flow.
Adjusted EBITDA and Adjusted EBIT is provided to assist investors in determining the financial performance of the Company and its divisions' operating activities on a consistent basis by excluding items such as business reorganization and integration costs, restructuring costs and acquisition related costs, finance costs and tax charges as they are considered not being reflective of the operational performance of the Company. Adjusted EBITDA also excludes certain non-cash elements such as depreciation and amortization expense. Adjusted EBITDA margin provides a percentage of revenue analysis of the Adjusted EBITDA measure. These measures are also used by Management to measure the underlying trading performance of the Company's operating segments. We believe that these financial measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business.
Adjusted Net Income also assists key stakeholders in determining the financial performance of the Company on a consistent basis by excluding from net income certain one-off costs as noted above, amortization costs related to intangible assets recognized on acquisition of subsidiaries and adjusted to reflect the tax effect on these elements. Adjusted Basic and Diluted Earnings Per Share give a consistent measure of the earnings of the Company by dividing the Adjusted Net Income by the basic and diluted weighted average number of shares. Net Debt is a measure indicating the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. Financial Leverage is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA ("LTM Adjusted EBITDA") and measures the number of years it would take for the Adjusted EBITDA of the business to pay off the Net Debt in full. LTM Adjusted EBITDA is the Adjusted EBITDA of the business for the previous twelve-month period together with any Adjusted EBITDA of an acquired business also for the same twelve-month period adjusted to include any pre-acquisition period. Adjusted Free Cash Flow is a measure indicating the relative amount of cash generated by the Company during the period and available to fund dividends, debt repayments and acquisitions We believe that the presentation of these financial measures enhances an investor's understanding of our financial performance and financial condition.
The definitions of the measures noted above are included in the "Reconciliation of non-IFRS Measures" section of this MD&A.
Overview
- Satisfactory start to 2020.
- Q1 2020 revenue behind prior year, in line with expectations, and Adjusted EBITDA(1) ahead of expectations.
- COVID-19impacted our operations beginning March 2020 - early learning in coping with COVID-19 at our Chinese facility benefitted the early transfer and implementation of contingency measures across the Group.
- Comprehensive contingency planning measures in place (since March 2020) with respect to COVID-19.
- Health and safety of our employees is of utmost importance.
- Substantial free cash balances and committed loan facilities available to the Group.
- Group business model has proven resilient and has responded to the various challenges posed by COVID-19, proving the value of diversification across the three divisions.
3 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS |
measure to its most directly comparable measure calculated | |
in accordance with IFRS. |
Q1 2020 Results Overview
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Q1 2020
Results Overview
Q1 2020 | Q1 2019 | Change | ||
Revenue | $141.1m | $141.8m | ↓ | (0.5%) |
Gross profit margin | 18.7% | 18.5% | ↑ | 1.1% |
Adjusted EBITDA(1) | $19.1m | $17.3m | ↑ | 10.4% |
Adjusted EBITDA(1) margin | 13.5% | 12.2% | ↑ | 10.7% |
Net income | $1.9m | $1.1m | ↑ | 72.7% |
Net cash flows used in operating activities | ($8.9m) | ($5.1m) | ↓ | (74.5%) |
Adjusted Free Cashflow(1) | ($16.2m) | ($7.3m) | ↓ | NM(2) |
Net debt(1) to the last twelve months Adjusted EBITDA(1) | 3.35x | 3.18x | ↑ | 5.3% |
5 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS | 2 Not Meaningful ("NM"). |
measure to its most directly comparable measure calculated | ||
in accordance with IFRS. |
Business model proving resilient during COVID-19 crisis
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Impact of COVID-19 on IPL's Operations
- Health and safety of our employees is of the utmost importance, appropriate and responsive measures are in place to protect their safety and well-being.
- Measures implemented to-date have served us well evidencing the resilience of our business model and end-markets.
- Implemented an extensive range of business continuity and contingency planning measures.
- Group's manufacturing activities designated as essential business - all 14 manufacturing facilities operational to date.
- Suspending and deferring non-essential capital expenditure.
- Monitoring and reducing working capital.
- Restructuring and cost reduction measures implemented where demand has reduced.
- The Group has not experienced any delays or disruption to its resin supply.
- No disruption to logistics supply chain - network remains in operation however certain aspects have been impacted by the stay at home orders.
- It is too early to assess the overall impact of COVID-19 on our business as no reliable determinable trends exist.
- LF&E division has experienced a slow down in sales of food services pails and environmental products partially offset by increased demand for material handling products.
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Impact of COVID-19 on IPL's Operations (cont'd)
- CPS division has in general experienced an increase in sales volumes, partially offset by a decrease in sales to customers in the hospitality sector.
- RPS division has experienced a decrease in sales of Macro Trac products and automotive bins.
- Q1 2020 revenues not significantly adversely impacted by COVID-19. Q2 revenues expected to be more adversely impacted as COVID-19 containment measures were significantly scaled up in most economies in early Q2 2020.
- New Normal will include COVID-19 measures.
- Tentative indications of re-opening of more economies in which we operate.
- Social distancing, contact tracing and isolation measures expected to remain in place for the foreseeable future.
- Guidelines on workplace distancing and work practices to cope with COVID-19 measures likely to trigger further changes to facilitate improved economic activity across economies.
- Uncertainty remains in the global macro-economic climate arising from COVID-19.
- Financial assistance programs and policy responses from central banks and governments globally will provide some degree of respite.
- A number of the industry sectors that we serve are proving to be relatively resilient to date, when compared with general market experience as it relates to COVID-19.
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Our staff, their safety and the communities we operate in are a key part of our 4- year sustainability strategy
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IPL Sustainability Strategy 2019-2022
- Our staff, their safety and the communities we operate in are a key part of our 4-year sustainability strategy.
- This enabled us to react quickly to the COVID-19 challenges and ensure all facilities successfully sustained operations.
- It ensured COVID-19 risks to our employees were assessed early and protection measures implemented immediately.
- Our strategy is being tested operationally in challenging circumstances, has been adapted quickly to evolving Government COVID-19 regulations and has so far proven robust.
- Our sustainability strategy continues to remain central to how we operate and engage with our employees, customers and the environment.
Our H&S and Sustainability teams were well positioned to
address the operational impacts of COVID-19
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The key pillars of our sustainability strategy
First Quarter 2020 Summary Results
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First Quarter 2020 Summary Results
Satisfactory performance in Q1 2020
USD$'million | Q1 2020 | Q1 2019 | Q/Q Change |
Revenue | $141.1 | $141.8 | (0.5%) |
Gross Profit | $26.4 | $26.2 | 0.8% |
Gross Profit Margin | 18.7% | 18.5% | 1.1% |
Adjusted EBITDA(1) | $19.1 | $17.3 | 10.4% |
Adjusted EBITDA Margin(1) | 13.5% | 12.2% | 10.7% |
Net Income | $1.9 | $1.1 | 72.7% |
Adjusted Net Income(1) | $4.6 | $4.4 | 4.5% |
Diluted EPS (in $) | $0.03 | $0.02 | 50.0% |
- Adjusted EBITDA margins(1) increased from 12.2% in Q1 2019 to 13.5% for Q1 2020.
- Gross profit margin strengthened from 18.5% in Q1 2019 to 18.7% in Q1 2020.
- Adjusted Net Income in Q1 2020 ($4.6m) improved by 4.5% compared to Q1 2019 ($4.4m) primarily due to a tax credit of $1.5 million in Q1 2020 (Q1 2019 - $1.1 million) partially offset by increased finance costs and transaction, reorganisation and integration costs related to restructuring initiatives in the RPS and CPS Europe divisions.
12 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS |
measure to its most directly comparable measure calculated | |
in accordance with IFRS. |
Fiscal 2020 First Quarter Revenue and Adjusted EBITDA Bridge (1)
Note - All amounts in USD$'million
13 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS |
measure to its most directly comparable measure calculated | |
in accordance with IFRS |
- Revenue was $141.1 million in Q1 2020 compared to $141.8 million in
Q1 2019, a decrease of $0.7 million or 0.5%. - Adjusted EBITDA increased by $1.8 million or 10.4% despite a reduction in revenue during Q1 2020, driven primarily by decreases in resin input costs, the contribution from the acquisition of Loomans ($2.4m), and foreign exchange gains. These increases were offset by increases in the cost of labor, increases in bad debt provision and increases in other operating expenses.
Q1 2020 Key Margin Drivers
Other(1)
Freight | Resin(2)(3) |
6.0%6.0% | |
Labor | 37.5% |
21.0% | Q1 2019 |
Revenue | |
$141.8m |
12.0%
17.5%
Other COGS(4)
Adjusted EBITDA(5)
Other(1)
Freight
3.0
Resin(2)
6.0% %
Labor
33.0% | |
25.0% | Q1 2020 |
Revenue | |
$141.1m |
13.0% | 20.0% |
Adjusted EBITDA(5) | Other COGS(4) |
- Q1 2020 positively impacted by reduced resin input costs.
- Freight costs in line with Q1 2019 following continued focus on cost management.
- Increases in labor costs are market driven arising from inflation and changes to labor agreements in North America.
(1) | Includes SG&A costs excluding SG&A labor costs | (4) | All directly attributable cost of sales excluding resin, labor and freight costs |
(2) | Q1 2019 Polypropylene (PP) ~55.0%. Polyethylene (PE) ~ 45.0% | (5) | See Appendix 1 for a reconciliation of this non-IFRS measure to its most directly comparable |
Q1 2020 Polypropylene (PP) ~61.0%. Polyethylene (PE) ~39.0% | measure calculated in accordance with IFRS | ||
(3) | Restated from 38.0% as per 2019 presentation |
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Resin Pricing Update
Q1 2020 Index Prices (Q/Q Change) | Pricing Outlook 2020 | |||||||||||
Resin | Europe | North America | Resin | Outlook | • Q1 | 2020: Between Q1 2019 and | ||||||
HDPE | (9.1%) | 1.2% | HDPE | Q1 | 2020, the average price of PP | |||||||
resin decreased by approximately | ||||||||||||
LLDPE | N/A | 1.2% | LLDPE | 15.0%. PE resin prices have | ||||||||
increased by 1.2% in Q1 2020 from | ||||||||||||
PP | (10.5%) | (15.0%) | PP | Q1 | 2019. | |||||||
• Limited visibility on resin pricing for | ||||||||||||
IHS Index Resin Pricing per Pound - US$cent | ||||||||||||
the remainder of Fiscal 2020 given | ||||||||||||
LLDPE IM | HDPE IM | PP COPO IM | the current volatility in the markets. | |||||||||
$ 1.000 $ 0.950 $ 0.900 $ 0.850 $ 0.800 $ 0.750 $ 0.700 $ 0.650 $ 0.600 $ 0.550
Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20
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Cash conservation
measures in place and expected to deliver as year progresses
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Fiscal 2020 First Quarter Adjusted Free Cash Flow (1)
USD$'M | Q1 2020 | Q1 2019 | Q/Q Change |
Net cash flows from operating activities before working capital | $14.3 | $16.3 | (12.3%) |
movements | |||
Movements in working capital | ($23.2) | ($21.4) | 8.4% |
Net cash flows used in operating activities | ($8.9) | ($5.1) | NM(2) |
Transaction, reorganization and integration costs paid | $0.9 | $4.5 | (80.0%) |
Other income received | $0.7 | $0.1 | NM(2) |
Adjusted net cash flow used in operating activities(1) | ($7.3) | ($0.5) | NM(2) |
Maintenance capital expenditure | ($4.4) | ($3.4) | 29.4% |
Finance costs paid | ($4.4) | ($3.4) | 29.4% |
Adjusted Free Cash Flow(1) | ($16.2) | ($7.3) | NM(2) |
- Net cash flow used in operating activities increased from $5.1 million (Q1 2019) to $8.9 million (Q1 2020).
- Adjusted Free Cash Flow was an outflow of $16.2 million compared to an outflow of $7.3 million in Q1 2019. The decrease in cash flows were primarily driven by an increase in working capital, finance costs and maintenance CAPEX and a decrease in transaction, reorganization and integration costs paid.
17 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS | 2 Not Meaningful ("NM"). |
measure to its most directly comparable measure calculated | ||
in accordance with IFRS |
Condensed Balance Sheet and Key Ratios
USD$' Million | Q1 2020 | Fiscal 2019 | Q1 | 2019 |
Working Capital | $107.5 | $82.7 | $105.7 | |
Total Assets | $900.6 | $901.7 | $887.4 | |
Net Debt(1) | $315.1 | $297.4 | $317.6 | |
Total Shareholders' Equity | $361.0 | $372.1 | $351.7 | |
Key Ratios | Q1 2020 | Fiscal 2019 | Q1 2019 |
Net Debt(1) to Equity | 0.87 | 0.80 | 0.90 |
Financial Leverage; Net | |||
Debt(1) to LTM Adjusted | 3.35x | 3.18x | 3.55 |
EBITDA(1) | |||
Interest coverage | 5.39x | 5.37x | 4.92 |
18 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS | ||
measure to its most directly comparable measure calculated |
in accordance with IFRS
- On January 10, 2020, we acquired the trade and assets of a U.K. based injection molding company. The assets acquired included injection molding machines, materials handling molds and ancillary molding equipment. The consideration paid was $4.1 million (GBP£3.1 million).
- The financial leverage ratio(1), is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA including the pre-acquisition period of the trade and assets of the U.K. based injection molding company, as at March 31, 2020 and the pre-acquisition period of Loomans as at December 31, 2019.
- Working capital grew 30.0% from $82.7 million (Fiscal 2019) to $107.5 million (Q1 2020) in line with seasonal trends in working capital.
CAPEX Update
Q/Q | |||
USD$'M | Q1 2020 | Q1 2019 | Change |
Consumer Packaging Solutions | $6.0 | $3.7 | 62.2% |
Large Format Packaging & Environmental | $4.5 | $4.6 | (2.1%) |
Solutions | |||
Returnable Packaging Solutions | $1.7 | $6.2 | (72.6%) |
Other | $0.1 | $0.1 | - |
Total | $12.4 | $14.6 | ($2.2) |
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- Cash outflow with respect to capital purchases of property, plant and equipment in Q1 2020 amounted to $12.4 million compared to Q1 2019 CAPEX of $14.6 million, with $8.0 million related to strategic and development capital expenditure and $4.4 million of maintenance capital expenditure.
- Suspension of non- essential capital expenditure commenced March 2020.
- Included in CPS CAPEX in spend Q1 2020 is a $4.2 million carryover of CAPEX related to a significant project win with a CPS NA strategic customer in 2019.
Margin expansion
across
all divisions in Q1 2020
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Large Format Packaging & Environmental Solutions (LF&E)
USD$'Million | Q1 2020 | Q1 2019 | Q/Q Change |
Revenue | $63.0 | $74.2 | (15.0%) |
Gross Profit | $11.9 | $13.8 | (13.8%) |
Gross Profit Margin | 18.9% | 18.6% | 1.6% |
Adjusted EBITDA(1) | $9.6 | $10.8 | (11.8%) |
Adjusted EBITDA Margin(1) | 15.2% | 14.6% | 4.1% |
21 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS |
measure to its most directly comparable measure calculated | |
in accordance with IFRS |
Consumer Packaging Solutions (CPS)
USD$'Million | Q1 2020 | Q1 2019 | Q/Q Change |
Revenue | $58.3 | $45.3 | 28.7% |
Gross Profit | $11.2 | $8.8 | 27.3% |
Gross Profit Margin | 19.2% | 19.4% | (0.1%) |
Adjusted EBITDA(1) | $11.1 | $7.7 | 44.5% |
Adjusted EBITDA Margin(1) | 19.0% | 16.9% | 12.4% |
22 - Earnings Conference Call | 1 See Appendix 1 for a reconciliation of this non-IFRS |
measure to its most directly comparable measure calculated | |
in accordance with IFRS |
Returnable Packaging Solutions (RPS)
USD$'Million | Q1 2020 | Q1 2019 | Q/Q Change |
Revenue | $15.7 | $16.6 | (5.5%) |
Gross Profit | $2.3 | $1.9 | 21.1% |
Gross Profit Margin | 14.7% | 11.4% | 28.1% |
Adjusted EBITDA(1) | $1.1 | $1.0 | 19.4% |
Adjusted EBITDA Margin(1) | 7.3% | 5.7% | 28.0% |
23 - Earnings Conference Call | 1 See the Company's most recent MD&A for a reconciliation |
of this non-IFRS measure to its most directly comparable | |
measure calculated in accordance with IFRS. |
Other
USD$'Million | Q1 2020 | Q1 2019 | Q/Q Change |
Adjusted EBITDA(1) | ($2.7) | ($2.2) | 23.1% |
24 - Earnings Conference Call | 1 See the Company's most recent MD&A for a reconciliation |
of this non-IFRS measure to its most directly comparable | |
measure calculated in accordance with IFRS. |
- Comprised of the results of the Metals U.K. recycling business
Outlook and Priorities
- We expect that our Q2 2020 revenues will be more adversely impacted by the COVID-19 virus and associated containment measures that were scaled up in most economies in which we operate in early Q2 2020.
- Our priorities are clear:
- to ensure the health and safety of our employees;
- to continue to keep all 14 manufacturing facilities operational;
- to deliver quality and safe products to our customers;
- to eliminate or defer non-essential capital expenditure;
- reduce costs and rationalize areas of the business where demand has reduced; and
- maintain strong liquidity and Balance Sheet strength as we navigate the COVID-19 crisis.
- Market volatility and uncertainty surrounding the extent and duration of global government restrictions limit management from being able to make reliable estimates of the impact of COVID-19 on IPL's revenues, cashflows and profitability for the remainder of 2020.
- We continue to believe that the overall prospects for IPL remain positive, benefiting from strong management, significant product and end market diversification, financial strength and resilience together with a well invested asset base.
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Outlook Fiscal 2020
Group priority is to protect the health and safety of our employees, maintain a strong Balance Sheet and position the business to leverage opportunities arising from the future market recovery.
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Appendix 1
Non-IFRS
Financial
Measures
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Reconciliation of Adjusted EBIT and Adjusted EBITDA to Net Income
Three months ended March 31 | |||
($'000) | 2020 | 2019 | • Adjusted EBITDA consists of net income |
Net Income | 1,860 | 1,077 | before income taxes, net finance costs, share |
Income tax credit | (1,500) | (1,105) | of loss of equity-accounted investee, other |
income, transaction, reorganization, and | |||
Finance costs (net) | 4,340 | 3,927 | |
integration costs, and depreciation and | |||
Share of loss of equity-accounted investee | - | 360 | amortization. Adjusted EBIT is Adjusted |
Other income (net) | (663) | (20) | EBITDA less depreciation and amortization. |
Operating Profit | 4,037 | 4,239 | |
Transaction, reorganization and integration costs | 2,836 | 2,207 | |
Adjusted EBIT | 6,873 | 6,446 | |
Depreciation and amortization | 12,196 | 10,820 | |
Adjusted EBITDA | 19,069 | 17,266 |
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Adjusted Net Income, Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share
Three months ended March 31 | |||
($'000, unless otherwise stated) | 2020 | 2019 | • Adjusted Net Income consists of net income |
Net Income | 1,860 | 1,077 | |
before share of loss of equity-accounted | |||
Transaction, reorganization and integration costs | 2,836 | 2,207 | investee, transaction, reorganization, and |
Amortization of acquisition related intangibles | 1,354 | 1,634 | integration costs, amortization of acquisition |
Other income (net) | (663) | (20) | related intangibles, other income and income |
tax related to the above noted items. Adjusted | |||
Share of loss of equity-accounted investee | - | 360 | |
Basic Earnings per Share and Adjusted | |||
Taxes related to the above noted items | (787) | (830) | Diluted Earnings per Share is calculated by |
Adjusted Net Income | 4,600 | 4,428 | dividing the Adjusted Net Income by the |
Weighted-average number of common shares | 54,295 | 53,758 | weighted-average number of common shares |
outstanding. In the case of Adjusted Diluted | |||
Adjusted basic earnings per share (in $) | 0.08 | 0.08 | |
Earnings per Share, the number of outstanding | |||
Equity instruments with a dilutive effect - share options | 39 | 606 | common shares is adjusted for the effects of |
Weighted-average number of common shares (diluted) | 54,334 | 54,364 | options with a dilutive effect. |
Adjusted diluted earnings per share (in $) | 0.08 | 0.08 |
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Reconciliation of Net Debt
($'000) | March 31, 2020 | December 31, 2019 |
Loans and Borrowings | 375,488 | 349,708 |
Lease liabilities | 21,935 | 24,068 |
Convertible loan notes | 1,358 | 1,393 |
Cash and cash equivalents | (83,677) | (77,731) |
Net Debt | 315,104 | 297,438 |
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- The table below sets out the Net Debt of the Company at March 31, 2020 and December 31, 2019. Net Debt is defined as loans and borrowings, lease liabilities and convertible loan notes less cash and cash equivalents.
Financial Leverage
($'000) | March 31, 2020 | December 31, 2019 |
Net Debt | 315,104 | 297,438 |
Adjusted EBITDA | 93,262 | 91,459 |
Loomans EBITDA pre-acquisition period | - | 1,970 |
U.K. based injection molding company EBITDA pre-acquisition | ||
period | 768 | - |
LTM Adjusted EBITDA | 94,030 | 93,429 |
Financial Leverage | 3.35 | 3.18 |
- The table below sets out the financial leverage ratio for the Company at March 31, 2020 and December 31, 2019. The financial leverage ratio is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA including the pre-acquisition period of the trade and assets of a U.K. based injection molding company, for March 31, 2020 and the pre- acquisition period of Loomans for December 31, 2019.
31 - Earnings Conference Call | 1 See the Company's most recent MD&A for a reconciliation |
of this non-IFRS measure to its most directly comparable | |
measure calculated in accordance with IFRS. |
Reconciliation of Adjusted Free Cash Flow
Three months ended March 31 | • Adjusted Free Cash Flow represents cash | |
($'000) | 2020 | 2019 |
Net cash flows used in operating activities | (8,876) | (5,138) | generated by IPLP activities and available for |
Transaction, reorganization and integration costs paid (excluding | reinvestment elsewhere, including the early | ||
repayment of debt. It is defined as the net cash | |||
investing | |||
flow used in operating activities, less finance | |||
and financing related costs) | 958 | 4,467 | |
costs and maintenance capital expenditure | |||
Other income (net) | 663 | 83 | |
amounts paid, adding back transaction, | |||
Adjusted net cash flow used in operating activities | (7,255) | (588) | |
reorganization and integration costs paid | |||
Maintenance capital expenditure | (4,429) | (3,351) | (which excludes investing and financing |
Finance costs paid | (4,470) | (3,355) | related costs) and other income received. |
Adjusted Free Cash Flow | (16,154) | (7,294) |
32 - Earnings Conference Call
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IPL Plastics Inc. published this content on 13 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 May 2020 21:14:01 UTC