NEWMARKET, Ontario, March 09, 2023 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX:ABSSF) (the “Company” or “AirBoss”) today announced its unaudited fourth quarter and annual results. The Company will host a conference call and webcast to discuss the results today, March 9^th at 10 a.m. ET, the details of which are further below. All dollar amounts are shown in thousands of United States dollars ("US $" or "$"), except per share amounts, unless otherwise noted.

Recent Highlights

• Record sales and profitability for the Rubber Solutions segment;
• AirBoss Defense Group supported initial delivery of COVID test kits to the US Government;
• Adjusted EBITDA² of $45.3 million (excluding the $57.0 million write-down of inventory) on Adjusted Profit² of $12.6 million and a loss of $31.9 million;
• Finished 2022 with a Net Debt to Adjusted EBITDA ratio² of 2.43x; and
• Declared a quarterly dividend of C$0.10 per common share.
  

“With our fourth quarter results, we are pleased to report improved performance in key areas of our business, bringing to a close what was otherwise a challenging year. Importantly, we believe we have positioned all three of our business segments well for growth in 2023”, said Chris Bitsakakis, President and COO of AirBoss. “Throughout 2022, the AirBoss team continued to navigate through unprecedented market issues related to supply chain and price inflation, impacting each of our business segments. We’re encouraged that we have started to see some moderation in the rate of price increases for raw materials in the latter part of the year along with a more cooperative environment with our customers as it relates to improved economics,” said Mr. Bitsakakis. “Our Rubber Solutions business segment delivered a record level of performance while the integration of Ace Elastomer was executed in a seamless manner.”

“The AirBoss team exited 2022 with momentum in some important areas, which is a testament to our strategic efforts to diversify our business,” stated Gren Schoch, Chairman and CEO of AirBoss, “Within AirBoss Defense Group, we’re encouraged by the contract wins secured in the fourth quarter. We have also taken important steps to develop and introduce innovative, in-demand products throughout AirBoss. And while the pace of contract activity, in particular for ADG, has been hard to predict, our ability to deliver on new sales agreements remains strong as we continue to pursue new opportunities to deliver healthcare and survivability solutions to our customers.”

Financial Results

Consolidated net sales in the three-month period ending December 31, 2022 (“Q4 2022”) decreased by 52.8% to $117,453 compared with the three-month period ended December 31, 2021 (“Q4 2021”), with a decrease from ADG partially offset by increases from the Rubber Solutions and Engineered Products segments. Consolidated net sales for the year decreased by 18.7% to $477,155 compared with 2021 primarily due to Airboss Defense Group’s (“ADG”) delivery of nitrile gloves to Department for Health and Human Services (“HHS”) in the prior year, partially offset by increased sales at Rubber Solutions across the majority of customer sectors and improved performance at the Engineered Products segment.

Consolidated gross profit for Q4 2022 decreased to $24,767 from $51,444 compared with the same period in 2021, with decreases in the AirBoss Defense Group segment offset by increases in the Rubber Solutions and Engineered Products segments. For the year, consolidated gross profit was down by $112,167 to $24,131 and gross profit as a percentage of net sales decreased to 5.1% from 23.2%, compared to 2021. The decrease was driven by a $57.0 million non-cash write-down at ADG related to nitrile glove inventory and the delivery of nitrile gloves to HHS in 2021, partially offset by significant improvements at the Rubber Solutions and Engineered Products segments. Adjusted EBITDA for Q4 2022 decreased by 48.5%, compared to the same period in 2021 and decreased by 43.6% for 2022 compared to 2021.

In addition, on December 6, 2022, the Company renewed its normal course issuer bid for its common shares, pursuant to which the Company may re-purchase up to 500,000 of its common shares (representing approximately 2.86% of the Company's public float of 17,460,712 common shares as of November 28, 2022).

Financial Position

The Company retains a $250 million credit facility and a net debt to TTM EBITDA ratio of 2.43x (from 0.70x at December 31, 2021).

Dividend

The Board of Directors of the Company has approved a quarterly dividend of C$0.10 per common share, to be paid on April 17, 2023 to shareholders of record at March 31, 2023.

Segment Results

In the AirBoss Defense Group segment, net sales in the quarter decreased by 88.7% to $19,806 and by 59.6% to $133,160 year-to-date from the comparable periods in 2021. For the quarter, the decrease was primarily the result of delivery under the nitrile patient examination gloves contract from HHS, as part of the U.S. government's response to the COVID-19 pandemic, in the prior year. For the year, the decrease was primarily due to ADG’s delivery of filters and nitrile gloves to HHS in 2021. Gross profit at AirBoss Defense Group decreased by 93.9% to $2,904 for the quarter and was $(10,970) for the year, down $127,628 from 2021. For the quarter, the decrease was primarily due to delivery of nitrile patient examination gloves to HHS in the prior year. For the year, the decrease was primarily the result of the $57.0 million inventory write-down, and deliveries to HHS in 2021, partially offset by favorable volume in ADG's industrial products line.

In the Rubber Solutions segment, net sales in the quarter increased by 9.8% to $57,778 and increased by 37.7% to $236,149 year-to-date, from the comparable periods in 2021. The increase in net sales for Q4 2022 was primarily in the conveyor belt, OTR/retread, industrial and specialty products sectors. For the year, volume was up 3.3% with increases across the majority of sectors despite residual softness due to economic headwinds. Tolling volume was down 46.0% in the quarter and 11.9% year-to-date, from the comparable periods in 2021. Non-tolling volume was down 4.5% for the quarter and increased by 6.6% year-to-date, compared to the same periods in 2021. Gross profit in the Rubber Solutions segment increased by 17.8% to $6,915 for the quarter and by 58.8% to $33,084 year-to-date, from the comparable periods in 2021. For the quarter, the increase in gross profit was principally due to mix partially offset by a modest reduction in volume. For the year, the increase was primarily as a result of increased non-tolling volumes compared to the same period in 2021 and managing controllable overhead costs, partially offset by labor and logistics costs and the elimination of government-directed subsidies in the first half of 2021.

At Engineered Products, net sales in the quarter increased by 64.8% to $46,655 and increased by 13.6% to $132,512 year-to-date from the comparable periods in 2021. For the quarter, the increase was the result of improved volumes across several automotive product lines, in particular the muffler hangers, bushings, and spring insulator product lines in addition to improved arrangements with Engineered Products’ key suppliers and customers recognized in the quarter. For the year, the increase was due to increased volume and improved arrangements with key suppliers and customers in the SUV, light truck and mini-van platforms compared to the same period in the prior year. Gross profit in the Engineered Products segment increased by $17,197 to $14,948 for the quarter and by $3,213 to $2,017 for the year, from the comparable periods in 2021. For the quarter, the increase was primarily a result of price, mix, and volume in the automotive sector in addition to operational cost containment, and managing overhead costs. For the year, the increase was primarily the result of increased volume, improved arrangements with Engineered Products’ key suppliers and customers and a continued focus on controllable operational cost containment and managing overhead costs, partially offset by a government-directed wage subsidy in the first half of 2021, challenges associated with global electronic chip shortages in the automotive sector combined with some residual raw material cost escalations, freight and logistics costs earlier in the year.

Overview

2022 was a challenging year for AirBoss as the company focused on managing risks at the corporate level and in each segment, while continuing to execute our strategic plan to deliver strong operational and financial results. The Company navigated significant and extensive obstacles including supply chain and logistics challenges, while beginning to see some modest improvements from previous record raw material price increases. AirBoss also worked diligently to address and mitigate the impact of uncertain economic conditions on its business and that of its customers during Q4 2022, including risk mitigation plans within its supply chain and a focus on growth initiatives and key investments, while maintaining its focus on a safe work environment for its employees.

The Rubber Solutions and ADG segments experienced residual softness in Q4 2022, while the Engineered Products segment was able to work with its key suppliers and customers to strengthen its financial situation and management expects this segment to deliver improved financial results in 2023. The continued recovery in volumes in 2023 for each segment will remain subject to the ongoing management of the stable and sustained operations of businesses globally, which remains complex and volatile considering evolving and ongoing challenges such as continued inflation pressure and the ongoing war in Ukraine, and successful conversion of opportunities.

For the Rubber Solutions segment, 2022 was a record year from a sales and EBITDA perspective, with strong momentum during the first three quarters and some pronounced softness experienced at the end of Q4 2022 as sales were impacted by customers focused on reducing inventory levels. Despite these headwinds, the segment remains focused on executing on its strategy to deliver strong results with specialized products, expanded production of a broader array of compounds (white and color) and enhanced flexibility in attracting and fulfilling new business through identified synergies and margin expansion. As a segment, Rubber Solutions continued to invest in research and development to support enhanced collaboration with customers and remained focused on integrating Ace Elastomer’s (“Ace”) specialized products into its expanding range of solutions.

ADG remained focused on its survivability solutions platform while targeting traditional defense contracts in line with its long term strategy of expanding its product portfolio. In addition, ADG continued to work with its key customers to leverage opportunities aligned with its growth initiatives, subject to timing as delays in the conversion of these opportunities continued through the fourth quarter of 2022. In particular, execution of the previously announced awards for Husky 2G vehicles has been delayed due to ongoing global challenges, and management now anticipates execution of those orders to commence by the end of the second quarter of 2023. Management continues to believe that the future sourcing of Personal Protective Equipment (“PPE”) for first responders and healthcare professionals will remain a necessity and priority for front line workers, evidenced by the strong pipeline of PPE-related opportunities that ADG is currently pursuing.

Within the Engineered Products segment, 2022 finished strong despite being a challenging year given the continued impact of raw material price increases, supply chain challenges and production volatility by the original equipment manufacturers (OEMs). Engineered Products was able to work with its key suppliers and customers to strengthen its financial situation and management expects this segment to deliver improved financial results in 2023. Management also continued to focus on operational improvements including managing variable costs and sustaining a stable hourly workforce, while dealing with volume volatility in the automotive sector and specifically on AirBoss' products for SUV, light truck and mini-van platforms. The segment also continued its focus and commitment to drive efficiencies and best-in-class automation, as well as diversification of its product lines into sectors adjacent to the automotive space.

In December 2022, a statement of claim was filed in the Ontario Superior Court of Justice against AirBoss and several named officers. The applicants under the proceeding seek an order for leave to proceed under the Securities Act (Ontario), certifying the proceeding as a class proceeding and appointing them as representative plaintiffs. The applicants seek, among other relief, a declaration that the Company made misrepresentations contrary to the Securities Act (Ontario) during a period extending from November 9,2021 to September 6, 2022, as well as unspecified damages. No provision for contingent losses has been recognized in the Company’s annual consolidated financial statements.

Despite the continued headwinds associated with economic and geopolitical issues, the Company’s longer-term priorities remain intact and include:

1. Growing the core Rubber Solutions segment by positioning it as a specialty supplier of choice in the consolidating North American market, with a focus on building defensible leadership positions in selected compounds;
2. Capitalizing on AirBoss Defense Group’s enhanced scale and capabilities to pursue an array of growth and value-creation opportunities in the broader survivability solutions segment serving both defense and first responder markets;
3. Driving improved performance from Engineered Products through a combination of disciplined cost containment, client relationship expansion, new product development and sector diversification; and
4. Targeting additional acquisition opportunities across the business with a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets.

AirBoss continues to generate meaningful returns to shareholders with 16 years of dividend payments growing at an average annual rate of 15%, while driving improved profitability and simultaneously investing in core areas of the business to expand a solid foundation that will support long-term growth.

Conference Call Details and Investor Presentation

A conference call to discuss the quarterly results is scheduled for 10:00 a.m. ET on Thursday, March 9, 2023. Please go to https://www.gowebcasting.com/12472 or dial in to the following numbers: 1-800-319-4610 or 416-915-3239, pass code: 55506. Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. A replay of the conference call as well as the Company’s updated investor presentation will also be made available at: https://airboss.com/investor-media-center.

Annual General Meeting

The Company’s Annual General Meeting for shareholders will occur May 10, 2023. Further details will be provided in the near future.

AirBoss of America Corp.

AirBoss of America is a leading and diversified developer, manufacturer and provider of innovative survivability solutions, advanced custom rubber compounds and finished rubber products that are designed to outperform in the most challenging environments. Founded in 1989, the company operates through three divisions. AirBoss Defense Group is a global leader in personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Engineered Products is a supplier of innovative anti-vibration solutions to the North American automotive market and other sectors. The Company’s shares trade on the TSX under the symbol BOS and on the OTCQX under the symbol ABSSF. Visit www.airboss.com for more information.

Note (1): Debt as at December 31, 2022, includes $15,007 of lease liabilities (2021: $17,399) (see Significant Account Policies in the Company’s FY2022 MD&A).

Note (2): Non – IFRS Financial Measures: This earnings release is based on consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) and uses Non-IFRS Financial Measures. Management believes that these measures provide useful information to investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS. These terms are not a measure of performance under IFRS and should not be considered in isolation or as a substitute for net income under IFRS.
        
EBITDA and Adjusted EBITDA are non-IFRS measures used to measure the Company's ability to generate cash from operations for debt service, to finance working capital and capital expenditures, potential acquisitions and to pay dividends. EBITDA is defined as earnings before income taxes, finance costs, depreciation, amortization, and impairment costs. Adjusted EBITDA is defined as EBITDA excluding acquisition costs, and non-recurring costs. A reconciliation of Profit to EBITDA and Adjusted EBITDA is below.

Reconciliations of Non-IFRS Measures

Adjusted profit is a non-IFRS measure defined as profit before acquisition costs and non-recurring costs. This measure and Adjusted earnings per share are used to evaluate operating results of the Company. A reconciliation of Profit to Adjusted profit and Adjusted earnings per share is below.

Net Debt measures the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. A reconciliation of loans and borrowings to Net Debt is below.

Free cash flow is a non-IFRS measure used to evaluate cash flow after investing in the maintenance or expansion of the Company's business. It is defined as cash provided by operating activities, less cash expenditures on long-term assets. A reconciliation of cash from operating activities to free cash flow is below.

AIRBOSS FORWARD LOOKING INFORMATION DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management’s expectations or estimates of future developments or AirBoss’ future performance, constitute “forward-looking information” or “forward-looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could” “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends” or similar expressions. These statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events and performance.

Statements containing forward-looking information are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking information involves known and unknown contingencies, uncertainties and other risks that may cause AirBoss’ actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by the forward-looking information. Numerous factors could cause actual results to differ materially from those in the forward-looking information, including without limitation: impact of general economic conditions, notably including its impact on demand for rubber solutions and products; dependence on key customers; global defense budgets, notably in the Company’s target markets, and success of the Company in obtaining new or extended defense contracts; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss’ ability to maintain existing customers or develop new customers in light of increased competition; AirBoss’ ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws; current and future litigation; ability to obtain financing on acceptable terms; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. The continued COVID-19 pandemic could also negatively impact the Company’s operations and financial results in future periods. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. As such, it is not possible to estimate the impacts the continued COVID-19 pandemic will have on the Company’s financial position or results of operations in future periods. While the direct impacts of COVID-19 are not determinable at this time, the Company has a credit facility that can provide financing up to $250,000. This list is not exhaustive of the factors that may affect any of AirBoss’ forward-looking information.

All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking information. All subsequent written and oral forward-looking information attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly the forward-looking information except as required by applicable laws. Risks and uncertainties about AirBoss’ business are more fully discussed under the heading “Risk Factors” in our most recent Annual Information Form and are otherwise disclosed in our filings with securities regulatory authorities which are available on SEDAR at www.sedar.com.

Investor Contact: Chris Bitsakakis, President or Gren Schoch, CEO at 905-751-1188.

Media Contact: media@airboss.com