NEWMARKET, Ontario, March 06, 2024 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX:ABSSF) (the “Company” or “AirBoss”) today announced its fourth quarter and annual results. The Company will host a conference call and webcast to discuss the results on March 7^th at 9:00 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

• Generated $40.9 million cash from operations during 2023, compared to consuming $30.8 million in 2022;
• 2023 Adjusted EBITDA¹ of $26.8 million on Adjusted Profit¹ of $(6.4) million and a loss of $41.7 million;
• Finished 2023 with a Net Debt to Adjusted EBITDA ratio¹ of 3.30x; and
• Declared a quarterly dividend of C$0.07 per common share.

“Despite a significant improvement in cash generation for AirBoss, 2023 was a challenging year as we continued to navigate the impact of economic headwinds, fueled by labour stoppages in the auto sector and continued delays in government sourcing. Looking forward however, and in order to better position the Company for sustainable growth, we recently completed an in-depth review of the entire enterprise, yielding a blueprint for a strategic transition related to the future roadmap of AirBoss,” said Chris Bitsakakis, President and Co-CEO of AirBoss. “This transition will consolidate all rubber compounding operations into one segment, AirBoss Rubber Solutions, emphasizing ARS’ ability to act as a core driver for margin expansion, sustainable growth and productivity. The new AirBoss Manufactured Products segment will consolidate all operations which manufacture or distribute finished products to a variety of target markets including automotive, non-automotive and defense. We will also undertake an in-depth strategic review of all individual product lines AMP currently manufactures and sells, in order to assess their overall alignment with the new strategic direction of AirBoss.”

“Our businesses and the markets in which we operate continue to experience significant change, and we believe our shift in strategic focus will help prioritize investments, drive long-term shareholder value, growth and be accretive to the Company,” added Gren Schoch, Chairman and Co-CEO. “We have focused on fortifying our balance sheet from cash generated in 2023, and continue to explore implementing further cost reduction initiatives within our business units in 2024. As an organization, we remain committed to our long-term priorities, including growing the core Rubber Solutions segment, refocusing the range of products which Manufactured Products sells, while ensuring alignment with our new strategic direction, and investing in core areas of the business to support long-term sustainable growth.”

Financial Results

Consolidated net sales in the three-month period ending December 31, 2023 (“Q4 2023”) decreased by 21.1% to $92,696 compared with the three-month period ended December 31, 2022 (“Q4 2022”), with decreases at both Rubber Solutions and Manufactured Products. Consolidated net sales for the year decreased by 10.7% to $426,025 compared with 2022 primarily due to decreased sales at Rubber Solutions across the majority of sectors and Manufactured Products’ delivery of nitrile gloves to Department for Health and Human Services (“HHS”) in the prior year, partially offset by improved performance in other product lines in that segment.

Consolidated gross profit for Q4 2023 decreased to $5,122 from $24,767 compared with Q4 2022, due to decreases in the Manufactured Products’ defense product lines and rubber molded product lines. For the year, consolidated gross profit was up by $34,279 to $58,410 and gross profit as a percentage of net sales increased to 13.7% from 5.1%, compared to 2022. The increase was driven by a $57.0 million non-cash write-down related to nitrile glove inventory in 2022 and improvements at the Rubber Solutions segments in addition to cost improvements that took place in the latter part of 2023 in each segment, partially offset by an $8 million non-cash write-down related to nitrile glove inventory in 2023. Adjusted EBITDA for Q4 2023 decreased by 71.1%, compared to the same period in 2022 and decreased by 41.0% for 2023 compared to 2022.

Financial Position

The Company retains a $250 million credit facility and a net debt to TTM Adjusted EBITDA ratio of 3.30x (from 2.43x at December 31, 2022).

Dividend

The Board of Directors of the Company has approved a quarterly dividend of C$0.07 per common share, to be paid on April 15, 2024 to shareholders of record at March 29, 2024.

Segment Results

In the Rubber Solutions segment, net sales in the quarter decreased by 21.1% to $54,464 and by 12.3% to $248,395 in 2023, from the comparable periods in 2022. The decrease in net sales for Q4 2023 was primarily due to softness across most sectors and for 2023 was across most sectors driven by economic headwinds. For the quarter and 2023, volume was down 17.5% with decreases across the majority of sectors given softness in many customer sectors. Tolling volume was down 63.0% in the quarter and 59.6% in 2023, from the comparable periods in 2022. Non-tolling volume was down 9.9% for the quarter and by 7.4% in 2023, compared to the same periods in 2022. Gross profit in the Rubber Solutions segment increased by 1.9% to $7,845 for the quarter and decreased by 4.63% to $34,947 in 2023, from the comparable periods in 2022. For the quarter, the increase in gross profit was principally due to product mix and managing overhear costs, offset by a reduction in volume. For the year, the decrease was primarily as a result of decreased tolling and non-tolling volumes compared to 2022 and partially offset by managing controllable overhead costs.

At Manufactured Products, net sales in the quarter decreased by 19.9% to $44,029 and by 7.4% to $202,290 in 2023 from the comparable periods in 2022. For the quarter, the decrease was the result of lower volumes in the defense product lines and across the rubber molding product lines, in particular the muffler hangers, bushings and spring isolator product lines. For the year, the decrease was primarily due to a decrease in the defense products lines from the delivery of nitrile gloves to HHS in the part of the previous year partly offset by an increase in the rubber molded products lines due to increased volume. Gross profit in the Manufactured Products segment decreased by $19,791 to a loss of $2,723 for the quarter and increased by $35,977 to $23,463 in 2023, from the comparable periods in 2022. For the quarter, the decrease was primarily a result of an $8.0 million non-cash write-down related to nitrile glove inventory and retroactive pricing from improved arrangements with key suppliers and customers recognized in the comparable period in 2022 and lower volumes in the defense product lines and across the rubber molded product lines, partially offset by operational cost improvements in the segment. For the year, the increase was primarily a result of a $57.0 million non-cash write-down related to nitrile glove inventory in 2022, in addition to increased volume, and improved arrangements in 2023 within the rubber molded products lines with key suppliers and customers. In addition, there was a continued focus on controllable operational cost containment and managing overhead costs, partially offset by an $8.0 million non-cash write-down related to nitrile glove inventory in 2023.

Overview

2023 was a challenging year for AirBoss as economic headwinds impacted each segment to varying degrees, and the Company continued to navigate significant and extensive obstacles related to labor, supply chain and logistics challenges. The Company focused on managing costs and risk mitigation plans in response to these challenges, which were particularly pronounced in the fourth quarter of 2023 (“Q4 2023”), and undertook a strategic review of each of its business units. This review has resulted in its new strategic transition, including a shift in reportable segments commencing with results for Q4 2023 and year ended December 31, 2023. AirBoss now reports results under two segments: (1) AirBoss Rubber Solutions (“ARS”), and (2) AirBoss Manufactured Products (“AMP”). The ARS segment consists of the former rubber solutions segment and the rubber compounding operations at Acton Vale, Quebec (previously included in the AirBoss Defense Group segment). The new AMP segment consists of AirBoss Engineered Products, formerly a standalone segment, and AirBoss Defense Group, formerly a standalone segment (other than the rubber compounding operations at Acton Vale, Quebec).

Both ARS and AMP experienced residual softness in Q4 2023. The rubber molded products operations at AMP were impacted by the tail end of the union strike related to the OEMs which was settled in the quarter. The ability to recover in volumes in 2024 for each segment will remain subject to the ongoing challenges related to continued inflation pressure and the ongoing global geopolitical challenges, and successful conversion of key opportunities.

Although ARS experienced some retraction in most business lines compared to 2022, which was a record year from both a sales and EBITDA perspective, 2023 remained a solid year with respect to sales and EBITDA. Despite strong performance during the earlier part of 2023, there was pronounced softness experienced at the end of Q4 2023 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.

AMP experienced strong traction in the rubber molded product lines despite challenges towards the latter part of the year due to labor disruptions with the OEMs, while the defense product lines experienced softness across the product portfolio throughout the entire year. Management continued its focus on operational improvements including managing costs and a commitment to drive efficiencies and best-in-class automation, as well as diversification of its product lines into adjacent sectors. In addition, the defense business 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 2023. Further, although the West African Husky order has been completed, execution on the balance of the previously announced awards for Husky 2G vehicles has been delayed further due to ongoing delays in funding, creating a lack of certainty to the scope, timing and the terms and conditions of these awards which cannot reasonably be determined.

The Company’s long-term priorities consist of the following:

1. Growing the core Rubber Solutions segment by emphasizing rubber compounding as the core driver for sustainable growth and productivity, focusing on innovation in custom rubber compounding while aiming to expand market share through organic and inorganic means, while striving to achieve enhanced diversification by a broadening of product breadth through technological advancements and investments in specialty compound niches;
2. Manufactured Products growth strategy will be focused on diversifying and expanding its range of rubber molded products while simultaneously narrowing the range of defense products through a renewed focus on core competencies; and
3. Undertaking a strategic review of all product lines currently manufactured and sold by the Company in its Manufactured Products segment while targeting additional acquisition opportunities with a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets.

AirBoss continues to focus on these long-term priorities while 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 9:00 a.m. ET on Thursday, March 7, 2024. Please go to https://www.gowebcasting.com/13160 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 and Special Meeting

The Company’s Annual General and Special Meeting for shareholders will occur May 9, 2024. Further details will be provided in the near future.

AirBoss of America Corp.

AirBoss of America is a 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 two divisions. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Manufactured Products is a supplier of anti-vibration and rubber molded solutions to the North American automotive market and other sectors, and also a global supplier of personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities. 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, 2023, includes $13,890 of lease liabilities (2022: $15,007) (see Significant Account Policies in the Company’s FY2023 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 and amortization. Adjusted EBITDA is defined as EBITDA excluding impairment costs, acquisition costs, and non-recurring costs. A reconciliation of profit (loss) to EBITDA and Adjusted EBITDA is below.

In 2023, the Company underwent a series of cost saving initiatives and staff reductions. Costs related to these restructuring activities are included in Other Costs on the Statement of Profit and Loss.

In 2022, the Company negotiated improved arrangements with automotive business' key suppliers and customers to improve profitability. Professional fees related to these activities are included in General & Administrative Costs on the Statement of Profit and Loss.

Adjusted profit is a non-IFRS measure defined as profit (loss) before impairment costs, 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”, “should” 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; AirBoss’ ability to successfully develop and execute effective business strategies, including the implementation of the strategic plan discussed in this news release; 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 and ability to satisfy the covenants set forth in such financing arrangements; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. 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 Interim Report 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.sedarplus.com.

Investor Contact: investor.relations@airboss.com

Media Contact: media@airboss.com