NEWMARKET, Ontario, May 08, 2024 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX: ABSSF) (the “Company” or “AirBoss”) today announced its first quarter 2024 results. The Company's annual general and special meeting will be held on Thursday, May 9th at 9:00 am (EDT). Along with the formal portion of the meeting, management will provide a presentation including a discussion of Q1 2024 results. The meeting will be accessible in person, via live webcast or by dialing in to the numbers provided later in this release. All dollar amounts are shown in thousands of United States dollars ("US $" or "$"), except per share amounts, unless otherwise noted.

Recent Highlights

• AirBoss Manufactured Products' defense business was awarded a contract valued at up to $45 million to provide its Bandolier multipurpose energetic system to a NATO partner nation;
• Reduced borrowings under our credit facilities by $11.1 million, in the first quarter of 2024 ("Q1 2024");
• Reached a settlement of the class action lawsuit pending against the Company in Canada, subject to standard conditions and court approvals;
• Amended our credit facilities to replace the leverage and interest coverage ratios with minimum Adjusted EBITDA and liquidity requirements; and
• Declared a quarterly dividend of C$0.035 per common share.
  

"AirBoss remained focused on operational execution, aggressive deleveraging and the implementation of our recently-announced strategic transition during the first quarter of 2024, while continuing to navigate challenging economic headwinds," said Chris Bitsakakis, President and Co-CEO of AirBoss. "At AirBoss Rubber Solutions, we experienced progressive traction compared to the prior calendar quarter and saw volumes which increased during Q1 2024. At Manufactured Products, the rubber molded and defense product lines both experienced softness in the quarter. However, we are encouraged by the recently announced Bandolier awards, totaling up to $57 million, and the positive traction this product line has experienced in the past twelve months. We also amended our credit facilities during the quarter, replacing the leverage and interest coverage ratios with minimum Adjusted EBITDA and liquidity requirements, changes which we believe are in the best interest of our shareholders and other stakeholders as they will enable us to invest in our long-term growth and create sustainable value."

"As previously stated, 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. “Our priorities remain growing the core Rubber Solutions segment, a renewed focus on core competencies in the Manufactured Products segment and a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets. We remain committed to our goal of growing AirBoss as a global market leader in the custom rubber compounding market and the industries which we serve."

¹ See Non-IFRS and Other Financial Measures.
² Debt as at March 31, 2024 and December 31, 2023 include lease liabilities of $13,642 and $13,890, respectively.

Financial Results

Consolidated net sales in Q1 2024 decreased by 11.6% to $103,490 compared with the first quarter of 2023 ("Q1 2023"). The decrease was primarily attributable to lower sales at both AirBoss Rubber Solutions ("ARS") and AirBoss Manufactured Products ("AMP"). Consolidated gross profit for Q1 2024 decreased by $7,764 to $14,173, compared with Q1 2023, driven primarily by volume at AMP and specifically in the defense business with additional softness experienced at the rubber molded products operations. Gross profit as a percentage of net sales decreased to 13.7% in Q1 2024 compared with 18.7% for Q1 2023, primarily due to reductions at AMP driven by volume and product mix, partially offset by improvements at Rubber Solutions. Adjusted EBITDA for Q1 2024 decreased by 58.2%, compared to the same period in 2023.

Financial Position

The Company retains a $150 million credit facility and a net debt to TTM Adjusted EBITDA ratio of 4.70x (from 3.30x at December 31, 2023).

Dividend

The Board of Directors of the Company has approved a quarterly dividend of C$0.035 per common share, to be paid on July 15, 2024 to shareholders of record at June 28, 2024.

Segment Results

In the Rubber Solutions segment, net sales for Q1 2024 decreased by 3.1% to $65,469, from $67,556 in Q1 2023. Volume was up 2.3% with increases in several sectors due to increased momentum in the mining and industrial sectors especially towards the end of the quarter. Tolling volume was down 23.2% while non-tolling volume was up 3.6%. Gross profit at Rubber Solutions for Q1 2024 increased by 27.9% to $11,033, from $8,625 in Q1 2023. The increase in gross profit was primarily the result of volume increases and product mix in addition to managing controllable overhead costs including additional overhead reductions and continuous improvement initiatives.

At Manufactured Products, net sales for Q1 2024 decreased by 26.2% to $42,341, from $57,399 in Q1 2023. The decrease was primarily due to decreases across most of the defense business products lines in addition to lower volumes in the rubber molded products operations, specifically in SUV and light truck platforms, driven by economic headwinds and softness which impacted production schedules across certain OEMs and Tier 1 suppliers in the quarter. Gross profit at Manufactured Products for Q1 2024 decreased to $3,140 from $13,312 in Q1 2023. This decrease was primarily the result of unfavourable volume and product mix in the defense business in addition to volume in the rubber molded products operations, partially offset by operational cost improvements and reduced overhead costs.

OVERVIEW

During Q1 2024, AirBoss maintained its focus on operational execution, aggressive deleveraging activities and the recently-announced strategic transition, despite continuing to deal with challenging economic headwinds that impacted each segment to varying degrees. The Company focused on risk mitigation plans in response to these economic challenges and managing costs with additional steps taken in Manufactured Products' defense business. This included amending our credit facilities to replace the leverage and interest coverage ratios with minimum Adjusted EBITDA and liquidity requirements until the end of 2024. As disclosed during Q1 2024, the Company completed a re-segmentation which included a shift in reportable segments commencing with results for the fourth quarter of 2023 ("Q4 2023") and the year ended December 31, 2023. AirBoss now reports results under two segments: (1) AirBoss Rubber Solutions, and (2) AirBoss Manufactured Products. 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).

ARS experienced progressive traction over the prior quarter and saw volumes bounce back in Q1 2024. This was in contrast to AMP which experienced continued softness in Q1 2024 in both the rubber molded products operations and the defense business. The rubber molded products operations at AMP were impacted by volume softness related to the original equipment manufacturers (OEMs) shuttering production in the current quarter as they rebalanced vehicle inventory levels. The defense business saw continued softness which carried over from Q4 2023, supporting the need for further overhead reductions to help mitigate the volume softness. The ability to recover in volumes in 2024 for each segment will remain subject to the ongoing challenges related to continued inflation pressure and ongoing global geopolitical challenges, and successful conversion of key opportunities.

ARS experienced improvements in most business lines compared to Q4 2023, and Q1 2024 was a strong quarter 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. Building on the traction experienced in Q1 2024, 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 continued softness in the rubber molded products operations as a result of OEMs shuttering production in the current quarter to rebalance vehicle inventory levels, and the ongoing impact from labor disruptions which impacted OEMs in the earlier part of the prior quarter. The business continued its focus on managing costs and a commitment to drive efficiencies and best-in-class automation, as well as diversification of its product lines into adjacent sectors. The defense business experienced continued softness across the product portfolio throughout the quarter. Management continued its focus on operational improvements and executed on additional cost cutting measures. In addition, the defense business continued to work with its key customers with a goal of leveraging opportunities aligned with its growth initiatives, subject to timing as delays in the conversion of these opportunities continued through the first quarter of 2024.

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.

AirBoss General and Special Meeting and Q1 Results Earnings Webcast

The Company's Annual and General Special Meeting for Shareholders will occur on May 9, 2024 at 9:00 am (EDT) at the Delta Hotel at 110 Erb St. W in Waterloo, Ontario. In addition to the formal shareholders' meeting, management will provide a webcast presentation including a discussion of Q1 2024 results.

For webcast access, please go online at https://airboss.com/AnnualGeneralMeeting2024. We recommend that viewers log in at least 15 minutes early before the meeting starts. If watching the meeting online, it is important to remain connected to the internet at all times during the meeting. It is each person’s responsibility to ensure connectivity for the duration of the meeting. The live webcast will include a facility for shareholders to enter questions for management.

For telephone access, please dial in at 1-800-319-4610 or 1-416-915-3239, access code: 55506. Callers should dial-in five to 10 minutes before the meeting starts and ask to join the call. When prompted, the access code should be provided.

AirBoss of America Corp.

AirBoss of America is a diversified developer, manufacturer and provider of 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 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, through AirBoss Defense Group. 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.

Non – IFRS and Other Financial Measures: This earnings release is based on consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) and 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 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 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; 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 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.sedarplus.com.

Investor Contact: investor.relations@airboss.com

Media Contact: media@airboss.com