NEWMARKET, Ontario, Nov. 06, 2024 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX: ABSSF) (the “Company” or “AirBoss”) today announced its third quarter 2024 results. The Company will host a conference call and webcast to discuss the results on November 7^th at 9:00 a.m. (ET), the details of which are outlined below. All dollar amounts are shown in thousands of United States dollars ("US $" or "$"), except per share amounts, unless otherwise noted.

Recent Highlights

• Commenced shipments in the third quarter of 2024 ("Q3 2024") under AirBoss Manufactured Products' ("AMP") defense business’ recently announced contract, valued at up to $45 million, to provide its Bandolier multipurpose energetic system to a NATO partner nation;
• AMP's defense business was awarded a contract worth up to $84 million by the U.S. Department of Health and Human Services ("HHS") for the supply of protective isolation gowns. HHS subsequently increased the funded portion of this award from $59M to $69.3M; and
• Declared a quarterly dividend of C$0.035 per common share.
  

"The isolation gown award from HHS and the commencement of shipments under the previously announced Bandolier contract are both very encouraging signs for AMP's defense business. We believe that the increase in new contract awards and solicitations in the last few quarters point to a recovery from the ongoing softness experienced by the Company in the quarter and will have a positive impact for our defense products business, in the remainder of 2024 and into 2025 and beyond," said Chris Bitsakakis, President and Co-CEO of AirBoss. "The Company continued to feel the impact of the ongoing industrial economic slowdown occurring in North America during the quarter, and we remain focused on operational execution and cost management to mitigate the effect of these challenges. We also continued to focus on our strategy to broaden and grow ARS while refocusing on core product lines at AMP."

"We continue to focus on our strategic transition, which we believe will help prioritize investments, growth and drive long-term shareholder value," added Gren Schoch, Chairman and Co-CEO of AirBoss. “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."

Financial Results

Consolidated net sales for Q3 2024 decreased by 5.9% to $96,204 compared with the third quarter of 2023 ("Q3 2023") and for 2024 year-to-date decreased by 11.5% to $295,061 compared with 2023 year-to-date. The decreases were primarily due to lower volumes at AirBoss Rubber Solutions ("ARS") and lower sales at AMP's rubber molded products business partially offset by higher sales in the defense products business.

Consolidated gross profit for Q3 2024 increased by $2,298 to $16,063, compared with Q3 2023, driven by improved volume and mix at AMP, specifically in the defense business, partially offset by additional softness experienced at the rubber molded products operations, along with softness across the ARS customer sectors. Gross profit as a percentage of net sales increased to 16.7% in Q3 2024 compared with 13.5% for Q3 2023, primarily due to improvements at AMP's defense products business and product mix at ARS, partially offset by softer margin percent at AMP's rubber molded products operations. Consolidated gross profit for 2024 year-to-date decreased by $14,589 to $38,699 compared with 2023 year-to-date, driven primarily by volume reductions at AMP and ARS, along with a $6,049 inventory write-down from gowns and gloves, partially offset by margin expansion at ARS. Gross profit as a percentage of net sales decreased to 13.1% for 2024 year-to-date compared with 16.0% for 2023 year-to-date. This decrease was primarily driven by a $6,049 inventory write-down related to its inventory of nitrile gloves and medical gloves in Q2 2024, in addition to a sales decline at AMP's defense and rubber molded products operations driven by volume partially offset by operational improvements and margin expansion at ARS.

Adjusted EBITDA for Q3 2024 decreased by 11.4%, compared to the same period in 2023 and decreased by 26.1% for 2024 year-to-date, compared with 2023 year-to-date.

Financial Position

The Company retains a $150 million credit facility and a net debt to TTM Adjusted EBITDA ratio of 4.67x (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 January 15, 2025 to shareholders of record at December 31, 2024.

Segment Results

In the Rubber Solutions segment, net sales for Q3 2024 decreased by 6.7% to $54,532, from $58,458 in Q3 2023 and decreased by 7.7% to $179,002 for 2024 year-to-date, from $193,931 for 2023 year-to-date. For the quarter, volume decreased by 17.5% with decreases in most sectors. Year-to-date, volume was down 11.5% with decreases across the majority of sectors and continued signs of softness with many customer's operations. For the quarter, tolling volume was down 74.3% while non-tolling volume was down 8.2%. Year-to-date, tolling volume was down 65.0% while non-tolling was down 6.1%. Gross profit at Rubber Solutions for Q3 2024 was consistent with Q3 2023 and for 2024 year-to-date increased by 9.1% to $29,562 from $27,102 for 2023 year-to-date, primarily as a result of product mix improvements as the Company pivots away from tolling and focuses on more specialty compounds while managing controllable overhead costs.

At Manufactured Products, net sales for Q3 2024 decreased by 5.7% to $45,507, from $48,248 in Q3 2023 and by 18.8% to $128,528, from $158,261 for 2024 year-to-date. For the quarter, the decrease was mainly in the rubber molded products business offset by improved sales in the defense products business. Specifically, the rubber molded products business had lower volumes in SUV and light truck platforms, driven by economic headwinds and increased vehicle inventories which impacted production schedules across certain OEMs and Tier 1 suppliers in the quarter. Year-to-date, the decrease was due to softness in the defense product lines and weaker volumes in the rubber molded products business, specifically in the SUV and light truck platforms compared to the same period in the prior year. Gross profit at Manufactured Products for Q3 2024 increased to $7,803 from $5,560 in Q3 2023 and decreased to $9,137 for 2024 year-to-date from $26,186 for 2023 year-to-date. For the quarter, the increase was primarily the result of improvements in the defense products business, operational cost improvements and reduced overhead costs, partially offset by unfavorable volume and product mix in the rubber molded products operations. The year-to-date decrease was primarily a result of unfavorable volume and product mix in the defense product lines in addition to the $6,049 inventory write-down related to its inventory of nitrile gloves and medical gowns in Q2 2024. In addition, there was pronounced softness in the rubber molded products operations as the OEMs continue to manage automobile inventory levels resulting in lower vehicle production, partially offset by a continued focus on controllable operational cost containment and overhead cost reductions.

Overview

AirBoss continued to focus on operational execution and managing working capital in each of its segments during Q3 2024, despite ongoing economic headwinds that impacted each segment. The Company also continued its risk mitigation plans in response to these economic challenges, managing costs while focusing on continuous improvements to help offset some of the pronounced softness experienced in both AirBoss Rubber Solutions ("ARS") and in the rubber molded products business within AMP. Management expects volume recovery to commence in early 2025, subject to ongoing challenges related to inflationary pressure and the global geopolitical climate, as well as successful conversion of key opportunities.

Although ARS had a strong quarter in terms of margin expansion, relative to the third quarter of 2023 ("Q3 2023"), the segment experienced additional softness compared to the second quarter of 2024 (“Q2 2024") primarily driven by volume reductions across most sectors and saw reduced volumes compared to Q3 2023. Despite strong performance during the earlier part of 2024, there was pronounced softness carried over from Q2 2024 as sales were impacted by customers focused on reducing inventory levels. The segment remains committed to executing on its strategy to deliver strong results with specialized products, expanded production of a broader array of compounds (white and colour), and enhanced flexibility in attracting and fulfilling new business through identified synergies and margin expansion. As a segment, ARS continued to invest in research and development to support enhanced collaboration with customers.

AMP experienced continued softness in Q3 2024 in the rubber molded products business with some progress generated in the defense business. The rubber molded products operations were impacted by continued volume softness related to the original equipment manufacturers (OEMs) shuttering production to rebalance vehicle inventory levels which has been ongoing throughout 2024. 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 some positive traction during Q3 2024 which is expected to continue into next year, supported by the commencement of deliveries on some previously announced contracts and additional overhead reductions carried out earlier this year to help mitigate volume softness. Management also continued its focus on operational improvements during the quarter and continued to work with its key customers with a goal of leveraging opportunities aligned with its growth initiatives.

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. Executing the 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, November 7, 2024. Please go to https://www.gowebcasting.com/13695 or dial in to the following numbers: 1-800-898-3989 or 416-406-0743, access code 3575261#. Please connect approximately 10 minutes prior to 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.

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 the second quarter of 2024, the Company recorded a $6,049 inventory provision related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing. Costs related to this provision are included in Cost of Sales on the Statement of Profit and Loss.

In 2023 and the second quarter of 2024, the Company completed a series of staff reductions. Costs related to this restructuring activity are included in Other expenses on the Statement of Profit and Loss.

In late 2022, the Company negotiated improved arrangements with AMP's rubber molded products business' key suppliers and customers to improve profitability. Professional fees related to these activities are included in General and administrative expenses 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 the 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; global political uncertainty; 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, without limitation, the recently announced strategic transition; 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