AirBoss of America reports fourth quarter and full year results

Newmarket, ONT- AirBoss of America Corp. announced its fourth quarter and annual results. The company 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 labor 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.”

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.

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).

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.

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.