AirBoss reports first quarter results and declares dividend

Newmarket, ON – AirBoss of America Corp. announced its first quarter 2024 results. The Company’s annual general and special meeting was 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.

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.”

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.

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).

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.

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.