NEWMARKET, Ontario, May 12, 2021 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (the “Company” or “AirBoss”) today announced strong first quarter performance as it has entered 2021 with continued momentum, as well as an increase in the quarterly dividend from C$0.07 per common share to C$0.10 per common share. The Company’s annual general and special meeting will be held on Thursday, May 13th, 2021, at 9:00 a.m. (EDT). Following the formal portion of the meeting, management will provide a presentation including a discussion of Q1 2021 results. In an effort to safeguard the health of its shareholders and given the current provincial guidelines on public gatherings and social-distancing related to the COVID-19 pandemic, the Meeting will be accessible via live webcast or by dialing in to the numbers provided later in this release.

Recent Highlights

($US except where otherwise noted)

• Increased dividend 43% to C$0.10 per share from C$0.07 per share;

• Increased Adjusted EBITDA by 47.9% to $14.4 million for the three-month period ended March 31, 2021 (“Q1 2021”) vs $9.7 million in the three month period ended March 31, 2020 (“Q1 2020”), with the increase driven primarily by a $7.3 million increase in gross profit, partially offset by a $4.0 million increase in corporate expenses related to the growth in the Company’s share price;

• Increased diluted EPS and adjusted diluted EPS² by $0.24 and $0.14 to $0.22 and $0.22 respectively, versus Q1 2020;

• Announced that AirBoss Defense Group (“ADG”) has agreed to acquire Blackbox Biometrics, developer of the Blast Gauge System of lightweight wearable blast overpressure sensors which have been outfitted on U.S. Special Forces, Army, and SWAT teams across the U.S.;

• Announced that ADG been awarded a $288 million contract by the U.S. Department for Health and Human Services (“HHS”) – Office of the Assistant Secretary for Preparedness and Response (“ASPR”) for the sale of nitrile patient examination gloves; and

• Announced that ADG was awarded a $23.0 million contract from U.S. Department of Defense to provide Extreme Cold Vapor Barrier Boots and Molded AirBoss Lightweight Overboots.

“I’m pleased to report another strong quarter of growth driven by continued performance and production efficiency by AirBoss Defense Group as well as increased volumes and sales within our Rubber Solutions and Engineered Products segments,” said Chris Bitsakakis, President and COO of AirBoss. “ADG’s successful delivery over the past year of our proprietary powered air purifying respirators (PAPRs) to FEMA and HHS, the latter of which we completed last month, enabled us to once again partner with HHS to supply a critical need, as we received a purchase order for up to $288 million worth of nitrile rubber gloves for use in hospitals and health care settings, with potential for a similar follow-on order in the future. However, we expect delivery on the HHS glove order to occur primarily in the second half of this year, given the ongoing demand for nitrile rubber gloves both domestically and globally. We intend to identify and compete for similar contracts this year and in future years as well.”

“During the quarter, ADG also agreed to acquire Blackbox Biometrics, developer of the Blast Gauge System of lightweight wearable blast overpressure sensors. We expect to complete this acquisition in the near future and continue to see strong potential for broader rollout of the Blast Gauge system, notably on military personnel, beginning in 2022. In addition, ADG was awarded a $23 million contract from the U.S. Department of Defense to provide protective extreme cold weather boots, continuing our decades-long position as a preferred supplier of various protective rubber wearables. We expect these awards to augment ADG’s traction and momentum and help offset any temporary near term impact on our other segments stemming from COVID-19 related impacts on businesses in North America, including customers impacted by global supply chain challenges.”

“We continue to be positioned in 2021 to drive long term profitability. We are also pursuing new contract opportunities not reflected in our guidance and continue to assess potential acquisitions that would accelerate our growth strategy.”

Financial Results

AirBoss increased consolidated net sales in the first quarter of 2021 (“Q1 2021”) by 13.9% to $107,329 compared with Q1 2020, due largely to the substantial completion of the HHS contract, supported by the continued integration of Critical Solutions International (“CSI”) into the ADG segment. This increase was further supported by stronger demand in the Rubber Solutions segment, and higher volumes in Engineered Products despite ongoing challenges due to the impact of the COVID-19 pandemic.

Consolidated gross profit for Q1 2021 increased by $7,294 to $25,775, compared with Q1 2020, driven by higher volume from ADG partially offset by lower margins in the Rubber Solutions and Engineered Products segments. Gross profit as a percentage of net sales increased to 24.0% from 19.6% compared with the same period in 2020. These increases were primarily as a result of the large PAPR contract award from HHS, supported by continued management of overhead costs in both the Rubber Solutions and Engineered Products segments and government-directed wage subsidies to support businesses impacted by COVID-19.

Adjusted EBITDA for Q1 2021 increased by 47.9% to $14.4 million, compared to $9.7 million in Q1 2020, with the increase driven primarily by a $7.3M increase in gross profit, partially offset by a $4.0M increase in expenses related to the growth in the Company’s share price.

Financial Position

The Company remains in strong financial condition. With a $150 million credit facility and a net debt to TTM EBITDA ratio of 0.01x at March 31, 2021, the Company continues 2021 with significant resources with which to pursue organic and acquisitive growth opportunities.

Dividend

The Board of Directors of AirBoss of America Corp. (the “Company”) has approved a quarterly dividend of C$0.10 per common share, to be paid on July 15, 2021 to shareholders of record at June 30, 2021. This represents an increase of 43% to C$0.10 per share from C$0.07 per share.

Segment Results

In the Rubber Solutions segment, net sales increased by 8.6% to $37,216 in Q1 2021, compared with Q1 2020. Volume was up 5.8% with increases across the majority of sectors with and continued ramp up of most customer’s operations despite residual softness due to the COVID-19 pandemic. Tolling volume was down 4.1% while non-tolling volume was up 9.2%. Volumes and sales improved progressively month over month during the quarter. Gross profit in the Rubber Solutions segment for Q1 2021 decreased by 11.8% to $5,209, compared with Q1 2020. This was primarily a result of increased raw material and logistics costs despite higher non- tolling volumes, partially offset by managing overhead costs and supported by government-directed wage subsidies. Gross profit as a percentage of net sales Q1 2021 was 14.0%, down from 17.2% in Q1 2020.

At Engineered Products, net sales for Q1 2021 increased by 7.6%, to $32,357, compared with Q1 2020. The increase was due to stronger volumes in the SUV, light truck and mini-van platforms in addition to continued production of certain molded defense products. Compared to Q1 2020, volume and sales improved progressively month-over-month as the automotive sector continued to perform strongly despite some challenges with global electronic chip shortages combined with raw material shortages in addition to freight and logistics bottlenecks. Gross profit in the Engineered Products segment for Q1 2021 was $(280), down from $1,921 in Q1 2020. This was primarily a result of higher labor, material and logistics costs despite higher volumes, partially offset by continued focus on operational cost containment and managing overhead costs.

In the AirBoss Defense Group segment, net sales increased by 28.5%, to $45,062 in Q1 2021, compared to Q1 2020. The increase was primarily the result of the large contract from HHS, which was substantially completed during the quarter as part of the U.S. government's response to the COVID-19 pandemic. In addition, there were higher sales related of masks and boots related to other defense customers. Gross profit at AirBoss Defense Group for Q1 2021 increased by 95.6% to $20,846 (46.3% of net sales), up from $10,657 (30.4% of net sales) in Q1 2020. The increase was primarily due to higher volume associated with new business awards, while the Canadian operations were supported by government-directed wage subsidies.

Overview

The first quarter has continued to advance the Company's financial position despite the continued impact of the COVID-19 pandemic, now in its third wave. The third wave has created challenges globally, despite the staggered roll out of vaccines slowly allowing for a measured reopening of businesses and economies. Despite the global challenges continuing to evolve at a rapid rate, AirBoss has continued to build on its record year of transformation, galvanizing its position in the PPE, health care and survivability sectors. Despite the extensive challenges associated with COVID-19, the Company has remained focused on supporting its customers, employees and stakeholders during the pandemic, ensuring the highest standards for safety at all of its locations.

This was a strong quarter for AirBoss compared to the same period in 2020, and the Company is poised for continued success during the remainder of 2021. The continued recovery in volumes will be subject, at least in part, to the continued management of stable and sustained operations of businesses globally, which could be difficult to predict, especially in light of the current COVID-19 impacts globally and across North America, which remains a key market for the Company. Supply issues continue to present challenges due to global freight constraints, material availability issues and increasing demand outpacing traditional supply models. Thus far, a combination of domestic sourcing, advanced buying tactics and the development of alternative sources have resulted in the mitigation of the most significant risks associated with these challenges, however we fully expect and have anticipated further constraints on our supply chain throughout 2021.

AirBoss has been able to take advantage of opportunities supporting continued demand for PPE which provided a strong financial backdrop to offset the COVID-19 related impact on the Rubber Solutions and Engineered Products segments. In addition to the US$121 million order for PAPRs from HHS, awarded in the second quarter of 2020, which was substantially completed in the quarter, ADG has continued to build momentum as it was awarded a contract for an initial order worth up to US$288 million by HHS – ASPR for the sale of nitrile patient examination gloves. HHS has provided ADG authorization to proceed immediately on this initial order.

AirBoss Defense Group also announced that it has agreed to acquire Blackbox Biometrics, developer of the Blast Gauge System of lightweight wearable blast overpressure sensors which have been outfitted on U.S. Special Forces, Army, and SWAT teams across the U.S.. In addition, ADG was awarded a $23.0 million contract from the U.S. Department of Defense to provide Extreme Cold Vapor Barrier Boots and Molded AirBoss Lightweight Overboots. These further awards are expected to help augment ADG’s traction and momentum and are expected to help offset possible further COVID-19 related weakness which may still impact the Rubber Solutions and Engineered Products businesses during the first part of 2021.

AirBoss saw continued progress in its operations that carried through the quarter, despite, many customers, including automakers, tire makers and related suppliers, struggling with supply chain issues including freight delays out of Asia driven by the lack of available containers, increased demands on raw materials as global economies recover, unprecedented increases on raw material pricing driven by supply constraints/availability and electronic chip shortages. Both the Rubber Solutions and Engineered Products segments saw sustained demand that exceeded volumes for the same quarter in the prior year. As stated previously, timing for a sustained and full recovery in volumes will be subject, at least in part, to the continued evolution of COVID-19 across North America, specifically in the U.S. which seems to be progressing well on vaccination deployment.

In the case of the Engineered Products segment, the Company continued to focus on supporting the volume increase realized in the automotive sector and specifically on AirBoss' platforms of SUV, light truck and mini-van platforms while managing variable costs, focused on sustaining a stable hourly workforce. The Company's commitment to driving efficiencies and best in class automation was further evidenced as Engineered Products commenced installation of new injection presses to support its long term transformation through automation and continuous improvements as well as the diversification of its product lines into sectors adjacent to the automotive space. Management has also continued to sustain the production of certain molded defense products at the Auburn Hills, MI facility.

For the Rubber Solutions segment, areas of investment continued to progress with the successful implementation of the automated small ingredient weighment system which is running at steady capacity. While this segment saw progressive traction this quarter, raw material price increases coupled with international freight constraints proved challenging on the supply chain. The Company development and sales in colored rubber continued to grow in line with the margin expansion strategy with new customers while continuing to develop new compounds, proprietary compounds, and continuous improvement on existing compounds. The continued focus on operational excellence supported production of a broader array of compounded products (white and color), as well as provided enhanced flexibility in attracting and fulfilling new business. The Company has also made further inroads in utilization of the tilt mixer, which should support the production of increasingly specialized, higher margin compounds, further diversifying AirBoss’ offering and enhancing penetration with both existing and new customers. In Kitchener, AirBoss continued to invest in its R&D expertise and lab capital to support enhanced collaboration with customers and better reflect the Company’s focus on innovative R&D and proprietary technical solutions.

Management believes that the future sourcing of personal protective equipment for first responders and healthcare professionals will continue to be become a necessity for front line workers in response to the COVID-19 pandemic. As a part of overall future emergency preparedness planning, management expects a more unified and streamlined approach aimed at reducing complexity, shortening acquisition times and building strategic stockpiles, compared to the fragmented and complex distributor relationship arrangements seen previously. This is expected to be a future driver for the business and ADG is modifying its business development approach accordingly. Beyond this, AirBoss continues to target traditional defense contracts, potentially valued at hundreds of millions of dollars globally over the next several years, for its broader portfolio of survivability solutions. This includes opportunities for its low-burden mask as well as next-generation products like the Blast Gauge™ blast overpressure solution, Bandolier and Rollover Detection Warning System (RDWS).

The Company remains in a sound financial position. The strong performance of ADG with continued support from Rubber Solutions has continued to support increased balance sheet strength and will provide management enhanced flexibility to execute opportunistically on both organic and inorganic growth initiatives, particularly as potential acquisition targets may lack the balance sheet strength to weather a prolonged downturn. AirBoss believes it is well positioned to further leverage its significant recent investments in innovation, capacity expansion, and innovative solutions as industry conditions improve.

Despite the continued headwinds associated with COVID-19, the Company’s longer-term priorities remain intact and include:

1. Growing the core Rubber Solutions segment by positioning it as a specialty supplier of choice in the consolidating North American market, with a growing focus on building defensible leadership positions in selected compounds;

2. Capitalizing on ADG’s enhanced scale and capabilities to pursue an array of growth and value-creation opportunities in the broader survivability solutions segment serving both defense and first responder markets;

3. Driving improved performance from Engineered Products through a combination of disciplined cost containment, client relationship expansion, new product development and sector diversification; and

4. Targeting additional acquisition opportunities across the business with a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets.

As before, management remains dedicated to the creation of long-term value for all stakeholders through a combination of strategic initiatives that both drive organic growth and support possible transactions.

2021 Guidance

AirBoss reiterated its outlook for full-year 2021, as previously provided on March 16, 2021:

• Revenues in the range of $630 to $710 million, reflecting growth of approximately 25% – 41% over 2020

• Adjusted EBITDA² margin in the range of 15.0% – 15.5%

• Adjusted Earnings per diluted share² of $1.80 to $2.19, reflecting growth of approximately 24% – 51% over 2020
  

The Company’s Guidance is based on its current outlook, but excludes the potential follow-on portion of the Company’s nitrile rubber glove contract with HHS and any other significant new contracts or significant M&A. For important information on risk factors related to 2021 Guidance, refer to “AirBoss Forward Looking Information Disclaimer” later in this news release.

Annual General and Special Meeting and Q1 Results Earnings Webcast

The Company’s Annual General and Special Meeting for Shareholders will occur May 13, 2021 at 9:00 a.m. (EDT). Following the formal portion of the Meeting, management will provide a webcast presentation including discussion of Q1 2021 results.

For webcast access, please log-in online at https://bit.ly/3ePS6HG (Microsoft Teams broadcast). We recommend that viewers log in at least 15 minutes 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.

Investor Contact: Chris Bitsakakis, President or Gren Schoch, CEO at 905-751-1188.

Media Contact: media@airboss.com

About Airboss

AirBoss of America is a leading and 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 three divisions. AirBoss Defense Group is a global leader in personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Engineered Products is a supplier of innovative anti-vibration solutions to the North American automotive market and other sectors. The Company’s shares trade on the TSX under the symbol BOS. Visit www.airboss.com for more information.

Note (1): Term loan and other debt as at March 31, 2021 and December 31,2020 include lease liabilities of $17,561 and $13,482, respectively.

Note (2): Non – IFRS Financial Measures: EBITDA, Adjusted EBITDA, Adjusted profit attributable to owners of the Company, Adjusted earnings per share, Adjusted earnings per diluted share, Free cash flow and Net debt are directly derived from the consolidated financial statements but do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measure presented by other issuers. The Company discloses these terms for use in financial measurements made by interested parties and investors to monitor the ability of the Company to generate cash from operations for debt service, to finance working capital and capital expenditures, potential acquisitions and to pay dividends. 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. Reconciliations of profit to EBITDA and Adjusted EBITDA, Adjusted profit attributable to owners of the Company, and Adjusted earnings per share, cash provided by operations to Free cash flow and loans and borrowings to Net debt, are presented below.

Reconciliations of Non-IFRS Measures ($US except where otherwise noted)

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” 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; 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 and potential litigation; ability to obtain financing on acceptable terms; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. COVID-19 could also negatively impact the Company’s operations and financial results in future periods. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. As such, it is not possible to estimate the impacts COVID-19 will have on the Company’s financial position or results of operations in future periods. While the direct impacts of COVID-19 are not determinable at this time, the Company has a credit facility that can provide financing up to $150,000. 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.sedar.com.