MONTREAL, March 11, 2020 (GLOBE NEWSWIRE) -- IPL Plastics Inc. (“IPL Plastics”, “IPLP”, the “Group” or the “Company”) (TSX: IPLP) today reported financial results for the fourth quarter and Fiscal year ended December 31, 2019 (“Q4 2019” and “Fiscal 2019”).
All financial information is in U.S. dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See “Non-IFRS Financial Measures” below.
Results for Fiscal 2019 and Q4 2019 reflect an overall improvement in operating and financial performance as measured by Net Income, Adjusted EBITDA and a significant improvement in net cash flows from operating activities.
Key Highlights
- Net income was $13.9 million for Fiscal 2019, an increase of $12.1 million from $1.8 million for Fiscal 2018. Net loss for Q4 2019 was $3.1 million, compared with the net loss for Q4 2018 of $1.8 million;
- Adjusted EBITDA was $91.5 million in Fiscal 2019 compared to $78.0 million in Fiscal 2018, an increase of $13.5 million or 17.2%. Adjusted EBITDA was $18.4 million in Q4 2019 compared to $17.7 million in Q4 2018, an increase of $0.7 million or 4.4%;
- Adjusted EBITDA margins have improved overall, from 11.9% in Fiscal 2018 to 15.1% in Fiscal 2019, with significant individual improvements in each of the divisions. Q4 2019 divisional Adjusted EBITDA margins (as compared to Q4 2018): Large Format Packaging and Environmental Solutions (“LF&E”) margins improved to 13.2% in Q4 2019, from 9.7% in Q4 2018, Consumer Packaging Solutions (“CPS”) margins improved from 14.1% in Q4 2018 to 14.6% in Q4 2019 and Returnable Packaging Solutions (“RPS”) Adjusted EBITDA margin was 19.1% for Q4 2019, an increase of 3.1% from 16.0% in Q4 2018;
- Revenue decreased by 8.0% to $605.1 million in Fiscal 2019 (Fiscal 2018: $657.8 million), with a decline of 16.0% in revenue in Q4 2019 compared to Q4 2018;
- The revenue decrease was driven by the effect of passing through resin price reductions, a decrease in automotive bin manufacturing in the RPS division, reduced demand from our largest CPS European customer (electronics sector) and a reduction in environmental container rollouts in the LF&E division, partially offset by the contribution from the acquisition of Loomans, price increases and volume growth in the CPS division in North America;
- Net cash flows from operating activities improved by $70.6 million from $18.7 million for Fiscal 2018 to $89.3 million for Fiscal 2019;
- Net Debt has increased from $210.5 million at December 31, 2018 to $297.4 million at December 31, 2019 primarily due to the acquisition of Loomans and the recognition of lease liabilities on adoption of IFRS 16 Leases which amounted to $22.4 million as at December 31, 2019. Net Debt has reduced by $45.5 million since June 30, 2019;
Commenting on the results, Alan Walsh, CEO of IPL Plastics said “Our ongoing focus on rebuilding margins and enhancing operational performance is continuing to deliver for the Company. While our results for the last calendar year reflect a very strong improvement in profitability and cash generation, we expect to sustain that progress into 2020 with further improvements in performance.
Trading across all our divisions is satisfactory to date in 2020 and we expect top line revenue growth in Fiscal 2020 underpinned by new contract wins and a broadly stable resin outlook.
We recently consolidated all of our individual brands and websites under the “IPL” umbrella to strengthen our customer relationships and market presence.
In addition, we have also published our 2019 Sustainability Report today which demonstrates that our journey to becoming a global leader in returnable, reusable and recyclable packaging solutions is now well progressed.”
Fourth Quarter and Fiscal 2019 Financial Results
| ($million, unless otherwise specified) | Q4 2019 | Q4 2018 | % change | Fiscal 2019 | Fiscal 2018 | % change | ||||
| Revenue | 136.1 | 162.0 | (16.0 | %) | 605.1 | 657.8 | (8.0 | %) | ||
| Gross Profit | 22.9 | 25.7 | (10.9 | %) | 118.9 | 109.2 | 8.9 | % | ||
| Adjusted EBITDA(1) | 18.4 | 17.7 | 4.4 | % | 91.5 | 78.0 | 17.2 | % | ||
| Net Income | (3.1 | ) | (1.8 | ) | (72.2 | %) | 13.9 | 1.8 | NM(2 | ) |
| Adjusted Net Income(1) | 1.6 | 5.7 | (71.9 | %) | 26.2 | 29.7 | (11.8 | %) | ||
| Diluted Earnings Per Share (in $) | (0.06 | ) | (0.03 | ) | (50.0 | %) | 0.25 | 0.04 | NM(2 | ) |
| Pro Forma Adjusted Diluted Earnings Per Share (in $)(1) | 0.03 | 0.11 | (72.7 | %) | 0.48 | 0.55 | (12.7 | %) | ||
| Net Cash Flows from Operating Activities | 54.0 | 21.8 | NM(2 | ) | 89.3 | 18.7 | NM(2 | ) | ||
| Adjusted Free Cash Flow(1) | 47.0 | 23.0 | NM(2 | ) | 68.4 | 14.0 | NM(2 | ) | ||
(1) Non-IFRS Financial Measure: A reconciliation to the most directly comparable measure calculated in accordance with IFRS is presented below.
(2) Not meaningful (“NM”)
Net income was $13.9 million for Fiscal 2019, an increase of $12.1 million from $1.8 million for Fiscal 2018 driven primarily by an improved operating performance offset by increased finance costs primarily due to the acquisition of Loomans and an increased income tax charge.
Diluted Earnings per Share increased by 21 cent to $0.25 in Fiscal 2019, compared with $0.04 in Fiscal 2018. Diluted Earnings per Share decreased by 3 cent to ($0.06) in Q4 2019, compared with ($0.03) in Q4 2018.
Adjusted Net Income decreased by $3.5 million to $26.2 million for Fiscal 2019 when compared to Fiscal 2018 and by $4.1 million to $1.6 million in Q4 2019 compared to Q4 2018. Pro Forma Adjusted Diluted Earnings per Share was $0.03 for Q4 2019, down 8 cent on Q4 2018, and was $0.48 for Fiscal 2019 down 7 cent on Fiscal 2018
Gross profit for Fiscal 2019 increased by 8.9% to $118.9 million, compared to $109.2 million for Fiscal 2018. Gross profit margin for Fiscal 2019 was 19.7%, compared to 16.6% in Fiscal 2018. Adjusted EBITDA was $91.5 million for Fiscal 2019, compared to $78.0 million for Fiscal 2018, while Adjusted EBITDA margin was 15.1% for Fiscal 2019 up from 11.9% for Fiscal 2018.
At a divisional level, Adjusted EBITDA margin improved to 13.2% in Q4 2019, from 9.7% in Q4 2018 in the LF&E division, from 14.1% in Q4 2018 to 14.6% in Q4 2019 in the CPS division, and from 16.0% in Q4 2018 to 19.1% for Q4 2019, an increase of 3.1%. in the RPS division. The increase in Adjusted EBITDA was achieved despite a reduction in revenue during Q4 2019 and was driven primarily by the decreases in resin input costs and increased resin savings, other operational improvements, contribution from the acquisition of Loomans and the positive impact resulting from the adoption of IFRS 16 Leases.
Revenue was $605.1 million in Fiscal 2019 compared to $657.8 million in Fiscal 2018, a decrease of $52.7 million or 8.0%. The decrease is driven primarily by negative foreign exchange translation impact from the strengthening U.S. dollar of approximately $12.6 million, reduced demand from CPS’ largest European customer (electronics sector), passthrough of lower resin prices, a reduction in environmental container rollouts in the LF&E division and the impact of weather on agricultural bin sales and delays in the rollout of the automotive bin contract to the primary automotive bin manufacturer in the RPS division, partially offset by the contribution of $37.7 million in Fiscal 2019 from the acquisition of Loomans, continued organic volume growth in the CPS business in North America and price increases across all divisions.
Revenue in the LF&E segment was $281.5 million in Fiscal 2019 ($181.4 million in North America and $100.0 million in Europe), a decrease of $39.1 million or 12.2% on the comparative period in Fiscal 2018. The revenue decline of $27.9 million for LF&E in the North American market was primarily attributable to reductions in sales volumes and negative foreign exchange impact partially offset by the positive impact of a general selling price increase implemented in the second half of Fiscal 2018. The European business contributed revenue of $100.0 million in Fiscal 2019, compared with $111.2 million in Fiscal 2018, a decrease of $11.1 million driven by the negative foreign exchange translation impact from the strengthening U.S. dollar and a reduction in new environmental container rollouts in Fiscal 2019 when compared with a particularly strong year for environmental container tenders in Fiscal 2018, partially offset by the positive impact of a selling price increase and organic volume growth in the bulk packaging category.
Revenue in the RPS division was $92.7 million in Fiscal 2019, a decrease of $33.5 million from $126.2 million in Fiscal 2018. The decrease in the RPS business is primarily driven by the delays experienced in securing agricultural bin sales due to amongst other factors, the severe adverse weather conditions in the U.S., buying patterns of the Washington apple market, and the reduction in sales of automotive bins. The reduction in the automotive and agricultural product areas was offset by volume growth of the MacroTrac product.
Revenue in the CPS segment was $212.4 million in Fiscal 2019 ($140.2 million in North America and $72.2 million in Europe), an increase of $25.6 million or 13.7%. The increase is primarily driven by the contribution of $37.7 million from the acquisition of Loomans to our CPS business in Europe and increased sales volumes in our food packaging products, offset by a reduction in demand from CPS’ largest European customer (electronics sector). The growth in the North American market is primarily attributable to volume growth in the existing business and general price increases offset by the impact of reduced revenue due to the contractual passthrough of lower resin prices and the unfavorable impact due to foreign exchange rate movements in Fiscal 2019 compared with Fiscal 2018.
Net cash flows from operating activities improved by $70.6 million from $18.7 million for Fiscal 2018 to $89.3 million for Fiscal 2019. Similarly, there was an increase of $32.2 million from $21.8 million to $54.0 million from Q4 2018 to Q4 2019. Adjusted Free Cash Flow improved by $54.3 million from $14.0 million for Fiscal 2018 to $68.4 million in Fiscal 2019 (from $23.0 million for Q4 2018 to $47.0 million for Q4 2019
Net Debt has increased from $210.5 million at December 31, 2018 to $297.4 million at December 31, 2019 primarily due to the acquisition of Loomans and the recognition of lease liabilities on adoption of IFRS 16 Leases which have a balance as at December 31, 2019 of $22.4 million. Net Debt has reduced by $45.5 million since June 30, 2019.
Outlook
Financial results in Fiscal 2019 while considerably improved on Fiscal 2018 were adversely impacted by, amongst other factors a reduction in project based revenues due to a reduction in 2019 of environmental container tenders and materials handling container orders, negative foreign exchange impacts from the strengthened US dollar, third party contractual issues affecting the rollout of automotive bins and reduced demand from the Company’s largest CPS European customer (electronics sector).
The U.S. dollar strengthened in Fiscal 2019 when compared to the Canadian dollar, Pound Sterling and euro giving rise to adverse impacts on revenue and Adjusted EBITDA in Q4 2019 and full year Fiscal 2019 when compared with the same periods in 2018. Due to macro factors such as global unrest and conflict, trade negotiations, the final agreed terms of Britain’s exit from the European Union and other uncertainties, it is expected that foreign currency volatility will continue to impact results during 2020.
In North America, average IHS resin index prices for polypropylene were 19.9% lower in Q4 2019 compared with Q4 2018 while HDPE polyethylene prices reduced by 5.9% when compared with Q4 2018. In Europe, average ICIS resin index prices for polypropylene and polyethylene were 12.9% and 12.4% lower respectively in Q4 2019 compared with Q4 2018. The near-term outlook is that, notwithstanding a 4 cent increase in North America in the price of polyethylene in January 2020 and possible further upward price pressures in Q1 2020 for both polyethylene and polypropylene, pricing for the remainder of the year is forecast to be broadly in line with closing 2019 levels. In North America, the IHS resin price per pound of polypropylene and polyethylene at the beginning in January 2020 is 14.6% lower and 1.2% higher respectively when compared with the price as of January 2019. In Europe the ICIS resin price per ton of polypropylene and polyethylene at the beginning in January 2020 is 12.3% and 10.3% lower when compared with the price as of January 2019.
The Company continues to monitor progress on resolving the issues which recently caused disruption to the Canadian rail network. The Company has two manufacturing plants located in Canada, Saint Damien (Quebec) and Edmundston (New Brunswick), both of these plants rely heavily on the Canadian rail network. To-date, the disruption to the Canadian network has not materially adversely impacted our operations.
While we have not yet experienced any direct impact of the outbreak of the coronavirus (COVID-19) on our operations and more specifically at our manufacturing facility located in Shanghai (China) which primarily serves our largest CPS customer (electronics sector), we are continuing to monitor developments of the epidemic, which continues to impact an increasing number of countries. The ability of governments and medical agencies to contain the spread of the COVID-19 virus will be important in preventing disruptions to customer demand, our supply chain, production activities and distribution of finished product to our customers. We continue to work closely with operational management across the organization, ensuring that policies, procedures and plans are in place to help minimize the negative impact on the business.
The Company expects top-line revenue growth to recover in the second half of Fiscal 2020 underpinned by a number of contractual wins secured by the CPS division in North America. In LF&E, the Company expects a pick-up in sales volumes of both material handling products and environmental bins as well as some additional new contractual wins to support revenue growth in Fiscal 2020. Trading conditions and market dynamics for our extensive range of bin and MacroTrac products is expected to support growth in the RPS division in Fiscal 2020.
Management is focused on delivering an overall improvement in Adjusted EBITDA in Fiscal 2020 and sustaining in Fiscal 2020 the improvement in Adjusted Free Cash Flow generation delivered in Fiscal. This goal is supported by the expectation of top line revenue growth, continued focus on operational efficiencies, completion of the significant capital expenditure program in 2019, further advances in procurement strategies and a stabilized resin pricing environment.
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s consolidated financial statements and accompanying notes for the year ended December 31, 2019 and related Management’s Discussion and Analysis (“MD&A”) are available under the Company’s profile on SEDAR at www.sedar.com and in the Investor Relations section of the Company’s website at www.iplglobal.com
Conference Call
Management will host a conference call for analysts and investors on Wednesday, March 11, 2020 at 6:00 pm (EST). The dial-in numbers for participants are 1-866-996-7190 in North America and 1-800-902189 in Ireland and the Conference ID is 4588901. Presentation slides to be referenced on the conference call will be available prior to the call on the Company’s website at www.iplglobal.com.
A replay of the call will be available until Thursday, March 19, 2020. To access the replay, call 1-855-859-2056 and enter passcode: 4588901. A transcript of the call will be posted on the Company’s website.
About IPLP
IPLP is a leading sustainable packaging solutions provider primarily in the food, consumer, agricultural, logistics and environmental end-markets operating in Canada, the U.S, the U.K., Ireland, Belgium, China and Mexico. IPLP employs approximately 2,100 people and has corporate offices in Montreal and Dublin. For more information, please visit the Company’s website at www.iplglobal.com.
Forward Looking Statements
This press release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements include all matters that are not historical facts. Specifically, forward-looking statements in this press release include, but are not limited to, statements regarding the expected completion dates of certain of the Company’s capital projects, the Company’s ability to pass through material price input change to customers, the Company’s expectations regarding resin and freight costs and the results from the Company’s response thereto including the impact on gross margin and Adjusted EBITDA margin for Fiscal 2020, expectations regarding securing labor and labor cost inflation and our expected cash outflows for Fiscal 2020, expectations of the Company with respect to the impact on its operations of the disruption to the Canadian rail network and expectations of the Company with respect to the outbreak of the coronavirus (COVID-19) and its possible impact on the Company’s revenues and Adjusted EBITDA, the Company’s expectations with respect to foreign currency volatility and its impact on revenue and Adjusted EBITDA. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.
In addition, our assessments of, and outlook for Fiscal 2020 are considered forward-looking information. See “Outlook” for additional information concerning our strategies, assumptions and market outlook in relation to these assessments. Management currently believes that the achievement of such financial targets is possible, can be reasonably estimated and is based on underlying assumptions that management believes are reasonable in the circumstances, given the time period for such targets. However, there can be no assurance that the Company’s responses to resin and freight costs increases will be successful in generating production efficiencies and improved Adjusted EBITDA margin in future periods. Furthermore, actual results or performance in the future may vary from our assumptions referred to in “Outlook” below.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Such information reflects IPLP’s then current views with respect to future events based on certain material facts and assumptions and are subject to certain risks and uncertainties.
Forward-looking information is based on certain key expectations, opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances. Although IPLP believes that the expectations, opinions, assumptions and estimates on which such forward-looking information is based are reasonable, such forward-looking information should not be unduly relied upon since there can be no assurance that such expectations, opinions, assumptions and estimates will prove to be correct.
All of the forward-looking information contained in this press release are qualified by the foregoing cautionary statements and there can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this press release is provided as of the date of this press release and the Company does not undertake to update or amend any forward-looking information contained herein whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Readers are also cautioned that outlook information contained in this press release should not be used for purposes other than for which it is disclosed herein or therein, as the case may be.
Non-IFRS Financial Measures
This press release uses certain non-IFRS financial measures and ratios. Management uses these non-IFRS financial measures for purposes of comparison to prior periods, to prepare annual operating budgets, and for the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing its financial condition, business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of financial information reported under IFRS. IPLP uses non-IFRS financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted Net Income, Adjusted Basic Earnings per Share, Adjusted Diluted Earnings per Share, Pro Forma Adjusted Basic and Adjusted Diluted Earnings per Share, Net Debt, Financial Leverage, Adjusted Net Debt and Adjusted Free Cash Flow to provide supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures.
Adjusted EBITDA and Adjusted EBIT is provided to assist investors in determining the financial performance of the Company and its divisions’ operating activities on a consistent basis by excluding items such as business reorganization and integration costs, restructuring costs and acquisition related costs, finance costs and tax charges as they are considered not being reflective of the operational performance of the Company. Adjusted EBITDA also excludes certain non-cash elements such as depreciation and amortization expense. Adjusted EBITDA margin provides a percentage of revenue analysis of the Adjusted EBITDA measure. These measures are also used by Management to measure the underlying trading performance of the Company’s operating segments. We believe that these financial measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business.
Adjusted Net Income also assists key stakeholders in determining the financial performance of the Company on a consistent basis by excluding from net income certain one-off costs as noted above, amortization costs related to intangible assets recognized on acquisition of subsidiaries and adjusted to reflect the tax effect on these elements. Adjusted Basic and Diluted Earnings per Share give a consistent measure of the earnings of the Company by dividing the Adjusted Net Income by the basic and diluted weighted average number of shares. Pro Forma Adjusted Basic and Adjusted Diluted Earnings per Share include adjustments to ensure any significant changes in the weighted average number of shares are normalized with reference to the comparative periods. Net Debt and Adjusted Net Debt are measures indicating the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. Adjusted Net Debt, excludes the impact of the adoption of IFRS 16 Leases and negative foreign exchange movements in Fiscal 2019 to provide a like for like measurement with Fiscal 2019. Financial Leverage is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA. Adjusted EBITDA (“LTM Adjusted EBITDA”) which measures the number of years it would take for the Adjusted EBITDA of the business to pay off the Net Debt in full. LTM Adjusted EBITDA is the Adjusted EBITDA of the business for the previous twelve-month period together with any Adjusted EBITDA of an acquired business also for the same twelve-month period adjusted to include any pre-acquisition period. Adjusted Free Cash Flow is a measure indicating the relative amount of cash generated by the Company during the period and available to fund dividends, debt repayments and acquisitions. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance and financial condition.
The definitions of the measures noted above are included in the “Reconciliation of non-IFRS Measures” section of this press release.
The Company believes that the presentation of these financial measures enhances an investor’s understanding of its financial performance and financial condition. The Company further believes that these financial measures are useful financial metrics to assess its operating performance from period to period by excluding certain items that management believes are not representative of the Company’s core business. The following tables below show a reconciliation of the non-IFRS measures included in this press release.
Reconciliation of Adjusted EBIT and Adjusted EBITDA to Net Income
Adjusted EBITDA consists of net loss/(income) before income taxes, net finance costs, share of profit of equity-accounted investees, refinancing transaction costs, business reorganization, acquisition and integration costs, initial public offering and related costs, depreciation and amortization, and other income/(expenses). Adjusted EBIT is Adjusted EBITDA less depreciation and amortization.
| Three months ended December 31 | For the year ended December 31 | ||||||
| ($’000) | 2019 | 2018 | 2019 | 2018 | |||
| Net income/(loss) | (3,065 | ) | (1,830 | ) | 13,857 | 1,775 | |
| Income tax expense/(credit) | 409 | (2,471 | ) | 4,032 | (8,636 | ) | |
| Refinancing transaction costs | — | — | — | 5,658 | |||
| Finance costs (net) | 3,989 | 3,658 | 17,041 | 16,134 | |||
| Other expenses (net) | 669 | 242 | 248 | 412 | |||
| Share of loss/(profit) of equity-accounted investees | 360 | (462 | ) | 360 | (2,415 | ) | |
| Operating Profit | 2,362 | (863 | ) | 35,538 | 12,928 | ||
| Business reorganization, acquisition and integration costs | 2,869 | 8,541 | 7,730 | 14,375 | |||
| Initial public offering and related costs | — | — | — | 9,923 | |||
| Adjusted EBIT | 5,231 | 7,678 | 43,268 | 37,226 | |||
| Depreciation and amortization | 13,214 | 9,990 | 48,191 | 40,815 | |||
| Adjusted EBITDA | 18,445 | 17,668 | 91,459 | 78,041 | |||
Reconciliation of Adjusted Net Income, Adjusted Basic Earnings per Share, Adjusted Diluted Earnings per Share and Pro Forma Earnings per Share
Adjusted Net Income, Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share
Adjusted Net Income consists of net income before share of profit of equity-accounted investees, business reorganization, acquisition and integration costs, initial public offering and related costs, amortization of acquisition-related intangibles, other expenses, income tax related to the above noted items. Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share is calculated by dividing the Adjusted Net Income by the weighted-average number of common shares outstanding. In the case of Adjusted Diluted Earnings per Share, the number of outstanding common shares is adjusted for the effects of options with a dilutive effect.
| Three months ended December 31 | For the year ended December 31 | |||||||
| ($’000, unless otherwise stated) | 2019 | 2018 | 2019 | 2018 | ||||
| Net income/(loss) | (3,065 | ) | (1,830 | ) | 13,857 | 1,775 | ||
| Refinancing transaction costs | — | — | — | 5,658 | ||||
| Business reorganization, acquisition and integration costs | 2,869 | 8,541 | 7,730 | 14,375 | ||||
| Initial public offering and related costs | — | — | — | 9,923 | ||||
| Amortization of acquisition related intangibles | 1,748 | 1,647 | 7,111 | 6,625 | ||||
| Other expenses (net) | 669 | 242 | 248 | 412 | ||||
| Share of loss/(profit) of equity-accounted investees | 360 | (462 | ) | 360 | (2,415 | ) | ||
| Taxes related to the above noted items | (1,023 | ) | (2,389 | ) | (3,145 | ) | (6,633 | ) |
| Adjusted Net Income | 1,558 | 5,749 | 26,161 | 29,720 | ||||
| Weighted-average number of common shares | 54,147 | 53,477 | 53,952 | 45,940 | ||||
| Adjusted basic earnings per share (in $) | 0.03 | 0.11 | 0.48 | 0.65 | ||||
| Equity instruments with a dilutive effect – share options | 713 | 635 | 713 | 963 | ||||
| Weighted-average number of common shares (diluted) | 54,860 | 54,112 | 54,665 | 46,903 | ||||
| Adjusted diluted earnings per share (in $) | 0.03 | 0.11 | 0.48 | 0.63 | ||||
Pro-Forma Basic and Diluted Earnings per Share
Pro-Forma Earnings per Share reflects historical earnings per share recast using the number of common shares outstanding for the relevant period end dates, after giving effect to the share reorganization transaction on February 28, 2018 where the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics Ltd (“IPL Ltd”). It also gives effect to the Scheme of Arrangement pursuant to which the holders of ordinary shares exchanged their shares for Class B common shares on the basis of five shares of IPL Ltd for one Class B common share in IPL Plastics Inc. Finally, the Pro-Forma Earnings per Share gives effect to the 14,200,000 common shares issued on closing of the initial public offering and the number of shares redeemed with respect to the Buy-Back Option.
| Three months ended December 31 | For the year ended December 31 | ||||||
| ($’000, unless otherwise stated) | 2019 | 2018 | 2019 | 2018 | |||
| Net income/(loss) | (3,065 | ) | (1,830 | ) | 13,857 | 1,775 | |
| Weighted-average number of common shares(1) | 54,147 | 53,477 | 53,952 | 45,940 | |||
| Pro-forma adjustment for shares issued on share reorganization(1) | — | — | — | 1,496 | |||
| Pro-forma adjustment for shares issued on initial public offering | — | — | — | 6,983 | |||
| Pro-forma adjustment for shares redeemed with respect to the Buy-Back Option | — | — | — | (1,014 | ) | ||
| 54,147 | 53,477 | 53,952 | 53,405 | ||||
| Pro-Forma basic earnings per share (in $) | (0.06 | ) | (0.03 | ) | 0.26 | 0.03 | |
| Equity instruments with a dilutive effect – share options(1) | 713 | 635 | 713 | 963 | |||
| Weighted-average number of common shares (diluted) | 54,860 | 54,112 | 54,665 | 54,368 | |||
| Pro-Forma diluted earnings per share (in $) | (0.06 | ) | (0.03 | ) | 0.25 | 0.03 | |
(1) After giving effect to the Scheme of Arrangement pursuant to which the holders of ordinary shares exchanged their shares for Class B common shares on the basis of five shares of IPL Ltd for one Class B common share in IPL Plastics Inc.
Pro-Forma Adjusted Basic and Adjusted Diluted Earnings per Share
The Pro-Forma Adjusted Earnings per Share is defined as the Adjusted Net Income divided by the same pro-forma number of common shares outstanding. In the case of the Pro Forma Diluted Earnings per Share and the Pro-Forma Adjusted Diluted Earnings per Share, the number of outstanding common shares is adjusted for the effects of options with a dilutive impact.
| Three months ended December 31 | For the year ended December 31 | ||||
| ($’000, unless otherwise stated) | 2019 | 2018 | 2019 | 2018 | |
| Adjusted Net Income/(loss) | 1,558 | 5,749 | 26,161 | 29,720 | |
| Weighted-average number of common shares(1) | 54,147 | 53,477 | 53,952 | 45,940 | |
| Pro-forma adjustment for shares issued on share reorganization(1) | — | — | — | 1,496 | |
| Pro-forma adjustment for shares issued on initial public offering | — | — | — | 6,983 | |
| Pro-forma adjustment for shares redeemed with respect to the Buy-Back Option | — | — | — | (1,014 | ) |
| 54,147 | 53,477 | 53,952 | 53,405 | ||
| Pro-Forma adjusted basic earnings per share (in $) | 0.03 | 0.11 | 0.48 | 0.56 | |
| Equity instruments with a dilutive effect – share options(1) | 713 | 635 | 713 | 963 | |
| Weighted-average number of common shares (diluted) | 54,860 | 54,112 | 54,665 | 54,368 | |
| Pro-Forma adjusted diluted earnings per share (in $) | 0.03 | 0.11 | 0.48 | 0.55 | |
(1) After giving effect to the Scheme of Arrangement pursuant to which the holders of ordinary shares of IPL Ltd exchanged their shares for Class B common shares on the basis of five ordinary shares of IPL Ltd for one Class B common share.
Reconciliation of Net Debt
The table below sets out the Net Debt position of the Company at the various period ends. Net Debt is defined as loans and borrowings, lease liabilities and convertible loan notes less cash and cash equivalents. The Net Debt definition was revised in Q2 2019 to include lease liabilities recognized on adoption of IFRS 16 Leases. These lease liabilities are not included in the reported Net Debt at Fiscal 2018 and amount to additional debt of $22.4 million as at December 31, 2019.
| As at December 31 | As at December 31 | |||
| ($’000) | 2019 | 2018 | ||
| Loans and Borrowings | 349,708 | 258,431 | ||
| Lease liabilities | 24,068 | 544 | ||
| Convertible loan notes | 1,393 | 1,420 | ||
| Cash and cash equivalents | (77,731 | ) | (49,857 | ) |
| Net Debt | 297,438 | 210,538 |
Financial Leverage
The table below sets out the financial leverage ratio for the Company at the various period ends. The financial leverage ratio is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA including the pre-acquisition period of Loomans, as at December 31, 2019.
| As at December 31 | As at December 31 | |
| ($’000) | 2019 | 2018 |
| Net Debt | 297,438 | 210,538 |
| Full Year Reported Adjusted EBITDA | 91,459 | 78,041 |
| Loomans EBITDA pre-acquisition period | 1,970 | - |
| LTM Adjusted EBITDA | 93,429 | 78,041 |
| Financial Leverage | 3.18 | 2.70 |
On a like for like basis, excluding the impact of the adoption of IFRS 16 Leases and negative foreign exchange movements in Fiscal 2019, our financial leverage ratio has increased from 2.70 at December 31, 2018 to 3.04 at December 31, 2019, primarily driven by the acquisition of Loomans.
| As at December 31 | As at December 31 | ||
| ($’000) | 2019 | 2018 | |
| Net Debt | 297,438 | 210,538 | |
| IFRS 16 Lease liabilities | (22,412 | ) | - |
| Foreign exchange | (3,150 | ) | - |
| Adjusted Net Debt | 271,876 | 210,538 | |
| Adjusted EBITDA | 91,459 | 78,041 | |
| Loomans EBITDA pre-acquisition period | 1,970 | - | |
| IFRS 16 EBITDA benefit | (3,992 | ) | - |
| LTM Adjusted EBITDA | 89,437 | 78,041 | |
| Financial Leverage | 3.04 | 2.70 | |
Reconciliation of Adjusted Free Cash Flow
Adjusted Free Cash Flow represents cash generated by IPLP activities and available for reinvestment elsewhere, including the early repayment of debt. It is defined as the net cash flows used in operating activities, less finance costs and maintenance capital expenditure amounts paid, adding back business reorganization, acquisition and integration costs paid which excludes investing and financing related costs and in prior periods includes the payment of initial public offering and related costs and other (income)/expenses (received)/paid.
| Three months ended December 31 | For the year ended December 31 | |||||||
| ($’000) | 2019 | 2018 | 2019 | 2018 | ||||
| Net cash flows from operating activities | 54,011 | 21,835 | 89,317 | 18,669 | ||||
| Initial public offering and related costs paid | - | 2,564 | - | 9,923 | ||||
| Business reorganization, acquisition and integration costs paid excluding investing and financing related costs) | 560 | 3,961 | 8,480 | 8,092 | ||||
| Other expenses (net) | (323 | ) | (150 | ) | (164 | ) | (205 | ) |
| Adjusted net cash flow from operating activities | 54,248 | 28,210 | 97,633 | 36,479 | ||||
| Maintenance capital expenditure | (3,238 | ) | (1,661 | ) | (12,778 | ) | (8,672 | ) |
| Finance costs paid | (4,056 | ) | (3,549 | ) | (16,500 | ) | (13,770 | ) |
| Adjusted Free Cash Flow | 46,954 | 23,000 | 68,355 | 14,037 | ||||
Investor Enquiries
Contact
Paul Meade, Head of investor relations, +353 87 0655368