6-K 1 pressrelease31105.txt PRESS RELEASE 2004 FOURTH QUARTER AND ANNUAL RESULTS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of March, 2005 Commission File Number 1-10928 INTERTAPE POLMER GROUP INC. 110E Montee de Liesse, St. Laurent, Quebec, Canada, H4T 1N4 Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F Form 40-F X Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): __________ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __________ Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-______ The Information contained in this Report is incorporated by reference into Registration Statement No. 333-109944 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERTAPE POLYMER GROUP INC. Date: March 11, 2005 By: /s/Andrew M. Archibald Chief Financial Officer, Secretary, Vice President Administration NYSE SYMBOL: ITP TSX SYMBOL: ITP Intertape Polymer Group Inc. Announces Fourth Quarter and Annual Results for 2004 - Fourth quarter sales were up 14.6% over last year - Adjusted pretax earnings were up 16.9% over last year Montreal, Quebec and Bradenton, Florida - March 11, 2005 - Intertape Polymer Group Inc. (NYSE, TSX: ITP) today released results for the fourth quarter and year ended December 31, 2004. "Our sales growth for the fourth quarter was particularly strong, and we exceeded our revenue growth target of 10% for the year," said Intertape Polymer Group Inc. (IPG) Chairman and Chief Executive Officer, Melbourne F. Yull. "We made progress in recovering raw material cost increases through price increases to our customers. Additionally, during the fourth quarter we announced the closure of two facilities, which should have a positive effect on our cost structure going forward. Improvements in our financial and selling, general and administrative cost structures also helped to offset the pressure of raw material cost increases, resulting in a 16.9% increase in our adjusted pretax earnings compared to the same period last year. Net income was up even more significantly, mainly driven by an adjustment for income taxes recoverable in future periods." Operating Results Sales for the fourth quarter were $180.7 million, up 14.6% compared to the corresponding quarter last year. The increase was due to unit growth, price increases, and acquisition-related revenues. Sales for the year were $692.4 million, up 11.4% compared to 2003. Gross margin for the fourth quarter was 19.9% compared to 22.0% for the same quarter last year. The Company was successful in achieving sales price increases during the fourth quarter of 2004. Raw material cost increases contributed to the decline in the gross margin. Nonetheless, gross profit increased by 3.9% compared to the same period in 2003. Gross margin for the year decreased to 20.7% from 22.4% in the prior year. Selling, general and administrative ("SG&A") expenses were $25.8 million in the fourth quarter of 2004, compared to $24.8 million for the fourth quarter of 2003. The increase relates to higher sales within the retail distribution channel, which carries a more expensive selling structure than other sales channels. "While SG&A expenses increased slightly compared to the same period last year, as a percent of sales, they were down from 15.8% in 2003 to 14.3% in 2004," said IPG's Chief Financial Officer, Andrew M. Archibald, C.A. SG&A expenses were $94.2 million, or 13.6% of sales, for the year, compared to $89.9 million, or 14.5% of sales, for 2003. Financial expenses in the fourth quarter were $4.3 million, a 23.0% decrease compared to $5.6 million for the fourth quarter last year. "The reduction in financial expenses is the result of the various debt restructuring activities over the past year," commented Mr. Archibald. "Assuming interest rates and our outstanding debt remain constant, we would expect financial expenses for 2005 to be in the range of $17.0 million to $18.0 million." Financial expenses for the year were $24.3 million, excluding the $30.4 million cost of refinancing, compared to $28.5 million for last year. The lower financial expenses for the year were also partly the result of a substantial debt repayment at the end of the third quarter of 2003, which was accomplished with the proceeds of the $40.8 million common stock issuance in late September 2003. The Company is including adjusted pretax earnings, a non-GAAP financial measure, in this discussion of results because it believes the measure permits more meaningful comparisons of its performance between the periods presented. See the table below for a reconciliation of adjusted pretax earnings to net earnings. Adjusted pretax earnings were $4.6 million for the quarter, up 16.9% from $3.9 million for the same quarter last year. Adjusted pretax earnings were $19.4 million for the year, compared to adjusted pretax earnings of $17.1 million for the previous year. Reconciliation of Net Earnings to Adjusted Pretax Earnings Periods ended December 31, (in millions of US dollars) Three months Twelve months __________________ __________________ 2004 2003 2004 2003 ________ _______ _______ _______ $ $ $ $ Net earnings - As reported 17.7 5.2 11.4 18.2 Add back: Income taxes (recovery) (20.5) (4.3) (29.7) (4.1) ________ _______ _______ _______ Pretax earnings (2.8) 0.9 (18.4) 14.1 Add back: Refinancing expense - - 30.4 - Manufacturing facility closure costs 7.4 3.0 7.4 3.0 ________ _______ _______ _______ Adjusted pretax earnings 4.6 3.9 19.4 17.1 ________ _______ _______ _______ For the fourth quarter, the Company recorded an income tax recovery of $20.5 million, of which $19.0 million was due to a reduction in the Company's valuation allowance for future income tax benefits. This adjustment was a result of the Company's periodic assessment of its ability to realize future income tax assets. For the same period in 2003, the Company booked an income tax recovery of $4.2 million. For the year, the Company recorded an income tax recovery of $29.7 million, compared to an income tax recovery of $4.1 million for the year 2003, reflecting primarily the impact of the valuation allowance adjustment in the fourth quarter of 2004 and the tax effect of the $30.4 million of refinancing expenses incurred in the third quarter of 2004. For 2005, the Company expects its effective tax rate to be in the range of 20.0% to 23.0% and cash taxes to be less than $2.0 million for the year. Net earnings for the fourth quarter of 2004 were $17.7 million, or $0.43 per share (basic and diluted), compared to net earnings of $5.2 million or $0.13 per share (basic and diluted) for the fourth quarter of 2003. Net earnings were $11.4 million for the year, or $0.27 per share (diluted), compared to net income of $18.2 million, or $0.50 per share (diluted), for the year 2003. The Company is including earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, non-GAAP financial measures, in this discussion of results because it believes these measures permit more meaningful comparisons of its performance between the periods presented. In addition, the Company's covenants contained in the loan agreement with its lenders require certain debt to Adjusted EBITDA ratios be maintained, thus EBITDA and Adjusted EBITDA are used by management and the Company's lenders in evaluating the Company's performance. A reconciliation of the Company's EBITDA and Adjusted EBITDA, non-GAAP financial measures, to GAAP net earnings (loss) is set out in the EBITDA and Adjusted EBITDA reconciliation table below. The Company's EBITDA for the fourth quarter of 2004 was $9.1 million compared to $13.9 million for the fourth quarter of 2003. The adjusted EBITDA was $16.5 million in the fourth quarter of 2004 as compared to $16.9 million in the fourth quarter of 2003. EBITDA was $65.0 million for 2004 compared to $70.2 million for 2003. The adjusted EBITDA was $72.4 million for 2004 compared to $73.2 million in 2003. EBITDA and Adjusted EBITDA Reconciliation to Net Earnings Periods ended December 31, (in millions of US dollars) Three months Twelve months __________________ __________________ 2004 2003 2004 2003 ________ _______ _______ _______ $ $ $ $ Net earnings - As reported 17.7 5.2 11.4 18.2 Add back: Financial expenses, net of amortization 4.1 5.1 23.0 26.7 Refinancing expense - - 30.4 - Income taxes (20.5) (4.2) (29.7) (4.1) Depreciation and amortization 7.8 7.8 29.9 29.4 ________ _______ ______ ______ EBITDA 9.1 13.9 65.0 70.2 Add back: Manufacturing facility closure costs 7.4 3.0 7.4 3.0 ________ _______ ______ ______ Adjusted EBITDA 16.5 16.9 72.4 73.2 Cash Flows Cash flows from operating activities were a net $1.7 million for the fourth quarter of 2004, compared to $9.2 million for the fourth quarter 2003. While cash from operating activities before non-cash working capital items was up significantly in 2004, non-cash working capital items used more cash in 2004 because of higher raw material costs included in inventories and the planned build-up of inventories to facilitate the closing of the Montreal, Quebec and Cumming, Georgia plants at year-end. Cash flows used by operating activities in 2004 were $4.1 million compared to cash flows from operating activities for 2003 of $40.4 million. The decline in cash flow on an annual basis was also partly attributable to the make-whole payment of $21.9 million made in the third quarter of 2004. Cash used in operating and investing activities totaled $5.0 million in the fourth quarter of 2004 and was funded by cash on hand at the beginning of the period. Cash used in operating and investing activities for the year totaled $41.6 million and was funded by a net increase in debt. Balance Sheet While total debt, net of cash, was increased by 17.4% over the course of 2004, the Company expects the benefits of the debt restructuring undertaken in the third quarter of 2004 to be reflected in lower annual financial expenses in future years and an improved repayment schedule which should provide greater financial flexibility to the Company over the next few years. As of December 31, 2004, the Company had cash and a temporary investment of $22.4 million, as well as a committed revolving credit facility of $75.0 million that remained undrawn. Mr. Archibald also noted that the Company recently completed a registered exchange offer for its senior subordinated notes. Outlook "We continue to target 10% sales growth for 2005 and are pleased with our sales so far this year," said Mr. Yull. "Our ability to make significant bottom line improvement is dependent on our ability to improve our gross margin. This should occur if we are able to achieve product price increases, as well as planned cost reductions." Capital expenditures are expected to be between $23.0 million and $27.0 million for 2005 as the Company continues to invest in equipment to improve its productivity and expand certain operations vertically, which at the same time will create new product capabilities. (All figures in U.S. dollars, unless otherwise stated; December 31, 2004, exchange rate: Cdn $1.2062 = U.S.$1.00) Conference Call A conference call to discuss IPG's fourth quarter results will be held Monday, March 14, 2005 at 10:00 A.M. Eastern Standard Time. Participants may dial 1-877-209-0397 (U.S. and Canada) and 1-612-332-1025 (International). The conference call will also be simultaneously webcast on the Company's website at http://www.intertapepolymer.com. You may access a replay of the call by dialing 1-800-475-6701 (U.S. and Canada), or 1-320-365-3844 (International), and entering the passcode 771687. The recording will be available from Monday, March 14, 2005 at 5:00 P.M. until Monday, March 21, 2005 at 11:59 P.M, Eastern Standard Time. About Intertape Polymer Group Intertape Polymer Group is a recognized leader in the development and manufacture of specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the Company employs approximately 2,600 employees with operations in 15 locations, including 10 manufacturing facilities in North America and one in Europe. Safe Harbor Statement Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, estimates and expectations is contained in the Company's SEC filings. The Company undertakes no duty to update its forward-looking statements, including its earnings outlook. This release contains certain non-GAAP financial measures as defined under SEC rules, including adjusted net earnings, EBITDA, and adjusted EBITDA. The Company believes such non-GAAP financial measures improve the transparency of the Company's disclosure, provide a meaningful presentation of the Company's results from its core business operations, excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations. As required by SEC rules, the Company has provided reconciliations of those measures to the most directly comparable GAAP measures. For Information Contact: Melbourne F. Yull Chairman and Chief Executive Officer Intertape Polymer Group Inc. Tel.: 866-202-4713 E-mail:itp$info@intertapeipg.com Web: www.intertapepolymer.com Selected Financial Information Intertape Polymer Group Inc. Consolidated Earnings Periods ended December 31, (In thousands of US dollars, except per share amounts) -------------------------------------------------------------------- Three months Twelve months -------------------------------------------------------------------- 2004 2003 2004 2003 -------------------------------------------------------------------- $ $ $ $ Sales 180,744 157,682 692,449 621,321 Cost of sales 144,689 122,975 549,252 482,423 -------------------------------------------------------------------- Gross profit 36,055 34,707 143,197 138,898 -------------------------------------------------------------------- Selling, general and administrative expenses 25,799 24,841 94,226 89,917 Stock-based compensation 355 130 1,046 130 Research and development 997 212 4,233 3,272 Financial expenses 4,302 5,587 24,253 28,521 Refinancing expense 30,444 Manufacturing facility closure costs 7,386 3,005 7,386 3,005 -------------------------------------------------------------------- 38,839 33,775 161,588 124,845 -------------------------------------------------------------------- Earnings (loss) before income taxes (2,874) 932 (18,391) 14,053 Income taxes (recovery) (20,455) (4,243) (29,749) (4,125) -------------------------------------------------------------------- Net earnings 17,671 5,175 11,358 18,178 -------------------------------------------------------------------- -------------------------------------------------------------------- Earnings per share Basic 0.43 0.13 0.28 0.51 -------------------------------------------------------------------- -------------------------------------------------------------------- Diluted 0.43 0.13 0.27 0.50 -------------------------------------------------------------------- -------------------------------------------------------------------- Consolidated Retained Earnings Periods ended December 31, (In thousands of US dollars) -------------------------------------------------------------------- Three months Twelve months -------------------------------------------------------------------- 2004 2003 2004 2003 -------------------------------------------------------------------- $ $ $ $ Balance, beginning of period 61,978 63,116 68,291 50,113 Net earnings 17,671 5,175 11,358 18,178 -------------------------------------------------------------------- 79,649 68,291 79,649 68,291 Premium on purchase for cancellation of common shares 40 40 -------------------------------------------------------------------- Balance, end of period 79,609 68,291 79,609 68,291 -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Common shares Average number of shares outstanding CDN GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550 CDN GAAP - Diluted 41,468,992 41,225,776 41,445,864 36,052,320 U.S. GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550 U.S. GAAP - Diluted 41,468,992 41,225,776 41,455,864 36,052,320 Intertape Polymer Group Inc. Consolidated Balance Sheets As at December 31, (In thousands of US dollars) -------------------------------------------------------------------- 2004 2003 -------------------------------------------------------------------- $ $ ASSETS Current assets Cash and cash equivalents 21,882 Temporary Investment 497 Trade receivables (net of allowance for doubtful accounts of $4,065; $3,911 in 2003) 101,628 89,297 Other receivables 13,381 11,852 Inventories 90,677 69,956 Parts and supplies 13,618 13,153 Prepaid expenses 7,788 7,924 Future income tax 1,509 2,682 -------------------------------------------------------------------- 250,980 194,864 Property, plant and equipment 352,610 354,627 Other assets 16,474 12,886 Future income taxes 36,689 3,812 Goodwill 179,958 173,056 -------------------------------------------------------------------- 836,711 739,245 -------------------------------------------------------------------- -------------------------------------------------------------------- LIABILITIES Current liabilities Bank indebtedness 13,944 Accounts payable and accrued liabilities 97,849 95,270 Instalments on long-term debt 3,032 16,925 -------------------------------------------------------------------- 100,881 126,139 Long-term debt 331,095 235,066 Other liabilities 435 530 -------------------------------------------------------------------- 432,411 361,735 -------------------------------------------------------------------- SHAREHOLDERS' EQUITY Capital stock 289,180 286,841 Contributed surplus 4,326 3,150 Retained earnings 79,609 68,291 Accumulated currency translation adjustments 31,185 19,228 -------------------------------------------------------------------- 404,300 377,510 -------------------------------------------------------------------- 836,711 739,245 -------------------------------------------------------------------- -------------------------------------------------------------------- Intertape Polymer Group Inc. Consolidated Cash Flows Periods ended December 31, (In thousands of US dollars) -------------------------------------------------------------------- Three months Twelve months -------------------------------------------------------------------- 2004 2003 2004 2003 -------------------------------------------------------------------- $ $ $ $ OPERATING ACTIVITIES Net earnings 17,671 5,175 11,358 18,178 Non-cash items Depreciation and amortization 7,770 7,786 29,889 29,375 Property, plant and equipment impairment and other non-cash charges in connection with facility closures 5,848 732 5,848 73 Future income taxes (21,341) (5,982) (28,806) (7,148) Write-off of debt issue expenses 8,482 Stock-based compensation expense 355 1,046 Other non-cash items (95) (3,000) (95) (3,000) -------------------------------------------------------------------- Cash flows from operations before changes in non-cash working capital items 10,208 4,711 27,722 38,137 --------------------------------------------------------------------- Changes in non-cash working capital items Trade receivables 5,502 8,616 (11,345) (741) Other receivables (444) (1,693) (1,308) (1,647) Inventories (12,112) (2,021) (20,115) (5,139) Parts and supplies 222 (107) (266) (776) Prepaid expenses (3,710) (1,957) 202 100 Accounts payable and accrued liabilities 2,041 1,606 1,051 10,465 --------------------------------------------------------------------- (8,501) 4,444 (31,781) 2,262 --------------------------------------------------------------------- Cash flows from operating activities 1,707 9,155 (4,059) 40,399 --------------------------------------------------------------------- INVESTING ACTIVITIES Temporary investment (497) (497) Property, plant and equipment (4,869) (3,280) (18,408) (12,980) Business acquisition (5,500) Goodwill (6,217) Other assets (1,328) (752) (13,178) (1,435) --------------------------------------------------------------------- Cash flows from investing activities (6,694) (4,032) (37,583) (20,632) --------------------------------------------------------------------- FINANCING ACTIVITIES Net change in bank indebtedness (298) (4,503) (13,967) 4,910 Issue of long-term debt 325,787 Repayment of long-term debt (408) (250,936) (64,329) Issue of common shares 20 552 2,717 43,009 Common shares purchased for cancellation (418) (418) --------------------------------------------------------------------- Cash flows from financing activities (1,104) (3,951) 63,183 (16,410) --------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (6,091) 1,172 21,541 3,357 Effect of foreign currency translation adjustments 105 (1,172) 341 (3,357) Cash, beginning of period 27,868 --------------------------------------------------------------------- Cash and cash equivalents, end of period 21,882 21,882 --------------------------------------------------------------------- --------------------------------------------------------------------- Supplementary Financial Information Intertape Polymer Group Inc. (in thousands of US dollars) --------------------------------------------------------------------- 1. Other receivables 2004 2003 __________ __________ $ $ Income and other taxes 8,914 7,009 Rebates receivable 1,193 861 Sales taxes 1,316 863 Other 1,958 3,119 __________ ___________ 13,381 11,852 __________ ___________ 2. Inventories 2004 2003 ___________ ____________ $ $ Raw materials 30,908 18,910 Work in process 14,255 12,583 Finished goods 45,514 38,463 ___________ ____________ 90,677 69,956 __________ ___________ 3. Other assets 2004 2003 ___________ ____________ $ $ Debt issue expenses and other deferred charges, at amortized cost 14,446 10,460 Loans without interest, various repayment terms 914 877 Other receivables 301 271 Other, at cost 813 1,278 ___________ ____________ 16,474 12,886 __________ ___________ 4. Long-term debt Long-term debt consists of the following: 2004 2003 ___________ ____________ $ $ a) US$125,000,000 Senior Subordinated Notes 125,000 b) US$200,000,000 Term Loan 199,500 c) US$137,000,000 Series A and B Senior Notes 123,804 d) US$137,000,000 Senior Notes 123,330 e) Obligation under capital lease 7,166 f) Other debt 2,461 4,857 ___________ ____________ 334,127 251,991 Less: current portion of long-term debt 3,032 16,925 ___________ ____________ 331,095 235,066 __________ ___________ 5. Income taxes The provision for income taxes consists of the following: 2004 2003 ___________ ____________ $ $ Current (943) 3,023 Future (28,806) (7,148) ___________ ____________ (29,749) (4,125) __________ ___________ The net future income tax assets are detailed as follows: 2004 2003 ___________ ____________ $ $ Future income tax assets Trade and other receivables 1,112 1,104 Accounts payable and accrued liabilities 765 Tax credits and loss carry-forwards 104,350 94,719 Other 14,658 5,901 Valuation allowance (16,508) (31,145) ___________ ____________ 103,612 71,344 Future income tax liabilities Inventories 214 311 Property, plant and equipment 64,134 64,539 Accounts payable and accrued liabilities 1,066 ___________ ____________ 65,414 64,850 ___________ ____________ Net future income tax assets 38,198 6,494 ___________ ____________ Net current future income tax assets 1,509 2,682 Net long-term future income tax assets 36,689 3,812 Total net future income tax assets 38,198 6,494 As at December 31, 2004, the Company has $55.7 million of Canadian operating loss carry-forwards expiring 2007 through 2014 and $175.5 million of US federal and state operating losses expiring 2010 through 2024. In assessing the realizability of future income tax assets, management considers whether it is more likely than not that some portion or all of the future income tax assets will not be realized. Management considers the scheduled reversal of future income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company expects the future income tax assets, net of the valuation allowance, as at December 31, 2004, to be realized as a result of the reversal of existing taxable temporary differences. As part of the above analysis, the valuation allowance was decreased by $14.6 million for the twelve months ended December 31, 2004 and increased $4.5 million for the twelve months ended December 31, 2003. For the three months ended December 31, 2004, the valuation allowance was decreased by $19.0 million and for the three months ended December 31, 2003, it was increased by $1.4 million. The remaining valuation allowance as of December 31, 2004 was $16.5 million.