6-K 1 pressrelease42905.txt PRESS RELEASE 2005 FIRST QUARTER 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 April, 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: April 29, 2005 By: /s/Andrew M. Archibald Chief Financial Officer & Secretary NYSE SYMBOL: ITP TSX SYMBOL: ITP Intertape Polymer Group Inc. Announces Increased First Quarter Sales and Earnings - First quarter sales were up 15.8% over the first quarter last year - Net earnings were up 163.3% over the first quarter last year Montreal, Quebec and Bradenton, Florida - April 29, 2005 - Intertape Polymer Group Inc. (NYSE, TSX: ITP) today released results for its first quarter ended March 31, 2005. "In the first quarter, we achieved volume growth across all of our product lines," said Intertape Polymer Group Inc. ("IPG" or the "Company") Chairman and Chief Executive Officer, Melbourne F. Yull. "We were also able to implement the price increases we announced in 2004 and some of those that we have announced for 2005, which along with the closing of two plants, all contributed to a significant improvement in our bottom line." OPERATING RESULTS Sales for the first quarter of 2005 were $187.7 million, up 15.8% compared to the corresponding quarter last year. Gross margin for the first quarter of 2005 was 20.8% compared to 19.8% for the same quarter last year. The improvement was attributable to selling price increases and lower manufacturing costs. Manufacturing costs were down as a result of the plant closings announced in the fourth quarter of 2004. Gross profit increased from $32.1 million to $39.0 million, or by 21.6%, compared to the same period in 2004. Selling, general and administrative ("SG&A") expenses were $23.9 million in the first quarter of 2005, compared to $22.3 million for the first quarter of 2004. As a percent of sales, they were down from 13.8% in the first quarter of 2004 to 12.7% in the first quarter of 2005. Financial expenses in the first quarter of 2005 were $5.6 million, a 16.5% decrease compared to $6.8 million for the first quarter last year, due to lower interest rates as a result of the debt restructuring completed in mid- 2004. "Compared to the fourth quarter of 2004, interest rates on our long term debt were up on average 20 basis points due to an increase in the Libor rate," said IPG's Chief Financial Officer, Andrew M. Archibald, C.A. For the first quarter of 2005, the Company recorded income tax expense of $1.3 million, which represents an effective tax rate of 18.2% and is in line with the Company's expectation of an effective tax rate in the range of 20.0% to 23.0% for the full year 2005. For the same period in 2004, the Company booked an income tax recovery of $0.3 million. Excluding the manufacturing facility closure costs and related tax benefits, net earnings for the first quarter of 2005 ("Adjusted net earnings") were $6.4 million or $0.16 per share (basic and diluted) compared to $2.3 million or $0.06 per share (basic and diluted) for the same quarter last year. The Company is including Adjusted net earnings, a non-GAAP financial measure, in this discussion of results because it believes the measure permits more meaningful comparisons of its core business performance between the periods presented. A reconciliation of Adjusted net earnings to GAAP net earnings is set forth below. Net earnings for the first quarter of 2005 were $6.0 million, or $0.15 per share (basic and diluted), compared to net earnings of $2.3 million or $0.06 per share (basic and diluted) for the first quarter of 2004. Reconciliation of Net Earnings to Adjusted Net Earnings For the three months ended (in millions of US dollars) March 31 ________________________________ 2005 2004 ______________ _____________ $ $ Net earnings - As reported 6.0 2.3 Add back: Manufacturing facility closure costs (after-tax) 0.4 - ______________ _____________ Adjusted net earnings 6.4 2.3 ______________ _____________ ______________ _____________ The Company is also including earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, non-GAAP financial measures, in this discussion of results because 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 is set forth in the EBITDA reconciliation table below. The Company's EBITDA for the first quarter of 2005 was $20.5 million compared to $15.4 million for the first quarter of 2004. The adjusted EBITDA was $21.1 million in the first quarter of 2005 as compared to $15.4 million in the first quarter of 2004. The increase reflects higher sales and improved gross margins. EBITDA and Adjusted EBITDA Reconciliation to Net Earnings For the three months ended (in millions of US dollars) March 31 ________________________________ 2005 2004 ______________ _____________ $ $ Net earnings - As reported 6.0 2.3 Add back: Financial expenses, net of amortization 5.3 6.3 Income taxes 1.3 (0.3) Depreciation and amortization 7.9 7.1 ______________ _____________ EBITDA 20.5 15.4 Add back: Manufacturing facility closure costs 0.6 - ______________ _____________ Adjusted EBITDA 21.1 15.4 ______________ _____________ ______________ _____________ CASH FLOWS Net cash flows used by operating activities were $1.9 million for the first quarter of 2005, compared to net cash flows provided by operating activities of $6.3 million for the first quarter of 2004. While cash from operating activities before non-cash working capital items was up significantly in 2005, $15.6 million compared to $8.6 million for the first quarter of 2004, non-cash working capital items used more cash in 2005 because of a return to more normal terms for supplier payments, higher inventories due to build- ups in the fourth quarter of 2004 relating to plant closures that have not yet returned to traditional levels, higher inventory values due to higher raw material costs, and higher accounts receivable due to higher sales levels. Mr. Archibald commented: "The Company is in the process of reducing its inventory levels for raw materials and finished goods, as well as improving on its collection of accounts receivable. Based on the anticipated impact of these actions, the Company's target for free cash flow in 2005 remains $25.0 million to $30.0 million." Free cash flow is defined as cash flows from operating activities less expenditures for plant, property and equipment (capital expenditures). Expenditures for property, plant and equipment were $5.0 million for the first quarter of 2005 compared to $5.8 million for the first quarter of 2004. The Company's estimated spending for such capital expenditures continues to be in the range of $23.0 million to $27.0 million for 2005. BALANCE SHEET Total debt, net of cash, increased by 2.6% over the course of the first quarter of 2005, reflecting the funding of the cash required by operating and investing activities during the period. As of March 31, 2005, the Company had cash and temporary cash investments of $18.6 million, as well as committed revolving credit facilities of $75.0 million of which $9.4 million has been utilized, including $4.4 million in letters of credit. OUTLOOK "Based on what we are seeing today, sales for 2005 could now be in the range of $775 million to $790 million for the year, which would exceed our annual sales growth target of 10%," said Mr. Yull. "We also expect margins to improve in the second quarter if we achieve our anticipated revenue growth and are able to implement our announced price increases." (All figures in U.S. dollars, unless otherwise stated; March 31, 2005, exchange rate: Cdn $1.2165 = U.S.$1.00) CONFERENCE CALL A conference call to discuss IPG's 2005 first quarter results will be held Monday, May 2, 2005 at 11:30 A.M. Eastern Standard Time. Participants may dial 1-800-553-5275 (U.S. and Canada) and 1-612-332-0228 (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 780054. The recording will be available from Monday, May 2, 2005 at 4:45 P.M. until Monday, May 9, 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 non-GAAP 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@itape.com Web: www.intertapepolymer.com Selected Financial Information Intertape Polymer Group Inc. Consolidated Earnings Three month ended (In thousands of US dollars, except per share amounts) --------------------------------------------------------------------- March 31, --------------------------------------------------------------------- 2005 2004 --------------------------------------------------------------------- $ $ Sales 187,697 162,100 Cost of sales 148,649 129,986 --------------------------------------------------------------------- Gross profit 39,048 32,114 --------------------------------------------------------------------- Selling, general and administrative expenses 23,917 22,307 Stock-based compensation expense 455 70 Research and development 1,011 962 Financial expenses 5,649 6,768 Manufacturing facility closure costs 644 -------------------------------------------------------------------- 31,676 30,107 --------------------------------------------------------------------- Earnings before income taxes 7,372 2,007 Income taxes (recovery) 1,339 (284) --------------------------------------------------------------------- Net earnings 6,033 2,291 --------------------------------------------------------------------- --------------------------------------------------------------------- Earnings per share Basic 0.15 0.06 --------------------------------------------------------------------- --------------------------------------------------------------------- Diluted 0.15 0.06 --------------------------------------------------------------------- --------------------------------------------------------------------- Consolidated Retained Earnings Three months ended (In thousands of US dollars) --------------------------------------------------------------------- March 31, --------------------------------------------------------------------- 2005 2004 --------------------------------------------------------------------- $ $ Balance, beginning of year 79,609 68,291 Net earnings 6,033 2,291 --------------------------------------------------------------------- Balance, end of period 85,642 70,582 --------------------------------------------------------------------- --------------------------------------------------------------------- Common shares Average number of shares outstanding CDN GAAP - Basic 41,237,461 40,971,739 CDN GAAP - Diluted 41,444,870 41,528,581 US GAAP - Basic 41,237,461 40,971,739 US GAAP - Diluted 41,444,870 41,528,581 Intertape Polymer Group Inc. Consolidated Balance Sheets As at (In thousands of US dollars) March 31, March 31, December 31, 2005 2004 2004 (Unaudited) (Unaudited) (Audited) --------------------------------------------------------------------- $ $ $ ASSETS Current assets Cash and cash equivalents 18,083 21,882 Temporary investment 493 497 Trade receivables, net of allowance for doubtful accounts of $4,139 ($4,102 in March 2004, $4,065 in December 2004) 113,283 99,320 101,628 Other receivables 13,384 11,364 13,381 Inventories 93,589 70,383 90,677 Parts and supplies 13,908 13,344 13,618 Prepaid expenses 8,100 6,820 7,788 Future income tax assets 1,509 2,682 1,509 --------------------------------------------------------------------- 262,349 203,913 250,980 Property, plant and equipment 348,955 362,066 352,610 Other assets 16,983 12,928 16,474 Future income taxes 35,220 4,700 36,689 Goodwill 180,004 176,953 179,958 --------------------------------------------------------------------- 843,511 760,560 836,711 --------------------------------------------------------------------- LIABILITIES Current liabilities Bank indebtedness 5,000 18,922 Accounts payable and accrued liabilities 96,197 102,072 97,849 Instalments on long-term debt 2,995 34,036 3,032 --------------------------------------------------------------------- 104,192 155,030 100,881 Long-term debt 330,541 225,936 331,095 Other liabilities 435 530 435 --------------------------------------------------------------------- 435,168 381,496 432,411 --------------------------------------------------------------------- SHAREHOLDERS' EQUITY Capital stock 289,183 287,811 289,180 Contributed surplus 4,781 3,220 4,326 Retained earnings 85,642 70,582 79,609 Accumulated currency translation adjustments 28,737 17,451 31,185 --------------------------------------------------------------------- 408,343 379,064 404,300 --------------------------------------------------------------------- 843,511 760,560 836,711 --------------------------------------------------------------------- --------------------------------------------------------------------- Intertape Polymer Group Inc. Consolidated Cash Flows Three months ended (In thousands of US dollars) March 31 2005 2004 --------------------------------------------------------------------- $ $ OPERATING ACTIVITIES Net earnings 6,033 2,291 Non-cash items Depreciation and amortization 7,908 7,123 Other non-cash charges in connection with facility closures 46 Future income taxes 1,169 (896) Stock-based compensation expense 455 70 --------------------------------------------------------------------- Cash flows from operations before changes in non-cash working capital items 15,611 8,588 --------------------------------------------------------------------- Changes in non-cash working capital items Trade receivables (11,901) (10,085) Other receivables (65) 487 Inventories (3,197) (512) Parts and supplies (313) (191) Prepaid expenses (317) 1,101 Accounts payable and accrued liabilities (1,669) 6,938 --------------------------------------------------------------------- (17,462) (2,262) --------------------------------------------------------------------- Cash flows from operating activities (1,851) 6,326 --------------------------------------------------------------------- INVESTING ACTIVITIES Property, plant and equipment (4,989) (5,820) Business acquisition (5,500) Other assets (921) (563) Goodwill (300) --------------------------------------------------------------------- Cash flows from investing activities (6,210) (11,883) --------------------------------------------------------------------- FINANCING ACTIVITIES Net change in bank indebtedness 5,000 4,933 Issue of long-term debt 787 Repayment of long-term debt (539) Issue of common shares 3 970 --------------------------------------------------------------------- Cash flows from financing activities 4,464 6,690 --------------------------------------------------------------------- Net increase (decrease) in cash position (3,597) 1,133 Effect of currency translation adjustments (202) (1,133) Cash, beginning of period 21,882 - --------------------------------------------------------------------- Cash, end of period 18,083 - --------------------------------------------------------------------- ---------------------------------------------------------------------