6-K 1 pressrelease7282005.txt 2005 2ND QUARTER RESULTS PRESS RELEASE 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 July, 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: July 28, 2005 By: /s/Andrew M. Archibald Andrew M. Archibald, C.A., CFO and Secretary NYSE SYMBOL: ITP TSX SYMBOL: ITP Intertape Polymer Group Inc. Announces Second Quarter Results - Sales up 10.7% compared to last year - Adjusted net earnings up 7.0% compared to last year - Free cash flow of $7.6 million Montreal, Quebec and Bradenton, Florida - July 28, 2005 - Intertape Polymer Group Inc. (NYSE, TSX: ITP) today released results for its second quarter ended June 30, 2005. Sales for the second quarter were $190.3 million, up 10.7% from $171.9 million for the same quarter of 2004, while the Company reported net earnings of $5.4 million or $0.13 per share (basic and diluted) compared to $5.7 million or $0.14 per share (basic and diluted) for the same period last year. The quarter's results included total charges of $1.1 million for costs associated with manufacturing facility closures and an industrial accident. Excluding the manufacturing facility closure and industrial accident costs and related tax benefits, adjusted net earnings for the second quarter of 2005 were $6.1 million or $0.15 per share (basic and diluted) compared to $5.7 million or $0.14 per share (basic and diluted) for the same quarter last year. The Company is including adjusted net earnings, a non-GAAP financial measure, 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 at the end of this press release. "We were able to achieve double-digit sales growth again this quarter, despite a softening of the market for film products and an industry-wide shortage of synthetic rubber, a key raw material for certain of our tape adhesives," said Intertape Polymer Group Inc. ("IPG) Chairman and Chief Executive Officer, Melbourne F. Yull. "While we were able to satisfy some of our customers' demand with alternative products, we were not able to meet all of their demands, which resulted in lower sales volumes compared to last year. This shortage in synthetic rubber is expected to be rectified by the end of 2005, but it could take longer. Higher sales were the result of price increases implemented over the past few quarters to recover increased raw material costs." "Our net earnings, however, did not grow proportionately as they were impacted negatively by higher raw material costs, including that of synthetic rubber, costs related to an industrial accident and increased staffing as a result of the organizational realignment that we began at the end of 2004," said Mr. Yull. "The sales price increases that have been implemented over the past while have allowed us to recover raw material cost increases, as well as some gross margin, but we have not yet been able to get back to historical gross margin levels. The additional staffing costs this quarter are an investment in our new organizational structure which we believe will begin to reap benefits in the second half of this year." With completion of the preliminary investigation of the accident at its Columbia, South Carolina facility, the Company has established a loss provision totaling approximately $1.1 million, almost all of which was recorded in the second quarter. Most of the loss provision relates to applicable insurance policy deductibles. "Decreased financial expenses continue to have a positive impact on our net earnings as they were down 18.2% in the second quarter of 2005 compared to the second quarter last year, reflecting the benefits of the refinancing undertaken in the third quarter of last year," said IPG's Chief Financial Officer, Andrew M. Archibald, C.A. "From a cash perspective, we were able to generate $7.6 million of free cash flow in the quarter. This was in part due to improved collection of trade receivables and the receipt of a tax refund during the quarter. 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). The Company is including free cash flow, a non-GAAP financial measure, because it is used by management and the Company's investors in evaluating the Company's performance. A reconciliation of free cash flow to cash flows from operating activities, the most directly comparable GAAP measure, is set forth at the end of this press release. The Company is also including earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, both non-GAAP financial measures, because these measures 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, both non-GAAP financial measures, to GAAP net earnings is set forth in the EBITDA reconciliation table at the end of this press release. The Company's EBITDA for the second quarter of 2005 was $19.6 million compared to $20.9 million for the second quarter of 2004. The adjusted EBITDA was $20.7 million in the second quarter of 2005 as compared to $20.9 million in the second quarter of 2004. Sales for the first six months of 2005 were $378.0 million, up 13.2% from $334.0 million for the same period in 2004. Net earnings for the first six months of 2005 were $11.5 million or $0.28 per share (basic and diluted) compared to $7.9 million or $0.19 per share (basic and diluted) for the same period of the preceding year. Adjusted net earnings for the first six months of 2005 were $12.6 million or $0.31 per share (basic) and $0.30 per share (diluted) compared to $7.9 million or $0.19 per share (basic and diluted) for the same period of the preceding year. "While sales growth for the first half of the year has been good, our outlook for full year 2005 sales has been adjusted downwards from the range of $775 million to $790 million to a range of $755 million to $775 million, which would represent annual sales growth in the range of 9% to 12%," said Mr. Yull. "The impact of the synthetic rubber shortage, which had an impact on both sales and gross margins this past quarter, is expected to continue through the summer and possibly into next year." Reconciliation of Net Earnings to Adjusted Net Earnings _______________________________________________________ (in millions of US dollars) For the three For the six months ended months ended June 30 June 30 ______________ _____________ 2005 2004 2005 2004 ____ ____ ____ ____ $ $ $ $ Net earnings - as reported 5.4 5.7 11.5 7.9 Add back: Manufacturing facility closure and industrial accident costs (after-tax) 0.7 1.1 ____ ____ ____ ____ Adjusted net earnings 6.1 5.7 12.6 7.9 ____ ____ ____ ____ ____ ____ ____ ____ Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA ____________________________________________________________ (in millions of US dollars) For the three For the six months ended months ended June 30 June 30 ______________ _____________ 2005 2004 2005 2004 ____ ____ ____ ____ $ $ $ $ Net earnings - as reported 5.4 5.7 11.5 7.9 Add back: Financial expenses, net of amortization 5.6 7.0 10.9 13.3 Income taxes 0.4 0.7 1.7 0.4 Depreciation and amortization 8.2 7.5 16.1 14.6 ____ ____ ____ ____ EBITDA 19.6 20.9 40.2 36.2 Add back: Manufacturing facility closure and industrial accident costs (after-tax) 1.1 1.8 ____ ____ ____ ____ Adjusted EBITDA 20.7 20.9 42.0 36.2 ____ ____ ____ ____ ____ ____ ____ ____ Reconciliation of Cash Flows from Operating Activities to Free Cash Flow ________________________________________________________________________ (in millions of US dollars) For the three For the six months ended months ended June 30 June 30 ______________ _____________ 2005 2004 2005 2004 ____ ____ ____ ____ $ $ $ $ Cash flows from (used in) operating activities - as reported 11.7 (0.6) 9.9 5.8 Subtract: Property, plant and equipment expenditures 4.1 4.1 9.1 9.9 ____ ____ ____ ____ Free cash flow 7.6 (4.7) 0.8 (4.1) ____ ____ ____ ____ ____ ____ ____ ____ (All figures in U.S. dollars, unless otherwise stated; June 30, 2005, exchange rate: Cdn $1.2263 = U.S.$1.00) Conference Call A conference call to discuss IPG's 2005 second quarter results will be held Friday, July 29, 2005 at 10:00 A.M. Eastern Standard Time. Participants may dial 1-800-553-0358 (U.S. and Canada) and 1-612-332-0636 (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 788816. The recording will be available from Friday, July 29, 2005 at 3:15 P.M. until Friday, August 5, 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 Periods ended June 30, (In thousands of US dollars, except per share amounts)
------------------------------------------------------- Three months Six months ------------ ----------- ------------- ----------- 2005 2004 2005 2004 ------------ ----------- ------------- ----------- $ $ $ $ Sales 190,282 171,934 377,979 334,034 Cost of sales 150,895 134,097 299,469 264,083 ------------ ----------- ------------- ----------- Gross profit 39,387 37,837 78,510 69,951 ------------ ----------- ------------- ----------- Selling, general and administrative expenses 24,844 22,793 48,761 45,100 Stock-based compensation 483 351 938 421 Research and development 1,224 1,153 2,235 2,115 Financial expenses 5,918 7,235 11,567 14,003 Manufacturing facility closure and industrial accident costs 1,087 1,806 ------------ ----------- ------------- ----------- 33,556 31,532 65,307 61,639 ------------ ----------- ------------- ----------- Earnings before income taxes 5,831 6,305 13,203 8,312 Income taxes 399 654 1,738 370 ------------ ----------- ------------- ----------- Net earnings 5,432 5,651 11,465 7,942 ------------ ----------- ------------- ----------- ------------ ----------- ------------- ----------- Earnings per share Basic 0.13 0.14 0.28 0.19 ------------ ----------- ------------- ----------- ------------ ----------- ------------- ----------- Diluted 0.13 0.14 0.28 0.19 ------------ ----------- ------------- ----------- ------------ ----------- ------------- -----------
Consolidated Retained Earnings Periods ended June 30, (In thousands of US dollars)
------------------------------------------------------- Three months Six months ------------------------- ------------- ----------- 2005 2004 2005 2004 ------------ ----------- ------------- ----------- $ $ $ $ Balance, beginning of period 85,642 70,582 79,609 68,291 Net earnings 5,432 5,651 11,465 7,942 ------------ ----------- ------------- ----------- 91,074 76,233 91,074 76,233 Premium on purchase for cancellation of common shares 11 11 ------------ ----------- ------------- ----------- Balance, end of period 91,063 76,233 91,063 76,233 ------------ ----------- ------------- ----------- ------------ ----------- ------------- ----------- _____________________________________________________________________________________ _____________________________________________________________________________________
Common shares Average number of shares outstanding CDN GAAP - Basic 41,214,969 41,215,111 41,226,215 41,092,785 CDN GAAP - Diluted 41,550,160 41,396,403 41,493,093 41,429,232 U.S. GAAP - Basic 41,214,969 41,215,111 41,226,215 41,092,785 U.S. GAAP - Diluted 41,550,160 41,396,403 41,493,093 41,429,232
Intertape Polymer Group Inc. Consolidated Balance Sheets As at (In thousands of US dollars) June 30, June 30, December 31, 2005 2004 2004 ________ _________ ___________ $ $ $ ASSETS Current assets Cash and cash equivalents 23,247 9,488 21,882 Temporary investment 489 497 Trade receivables, net of allowance for doubtful accounts of $4,463 ($4,037 in June 2004, $4,065 in December 2004) 110,167 101,201 101,628 Other receivables 11,283 11,353 13,381 Inventories 99,632 73,213 90,677 Parts and supplies 13,979 13,301 13,618 Prepaid expenses 7,642 5,761 7,788 Future income tax 1,509 2,682 1,509 ________ _________ ________ 267,948 216,999 250,980 Property, plant and equipment 343,839 357,227 352,610 Other assets 17,397 13,181 16,474 Future income taxes 34,731 4,457 36,689 Goodwill 179,767 176,231 179,958 ________ _________ ________ 843,682 768,095 836,711 ________ _________ ________ ________ _________ ________ LIABILITIES Current liabilities Bank indebtedness 5,000 Accounts payable and accrued liabilities 94,059 91,834 97,849 Installments on long-term debt 2,802 1,958 3,032 ________ _________ ________ 101,861 93,792 100,881 Long-term debt 329,539 290,240 331,095 Other liabilities 435 530 435 ________ _________ ________ 431,835 384,562 432,411 _________ ________ _______ SHAREHOLDERS' EQUITY Capital stock 288,911 289,219 289,180 Contributed surplus 5,264 3,701 4,326 Retained earnings 91,063 76,233 79,609 Accumulated currency translation adjustments 26,609 14,380 31,185 ________ _________ ________ 411,847 383,533 404,300 ________ _________ ________ 843,682 768,095 836,711 ________ _________ ________ ________ _________ ________ Intertape Polymer Group Inc. Consolidated Cash Flows Periods ended June 30, (In thousands of US dollars)
------------------------------------------------------- Three months Six months ------------------------- ------------- ----------- 2005 2004 2005 2004 ------------ ----------- ------------- ----------- $ $ $ $ OPERATING ACTIVITIES Net earnings 5,432 5,651 11,465 7,942 Non-cash items Depreciation and amortization 8,234 7,514 16,142 14,637 Other non-cash charges in connection with facility closures 81 127 Future income taxes 203 310 1,372 (586) Stock-based compensation expense 483 351 938 421 ------------ ----------- ------------- ----------- Cash flow from operations before changes in non-cash working capital items 14,433 13,826 30,044 22,414 ------------ ----------- ------------- ----------- Changes in non-cash working capital items Trade receivables 2,801 (2,163) (9,100) (12,248) Other receivables 2,082 2,017 487 Inventories (6,338) (3,366) (9,535) (3,878) Parts and supplies (96) 43 (409) (148) Prepaid expenses 449 1,039 132 2,140 Accounts payable and accrued liabilities (1,616) (9,935) (3,285) (2,997) ------------ ----------- ------------- ----------- (2,718) (14,382) (20,180) (16,644) ------------ ----------- ------------- ----------- Cash flows from operating activities 11,715 (556) 9,864 5,770 ------------ ----------- ------------- ----------- INVESTING ACTIVITIES Property, plant and equipment (4,069) (4,055) (9,058) (9,875) Business acquisition (5,500) Other assets (800) (501) (1,721) (1,064) Goodwill (58) (300) (58) ------------ ----------- ------------- ----------- Cash flows from investing activities (4,869) (4,614) (11,079) (16,497) ------------ ----------- ------------- ----------- FINANCING ACTIVITIES Net change in bank indebtedness 15,907 5,000 20,840 Issue of long-term debt 787 Repayment of long-term debt (1,164) (2,477) (1,703) (2,477) Issue of common shares 68 1,408 71 2,378 Common shares purchased for cancellation (340) (340) ------------ ----------- ------------- ----------- Cash flows from financing activities (1,436) 14,838 3,028 21,528 ------------ ----------- ------------- ----------- Net increase (decrease) in cash position 5,410 9,668 1,813 10,801 Effect of currency translation adjustments (246) (180) (448) (1,313) Cash position, beginning of period 18,083 21,882 ------------ ----------- ------------- ----------- Cash position, end of period 23,247 9,488 23,247 9,488 ------------ ----------- ------------- ----------- ------------ ----------- ------------- -----------