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 November, 2009
Commission File Number 1-10928
INTERTAPE POLYMER GROUP INC.
9999 Cavendish Blvd., Suite 200, Ville St. Laurent, Quebec, Canada, H4M 2X5
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 X Form 40-F _________
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): __________
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: November 10, 2009 By: /s/ Victor Di Tommaso_____________
Victor DiTommaso, Chief Financial Officer
November 10, 2009
NYSE, TSX
SYMBOL: ITP
Intertape Polymer Group Reports Third Quarter 2009 Results
MONTREAL, QUEBEC and BRADENTON, FLORIDA – November 10, 2009 – Intertape Polymer Group Inc. (TSX:ITP) (NYSE:ITP) ("Intertape" or the "Company") today released results for the three months and nine months ended September 30, 2009. All dollar amounts are US denominated unless otherwise indicated.
“The third quarter is historically our strongest and this year is no exception. I am pleased with our results which indicate the effectiveness of our cost reductions and the development and sales of new products. Owing to the seasonal aspects of our business, we expect lower fourth quarter results,” stated Intertape Chairman, Eric E. Baker.
Net earnings for the third quarter of 2009 were $2.0 million or $0.03 per share, both basic and diluted, compared to net earnings of $4.2 million or $0.07 per share both basic and diluted for the same period last year. Both of the Company’s Divisions made progress when compared with the first half of 2009, as economic conditions improved and the North American housing market showed initial signs of recovery, most notably in the sale of new houses. Net loss for the nine months of 2009 totaled $5.8 million ($0.10 per share, basic and diluted) compared to net earnings of $7.0 million ($0.12 per share, basic and diluted) for the same period in 2008.
Third quarter sales were down 19% to $163.7 million, compared to sales of $202.0 million in the third quarter of 2008, reflecting a 16.2% decrease in sales for the Tapes & Films (“T&F”) Division and a 29.8% reduction for the Engineered Coated Products (“ECP”) Division. Sales for the first nine months of the year were $454.7 million compared to $584.0 million for the same period in 2008, a decrease of 22.1%.
Gross profit for the third quarter totaled $26.4 million, compared to $29.2 million a year ago, reflecting an increased contribution from the T&F Division, largely offset by a decrease in the ECP Division. The gross margin increased to 16.1%, from 14.5% in the third quarter of 2008, as a result of the increase in the gross margin of the T&F Division, mitigated by a decline in the ECP Division’s gross margin. Gross profit and gross margin for the first nine months of 2009 were $62.7 million and 13.8% respectively, compared to $83.7 million and 14.3% for the first nine months of 2008.
Selling, general and administrative (“SG&A”) expenses totaled $17.8 million for the third quarter of 2009, $0.3 million higher than the $17.5 million for the third quarter of 2008. For the first nine months of 2009, SG&A expenses were $49.8 million compared to $52.3 million for the same period in 2008. SG&A expenses for 2009 reflect cost reduction initiatives implemented by the Company starting in the fourth quarter of 2008 and throughout the first half of 2009.
Third quarter 2009 EBITDA was $16.1 million compared to $18.8 million for the third quarter in 2008. For the first nine months of 2009, EBITDA was $35.2 million compared to $52.4 million for the same period in 2008.
The Company used cash flows from operating activities in the third quarter of 2009 of $10.4 million compared to $9.2 million of cash flows generated in the third quarter of 2008. The cash usage in 2009 was largely due to decreased accounts payable and accrued liabilities. For the first nine months of 2009, the Company generated cash flows from operating activities of $10.4 million compared to $8.6 million for the same period of 2008.
Over the most recent quarter, the Company increased its outstanding debt by $9.0 million. Following substantial debt reduction in the first half of the year, debt reduced year-to-date totals $10.2 million. The Company’s asset based loan has one financial covenant, a fixed charge ratio, the target for which is 1.0 to 1.0. This covenant becomes effective only when unused availability drops below $25.0 million. While Intertape did not meet the ratio as at September 30, 2009, this covenant was not in effect as unused availability was $30.8 million. To date in the fourth quarter, the Company has maintained availability in excess of $25.0 million and expects to remain above that level into 2010.
Other
As part of the Company’s ongoing objectives to lower costs, enhance customer order fulfillment and effectively optimize inventory investment, the Company will consolidate operations currently performed at its Hawkesbury, Ontario plant. The Hawkesbury plant will be closed by the end of the year and operations will be transferred to the Company’s Truro, Nova Scotia plant. The Company expects to incur a charge in the fourth quarter associated with this closure.
Segmented Information
Tapes & Films (“T&F”) Division
Sales for the T&F Division for the third quarter were $135.2 million, representing a 16.2% decrease compared to $161.4 million for the third quarter of 2008. The rate of sales volumes decline was slower than prior quarters and was 5.3% on a year-over-year basis. New products and entry into new distribution channels have partially alleviated difficult but improving economic conditions.
Selling prices for the third quarter were 10.9% lower than in the third quarter of 2008, primarily impacted by lower resin-based raw material prices. Sales for the T&F Division for the first nine months of 2009 totaled $377.6 million compared to $469.6 million for the first nine months of 2008, a 19.6% decrease. Sales volumes for the first nine months declined 13.0% compared to the first nine months of 2008. The remainder of the decline was attributable to lower selling prices resulting from a decline in raw material costs.
Third quarter gross profits for the T&F Division totaled $24.4 million compared to $23.6 million for the third quarter of 2008. Gross margins increased to 18.0% from 14.6% a year ago reflecting cost reduction initiatives combined with the effect of the unusually high resin-based raw material prices which impacted costs and selling prices in the third quarter of 2008. T&F Division gross profits and gross margins for the first nine months of 2009 and 2008 were $57.7 million (15.3%) and $70.2 million (15.0%) respectively. T&F Division’s EBITDA for the third quarter was $16.3 million compared to $15.8 million for the comparable period a year ago. For the first nine months of 2009 and 2008, the T&F Division’s EBITDA was $36.4 million and $47.0 million respectively.
Tapes and Films Division EBITDA Reconciliation to GAAP Net Earnings (Loss) (in millions of US dollars) | ||||
Three months | Nine months | |||
For the periods ended September 30, | 2009 | 2008 | 2009 | 2008 |
$ | $ | $ | $ | |
Divisional net earnings before income taxes | 8.9 | 8.5 | 14.1 | 25.1 |
Depreciation and amortization | 7.4 | 7.3 | 22.3 | 21.9 |
EBITDA | 16.3 | 15.8 | 36.4 | 47.0 |
EBITDA margin | 12.0% | 9.8% | 9.7% | 10.0% |
Engineered Coated Products (“ECP”) Division
Sales for the ECP Division for the third quarter were $28.5 million, representing a 29.8% decrease compared to $40.6 million for the third quarter a year ago. Year-over-year sales volumes decreased 9.1%. Lower resin-based raw material costs and intense pricing pressure continued to significantly impact selling prices during the quarter. New product sales growth within the residential construction market has helped to mitigate some of the decline in existing product sales. Nine month sales for the ECP Division totaled $77.1 million compared to $114.4 million for the same period of 2008, a 32.6% decrease. Sales volumes for the first nine months of 2009 declined 5.0% compared to the first nine months of 2008.
Gross profits for the ECP Division for the third quarter totaled $2.0 million, representing a gross margin of 7.0%, compared to $5.6 million and a gross margin of 13.8% for the third quarter of 2008. Decreases in gross profit and gross margin are indicative of the declining trading margins caused by depressed customer demand and the Division’s lack of pricing power in that context. ECP Division gross profits and gross margins for the first nine months of 2009 and 2008 were $5.0 million (6.5%) and $13.5 million (11.8%), respectively.
The ECP Division’s EBITDA for the third quarter was $0.8 million compared to $3.8 million for the same quarter of 2008. For the first nine months of 2009 and 2008, the ECP Division’s EBITDA was $1.4 million and $7.5 million, respectively.
ECP Division EBITDA Reconciliation to GAAP Net Earnings (Loss) (in millions of US dollars) | ||||
Three months | Nine months | |||
For the periods ended September 30, | 2009 | 2008 | 2009 | 2008 |
$ | $ | $ | $ | |
Divisional net earnings (loss) before income taxes | (0.9) | 2.3 | (3.4) | 3.1 |
Depreciation and amortization | 1.7 | 1.5 | 4.8 | 4.4 |
EBITDA | 0.8 | 3.8 | 1.4 | 7.5 |
EBITDA margin | 2.8% | 9.3% | 1.8% | 6.6% |
Outlook
“During the third quarter, we saw our customer base increase inventory levels. This restocking could translate into lower demand in the fourth quarter. Propylene-related raw material costs have escalated significantly in the past three months. Unfortunately there is no pricing power in the market and therefore we expect lower fourth quarter gross margins,” said Intertape Executive Director, Melbourne F. Yull.
Non-GAAP Information
This release contains a non-GAAP financial measure, EBITDA. The Company believes the inclusion of such a non-GAAP financial measure improves the transparency of the Company's disclosure, and is used by management and the Company's investors in evaluating the Company's performance. The Company has provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure.
A reconciliation of the Company’s EBITDA to GAAP net earnings (loss) is set out in the EBITDA reconciliation table below. EBITDA should not be construed as net earnings (loss) before income taxes, net earnings (loss) or cash flows from operating activities as determined by GAAP. The Company defines EBITDA as net earnings (loss) before (i) income taxes (recovery); (ii) financial expenses, net of amortization; (iii) refinancing expenses net of amortization; (iv) amortization of other intangibles and capitalized software costs; and (v) depreciation. Other companies in our industry may calculate EBITDA differently than we do. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or as an alternative to net earnings (loss) as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP. The Company has included this non-GAAP financial measure because it is used by management in evaluating the Company’s performance.
EBITDA Reconciliation to GAAP Net Earnings (Loss) (in millions of US dollars) | ||||
Three months | Nine months | |||
For the periods ended September 30, | 2009 | 2008 | 2009 | 2008 |
$ | $ | $ | $ | |
Net earnings (loss) – as reported | 2.0 | 4.2 | (5.8) | 7.0 |
Add back (deduct): Financial expenses, net of amortization | 3.2 | 4.7 | 11.8 | 13.1 |
Refinancing expenses, net of amortization | 2.9 | |||
Income taxes (recovery) | 1.4 | 0.8 | 1.3 | (1.0) |
Depreciation and amortization | 9.5 | 9.1 | 27.9 | 30.4 |
EBITDA | 16.1 | 18.8 | 35.2 | 52.4 |
Conference Call
A conference call to discuss Intertape's 2009 third quarter results will be held on Wednesday, November 11, 2009, at 10 A.M. Eastern Time. Participants may dial 1-800-288-8960 (U.S. and Canada) and 1-612-332-0530 (International). The conference call will be simultaneously broadcast on our website: www.intertapepolymer.com (Go to "Investor Relations", "Conference Call Notice" and click on "WebCast" icon for live Web Cast).
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 Access Code 121868. The recording will be available from Wednesday, November 11, 2009 at 12:00 P.M. until Friday, December 11, 2009 at 11:59 P.M., Eastern 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 2,100 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe.
Safe Harbor Statement
Certain statements and information included in this press release constitute forward-looking information within the meaning of applicable Canadian securities legislation and the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to the Company’s future outlook and anticipated events, the Company’s business, its operations, financial condition or results. Particularly, statements about the Company’s objectives and
strategies to achieve those objectives are forward-looking statements and are identified by terms such as “believe”, “expect”, “intend” “anticipate” and similar expressions. While these statements are based on certain factors and assumptions, which management considers to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information involves 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. The risks include, but are not limited to, exchange rate risk, deteriorating economic conditions, fluctuations in the amount of available funds under the Company’s ABL, ability to meet debt service obligations, cost and availability of raw materials, timing and market acceptance of new products, competition, international operations, compliance with environmental regulations and protection of intellectual property. A discussion of risk factors is also contained in the Company’s filings with the Canadian securities regulators and the U.S. Securities and Exchange Commission (“SEC”). Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This press release contains a non-GAAP financial measure as defined under SEC rules. The Company believes such a non-GAAP financial measure improves the transparency of the Company’s disclosures, and improves the period-to-period comparability of the Company’s results from its core business operations. As required by SEC rules, the Company has provided a reconciliation of the measure to the most directly comparable GAAP measure.
FOR FURTHER INFORMATION PLEASE CONTACT:
MaisonBrison
Rick Leckner
514-731-0000
Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended September 30,
(In thousands of US dollars, except per share amounts)
(Unaudited)
Three months | Nine months | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
Sales | 163,688 | 201,978 | 454,668 | 584,013 | ||||
Cost of sales | 137,295 | 172,772 | 391,926 | 500,280 | ||||
Gross profit | 26,393 | 29,206 | 62,742 | 83,733 | ||||
Selling, general and administrative expenses | 17,756 | 17,490 | 49,773 | 52,315 | ||||
Stock-based compensation expense | 255 | 348 | 767 | 1,098 | ||||
Research and development expenses | 1,449 | 1,334 | 4,117 | 4,303 | ||||
Financial expenses | ||||||||
Interest | 4,050 | 4,230 | 12,105 | 14,553 | ||||
Other | (525) | 806 | 505 | (523) | ||||
Refinancing (Note 8) | 6,031 | |||||||
22,985 | 24,208 | 67,267 | 77,777 | |||||
Earnings (loss) before income taxes | 3,408 | 4,998 | (4,525) | 5,956 | ||||
Income taxes (recovery) | ||||||||
Current | 155 | (374) | 549 | (48) | ||||
Future | 1,253 | 1,153 | 773 | (990) | ||||
1,408 | 779 | 1,322 | (1,038) | |||||
Net earnings (loss) | 2,000 | 4,219 | (5,847) | 6,994 | ||||
Earnings (loss) per share | ||||||||
Basic | 0.03 | 0.07 | (0.10) | 0.12 | ||||
Diluted | 0.03 | 0.07 | (0.10) | 0.12 | ||||
Intertape Polymer Group Inc.
Consolidated Deficit
Periods ended September 30,
(In thousands of US dollars)
(Unaudited)
Three months | Nine months | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
Balance, beginning of period | (168,367) | (64,959) | (160,533) | (67,482) | ||||
Cumulative impact of accounting changes relating to inventories | (252) | |||||||
Balance, beginning of period, as restated | (168,367) | (64,959) | (160,533) | (67,734) | ||||
Net earnings (loss) | 2,000 | 4,219 | (5,847) | 6,994 | ||||
Repurchase of common shares | 13 | |||||||
Balance, end of period | (166,367) | (60,740) | (166,367) | (60,740) | ||||
Intertape Polymer Group Inc.
Consolidated Comprehensive Income (Loss)
Periods ended September 30,
(In thousands of US dollars)
(Unaudited)
Three months | Nine months | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
Net earnings (loss) | 2,000 | 4,219 | (5,847) | 6,994 | ||||
Other comprehensive income (loss): | ||||||||
Changes in fair value of interest rate swap agreements, designated as cash flow hedges (net of future income taxes of nil for the three and nine months ended September 30, 2009, $105 and $680 for the three and nine months ended September 30, 2008, respectively) | 103 | 179 | (137) | (1,158) | ||||
Settlement of interest rate swap agreements, recorded in the consolidated earnings (net of income taxes of $1,080) | 1,840 | |||||||
Changes in fair value of investment in publicly traded securities designated as available-for-sale | (21) | 1,044 | ||||||
Gain on sale of investment in publicly traded securities, recorded in the consolidated earnings | (1,044) | (1,044) | ||||||
Changes in fair value of forward foreign exchange rate contracts, designated as cash flow hedges (net of future income taxes of nil for the three and nine months ended September 30, 2009) | 1,732 | 3,154 | ||||||
Settlement of forward foreign exchange rate contracts, recorded in the consolidated earnings (net of income taxes of nil for the three and nine months ended September 30, 2009) | (423) | (353) | ||||||
Gain on forward foreign exchange rate contracts recorded in the consolidated earnings pursuant to recognition of the hedged item in cost of sales | (453) | |||||||
Reduction in net investment in a foreign subsidiary | (125) | (1,143) | ||||||
Changes in accumulated currency translation adjustments | 8,073 | (6,401) | 13,236 | (9,356) | ||||
Other comprehensive income (loss) | 8,420 | (6,222) | 15,322 | (9,817) | ||||
Comprehensive income (loss) for the period | 10,420 | (2,003) | 9,475 | (2,823) | ||||
Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended September 30,
(In thousands of US dollars)
(Unaudited)
Three months | Nine months | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
OPERATING ACTIVITIES | ||||||||
Net earnings (loss) | 2,000 | 4,219 | (5,847) | 6,994 | ||||
Non-cash items | ||||||||
Depreciation, amortization and accretion expense | 9,480 | 9,081 | 27,974 | 27,306 | ||||
Loss on disposal of property, plant and equipment | 155 | 304 | 478 | 207 | ||||
Write-off of debt issue expenses in connection with debt refinancing | 3,111 | |||||||
Write-down of inventories | 782 | 1,046 | ||||||
Reversal of a portion of a write-down of inventories | (390) | (2,082) | ||||||
Future income taxes | 1,253 | 1,153 | 773 | (990) | ||||
Stock-based compensation expense | 255 | 349 | 767 | 1,099 | ||||
Pension and post-retirement benefits funding in excess of amounts expensed | 435 | (340) | 1,228 | (1,240) | ||||
Gain on forward foreign exchange rate contracts | 453 | |||||||
Change in fair value of forward foreign exchange rate contracts | (110) | |||||||
Unrealized foreign exchange loss | 3 | 57 | ||||||
Gain on sale of publicly traded securities | (1,044) | (1,044) | ||||||
Foreign exchange gain resulting from reduction in net investment in a foreign subsidiary | (125) | |||||||
Other | 166 | 288 | ||||||
Cash flows from operations before changes in working capital items | 13,438 | 14,766 | 23,513 | 36,487 | ||||
Changes in working capital items | ||||||||
Trade receivables | 164 | (5,100) | (4,922) | (18,349) | ||||
Other receivables | (688) | 231 | 451 | (460) | ||||
Inventories | (1,445) | (4,713) | 12,243 | (16,043) | ||||
Parts and supplies | (9) | (283) | (420) | (638) | ||||
Prepaid expenses | 172 | (270) | (700) | 17 | ||||
Accounts payable and accrued liabilities | (21,996) | 4,560 | (19,770) | 7,620 | ||||
(23,802) | (5,575) | (13,118) | (27,853) | |||||
Cash flows from operating activities | (10,364) | 9,191 | 10,395 | 8,634 | ||||
INVESTING ACTIVITIES | ||||||||
Property, plant and equipment | (2,435) | (8,972) | (9,695) | (17,964) | ||||
Proceeds on disposal of property, plant and equipment | 10 | 8 | 10 | 3,122 | ||||
Proceeds on disposal of investment in publicly traded securities | 1,044 | 1,044 | ||||||
Other assets | (53) | (260) | (107) | (684) | ||||
Intangible assets | (2,637) | (933) | (2,637) | |||||
Cash flows from investing activities | (1,434) | (11,861) | (9,681) | (18,163) | ||||
FINANCING ACTIVITIES | ||||||||
Long-term debt | 9,143 | 9,622 | 13,752 | 136,211 | ||||
Debt issue expenses | (2,643) | |||||||
Repayment of long-term debt | (182) | (6,187) | (23,928) | (127,999) | ||||
Repurchase of common shares | (18) | |||||||
Cash flows from financing activities | 8,961 | 3,435 | (10,194) | 5,569 | ||||
Net increase (decrease) in cash | (2,837) | 765 | (9,480) | (3,960) | ||||
Effect of foreign currency translation adjustments | 319 | (621) | 479 | (632) | ||||
Cash, beginning of period | 8,907 | 10,793 | 15,390 | 15,529 | ||||
Cash, end of period | 6,389 | 10,937 | 6,389 | 10,937 | ||||
Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)
September 30, | December 31, | |||
$ | $ | |||
ASSETS | ||||
Current assets | ||||
Cash | 6,389 | 15,390 | ||
Trade receivables | 82,003 | 75,467 | ||
Other receivables | 3,834 | 4,093 | ||
Inventories | 82,647 | 90,846 | ||
Parts and supplies | 14,796 | 14,119 | ||
Prepaid expenses | 3,767 | 3,037 | ||
Derivative financial instruments | 2,091 | |||
Future income taxes | 9,129 | 9,064 | ||
204,656 | 212,016 | |||
Property, plant and equipment | 278,966 | 289,763 | ||
Other assets | 22,134 | 22,364 | ||
Intangible assets (Note 7) | 3,662 | 3,956 | ||
Future income taxes | 48,103 | 47,067 | ||
557,521 | 575,166 | |||
LIABILITIES | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | 59,486 | 78,249 | ||
Installments on long-term debt | 1,002 | 623 | ||
60,488 | 78,872 | |||
Long-term debt (Note 8) | 240,850 | 250,802 | ||
Pension and post-retirement benefits | 10,113 | 9,206 | ||
Derivative financial instruments | 1,750 | 2,969 | ||
Other liabilities (Note 9) | 779 | |||
313,980 | 341,849 | |||
SHAREHOLDERS’ EQUITY | ||||
Capital stock (Note 10) | 348,143 | 348,174 | ||
Contributed surplus (Note 10) | 13,891 | 13,124 | ||
Deficit | (166,367) | (160,533) | ||
Accumulated other comprehensive income (Note 11) | 47,874 | 32,552 | ||
(118,493) | (127,981) | |||
243,541 | 233,317 | |||
557,521 | 575,166 |
ORLDOCS 11663940 1