Investor Presentation. May 2013

Transcription

1 Investor Presentation May 2013

2 Safe Harbor Statement Certain statements and information included in this presentation constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of United States federal securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical facts included in this presentation, including statements regarding our industry and our prospects, plans, financial position and business strategy, may constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate as well as beliefs and assumptions made by our management. Such statements include, in particular, statements about our plans, prospects, financial position and business strategies. Words such as "may," "will," "expect," "continue," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "seek" or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: our anticipated business strategies; anticipated savings from the Company s manufacturing plant rationalization initiatives; anticipated trends in our business; anticipated cash flows from the Company s operations; availability of funds under the Company s Asset-Based Loan facility; and our ability to continue to control costs. The Company can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. For additional information regarding important factors that could cause actual results to differ materially from those expressed in these forwardlooking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read "Item 3. Key Information - Risk Factors" as well as statements located elsewhere in the Company's annual report on Form 20-F for the year ended December 31, 2012 and the other factors contained in our filings with the Canadian securities regulators and the US Securities and Exchange Commission. Each of these forward-looking statements speaks only as of the date of this presentation. The Company will not update these statements unless applicable securities laws require us to do so. This presentation contains certain non-gaap financial measures as defined under applicable securities legislation. The Company believes such non-gaap financial measures improve 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 applicable securities legislation, the Company has provided a reconciliation of the non-gaap financial measures contained in this presentation to the most directly comparable GAAP measures on its website at under Investor Relations and Financial Presentations. Investor Presentation 2

3 Profile The second largest tape manufacturer in North America Tapes and Films (~85% of 2012 sales) Engineered Coated Products (~15% of 2012 sales) Employs ~1,800 persons with 10 manufacturing facilities in North America and one in Europe Quarter revenue of $197 million Investor Presentation 3

4 Manufacturing Footprint Tremonton, Utah Menasha, Wisconsin Brighton, Colorado Carbondale, Illinois Langley, British Columbia Marysville, Michigan Truro, Nova Scotia Danville, Virginia Porto, Portugal Columbia, (1) South Carolina Tampa, Florida (1) In February 2013, the Company announced that it plans to relocate and modernize the Columbia, South Carolina manufacturing operation to Blythewood, South Carolina, which is in close proximity to Columbia. Investor Presentation 4

5 North American Distribution Network Supported by 2,600+ distributors across multiple channels and customers Access to every major industrial and population center in North America Customers Manufacturing Facilities Investor Presentation 5

6 IPG at a Glance Industrial Packaging Marine & Composites HVAC Building & Construction Geo Membrane Structured Fabrics Automotive Aftermarket Aerospace Investor Presentation 6

7 Market Leadership Positions in Core Products North American Market Position #1 #2 North American Market Position #1 #2 Carton Sealing Tapes Building & Construction Hot Melt Lumber Wrap Natural Rubber Fiberglass Sleeves Water-Activated Agro-Environmental Industrial & Specialty Tapes Structure Fabrics Paper Flatback Filament Stencil Hay Cover Fabrics Poultry Fabrics Woven Coated Geo Membrane Approximately 60% of 2012 sales from products with a top 2 market position Investor Presentation 7

8 Gross Margin Focus Components to Reach Goal of 18%-20% Market Pricing Dynamics Mix Internal External Focus on a portfolio of higher margin products Launch of new products New markets Cost Reduction and Leverage Manufacturing cost reduction programs Leverage existing resources The Company does not update forward looking statements unless required by applicable securities laws. All forward looking statements set forth herein are made as of May 14, 2013 and should not be interpreted as a confirmation of any estimates set forth herein. Investor Presentation 8

9 Pricing Power Raw material costs remain somewhat volatile Pricing environment has improved since 2010 Q ASP decreased approximately 1% from Q Shift toward lower priced mix of products sold, partially offset by higher selling prices Q ASP increased approximately 3% from Q Shift toward higher price mix of products sold and higher selling prices ASP increased approximately 3% from 2011 to 2012 after adjusting for the closure of the Brantford, Ontario facility - Higher selling prices and improved shift in the mix of products sold Investor Presentation 9

10 Portfolio of Higher Margin Products Combines new and existing products with higher margins Sales and marketing emphasis on this group of products alignment of compensation Important part of path toward consistently achieving gross margin in the higher end of the targeted goal Long sales cycle of new products Investor Presentation 10

11 New Products new products More than 135 new products with over 60% in the Tape category new products 35 new products New products represented more than 15% of total revenue for new products Investor Presentation 11

12 Reduce Manufacturing Costs and Leverage Capacity Manufacturing cost reductions totalled more than $17 million in 2012 and totalled approximately $3 million for the first quarter of Manufacturing cost reductions are anticipated to be between $16 and $20 million in 2013: Productivity improvements Material: reducing waste and lower cost raw material substitutions Energy saving measures Closure of Richmond manufacturing facility Manage our manufacturing capacity available in relation to: Volume Mix New products Future manufacturing cost structure reduction: - The Company plans to relocate and modernize its Columbia, South Carolina manufacturing operation with state-of-the-art equipment in a new facility. The Company anticipates total annual cash savings in excess of $13 million starting in the first half of 2015 with the first full year effects in Investor Presentation 12

13 2013 Q1 Results: Year over Year in millions US $ (except per share amounts) Investor Presentation 13 Q Q (1) Change Revenue $196.7 $ % Gross profit % Net earnings/(loss) % Adj net earnings % Adj EBITDA % EPS/(loss), fully diluted % Adj EPS, fully diluted % Sales volume increased slightly when compared to Q Average Selling Price decreased approximately 1% when compared to Q (1) 2012 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits

14 2013 Q1 Results: Sequential in millions US $ (except per share amounts) Investor Presentation 14 Q Q (1) Change Revenue $196.7 $ % Gross profit % Net earnings/(loss) % Adj net earnings % Adj EBITDA % EPS(loss), fully diluted % Adj EPS, fully diluted % Sales volume increased approximately 1% when compared to Q Average Selling Price increased approximately 3% when compared to Q (1) 2012 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits

15 2012 Full Year Results (1) in millions US $ (except per share amounts) Full Year Full Year Change Revenue $784.4 $ % Gross profit % Net earnings % Adj net earnings % Adj EBITDA % EPS, fully diluted % Adj EPS, fully diluted % Sales volume after adjusting for the closure of the Brantford facility, decreased approximately 3% when compared to Full Year 2011 Average Selling Price after adjusting for the closure of the Brantford facility, increased approximately 3% from Full Year 2011 (1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits Investor Presentation 15

16 Quarterly Revenue $US millions Investor Presentation 16

17 Quarterly Gross Profit and Gross Margin (1) $US millions (1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits Investor Presentation 17

18 Quarterly Adjusted EBITDA (1) $US millions (1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits Investor Presentation 18

19 Debt $US millions Investor Presentation 19

20 Debt Structure Senior Subordinated Notes ( Notes ) (bearing interest at 8½%) Remaining $38.7 million $25 million redeemed in August 2012 $55 million redeemed in December 2012 $20 million to be redeemed in June 2013 Asset Based Loan ( ABL ) facility (interest rate currently less than 3%) Amended and extended in February 2012 Matures in February 2017; subject to timely retirement of Notes Equipment Finance Agreement (interest rate currently less than 3%) Entered into a facility in August 2012 Lifetime and maximum funding amount of $24 million of which $12.0 million of availability remained as of March 31, 2013 Multiple individual capital leases, each of which will have a term of 60 months and a fixed interest rate Final funding to occur by December 2013 Real Estate Term Loan ( interest rate currently less than 3%) Entered into a $16.6 million agreement in November day LIBOR plus a loan margin between 225 and 275 BPS depending on debt to EBITDA ratio Matures in November 2022 but the maturity date could be accelerated if the ABL facility is not extended Average cost of debt decreased from about 6% at December 31, 2011 to about 4% at March 31, 2013 Investor Presentation 20

21 Components of Debt (Millions of USD) 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 ABL Borrowings Bonds Notional Amount Term Debt (1) Mortgages Capital Leases (2) Other (3) Unamortized Fees (3.6) (3.3) (3.0) (2.7) (3.8) (3.5) (3.0) (3.0) (2.6) Total Debt As Reported (1) Includes real estate term loan (2) Includes advance fundings (3) Includes forgivable municipal loan Investor Presentation 21

22 Debt to TTM Adjusted EBITDA Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q CGAAP Investor Presentation 22

23 Cash Taxes and Tax Expenses Cash Taxes NOLs (as of December 31, 2012) $49.6 million of Canadian NOLs $140.0 million of US NOLs 99% expire after 2020 Expected to be less than $2 million for 2013 Cash tax payments are expected to be primarily State taxes Tax Expenses The total tax expense and effective income tax rate in 2013 may vary significantly from prior years due to the accounting for tax assets in conjunction with the impact of restructuring charges and other adjustments. Such potential variations would, therefore, not necessarily be indicative of future income tax payments. No tax asset has been recognized for the US entities as of December 31, 2012 No cash taxes are expected for the Canadian entities, tax expense is expected to be recognized as the tax assets are reduced in conjunction with taxable income Investor Presentation 23

24 Outlook Q Revenue for the second quarter of 2013 is expected to be slightly lower than the first quarter of 2013; Gross margin for the second quarter of 2013 is expected to be slightly higher than the first quarter of 2013; Adjusted EBITDA for the second quarter of 2013 is expected to be slightly higher than the first quarter of 2013; Capital expenditures are expected to be $19 to $22 million for the second quarter of 2013, $48 to $54 million for total 2013 and $21 to $26 million in These amounts include capital expenditures for the manufacturing rationalization projects; and Total debt at June 30, 2013 is expected to be higher than at March 31, 2013 due to an increase in capital expenditures and payment of a dividend. Announced $20.0 million redemption of the Notes on June 27, 2013 is expected to result in a lower average cost of debt as of June 30, 2013 as compared to prior periods. The remaining $18.7 million of the Notes are expected to be redeemed later in Investor Presentation 24

25 Outlook Q The Company recently ceased production at its Richmond, Kentucky manufacturing facility as well as shrink film production at its Truro, Nova Scotia facility. Cash savings related to these projects are expected to total $5 million in 2013 and approximately $6 million annually in future years. The Company plans to relocate and modernize its Columbia, South Carolina manufacturing operation with state-of-the-art equipment in a new facility. The Company anticipates total annual cash savings in excess of $13 million starting in the first half of 2015 with the first full year effects in Estimated restructuring expenses and cash flows for these projects are summarized on the following slide. Investor Presentation 25

26 Outlook Q South Carolina Project After 2013 Q4 Q1 Q2 2nd Half Total Actual Actual Est. Est. Range Est. Range Impact on statement of earnings (loss): Non-cash charges Charges related to equipment moves, severance and environmental Total Timing of cash outflows: Capital expenditures (including real estate $14.5 to $16.0) Cash outflows for equipment moves, severance and environmental Total All Manufacturing Rationalization Projects including South Carolina Project After 2013 Q4 Q1 Q2 2nd Half Total Actual Actual Est. Est. Range Est. Range Impact on statement of earnings (loss): Non-cash charges, net of asset impairment recoveries Charges related to equipment moves, severance and environmental Total Timing of cash outflows: Capital expenditures including real estate Cash outflows for equipment moves, severance and environmental Total Investor Presentation 26

27 Thank You Question and answer period Investor Presentation 27