Imaflex Delivers Solid Q1 2024 Results, Provides Business Update

Robust sales and earnings drive growth

Highlights

• Revenues of $27.4 million, up 17.9% from $23.2 million in Q1 2023
• Net income of $1.8 million ($0.04 cents per share¹), up 100.1% from $0.9 million ($0.02 cents per share) in prior year
• EBITDA² of $3.6 million (13.3% sales), up 65.0% over Q1 2023
• Strong balance sheet with cash available for operating activities totalling $8.5 million at quarter end, including a cash balance of $0.9 million and another $7.6 million under Imaflex's $12.0 million revolving line of credit

MONTRÉAL, May 29, 2024 /CNW/ - Imaflex Inc. ("Imaflex" or the "Corporation") (TSXV: IFX) reports consolidated financial results for the first quarter (Q1) ended March 31, 2024 and provides a business update. All amounts are in Canadian dollars.

"Imaflex saw a marked improvement in results for the first quarter of 2024, with revenues and profitability growing materially over the corresponding prior year period," said Mr. Abbandonato, President and Chief Executive Officer of Imaflex. "With a solid foundation we expect continued strength going forward, though the pace and magnitude remain uncertain."

Delivering Sustainable Growth
"We are excited about our future and encouraged by the growth platform we have built in recent years," continued Mr. Abbandonato. In 2022, Imaflex announced important investments to support and increase its production capacity and capabilities. This included the purchase of three co-extruders, and other ancillary flexible packaging equipment, namely a metallizer. The new extruders double Imaflex's multi-layer extrusion capacity and generate an additional 12 to 15 million pounds of film per year, depending on product mix. Collectively, these investments should bring a more meaningful impact to revenues and profitability, while also heightening operational efficiencies. As previously announced, the first extruder and metallizer are installed and fully operational and the benefits are already being seen. The remaining extruders will be coming on-line in the second half of 2024. Following an initial ramp-up period, it takes approximately 18 months for a new extruder to be completely utilized. "The strong performance achieved in past years was driven by our prior capital initiatives and we are confident this proven process can be repeated with these new purchases."

"The Board and Imaflex's management team are focused on driving shareholder returns and we regularly assess strategic alternatives beyond capital investments. This may include evaluating potential share buybacks in the future, or other initiatives subject to market conditions and other relevant factors. With a strong balance sheet, Imaflex is in an enviable position, and we are confident the actions we are taking position the business for sustainable growth and future success."

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¹ Based on basic and diluted weighted shares outstanding

² EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. See "Caution Regarding Non-IFRS Financial Measures" which follows.

Succession Planning
"Together with the Board of Directors, we recognize the importance of proactive leadership planning to ensure our on-going success," said Mr. Abbandonato. "After founding Imaflex and dedicating over thirty years of service, I have decided to transition to the role of Executive Chairman in the next year. This will allow me to keep supporting the business in a strategic advisory capacity, while paving the way for new leadership to guide the Corporation through its next chapter of growth. With the Board's full support, we have initiated a CEO succession planning process to ensure a smooth leadership transition. We will provide further updates in due course." 

Consolidated Financial Highlights (unaudited) 

	Three months ended March 31,
CDN $ thousands, except per share amounts (or otherwise indicated)	2024	2023	% Change
Revenues	27,404	23,236	17.9 %
Gross Profit	4,031	3,180	26.8 %
Selling & admin. expenses	2,182	1,978	10.3 %
Other (gains) losses	(525)	(4)	n/a
Net income	1,847	923	100.1 %
Basic EPS	0.04	0.02	100.0 %
Diluted EPS	0.04	0.02	100.0 %
Gross margin	14.7 %	13.7 %	1.0 pp
Selling & admin. expenses as % of revenues	8.0 %	8.5 %	(0.5) pp
EBITDA (Excluding FX)	3,114	2,256	38.0 %
EBITDA	3,639	2,206	65.0 %
EBITDA margin	13.3 %	9.5 %	3.8 pp

Financial Review: Quarter Ended March 31
Revenues
Revenues were $27.4 million for the first quarter of 2024, up 17.9% from $23.2 million in 2023. The increase was driven by higher volumes, with growth coming from both Canadian and U.S. operations (pounds).

Gross Profit 
Gross profit came in at $4.0 million (14.7% of sales) for the current quarter, versus $3.2 million (13.7% of sales) in 2023. Although price competition remains strong, the Corporation is benefitting from higher sales volumes, along with operational efficiencies and on-going cost controls.

Operating Expenses
Selling and Administrative expenses were $2.2 million (8.0% of sales) for the current quarter, up modestly from $2.0 million (8.5% of sales) in 2023. The improvement in the selling expense ratio was driven by the higher sales base in 2024.

Imaflex recorded other gains of $0.5 million in the quarter, resulting from movements in foreign exchange. This compares to other gains of $4 thousand in 2023, consisting of $51 thousand in foreign exchange losses and $55 thousand in interest revenue.

A majority of the Corporation's foreign exchange gains and losses are non-cash impacting and largely relate to intercompany balances for which Imaflex can control the time of settlement.

Net Income and EBITDA
The Company recorded net income of $1.8 million for the first quarter of 2024, up 100.1% from $0.9 million in 2023. The year-over-year increase was driven by the higher gross profit and foreign exchange gain in the first quarter of 2024, versus the corresponding prior year period.

EBITDA came in at $3.6 million (13.3% of sales) for the first quarter of 2024, up 65% from $2.2 million (9.5% of sales) in 2023. On a constant currency basis, EBITDA came in at $3.1 million (11.4% of sales) for the current quarter, up from $2.3 million (9.7% of sales) in 2023.

Liquidity and Capital Resources
Net cash flows generated by operating activities, before movements in working capital and taxes paid, stood at $3.1 million for the first quarter of 2024, up $0.9 million from the corresponding prior year period. The year-over-year increase was driven by the higher profit in the current quarter. Including movements in working capital and taxes paid, the Company recorded net cash outflows in operating activities of $2.0 million for the current quarter versus inflows of $3.5 million in 2023. The $5.5 million decrease versus 2023 is mainly due to year-over-year movements in trade & other payables and inventories.

As at March 31, 2024, cash available for operating activities totaled $8.5 million, including a cash balance of $0.9 million and another $7.6 million under Imaflex's $12.0 million revolving line of credit. During the quarter the Corporation invested $1.2 million, largely towards the new extrusion equipment purchases announced in Q2 2022. To help finance this, the Corporation secured $3.0 million in lease financing during the quarter. These investments enhance our production capacity and capabilities, which should ultimately drive sales growth and profitability. "As we approach the completion of our multi-year capital asset purchase program, we are shifting our focus to maximizing asset utilization and unlocking the operational efficiencies they deliver," said 
Mr. Abbandonato. Capital asset expenditures are expected to move towards historical levels. 

ADVASEAL^® Update
Imaflex continues to believe in the potential of ADVASEAL^® and securing U.S. Environmental Protection Agency ("EPA") approval remains a key objective. As is typical with the EPA's review process, no specific timeline for a decision has been given, although it is taking longer than the Corporation originally expected.

Outlook
"Imaflex is well-positioned for continued growth, although the pace and scale remain uncertain due to market conditions," said Mr. Abbandonato. All major equipment purchases have now been received and the two remaining extruders will be coming online soon. "These investments should significantly increase our multi-layer capabilities and drive operational efficiencies. Collectively, this should position us to achieve higher contributions than historical norms. With a healthy balance sheet we have the financial flexibility to deliver sustainable growth and navigate potential uncertainties."

Annual General Meeting
Imaflex will be holding a live virtual-only Annual General Meeting this year to allow for greater participation by shareholders and their proxyholders. It will be held on Thursday June 13, 2024 at 10:00 a.m. (Montréal time) via live audio webcast only. All shareholders will be able to attend the meeting. Information on how to participate can be found in Imaflex's Management Information Circular dated May 16, 2024, or on Imaflex's website at www.imaflex.com ("news & events/events & presentations") and under Imaflex's profile at www.sedarplus.ca. 

Caution Regarding Non-IFRS Financial Measures
The Company's management uses non-IFRS measures in this press release, namely EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and EBITDA excluding foreign exchange.

While EBITDA is not a standard International Financial Reporting Standards (IFRS) measure, management, analysts, investors and others use it as an indicator of the Company's financial and operating management and performance. EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the Company's performance. The Company's method of calculating EBITDA may be different from those used by other companies and accordingly they should not be considered in isolation.

About Imaflex Inc.
Founded in 1994, Imaflex is focused on the development and manufacturing of innovative solutions for the flexible packaging space. Concurrently, the Corporation develops and manufactures films for the agriculture industry. The Corporation's products consist primarily of polyethylene (plastic) film and bags, including metalized plastic film, for the industrial, agricultural and consumer markets. Headquartered in Montreal, Quebec, Imaflex has manufacturing facilities in Canada and the United States. The Corporation's common stock is listed on the TSX Venture Exchange under the ticker symbol IFX. Additional information is available at www.imaflex.com.

Cautionary Statement on Forward Looking Information
Certain information included in this press release constitutes "forward-looking" statements within the meaning of Canadian securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the management of the Corporation, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies. The Corporation cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance, or achievements of Imaflex to be materially different from the Corporation's estimated future results, performance or achievements expressed or implied by those forward-looking statements and that the forward-looking statements are not guarantees of future performance. These statements are also based on certain factors and assumptions. For more details on these estimates, risks, assumptions and factors, see the Corporation's most recent Management Discussion and Analysis filed on SEDAR+ at www.sedarplus.ca and on the investor section of the Corporation's website at www.imaflex.com. The Corporation disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Imaflex Inc.

Imaflex Contact: John Ripplinger, Vice-President Corporate Affairs, Tel: [phone] ext. 157, Fax: [phone], [email protected], www.imaflex.com