IPL Plastics Inc. Reports First Quarter 2020 Financial Results
MONTREAL, May 13, 2020 (GLOBE NEWSWIRE) -- IPL Plastics Inc. (“IPL Plastics”, “IPLP”, the “Group” or the “Company”) (IPLP.TO) today reported financial results for the first quarter ended March 31, 2020 (“Q1 2020”).
All financial information is in U.S. dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See “Non-IFRS Financial Measures” below.
Results for Q1 2020 reflect a satisfactory performance with further improvement in Adjusted EBITDA margins compared to Q1 2019. Net income also increased from $1.1 million in Q1 2019 to $1.9 million in Q1 2020.
Q1 2020 Key Highlights
Revenue decreased by 0.5% to $141.1 million for Q1 2020 (Q1 2019: $141.8 million);
Revenue in the Consumer Packaging Solutions (“CPS”) division increased from $45.3 million in Q1 2019 to $58.3 million in Q1 2020, revenue in the Large Format Packaging and Environmental Solutions (“LF&E”) division decreased to $63.0 million in Q1 2020 from $74.2 million in Q1 2019, and the Returnable Packaging Solutions (“RPS”) division’s revenue decreased from $16.6 million in Q1 2019 to $15.7 million in Q1 2020;
Adjusted EBITDA was $19.1 million in Q1 2020 compared to $17.3 million in Q1 2019;
Overall Group Adjusted EBITDA margins have improved from 12.2% in Q1 2019 to 13.5% in Q1 2020, with improvements in each of the divisions. CPS margins improved from 16.9% in Q1 2019 to 19% in Q1 2020, LF&E margins improved to 15.2% in Q1 2020, from 14.6% in Q1 2019, and RPS margins improved to 7.3% for Q1 2020 from 5.7% in Q1 2019;
Net income was $1.9 million for Q1 2020, an increase of $0.8 million from $1.1 million for Q1 2019;
Net cash flows used in operating activities increased by $3.8 million from an outflow of $5.1 million for Q1 2019 to an outflow of $8.9 million for Q1 2020; and
Net Debt has increased from $297.4 million at December 31, 2019 to $315.1 million at March 31, 2020 primarily due to drawdown of borrowings to fund the acquisition of the trade and assets of a UK based injection molding company, and for seasonal increases in working capital.
Commenting on the results, Alan Walsh, CEO of IPL Plastics said
“Like most other businesses, COVID-19 has forced IPL to face unprecedented challenges, with the safety of our 2,000 employees being at all times our top priority. We have had to adapt, implementing a range of measures that allowed us to keep each of our 14 facilities around the world operational. The diversity of our product range and end markets served has acted as a natural hedge against a more significant fall-off in demand experienced by many businesses as a result of the impact of COVID-19 and associated containment measures.
Although the nature of this crisis means that future market conditions are far from certain, IPL remains well positioned to take advantage of any end-market growth opportunities which may arise.”
First Quarter 2020 Financial Results
($million, unless otherwise specified) | Q1 2020 | Q1 2019 | % change |
Revenue | 141.1 | 141.8 | (0.5%) |
Gross Profit | 26.4 | 26.2 | 0.8% |
Adjusted EBITDA(1) | 19.1 | 17.3 | 10.4% |
Net Income | 1.9 | 1.1 | 72.7% |
Adjusted Net Income(1) | 4.6 | 4.4 | 4.5% |
Adjusted Diluted Earnings Per Share (in $)(1) | 0.08 | 0.08 | - |
Net Cash Flows from Operating Activities | (8.9) | (5.1) | (74.5%) |
Adjusted Free Cash Flow(1) | (16.2) | (7.3) | NM(2) |
(1) | Non-IFRS Financial Measure: A reconciliation to the most directly comparable measure calculated in accordance with IFRS is presented below. |
(2) | Not meaningful (“NM”) |
Revenue decreased by 0.5% to $141.1 million in Q1 2020 compared to $141.8 million in Q1 2019. The revenue decrease was driven by a reduction in sales volumes in the LF&E division in North America, a reduction in environmental container rollouts in the LF&E division in Europe, a decrease in MacroTrac sales in the RPS division and reduced demand from CPS’ largest European customer (electronics sector), partially offset by the contribution from the acquisition of Loomans and volume growth in the CPS division in North America.
Gross profit, gross profit margin, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBIT all increased in Q1 2020 when compared with Q1 2019. These increases were driven primarily by decreases in resin input costs, foreign exchange gains and the contribution from the acquisition of Loomans, partially offset by increases in labor costs and other selling, general and administrative expenses including central overheads.
Net income for Q1 2020 was $1.9 million, compared with net income for Q1 2019 of $1.1 million. The increase in net income was primarily due to a tax credit of $1.5 million in Q1 2020, offset by increased finance costs and transaction, reorganization, and integration costs primarily due to the restructuring initiatives implemented in the RPS and CPS Europe divisions in Q1 2020. Adjusted Net Income increased by $0.2 million to $4.6 million for Q1 2020.
Diluted Earnings per Share increased by 1 cent to $0.03 in Q1 2020, compared with $0.02 in Q1 2019. Adjusted Diluted Earnings per Share was $0.08 for Q1 2020, which is in line with Q1 2019.
Cash outflow with respect to capital purchases of property, plant and equipment amounted to $12.4 million in Q1 2020 (Q1 2019: $14.6 million), with $8.0 million related to strategic and development capital expenditure and $4.4 million of maintenance capital expenditure.
Net cash flows used in operating activities increased by $3.8 million from an outflow of $5.1 million to an outflow of $8.9 million in Q1 2020. Adjusted Free Cash Flow increased by $8.9 million from $7.3 million for Q1 2019 to $16.2 million for Q1 2020.
Impact of COVID-19
The current health emergency caused by the spread of COVID-19 has significant implications for the economies and markets in which we operate. We are following the advice of the World Health Organization and the Centre for Disease Control as well as local government guidelines in the jurisdictions in which we have operations. We continue to evaluate and assess the impact of COVID-19 on our business and operations as new facts and circumstances emerge.
The health and safety of our employees is of the utmost importance and we have moved rapidly to put appropriate and responsive measures in place to protect their safety and well-being. The business has also had to respond rapidly to comply with many new governmental regulations in each of the jurisdictions in which we operate and in adjusting, adopting and coordinating ways of working as we restructure our business to ensure the health and safety of our employees as we continue to deliver quality and safe products to our customers. We continue to work closely with our operational management teams across the organization, ensuring that policies, procedures and plans are in place to help minimize the negative impact on the business.
We have implemented an extensive range of business continuity and contingency planning measures as we continue to keep all 14 of our manufacturing facilities operational. In jurisdictions where it is applicable, our plants are considered to manufacture essential products for essential businesses. Due to the unprecedented level of volatility in our markets and the uncertainty surrounding the extent and duration of government restrictions that are currently being implemented, the impact on future demand for IPL’s products cannot be reliably estimated at this time. On the one hand, we have experienced increased demand for some of our products such as food packaging containers, while on the other hand, we have seen a slow-down in demand for certain of our other products.
The Company has not experienced any delays in the delivery of resin to the plants to date as a result of COVID-19 and monitors the situation closely with its suppliers. There have been no significant disruptions to the procurement of other materials or other inputs to the manufacturing process. The logistics network remains in operation, however certain elements of it have been affected by the stay-at-home orders. In some cases, IPLP is utilizing its own logistics suppliers to support customers that would typically have their own transportation suppliers.
The scale of the impact of the virus on our operating results is dependent on the duration of existing containment measures, the time frame over which these measures get relaxed as economies re-open and the extent of measures which remain in place in the longer term.
We expect the practices of social distancing, contact tracing and isolation measures will remain in place until the end of 2020 and possibly beyond (until either treatments or a vaccine are developed or both). We are now developing revisions to our COVID-19 internal procedures to incorporate new practices to cater for what we believe will be a loosening up of governmental enforced lockdown measures.
Overall, we are encouraged by the resilience of our business model which has responded to the very serious challenges which have arisen as every area of our business’ resilience has been tested. We are grateful to the incredible contribution of our staff and management teams and their continuing enormous efforts in meeting the challenges presented by the COVID-19 pandemic head-on.
Outlook
Results for Q1 2020 as measured by EBITDA were in line with Q1 2019, when the prior year comparative results are adjusted for the inclusion of the EBITDA contribution for Loomans. While we did experience a reduction in revenues during March 2020 of certain products, particularly food service pails in North America, our overall revenues for Q1 2020 were not significantly adversely impacted by COVID-19 as the spread of the virus was only in its early stages in Europe and North America.
We expect that our Q2 2020 revenues will be more adversely impacted by COVID-19. In particular the LF&E division has experienced a slow-down in sales of food service pails in North America, along with delays in request-for-proposals and new orders for some environmental products in North America and a reduction in demand for industrial products in the U.K market which have been partially offset by an increase in demand for material handling products from customers experiencing an increase in demand for bread, meat trays and home delivery totes. The CPS division has experienced an increase in volume for food packaging generally, however there has been a reduction in sales to some customers, notably those dependent on the hospitality sector. The RPS division has experienced a decrease in demand for MacroTrac products as a result of the cancellation of all outdoor recreational events, concerts and tradeshows and in automotive bin sales which have also slowed. .
The U.S. dollar strengthened when compared to the Canadian dollar, Pound Sterling and euro giving rise to an unfavorable impact on revenue in Q1 2020 when compared with the same period in 2019. Due to macro factors such as global unrest and conflict, trade negotiations, the final agreed terms of Britain’s exit from the European Union and other uncertainties including the impact of COVID-19, it is expected that foreign currency volatility will continue to impact results during 2020.
In North America, average IHS resin index prices for polypropylene were 15.0% lower in Q1 2020 compared with Q1 2019 while HDPE polyethylene prices increased by 1.2% when compared with Q1 2019. In Europe, average ICIS resin index prices for polypropylene and polyethylene were 10.5% and 9.1% lower respectively in Q1 2020 compared with Q1 2019. Given the current volatility in the markets, the near-term outlook for Q2 2020 resin pricing is uncertain. In North America, the IHS resin price per pound of polypropylene and polyethylene in April 2020 are 19.0% and 6.8% lower when compared with the prices as of April 2019. In Europe, ICIS resin price per tonne of polypropylene and polyethylene in April 2020 are 19.4% and 21.3% lower when compared with the prices as of April 2019.
As we manage our way through the COVID-19 crisis our priorities are clear which are to protect and preserve at all times the health and safety of our employees, keep our 14 manufacturing facilities operational, deliver quality and safe products to our customers, eliminate or defer non-essential capital expenditure, reduce costs and rationalize areas of the business where demand has reduced. We also want to manage working capital and maintain high levels of free cash balances and liquidity which provide business resilience and will position the Company to recover when affected end-markets which we serve start to emerge from the crisis as economies start to relax COVID-19 lockdown and containment measures.
The global COVID-19 pandemic is expected to have a material impact on economic activity across our markets in 2020. Due to the unprecedented level of volatility in our markets and the uncertainty surrounding the extent and duration of government restrictions that are currently being implemented, the impact on IPL’s revenues, cashflows and profitability in 2020 cannot be reasonably estimated at this time. The effect of global economic stimulus packages, employment and other supports mechanisms on economic activity will take time to be understood and absorbed in the jurisdictions in which we operate. The Group continues to monitor the situation closely and further updates will be provided when visibility improves, and we have greater clarity over the expected financial performance of the Group in 2020.
We continue to believe that the overall prospects for IPL remain positive, benefiting from strong management, significant product and end market diversification, financial strength and resilience together with a well invested asset base.
The description of our Fiscal 2020 financial outlook in this press release is based on management’s current views and strategies, our assumptions and expectations concerning our growth opportunities and our assessment of the opportunities for our business and the global packaging industry and the rigid plastic packaging market and has been calculated using accounting policies that are generally consistent with our current accounting policies. The purpose of disclosing the foregoing outlook is to provide investors with more information concerning the financial impact of our business initiatives and growth strategies. The description of our Fiscal 2020 outlook is forward-looking information for purposes of applicable securities laws in Canada and readers are therefore cautioned that actual results may vary from those described above. See “Forward-Looking Statements” and “Risk Factors” for a reference to the risks and uncertainties that impact our business and that could cause actual results to vary.
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s unaudited condensed consolidated financial statements and accompanying notes for the three months ended March 31, 2020 and related Management’s Discussion and Analysis (“MD&A”) are available under the Company’s profile on SEDAR at www.sedar.com and in the Investor Relations section of the Company’s website at www.iplglobal.com
Conference Call
Management will host a conference call for analysts and investors on Thursday, May 14, 2020 at 10:00 am (ET). The dial-in numbers for participants are 1-866-996-7190 in North America and 1-800-902189 in Ireland and the Conference ID is 5035666. Presentation slides to be referenced on the conference call will be available prior to the call on the Company’s website at www.iplglobal.com.
A replay of the call will be available until Wednesday, May 20, 2020. To access the replay, call 1-855-859-2056 and enter passcode: 5035666. A transcript of the call will be posted on the Company’s website.
About IPLP
IPLP is a leading sustainable packaging solutions provider primarily in the food, consumer, agricultural, logistics and environmental end-markets operating in Canada, the U.S, the U.K., Ireland, Belgium, China and Mexico. IPLP employs approximately 2,000 people and has corporate offices in Montreal and Dublin. For more information, please visit the Company’s website at www.iplglobal.com.
Forward Looking Statements
This press release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements include all matters that are not historical facts. Specifically, forward-looking statements in this press release include, but are not limited to, statements regarding expectations of the Company with respect to the outbreak of the coronavirus (COVID-19) and its possible impact on the Company’s revenue and Adjusted EBITDA, the expected completion dates of certain of the Company’s capital projects, the Company’s ability to pass through material price input change to customers, the Company’s expectations regarding resin and freight costs and the results from the Company’s response thereto including the impact on gross margin and Adjusted EBITDA margin for Fiscal 2020, expectations regarding securing labor, labor cost inflation, our expected cash outflows for Fiscal 2020, and the Company’s expectations with respect to foreign currency volatility and its impact on revenue and Adjusted EBITDA. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.
In addition, our assessments of, and outlook for Fiscal 2020 are considered forward-looking information. See “Outlook” for additional information concerning our strategies, assumptions and market outlook in relation to these assessments. Furthermore, actual results or performance in the future may vary from our assumptions referred to in “Outlook” above.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Such information reflects IPLP’s then current views with respect to future events based on certain material facts and assumptions and are subject to certain risks and uncertainties.
Forward-looking information is based on certain key expectations, opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances. Although IPLP believes that the expectations, opinions, assumptions and estimates on which such forward-looking information is based are reasonable, such forward-looking information should not be unduly relied upon since there can be no assurance that such expectations, opinions, assumptions and estimates will prove to be correct.
Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the "Risk Factors" section of this press release: the impact of the Coronavirus (COVID-19) outbreak on our business and our operations; our ability to successfully implement our business strategy; our highly competitive marketplace; a disruption in the overall economy and the financial market which may affect consumer demand; risks relating to Canada — U.S. trade; price volatility or a shortage of some of the raw materials we purchase; our results of operations may be impacted by different financial risks; our dependence on our manufacturing facilities and equipment, which require a high degree of capital expenditures to maintain or replace; changes in laws, regulations and related interpretations as well as changes in consumer trends; the loss of any key customers or a decrease in customer demand; our exposure to food industry risks; risks relating to our brand and reputation; brand and reputational risks associated with actions taken by our subcontractors; competition for acquisition candidates; our ability to execute our growth strategy being dependent on our ability to identify and acquire desirable candidates; our ability to successfully integrate recent acquisitions or future acquisitions; risks associated with our acquisition diligence procedures; failure to adapt to technological changes or the inability to continue to enhance existing products and develop and market new products that respond to customer needs and preferences; our ability to recruit and retain senior management and qualified personnel; failure to maintain good employee relations; increases in transportation costs; increases in energy costs; industry consolidation risk; potential exposure to product liability claims arising from the manufacture of faulty or contaminated products; failure to protect our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others; failure to comply with applicable laws and regulations; risks relating to environmental and health and safety laws and regulations; risks of downward pressure on pricing of our products; the inability to obtain appropriate funding; interest rate fluctuations; failure in internal controls; risks relating to information technology interruptions or breaches; litigation risk; potential indemnification obligations relating to divestments; counterparty credit risks; risks relating to future write-offs of our goodwill and other intangible assets; changes in applicable tax legislation; future sales of our securities by existing shareholders or by us could cause the market price for our common shares to fall; Caisse de dépôt et placement du Québec (“CDPQ”) having significant influence with respect to matters put before the shareholders; our dependence on our subsidiaries for cash to fund our operations and expenses; our dividend policy; difficulties enforcing judgments against the Company's directors and officers who are not resident in Canada; risks relating to claims for indemnification by our directors and officers; risks relating to our forum selection by law; and the forward looking statements contained in this press release proving to be incorrect.
The above-mentioned factors should not be construed as exhaustive. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that may cause results not to be as anticipated, estimated or intended.
All of the forward-looking information contained in this press release are qualified by the foregoing cautionary statements and there can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this press release is provided as of the date of this press release and the Company does not undertake to update or amend any forward-looking information contained herein whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Readers are also cautioned that outlook information contained in this press release should not be used for purposes other than for which it is disclosed herein or therein, as the case may be.
Non-IFRS Financial Measures
This press release uses certain non-IFRS financial measures and ratios. Management uses these non-IFRS financial measures for purposes of comparison to prior periods, to prepare annual operating budgets, and for the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing our financial condition, business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS financial measures to provide supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. The financial measures applied include Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted Net Income, Adjusted Basic Earnings per Share, Adjusted Diluted Earnings per Share, Net Debt, Financial Leverage and Adjusted Free Cash Flow.
Adjusted EBITDA and Adjusted EBIT is provided to assist investors in determining the financial performance of the Company and its divisions’ operating activities on a consistent basis by excluding items such as transaction, reorganization and integration costs, share of loss of equity-accounted investee, finance costs and tax charges as they are considered not being reflective of the operational performance of the Company. Adjusted EBITDA also excludes certain non-cash elements such as depreciation and amortization expenses. Adjusted EBITDA margin provides a percentage of revenue analysis of the Adjusted EBITDA measure. These measures are also used by Management to measure the underlying trading performance of the Company’s operating segments. We believe that these financial measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business.
Adjusted Net Income also assists key stakeholders in determining the financial performance of the Company on a consistent basis by excluding from net income certain costs as noted above, amortization costs related to intangible assets recognized on acquisition of subsidiaries and adjusted to reflect the tax effect on these elements. Adjusted Basic and Diluted Earnings Per Share give a consistent measure of the earnings of the Company by dividing the Adjusted Net Income by the basic and diluted weighted average number of shares. Net Debt is a measure indicating the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. Financial Leverage is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA (“LTM Adjusted EBITDA”),and measures the number of years it would take for the Adjusted EBITDA of the business to pay off the Net Debt in full. LTM Adjusted EBITDA is the Adjusted EBITDA of the business for the previous twelve-month period together with any Adjusted EBITDA of an acquired business also for the same twelve-month period adjusted to include any pre-acquisition period. Adjusted Free Cash Flow is a measure indicating the relative amount of cash generated by the Company during the period and available to fund dividends, debt repayments and acquisitions. We believe that the presentation of these financial measures enhance an investor’s understanding of our financial performance and financial condition.
The definitions of the measures noted above are included in the “Reconciliation of non-IFRS Measures” section of this press release.
The Company believes that the presentation of these financial measures enhances an investor’s understanding of its financial performance and financial condition. The Company further believes that these financial measures are useful financial metrics to assess its operating performance from period to period by excluding certain items that management believes are not representative of the Company’s core business. The following tables below show a reconciliation of the non-IFRS measures included in this press release.
Reconciliation of non-IFRS Measures
Reconciliation of Adjusted EBIT and Adjusted EBITDA to Net Income
Adjusted EBITDA consists of net income before income taxes, net finance costs, share of loss of equity-accounted investee, other income, transaction, reorganization, and integration costs, and depreciation and amortization. Adjusted EBIT is Adjusted EBITDA less depreciation and amortization.
Three months ended March 31 | ||||
($’000) | 2020 | 2019 | ||
Net Income | 1,860 | 1,077 | ||
Income tax credit | (1,500 | ) | (1,105 | ) |
Finance costs (net) | 4,340 | 3,927 | ||
Share of loss of equity-accounted investee | — | 360 | ||
Other income (net) | (663 | ) | (20 | ) |
Operating Profit | 4,037 | 4,239 | ||
Transaction, reorganization and integration costs | 2,836 | 2,207 | ||
Adjusted EBIT | 6,873 | 6,446 | ||
Depreciation and amortization | 12,196 | 10,820 | ||
Adjusted EBITDA | 19,069 | 17,266 | ||
Reconciliation of Adjusted Net Income, Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share
Adjusted Net Income, Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share
Adjusted Net Income consists of net income before share of loss of equity-accounted investees, transaction, reorganization, and integration costs, amortization of acquisition related intangibles, other income and income tax related to the above noted items. Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per Share is calculated by dividing the Adjusted Net Income by the weighted-average number of common shares outstanding. In the case of Adjusted Diluted Earnings per Share, the number of outstanding common shares is adjusted for the effects of options with a dilutive effect.
Three months ended March 31 | ||||
($’000, unless otherwise stated) | 2020 | 2019 | ||
Net Income | 1,860 | 1,077 | ||
Transaction, reorganization and integration costs | 2,836 | 2,207 | ||
Amortization of acquisition related intangibles | 1,354 | 1,634 | ||
Other income (net) | (663 | ) | (20 | ) |
Share of loss of equity-accounted investee | — | 360 | ||
Taxes related to the above noted items | (787 | ) | (830 | ) |
Adjusted Net Income | 4,600 | 4,428 | ||
Weighted‑average number of common shares | 54,295 | 53,758 | ||
Adjusted basic earnings per share (in $) | 0.08 | 0.08 | ||
Equity instruments with a dilutive effect – share options | 39 | 606 | ||
Weighted‑average number of common shares (diluted) | 54,334 | 54,364 | ||
Adjusted diluted earnings per share (in $) | 0.08 | 0.08 | ||
Reconciliation of Net Debt
The table below sets out the Net Debt of the Company at March 31, 2020 and December 31, 2019. Net Debt is defined as loans and borrowings, lease liabilities and convertible loan notes less cash and cash equivalents.
March 31 | December 31 | |||
($’000) | 2020 | 2019 | ||
Loans and Borrowings | 375,488 | 349,708 | ||
Lease liabilities | 21,935 | 24,068 | ||
Convertible loan notes | 1,358 | 1,393 | ||
Cash and cash equivalents | (83,677 | ) | (77,731 | ) |
Net Debt | 315,104 | 297,438 |
Financial Leverage
The table below sets out the financial leverage ratio for the Company at March 31, 2020 and December 31, 2019. The financial leverage ratio is defined as the ratio of Net Debt to the last twelve months Adjusted EBITDA including the pre-acquisition period of the trade and assets of a U.K. based injection molding company, for March 31, 2020 and the pre-acquisition period of Loomans for December 31, 2019.
March 31 | December 31 | |
($’000) | 2020 | 2019 |
Net Debt | 315,104 | 297,438 |
Adjusted EBITDA | 93,262 | 91,459 |
Loomans EBITDA pre-acquisition period | — | 1,970 |
U.K. based injection molding company EBITDA pre-acquisition period | 768 | — |
LTM Adjusted EBITDA | 94,030 | 93,429 |
Financial Leverage | 3.35 | 3.18 |
Reconciliation of Adjusted Free Cash Flow
Adjusted Free Cash Flow represents cash generated by IPLP activities and available for reinvestment elsewhere, including the early repayment of debt. It is defined as the net cash flow used in operating activities, less finance costs and maintenance capital expenditure amounts paid, adding back transaction, reorganization and integration costs paid (which excludes investing and financing related costs) and other income received.
Three months ended March 31 | ||||
($’000) | 2020 | 2019 | ||
Net cash flows used in operating activities | (8,876 | ) | (5,138 | ) |
Transaction, reorganization and integration costs paid (excluding investing and financing related costs) | 958 | 4,467 | ||
Other income (net) | 663 | 83 | ||
Adjusted net cash flow used in operating activities | (7,255 | ) | (588 | ) |
Maintenance capital expenditure | (4,429 | ) | (3,351 | ) |
Finance costs paid | (4,470 | ) | (3,355 | ) |
Adjusted Free Cash Flow | (16,154 | ) | (7,294 | ) |
Investor Enquiries
Contact
Paul Meade, Head of investor relations, +353 87 0655368
