IPG Investor Presentation
IPG Investor Presentation March 2015 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, "forward-looking statements"), which are made in reliance upon the protections provided by such legislation for forward-looking statements. All statements other than statements of historical facts included in this presentation, including statements regarding the Company's strengths, the Company's path forward, including its acquisition strategy and its strategies to increase revenues and reduce cost of sales, its projected cost reductions, the Company's expected annualized saving from, and timing for completion of, manufacturing rationalization projects, the Company's expected income tax benefit from the Legal Entity Reorganization, timing for fully utilizing its NOLs, and effective income tax rate for 2015, the Company's investment and share repurchase plans, and the Company's full year 2015 outlook, may constitute forward-looking statements. These forward-looking statements are based on current beliefs, assumptions, expectations, estimates, forecasts and projections made by the Company's management. Words such as "may," "will," "should," "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 the Company believes 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: business conditions and growth or declines in the Company's industry, the Company's customers' industries and the general economy; the anticipated benefits from the Company's manufacturing facility closures and other restructuring efforts; the quality, and market reception, of the Company's products; the Company's anticipated business strategies; risks and costs inherent in litigation; the Company’s ability to maintain and improve quality and customer service; anticipated trends in the Company’s business; anticipated cash flows from the Company’s operations; availability of funds under the Company’s Credit Facility; and the Company's ability to continue to control costs. The Company can give no assurance that these statements 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. You are cautioned not to place undue reliance on any forward-looking statement. For additional information regarding some important factors that could cause actual results to differ materially from those expressed in these forward-looking 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," "Item 5. Operating and Financial Review and Prospects (Management's Discussion & Analysis)" and statements located elsewhere in the Company's Annual Report on Form 20-F for the year ended December 31, 2013 and the other statements and factors contained in the Company's 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 it to do so. This presentation contains certain non-GAAP financial measures as defined under applicable securities legislation including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings, and Adjusted Earnings per Share. 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 definitions of these non-GAAP measures contained in this presentation, as well as a reconciliation of each of them to the most directly comparable GAAP measure, on its website at http://www.intertapepolymer.com under “Investor Relations” and “Financial Presentations.” You are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth on the website and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. IPG Investor Presentation 3
Company Profile • The second largest tape manufacturer in North America • Employs ~1,900 people • Approximately 61% of sales from products with a Top 2 market position in North America Tapes 16% Films 2014 $812.7 million 19% Net Sales Woven & Other 65% IPG Investor Presentation 4
Our Locations • 10 Manufacturing Facilities in North America • 1 Manufacturing Facility in Europe IPG Investor Presentation 5
#1 or #2 Market Tapes At-A-Glance Leadership Position in North America Carton Sealing Tapes Hot Melt (#2) Natural Rubber (#1) Water-Activated (#1) Industrial & Specialty Tapes Paper (#2) Flatback (#1) Filament (#2) Stencil (#1) IPG Investor Presentation 6
#1 or #2 Market Woven & Other At-A-Glance Leadership Position in North America Agro-Environmental Structure Fabrics (#1) Woven Coated Geomembrane (#1) Hay Cover Fabrics (#1) Poultry Fabrics (#1) Building & Construction Lumber Wrap (#2) Fiberglass Sleeves (#1) IPG Investor Presentation 7
Films At-A-Glance IPG Investor Presentation 8
Key Raw Materials • Raw material inputs: Raw Materials (1) – Resin – Adhesive – Paper 16% Resin – Other (2) Adhesive 47% 17% Paper Other 20% (1) Based on usage of raw materials in 2014. (2) Other includes but not limited to Latex, Fiberglass and Starch. IPG Investor Presentation 9
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Strengths Established Strong Well positioned Proven Wide breadth relationships financial to invest in management of products with position and strategic team customers profitability opportunities IPG Investor Presentation 11
Share Price – 12 Years Highest share price in 12 years We are proud of the IPG turn-around story so far IPG Investor Presentation 12
Our Strategic Path Forward Top Line Drivers Cost of Sales Drivers • Grow organically through • Consolidation of capacity • Focus on core businesses (Tapes & Woven) • Modernization of plants • R&D (New products, Innovation, Process • Continuous improvements (IPS (1) ) Improvement) • Minimization of labor and energy costs • New distribution channels and market verticals • Market Pricing Dynamics • Execution of acquisition strategy to • Cost reduction and leverage complement organic growth • Target gross margin of 22%-24% (2) Next Steps Continue to Continue to Grow Continue to Continue to Invest Continue to Execute on Market Leadership Identify Profitable in the Business, Operational Create a Culture Position in Core High Growth Grow the of Growth Initiatives and Products Market Segments Business Efficiency Projects (1) Intertape Performance System. (2) Expected on an annualized basis once the savings related to the South Carolina Project begin to be fully realized. IPG Investor Presentation 13
Reduce Manufacturing Costs and Leverage Capacity Key Initiatives Cost Reductions Achieved Cost Reductions Projected 1) Plant consolidations 2) Material productivity gains Greater than $17 million 3) Labor and energy savings for 2012 $15 to $18 million for 2015 which includes measures Approx. $14 million for 2013 South Carolina Project savings • EPA 2014 ENERGY STAR $14.1 million for 2014 At least $13 million per year for the South Partner of the Year Carolina Project (3) Manufacturing Rationalization Projects Completed and in Progress • Brantford (Ont) • Columbia (SC) • Carbondale (IL), Richmond (KY), • Announced: Q4 2010 • Announced: Q1 2013 Tremonton (UT) & Truro, • Completed: Q2 2011 • Expected to be completed: 1H 2015 $23 million NS in total • Announced: Q2 2012 $4 million (1) annualized • Production transfers completed: Q1 2013 savings (4) • Production start-up issues resolved: Q3 2013 At least $6 million (2) $13 million (3) (1) Starting in Q2 2011. (2) Approximately $3 million in 2013. (3) Savings expected to start in 2015 with the first full year benefits of at least $13 million expected to start in 2016. (4) On an annualized basis when in full effect. IPG Investor Presentation 14
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