IPG Investor Presentation
IPG Investor Presentation September 2015 IPG Investor Presentation 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 strategy and priorities, including its investments in growing its business, its acquisition strategy, its dividends and share repurchases, the Company's ability to raise equity, the Company's 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, and the Company's outlook on certain financial metrics for the third quarter of 2015 and the South Carolina Project, 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, 2014 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 “Events and Presentations” and “Investor 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 ~1,950 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 • 11 Manufacturing Facilities in North America • 1 Manufacturing Facility in Europe IPG Investor Presentation 5
Tapes At-A-Glance #1 or #2 Market Leadership Position in North America Carton Sealing Tapes Hot Melt Natural Rubber Water-Activated Water-Activated Machine Dispensers Industrial & Specialty Tapes Paper Flatback Filament Stencil IPG Investor Presentation 6
#1 or #2 Market Woven & Other At-A-Glance Leadership Position in North America Agro-Environmental Structure Fabrics Woven Coated Geomembrane Hay Cover Fabrics Poultry Fabrics Building & Construction Lumber Wrap Fiberglass Sleeves 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
IPG Investor Presentation 10
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
Strategy and Priorities Continued Acquisitions Dividends Share investment to repurchases • Potential focus • On August 12, 2015 grow our areas include: annualized dividend • Total repurchased: business increased from • Expansion in tape, 1,564,588 common $0.48 to $0.52 per woven and shares for $21.3 • Strategic high-return share packaging million as of June projects adjacencies and • On July 7, 2014 30, 2015 • R&D investment annualized dividend • Geographic • NCIB renewal • New distribution increased from expansion effective July 10, channels and market $0.32 to $0.48 per 2015 to repurchase • Acquisition of verticals share up to 2,000,000 Better Packages on additional common April 7, 2015 shares IPG Investor Presentation 12
Source of Funds Cash Flow Based Loan Facility of $300 million negotiated in November 2014 • As of June 30, 2015 • – Total cash and loan availability was $170 million – Leverage was 1.7x debt to TTM adjusted EBITDA Option to raise equity if needed • Cash Flow Based Loan Facility (1) - Key Terms $206 $198 Facility $300 million Revolving Credit Facility $170 Cash $155 Incremental Facility $150 million Availability (Accordion Feature) Loan Pricing LIBOR + Spread (1.00% to 2.25%) Availability Key Financial (1) Leverage < 3.25 Cash and Loan Covenants (2) Debt Service Coverage Ratio > 1.5 Availability $15 $8 Maturity November 18, 2019 31 ‐ Dec ‐ 14 30 ‐ Jun ‐ 15 In millions (1) The transition from an Asset-Based Loan to the Cash Flow-Based Loan facility occurred on November 18, 2014. IPG Investor Presentation 13
Average Cost of Debt (1) March 18, 2015 - interest rate swap agreement to fix the floating rate 30-day LIBOR benchmark • interest rate on $40 million of debt at 1.61% through November 18, 2019 Average cost of debt increased from Q1 2015 to Q2 2015 primarily due to the impact of the interest • rate swap agreement combined with a higher spread due to an increase in the leverage ratio Percent of floating debt was 61% as of June 30, 2015 which includes the impact of the interest rate • swap agreement (1) At quarter end. IPG Investor Presentation 14
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