AirBoss Reports 4th Quarter and Full Year 2024 Results

Rhea-AI Summary

AirBoss of America (OTCQX: ABSSF) reported its Q4 and full-year 2024 results, with annual net sales decreasing 9.2% to $387,024,000. The company achieved 2024 Adjusted EBITDA of $21.9M on a loss of $20.4M.

Key highlights include:

• U.S. Government contract award worth up to $82.3M for ADG Molded Lightweight Overboots
• New secured credit facilities with $125M asset-based facility and $55M term facility
• Launch of first silicone production line in Michigan
• Quarterly dividend declared at C$0.035 per share

The Rubber Solutions segment saw an 8.9% decrease in 2024 sales to $226.4M, while Manufactured Products experienced a 12.7% decline to $176.7M. The company enters 2025 with over $200M in government contracts, though faces challenges from geopolitical climate and recently-enacted tariffs that could impact cross-border operations.

Positive

• Secured U.S. Government contract worth up to $82.3M for MALOs
• Over $200M in government contracts entering 2025
• Increased credit facility to $125M
• Rubber Solutions achieved higher margins in 2024 vs 2023
• Q4 2024 Adjusted EBITDA increased by 26.9% vs Q4 2023

Negative

• Net loss of $20.4M in 2024
• Annual net sales decreased 9.2% to $387M
• Net debt to TTM Adjusted EBITDA ratio increased to 4.51x from 3.30x
• Rubber Solutions volume down 13.9% in 2024
• Manufactured Products sales decreased 12.7% to $176.7M

NEWMARKET, Ontario, March 05, 2025 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX: ABSSF) (the “Company” or “AirBoss”) today announced its unaudited fourth quarter and annual 2024 results. The Company will host a conference call and webcast to discuss the results on March 8, 2025 at 9:00 a.m. (ET), the details of which are outlined below. This earnings press release should be read in conjunction with our Management Discussion & Analysis and Audited Consolidated Financial Statements for the year ended December 31, 2024, which will be filed with the securities regulators in Canada on or about March 10, 2025. These documents will be made available at https://airboss.com/investor-center/ and www.sedarplus.ca. All dollar amounts are shown in thousands of United States dollars ("US $" or "$"), except share data, unless otherwise noted.

Recent Highlights

• AirBoss Manufactured Products’ (“AMP”) defense business awarded a contract from the U.S. Government valued at up to $82.3M for ADG Molded Lightweight Overboots (“MALOs”);
• AirBoss Rubber Solutions ("ARS") performed strongly despite lowers sales in 2024 by driving growth in specialty compounding, generating higher margins in 2024 compared to 2023;
• Entered into new senior secured credit facilities consisting of an asset-based credit facility with total commitments of $125M, following the addition of Comerica Bank to the syndicate of lenders, and a term facility of $55M;
• The Company launched its first silicone production line in Michigan, as part of an ongoing strategy to drive an increased focus on specialty compounding;
• 2024 Adjusted EBITDA¹ of $21.9 million on Adjusted Profit¹ of $(12.5) million and a loss of $20.4 million; and
• Declared a quarterly dividend of C$0.035 per common share.

"Although 2024 was a challenging year for AirBoss, we are particularly encouraged by the continued recovery within AMP's defense business. The new MALO contract awarded in the past quarter, in addition to isolation gown and Bandolier awards announced earlier in 2024, are all building upon the growing momentum for this division as we enter 2025 with over $200 million in government contracts awarded," said Chris Bitsakakis, President and Co-CEO of AirBoss. "It is important to also note that despite the optimism for growth given this significant increase in backlog, the current geopolitical climate, recently-enacted tariffs and the potential for further escalating tariffs could significantly impact our sales and operations, given the cross-border nature of the Company's business. We are actively evaluating and executing on contingency plans and reviewing all available options to deal with these challenges in an effort to minimize their impact to the Company and our customers."

“Despite the potential challenges being posed by the current trade-related issues, our priorities remain growing the core Rubber Solutions segment, a renewed focus on core competencies in the Manufactured Products segment and a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets," added Gren Schoch, Chairman and Co-CEO of AirBoss.

	Three-months ended		Twelve-months ended
	December 31 (unaudited)		December 31
In thousands of dollars, except share data	2024	2023	2024 (unaudited)	2023
Financial results:
Net sales	91,963	92,696	387,024	426,025
Profit (loss)	(2,616)	(35,958)	(20,390)	(41,749)
Adjusted Profit1	(1,613)	(2,790)	(12,536)	(6,424)
Earnings (loss) per share (US$)
– Basic	(0.10)	(1.33)	(0.75)	(1.54)
– Diluted	(0.10)	(1.33)	(0.75)	(1.54)
Adjusted earnings per share1 (US$)
– Basic	(0.06)	(0.10)	(0.46)	(0.24)
– Diluted	(0.06)	(0.10)	(0.46)	(0.24)
EBITDA1	5,105	(31,002)	15,063	(11,177)
Adjusted EBITDA1	5,105	4,023	21,914	26,758
Net cash from operating activities	4,295	9,291	8,780	40,917
Free cash flow1	1,175	6,099	(1,826)	32,453
Dividends declared per share (CAD$)	0.035	0.070	0.175	0.370
Capital expenditures	3,132	3,224	10,632	8,505
Financial position:
Total assets			309,528	356,656
Debt2			117,390	131,092
Net Debt1			98,888	88,213
Shareholders’ equity			126,010	148,857
Outstanding shares*			27,130,556	27,130,556
*27,130,556 at March 5, 2025
1 See Non-IFRS and Other Financial Measures.
2 Debt as at December 31, 2024 and December 31, 2023 included lease liabilities of $12,011 and $13,890, respectively.

Financial Results

Consolidated net sales for the three month period ended December 31, 2024 ("Q4 2024") decreased by 0.8% to $91,963 compared with the fourth quarter of 2023 ("Q4 2023") with decreases at ARS partially offset by AMP. For 2024, consolidated net sales decreased by 9.2% to $387,024 compared with 2023, primarily due to decreased sales at ARS across the majority of sectors and decreases at AMP's rubber molded products business, partially offset by increases in the defense products business.

Consolidated gross profit for Q4 2024 increased by $10,175 to $15,297, compared with Q4 2023, primarily a result of an $8.0 million non-cash write down in 2023 related to nitrile gloves and isolation gown inventory in the defense products business and improvements in the defense products business, partially offset by decreases in Rubber Solutions and softness in AMP's rubber molded products lines. Consolidated gross profit for 2024 decreased by $4,414 to $53,996 compared with 2023. Gross profit as a percentage of net sales increased to 14.0% for 2024 compared with 13.7% for 2023. The increase in margin percentage was driven primarily by margin expansion in the Rubber Solutions segment, margin improvements resulting from the new business awards at AMP's defense products business, and a $2.0 million lower non-cash inventory write-down compared to the prior year, partially offset by margin compression at AMP's rubber molded products business.

Adjusted EBITDA for Q4 2024 increased by 26.9%, compared to the same period in 2023 and decreased by 18.1% for 2024, compared with 2023.

Financial Position

The Company retains a $100 million credit facility (increased to $125 million in January 2025). At December 31, 2024, the borrowing capacity under this facility was $79,428 with $52,665 drawn and the net debt to TTM Adjusted EBITDA ratio was 4.51x (from 3.30x at December 31, 2023).

Dividend

The Board of Directors of the Company has approved a quarterly dividend of C$0.035 per common share, to be paid on April 15, 2025 to shareholders of record at March 31, 2025.

Segment Results

In the Rubber Solutions segment, net sales for Q4 2024 decreased by 13.1% to $47,349, from $54,464 in Q4 2023 and decreased by 8.9% to $226,351 for 2024, from $248,395 for 2023. For the quarter, volume was down 22.5% with decreases across the majority of sectors given softness in most customer sectors. For the year, volume was down 13.9% with decreases across the majority of sectors given softness in many customer sectors. For the quarter, tolling volume was down 39.0% while non-tolling volume was down 21.7% driven by decreases in most sectors. For the year, tolling volume decreased by 61.8% while non-tolling decreased by 9.7%. Gross profit at Rubber Solutions for Q4 2024   decreased by 24.3% to 5,938 from 7,845 in Q4 2023 and for 2024 increased by 1.6% to $35,500 from $34,947 for 2023. For the quarter, the decrease was principally due to lower volumes across most customer sectors and product mix. For the year, the increase was primarily a result of favorable mix and margin expansion partially offset by decreased tolling and non-tolling volumes compared to the same period in 2023.

At Manufactured Products, net sales for Q4 2024 increased by 9.4% to $48,168, from $44,029 in Q4 2023 and decreased by 12.7% to $176,696, from $202,290 for 2024. For the quarter, the increase was a result of higher volumes in the defense product business with decreases across the rubber molded product lines, driven by production reductions across most OEMs. For the year, the decrease was primarily due to lower sales in the molded rubber products business partially offset by improved sales in the defense products business driven by deliveries in new contract awards. Gross profit at Manufactured Products for Q4 2024 increased to $9,359 from $(2,723) in Q4 2023 and decreased to $18,496 for 2024 from $23,463 for 2023. For the quarter, the increase was primarily a result of an $8.0 million non-cash write-down in 2023 related to nitrile glove and isolation gown inventory and improved volumes and product mix in the defense product lines further supported by operational cost improvements in the segment. For the year, the decrease was primarily a result of significant volume drops in the rubber molded products business partially offset by a $2.0 million lower non-cash inventory write-down compared to the prior year. The defense products business did see margin improvements in the latter part of the year driven by several new business awards.

Overview

2024 was a challenging year for AirBoss as pronounced economic headwinds impacted each segment to varying degrees, and the Company continued to navigate obstacles related to market softness and geopolitical challenges. The Company continued to focus on risk mitigation plans in response to these economic challenges, including managing costs and targeting continuous improvements to help offset some of the pronounced softness experienced at both AirBoss Rubber Solutions ("ARS") and AirBoss Manufactured Products ("AMP"). Management remains focused on the successful conversion of key opportunities to support the future growth aligned with its strategic plan. Subject to ongoing challenges related to inflationary pressure, the global geopolitical climate, recently-enacted tariffs and the potential for further escalating tariffs, which could disrupt trade flows, increase costs and strain supply chains, the Company expects volume recovery to commence in mid-2025. This recovery could be particularly impacted by the imposition of tariffs, duties or other similar restrictions. A significant portion of the products manufactured by the Company in Canada are sold into the United States and are subject to the recently-enacted tariffs during the production process given the cross-border nature of the Company’s business operations. The Company is actively evaluating and executing contingency plans and reviewing all available options to try and deal with these challenges, including rebalancing production and sales activities between the U.S. and Canada, in order to try to minimize the impacts to the Company and its customers.

ARS saw continued softness carried over from the previous quarter as customers continued to reduce orders and shutter production earlier than anticipated as they focused on reducing inventory levels partially driven by lower demand, despite strong performance during the earlier part of 2024. This also impacted margins unfavorably relative to the third quarter of 2024 ("Q3 2024"). In addition, the segment experienced additional softness primarily driven by volume reductions across most sectors and saw reduced volumes compared to Q4 2023. ARS remains committed to executing on its strategy to deliver strong results with specialized products, expanded production of a broader array of compounds (white and color), and enhanced flexibility in attracting and fulfilling new business through identified synergies and margin expansion. As a segment, ARS also continued to invest in research and development in 2024 to support enhanced collaboration with customers.

AMP experienced an overall volume improvement in the fourth quarter of 2024 (“Q4 2024”), primarily driven by its defense products business and offset by continued softness in the rubber molded products business. The defense business saw improvements in both revenue and gross profit, mainly driven by new business awards that it executed on in the quarter. The rubber molded products operations were impacted by continued volume softness related to the original equipment manufacturers (OEMs) shuttering production to rebalance vehicle inventory levels, which has been ongoing throughout 2024. The business continued its focus on managing costs and a commitment to drive efficiencies and automation, as well as diversification of its product lines into adjacent sectors. The defense business experienced some positive traction during Q4 2024 which is expected to continue into next year, supported by the commencement of deliveries on several previously announced contracts including some recent new awards in addition to the overhead reductions carried out earlier this year to help mitigate volume softness. Management also continued its focus on operational improvements during the quarter and continued to work with its key customers with a goal of leveraging opportunities aligned with its growth initiatives.

The Company’s long-term priorities consist of the following:

1. Growing the core Rubber Solutions segment by emphasizing rubber compounding as the core driver for sustainable growth and productivity, focusing on innovation in custom rubber compounding while aiming to expand market share through organic and inorganic means, while striving to achieve enhanced diversification by a broadening of product breadth through technological advancements and investments in specialty compound niches;
2. Manufactured Products' growth strategy is focused on diversifying and expanding its range of rubber molded products while simultaneously narrowing the range of defense products through a renewed focus on core competencies; and
3. Executing the strategic review of all product lines currently manufactured and sold by the Company in its Manufactured Products segment while targeting additional acquisition opportunities with a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets.
   

AirBoss continues to focus on these long-term priorities while investing in core areas of the business to expand a solid foundation that will support long-term growth.

Conference Call Details and Investor Presentation

A conference call to discuss the quarterly results is scheduled for 9:00 a.m. ET on Thursday, March 6, 2025. Please go to https://www.gowebcasting.com/13960 or dial in to the following numbers: 1-844-763-8274 or 1-647-484-8814 and ask to be joined to the AirBoss of America call. Please connect approximately 10 minutes prior to the call to ensure participation. A replay of the conference call as well as the Company’s updated investor presentation will also be made available at: https://airboss.com/investor-media-center.

Annual General Meeting

The Company's Annual General Meeting for shareholders will occur May 8, 2025. Further details will be provided in the near future.

AirBoss of America Corp.

AirBoss of America is a diversified developer, manufacturer and provider of survivability solutions, advanced custom rubber compounds and finished rubber products that are designed to outperform in the most challenging environments. Founded in 1989, the company operates through two divisions. AirBoss Rubber Solutions is a North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Manufactured Products is a supplier of anti-vibration and rubber molded solutions to the North American automotive market and other sectors, and also a global supplier of personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities, through AirBoss Defense Group. The Company’s shares trade on the TSX under the symbol BOS and on the OTCQX under the symbol ABSSF. Visit www.airboss.com for more information.

Non–IFRS and Other Financial Measures: This earnings release is based on consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) and Non-IFRS Financial Measures. Management believes that these measures provide useful information to investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS. These terms are not a measure of performance under IFRS and should not be considered in isolation or as a substitute for net income under IFRS.

EBITDA and Adjusted EBITDA are non-IFRS measures used to measure the Company's ability to generate cash from operations for debt service, to finance working capital and capital expenditures, potential acquisitions and to pay dividends. EBITDA is defined as earnings before income taxes, finance costs, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding impairment costs, acquisition costs, and non-recurring costs. A reconciliation of profit (loss) to EBITDA and Adjusted EBITDA is below.

	Three-months ended		Twelve-months ended
	December 31 (unaudited)		December 31
In thousands of US dollars	2024	2023	2024 (unaudited)	2023
EBITDA:
Profit (loss)	(2,616)	(35,958)	(20,390)	(41,749)
Finance costs	3,144	(2,746)	12,763	5,233
Depreciation and amortization	5,188	5,429	21,012	22,345
Income tax expense (recovery)	(611)	2,273	1,678	2,994
EBITDA	5,105	(31,002)	15,063	(11,177)
Professional fees related to AEP negotiations	—	—	—	152
Write-down of inventory	—	8,031	6,049	8,031
Restructuring costs	—	346	802	3,104
Impairment of intangible assets	—	26,648	—	26,648
Adjusted EBITDA	5,105	4,023	21,914	26,758

In the second quarter of 2024, the Company recorded a $6,049 inventory provision related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing. In 2023, the Company recorded a $8,031 inventory provision related to its inventory of nitrile gloves due to significant downward shifts in pricing. Costs related to these provisions are included in Cost of Sales on the Statement of Profit and Loss.

In 2023 and the second quarter of 2024, the Company completed a series of staff reductions. Costs related to this restructuring activity are included in Other expenses on the Statement of Profit and Loss.

In 2023, the Company recognized a goodwill impairment related to the defense operations. Costs related to the impairment are included in Other expenses on the Statement of Profit and Loss.

In late 2022, the Company negotiated improved arrangements with AMP's rubber molded products business' key suppliers and customers to improve profitability. Professional fees related to these activities are included in General and administrative expenses on the Statement of Profit and Loss.

Adjusted profit is a non-IFRS measure defined as profit (loss) before impairment costs, acquisition costs and non-recurring costs. This measure and Adjusted earnings per share are used to evaluate operating results of the Company. A reconciliation of Profit (loss) to Adjusted profit and Adjusted earnings per share is below.

	Three-months ended		Twelve-months ended
	December 31 (unaudited)		December 31
In thousands of US dollars	2024	2023	2024 (unaudited)	2023
Adjusted profit:
Profit (loss)	(2,616)	(35,958)	(20,390)	(41,749)
Write-off of deferred finance costs (after tax)	1,003	—	1,003	—
Professional fees related to AEP negotiations (after tax)	—	—	—	116
Write-down of inventory (after tax)	—	6,264	6,049	6,264
Restructuring costs (after tax)	—	256	802	2,297
Impairment of intangible assets (after tax)	—	26,648	—	26,648
Adjusted profit	(1,613)	(2,790)	(12,536)	(6,424)
Basic weighted average number of shares outstanding	27,131	27,131	27,131	27,118
Diluted weighted average number of shares outstanding	27,131	27,131	27,131	27,118
Adjusted earnings per share (in US dollars):
Basic	(0.06)	(0.10)	(0.46)	(0.24)
Diluted	(0.06)	(0.10)	(0.46)	(0.24)

Net Debt measures the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. A reconciliation of loans and borrowings to Net Debt is below.

In thousands of US dollars	December 31, 2024 (unaudited)	December 31, 2023
Net debt:
Loans and borrowings - current	5,002	2,437
Loans and borrowings - non-current	112,388	128,655
Leases included in loans and borrowings	(12,011)	(13,890)
Cash and cash equivalents	(6,491)	(28,989)
Net debt	98,888	88,213

Free cash flow is a non-IFRS measure used to evaluate cash flow after investing in the maintenance or expansion of the Company's business. It is defined as cash provided by operating activities, less cash expenditures on long-term assets. A reconciliation of net cash provided by (used in) operating activities to free cash flow is below.

	Three-months ended		Twelve-months ended
	December 31 (unaudited)		December 31
In thousands of US dollars	2024	2023	2024 (unaudited)	2023
Free cash flow:
Net cash from operating activities	4,295	9,291	8,780	40,917
Acquisition of property, plant and equipment	(3,077)	(3,202)	(9,902)	(7,256)
Acquisition of intangible assets	(55)	(22)	(730)	(1,249)
Proceeds from disposition	12	32	26	41
Free cash flow	1,175	6,099	(1,826)	32,453
Basic weighted average number of shares outstanding	27,131	27,131	27,131	27,118
Diluted weighted average number of shares outstanding	27,331	27,263	27,131	27,439
Free cash flow per share (in US dollars):
Basic	0.04	0.22	(0.07)	1.20
Diluted	0.04	0.22	(0.07)	1.18

AIRBOSS FORWARD-LOOKING INFORMATION DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management’s expectations or estimates of future developments or AirBoss’ future performance, constitute “forward-looking information” or “forward-looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could”, “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends”, “should” or similar expressions. These statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events and performance.

Statements containing forward-looking information are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking information involves known and unknown contingencies, uncertainties and other risks that may cause AirBoss’ actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by the forward-looking information. Numerous factors could cause actual results to differ materially from those in the forward-looking information, including without limitation: impact of general economic conditions, notably including its impact on demand for rubber solutions and products; dependence on key customers; global defense budgets, notably in the Company’s target markets, and success of the Company in obtaining new or extended defense contracts; contract-related risks; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; global political uncertainty; AirBoss’ ability to maintain existing customers or develop new customers in light of increased competition; AirBoss’ ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof; AirBoss’ ability to successfully develop and execute effective business strategies including, without limitation, the recently announced strategic transition; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws; changes in trade policies or the imposition of new tariffs, duties or other similar restrictions which could influence the cost and flow of goods and services across borders; current and future litigation; political uncertainty and policy change; ability to obtain financing on acceptable terms and ability to satisfy the covenants set forth in such financing arrangements; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. This list is not exhaustive of the factors that may affect any of AirBoss’ forward-looking information.

All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking information. All subsequent written and oral forward-looking information attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly the forward-looking information except as required by applicable laws. Risks and uncertainties about AirBoss’ business are more fully discussed under the heading “Risk Factors” in our most recent Annual Information Form and are otherwise disclosed in our filings with securities regulatory authorities which are available on SEDAR+ at www.sedarplus.com.

FAQ

What is the value of AirBoss's (ABSSF) new MALO contract with the U.S. Government?

The U.S. Government awarded AirBoss a contract valued at up to $82.3M for ADG Molded Lightweight Overboots (MALOs).

How much did AirBoss's (ABSSF) net sales decline in 2024?

AirBoss's consolidated net sales decreased by 9.2% to $387,024,000 compared to 2023.

What is AirBoss's (ABSSF) dividend payment for Q4 2024?

AirBoss declared a quarterly dividend of C$0.035 per common share, payable on April 15, 2025.

What was AirBoss's (ABSSF) Adjusted EBITDA for 2024?

AirBoss reported Adjusted EBITDA of $21.9 million for 2024.

How much is AirBoss's (ABSSF) new credit facility worth?

AirBoss secured new credit facilities consisting of a $125M asset-based facility and a $55M term facility.