annual meeting may 12, 2009 demanding conditions products in demand
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2008
ANNUAL MEETING 2008 RECAP
2008 2007
SALES 259.4$ 209.3$
MARGIN 30.3 18.6
EXPENSES 14.9 13.6
INCOME FROMCONTINUING OPERATIONS 15.4 5.0 300%
EBITDA 17.0 11.7 45%
* Read in conjunction with Annual Report
2008
Q1 2009
2009 2008SALES $53,085 $55,134
OPERATING INCOME 1,655 1,835
OTHER EXPENSE 471 (451) EBIT 1,184$ 2,286$
EPS $0.02 $0.04
* Read in conjunction with 1st Quarter Report
2008
Q1 2009
• Results were Defense Driven Sales Increase 35% Margin Increase 75% Mix, Volume and Exchange
• Rubber Compounding Sales down 16% better than industry average 2008 high priced inventory gone by April Volume improvements noticeable in April
* Read in Conjunction with 1st Quarter Report
2008
OTHER INCOME (EXPENSE)
2009 2008
EXCHANGE (LOSS) GAIN $(647) (1) $277
OTHER INCOME 176 174
$(471) $451
(1) Unrealized Loss
2008
EXCHANGE
FORWARD CONTRACTS
ARC INV HEDGE US $9 MILLION
DEFENSE NET RECEIPTS HEDGE $15 MILLION
TOTAL US $24 MILLION
AVG RATE $0.82
MARCH 0.80 Non-Cash Loss $431K
APRIL 0.85 Gain of $800 K
2008
BALANCE SHEET
MARCH DECEMBER2009 2008
NET WORKING CAPITAL 36.3$ 32.2$ 12%
WORKING CAPITAL RATIO 2.2 TO 1 1.6 TO 1
DEBT 39.3$ 45.8$ 14%
CASH PROVIDED BYOPERATIONS 4.8$ 1.5$ (1)
(1) March '08
2008
Customer Diversification 2005 vs. 2008
2005 2008
# of customers over $0.5 MM 29 35
Top 41 accounts as % of total 98.8% 99.1%
# Top accounts w/good growth 17
% US sales 55.0% 59.2%
% Canadian sales 44.9% 39.6%
% International sales 0.1% 1.2%
Lbs sold from SN facility 0 22.9 MM
2008
Market Segment shifts (2005 to 2008)
Focused growth Segments
• Defense total (Internal & External) Increased by 175%• Mining Increased by 32%
De-emphasized Segments
• Automotive Reduced by 12%• Tires Total Reduced by 38%
2008
New project activity
• 103 MM lbs of NPD opportunities - 23 MM lbs in 2009/early 2010.
• Kitchener trials to yield 13.8 MM lbs/year.
• Scotland Neck trials to yield 6.4 MM lbs/year.
2008
Employee’s
• In 2008 absenteeism was down 42.5% versus 2005.• In 2008 we saw the following Health and Safety improvements
versus 2005
# recordable injuries down by 42.5%
# of lost time days down 76.4%
# of light duty days down 44.4%
2008
ARC Operational Performance 2008 vs. 2005
• Throughput/hr has increased by 19.4%• Downtime has been reduced by 20.1%• % rework is down by 12.4%• PPM returns are down by 43.4%• On-time delivery has improved so much that’s its now a
significant competitive advantage.• We have maximized/optimized efficient equipment.• Kitchener’s break even point has been reduced by 20%.
2008
2005 to 2008 key initiatives implemented
• Developed a segmented sales approach and focus.• Targeted new markets/segments.• De-centralized operational functions.• Improved speed to market.• Reduced system wide waste with focus only on value added
activities• Global procurement enhancement.
2008
Conclusions and Outlook for ARC
• ARC’s customer base is more diversified than ever.
• ARC’s global footprint is a competitive advantage and expanding.
• ARC operationally is performing very well.
• ARC is now a better place to work for our associates and they continue to make ARC a great company.
• ARC has a healthy balance sheet and is solid financially
• As our addressable markets consolidate only the strong suppliers with survive – ARC is a strong supplier.
2008
What can you expect to see next?
• ARC will expand rapidly into traditionally non core segments/markets.• Stress in the markets will provide opportunities for those in a solid enough
position to take advantage of them - we will be there for the long haul.• We will continue to build on our US presence via our new Scotland Neck
facility.• We are a solid #2 in the America’s and heading for #1.
2008
AIRBOSS-DEFENSECBRN VOLUME FORECAST - OVERBOOTS
0
200000
400000
600000
800000
2008 2009 2010 2011
Overboots
Overboots
2008
AIRBOSS-DEFENSE CBRN VOLUME FORECASTS - GLOVE
0
200000
400000
600000
800000
1000000
2008 2009 2010 2011
Gloves
Gloves
2008
AIRBOSS-DEFENSE
2nd Quarter production changes to meet demand:
• Injection moulding 3 shifts, 7days/week• Overboot capacity increased• U.S. Expansion project
2008
AIRBOSS-DEFENSEU.S. EXPANSION
• Location announcement 30 days• In production 1st Quarter 2010• Injection Moulding
Gloves Next Generation Overboot
2008
AIRBOSS-DEFENSE 2009
• Volume increases, favorable product mix and exchange will positively impact profitability
• Most of net U.S. $ receipts locked in at $0.82 for 2009• 2010 will be even more exciting
2008
Chairman’s Closing Comments
• AirBoss has recorded operating profits since 1995
• We continue to see growth for the future
• Defense sales increases in 2009 and further expansion in 2010
• Rubber Compounding Division returning to normal profitability
• Exploring value added opportunities
2008
Chairman’s Closing Comments cont’d.
• Continuation of Dividend Policy Semi-annual dividend 2.5 cents payable to shareholders of record June 30, 2009 Issuer Bid to purchase up to 1.8 million Company shares
2008
FORWARD LOOKING STATEMENT DISCLAIMER
This report contains forward-looking statements, which reflect managements best judgment based on factors currently known but involve significant risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including but not limited to risks more fully described in the “Risk Factors” section of the Company’s Annual Report, and other risks detailed in filings with the Ontario Securities Commission. Forward-looking information provided pursuant to the safe harbor established by recent securities legislation should be evaluated in the context of these factors.
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