NEWMARKET, Ontario—Rubber compounder and products maker AirBoss of America Corp., thanks to increased defense business, posted record second-quarter results.
The Newmarket-based company had a profit of $14.38 million, or 27 cents per diluted share, on revenue of $112.45 million for the quarter ended June 30. That compares with a profit $3.31 million, or 12 cents per diluted share, on revenue of $82.62 million or the second quarter of 2019.
The increase in both sales and profits is due to the company's defense business as well as its merger with Critical Solutions International Inc. at the beginning of this year. Softness in its Rubber Solutions and Engineered Products segments chiefly due to COVID-19 partially offset those gains, the company said.
"Our record results for the second quarter and first half of the year reflect our rapid ramp-up and successful delivery against the FEMA contract that was awarded at the very end of the first quarter," Chief Operating Officer Chris Bitsakakis said in a statement. "We expect ADG (AirBoss Defense Group) to be a strong driver of our financial performance and enhanced balance sheet strength through the remainder of 2020 and into 2021."
While COVID-19 challenged the Rubber Solutions and Engineered Products business segments, the company said there have been signs of recovery as key customers reopen and increase orders.
Rubber Solutions saw net sales drop by 34.2 percent to $23.4 million during the quarter due to full or partial shutdown of customer operations. Tolling volume fell 82 percent in the quarter compared with 2019.
"Although the Rubber Solutions business remained open and operational, it did experience a decline in volumes beginning in April, which continued through part of May before beginning to recover. The timing for a full recovery in volumes will be subject, at least in part, to a stable and sustained re-opening of businesses across North America, which could be difficult to predict, especially in light of the ongoing rise in cases in the U.S., which remains a key market," the company said.
Engineered Products saw net sales by 58.6 percent to $13.5 million due to a decrease across all automotive product lines. Closure of original equipment manufacturers and tier one suppliers caused the fall.
"In the case of the Engineered Products segment, AirBoss elected to temporarily suspend operations at the end of the first quarter, pending re-starts by key customers that began in mid-May. During this period, the company managed variable costs within this segment, temporarily laying-off hourly and salaried employees," AirBoss said.
"Management also accelerated the plan to begin producing certain molded defense products at the Auburn Hills, Mich., facility, as well as PAPRs (powered air, purifying respirators), which supported the return to work for some staff as well as continued execution against existing defense contracts. These measures helped utilize and offset the impact of temporarily shuttered manufacturing capacity from the anti-noise, vibration and harshness business, which has started to ramp back up again."
AirBoss began to see volume recovery following reopening of the Engineered Products segment thanks to the company's focus on the SUV, light truck and minivan platforms, the company said.
AirBoss Defense Group saw net sales in the quarter increased by 327.3 percent to $82.1 million, primarily due to a federal contract to PAPR systems, filters and related accessories in response to the COVID-19 pandemic. Higher sales in masks and boots from other defense customers also helped drive the increase.
"The COVID-19 pandemic continues to generate both opportunities and challenges for organizations globally, including AirBoss," the company said.