NEWMARKET, Ontario—AirBoss of America Corp. has released a preview of its second quarter financials, as well as further cost-cutting measures associated with the AirBoss Defense Group segment.
In addition, the company on July 27 updated its corporate structure with the promotion of Chris Bitsakakis from chief operating officer to president and co-CEO of AirBoss of America Corp.
Gren Schoch will continue in the role of chairman and serve alongside Bitsakakis as co-CEO.
"Chris joined AirBoss in November 2017, and has overseen significant growth and enhanced performance in the organization, guiding us through a number of transformative changes," Schoch said. "His ability to enhance operational discipline, streamline key areas of the business and attract experienced management to the organization, as well as his focus on growth, innovation and product development, make him ideally suited to play a greater role in our next phase of growth and execution of strategic opportunities.
"I look forward to continuing my close collaboration with Chris in his new role as we work on growing our core Rubber Solutions segment, driving improved performance from Engineered Products, and pursuing an array of growth and value-creation opportunities within ADG."
As the company jostled its leadership positions, AirBoss also announced a series of cost-cutting avenues implemented across ADG's operations, including a reduction in its work force.
A number of employees that could be let go within ADG was not immediately known.
"These changes are intended to streamline the business segment's operations following a series of acquisitions and reduced business activity from continued delays in expected contract awards," the company said in a July 27 statement.
The moves will save about $5 million annually for ADG once they are implemented.
"Over the past two and a half years, ADG has undergone substantial change," Bitsakakis said. "These changes came from acquisitions we had made within the business and from significant swings in our underlying business activity."
The co-CEO said AirBoss is taking these steps to "closely review our operating practices."
"We've taken an important step to ... structure ADG to return to profitability, as we await new contract awards," Bitsakakis said. "We expect substantial cost efficiencies going forward, while our ability to pursue and capture growth opportunities remains fully intact."
AirBoss anticipates net sales between $112.5 million and $115 million in the second quarter of this year, against $110.5 million in the second quarter of 2022.
However, EBITDA is likely to drop to between $5 million and $5.3 million in the second quarter of 2023 against an EBITDA of $10.5 million in the second quarter of 2022.
EBITDA is used to measure a company's ability to generate cash from operations for debt service, to finance working capital and capital expenditures, potential acquisitions and to pay dividends.
"The expected decrease in EBITDA (from Q2 2022) arises primarily from higher operating expenses," AirBoss said its July 27 statement.
Earnings per diluted share will be between 8 and 12 cents per share, according to AirBoss.
AirBoss will issue its official financial results for the second quarter of 2023 Aug. 9 at the close of the day. The company will follow up with a company call Aug. 10 at 9 a.m. Eastern.
While net sales dipped in the first quarter of this year at $117.1 million against $144.5 million in the first quarter of 2022, cash from operations increased by $38.7 million, from a deficit of $32.7 million in the first quarter of 2022 to $6 million for the first quarter of 2023.
For the fourth quarter of 2022, net sales dropped 52.8 percent from the prior-year quarter to $117.4 million, with a drop in ADG partially offset by increases from the Rubber Solutions and Engineered Products segments.
Consolidated gross profit for the fourth quarter of 2022 fell 51.9 percent to $24.8 million, again with the lower profits coming from ADG.
Full-year 2022 results saw sales decline 18.7 percent to $477.2 million, with consolidated gross profit off 78.5 percent to $24.1 million. That put gross profit as a percentage of net sales at 5.1 percent, compared with 23.2 percent in 2021.
AirBoss said the decrease was driven by a $57 million non-cash write-down at ADG related to nitrile glove inventory and the delivery of nitrile gloves to the U.S. Department for Health and Human Services in 2021.
Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].