AirBoss of America Corp.
(BOS-T) C$31.74
Q4/21 First Look Event
Last night, AirBoss reported Q4/21 Adjusted EBITDA of $27.0 million, compared with our forecast/consensus of $24.7 million/$23.9 million. Adjusted diluted EPS of $0.55 compared with our forecast/consensus of $0.42/$0.44. We will provide a further update following a review of the company's Q4/21 conference call.
Impact: SLIGHTLY POSITIVE
We view the stronger-than-forecast revenue from RS and EP segments, adjusted EBITDA reaching the top end of guidance, and coming in 9% above our forecast, positively. Despite a year filled with supply-chain challenges, AirBoss generated strong results that demonstrated its many opportunities for recovery and growth. We believe that the company has the financial resources, expertise, organic growth opportunities, and customer base necessary to drive future shareholder value.
Rubber Solutions: Revenue increased 87% y/y to $48.4 million (TD forecast: $38.0 million) due to 18.8% non-tolling volume growth driving the increase. EBIT margin of 4.9% was down 190 bps y/y, but was above our 3.9% forecast.
Engineered Products: Revenue decreased 16% y/y to $25.6 million (TD forecast: $25.0 million). The decrease was due to supply-chain challenges, raw material price increases, and the impact of the chip shortage on SUV, light truck, and minivan platforms. EBIT margin of -18.6% was below our -15.9% forecast.
AirBoss Defense: Revenue increased 131% y/y to $175.1 million (TD forecast: $178.6 million). The increase in revenue was due to the continued delivery of nitrile gloves under the HHS contract. EBIT margin declined y/y to 16.2%, but was above our forecast of 14.1%.
FCF and Liquidity: FCF increased 159% y/y to $133.4 million, but was below our forecast of $176.4 million. The difference was due to lower-than-expected working capital inflows ($111.5 million vs TD forecast of $163.6 million), partially offset by stronger-than-expected cash earnings ($26.9 million vs TD forecast of $17.5 million). AirBoss ended the year strong with liquidity greater than $250 million and net debt declining to 0.7x EBITDA.
Outlook: The company's pipeline of contract opportunities is $1.5 billion, the highest level in history. Long-term goals remain acquisitions, defense growth through focusing on first responder markets, and growing its position within the North American specialty compounds market.