Intertape Polymer Group Inc. (IPG) recently released results for its third quarter ended September 30, 2020. Revenue increased 10% compared to the 2019 third quarter, to $323 million, primarily due to increased demand in products with significant e-commerce end market exposure, including water-activated tape and protective packaging.
“The pandemic has impacted businesses differently depending on the markets they serve,” said Greg Yull, president and CEO. “What is becoming clear to us, is the structural change underway in e-commerce. Increased demand in e-commerce and building & construction as well as a return to positive performance in most of our other end markets drove increased growth in both our top and bottom line results and our ability to generate cash flows. These results were underpinned by strong plant performance, effective management of the spread between selling prices and raw materials costs and proactive cost reductions in the face of the pandemic...”
The company reports that it has implemented measures in response to COVID-19 to prioritize the health and safety of its employees while protecting its assets, customers, suppliers, and shareholders. IPG’s facilities are open and operating, having qualified as essential under the applicable government orders and guidelines. Alternative capacity exists across all major product lines that would enable the continuation of operations if certain facilities were required to close; however, in most cases, this alternative capacity would produce less than current run rates. Management has adjusted, and will continue to adjust, production plans to align with changes in demand in order to manage working capital and associated cost levels. Management has successfully mitigated minor supply chain challenges experienced to date and continues to work closely with suppliers as supply chain risk mitigation plans are refined.
According to IPG, it has put measures in place to enable employees to work safely according to the United States Centers for Disease Control and Prevention guidelines and other applicable social distancing guidelines, including requiring employees to wear protective face coverings provided by the company while in its manufacturing facilities and to complete health interviews prior to entry on a regular basis. The company has significantly increased the frequency of cleaning and sanitizing equipment and facilities in the context of COVID-19, and it continues to support remote work arrangements for approximately 20% of its workforce in North America. The remote work arrangements have not had any significant effect on the company’s ability to conduct its day-to-day operations.
Employee health coverage has been enhanced to include the cost of COVID-19 testing and treatment at no additional cost to employees, and the higher-risk workforce or those experiencing illness of any kind are strongly encouraged to stay at home or shelter in place. As a result of these and other factors, IPG believes the current absentee rate at facilities in North America is at a manageable level and has not resulted in any material level of production disruption.
IPG expects that its revenue in the fourth quarter of 2020 will grow by 10% or more compared to the same period in 2019, excluding any significant unforeseen fluctuations in raw material prices. Capital expenditures are expected to be between $45 and $50 million for the 2020 fiscal year, up from between $30 and $40 million previously estimated for the year, as a result of the company accelerating investments in production capacity related to e-commerce products in order to address future increased demand beyond 2020.
Additional details are available at www.itape.com.