MARKHAM, ON / ACCESSWIRE / August 13, 2020 / iFabric Corp. ("iFabric" or the "Company") (TSX:IFA), today announced its financial results for its third quarter and nine months ended June 30, 2020.
"I am pleased to report that our Intelligent Fabrics Division achieved record revenues in the quarter, which in turn allowed the iFabric group as a whole to report a revenue increase of 41% compared to the previous year, despite extremely adverse current retail conditions," stated Hylton Karon, President and CEO of iFabric. "Following the recent successful testing of our PROTX2 technology against the COVID-19 causing virus, we are currently experiencing an unprecedented level of inquiries for our textile technologies, finished performance apparel and protective garments. We are also starting to see a modest rebound in Intimate Apparel orders as a result of the reopening of retail stores and we are launching our own performance and protective apparel brand in the fall. According, I am confident that iFabric has entered into a period of sustainable growth," concluded Hylton Karon.
EFFECT OF THE COVID-19 PANDEMIC ON OPERATIONS – QUARTER ENDED JUNE 30, 2020
During the third quarter of 2020, the spread of the Coronavirus (COVID-19) had significant positive and negative impacts on the Company's operations during the quarter.
In the Intelligent Fabric division, revenues increased by 215% due to the following factors:
Commencement in shipments of personal protective equipment (PPE) for sale to the US market.
A rebound in chemical sales in Asia following successful testing of the ability of PROTX2 to deactivate the COVID-19 causing virus.
The near normalization in the supply of products from China, which resulted in the receipt of delayed shipments of finished performance apparel for a major Canadian retailer.
In the Intimate Apparel division, revenues decreased by 78% as a result of increased COVID-19 infections in the US and Canada, which in turn resulted in the continuance of lockdowns and social distancing measures. Major retailers remained closed for most of the quarter and even after reopening towards the end of the quarter, did not experience a measurable rebound in sales as many of their regular customers continued to remain housebound. In addition, Amazon (a major customer of the division) restricted shipments to what they deemed as essential goods.
In response to these events, the Company has developed a number of comprehensive and evolving operational and risk management strategies to support the business for a future rebound in sales, particularly in its Intelligent Fabrics division.
The management of iFabric is of the opinion that it has made adequate provision in the Interim Financial Statements for the quarter and nine months ended June 30, 2020, for all potential impairment to the Company's assets as a result of the COVID-19 pandemic. These adjustments did not have a material effect on the financial position of iFabric as at June 30, 2020.
Q3 2020 HIGHLIGHTS:
Revenues in Q3 2020 amounted to $3,214,465 compared to $2,284,507 in Q3 2019, representing an increase of $929,958 or 41%. With regard to Company's operating divisions, revenue increased by 215% In the Intelligent Fabrics Division to $2,839,549 compared to $901,864 in Q3 2019, representing an increase of $1,937,685. The increase was mainly attributable to initial personal protective equipment sales, increased chemical sales and increases in performance apparel sales to a major retailer in Canada. In its Intimate Apparel Division revenue amounted to $315,819 from $1,412,270 in Q3 2019, representing a decrease of 78% or $1,096,451. The decrease in Intimate Apparel revenue was primarily attributable to the closure of retail stores as a result of the COVID-19 pandemic.
Net loss before tax of $634,859 compared to a loss before tax of $810,045 in 2019. The loss in the quarter was primarily attributable to non-cash share based compensation costs of $502,255 compared to $16,991 in 2019, in respect of 200,000 options issued during he quarter to an existing director and new director of the Company, which vested immediately.
Adjusted negative EBITDA of $93,205 compared to adjusted negative EBITDA of $753,012 in Q3 2019 representing increased earnings of $659,807.
Gross profit as a percentage of revenue was 30% in Q3 2020, compared to 23% in Q3 2019. The increase in gross profit percentage is mainly attributable to increased chemical and performance apparel margins. Gross profit in dollars increased by 83% or $432,980 to $954,698 from $521,718 in Q3 2019, attributable to increased revenues and improved margins.
The net loss attributable to iFabric's shareholders during Q3 2020 was $546,926 ($0.021 per share, basic and diluted) compared to a net loss of $642,120 in Q3 2019 ($0.024 per share, basic and diluted).
Other comprehensive loss, being unrealized currency differences on the translation of foreign operations, amounted to $177,399 compared to $11,222 in 2019. The total comprehensive loss amounted to $721,793 in Q3 2020 compared to $658,041 in 2019.
Working capital decreased by $13,425 to $6,650,552 compared to $6,663,977 at the end of the previous quarter ended March 31, 2020. The calculation of working capital excludes a term loan of $1,203,593, which is shown as a current liability as required under International Financial Reporting Standards, as management intends renewing this loan on maturity.
Cash increased by $226,831 to $2,313,282 compared to $2,086,451 at the end of the previous quarter ended March 31, 2020.
The Company's bank operating line was unutilized as at June 30, 2020, leaving the full amount of $3,750,000 available to finance future business of the Company.
Shareholder Equity attributable to common shareholders was $9,016,561 as at June 30, 2020 compared to $9,027,131 at the end of the previous quarter representing a decrease of $10,570.
NINE MONTH HIGHLIGHTS:
Revenues for the nine months ended June 30, 2020 were $8,063,396 compared to $7,260,181 for the comparable period in 2019, representing an increase of $803,215 or 11%. With respect to its two operating divisions, Intimate Apparel revenues decreased by 40% or $1,627,561 while Intelligent Fabrics revenues increased by 75% or $2,366,701.
Gross profit for the nine months ended June 30, 2020 increased by 24% or $550,403 to $2,888,540 (36% of revenues) from $2,338,137 (32% of revenues) for the comparable nine months of 2019, as a result of increased revenues and improved chemical and performance apparel margins.
Net loss attributable to iFabric's shareholders during the nine months ended June 30, 2020 was $974,861 ($0.037 per share, basic and diluted) compared to $1,585,729 ($0.061 per share, basic and diluted) for the nine months ended June 30, 2019. The decrease in losses from 2019 to 2020 were as a result of higher revenues and margins, which were partially offset by an increase in share based compensation.
For the nine months ended June 30, 2020 an amount of $2,322 was expensed to other comprehensive earnings, in respect of the accumulated unrealized loss arising on the currency translation of foreign operations, compared to $105,214 included in other comprehensive earnings for the same period in 2019. The total comprehensive loss totaled $969,928 for the current nine months, compared to a loss of $1,485,412 in 2019.
Complete Financial Statements are available on www.sedar.com
FINANCIAL HIGHLIGHTS
Quarter Ended June 30
Nine Months Ended June 30
2020
$
2019
$
2020
$
2019
$
Revenue
3,214,465
2,284,507
8,063,396
7,260,181
(Loss) earnings from operations
(603,724
)
(743,310
)
(1,250,921
)
(1,824,776
)
Share based compensation
502,255
16,991
525,605
109,189
Adjusted EBITDA *(Note)
(93,205
)
(753,012
)
(451,138
)
(1,722,323
)
Net (loss) earnings before tax
(634,859
)
(810,045
)
(1,097,584
)
(1,951,931
)
Net (loss) earnings after tax attributable to shareholders
(546,926
)
(642,120
)
(974,861
)
(1,585,729
)
Other comprehensive (loss) earnings
(177,399
)
(11,222
)
(2,322
)
105,214
Total compreshensive (loss) earnings
(721,793
)
(658,041
)
(969,928
)
(1,485,412
)
Net income (loss) per share – basic
(0.021
)
(0.024
)
(0.037
)
(0.061
)
Net income (loss) per share – dliuted
(0.021
)
(0.024
)
(0.037
)
(0.061
)
*Note: Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization and share based compensation. The disclosure of EBITDA is not a requirement under International Financial Reporting Standards (IFRS).
ABOUT iFABRIC CORP:
Headquartered in Markham, Ontario, iFabric Corp www.ifabriccorp.com currently has 26.5 million shares issued and outstanding.
Through its wholly-owned subsidiaries, Intelligent Fabric Technologies (North America) Inc. ("IFTNA") and Coconut Grove Pads Inc. ("Coconut Grove"), the Company offers a variety of products and services in both of its strategic divisions:
IFTNA is focused on performance apparel as well as proprietary chemical formulations that render fabrics, foams, plastics and numerous other surfaces intelligent, thereby improving the safety and well-being of the consumer.
Coconut Grove, operating as Coconut Grove Intimates, is a designer, manufacturer, distributor, licensor and licensee of ladies intimate apparel products and accessories.
FORWARD LOOKING STATEMENTS:
Forward-looking statements provide an opinion as to the effect of certain events and trends on the business. Certain statements contained in this news release constitute forward looking statements. The use of any words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors. Forward-looking information includes, but is not limited to, statements with respect to the development potential of the Company's products.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Readers are cautioned not to place undue reliance on these statements as the Company's actual results, performance, or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, or if the Company's estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or any other reason except as required by applicable securities laws.
Any financial outlook or future oriented financial information in this news release, as defined by applicable securities legislation, has been approved by management of iFabric. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
FOR FURTHER INFORMATION, please contact:
Hilton Price, CFO
Tel: 647.465.6161
Email: hilton.price@rogers.com
Tina Byers – Investor Relations
Tel: 905.330.3275
Email: tina@adcap.ca
Gary Perkins – Investor Relations
Tel: 416.882.0020
Email: garyperkins@rogers.com
Jean-François Dubé (Québec) – Investor Relations
Tel: 514.233.9551
Email: jfdube@mac.com
Website: www.ifabriccorp.com
SOURCE: iFabric Corp.
ReleaseID: 601658
