AirBoss of America (BOS) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales declined 16.4% year-over-year to $95.4M, with softness in both Rubber Solutions and Manufactured Products segments.

• Adjusted EBITDA rose 17.5% year-over-year to $6.1M, driven by cost controls, but net profit and EPS declined due to a $6.0M inventory write-down and higher taxes.

• Strategic review underway with TD Securities as advisor; class action lawsuit settlement approved.

• Long-term priorities include growing the core rubber solutions segment, diversifying products, and pursuing acquisitions.

• Quarterly dividend declared at C$0.035 per share.

Financial highlights

• Q2 2024 net sales were $95.4M, down from $114.1M in Q2 2023.

• Consolidated gross profit fell by $9.1M to $8.5M, impacted by lower volumes and a $6.0M glove and gown inventory write-down.

• Adjusted EBITDA was $6.1M, up from $5.2M in Q2 2023.

• Net loss was $9.6M in Q2 2024, compared to a $2.6M loss in Q2 2023; diluted EPS was $(0.35).

• Net debt at the end of Q2 2024 was $92.6M, up from $88.2M at year-end 2023.

Outlook and guidance

• Management expects improved performance in the second half of 2024 and into 2025, driven by new defense contracts and CBRN market momentum.

• Bandolier order deliveries will ramp up through Q4 2024 and Q1 2025, then stabilize.

• No further inventory write-downs for gloves and gowns are anticipated; sales of remaining inventory expected to be steady through Q1 2025.

• Strategic focus remains on operational execution, deleveraging, and cost management.

• Ongoing economic headwinds, inflation, and geopolitical challenges may impact volume recovery.