AirBoss narrows loss, increases target for costs-reduction

Newmarket, Ontario – AirBoss of America Corp. has reported a loss of $4.6 million (€4.2 million) for the third quarter, compared to a loss of nearly $56 million in the same period of last year.

The improvement was alongside a 2% year-on-year decline in sales over the three months to 30 Sept, to $102 million, the Ontario-based rubber-based products maker said 8 Nov.

“Despite continued market and economic headwinds, our third quarter financial results showed a degree of stability,” said Chris Bitsakakis, president and co-CEO of AirBoss.

From a market perspective, Bitsakakis said the group experienced decreased volume demand from industrial customers over the course of the third quarter.

The decline, he noted, marked “the initial signs” of the impacts to automotive OEM production schedules, following the UAW labour strikes in the US.

On a more upbeat note, AirBoss secured additional contract awards for its AirBoss Defense Group (ADG).

These included new orders from the US department of defence (DoD) for extreme cold vapour barrier footwear, known as 'bunny boots'.

The business group received two additional follow-on orders for the manufacture of up to 42,965 pairs of these boots, under a previously announced contract with DoD.

ADG will execute the orders, along with previously announced awards for moulded gloves and 'line charge' systems, over the next three years, with an expected value of over $34 million.

Looking at the financial positioning of the group, chairman and co-CEO Gren Schoch said the businesses and markets AirBoss operates in “continue to experience significant change.”

As a result, Airboss is pursuing several initiatives to reduce costs and ensure long-term stability.

The Canadian group has now expanded cost-saving measures, initially announced in July, to generate $7.7 million of savings per year.

The initial plan, unveiled in the summer, aimed to save $5 million a year and involved a “close review” of operating practices, and structure of ADG to return to profitability.

Breaking down segment performance, AirBoss said sales within its ADG unit fell 10.0% year-on-year to $21,193 for the third quarter and by 33.1% to $75,839 for the first nine months of the year.

The decrease in the third quarter was primarily the result of modest decreases in volume in the industrial sector.

The group linked the overall year-to-date decline to the completion of a large nitrile examination glove order by the government in the early part of last year.

Softness experienced in the moulded defence products and the industrial lines of business also contributed to the decline.

The segment returned to profit, posting gross profit of $2,563, up from a loss of $51,299 last year, for the third quarter.

For the first nine months, ADG recorded profit of $15,541, against a loss of $13,874 reported last year.

The increase was primarily due to the $57.0 million non-cash write down in the prior year and lower overhead costs which took effect late in the third quarter.

AirBoss Rubber Solutions (ARS) saw third quarter sales fall 12.9% to $50,967, due to a 9.1% decline in volumes, across the vast majority of sectors.

For the first nine months, segment revenue fell 8.1% to $163,907 on 17.9% lower volumes, and “continued signs of softness with many customer’s operations”.

Gross profit at ARS declined 8.7% to $7,642 for the third quarter and 5.0% to $24,853 for the first nine months.

The overall gross profit decrease was primarily linked to volume reductions and product mix, which were partially offset by “managing controllable overhead costs”. 

AirBoss Engineered Products (AEP) registered the strongest performance, posting a 28.5% increase third quarter sales to $37,486.

For the first nine months, the unit saw sales increase 35.2% to $116,052. 

AirBoss attributed the growth to higher volumes and favourable mix in SUV and light truck platforms and “despite some economic headwinds” such as US automotive labour strikes.

The strikes, it added, had “a modest impact” on production schedules across certain OEMs and Tier 1 suppliers in the quarter. 

Year-to-date, the increase was due to stronger volumes in the SUV, light truck and mini-van platforms.

AEP reported a significant improvement in profits in the third quarter at $3,560, up from a loss of $4,108.

Over the nine months, the segment returned to black, posting a profit of $12,894, compared to a loss of $12,931 last year. 

The increase was linked to “favourable volume and product mix in the automotive sector and improved arrangements with key suppliers and customers”.