AirBoss says U.S. government contracts for COVID respirators give it momentum
Two back-to-back U.S. government contracts will be a strong financial driver for the Ontario-based company
NEWMARKET, Ont. — AirBoss of America Corp. says it expects to build on its recent success from supplying tens of thousands of respirators and related products ordered by U.S. government agencies in response to COVID-19.
AirBoss president Chris Bitsakaki told analysts Aug. 11 that two back-to-back U.S. government contracts will be a strong financial driver for the Ontario-based company for the rest of 2020 and into 2021.
AirBoss Defence Group, which is owned 55% by AirBoss, delivered 100,000 respirator systems to the U.S. Federal Emergency Management Agency (FEMA) under a US$96.4 million contract issued in March.
That was followed, after the quarter ended, by a US$121.0 followup contract from the U.S. government’s health and human services department (HHS) to provide more respirators, filters and related accessories.
Consolidated revenue from AirBoss’s three business segments was up 36.1% at US$112.5 million and adjusted net income rose 1.35% to US$6.7 million, or 27 cents per diluted share.
AirBoss Defense Group’s net sales, reported in U.S. currency, were up 327% at $82 million and its gross profit increased by 451% to $28.2 million for the quarter.
However, that was largely offset by declines at the company’s other two segments as customers, including automakers, tire makers and related suppliers, suspended operations in late March.
At its rubber solutions segment, net sales fell 34% from last year to $23.4 million and gross profit fell nearly 30% to $3.9 million.
At its engineer products segment, net sales fell 58.6% to $13.5 million, resulting in a $698,000 gross loss.
Bitsakaki told analysts that AirBoss will look for opportunities to use its strong balance sheet to fund acquisitions “at a more realistic” price than before COVID.
“The contract awards we have secured over the last two quarters alone mean that we will exit 2020 on our strongest financial footing ever, offering us maximum flexibility to deploy capital and invest in those initiatives that can support enhanced levels of growth,” Bitsakaki said.
“As we saw following the financial crisis of 2008, we expect there will be some companies that managed to get through the pandemic but are unable to recapitalize coming out on the other side, having accumulated too much debt.”
AirBoss shares loss 99 cents or 4.3% at C$22.01 in afternoon trading on the Toronto Stock Exchange.
By David Paddon in Toronto