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Form 6-K INTERTAPE POLYMER GROUP For: Mar 31

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May 12, 2021 7:03 AM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of May, 2021
Commission File Number 1-10928
  
INTERTAPE POLYMER GROUP INC.
 

9999 Cavendish Blvd., Suite 200, Ville St. Laurent, Quebec, Canada, H4M 2X5
 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x           Form 40-F  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  INTERTAPE POLYMER GROUP INC.
Date: May 12, 2021  By: /s/ Jeffrey Crystal
   Jeffrey Crystal, Chief Financial Officer





Intertape Polymer Group Inc.
Management’s Discussion and Analysis

This Management’s Discussion and Analysis (“MD&A”) is intended to provide the reader with a better understanding of the business, strategy and performance of Intertape Polymer Group Inc. (the “Company”), as well as how it manages certain risks and capital resources. This MD&A, which has been prepared as of May 11, 2021, should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements and notes thereto as of and for the three months ended March 31, 2021 and 2020 ("financial statements") and “Item 5 Operating and Financial Review and Prospects (Management’s Discussion & Analysis)” located in the Company’s annual report on Form 20-F for the year ended December 31, 2020 and the other statements contained in the Company’s filings with the Canadian securities regulators and the US Securities and Exchange Commission. It should also be read together with the text below on forward-looking statements in the section entitled “Forward-Looking Statements”.

For the purposes of preparing this MD&A, the Company considers the materiality of information. Information is considered material if the Company believes at the time of preparing this MD&A that: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the common shares of the Company; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; and/or (iii) it would significantly alter the total mix of information available to investors. The Company evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Except where otherwise indicated, all financial information presented in this MD&A, including tabular amounts, is prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS” or “GAAP”) and is expressed in US dollars ("USD") unless otherwise stated to be in Canadian dollar ("CDN") or Indian Rupee ("INR"). Variance, ratio and percentage changes in this MD&A are based on unrounded numbers.
This MD&A contains certain non-GAAP financial measures and key performance indicators as defined under applicable securities legislation, including adjusted net earnings (loss), adjusted earnings (loss) per share, EBITDA, adjusted EBITDA, and free cash flows (please see the "Adjusted Net Earnings (Loss)" section below for a description and reconciliation of adjusted net earnings (loss) and adjusted earnings (loss) per share, “EBITDA and Adjusted EBITDA” section below for a description and reconciliation of EBITDA and adjusted EBITDA, and the “Cash Flows” section below for a description and reconciliation of free cash flows). In determining these measures, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. The Company believes such non-GAAP financial measures are key performance indicators that improve the period-to-period comparability of the Company’s results and provide investors with more insight into, and an additional tool to understand and assess, the performance of the Company's ongoing core business operations. As required by applicable securities legislation, the Company has provided definitions of those measures and reconciliations of those measures to the most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures set forth below in the section entitled "Non-GAAP Financial Measures and Key Performance Indicators" and should consider non-GAAP financial measures and key performance indicators only as a supplement to, and not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.
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Consolidated Quarterly Statements of Earnings
Three month periods ended
(In thousands of US dollars, except per share amounts)
(Unaudited)
March 31, 2021December 31, 2020September 30, 2020June 30, 2020
 $$$$
Revenue345,566 344,079 323,027 267,710 
Cost of sales263,016 255,599 238,917 210,623 
Gross profit82,550 88,480 84,110 57,087 
Gross margin23.9 %25.7 %26.0 %21.3 %
Selling, general and administrative expenses46,743 53,424 38,621 34,534 
Research expenses3,048 2,763 2,554 2,546 
49,791 56,187 41,175 37,080 
Operating profit before manufacturing facility closures, restructuring and other related charges32,759 32,293 42,935 20,007 
Manufacturing facility closures, restructuring and other related charges— — 466 3,211 
Operating profit32,759 32,293 42,469 16,796 
Finance costs (income)
Interest5,368 6,757 7,368 7,513 
Other finance expense (income), net1,342 3,188 1,296 (9,590)
6,710 9,945 8,664 (2,077)
Earnings before income tax expense26,049 22,348 33,805 18,873 
Income tax expense (benefit)
Current2,184 9,871 9,373 3,996 
Deferred4,076 (4,910)(2,741)296 
6,260 4,961 6,632 4,292 
Net earnings19,789 17,387 27,173 14,581 
Net earnings attributable to:
Company shareholders19,052 17,089 26,726 14,479 
Non-controlling interests737 298 447 102 
19,789 17,387 27,173 14,581 
Earnings per share attributable to Company shareholders
Basic0.32 0.29 0.45 0.25 
Diluted0.32 0.28 0.45 0.25 
Weighted average number of common shares outstanding
Basic59,027,047 59,012,869 59,009,685 59,009,685 
Diluted60,358,431 60,083,664 59,745,118 59,467,336 


2


Consolidated Quarterly Statements of Earnings
Three month periods ended
(In thousands of US dollars, except per share amounts)
(Unaudited)
 
March 31, 2020December 31, 2019September 30, 2019June 30, 2019
 $$$$
Revenue278,212 291,489 293,598 295,609 
Cost of sales219,105 231,167 229,535 230,915 
Gross profit59,107 60,322 64,063 64,694 
Gross margin21.2 %20.7 %21.8 %21.9 %
Selling, general and administrative expenses30,907 32,533 35,025 36,433 
Research expenses3,333 3,010 3,326 3,023 
34,240 35,543 38,351 39,456 
Operating profit before manufacturing facility closures, restructuring and other related charges (recoveries)24,867 24,779 25,712 25,238 
Manufacturing facility closures, restructuring and other related charges (recoveries)651 (657)1,614 3,875 
Operating profit24,216 25,436 24,098 21,363 
Finance costs
Interest7,798 7,668 7,764 8,565 
Other finance (income) expense, net(1,132)3,630 (459)798 
6,666 11,298 7,305 9,363 
Earnings before income tax expense17,550 14,138 16,793 12,000 
Income tax expense (benefit)
Current2,355 3,459 6,584 5,977 
Deferred881 (1,010)(2,332)(439)
3,236 2,449 4,252 5,538 
Net earnings14,314 11,689 12,541 6,462 
Net earnings (loss) attributable to:
Company shareholders14,376 11,631 12,528 6,566 
Non-controlling interests(62)58 13 (104)
14,314 11,689 12,541 6,462 
Earnings per share attributable to Company shareholders
Basic0.24 0.20 0.21 0.11 
Diluted0.24 0.20 0.21 0.11 
Weighted average number of common shares outstanding
Basic59,009,685 58,900,337 58,877,185 58,760,473 
Diluted59,075,593 59,027,917 59,058,758 58,955,643 
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Overview
The Company develops, manufactures and sells a variety of paper-and-film based pressure sensitive and water-activated tapes, polyethylene and specialized polyolefin films, protective packaging, engineered coated products and packaging machinery for industrial and retail use. The Company provides packaging and protective solutions for industrial markets in North America, Europe and other geographies.
The Company’s products primarily consist of carton sealing tapes, including pressure-sensitive and water-activated tapes; packaging equipment; industrial and performance specialty tapes, including masking, duct, electrical, foil, process indicator, sheathing, sports and reinforced filament tapes; protective packaging solutions, including inflatable systems, mailer products, bubble cushioning, paper void fill, thermal solutions and protective foam roll stock; stencil products; shrink film; stretch wrap; lumber wrap, structure fabrics, geomembrane fabrics; and non-manufactured flexible intermediate bulk containers. Most of the Company’s products are made from similar processes. A vast majority of the Company’s products, while brought to market through various distribution channels, generally have similar economic characteristics.
The Company has assembled a broad range of products by leveraging its manufacturing technologies, research and development capabilities, global sourcing expertise and strategic acquisitions. Over the years, the Company has made a number of strategic acquisitions intended to offer a broader range of products to better serve its markets. The Company’s extensive product line permits the Company to offer tailored solutions to a wide range of end markets. The Company's largest end markets as of December 31, 2020 were: general manufacturing, fulfillment/e-commerce, food and beverage, building and construction, retail and transportation(1).
The Company's unique bundle of products positions it to serve the market with a broad and comprehensive range of packaging, protective and industrial product solutions. The Company believes that its broad and unique product bundle is a key competitive advantage. The portfolio of products is valuable to the Company’s customers as it contributes to the flexibility of its distributor partners by allowing them to offer a solutions-oriented approach to address specific end user needs, creates operating efficiencies and lowers operating costs. Management believes this flexibility is unique to the Company and differentiates the Company from its competitors.
(1)Represents management estimates as the Company does not have access to exact point of sale data.
COVID-19
In response to the coronavirus ("COVID-19") pandemic that began in December 2019, the Company has implemented measures to prioritize the health and safety of its employees while protecting its assets, customers, suppliers, shareholders and other stakeholders. The following is an overview of the status of the Company's efforts as of the time of this filing as well as a discussion of certain risks to its business associated with COVID-19:
•The Company'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 attributable to COVID-19 and continues to work closely with suppliers as supply chain risk mitigation plans are refined.
•Management has put measures in place to enable employees to work safely according to the United States Centers for Disease Control and Prevention and World Health Organization guidelines and other applicable local guidelines, including social distancing and 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 the Company 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.
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•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, the Company 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.
There continues to be significant macroeconomic uncertainty, and the Company expects the COVID-19 pandemic may continue to have a materially negative impact on the global economy into the remainder of 2021 and perhaps beyond. While the Company has delivered positive financial results to date, the pandemic could yet materially impact the Company’s ability to manufacture, source (including the delivery of raw materials to its facilities) or distribute its products both domestically and internationally and reduce demand for its products, any of which could have a significant negative impact on the Company’s financial results in 2021 and beyond. Given the dynamic nature of the pandemic (including its duration and the severity of its impact on the global economy and the applicable governmental responses), the extent to which the COVID-19 pandemic impacts the Company’s future results will depend on unknown future developments and any further impact on the global economy and the markets in which the Company operates and sells its products, all of which remain highly uncertain and cannot be accurately predicted at this time.
Financial Highlights
The Company reported a 24.2% increase in revenue for the first quarter of 2021 compared to the first quarter of 2020. The increase in revenue was primarily due to an increase in demand for products with significant e-commerce end-market exposure, including water-activated tape and protective packaging, combined with an increase in demand for certain film and woven products.
Gross margin increased to 23.9% in the first quarter of 2021 compared to 21.2% in the first quarter of 2020 primarily due to favourable plant performance driven by increased scale, a favourable product mix, and an increase in spread between selling prices and combined raw material and freight costs.

Net earnings attributable to the Company's shareholders ("IPG Net Earnings") increased to $19.1 million ($0.32 basic and diluted earnings per share) for the first quarter of 2021 from $14.4 million ($0.24 basic and diluted earnings per share) for the first quarter of 2020, primarily due to an increase in gross profit, partially offset by an increase in selling, general and administrative expenses ("SG&A") mainly due to an increase in the fair value of cash-settled share-based compensation and an increase in income tax expense mainly due to improved profitability in the first quarter of 2021.

Adjusted net earnings(1) increased to $28.8 million ($0.49 basic adjusted earnings per share and $0.48 diluted adjusted earnings per share(1)) for the first quarter of 2021 from $13.1 million ($0.22 basic and diluted adjusted earnings per share) for the first quarter of 2020. The increase was primarily due to an increase in gross profit, partially offset by an increase in income tax expense.

Adjusted EBITDA(1) increased to $60.3 million for the first quarter of 2021 from $38.0 million for the first quarter of 2020. The increase was primarily due to an increase in gross profit.

(1)    Non-GAAP financial measure. For definitions and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures, see "Non-GAAP Financial Measures and Key Performance Indicators" below.


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Other Highlights

Dividend Declaration

On May 11, 2021, the Company declared a quarterly cash dividend of $0.1575 per common share payable on June 30, 2021 to shareholders of record at the close of business on June 16, 2021.

Sustainability

The Company continues to embrace sustainability as a key strategy of doing business to drive operational excellence. The Company's achievements in 2021 to date include:
•Achieved Cradle to Cradle Certified™ Bronze level for Intertape® Acrylic Carton Sealing Tape and Intertape® Hot Melt Carton Sealing Tape.
•Awarded the U.S. Environmental Protection Agency's 2021 ENERGY STAR® Partner of the Year - Sustained Excellence designation for the sixth consecutive year.
•Achieved ISO 50001 certification for the energy management system in place at the Danville, Virginia manufacturing facility and distribution center.
•Partnered with the Sustainable Packaging Coalition and How2Recycle® program in an effort to ensure recycling instructions are communicated to customers in the most effective manner. As a result of this collaboration, StretchFLEX® and SuperFLEX® stretch films are store drop-off recyclable per the How2Recycle® guidelines.
Outlook
The Company has revised its expectations for revenue, adjusted EBITDA and effective tax rate for fiscal year 2021 as follows:

•Revenue in 2021 is now expected to be between $1.375 and $1.450 billion. An increase from the original expectation of between $1.3 and $1.4 billion. The increase is due the strong demand and order backlog experienced to date.

•Adjusted EBITDA for 2021 is now expected to be between $235 and $250 million which is higher than the original range of $220 and $240 million due to demand strength noted above.

•The Company now expects a 25% to 30% effective tax rate for 2021, an increase from 22% to 27% mainly due to an unfavourable mix of earnings between jurisdictions. This expectation excludes the potential impact of additional changes in the mix of earnings between jurisdictions and the impact of changes resulting from potential US tax legislation that increases rates (particularly, if such increased rates are retroactive to January 1, 2021). The Company continues to expect cash taxes paid in 2021 to be approximately 10% greater than income tax expense due to less availability of tax attributes and loss carryforwards than were available for 2020, as well as the impacts of bonus depreciation previously taken.

The remaining expectations are unchanged from those set out in the Company's MD&A as of and for the year ended December 31, 2020 ("2020 MD&A").

•Total capital expenditures for 2021 are expected to be approximately $100 million, which includes $70 million to expand production capacity in the Company's highest growth product categories, specifically water-activated tape, wovens, protective packaging and films. This also includes $10 million for digital transformation and cost savings initiatives, and $20 million for regular maintenance.

•Free cash flows(1) for 2021 are expected to be between $80 and $100 million. As in previous years, the Company expects the majority of free cash flows to be generated in the second half of the year due to the normal seasonality of working capital requirements.
The Company recognizes that the potential effects and duration of COVID-19, as well as the impact of the weather-related event in Texas during February on the availability and price of raw materials remains uncertain and could have an effect on the expected level of revenue and adjusted EBITDA. Consistent with past practices, the Company expects to protect the dollar spread by implementing price increases as required to offset higher raw material and freight costs. The implications of the
6


weather-related event in Texas continue to evolve. The Company continues to monitor the situation and is confident in its ability to navigate any further supply chain disruptions.

The Company continues to expand production capacity in high-growth product categories. By installing new capacity within its existing footprint, the Company expects these projects will provide shorter-term investment horizons and return profiles that more than exceed the 15% after-tax internal rate of return threshold that the Company has traditionally applied to its strategic investments. The Company is investing directly into categories where it expects demand to exceed production in the near term. The Company views these as low risk, margin accretive projects. Based on its capital plan, the Company anticipates generating more than $100 million in incremental revenue on an annualized run-rate basis by the end of 2022 as well as additional growth into 2023 and beyond.
The above description of the Company's 2021 financial outlook in this MD&A is based on management's current views, strategies, assumptions and expectations concerning growth opportunities, expansion and investment projects, the potential impact of COVID-19, as well as management's assessment of the opportunities for the Company and its industry. The purpose of disclosing this outlook is to provide investors with more information concerning the fiscal impact of the Company's business initiatives and growth strategies. The above description of the Company's 2021 outlook is forward-looking information for the purposes of applicable securities laws in Canada and the United States and readers are therefore cautioned that actual results may vary materially from those described above. Refer to the section below entitled "Forward-Looking Statements" as well as "Item 3. Key Information - Risk Factors," located in the Company’s annual report on Form 20-F for the year ended December 31, 2020 for a reference to the risks and uncertainties impacting the Company that could cause actual results to vary.
(1)    Non-GAAP financial measure. For definitions and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures, see "Non-GAAP Financial Measures and Key Performance Indicators" below.
Results of Operations
Revenue
Revenue for the first quarter of 2021 totalled $345.6 million, a $67.4 million or 24.2% increase from $278.2 million for the first quarter of 2020, primarily due to:

•An increase in volume/mix of approximately 20% or $55.7 million primarily driven by an increase in demand for products with significant e-commerce end-market exposure including water-activated tape and protective packaging combined with an increase in demand for certain film and woven products;
•The impact of higher selling prices of approximately $8.7 million primarily in film, woven, and protective packaging products driven by increases in certain raw materials; and
•A favourable foreign exchange impact of $2.9 million.
Gross Profit and Gross Margin
Gross profit totalled $82.6 million for the first quarter of 2021, a $23.4 million or 39.7% increase from $59.1 million for the first quarter of 2020. Gross margin was 23.9% in the first quarter of 2021 and 21.2% in the first quarter of 2020.
•Gross profit increased primarily due to a favorable product volume/mix, an increase in spread between selling prices and combined raw material and freight costs, and favourable plant performance driven by increased scale providing leverage on both fixed costs and recent investments.
•Gross margin increased primarily due to favourable plant performance driven by increased scale, a favourable product mix, and an increase in spread between selling prices and combined raw material and freight costs.
Selling, General and Administrative Expenses
SG&A for the first quarter of 2021 totalled $46.7 million, a $15.8 million or 51.2% increase from $30.9 million for the first quarter of 2020. The increase was primarily due to an increase in share-based compensation mainly due to an increase in the fair value of cash-settled awards.
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Finance Costs
Finance costs totalled $6.7 million for both the first quarter of 2021 and 2020. Finance costs in the first quarter of 2021 included charges incurred related to amounts payable to the former shareholders of Nortech for tax-related costs associated with the Nortech Acquisition(1) and a decrease in foreign exchange gains compared to the same period in 2020, largely offset by a decrease in interest expense compared to the same period in 2020.
The decrease in interest expense is primarily due to interest reimbursements received in the first quarter of 2021 related to an interest subsidy program for one of the Company's Indian borrowing facilities, lower average debt outstanding and a lower average cost of debt.
(1)    The "Nortech Acquisition" refers to the acquisition by the Company of substantially all of the operating assets of Nortech Packaging LLC and Custom Assembly Solutions, Inc. (together "Nortech") on February 11, 2020.
Income Taxes
The Company is subject to income taxation in multiple tax jurisdictions around the world. Accordingly, the Company’s effective tax rate fluctuates depending on the geographic source of its earnings. The Company’s effective tax rate is also impacted by tax planning strategies that the Company implements. Income tax expense is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year.
The table below reflects the calculation of the Company’s effective tax rate (in millions of USD):
 
 Three months ended
March 31,
 20212020
 $$
Income tax expense6.3 3.2 
Earnings before income tax expense26.0 17.6 
Effective tax rate24.0 %18.4 %
The increase in the effective tax rate in the three months ended March 31, 2021 as compared to the same period in 2020 was primarily due to an unfavourable mix of earnings between jurisdictions, partially offset by the favourable application of tax credits.
IPG Net Earnings
IPG Net Earnings totalled $19.1 million for the first quarter of 2021, a $4.7 million or 32.5% increase from $14.4 million for the first quarter of 2020, primarily due to an increase in gross profit, partially offset by an increase in SG&A mainly due to an increase in the fair value of cash-settled share-based compensation and an increase in income tax expense mainly due to improved profitability in the first quarter of 2021.
Non-GAAP Financial Measures and Key Performance Indicators
The Company measures the success of the business using a number of key performance indicators, many of which are in accordance with GAAP as described throughout this MD&A. This MD&A also contains certain non-GAAP financial measures and key performance metrics as defined under applicable securities legislation, including adjusted net earnings (loss), adjusted earnings (loss) per share, EBITDA, adjusted EBITDA, and free cash flows (please see the "Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) Per Share" section below for a description and reconciliation of adjusted net earnings (loss) and adjusted earnings (loss) per share, “EBITDA and Adjusted EBITDA” section below for a description and reconciliation of EBITDA and adjusted EBITDA, and the “Cash Flows” section below for a description and reconciliation of free cash flows). In determining these measures, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. The Company believes such non-GAAP financial measures are key performance indicators that improve the period-to-period comparability of the Company’s results and provide investors with more insight into, and an additional tool to understand and assess, the performance of the Company's ongoing core business operations. As required by applicable securities legislation, the Company has provided definitions of those measures and reconciliations of those measures
8


to the most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures set forth below and should consider non-GAAP financial measures and key performance indicators only as a supplement to, and not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.
Adjusted Net Earnings (Loss) and Adjusted Earnings (Loss) Per Share

A reconciliation of the Company’s adjusted net earnings (loss), a non-GAAP financial measure, to IPG Net Earnings, the most directly comparable GAAP financial measure, is set out in the adjusted net earnings (loss) reconciliation table below. Adjusted net earnings (loss) should not be construed as IPG Net Earnings as determined by GAAP. The Company defines adjusted net earnings (loss) as IPG Net Earnings before (i) manufacturing facility closures, restructuring and other related charges (recoveries); (ii) advisory fees and other costs associated with mergers and acquisitions activity, including due diligence, integration and certain non-cash purchase price accounting adjustments ("M&A Costs"); (iii) share-based compensation expense (benefit); (iv) impairment of goodwill; (v) impairment (reversal of impairment) of long-lived assets and other assets; (vi) write-down on assets classified as held-for-sale; (vii) (gain) loss on disposal of property, plant, and equipment; (viii) other discrete items as shown in the table below; and (ix) the income tax expense (benefit) effected by these items. The term “adjusted net earnings (loss)” does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted net earnings (loss) is not a measurement of financial performance under GAAP and should not be considered as an alternative to IPG Net Earnings as an indicator of the Company’s operating performance or any other measures of performance derived in accordance with GAAP. The Company has included this non-GAAP financial measure because it believes that it allows investors to make a more meaningful comparison of the Company’s performance between periods presented by excluding certain non-operating expenses, non-cash expenses and, where indicated, non-recurring expenses. In addition, adjusted net earnings (loss) is used by management in evaluating the Company’s performance because it believes it provides an indicator of the Company’s performance that is often more meaningful than GAAP financial measures for the reasons stated in the previous sentence.

Adjusted earnings (loss) per share is also presented in the following table and is a non-GAAP financial measure. Adjusted earnings (loss) per share should not be construed as IPG Net Earnings per share as determined by GAAP. The Company defines adjusted earnings (loss) per share as adjusted net earnings (loss) divided by the weighted average number of common shares outstanding, both basic and diluted. The term “adjusted earnings (loss) per share” does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted earnings (loss) per share is not a measurement of financial performance under GAAP and should not be considered as an alternative to IPG Net Earnings per share as an indicator of the Company’s operating performance or any other measures of performance derived in accordance with GAAP. The Company has included this non-GAAP financial measure because it believes that it allows investors to make a more meaningful comparison of the Company’s performance between periods presented by excluding certain non-operating expenses, non-cash expenses and, where indicated, non-recurring expenses. In addition, adjusted earnings (loss) per share is used by management in evaluating the Company’s performance because it believes it provides an indicator of the Company’s performance that is often more meaningful than GAAP financial measures for the reasons stated in the previous sentence.

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Adjusted Net Earnings Reconciliation to IPG Net Earnings
(In millions of USD, except per share amounts and share numbers)
(Unaudited)
Three months ended
March 31,
20212020
$$
IPG Net Earnings
19.1 14.4 
Manufacturing facility closures, restructuring and other related charges— 0.7 
M&A Costs
— 1.6 
Share-based compensation expense (benefit)11.1 (4.0)
Impairment of long-lived assets and other assets0.1 — 
(Gain) loss on disposal of property, plant and equipment(0.0)0.1 
Other item: Nortech incremental tax costs (1)
1.3 — 
Income tax (benefit) expense, net(2.7)0.3 
Adjusted net earnings
28.8 13.1 
IPG Net Earnings per share
Basic
0.32 0.24 
Diluted
0.32 0.24 
Adjusted earnings per share
Basic
0.49 0.22 
Diluted
0.48 0.22 
Weighted average number of common shares outstanding
Basic
59,027,047 59,009,685 
Diluted
60,358,431 59,075,593 
(1)    Refers to charges incurred related to amounts payable to the former shareholders of Nortech for tax-related costs associated with the Nortech Acquisition.
Adjusted net earnings for the first quarter of 2021 totalled $28.8 million, a $15.8 million or 121% increase from $13.1 million for the first quarter of 2020. The increase was primarily due to an increase in gross profit, partially offset by an increase in income tax expense.
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EBITDA and Adjusted EBITDA
A reconciliation of the Company’s EBITDA, a non-GAAP financial measure, to net earnings (loss), the most directly comparable GAAP financial measure, is set out in the EBITDA reconciliation table below. EBITDA should not be construed as earnings (loss) before income taxes, net earnings (loss) or cash flows from operating activities as determined by GAAP. The Company defines EBITDA as net earnings (loss) before (i) interest and other finance costs (income); (ii) income tax expense (benefit); (iii) amortization of intangible assets; and (iv) depreciation of property, plant and equipment. The Company defines adjusted EBITDA as EBITDA before (i) manufacturing facility closures, restructuring and other related charges (recoveries); (ii) advisory fees and other costs associated with mergers and acquisitions activity, including due diligence, integration and certain non-cash purchase price accounting adjustments ("M&A Costs"); (iii) share-based compensation expense (benefit); (iv) impairment of goodwill; (v) impairment (reversal of impairment) of long-lived assets and other assets; (vi) write-down on assets classified as held-for-sale; (vii) (gain) loss on disposal of property, plant and equipment; and (viii) other discrete items as shown in the table below. The terms "EBITDA" and "adjusted EBITDA" do not have any standardized meanings prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. EBITDA and adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered as alternatives to cash flows from operating activities or as alternatives to net earnings (loss) as indicators of the Company’s operating performance or any other measures of performance derived in accordance with GAAP. The Company has included these non-GAAP financial measures because it believes that they allow investors to make a more meaningful comparison between periods of the Company’s performance, underlying business trends and the Company’s ongoing operations. The Company further believes these measures may be useful in comparing its operating performance with the performance of other companies that may have different financing and capital structures, and tax rates. Adjusted EBITDA excludes costs that are not considered by management to be representative of the Company’s underlying core operating performance, including certain non-operating expenses, non-cash expenses and, where indicated, non-recurring expenses. In addition, EBITDA and adjusted EBITDA are used by management to set targets and are metrics that, among others, can be used by the Company’s Human Resources and Compensation Committee to establish performance bonus metrics and payout, and by the Company’s lenders and investors to evaluate the Company’s performance and ability to service its debt, finance capital expenditures and acquisitions, and provide for the payment of dividends to shareholders. The Company experiences normal business seasonality that typically results in adjusted EBITDA that is proportionately higher in the second half of the year relative to the first half.
EBITDA and Adjusted EBITDA Reconciliation to Net Earnings
(In millions of USD)
(Unaudited)
Three months ended
March 31,
20212020
$$
Net earnings19.8 14.3 
Interest and other finance costs6.7 6.7 
Income tax expense 6.3 3.2 
Depreciation and amortization16.3 15.3 
EBITDA49.1 39.5 
Manufacturing facility closures, restructuring and other related charges— 0.7 
M&A Costs
— 1.6 
Share-based compensation expense (benefit)11.1 (4.0)
Impairment of long-lived assets and other assets0.1 — 
(Gain) loss on disposal of property, plant and equipment(0.0)0.1 
Adjusted EBITDA60.3 38.0 
Adjusted EBITDA totalled $60.3 million for the first quarter of 2021, a $22.3 million or 58.7% increase from $38.0 million for the first quarter of 2020. The increase was primarily due to an increase in gross profit.
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Off-Balance Sheet Arrangements
There have been no material changes with respect to off-balance sheet arrangements since December 31, 2020 outside of the Company’s ordinary course of business. Reference is made to the section entitled “Off-Balance Sheet Arrangements” in the Company’s 2020 MD&A.
Working Capital

The Company experiences some business seasonality that results in the Company’s efforts to effectively manage its working capital resources. Typically, a larger investment in working capital is required in quarters during which accounts receivable increase due to a higher level of sales invoiced toward the end of the quarter and inventory builds in anticipation of higher future sales. This working capital build normally unwinds later in the fiscal year. Furthermore, certain liabilities are accrued for throughout the year and are paid only during the first quarter of the following year.

The Company uses Days Inventory to measure inventory performance. Days Inventory decreased to 64 for the first quarter of 2021 from 71 for the same period in 2020. Inventories increased $28.7 million to $223.2 million as of March 31, 2021 from $194.5 million as of December 31, 2020, primarily due to inventory builds as a result of increased demand and increases in raw material prices.

The calculations are shown in the following table (in millions of USD, except days):
 Three months ended
March 31,
20212020
Cost of sales$263.0 $219.1 
Days in period90 91 
Cost of sales per day$2.9 $2.4 
Average inventory$186.6 $170.5 
Days inventory64 71 
Days inventory is calculated as follows:
Cost of sales ÷ Days in period = Cost of sales per day
(Beginning inventory + Ending inventory) ÷ 2 = Average inventory
Average inventory ÷ Cost of goods sold per day = Days inventory
For purposes of this calculation inventory excludes items considered parts and supplies


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The Company uses Days Sales Outstanding (“DSO”) to measure the performance of its trade receivables. DSO decreased to 45 for the first quarter of 2021 from 46 for the same period in 2020. Trade receivables increased $9.0 million to $171.2 million as of March 31, 2021 from $162.2 million as of December 31, 2020, primarily due to the timing of revenue invoiced later in the first quarter of 2021 compared to the fourth quarter of 2020.
The calculations are shown in the following table (in millions of USD, except days):
 Three months ended
March 31,
20212020
Revenue$345.6 $278.2 
Days in period90 91 
Revenue per day$3.8 $3.1 
Trade receivables$171.2 $140.8 
DSO45 46 
DSO is calculated as follows:
Revenue ÷ Days in period = Revenue per day
Ending trade receivables ÷ Revenue per day = DSO
Accounts payable and accrued liabilities decreased $24.2 million to $156.3 million as of March 31, 2021 from $180.4 million as of December 31, 2020, primarily due to the timing of payments made for inventory as well as SG&A, including annual payments made in 2021 for 2020 liabilities mainly related to variable compensation and volume rebates paid to customers.
Liquidity and Borrowings
Liquidity
The Company relies upon cash flows from operations and funds available under its credit facilities to meet working capital requirements, as well as to fund capital expenditures, business acquisitions, dividends, share repurchases, obligations under its other debt instruments, and other general corporate activities.
The Company's liquidity risk management process serves to maintain a sufficient amount of cash and to ensure that the Company has financing sources for a sufficient authorized amount. The Company establishes budgets, cash estimates, cash management policies and long-term capital structure strategies to ensure it has the necessary funds to fulfill its obligations for the foreseeable future and ensure adequate liquidity on a long-term basis.
The Company believes it has sufficient cash on hand, and that it will generate sufficient funds from cash flows from operating activities, to meet its ongoing expected capital expenditures, working capital and discretionary dividend payment funding needs for at least the next twelve months. In addition, funds available from borrowings may be used, as needed, to fund more significant strategic initiatives.
As of March 31, 2021, the Company had $11.0 million of cash and $340.1 million of loan availability (comprised of committed funding of $331.2 million and uncommitted funding of $8.9 million), yielding total cash and loan availability of $351.1 million compared to total cash and loan availability of $408.7 million as of December 31, 2020.
The Company's total outstanding borrowings and lease liabilities increased $47.2 million to $542.3 million ($537.5 million net of unamortized debt issue costs of $4.8 million) as of March 31, 2021 from $495.1 million ($490.0 million net of unamortized debt issue costs of $5.1 million) as of December 31, 2020. The incremental borrowings were primarily due to seasonal increases in working capital needs and to fund strategic initiatives as discussed in the section entitled "Capital Resources".
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Senior Unsecured Notes
On October 15, 2018, the Company completed the private placement of $250.0 million aggregate principal amount of senior unsecured notes due October 15, 2026 ("Senior Unsecured Notes"). The Company's Senior Unsecured Notes bear interest at a fixed rate of 7.00% per annum, payable semi-annually in cash in arrears on April 15 and October 15 of each year, beginning on April 15, 2019. As of March 31, 2021, the Senior Unsecured Notes outstanding balance amounted to $250.0 million ($246.4 million net of $3.6 million in unamortized debt issue costs). The Company's Senior Unsecured Notes include optional redemptions on or after October 15, 2021. The Company may redeem the Senior Unsecured Notes in 2021 at a redemption price of 103.50%, in 2022 at a redemption price of 101.75%, and in 2023 and thereafter at a redemption price of 100%.
2018 Credit Facility
Pursuant to a credit agreement executed in June 2018 with a syndicated lending group, and a subsequent amendment executed in July 2019, the Company has a five-year $600.0 million credit facility ("2018 Credit Facility") comprised of a $400.0 million revolving credit facility (“2018 Revolving Credit Facility”) and a $200.0 million term loan (“2018 Term Loan”).
The 2018 Term Loan amortizes $65.0 million until March 2023 ($5.0 million in 2018, $10.0 million in 2019, $12.5 million in 2020, $15.0 million in 2021, $17.5 million in 2022, and $5.0 million in 2023), and the remaining balance of the 2018 Credit Facility is due upon maturity in June 2023. Any repayments of borrowings under the 2018 Term Loan are not available to be borrowed again in the future.
The 2018 Credit Facility also includes an incremental accordion feature of $200.0 million, which enables the Company to increase the limit of this facility (subject to the credit agreement's terms and lender approval) if needed. The 2018 Credit Facility bears an interest rate based, at the Company’s option, on the London Inter-bank Offered Rate ("LIBOR") (or a lender-approved comparable or successor rate), the Federal Funds Rate, or Bank of America’s prime rate, plus a spread varying between 25 and 250 basis points (125 and 150 basis points as of March 31, 2021 and December 31, 2020, respectively) depending on the debt instrument's benchmark interest rate and the consolidated secured net leverage ratio.
The 2018 Credit Facility has two financial covenants, a consolidated secured net leverage ratio and a consolidated interest coverage ratio. The consolidated secured net leverage ratio must not be more than 3.70 to 1.00, with an allowable temporary increase to 4.20 to 1.00 for the quarter in which the Company consummates an acquisition with a price not less than $50 million and the following three quarters. The consolidated interest coverage ratio must not be less than 2.75 to 1.00. The Company was in compliance with the consolidated secured net leverage ratio and consolidated interest coverage ratio, which were 1.40 and 7.49, respectively, as of March 31, 2021. In addition, the 2018 Credit Facility has certain non-financial covenants, such as covenants regarding indebtedness, investments, and asset dispositions. The Company was in compliance with all covenants as of and for the three months ended March 31, 2021.
As of March 31, 2021, the 2018 Term Loan's outstanding principal balance amounted to $168.8 million and the 2018 Revolving Credit Facility’s outstanding principal balance amounted to $67.1 million, for a total gross outstanding principal balance under the 2018 Credit Facility of $235.8 million (net outstanding principal balance of $234.6 million, net of unamortized debt issue costs of $1.2 million). Standby letters of credit totalled $1.7 million resulting in total utilization under the 2018 Credit Facility of $237.5 million. Accordingly, unused availability under the 2018 Credit Facility as of March 31, 2021 amounted to $331.2 million. The Company's capacity to borrow available funds under the 2018 Credit Facility may be limited because of the secured net leverage ratio covenant and other restrictions as defined in the Company's credit agreement.

Other Borrowings

As of March 31, 2021, the Company's credit facilities denominated in INR had an outstanding balance of INR 777.3 million ($10.6 million). Including INR 111.8 million ($1.5 million) in outstanding letters of credit, total utilization under these credit facilities amounted to INR 889.1 million ($12.1 million). Any repayment of term loan borrowings under the credit facilities denominated in INR are not available to be borrowed again in the future. Unused availability under these facilities as of March 31, 2021 amounted to INR 440.0 million ($6.0 million). All unused availability was uncommitted.

In addition, one of the Company’s wholly-owned subsidiaries has a short-term credit line for up to €2.5 million ($2.9 million), which is fully available as of March 31, 2021. All unused availability was uncommitted.
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Cash Flows

Cash flows from operating activities decreased in the first quarter of 2021 by $11.8 million to an outflow of $28.9 million from an outflow of $17.1 million in the same period in 2020 primarily due to an increase in cash used for working capital items and an increase in federal income taxes paid, partially offset by an increase in gross profit. Changes in working capital items consisted primarily of a greater increase in inventories as a result of increased demand and impacts from increases in raw material prices, including pre-purchases, as well as share-based compensation settlements in the first quarter of 2021 related to cash-settled awards as discussed in the section below entitled "Capital Stock".
Cash flows used for investing activities decreased in the first quarter of 2021 by $30.9 million to $12.1 million from $43.0 million in the same period in 2020, primarily due to the non-recurrence of the Nortech Acquisition in the first quarter of 2020.
Cash flows from financing activities decreased in the first quarter of 2021 by $37.8 million to $36.5 million from $74.4 million in the same period in 2020, primarily due to greater net debt borrowings in 2020 to fund the Nortech Acquisition.
The Company has included free cash flows, a non-GAAP financial measure, because it is used by management and investors in evaluating the Company’s performance and liquidity. Free cash flows does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Free cash flows should not be interpreted to represent the total cash movement for the period as described in the Company's financial statements, or to represent residual cash flow available for discretionary purposes, as it excludes other mandatory expenditures such as debt service. The Company experiences business seasonality that typically results in the majority of cash flows from operating activities and free cash flows being generated in the second half of the year.
The Company defines free cash flows as cash flows from operating activities less purchases of property, plant and equipment.
A reconciliation of free cash flows to cash flows from operating activities, the most directly comparable GAAP financial measure, is set forth below.
Free Cash Flows Reconciliation to Cash Flows from Operating Activities
(In millions of USD)
(Unaudited)
 Three months ended
March 31,
 20212020
 $$
Cash flows from operating activities(28.9)(17.1)
Less purchases of property, plant and equipment(9.3)(7.4)
Free cash flows(38.2)(24.5)
Free cash flows decreased in the first quarter of 2021 by $13.7 million to negative $38.2 million from negative $24.5 million in the same period in 2020 primarily due to a decrease in cash flows from operating activities.
Capital Resources
Capital expenditures totalled $9.3 million in the three months ended March 31, 2021 and were funded primarily by borrowings and cash flows from operating activities. The Company had commitments to suppliers to purchase machinery and equipment totalling approximately $22.9 million as of March 31, 2021 that are expected to be paid out in the next twelve months and will be funded by borrowings and cash flows from operating activities.
Capital expenditures and commitments to suppliers to purchase machinery and equipment for the three months ended March 31, 2021 were primarily to support the Company's investment in its highest growth product categories, specifically water-activated tape, films, protective packaging and wovens as discussed in the section entitled "Outlook" above.
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Contractual Obligations
There have been no material changes with respect to contractual obligations since December 31, 2020 outside of the Company’s ordinary course of business. Reference is made to the section entitled “Contractual Obligations” in the Company’s 2020 MD&A.
Capital Stock and Dividends
As of March 31, 2021, there were 59,027,047 common shares of the Company outstanding.
The Company's share-based compensation plans include: stock options, Performance Share Units ("PSU"), Restricted Share Units ("RSU") and Deferred Share Units ("DSU").
The table below summarizes share-based compensation activity that occurred during the following periods:
 
 Three months ended March 31,
 20212020
Equity-settled
Stock options granted243,152 1,533,183 
Stock options cancelled/forfeited— 37,500 
Cash-settled
DSUs granted42,778 6,724 
PSUs granted200,982 694,777 
PSUs forfeited— 2,516 
PSUs added (cancelled) by performance factor (1)
143,512 (346,887)
PSUs settled (1)
409,670 —
RSUs granted81,981 281,326 
RSUs forfeited— 839 
RSUs settled106,906 — 
Cash settlements (in millions of USD) (2)
$13.2 — 
(1)    The following table provides further information regarding the PSUs settled and adjusted by performance factor included in the table above. The number of "Target Shares" reflects 100% of the PSUs granted and the number of PSUs settled reflects the performance adjustments to the Target Shares.
Grant DateDate SettledTarget SharesPerformancePSUs settled
March 20, 2017March 20, 2020346,887 — %— 
March 21, 2018March 23, 2021266,158 153.9 %409,670 
(2)    Includes a cash payment of dividend equivalents on PSUs and RSUs equaling the product that results from multiplying the number of settled awards by the amount of cash dividends per common share declared and paid by the Company from the date of grant of the awards to the settlement date.
As of March 31, 2021, $17.4 million was recorded in share-based compensation liabilities, current, and $11.9 million was recorded in share-based compensation liabilities, non-current.
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The table below presents the share-based compensation expense (benefit) recorded in earnings in SG&A by award type (in millions of USD):
 Three months ended March 31,
 20212020
 $$
Equity-settled0.2 0.2 
Cash-settled11.0 (4.1)
Total11.1 (4.0)
On March 31, 2021 the Company paid cash dividends of $0.1575 per common share to shareholders of record at the close of business March 22, 2021 for an aggregate amount of $9.2 million.

On May 11, 2021, the Company declared a quarterly cash dividend of $0.1575 per common share payable on June 30, 2021 to shareholders of record at the close of business on June 16, 2021.
The dividends paid and payable in 2021 by the Company are “eligible dividends” as defined in subsection 89(1) of the Income Tax Act (Canada).
Under its current normal course issuer bid ("NCIB"), the Company has the ability to repurchase for cancellation up to 4,000,000 common shares of the Company at prevailing market prices over a twelve-month period starting on July 23, 2020 and ending on July 22, 2021. As of May 11, 2021, no shares have been repurchased under the NCIB.
Financial Risk, Objectives and Policies
Interest Rate Risk
The Company is exposed to a risk of changes in cash flows due to the fluctuations in interest rates on its variable rate borrowings. To minimize the potential long-term cost of floating rate borrowings, the Company entered into interest rate swap agreements.
The Company was party to the following interest rate swap agreements, which are qualifying cash flow hedges designated as hedging instruments as of March 31, 2021 (in millions of USD):
Effective DateMaturityNotional AmountSettlementFixed interest rate paid
$%
June 8, 2017June 20, 202240.0Monthly1.7900
August 20, 2018August 18, 202360.0Monthly2.0450
Hedge of net investment in foreign operations
A foreign currency exposure arises from Intertape Polymer Group Inc.'s net investment in its USD functional currency subsidiary, IPG (US) Holdings Inc. The risk arises from the fluctuations in the USD and CDN current exchange rate, which causes the amount of the net investment in IPG (US) Holdings Inc. to vary. The Company's Senior Unsecured Notes are being used to hedge the Company’s exposure to the USD foreign exchange risk on this investment.
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The changes in value related to the net investment in IPG (US) Holdings, Inc., designated as the hedged item, and the Senior Unsecured Notes, designated as a hedging instrument, in the hedge of a net investment, are as follows (in millions of USD):
 Three months ended
March 31,
 20212020
$$
(Loss)/gain from change in value of IPG (US) Holdings, Inc. used for calculating hedge ineffectiveness(2.7)20.0 
Gain/(loss) from change in value of the Senior Unsecured Notes used for calculating hedge ineffectiveness2.7 (20.0)
Gain/(loss) from Senior Unsecured Notes recognized in other comprehensive income2.7 (20.0)
Deferred tax (expense)/benefit on change in value of the Senior Unsecured Notes recognized in other comprehensive income(0.4)0.0 

The cumulative amounts included in the foreign currency translation reserve recognized in other comprehensive income related to the hedge of net investment in foreign operations are a gain of $10.0 million and $7.3 million as of March 31, 2021 and December 31, 2020, respectively.
Legal Matters
The Company is engaged from time-to-time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all of the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with external legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole, and accordingly, no material amounts have been recorded as of March 31, 2021.
Critical Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Significant changes in the underlying assumptions could result in significant changes to these estimates. Consequently, management reviews these estimates on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The judgments, estimates and assumptions applied in the financial statements were the same as those applied in the Company’s most recent annual audited consolidated financial statements, except for the estimate of the provision for income taxes, which is determined in the financial statements using the estimated weighted average annual effective income tax rate applied to the earnings before income tax expense of the interim period, which may have to be adjusted in a subsequent interim period of the financial year if the estimate of the annual income tax rate changes. The financial statements should be read in conjunction with the Company’s 2020 annual audited consolidated financial statements.
The Company is closely monitoring the impacts of the COVID-19 pandemic as a trigger for changes in critical accounting judgments, estimates and assumptions.
New Standards adopted as of January 1, 2021
In the current period, the Company has applied a number of amendments to IFRS Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) that are effective for an annual period that begins on or after January 1, 2021. Their adoption has not had any material impact on the disclosures or on the amounts reported in the Company's financial statements.
New Standards and Interpretations Issued but Not Yet Effective
Certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective and have not been adopted early by the Company. Management anticipates that all the relevant
18


pronouncements will be adopted in the first reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Company’s financial statements, are detailed as follows:
On January 23, 2020, the IASB published Classification of Liabilities as Current or Non-current (Amendments to IAS 1), which includes narrow-scope amendments to IAS 1 Presentation of Financial Statements. The objective of the amendments is to clarify how to classify debt and other liabilities as current or non-current depending on the rights that exist at the end of the reporting period. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. The amendments are effective on January 1, 2023 and will be applied retrospectively. Management is currently assessing, but has not yet determined, the impact on the Company’s financial statements.
On May 14, 2020, the IASB published Property, Plant and Equipment: Proceeds Before Intended Use (Amendments to IAS 16), which prohibits deducting amounts received from selling items produced while preparing the asset for its intended use from the cost of property, plant and equipment. Instead, such sales proceeds and related costs will be recognized in earnings. The amendments are effective on January 1, 2022. Management is currently assessing, but has not yet determined, the impact on the Company’s financial statements.
On May 14, 2020, the IASB published Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37), which specifies which costs a Company includes when assessing whether a contract will be loss-making. The amendments are effective on January 1, 2022. Management is currently assessing, but has not yet determined, the impact on the Company’s financial statements.
Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements.
Internal Control Over Financial Reporting
In accordance with the Canadian Securities Administrators’ National Instrument 52-109, “Certification of Disclosure in Issuers’ Annual and Interim Filings” (“NI 52-109”), the Company has filed interim certificates signed by the Chief Executive Officer (“CEO”) and the Chief Financial Officer ("CFO") that, among other things, report on the design of disclosure controls and procedures and design of internal control over financial reporting. With regards to the annual certification requirements of NI 52-109, the Company relies on the statutory exemption contained in section 8.1 of NI 52-109, which allows it to file with the Canadian securities regulatory authorities the certificates required under the Sarbanes-Oxley Act of 2002 at the same time such certificates are required to be filed in the United States of America.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its annual filings, interim filings or other reports filed or submitted by the Company under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation and that such information is accumulated and communicated to the Company's management including the CEO and CFO as appropriate to allow timely decision regarding required disclosure. The Company has also established internal control over financial reporting which is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and its compliance with GAAP (as derived in accordance with IFRS) in its consolidated financial statements.
Management, under the supervision of the Company's CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as well as the effectiveness of the Company's internal control over financial reporting as of December 31, 2020. The CEO and CFO concluded that the Company’s disclosure controls and procedures and internal control over financial reporting as of December 31, 2020 were effective.
There have been no changes to the Company’s internal control over financial reporting during the Company’s most recent interim period that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Additional Information
Additional information relating to the Company, including its Form 20-F filed in lieu of an Annual Information Form for 2020, is available on the Company’s website (www.itape.com) as well as under the Company’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Forward-Looking Statements

Certain statements and information included in this MD&A constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, “forward-looking statements”), which are made in reliance upon the protections provided by such legislation for forward-looking statements. All statements other than statements of historical facts included in this MD&A, including statements regarding the COVID-19 pandemic (including the impact of the Company’s key end markets, the operations of the Company’s facilities, the Company’s priorities as it moves through the pandemic, the uncertainty for the duration of the impacts resulting from the pandemic, the exposure of the Company’s business to the pandemic, and the Company’s alternative capacity and production plan adjustments), the Company's future dividend payments, anticipated demand, including e-commerce demand, the Company’s industry and the Company’s outlook, prospects, plans, financial position, future transactions, acquisitions and partnerships, capital expenditures, sales and financial results, inventory, income tax and effective tax rate, availability of funds and credit, expected credit spread, level of indebtedness, payment of dividends, capital and other significant expenditures, working capital requirements, liquidity, selling prices, fluctuations in costs, the Company’s integration of Nortech and the expected costs, capabilities, earnings and contingent consideration related to the Nortech Acquisition, the impacts of new accounting standards, judgments, estimates, assumptions, litigation and business strategy, may constitute forward-looking statements. These forward-looking statements are based on current beliefs, assumptions, expectations, estimates, forecasts and projections made by the Company’s management. Words such as “may,” “will,” “should,” “expect,” “continue,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe” or “seek” or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: business conditions and growth or declines in the Company’s industry, the Company’s customers’ industries and the general economy, including as a result of the impact of COVID-19; the impact of changes to tariffs and other international trade developments; the anticipated benefits from the Company’s greenfield projects and manufacturing facility expansions; the impact of fluctuations in selling prices; the impact of fluctuations in raw material prices and freight costs; costs associated with the impact of climate change, including weather related events and environmental matters; the anticipated benefits from the Company’s acquisitions and partnerships; the expected financial performance and benefits of the Nortech Acquisition; the Company’s growth strategy and the strength of the Company’s competitive position moving forward; the anticipated benefits from the Company’s capital expenditures; the quality, and market reception, of the Company’s products; the Company’s anticipated business strategies; risks and costs inherent in litigation; legal and regulatory requirements, including as related to COVID-19; the Company’s ability to maintain and improve quality and customer service; anticipated trends in the Company’s business, including the Company's growing e-commerce business; anticipated cash flows from the Company’s operations; anticipated changes in the tax treatment of intercompany debt; availability of funds under the Company’s 2018 Credit Facility; the Company’s flexibility to allocated capital as a result of the Senior Unsecured Notes offering; changes to accounting rules and standards; and the Company’s ability to continue to control costs. The Company can give no assurance that these statements and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. Readers are cautioned not to place undue reliance on any forward-looking statement. For additional information regarding some important factors that could cause actual results to differ materially from those expressed in these forward-looking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read “Item 3. Key Information - Risk Factors,” “Item 5 Operating and Financial Review and Prospects (Management’s Discussion & Analysis)” and statements located elsewhere in the Company’s annual report on Form 20-F for the year ended December 31, 2020 and the other statements and factors contained in the Company’s filings with the Canadian securities regulators and the US Securities and Exchange Commission. Each of the forward-looking statements speaks only as of the date of this MD&A. The Company will not update these statements unless applicable securities laws require it to do so.

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