Winpak Reports 2025 Third Quarter Results

Winpak Reports 2025 Third Quarter Results Canada NewsWire WINNIPEG, MB, Oct. 22, 2025 WINNIPEG, MB, Oct. 22, 2025 /CNW/ - Winpak Ltd. (WPK) today reports consolidated results in US dollars for the third quarter of 2025, which ended on September 28, 2025. Quarter Ended Year-To-Date Ended September 28 September 29 September 28 September 29 2025 2024 2025 2024 (thousands of US dollars, except per share amounts) Revenue 282,967 285,473 840,569 845,752 Net income 36,513 39,309 100,897 114,103 Income tax expense 13,396 14,659 36,719 43,287 Net finance income (2,851) (5,710) (8,291) (17,816) Depreciation and amortization 14,253 13,338 41,177 39,038 EBITDA (1) 61,311 61,596 170,502 178,612 Net income attributable to equity holders of the Company 36,375 38,486 101,156 112,833 Net income (loss) attributable to non-controlling interests 138 823 (259) 1,270 Net income 36,513 39,309 100,897 114,103 Basic and diluted earnings per share (cents) 60 61 165 177 Winpak Ltd. manufactures and distributes high-quality packaging materials and related packaging machines.  The Company's products are used primarily for the packaging of perishable foods, beverages and in healthcare applications. 1 EBITDA is not a recognized measure under IFRS Accounting Standards (IFRS).  Management believes that in addition to net income, this measure provides useful supplemental information to investors including an indication of cash available for distribution prior to debt service, capital expenditures, payment of lease liabilities and income taxes.  Investors should be cautioned, however, that this measure should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company's performance.  The Company's method of calculating this measure may differ from other companies and, accordingly, the results may not be comparable. (presented in US dollars) Forward-looking statements: Certain statements made in the following report contain forward-looking statements including, but not limited to, statements concerning possible or assumed future results of operations of the Company.  Forward-looking statements represent the Company's intentions, plans, expectations and beliefs, and are not guarantees of future performance.  Such forward-looking statements represent Winpak's current views based on information as at the date of this report.  They involve risks, uncertainties and assumptions and the Company's actual results could differ, which in some cases may be material, from those anticipated in these forward-looking statements.  Factors that could cause results to differ from those expected include, but are not limited to: the terms, availability and costs of acquiring raw materials and the ability to pass on price increases to customers; ability to negotiate contracts with new customers or renew existing customer contracts with less favorable terms; timely response to changes in customer product needs and market acceptance of our products; the potential loss of business or increased costs due to customer or vendor consolidation; competitive pressures, including new product development; industry capacity, and changes in competitors' pricing; ability to maintain or increase productivity levels; ability to contain or reduce costs; foreign currency exchange rate fluctuations; changes in governmental regulations, including environmental, health and safety; changes in Canadian and foreign tariff rates; changes in Canadian and foreign income tax rates, income tax laws and regulations.  Unless otherwise required by applicable securities law, Winpak disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise.  The Company cautions investors not to place undue reliance upon forward-looking statements.  Financial Performance Net income attributable to equity holders of the Company (Earnings) for the third quarter of 2025 of $36.4 million contracted by $2.1 million or 5.5 percent from the comparable 2024 quarter.  Net finance income dampened Earnings by $1.7 million.  Additionally, gross profit reduced Earnings by $1.5 million.  The decrease in sales volumes lowered Earnings by $1.2 million.  Conversely, operating expenses raised Earnings by $1.0 million.  In total, all remaining items boosted Earnings by $1.3 million.   For the nine months ended September 28, 2025, Earnings declined by 10.3 percent to $101.2 million from the corresponding 2024 result of $112.8 million.  The deterioration in gross profit was a key factor, subtracting $8.0 million from Earnings.  In addition, net finance income led to a contraction in Earnings of $6.3 million.  Foreign exchange added $2.8 million to Earnings.  In combination, all other factors decreased Earnings by $0.1 million. Operating Segments and Product Groups The Company provides three distinct types of packaging technologies: a) flexible packaging, b) rigid packaging and flexible lidding and c) packaging machinery.  Each is deemed to be a separate operating segment. The flexible packaging segment includes the modified atmosphere packaging, specialty films and biaxially oriented nylon product groups.  Modified atmosphere packaging extends the shelf life of perishable foods, while at the same time maintains or improves the quality of the product.  The packaging is used for a wide range of markets and applications, including fresh and processed meats, poultry, cheese, medical device packaging, high performance pouch applications and high-barrier films for converting applications.  Specialty films include a full line of barrier and non-barrier films which are ideal for converting applications such as printing, laminating and bag making, including shrink bags.  Biaxially oriented nylon film is stretched by length and width to add stability for further conversion using printing, metalizing or laminating processes and is ideal for food packaging applications such as cheese, fluid and viscous liquids, and industrial applications such as book covers and balloons. The rigid packaging and flexible lidding segment includes the rigid containers, lidding and specialized printed packaging product groups.  Rigid containers include portion control and single-serve containers, as well as plastic sheet, custom and retort trays, which are used for applications such as food, pet food, beverage, dairy, industrial and healthcare.  Lidding products are available in die-cut, daisy chain and rollstock formats and are used for applications such as food, dairy, beverage, pet food, industrial and healthcare.  Specialized printed packaging provides packaging solutions to the pharmaceutical, healthcare, nutraceutical, cosmetic and personal care markets. Packaging machinery includes a full line of horizontal fill/seal machines for preformed containers and vertical form/fill/seal pouch machines for pumpable liquid and semi-liquid products and certain dry products.  Revenue Revenue in the third quarter of 2025 was $283.0 million, $2.5 million or 0.9 percent less than the third quarter of 2024.  Volumes fell by 3.0 percent when compared to the third quarter of 2024.  Weakened customer demand within several product categories contributed to the result.  The level of customer turnover thus far in 2025 has been consistent with recent historical experience.  Within the flexible packaging operating segment, volume losses amounted to 3 percent.  For the modified atmosphere packaging product group, the recent growth path reversed and volumes retreated by 3 percent.  New dairy business was overshadowed by muted demand levels at the core protein accounts.  The rigid packaging and flexible lidding operating segment experienced a drop in volumes of 3 percent.  Rigid container volumes decreased by 10 percent due to a sizeable drop in specialty beverage and snack food container shipments.  For the lidding product group, volumes surpassed the prior year by 5 percent predominantly because of higher retort petfood lidding volumes.  Driven by the expansion in replacement parts sales, packaging machinery volumes advanced by 7 percent.  Selling price and mix changes had a positive effect on revenue of $6.2 million.  Foreign exchange lowered revenue by $0.2 million. For the first nine months of 2025, revenue decreased by $5.2 million from the $845.8 million recorded in the corresponding prior year period.  Volumes receded by 1.2 percent.  The flexible packaging operating segment recorded an uptick in volumes of 2 percent.  Modest volume growth for the modified atmosphere packaging product group reflected business gains pertaining to dairy and healthcare packaging.  For the biaxially oriented nylon product group, the volume loss of 11 percent was a reflection of competitive pricing pressures.  Specialty film volumes were virtually unchanged.  Within the rigid packaging and flexible lidding operating segment, volumes dropped by 5 percent.  The rigid container product group experienced a 5 percent decline in volumes stemming from lower snack food, applesauce and juice container shipments.  For the lidding product group, volumes declined by 4 percent because of softer specialty beverage volumes.  Packaging machinery volumes were on par with the prior year.  Selling price and mix changes raised revenue by 1.0 percent while foreign exchange lowered revenue by 0.3 percent. Gross Profit Margins Gross profit margins in the third quarter fell by 1.4 percentage points to 30.6 percent of revenue from the 32.0 percent recorded in the same quarter of 2024.  Selling prices rose to a greater extent than raw material costs, generating an increase in Earnings of $1.2 million.  This outcome stemmed from the positive shift in product mix and tariff mitigation strategies which was only partially offset by selling price concessions stemming from heightened competitive pressures.  Other factors combined to reduce Earnings by $2.7 million.  The most notable were quality-related and depreciation expenses.    For the first nine months of 2025, gross profit margins were 30.4 percent of revenue, shrinking by 1.5 percentage points from the 31.9 percent of revenue achieved during the 2024 year-to-date comparative period.  Higher selling prices, resulting from the change in product mix and tariff pass-through adjustments, combined with relatively flat raw material costs, raised Earnings by $6.9 million.  In total, all remaining items lowered Earnings by $14.9 million.  The most prominent were production waste and expenses relating to inventory disposals on account of quality issues. The Company's cost structure was also adversely affected by higher personnel and depreciation expenses.  Personnel expenses included an aggregate of $2.3 million in one-time payments made to every employee to commemorate the 50th anniversary of Winpak's incorporation.  Lastly, diminished output levels elevated the effective cost of production. The raw material purchase price index decreased by 1 percent compared to the second quarter of 2025.  During the third quarter, polypropylene resin declined by 11 percent while the prices for other specialty resins increased moderately.  Over the past 12 months, the index dropped by 8 percent.  Expenses and Other Operating expenses in the third quarter of 2025, adjusted for foreign exchange, decreased at a rate of 6.3 percent in comparison to the 3.0 percent reduction in sales volumes, thereby having a favorable impact on Earnings of $1.0 million.  Improved freight costs were the main contributor.  Net finance income softened Earnings by $1.7 million as the magnitude of cash invested in short-term deposits and money market accounts was much lower than a year earlier.  The change was largely a result of the share buyback program as well as the special dividend paid in early 2025.     On a year-to-date basis, operating expenses, exclusive of foreign exchange, were virtually unchanged whereas sales volumes fell by 1.2 percent, resulting in a reduction in Earnings of $0.9 million.  One-time employee payments amounted to $0.8 million.  Foreign exchange had a positive effect on Earnings of $2.8 million due to the favorable translation differences recorded on the revaluation of monetary assets and liabilities in comparison to the unfavorable translation differences recorded in the first nine months of 2024.  Due to the substantial decrease in the balance of cash invested in short-term deposits and money market accounts, net finance income tempered Earnings by $6.3 million.  Capital Resources, Cash Flow and Liquidity On March 24, 2025, the Toronto Stock Exchange (the "TSX") accepted a notice filed by Winpak of its intention to renew its normal course issuer bid (the "NCIB") with respect to its outstanding common shares.  The notice provided that Winpak may, during the 12-month period commencing March 26, 2025 and ending no later than March 25, 2026, purchase through the facilities of the TSX and other alternative Canadian trading systems up to a maximum of 3,087,500 common shares in total, being 5.0 percent of the issued and outstanding shares of Winpak as of March 18, 2025.  The price which Winpak will pay for any common shares will be the market price at the time of acquisition.  Daily purchases under the NCIB will be generally limited to 13,761 common shares, other than block purchases.  All shares purchased will be canceled.  In connection with the NCIB, Winpak has entered into an automatic share purchase plan with CIBC World Markets Inc. to facilitate the purchase of common shares under the NCIB, including at times when Winpak would ordinarily not be permitted to purchase its common shares due to regulatory restrictions or self-imposed blackout periods.  As at September 28, 2025, the Company had purchased 1,116,869 common shares under its current NCIB. The Company's cash and cash equivalents balance ended the third quarter of 2025 at $365.3 million, an increase of $9.3 million from the end of the second quarter.  Winpak continued to generate strong cash flows from operating activities before changes in working capital of $60.8 million.  The net investment in working capital increased by $0.5 million.  The $11.0 million decrease in inventories was impacted by the systematic unwinding of raw materials and finished goods that had accumulated during the first half of 2025.  Stemming from the timing of equipment and inventory purchases, trade payables and other liabilities decreased by $9.1 million.  Cash was used for common share repurchases of $26.7 million, property, plant and equipment additions of $18.0 million, income tax payments of $5.2 million and other items totaling $3.1 million.  Net finance income provided cash of $2.0 million.  For the first nine months of 2025, the cash and cash equivalents balance decreased by $131.9 million.  Cash flows generated from operating activities before changes in working capital were solid at $170.1 million.  Investments in working capital amounted to $22.2 million.  The $9.3 million build up of inventories was largely due to the measures taken since early 2025 to minimize the effect of cross-border import tariffs.  Influenced by the timing of supplier payments relating to inventory, equipment and building additions, trade payables and other liabilities decreased by $14.3 million.  Cash outflows included: dividend payments of $137.6 million, property, plant and equipment expenditures of $64.0 million, common share repurchases of $45.8 million, income tax payments of $36.1 million and other items amounting to $3.5 million.  Net finance income produced incremental cash of $7.2 million.    Summary of Quarterly Results Thousands of US dollars, except per share amounts (US cents) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2025 2025 2025 2024 2024 2024 2024 2023 Revenue 282,967 272,800 284,802 285,143 285,473 283,496 276,783 275,637 Net income attributable to equity holders of the Company 36,375 30,205 34,576 36,622 38,486 38,825 35,522 34,846 EPS 60 49 56 58 61 61 55 54 Looking Forward With the exception of foil-based products, the Company's entire product portfolio is currently exempt from tariffs under the United States-Mexico-Canada Agreement (USMCA).  Furthermore, nearly all raw materials sourced within North America are exempt from tariffs.  However, these exemptions could lapse within the next nine months with modifications to the USMCA or the introduction of a complementary bilateral trade agreement with the United States.  This could have a sizeable impact on the Company's growth aspirations and manufacturing costs.  The Company is keenly focused on mobilizing strategic capital investments that enhance its resilience to a more protectionist trade environment.  Restrained customer demand, which is mainly attributed to persistent inflation and trade uncertainty, has had a significant impact on sales volumes thus far in 2025.  These dynamics will likely persist throughout the fourth quarter and accordingly, the Company is projecting flat volume growth relative to the fourth quarter of 2024.  Looking ahead to 2026, the Company is optimistic that the commercialization of new extrusion capacity at the modified atmosphere packaging facility will fuel solid growth, particularly with respect to recycle-ready products.  Additionally, during 2025, the Company has secured new business awards at large Consumer Packaged Goods companies.  Other opportunites at these companies are being aggressively pursued, and in combination with recent gains, will be a key driver for growth in 2026 and over the long-term. Raw material costs have been consistent over the past six months.  Market expectations are that overall resin and foil prices will be relatively stable for the balance of the year.  The majority of the foil import tariffs should continue to be passed along to customers.  Going forward, Winpak is focused on optimizing its cost structure with respect to manufacturing performance, automation, product formulations, raw material procurement and personnel levels.  Gross profit margin in the fourth quarter of 2025 should be comparable to the immediately preceding quarter. Capital expenditures of approximately $80 to $90 million are forecast for 2025, highlighted by the completion of the extensive expansion of the Winnipeg, Manitoba modified atmosphere packaging facility.  Simultaneously, Winpak will investigate potential acquisition opportunities that align strategically with the Company's core strengths, especially those that are focused on medical and pharmaceutical applications. Winpak Ltd. Interim Condensed Consolidated Financial Statements Third Quarter Ended: September 28, 2025 These interim condensed consolidated financial statements have not been audited or reviewed by the Company's independent external auditors, KPMG LLP.  For a complete set of notes to the condensed consolidated financial statements, refer to www.sedar.com or the Company's website, www.winpak.com. Winpak Ltd. Condensed Consolidated Balance Sheets (thousands of US dollars) (unaudited) September 28 December 29 2025 2024 Assets Current assets:    Cash and cash equivalents 365,337 497,261    Trade and other receivables 216,261 220,201    Income taxes receivable 12,939 8,749    Inventories 259,696 250,383    Prepaid expenses 8,657 6,710    Derivative financial instruments 287 - 863,177 983,304 Non-current assets:    Property, plant and equipment 645,792 622,666    Intangible assets and goodwill 29,385 29,709    Employee benefit plan assets 10,973 11,405 686,150 663,780 Total assets 1,549,327 1,647,084 Equity and Liabilities Current liabilities:    Trade payables and other liabilities 107,803 252,134    Contract liabilities 1,120 1,747    Income taxes payable 4,688 6,879    Derivative financial instruments 640 4,175 114,251 264,935 Non-current liabilities:    Employee benefit plan liabilities 4,476 4,774    Deferred income 19,268 19,721    Provisions and other long-term liabilities 15,169 16,781    Deferred tax liabilities 62,430 56,999 101,343 98,275 Total liabilities 215,594 363,210 Equity:    Share capital 27,034 27,735    Reserves (259) (3,174)    Retained earnings 1,272,001 1,224,097 Total equity attributable to equity holders of the Company 1,298,776 1,248,658 Non-controlling interests 34,957 35,216 Total equity   1,333,733 1,283,874 Total equity and liabilities 1,549,327 1,647,084   Winpak Ltd. Condensed Consolidated Statements of Income (thousands of US dollars, except per share amounts) (unaudited) Quarter Ended Year-To-Date Ended September 28 September 29 September 28 September 29 2025 2024 2025 2024 Revenue 282,967 285,473 840,569 845,752 Cost of sales (196,383) (194,121) (585,234) (576,143) Gross profit 86,584 91,352 255,335 269,609 Sales, marketing and distribution expenses (22,482) (25,240) (70,797) (74,307) General and administrative expenses (11,594) (11,632) (37,829) (36,766) Research and technical expenses (5,177) (5,221) (16,519) (15,952) Pre-production expenses (117) - (397) - Other expenses (156) (1,001) (468) (3,010) Income from operations 47,058 48,258 129,325 139,574 Finance income 3,855 6,833 11,744 21,461 Finance expense (1,004) (1,123) (3,453) (3,645) Income before income taxes 49,909 53,968 137,616 157,390 Income tax expense (13,396) (14,659) (36,719) (43,287) Net income for the period 36,513 39,309 100,897 114,103 Attributable to:      Equity holders of the Company 36,375 38,486 101,156 112,833      Non-controlling interests 138 823 (259) 1,270 36,513 39,309 100,897 114,103 Basic and diluted earnings per share - cents 60 61 165 177 Condensed Consolidated Statements of Comprehensive Income (thousands of US dollars) (unaudited) Quarter Ended Year-To-Date Ended September 28 September 29 September 28 September 29 2025 2024 2025 2024 Net income for the period 36,513 39,309 100,897 114,103 Items that will not be reclassified to the statements of income: Cash flow hedge gains (losses) recognized - 241 57 (919) Cash flow hedge (gains) losses transferred to property, plant and equipment - (35) 378 29 - 206 435 (890) Items that are or may be reclassified subsequently to the statements of income: Cash flow hedge (losses) gains recognized (1,583) 684 1,249 (879) Cash flow hedge losses transferred to the statements of income 557 142 2,137 494 Income tax effect 275 (221) (906) 103 (751) 605 2,480 (282) Other comprehensive (loss) income for the period  - net of income tax (751) 811 2,915 (1,172) Comprehensive income for the period 35,762 40,120 103,812 112,931 Attributable to:      Equity holders of the Company 35,624 39,297 104,071 111,661      Non-controlling interests 138 823 (259) 1,270 35,762 40,120 103,812 112,931    Winpak Ltd. Condensed Consolidated Statements of Changes in Equity (thousands of US dollars) (unaudited) Attributable to equity holders of the Company Non- Share Retained controlling capital Reserves earnings Total interests Total equity Balance at January 1, 2024 29,195 1,361 1,319,491 1,350,047 33,602 1,383,649    Comprehensive (loss) income for the period       Cash flow hedge losses, net of tax - (1,563) - (1,563) - (1,563)       Cash flow hedge losses transferred to the statements          of income, net of tax - 362 - 362 - 362       Cash flow hedge losses transferred to property, plant and          equipment - 29 - 29 - 29    Other comprehensive loss - (1,172) - (1,172) - (1,172)    Net income for the period - - 112,833 112,833 1,270 114,103    Comprehensive (loss) income for the period - (1,172) 112,833 111,661 1,270 112,931    Dividends - - (5,151) (5,151) - (5,151)    Repurchase of common shares (876) - (63,250) (64,126) - (64,126) Balance at September 29, 2024 28,319 189 1,363,923 1,392,431 34,872 1,427,303 Balance at December 30, 2024 27,735 (3,174) 1,224,097 1,248,658 35,216 1,283,874    Comprehensive income (loss) for the period       Cash flow hedge gains, net of tax - 971 - 971 - 971       Cash flow hedge losses transferred to the statements          of income, net of tax - 1,566 - 1,566 - 1,566       Cash flow hedge losses transferred to property, plant and          equipment - 378 - 378 - 378    Other comprehensive income - 2,915 - 2,915 - 2,915    Net income (loss) for the period - - 101,156 101,156 (259) 100,897    Comprehensive income (loss) for the period - 2,915 101,156 104,071 (259) 103,812    Dividends - - (6,574) (6,574) - (6,574)    Repurchase of common shares (701) - (46,678) (47,379) - (47,379) Balance at September 28, 2025 27,034 (259) 1,272,001 1,298,776 34,957 1,333,733   Winpak Ltd. Condensed Consolidated Statements of Cash Flows (thousands of US dollars) (unaudited) Quarter Ended Year-To-Date Ended September 28 September 29 September 28 September 29 2025 2024 2025 2024 Cash provided by (used in): Operating activities:    Net income for the period 36,513 39,309 100,897 114,103    Items not involving cash:       Depreciation 14,348 13,313 41,541 39,079       Amortization - deferred income (438) (432) (1,403) (1,276)       Amortization - intangible assets 343 457 1,039 1,235       Employee defined benefit plan expenses 620 756 1,977 2,112       Net finance income (2,851) (5,710) (8,291) (17,816)       Income tax expense 13,396 14,659 36,719 43,287       Other (1,089) (2,351) (2,400) (3,368)             Cash flow from operating activities before the following 60,842 60,001 170,079 177,356    Change in working capital:       Trade and other receivables (2,905) (6,866) 3,896 (13,997)       Inventories 11,022 (5,468) (9,313) (12,788)       Prepaid expenses 932 639 (1,947) 798       Trade payables and other liabilities (9,110) 9,618 (14,250) 20,613       Contract liabilities (446) 98 (627) (430)     Employee defined benefit plan contributions (21) (18) (1,259) (1,192)     Income tax paid (5,236) (9,546) (36,136) (44,144)     Interest received 2,941 6,787 10,384 20,865     Interest paid (941) (1,037) (3,145) (3,365)             Net cash from operating activities 57,078 54,208 117,682 143,716 Investing activities:    Acquisition of property, plant and equipment - net  (18,018) (26,785) (63,952) (101,214)    Acquisition of intangible assets (295) (6) (714) (38) (18,313) (26,791) (64,666) (101,252) Financing activities:    Payment of lease liabilities (545) (409) (1,456) (1,208)    Dividends paid (2,245) (1,382) (137,644) (4,289)    Repurchase of common shares (26,668) - (45,840) (62,878) (29,458) (1,791) (184,940) (68,375) Change in cash and cash equivalents 9,307 25,626 (131,924) (25,911) Cash and cash equivalents, beginning of period 356,030 490,333 497,261 541,870 Cash and cash equivalents, end of period 365,337 515,959 365,337 515,959 SOURCE Winpak Ltd. View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2025/22/c8982.html Contact: For further information: S.M. Taylor, Vice President and CFO, (204) 831-2254; O.Y. Muggli, President and CEO, (204) 831-2214