AirBoss of America Q2 Earnings Call Highlights

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Mon, August 10, 2026 at 12:03 AM GMT+3 6 min read

BOS.TO +3.38%

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Second-quarter sales and gross profit increased: Consolidated sales rose 9.4% year over year to $107.9 million, while gross profit reached $18.8 million and gross margin expanded to 17.4%.
Manufactured Products led growth, with sales up 13.9% to $62.7 million on stronger defense and molded-rubber volumes. However, the completed Bandolier contract may create some third-quarter softness.
Rubber Solutions volumes improved but margins remained pressured: Sales rose 10.7% and volume increased 16.4%, but gross margin fell to 12.2% amid unfavorable mix and competition. Management expects continued volatility while investing in specialty products such as silicone and monitoring tariffs and trade risks.

AirBoss of America (TSE:BOS) reported higher second-quarter sales and gross profit for 2026, supported by growth in its Manufactured Products segment and improving volumes at Rubber Solutions, while management cautioned that economic uncertainty and competitive conditions could continue to create volatility through much of the year.

Consolidated net sales rose 9.4% year over year to $107.9 million in the second quarter. CFO Frank Ientile said gross profit increased by $2.6 million to $18.8 million, while gross margin expanded to 17.4% of net sales from 16.4% a year earlier.

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President and Co-CEO Chris Bitsakakis described the quarter as a three-year high point for quarterly revenue. He said the company's performance reflected its efforts to serve existing customers, develop new markets and customers, and create more flexible supply chains amid tariffs, inflation and geopolitical developments.

Manufactured Products Drives Revenue and Profit Gains

Manufactured Products delivered the strongest segment-level improvement during the quarter. Sales in the segment increased 13.9% to $62.7 million from $55 million in the prior-year period, driven by higher defense-products sales under previously awarded contracts and improved sales in the rubber molded-products business.

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Segment gross profit rose to $11.9 million from $9.6 million, reflecting volume and mix improvements in defense products as well as gains in rubber molded products. Bitsakakis said the company completed the final Bandolier delivery under its most recently announced contract during the quarter.

However, Ientile said the completion of the Bandolier contract is expected to result in some softness entering the third quarter, which could moderately affect the segment's margin profile. He added that the engineered-products business continues to build momentum, citing robust automotive volumes and activity in its non-automotive operations.

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At the consolidated level, Bitsakakis noted that adjusted EBITDA was $719,000 below the prior-year quarter. He said the year-earlier comparison included a one-time $3.7 million legal settlement recorded in the second quarter of 2025.

Rubber Solutions Volumes Improve, but Margin Pressure Persists

AirBoss Rubber Solutions posted a 10.7% increase in sales to $56.4 million, compared with $50.9 million a year earlier. Volume increased 16.4%, with non-tolling volume up 17.5%, while tolling volume declined 38.1%.

Gross profit in the segment rose modestly to $6.9 million from $6.6 million. However, gross margin declined to 12.2% from 13% because of unfavorable mix and continued market pressure.

Bitsakakis said Rubber Solutions has recorded progressive volume growth for three consecutive quarters and reached a 12-month high in revenue. He attributed the improvement to new-customer wins, market development and efforts to defend existing market share.

Management nevertheless expects volume and margin volatility at Rubber Solutions for the foreseeable future and through most of 2026. Bitsakakis said the caution primarily reflects uncertainty in the company's end markets rather than current customer order patterns.

"We feel pretty good about the momentum we're seeing at ARS," Bitsakakis said, adding that the company expects year-over-year growth in the second half, although the quarterly rate of growth may fluctuate. He said a significant U.S. economic event or further geopolitical disruption could slow that progress.

Competition, Raw Materials and Product Mix

Bitsakakis said weak conditions in the U.S. industrial base have left open capacity across the industry, increasing pricing competition. At the same time, the company has faced raw-material cost increases linked to Middle East developments, as many inputs for rubber production are connected to oil and petrochemicals.

Although AirBoss has generally passed cost increases through to customers, the timing can create pressure when competitors are working through lower-cost inventory, he said. Management believes the market is becoming more level as those inventories are used and expects to pass through newer price increases more quickly in the third quarter.

The company is also pursuing higher-margin specialty materials to improve the Rubber Solutions mix. Bitsakakis said AirBoss recently launched a silicone line and is beginning to build market momentum. The company expects silicone to have a more noticeable effect on the margin profile over the next six to eight months, though he said it will take several quarters to scale.

AirBoss has also ordered specialty equipment for another polymer offering expected to arrive toward the end of 2026. Management said it continues to evaluate acquisition opportunities in Rubber Solutions that could improve both volume and margins.

Liquidity and Trade Planning

Net cash provided by operating activities was $1.8 million in the second quarter, down from $12.9 million in the prior-year period. Capital expenditures totaled $4 million, compared with $1.8 million a year earlier, and were tied to growth initiatives and upgrades at Rubber Solutions and Manufactured Products facilities.

Net debt stood at $72.9 million at June 30, compared with $67.6 million at the end of the second quarter of 2025. The company had $78.3 million of available borrowing capacity under its asset-based revolving credit facility, with $31.4 million drawn.

Management said it expects to fund 2026 operating cash requirements, working-capital needs, capital expenditures and scheduled debt repayments through cash on hand, operating cash flow and committed borrowing capacity.

AirBoss continues to monitor U.S. trade negotiations because of its cross-border operations. Management said most products qualify under the USMCA/CUSMA framework, but the company is maintaining contingency plans for potential tariff duties, trade restrictions or future agreement renegotiations. Approximately 80% to 85% of Rubber Solutions volume goes across the border, while roughly 15% to 20% remains in Canada, according to management.

About AirBoss of America (TSE:BOS)

AirBoss of America Corp is a Canada-based manufacturer of rubber-based products for the resource, military, automotive and industrial markets. It operates in three segments: Rubber Solutions, Engineered Products, and AirBoss Defense Group. The Rubber Solutions segment includes manufacturing and distribution of rubber compounds and distribution of rubber compounding-related chemicals. The Engineered Products segment includes the manufacture and distribution of anti-noise, vibration, and harshness dampening parts.

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