Attached files
| file | filename |
|---|---|
| 8-K - 8-K - SCHULMAN A INC | shlm130701pressrelease.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
A. SCHULMAN REPORTS FISCAL 2013 THIRD-QUARTER RESULTS
• | Net income from continuing operations for the quarter was $10 million, or $0.34 per diluted share; excluding certain items, adjusted net income from continuing operations was $14.8 million, or $0.50 per diluted share |
• | Company continues optimizing its cost structure in Europe and Australia and announces actions to adjust capacity in specialty powders facility in the Americas |
• | Company updates full-year fiscal 2013 net income guidance, excluding certain items, to a revised range of $1.70 to $1.80 per diluted share, citing continued inconsistency in European markets and additional costs in Latin America |
• | Company believes third-quarter challenges are temporary and not systemic in nature and, with a strong balance sheet, the Company is well-positioned for future growth |
AKRON, Ohio - July 1, 2013 - A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today financial results for the fiscal 2013 third quarter ended May 31, 2013.
Summary of Third-Quarter Results
(In Millions, Except EPS)
Q3 FY13 | Q3 FY12 | $ or lbs. Change | % Change | ||||
Volume (lbs.) | 490.9 | 492.5 | (1.6) | 0% | |||
Net Sales | $548.6 | $563.1 | $(14.5) | (3)% | |||
Net Income from Continuing Operations | $10.0 | $17.3 | $(7.3) | (42)% | |||
Adjusted Net Income from Continuing Operations* | $14.8 | $20.7 | $(5.9) | (29)% | |||
EPS from Continuing Operations as Reported | $0.34 | $0.59 | $(0.25) | (42)% | |||
EPS from Continuing Operations as Adjusted* | $0.50 | $0.70 | $(0.20) | (29)% | |||
*The Company provides operating results exclusive of certain items such as costs related to acquisitions, restructuring related expenses and asset write-downs, as these costs are not indicative of the Company's ongoing core operations. The operating results presented in this manner are considered relevant to aid analysis and understanding of the Company's results and business trends. See note later in this release about the use of non-GAAP financial measures.
Joseph M. Gingo, Chairman, President and Chief Executive Officer, said, “The weak economic environment in Europe has lingered. We continue to face inconsistent order patterns in our European markets, but the strong performance of our Americas and Asia Pacific segments had helped to offset this challenge in prior periods; however, this did not occur during the fiscal 2013 third quarter, and we have taken the following actions to resolve current challenges:
• | In Brazil, we began streamlining our costs and consolidating two existing facilities into one new facility. However, the costs and disruption to our Latin American operations and the related requirements to service our customers during the |
transition were greater than anticipated, which resulted in a negative impact on our third-quarter results. The new plant will be operational during the fiscal 2014 first quarter and will better position us to meet customer demand in an efficient manner.
• | In Mexico, our operating costs increased as we anticipated improved local market demand that did not materialize. Additionally, we increased capacity needs to serve the shortfall in production caused by the Brazilian consolidation. We have taken actions to better align our capacity with demand; thus our cost structure in Mexico will be more competitive. |
• | We continue to move our global Specialty Powders product family into higher value-added products and optimize our market position. As previously announced, in our Asia Pacific (APAC) segment we are selling our rotational compounding business in Brisbane, Australia. In June, we decided to downsize capacity in Grand Junction, Tennessee for an expected annual run rate savings of $1.5 million to $1.7 million in fiscal 2014. |
• | As we've previously announced, we've implemented restructuring in EMEA, which is expected to generate approximately $4 million in annual run rate savings in fiscal 2014, bringing the total annualized run rate savings to approximately $10 million from actions taken since 2010.” |
Fiscal Third-Quarter Results
The 2.6% decrease in net sales for the quarter was primarily a result of the continued sluggish economic environment in Europe, which was only partially offset by the incremental net sales and volume from recent acquisitions. Net sales were negatively impacted by a 2.2% decrease in price per pound and $1.9 million of foreign currency translation. The Company reported net income attributable to A. Schulman, Inc. for the third quarter of $5.2 million, or $0.18 per diluted share.
In the Europe, Middle East and Africa (EMEA) segment, net sales decreased 5.5% for the quarter compared with the prior-year period. Foreign currency translation negatively impacted net sales by $2.9 million. Overall, price per pound decreased 3.7% across nearly all product families as a result of increased competition, primarily in the specialty powder and distribution product families. As customer demand decreased, volume declined in all product families with the exception of the custom performance colors and masterbatch solutions product families. EMEA gross profit decreased by $1.9 million compared with the prior-year period. Foreign currency translation negatively impacted gross profit by $0.4 million.
Net sales for the Americas segment increased 3.7% for the quarter compared with the prior-year period due to incremental net sales of $9.8 million from the ECM Plastics, Inc. acquisition. Excluding the impact of ECM, net sales declined due to reduced volume in the engineered plastics and masterbatch solutions product families. Gross profit declined by 6.9% due to the unfavorable mix in the specialty powders product family along with increased costs in Mexico and Brazil. These factors were partially offset by the positive contribution of ECM. Foreign currency translation favorably impacted net sales by $0.6 million.
The Company's Asia Pacific (APAC) segment reported net sales which increased by 3.3% for the quarter compared with the prior-year period, largely due to a 14.7 % increase in price per pound across all product families which more than offset the decreased volume. Gross profit increased 8.2% compared with the fiscal 2012 third quarter.
Restructuring Activities
Given the economic environment in Europe, the Company announced further restructuring plans in its EMEA region during the quarter. As part of this restructuring, the EMEA regional team has reduced headcount. This action is expected to generate approximately $4 million in annual run rate savings in fiscal 2014.
As previously announced, the Company intends to sell its rotational compounding business in Brisbane, Australia. The Company has reflected the results of this business as discontinued operations in its financial statements. The operating results for this business were previously included in the Company's APAC segment. The Company expects to complete a sale within 12 months. This Australian business recorded revenue of approximately $25 million for fiscal 2012.
In addition, the Company is executing restructuring plans in the Americas region which includes optimizing its Grand Junction, Tennessee facility to better align capacity with demand. The Grand Junction portion of the project is expected to generate $1.5 million to $1.7 million in annual run rate savings in fiscal 2014. The Grand Junction facility primarily provides size reduction and custom powder services. As a result of this action in the U.S., the Company expects to reduce headcount by approximately 25 and to recognize charges of approximately $1 million related to restructuring costs and accelerated depreciation during the fourth quarter of fiscal 2013 and the first half of fiscal 2014.
Summary of Third-Quarter Operating Results
(In Millions, Except Operating Income per lb.)
Q3 FY13 | Q3 FY12 | $ Change | % Change | ||||
Operating Income | $16.7 | $23.4 | $(6.7) | (29)% | |||
Adjusted Operating Income* | $22.1 | $28.1 | $(6.0) | (21)% | |||
Adjusted Operating Income Per lb.* | $0.045 | $0.057 | $(0.012) | (21)% | |||
*The Company provides operating results exclusive of certain items such as costs related to acquisitions, restructuring related expenses and asset write-downs, as these costs are not indicative of the Company's ongoing core operations. The operating results presented in this manner are considered relevant to aid analysis and understanding of the Company's results and business trends. See note later in this release about the use of non-GAAP financial measures.
Gross profit for the quarter was $73.1 million excluding the effect of certain items, compared with $76.1 million a year ago. The decline in gross profit was primarily the result of global competitive pricing pressure, unfavorable mix in certain product families and increased manufacturing costs.
SG&A expenses for the quarter increased $3.0 million compared with the same period in the prior year, excluding the effect of certain items. The increase was primarily attributable to an incremental $1.0 million from recent acquisitions, increased pension expense of $0.5 million in the Company's EMEA region and higher bad debt expense of $0.6 million. During the quarter, the Company also continued to invest in infrastructure costs related to the newly established regional headquarters in Hong Kong and the new manufacturing facility in India.
Year-to-Date Results
For the nine months, net sales increased $32.5 million compared with the prior-year period. The increase was primarily a result of incremental net sales of $43.5 million and volume of 30 million pounds from the Elian and ECM acquisitions. Foreign currency translation negatively impacted net sales by $13.5 million.
The Company reported net income of $28.8 million and $39.7 million for the nine months ended May 31, 2013 and 2012, respectively. Net income from continuing operations was $33.9 million compared with $40.2 million for the comparable period last year. Excluding the effect of certain items such as restructuring-related charges, acquisition-related costs, asset impairments and income tax valuation allowance adjustments, year-to-date adjusted net income was $37.6 million, or $1.28 per diluted share, compared with $47.4 million, or $1.60 per diluted share, a year ago.
Working Capital/Cash Flow from Operations
Working capital days at May 31, 2013 decreased to 57 days compared with 59 days at May 31, 2012. Foreign currency translation, primarily the euro, negatively impacted working capital by approximately
$4 million.
Net cash provided from operations was $52.6 million and net cash provided from operations was $34.5 million for the nine months ended May 31, 2013 and 2012, respectively. The increase of $18.1 million in cash provided from operations was primarily due to improved working capital management.
The Company's cash and cash equivalents increased $6.1 million from August 31, 2012. This increase was driven primarily by cash provided from operations coupled with increased net borrowings on revolving credit facilities of $48 million, and proceeds from the sale of assets of $11.7 million. This was partially offset by the acquisition of ECM for $36.4 million in cash consideration, expenditures for capital projects of $20.5 million, repayment of the $30.0 million of senior notes in the United States, and dividend payments of $17.3 million.
Business Outlook
The Company is updating its adjusted earnings per share guidance to between $1.70 and $1.80 per diluted share for its fiscal year ending August 31, 2013.
“The challenges we experienced in the third quarter in Latin America are temporary and not systemic in nature. We will resolve them during the fiscal fourth quarter and we look forward to significant earnings growth in fiscal 2014. As always, we will
continue to globally align our cost structure with demand and improve our product mix. With a strong balance sheet, solid cash flow generation and distinctive market position, I am confident that we can achieve our strategy to become a premier global specialty chemicals company through organic growth as well as acquisitions and opportunistically provide additional value to our shareholders through share repurchases and dividends,” stated Gingo.
Conference Call on the Web
A live Internet broadcast of A. Schulman's conference call regarding fiscal 2013 third-quarter earnings can be accessed at 10:00 a.m. Eastern Time on Tuesday, July 2, 2013, on the Company's website, www.aschulman.com. An archived replay of the call will also be available on the website.
Investor Presentation Materials
Senior executives of the Company may participate in meetings with analysts and investors throughout the remainder of this fiscal year. The Company has posted presentation materials, portions of which may be used during such meetings, in the Investors section of its website at www.aschulman.com. The presentation will remain on the website as long as it is in use.
About A. Schulman, Inc.
A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. Since 1928, the Company has been providing innovative solutions to meet its customers' demanding requirements. The Company's customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, sports, leisure & home, custom services and others. The Company employs approximately 3,300 people and has 34 manufacturing facilities globally. A. Schulman reported net sales of $2.1 billion for the fiscal year ended August 31, 2012. Additional information about A. Schulman can be found at www.aschulman.com.
Use of Non-GAAP Financial Measures
This release includes certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include: net income excluding certain items and net income per diluted share excluding certain items. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures, and tables included in this release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure. The most directly comparable GAAP financial measures for these purposes are net income and net income per diluted share. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
The Company provides operating results exclusive of certain items such as costs related to acquisitions, restructuring related expenses and asset write-downs, as these costs are not indicative of the Company's ongoing core operations. The operating results presented in this manner are considered relevant to aid analysis and understanding of the Company's results and business trends, and the Company uses these financial measures to make decisions, assess performance and allocate resources.
While the Company believes that these non-GAAP financial measures provide useful supplemental information to investors, there are very significant limitations associated with their use. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
Cautionary Note on Forward-Looking Statements
A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that may cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these forward-
looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:
• | worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company's major product markets or countries where the Company has operations; |
• | the effectiveness of the Company's efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques; |
• | competitive factors, including intense price competition; |
• | fluctuations in the value of currencies in major areas where the Company operates; |
• | volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company's products, particularly plastic resins derived from oil and natural gas; |
• | changes in customer demand and requirements; |
• | effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions, joint ventures and restructuring initiatives; |
• | escalation in the cost of providing employee health care; |
• | uncertainties regarding the resolution of pending and future litigation and other claims; |
• | the performance of the global automotive market; and |
• | further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products. |
The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2012. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations.
SHLM_ALL
Contact information:
Jennifer K. Beeman
Director of Corporate Communications & Investor Relations
A. Schulman, Inc.
3637 Ridgewood Road
Fairlawn, Ohio 44333
Tel: 330-668-7346
email: Jennifer_Beeman@us.aschulman.com
www.aschulman.com
A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended May 31, | Nine months ended May 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Unaudited (In thousands, except per share data) | |||||||||||||||
Net sales | $ | 548,589 | $ | 563,071 | $ | 1,596,114 | $ | 1,563,588 | |||||||
Cost of sales | 475,766 | 487,016 | 1,391,113 | 1,354,718 | |||||||||||
Selling, general and administrative expenses | 53,188 | 48,271 | 153,837 | 143,662 | |||||||||||
Restructuring expense | 1,807 | 1,944 | 5,413 | 6,785 | |||||||||||
Asset impairment | 1,121 | 2,586 | 1,619 | 2,586 | |||||||||||
Curtailment (gain) loss | — | (101 | ) | 333 | (310 | ) | |||||||||
Operating income | 16,707 | 23,355 | 43,799 | 56,147 | |||||||||||
Interest expense | 1,865 | 1,953 | 5,559 | 6,532 | |||||||||||
Interest income | (80 | ) | (318 | ) | (408 | ) | (674 | ) | |||||||
Foreign currency transaction (gains) losses | 139 | (199 | ) | 676 | 410 | ||||||||||
Other (income) expense, net | (27 | ) | (71 | ) | (374 | ) | (1,206 | ) | |||||||
Income from continuing operations before taxes | 14,810 | 21,990 | 38,346 | 51,085 | |||||||||||
Provision (benefit) for U.S. and foreign income taxes | 4,497 | 4,422 | 3,584 | 10,066 | |||||||||||
Income from continuing operations | 10,313 | 17,568 | 34,762 | 41,019 | |||||||||||
Loss from discontinued operations, net of tax | (4,821 | ) | (320 | ) | (5,102 | ) | (518 | ) | |||||||
Net income | 5,492 | 17,248 | 29,660 | 40,501 | |||||||||||
Noncontrolling interests | (275 | ) | (252 | ) | (881 | ) | (850 | ) | |||||||
Net income attributable to A. Schulman, Inc. | $ | 5,217 | $ | 16,996 | $ | 28,779 | $ | 39,651 | |||||||
Weighted-average number of shares outstanding: | |||||||||||||||
Basic | 29,316 | 29,440 | 29,275 | 29,411 | |||||||||||
Diluted | 29,477 | 29,569 | 29,421 | 29,585 | |||||||||||
Basic earnings per share of common stock attributable to A. Schulman, Inc. | |||||||||||||||
Income from continuing operations | $ | 0.34 | $ | 0.59 | $ | 1.16 | $ | 1.37 | |||||||
Loss from discontinued operations | (0.16 | ) | (0.01 | ) | (0.18 | ) | (0.02 | ) | |||||||
Net income attributable to A. Schulman, Inc. | $ | 0.18 | $ | 0.58 | $ | 0.98 | $ | 1.35 | |||||||
Diluted earnings per share of common stock attributable to A. Schulman, Inc. | |||||||||||||||
Income from continuing operations | $ | 0.34 | $ | 0.59 | $ | 1.15 | $ | 1.36 | |||||||
Loss from discontinued operations | (0.16 | ) | (0.02 | ) | (0.17 | ) | (0.02 | ) | |||||||
Net income attributable to A. Schulman, Inc. | $ | 0.18 | $ | 0.57 | $ | 0.98 | $ | 1.34 | |||||||
Cash dividends per common share | $ | 0.195 | $ | 0.190 | $ | 0.585 | $ | 0.530 | |||||||
A. SCHULMAN, INC.
CONSOLIDATED BALANCE SHEETS
May 31, 2013 | August 31, 2012 | ||||||
Unaudited (In thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 130,088 | $ | 124,031 | |||
Accounts receivable, less allowance for doubtful accounts of $10,222 at May 31, 2013 and $9,190 at August 31, 2012 | 322,872 | 304,698 | |||||
Inventories, average cost or market, whichever is lower | 272,744 | 247,222 | |||||
Prepaid expenses and other current assets | 46,081 | 32,403 | |||||
Total current assets | 771,785 | 708,354 | |||||
Property, plant and equipment, at cost: | |||||||
Land and improvements | 27,666 | 28,739 | |||||
Buildings and leasehold improvements | 145,013 | 156,951 | |||||
Machinery and equipment | 348,597 | 363,811 | |||||
Furniture and fixtures | 38,174 | 39,404 | |||||
Construction in progress | 12,391 | 14,320 | |||||
Gross property, plant and equipment | 571,841 | 603,225 | |||||
Accumulated depreciation and investment grants of $473 at May 31, 2013 and $579 at August 31, 2012 | 356,765 | 377,349 | |||||
Net property, plant and equipment | 215,076 | 225,876 | |||||
Other assets: | |||||||
Deferred charges and other noncurrent assets | 53,683 | 41,146 | |||||
Goodwill | 138,187 | 128,353 | |||||
Intangible assets, net | 94,481 | 90,038 | |||||
Total other assets | 286,351 | 259,537 | |||||
Total assets | $ | 1,273,212 | $ | 1,193,767 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 280,133 | $ | 248,069 | |||
U.S. and foreign income taxes payable | 5,086 | 4,268 | |||||
Accrued payroll, taxes and related benefits | 40,003 | 42,275 | |||||
Other accrued liabilities | 47,576 | 37,282 | |||||
Short-term debt | 7,213 | 35,411 | |||||
Total current liabilities | 380,011 | 367,305 | |||||
Long-term debt | 221,017 | 174,466 | |||||
Pension plans | 96,671 | 92,581 | |||||
Other long-term liabilities | 26,758 | 29,324 | |||||
Deferred income taxes | 21,223 | 22,402 | |||||
Total liabilities | 745,680 | 686,078 | |||||
Commitments and contingencies | — | — | |||||
Stockholders’ equity: | |||||||
Common stock, $1 par value, authorized - 75,000 shares, issued - 48,096 shares at May 31, 2013 and 47,958 shares at August 31, 2012 | 48,096 | 47,958 | |||||
Additional paid-in capital | 263,336 | 259,253 | |||||
Accumulated other comprehensive income (loss) | (1,724 | ) | (5,921 | ) | |||
Retained earnings | 582,671 | 571,205 | |||||
Treasury stock, at cost, 18,683 shares at May 31, 2013 and 18,649 shares at August 31, 2012 | (371,912 | ) | (371,099 | ) | |||
Total A. Schulman, Inc.’s stockholders’ equity | 520,467 | 501,396 | |||||
Noncontrolling interests | 7,065 | 6,293 | |||||
Total equity | 527,532 | 507,689 | |||||
Total liabilities and equity | $ | 1,273,212 | $ | 1,193,767 | |||
A. SCHULMAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended May 31, | |||||||
2013 | 2012 | ||||||
Unaudited (In thousands) | |||||||
Operating from continuing and discontinued operations: | |||||||
Net income | $ | 29,660 | $ | 40,501 | |||
Adjustments to reconcile net income to net cash provided from (used in) operating activities: | |||||||
Depreciation | 22,489 | 21,860 | |||||
Amortization | 8,665 | 6,937 | |||||
Deferred tax provision | (8,879 | ) | (7,414 | ) | |||
Pension, postretirement benefits and other deferred compensation | 6,465 | 4,327 | |||||
Asset impairment | 5,619 | 2,586 | |||||
Curtailment (gain) loss | 333 | (310 | ) | ||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (13,123 | ) | (6,501 | ) | |||
Inventories | (18,841 | ) | (31,161 | ) | |||
Accounts payable | 27,092 | 16,726 | |||||
Income taxes | (1,157 | ) | (6,123 | ) | |||
Accrued payroll and other accrued liabilities | 2,034 | (11,305 | ) | ||||
Other assets and long-term liabilities | (7,780 | ) | 4,380 | ||||
Net cash provided from (used in) operating activities | 52,577 | 34,503 | |||||
Investing from continuing and discontinued operations: | |||||||
Expenditures for property, plant and equipment | (20,518 | ) | (27,505 | ) | |||
Proceeds from the sale of assets | 11,745 | 1,255 | |||||
Business acquisitions, net of cash acquired | (36,360 | ) | (64,918 | ) | |||
Net cash provided from (used in) investing activities | (45,133 | ) | (91,168 | ) | |||
Financing from continuing and discontinued operations: | |||||||
Cash dividends paid | (17,313 | ) | (15,352 | ) | |||
Increase (decrease) in short-term debt | (28,086 | ) | (5,623 | ) | |||
Borrowings on revolving credit facilities | 133,950 | 166,830 | |||||
Repayments on revolving credit facilities | (85,950 | ) | (139,769 | ) | |||
Borrowings on long-term debt | 147 | 130 | |||||
Repayments on long-term debt | (3,291 | ) | (3,512 | ) | |||
Cash distributions to noncontrolling interests | — | (580 | ) | ||||
Issuances of stock, common and treasury | 1,469 | 1,079 | |||||
Redemptions of common stock | (397 | ) | (375 | ) | |||
Purchases of treasury stock | (1,021 | ) | (21,474 | ) | |||
Net cash provided from (used in) financing activities | (492 | ) | (18,646 | ) | |||
Effect of exchange rate changes on cash | (895 | ) | (10,989 | ) | |||
Net increase (decrease) in cash and cash equivalents | 6,057 | (86,300 | ) | ||||
Cash and cash equivalents at beginning of period | 124,031 | 155,753 | |||||
Cash and cash equivalents at end of period | $ | 130,088 | $ | 69,453 | |||
A. SCHULMAN, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
Unaudited
(In thousands, except per share data)
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net income attributable to A. Schulman, Inc.: | ||||||||||||||||
GAAP, as reported | $ | 5,217 | $ | 16,996 | $ | 28,779 | $ | 39,651 | ||||||||
Loss from discontinued operations, net of tax | (4,821 | ) | (320 | ) | (5,102 | ) | (518 | ) | ||||||||
Net income from continuing operations | $ | 10,038 | $ | 17,316 | $ | 33,881 | $ | 40,169 | ||||||||
Certain items, net of tax: | ||||||||||||||||
Asset write-downs (1) | 1,386 | 1,917 | 2,417 | 1,917 | ||||||||||||
Costs related to acquisitions (2) | 890 | 147 | 1,799 | 952 | ||||||||||||
Restructuring related (3) | 2,472 | 1,556 | 5,554 | 4,904 | ||||||||||||
Inventory step-up (4) | — | 53 | 138 | 451 | ||||||||||||
Tax benefits (charges) (5) | (17 | ) | (260 | ) | (6,177 | ) | (967 | ) | ||||||||
Total certain items, net of tax | $ | 4,731 | $ | 3,413 | $ | 3,731 | $ | 7,257 | ||||||||
Non-GAAP | $ | 14,769 | $ | 20,729 | $ | 37,612 | $ | 47,426 | ||||||||
Non-GAAP diluted EPS | $ | 0.50 | $ | 0.70 | $ | 1.28 | $ | 1.60 | ||||||||
Weighted-average number of shares outstanding -diluted | 29,477 | 29,569 | 29,421 | 29,585 | ||||||||||||
1 - Asset write-downs primarily relate to asset impairments and accelerated depreciation. | ||||||||||||||||
2 - Costs related to acquisitions include those costs incurred to pursue intended targets. | ||||||||||||||||
3 - Restructuring related costs include items such as employee severance charges, lease termination charges, curtailment gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure. | ||||||||||||||||
4 - Inventory step-up costs include the adjustment for fair value of inventory acquired as a result of acquisition purchase accounting. | ||||||||||||||||
5 - Tax benefits (charges) include the effect of the adjustments to the Italian valuation allowance in fiscal 2012 and the adjustments to the Germany and Brazil valuation allowances in fiscal 2013. | ||||||||||||||||
A. SCHULMAN, INC.
SUPPLEMENTAL SEGMENT INFORMATION
Three months ended May 31, | Nine months ended May 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Unaudited (In thousands, except for %'s) | ||||||||||||||||
Pounds sold to unaffiliated customers | ||||||||||||||||
EMEA | 303,662 | 309,200 | 875,393 | 882,292 | ||||||||||||
Americas | 162,411 | 155,705 | 479,060 | 439,415 | ||||||||||||
APAC | 24,805 | 27,548 | 69,779 | 73,645 | ||||||||||||
Total pounds sold to unaffiliated customers | 490,878 | 492,453 | 1,424,232 | 1,395,352 | ||||||||||||
Net sales to unaffiliated customers | ||||||||||||||||
EMEA | $ | 362,847 | $ | 383,852 | $ | 1,056,533 | $ | 1,069,304 | ||||||||
Americas | 152,535 | 147,059 | 446,314 | 404,685 | ||||||||||||
APAC | 33,207 | 32,160 | 93,267 | 89,599 | ||||||||||||
Total net sales to unaffiliated customers | $ | 548,589 | $ | 563,071 | $ | 1,596,114 | $ | 1,563,588 | ||||||||
Segment gross profit | ||||||||||||||||
EMEA | $ | 47,669 | $ | 49,612 | $ | 130,701 | $ | 133,926 | ||||||||
Americas | 19,796 | 21,273 | 59,272 | 60,796 | ||||||||||||
APAC | 5,679 | 5,250 | 16,169 | 14,825 | ||||||||||||
Total segment gross profit | 73,144 | 76,135 | 206,142 | 209,547 | ||||||||||||
Inventory step-up | — | (80 | ) | (138 | ) | (677 | ) | |||||||||
Accelerated depreciation and restructuring related | (321 | ) | — | (1,003 | ) | — | ||||||||||
Total gross profit | $ | 72,823 | $ | 76,055 | $ | 205,001 | $ | 208,870 | ||||||||
Segment operating income | ||||||||||||||||
EMEA | $ | 20,222 | $ | 23,413 | $ | 47,888 | $ | 57,953 | ||||||||
Americas | 5,340 | 7,869 | 18,977 | 19,323 | ||||||||||||
APAC | 2,738 | 2,969 | 8,231 | 8,242 | ||||||||||||
Total segment operating income | 28,300 | 34,251 | 75,096 | 85,518 | ||||||||||||
Corporate and other | (6,192 | ) | (6,195 | ) | (19,651 | ) | (18,567 | ) | ||||||||
Total operating income before certain items | 22,108 | 28,056 | 55,445 | 66,951 | ||||||||||||
Costs related to acquisitions | (849 | ) | (192 | ) | (1,837 | ) | (1,066 | ) | ||||||||
Restructuring related | (3,166 | ) | (1,944 | ) | (6,772 | ) | (6,785 | ) | ||||||||
Accelerated depreciation | (265 | ) | — | (947 | ) | — | ||||||||||
Asset impairment | (1,121 | ) | (2,586 | ) | (1,619 | ) | (2,586 | ) | ||||||||
Curtailment gain (loss) | — | 101 | (333 | ) | 310 | |||||||||||
Inventory step-up | — | (80 | ) | (138 | ) | (677 | ) | |||||||||
Operating income | 16,707 | 23,355 | 43,799 | 56,147 | ||||||||||||
Interest expense, net | (1,785 | ) | (1,635 | ) | (5,151 | ) | (5,858 | ) | ||||||||
Foreign currency transaction gains (losses) | (139 | ) | 199 | (676 | ) | (410 | ) | |||||||||
Other income (expense), net | 27 | 71 | 374 | 1,206 | ||||||||||||
Income from continuing operations before taxes | $ | 14,810 | $ | 21,990 | $ | 38,346 | $ | 51,085 | ||||||||
Capacity utilization | ||||||||||||||||
EMEA | 81 | % | 87 | % | 77 | % | 81 | % | ||||||||
Americas | 67 | % | 70 | % | 65 | % | 67 | % | ||||||||
APAC | 66 | % | 89 | % | 69 | % | 82 | % | ||||||||
Worldwide | 74 | % | 80 | % | 71 | % | 75 | % | ||||||||