Attached files
| file | filename |
|---|---|
| 8-K - 8-K - MATERION Corp | mtrn_2014724x8kearningsrel.htm |
Exhibit 99.1
MATERION CORPORATION REPORTS SECOND QUARTER FINANCIAL RESULTS
REVISES FULL-YEAR GUIDANCE
MAYFIELD HEIGHTS, Ohio - July 24, 2014 - Materion Corporation (NYSE:MTRN) today reported second quarter financial results.
▪ | Second quarter 2014 earnings were $0.47 per share, compared to $0.20 per share earned in the second quarter of the prior year. |
▪ | Adjusted to exclude the benefit of the previously announced insurance settlement, second quarter earnings were $0.36 per share, up 80% compared to the same quarter of the prior year. |
▪ | Sequentially, second quarter adjusted earnings were 24% ahead of first quarter of 2014 adjusted earnings of $0.29 per share. |
▪ | The facility closures and product line rationalizations completed in 2013 are delivering the expected margin benefits. |
▪ | Net sales for the second quarter were $288.0 million, 6% below prior-year’s second quarter. Value-added sales, a non-GAAP measure as defined in Attachment 4, for the second quarter were $159.6 million, up 5% compared to the same quarter of the prior year and up 10% sequentially from the first quarter of the current year. |
▪ | Adjusted operating profit margin, as a percent of value-added sales, expanded by 240 basis points to 6.7% from prior-year second quarter levels. |
▪ | For the six months to date, adjusted earnings were $0.64 per share, 23% ahead of the same period of last year. |
▪ | Earnings were below the Company’s internal expectations due primarily to weaker demand from customers in the defense and automotive electronics markets. |
▪ | Due primarily to the weaker demand from customers in the defense and automotive electronics markets, the Company is reducing its guidance for the year by approximately 12% to the range of $1.55 to $1.70 per share adjusted, an increase of 40% to 55% compared to $1.10 per share in the prior year. |
▪ | Second half adjusted earnings are now expected to be in the range of $0.90 to $1.05 per share, up 40% to 60% from first half levels and up approximately 70% from prior-year second half levels. |
SECOND QUARTER 2014 RESULTS
Sales for the second quarter were $288.0 million, compared to sales of $306.1 million for the second quarter of 2013. Value-added sales were $159.6 million, up $7.1 million, or 5%, compared to value-added sales of $152.5 million for the second quarter of 2013 and up
sequentially 10% from the first quarter of 2014. The growth in value-added sales in the second quarter compared to the same period of last year was due primarily to stronger demand from customers in the consumer electronics and medical markets, partially offset by lower demand from customers in the automotive electronics and defense markets.
Net income for the second quarter of 2014 was $10.0 million, or $0.47 per share. This compares to net income of $4.2 million, or $0.20 per share for the second quarter of the prior year. Excluding the net benefit of the aforementioned insurance claim settlement, second quarter adjusted earnings were $0.36 per share. Second quarter adjusted earnings were also up sequentially 24% from the first quarter adjusted earnings of $0.29 per share (see Attachment 5 for a reconciliation of the adjusted earnings).
For the first six months of 2014, sales were $546.9 million compared to sales of $605.3 million for the same period of last year. Value-added sales for the first six months of 2014 were $304.5 million compared to $303.8 million for the same period of last year. In the first six months, strong demand from customers in consumer electronics was offset by the weakness in the automotive electronics and defense industries. Year-to-date 2014 net income was $17.3 million compared to $10.9 million for the first six months of 2013. Year-to-date adjusted net income was $13.5 million, or $0.64 per share, an increase of 23% over the comparable period of the prior year.
BUSINESS SEGMENT REPORTING
Advanced Material Technologies
Advanced Material Technologies’ sales for the second quarter of 2014 were $179.1 million, which compares to sales of $196.0 million in the second quarter of 2013. Value-added sales, which removes the impact of changes in the market prices of pass-through metals as defined in Attachment 4, were $69.9 million in the second quarter of 2014, up $4.7 million, or 7%, compared to $65.2 million in the second quarter of 2013. Second quarter value-added sales were also up sequentially by $4.3 million, or 7%, compared to the first quarter of 2014 value-added sales of $65.6 million. As compared to the second quarter of 2013, the increase in value-added sales was driven primarily by increased shipments to customers in the consumer electronics and medical industries. These were partially offset by lower sales to customers in the defense industry compared to the same period of last year. Stronger demand from consumer electronics customers was also a factor in the sequential growth in the second quarter of 2014 compared to the first quarter of 2014.
Operating profit for the second quarter of 2014 was $11.5 million, which compares to an operating loss of $2.3 million for the second quarter of 2013. The second quarter operating profit includes a $3.8 million benefit primarily related to the insurance settlement. Operating profit also improved due to higher value-added sales and improved yields. Facility closures and product line rationalization initiatives completed in 2013 delivered the expected stronger product mix and margin expansion. Excluding the benefit of the insurance settlement, operating margins improved by 200 basis points to 11% compared to adjusted first quarter levels. It is anticipated that margins will further improve in the second half of 2014 by approximately 100 basis points.
Performance Alloys
Performance Alloys' sales for the second quarter of 2014 were $76.7 million, which compares to the second quarter of 2013 sales of $74.3 million. Value-added sales for the second quarter of 2014 were $63.5 million, up $4.7 million, or 8%, and $8.8 million, or 16%, comparing to the second quarter 2013 and first quarter 2014, respectively. The year-over-year growth is primarily due to the timing of hydroxide shipments, which are now made quarterly versus semi-annually in 2013. Second quarter 2014 value-added sales to customers in the consumer electronics industry grew by approximately 29% from prior-year levels. Second quarter value-added sales of ToughMet® products were up 22% compared to the same period of last year. The year-over-year growth in consumer electronics and in ToughMet was offset by weaker demand from customers in the automotive electronics and telecommunications infrastructure industries. Value-added sales improved sequentially from the first quarter of 2014, which had been impacted by weather-related plant closings.
Operating profit for the second quarter of 2014 was $5.2 million, compared to an operating profit of $6.9 million in the second quarter of 2013. Operating profit for the second quarter of 2014 was up sequentially by $1.7 million, or 47%, from the first quarter of 2014. Operating profit levels in this segment were negatively affected in the second quarter by a weaker product mix and higher costs driven by the lower sales to customers in the telecommunications infrastructure and automotive industries. While performance in this segment was below Company expectations, in the first and second quarters of 2014, it is expected that value-added sales and profit growth in the second half will increase when compared to the first half.
Beryllium and Composites
Beryllium and Composites' sales for the second quarter of 2014 were $16.6 million, compared to sales of $16.2 million in the second quarter of 2013. Second quarter sales were up sequentially by 7% from first quarter of 2014 sales of $15.5 million. Beryllium and Composites does not directly pass through changes in the costs of its materials sold, and, therefore, value-added sales for this segment are the same as sales. Demand from customers in medical and science industries were up modestly from the same period of last year while defense customers’ demand continued to be below prior-year levels.
Operating results in the segment were below what the Company had expected due to specific defense program delays into 2015, a weaker mix and higher than anticipated costs. These factors contributed to an operating loss of $1.8 million in the quarter compared to an operating profit of $0.8 million in the second quarter of 2013.
The beryllium pebble plant met production needs in the quarter and continues to be on target for supporting higher levels in the second half of the year. It is anticipated that a significantly improved product mix from stronger shipments to the nuclear medical market will result in second half 2014 performance in this segment well above first-half levels.
Technical Materials
Technical Materials’ sales for the second quarter of 2014 were $15.5 million, compared to $19.6 million for the same period of last year. Value-added sales were $9.6 million in the second quarter of 2014, compared to $12.3 million for the second quarter of 2013. The decline in value-added sales was due to lower demand from customers in the consumer electronics and automotive electronics industries, which affected the segment in both the first and second
quarters of the year. Although the automotive electronics industry’s destocking in the first quarter began to improve in the second quarter of 2014, demand continued to trail 2013 levels.
Operating profit for the second quarter of 2014 was $1.0 million, compared to an operating profit of $2.4 million for the same period of last year. The decline in operating profit was due to the lower sales volume. Operating profit improved sequentially in the second quarter compared to the first quarter of 2014’s operating profit of $0.2 million. It is anticipated at this time that the sequential improvements seen in the second quarter will continue, resulting in a second half that should be well above the first half’s financial performance.
OUTLOOK
Both value-added sales and margins continued to improve when compared to the second quarter of the prior year as well as sequentially compared to the first quarter. The facility closing and product line rationalization initiatives implemented during 2013 are complete and are providing the expected significant margin and profit improvement leverage in the Advanced Materials Technologies segment. The unfavorable product mix noted in the first half, which was driven by the weaker conditions in defense and automotive, should improve in the second half of the year.
The Company continues to expect significant increases in value-added sales, margins and earnings in the second half when compared to both the prior-year’s second half and the current-year’s first half. Nonetheless, the Company is revising its previously announced expected adjusted earnings range for the year by approximately 12% to $1.55 to $1.70 per share from $1.75 to $1.95 per share. The revision is due to the two market specific issues that drove the lower than expected first half results as well as to reflect the lowered macroeconomic forecast. This range, which excludes the $0.17 EPS benefit of the previously reported first quarter asset sale and second quarter insurance settlement, represents an improvement of 40% to 55% over the prior-year’s adjusted earnings of $1.10 per share and an improvement of 40% to 60% from first half levels.
CHAIRMAN’S COMMENTS
Richard J. Hipple, Chairman, President and CEO, stated, “We are seeing a significant improvement in the Company’s earnings in 2014 over 2013 levels. The benefits from our new product initiatives and the actions that we have undertaken during 2013 are delivering the expected margin improvement. However, our value-added sales growth rate is below what we anticipated coming into 2014 due to weaker demand from the automotive electronics supply chain and from defense program push outs. We continue to expect stronger second half financial performance and a significant improvement in earnings in 2014 over 2013.”
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00 a.m. Eastern Time, July 24, 2014. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0778, callers outside the U.S. can dial (201) 689-8565. A replay of the call will be available until August 8, 2014 by dialing (877) 660-6853 or (201) 612-7415; please reference Conference ID Number 13586002. The call will also be archived on the Company’s website.
FORWARD-LOOKING STATEMENTS
Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements, in particular, the outlook provided above. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein:
▪ | Actual sales, operating rates and margins for 2014; |
▪ | Our ability to strengthen our internal control over financial reporting and disclosure controls and procedures; |
▪ | The global economy; |
▪ | The impact of any U.S. Federal Government shutdowns and sequestrations; |
▪ | The condition of the markets which we serve, whether defined geographically or by segment, with the major market segments being: consumer electronics, industrial components, commercial aerospace, defense, science, automotive electronics, medical, energy and telecommunications infrastructure; |
▪ | Changes in product mix and the financial condition of customers; |
▪ | Our success in developing and introducing new products and new product ramp-up rates; |
▪ | Our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; |
▪ | Our success in integrating acquired businesses; |
▪ | The impact of the results of acquisitions on our ability to achieve fully the strategic and financial objectives related to these acquisitions; |
▪ | Our success in achieving the expected benefits from our facility consolidations; |
▪ | Our success in implementing our strategic plans and the timely and successful completion and start-up of any capital projects, including the new primary beryllium facility in Elmore, Ohio; |
▪ | The availability of adequate lines of credit and the associated interest rates; |
▪ | Other financial factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal financing fees, tax rates, exchange rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, and the impact of the Company’s stock price on the cost of incentive compensation plans; |
▪ | The uncertainties related to the impact of war, terrorist activities and acts of God; |
▪ | Changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; |
▪ | The conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; and |
▪ | The risk factors set forth in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013. |
Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company, through its wholly owned subsidiaries, supplies highly engineered advanced enabling materials to global markets. Products include precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, specialty engineered beryllium alloys, beryllium and beryllium composites, and engineered clad and plated metal systems.
###
Investor Contact: | Media Contact: | |
Michael C. Hasychak | Patrick S. Carpenter | |
(216) 383-6823 | (216) 383-6835 | |
mike.hasychak@materion.com | patrick.carpenter@materion.com | |
http://www.materion.com
Attachment 1
Materion Corporation
Consolidated Statements of Income
(Unaudited)
Second Quarter Ended | First Half Ended | ||||||||||||||
(In thousands except per share amounts) | Jun. 27, 2014 | Jun. 28, 2013 | Jun. 27, 2014 | Jun. 28, 2013 | |||||||||||
Net sales | $ | 287,965 | $ | 306,141 | $ | 546,894 | $ | 605,310 | |||||||
Cost of sales | 238,164 | 260,149 | 451,631 | 510,979 | |||||||||||
Gross margin | 49,801 | 45,992 | 95,263 | 94,331 | |||||||||||
Selling, general and administrative expense | 34,685 | 33,327 | 65,945 | 66,106 | |||||||||||
Research and development expense | 3,443 | 3,154 | 6,230 | 6,711 | |||||||||||
Other — net | (2,895 | ) | 2,950 | (2,533 | ) | 5,431 | |||||||||
Operating profit | 14,568 | 6,561 | 25,621 | 16,083 | |||||||||||
Interest expense — net | 672 | 813 | 1,367 | 1,641 | |||||||||||
Income before income taxes | 13,896 | 5,748 | 24,254 | 14,442 | |||||||||||
Income tax expense | 3,922 | 1,593 | 6,949 | 3,502 | |||||||||||
Net income | $ | 9,974 | $ | 4,155 | $ | 17,305 | $ | 10,940 | |||||||
Basic earnings per share: | |||||||||||||||
Net income per share of common stock | $ | 0.48 | $ | 0.20 | $ | 0.84 | $ | 0.53 | |||||||
Diluted earnings per share: | |||||||||||||||
Net income per share of common stock | $ | 0.47 | $ | 0.20 | $ | 0.82 | $ | 0.52 | |||||||
Cash dividends per share | $ | 0.085 | $ | 0.080 | $ | 0.165 | $ | 0.155 | |||||||
Weighted-average number of shares of common stock outstanding | |||||||||||||||
Basic | 20,642 | 20,566 | 20,625 | 20,524 | |||||||||||
Diluted | 21,001 | 20,869 | 20,983 | 20,845 | |||||||||||
Attachment 2
Materion Corporation
Consolidated Balance Sheets
(Unaudited)
(In thousands) | Jun. 27, 2014 | Dec. 31, 2013 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 18,062 | $ | 22,774 | ||||
Accounts receivable | 121,766 | 113,012 | ||||||
Inventories | 254,790 | 232,800 | ||||||
Prepaid expenses | 16,645 | 16,353 | ||||||
Deferred income taxes | 10,345 | 9,566 | ||||||
Total current assets | 421,608 | 394,505 | ||||||
Long-term deferred income taxes | 2,049 | 4,672 | ||||||
Property, plant and equipment | 790,154 | 782,879 | ||||||
Less allowances for depreciation, depletion and amortization | (538,095 | ) | (520,986 | ) | ||||
Property, plant and equipment—net | 252,059 | 261,893 | ||||||
Intangible assets | 21,534 | 24,248 | ||||||
Other assets | 4,851 | 3,874 | ||||||
Goodwill | 88,753 | 88,753 | ||||||
Total assets | $ | 790,854 | $ | 777,945 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Short-term debt | $ | 33,368 | $ | 35,566 | ||||
Accounts payable | 32,959 | 36,556 | ||||||
Other liabilities and accrued items | 47,832 | 54,851 | ||||||
Income taxes | 7,015 | 1,564 | ||||||
Unearned revenue | 2,116 | 479 | ||||||
Total current liabilities | 123,290 | 129,016 | ||||||
Other long-term liabilities | 16,252 | 16,531 | ||||||
Retirement and post-employment benefits | 56,949 | 80,275 | ||||||
Unearned income | 54,143 | 56,490 | ||||||
Long-term income taxes | 1,576 | 1,576 | ||||||
Deferred income taxes | 3,842 | 1,469 | ||||||
Long-term debt | 46,945 | 29,267 | ||||||
Shareholders’ equity | 487,857 | 463,321 | ||||||
Total liabilities and shareholders’ equity | $ | 790,854 | $ | 777,945 | ||||
Attachment 3
Materion Corporation
Consolidated Statements of Cash Flows
(Unaudited)
First Half Ended | ||||||||
Jun. 27, | Jun. 28, | |||||||
(In thousands) | 2014 | 2013 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 17,305 | $ | 10,940 | ||||
Adjustments to reconcile net income to net cash provided from operating activities: | ||||||||
Depreciation, depletion and amortization | 22,093 | 18,656 | ||||||
Amortization of deferred financing costs in interest expense | 356 | 325 | ||||||
Stock-based compensation expense | 3,027 | 2,676 | ||||||
Changes in assets and liabilities net of acquired assets and liabilities: | ||||||||
Decrease (increase) in accounts receivable | (8,680 | ) | (5,156 | ) | ||||
Decrease (increase) in inventory | (19,246 | ) | 4,212 | |||||
Decrease (increase) in prepaid and other current assets | 29 | 9,029 | ||||||
Decrease (increase) in deferred income taxes | 58 | 1,166 | ||||||
Increase (decrease) in accounts payable and accrued expenses | (8,965 | ) | (27,143 | ) | ||||
Increase (decrease) in unearned revenue | 1,637 | (1,077 | ) | |||||
Increase (decrease) in interest and taxes payable | 5,432 | 177 | ||||||
Increase (decrease) in long-term liabilities | (11,419 | ) | 2,409 | |||||
Other-net | (3,111 | ) | 1,906 | |||||
Net cash (used in) provided from operating activities | (1,484 | ) | 18,120 | |||||
Cash flows from investing activities: | ||||||||
Payments for purchase of property, plant and equipment | (12,859 | ) | (13,023 | ) | ||||
Payments for mine development | (337 | ) | (4,382 | ) | ||||
Proceeds from sale of property, plant and equipment | 3,009 | 67 | ||||||
Other investments-net | (2 | ) | 20 | |||||
Net cash used in investing activities | (10,189 | ) | (17,318 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of short-term debt | (4,886 | ) | (12,729 | ) | ||||
Proceeds from issuance of long-term debt | 33,170 | 70,240 | ||||||
Repayment of long-term debt | (15,492 | ) | (55,541 | ) | ||||
Principal payments under capital lease obligations | (328 | ) | (329 | ) | ||||
Cash dividends paid | (3,405 | ) | (3,198 | ) | ||||
Debt issuance costs | — | (1,301 | ) | |||||
Repurchase of common stock | (2,672 | ) | — | |||||
Issuance of common stock under stock option plans | 360 | 849 | ||||||
Tax benefit from stock compensation realization | 109 | 1,316 | ||||||
Net cash provided from (used in) financing activities | 6,856 | (693 | ) | |||||
Effects of exchange rate changes | 105 | (439 | ) | |||||
Net change in cash and cash equivalents | (4,712 | ) | (330 | ) | ||||
Cash and cash equivalents at beginning of period | 22,774 | 16,056 | ||||||
Cash and cash equivalents at end of period | $ | 18,062 | $ | 15,726 | ||||
Attachment 4
Materion Corporation
Reconciliation of Non-GAAP Measure - Value-added Sales
(Unaudited)
Second | Second | First | |||||||||||
(In thousands) | Quarter 2014 | Quarter 2013 | Quarter 2014 | ||||||||||
Sales | |||||||||||||
Advanced Material Technologies | $ | 179,112 | $ | 196,011 | $ | 163,197 | |||||||
Performance Alloys | 76,741 | 74,335 | 66,685 | ||||||||||
Beryllium and Composites | 16,598 | 16,187 | 15,497 | ||||||||||
Technical Materials | 15,514 | 19,608 | 13,550 | ||||||||||
All Other | — | — | — | ||||||||||
Total | $ | 287,965 | $ | 306,141 | $ | 258,929 | |||||||
Less: Pass-through Metal Cost | |||||||||||||
Advanced Material Technologies | $ | 109,213 | $ | 130,811 | $ | 97,624 | |||||||
Performance Alloys | 13,260 | 15,535 | 12,052 | ||||||||||
Beryllium and Composites | — | — | — | ||||||||||
Technical Materials | 5,926 | 7,308 | 4,393 | ||||||||||
All Other | — | — | — | ||||||||||
Total | $ | 128,399 | $ | 153,654 | $ | 114,069 | |||||||
Value-added Sales (non-GAAP) | |||||||||||||
Advanced Material Technologies | $ | 69,899 | $ | 65,200 | $ | 65,573 | |||||||
Performance Alloys | 63,481 | 58,800 | 54,633 | ||||||||||
Beryllium and Composites | 16,598 | 16,187 | 15,497 | ||||||||||
Technical Materials | 9,588 | 12,300 | 9,157 | ||||||||||
All Other | — | — | — | ||||||||||
Total | $ | 159,566 | $ | 152,487 | $ | 144,860 | |||||||
Gross Margin | % of VA | % of VA | % of VA | ||||||||||
Advanced Material Technologies | $ | 25,811 | 37% | $ | 19,226 | 29% | $ | 23,206 | 35% | ||||
Performance Alloys | 18,606 | 29% | 17,805 | 30% | 15,498 | 28% | |||||||
Beryllium and Composites | 2,669 | 16% | 4,543 | 28% | 4,906 | 32% | |||||||
Technical Materials | 3,084 | 32% | 4,636 | 38% | 2,044 | 22% | |||||||
All Other | (369 | ) | —% | (218 | ) | —% | (192 | ) | —% | ||||
Total | $ | 49,801 | 31% | $ | 45,992 | 30% | $ | 45,462 | 31% | ||||
Operating Profit | % of VA | % of VA | % of VA | ||||||||||
Advanced Material Technologies | $ | 11,495 | 16% | $ | (2,286 | ) | (4)% | $ | 7,604 | 12% | |||
Performance Alloys | 5,229 | 8% | 6,898 | 12% | 3,548 | 6% | |||||||
Beryllium and Composites | (1,812 | ) | (11)% | 822 | 5% | 1,102 | 7% | ||||||
Technical Materials | 959 | 10% | 2,389 | 19% | 182 | 2% | |||||||
All Other | (1,303 | ) | —% | (1,262 | ) | —% | (1,383 | ) | —% | ||||
Total | $ | 14,568 | 9% | $ | 6,561 | 4% | $ | 11,053 | 8% | ||||
The cost of gold, silver, platinum, palladium and copper is passed through to customers and therefore the trends and comparisons of sales are affected by movements in the market price of these metals. Internally, management reviews sales on value-added basis. Value-added sales is a non-GAAP measure that deducts the value of the pass-through metals sold from sales. Value-added sales allows management to assess the impact of differences in sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs and their costs are not deducted from sales to calculate value-added sales.
The Company's pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company's results from operations and value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company's intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.
Attachment 5
Materion Corporation
Reconciliation of Non-GAAP Measure - Profitability
(Unaudited)
Second | Second | First | |||||||||
(In thousands except per share amounts) | Quarter 2014 | Quarter 2013 | Quarter 2014 | ||||||||
GAAP as Reported | |||||||||||
Sales | $ | 287,965 | $ | 306,141 | $ | 258,929 | |||||
Gross margin | 49,801 | 45,992 | 45,462 | ||||||||
Operating profit | 14,568 | 6,561 | 11,053 | ||||||||
Net income | 9,974 | 4,155 | 7,331 | ||||||||
EPS - Diluted | $ | 0.47 | $ | 0.20 | $ | 0.35 | |||||
Facility closure and product line rationalization costs (benefits) | |||||||||||
Cost of goods sold | $ | 28 | $ | — | $ | 196 | |||||
Selling, general and administrative | — | — | 459 | ||||||||
Other-net | — | — | (2,627 | ) | |||||||
Recovery from insurance and other litigation, net of expenses | |||||||||||
Selling, general and administrative | 2,899 | — | — | ||||||||
Other-net | (6,750 | ) | — | — | |||||||
Total special items | (3,823 | ) | — | (1,972 | ) | ||||||
Special items - net of tax | $ | (2,485 | ) | $ | — | $ | (1,341 | ) | |||
Non-GAAP Measures - Adjusted Profitability | |||||||||||
Value-added sales | $ | 159,566 | $ | 152,487 | $ | 144,860 | |||||
Gross margin | 49,829 | 45,992 | 45,658 | ||||||||
Gross margin % of VA | 31.2 | % | 30.2 | % | 31.5 | % | |||||
Operating profit | 10,745 | 6,561 | 9,081 | ||||||||
Operating profit % of VA | 6.7 | % | 4.3 | % | 6.3 | % | |||||
Net income | 7,489 | 4,155 | 5,990 | ||||||||
EPS - Diluted | $ | 0.36 | $ | 0.20 | $ | 0.29 | |||||
In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including gross margin, operating profit, net income and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation, we have adjusted out the cost (benefit) impact of the plant consolidation and product line rationalization efforts and the net recovery from insurance and other litigation claims in our Advanced Material Technologies segment from the applicable GAAP measure. Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.