Attached files
| file | filename |
|---|---|
| 8-K - 8-K - 2-21-18 - ENPRO INDUSTRIES, INC | form8-kx2x21x18.htm |
Exhibit 99.1
News Release
Investor Contact: | Chris O'Neal | EnPro Industries |
Senior Vice President, Strategy, Corporate | 5605 Carnegie Boulevard | |
Development and Investor Relations | Charlotte, North Carolina 28209-4674 | |
Phone: | 704-731-1527 | Phone: 704-731-1500 |
Email: | investor.relations@enproindustries.com | Fax: 704-731-1511 |
www.enproindustries.com | ||
EnPro Industries Adjusts Fourth Quarter 2017 Income Tax Provision
Fourth quarter income tax benefit and net income increase by $10.8 million
CHARLOTTE, N.C., February 21, 2018 -- EnPro Industries, Inc. (NYSE: NPO) announced calendar and fourth quarter 2017 financial results on February 13, 2018. In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 118 “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (“SAB 118”), the 2017 income tax expense reflected in the February 13 announced results was provisional and subject to adjustment for, among other things, guidance that may be issued under the Tax Cuts and Jobs Act enacted in December 2017 (the “Tax Reform Act”).
On February 13, 2018, the Internal Revenue Service (the “IRS”) issued guidance, Revenue Procedure 2018-17, under the Tax Reform Act that, due to the timing of the release of the guidance, was not reflected in EnPro’s financial results announced that same day. This new guidance has been considered by EnPro in determining the tax provision and related items for 2017 as it finalizes its financial statements for inclusion in its Form 10-K for the year ended December 31, 2017, which is to be filed on or about February 27, 2018. In addition, since February 13, 2018, EnPro has further refined its calculation of the provisional tax impact under the Tax Reform Act and (in light of the Tax Reform Act) determined to accelerate funding of its U.S. pension plans and implement other tax planning strategies which also affect the income tax benefit for 2017. Accordingly, EnPro has recalculated its fourth quarter 2017 income tax provision and is revising affected items included in its previously announced fourth quarter and calendar year 2017 financial results and December 31, 2017 consolidated balance sheet.
As a result of the new IRS guidance, additional tax planning strategies, and further refinement of the provisional impact of the Tax Reform Act, the income tax benefit and net income for the fourth quarter of 2017 both increased by $10.8 million. Net income for the fourth quarter increased from $23.4 million to $34.2 million. Diluted earnings per share for the fourth quarter of 2017 increased from $1.07 to $1.57 per share.
The following table reflects these adjustments to the income tax benefit and other items from the amounts reflected in the consolidated statements of operations data for the fourth quarter and year ended December 31, 2017, the consolidated balance sheet data as of December 31, 2017 and the consolidated statement of cash flows data for the year ended December 31, 2017 as included in the February 13, 2018 announcement.
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Consolidated Statements of Operations (Unaudited) | |||||||||
(in $ millions, except per share amounts) | Prior | Change | Revised | ||||||
Fourth Quarter Ended December 31, 2017 | |||||||||
Income before income taxes | $ | 16.2 | $ | — | $ | 16.2 | |||
Income tax benefit (expense) | 7.2 | 10.8 | 18.0 | ||||||
Net income | 23.4 | 10.8 | 34.2 | ||||||
Basic earnings per share | 1.10 | 0.50 | 1.60 | ||||||
Diluted earnings per share | 1.07 | 0.50 | 1.57 | ||||||
Year Ended December 31, 2017 | |||||||||
Income before income taxes | $ | 577.5 | $ | — | $ | 577.5 | |||
Income tax benefit (expense) | (48.5 | ) | 10.8 | (37.7 | ) | ||||
Net income | 529.0 | 10.8 | 539.8 | ||||||
Basic earnings per share | 24.77 | 0.51 | 25.28 | ||||||
Diluted earnings per share | 24.27 | 0.49 | 24.76 | ||||||
Consolidated Balance Sheet (Unaudited) | |||||||||
As of December 31, 2017 | Prior | Change | Revised | ||||||
(in US $ millions) | |||||||||
Income tax receivable | $ | 122.8 | $ | (9.6 | ) | $ | 113.2 | ||
Deferred income taxes and income tax receivable | 20.1 | 4.7 | 24.8 | ||||||
Total assets | 1,891.0 | (4.9 | ) | 1,886.1 | |||||
Accrued expenses | 137.5 | (0.9 | ) | 136.6 | |||||
Other liabilities | 111.7 | (14.8 | ) | 96.9 | |||||
Retained earnings | 593.6 | 10.8 | 604.4 | ||||||
Shareholders' equity | 892.0 | 10.8 | 902.8 | ||||||
Total liabilities and equity | 1,891.0 | (4.9 | ) | 1,886.1 | |||||
Consolidated Statements of Cash Flows (Unaudited) | |||||||||
Year Ended December 31, 2017 | Prior | Change | Revised | ||||||
(in US $ millions) | |||||||||
Net income | $ | 529.0 | $ | 10.8 | $ | 539.8 | |||
Deferred income taxes | 56.3 | (20.4 | ) | 35.9 | |||||
Change in other current assets and liabilities | (10.7 | ) | 9.6 | (1.1 | ) | ||||
Net cash provided by operating activities | 46.6 | — | 46.6 | ||||||
The following pages present the revised Consolidated Statements of Operations, Consolidated Statements of Cash Flows, and Consolidated Balance Sheets as of and for the year ended December 31, 2017 which reflect these adjustments, but are otherwise unchanged for the corresponding information included in the February 13, 2018 announcement. The complete 2017 consolidated financial statements of EnPro on Form 10-K will be filed with the Securities and Exchange Commission on or about February 27, 2018.
Since the Tax Reform Act was passed at the end of 2017, and ongoing guidance and interpretation is expected over the remainder of the year, EnPro considers the impact of the Tax Reform Act, including the transition tax, remeasurement of deferred tax assets and liabilities, and other items recorded in its revised income tax provision to be a reasonable estimate, but provisional, subject to further IRS guidance, analysis of year-end data and refinement of its calculations. EnPro expects to complete its analysis of the impact of the Tax Reform Act within the one-year measurement period in accordance with the SEC’s guidance reflected in SAB 118.
About EnPro Industries
EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company’s website at http://www.enproindustries.com.
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EnPro Industries, Inc.
Consolidated Statements of Operations (Unaudited)
For the Quarters and Years Ended December 31, 2017 and 2016
(Stated in Millions of Dollars, Except Per Share Data)
Quarters Ended | Years Ended | ||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||
Net sales | $ | 362.5 | $ | 286.9 | $ | 1,309.6 | $ | 1,187.7 | |||||
Cost of sales | 239.4 | 196.3 | 865.2 | 793.0 | |||||||||
Gross profit | 123.1 | 90.6 | 444.4 | 394.7 | |||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | 93.6 | 72.1 | 326.3 | 303.8 | |||||||||
Asbestos settlement | — | — | — | 80.0 | |||||||||
Other | 1.5 | 5.2 | 16.9 | 15.6 | |||||||||
Total operating expenses | 95.1 | 77.3 | 343.2 | 399.4 | |||||||||
Operating income (loss) | 28.0 | 13.3 | 101.2 | (4.7 | ) | ||||||||
Interest expense | (8.7 | ) | (14.2 | ) | (50.9 | ) | (55.9 | ) | |||||
Interest income | 0.5 | 0.1 | 1.5 | 0.8 | |||||||||
Gain on reconsolidation of GST and OldCo | — | — | 534.4 | — | |||||||||
Other expense | (3.6 | ) | (3.5 | ) | (8.7 | ) | (8.9 | ) | |||||
Income (loss) before income taxes | 16.2 | (4.3 | ) | 577.5 | (68.7 | ) | |||||||
Income tax benefit (expense) | 18.0 | 1.4 | (37.7 | ) | 28.6 | ||||||||
Net income (loss) | $ | 34.2 | $ | (2.9 | ) | $ | 539.8 | $ | (40.1 | ) | |||
Basic earnings (loss) per share | $ | 1.60 | $ | (0.14 | ) | $ | 25.28 | $ | (1.86 | ) | |||
Average common shares outstanding (millions) | 21.4 | 21.4 | 21.3 | 21.6 | |||||||||
Diluted earnings (loss) per share | $ | 1.57 | $ | (0.14 | ) | $ | 24.76 | $ | (1.86 | ) | |||
Average common shares outstanding (millions) | 21.8 | 21.4 | 21.8 | 21.6 | |||||||||
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EnPro Industries, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Years Ended December 31, 2017 and 2016
(Stated in Millions of Dollars)
2017 | 2016 | |||||||
Operating activities | ||||||||
Net income (loss) | $ | 539.8 | $ | (40.1 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation | 32.7 | 30.4 | ||||||
Amortization | 31.1 | 26.7 | ||||||
Gain on reconsolidation of GST and OldCo | (534.4 | ) | — | |||||
Asset impairments | 12.1 | — | ||||||
Asbestos settlement | — | 80.0 | ||||||
Deferred income taxes | 35.9 | (30.0 | ) | |||||
Stock-based compensation | 9.5 | 5.1 | ||||||
Other non-cash adjustments | 2.9 | 1.1 | ||||||
Change in assets and liabilities, net of effects of acquisition, deconsolidation and reconsolidation of businesses: | ||||||||
Asbestos liabilities, net of insurance receivables | (68.9 | ) | — | |||||
Accounts receivable, net | (35.7 | ) | 3.0 | |||||
Inventories | 7.9 | 2.4 | ||||||
Accounts payable | 20.5 | (2.9 | ) | |||||
Other current assets and liabilities | (1.1 | ) | 8.4 | |||||
Other non-current assets and liabilities | (5.7 | ) | (19.6 | ) | ||||
Net cash provided by operating activities | 46.6 | 64.5 | ||||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (41.0 | ) | (35.8 | ) | ||||
Payments for capitalized internal-use software | (3.7 | ) | (4.1 | ) | ||||
Proceeds from sale of business | — | 6.6 | ||||||
Acquisitions, net of cash acquired | (44.6 | ) | (28.5 | ) | ||||
Reconsolidation of GST and OldCo | 41.1 | — | ||||||
Deconsolidation of OldCo | (4.8 | ) | — | |||||
Capital contribution to OldCo | (45.2 | ) | — | |||||
Other | 0.5 | 0.4 | ||||||
Net cash used in investing activities | (97.7 | ) | (61.4 | ) | ||||
Financing activities | ||||||||
Proceeds from debt | 635.7 | 350.8 | ||||||
Repayments of debt | (484.3 | ) | (278.1 | ) | ||||
Repurchase of common stock | (11.5 | ) | (30.4 | ) | ||||
Dividends paid | (19.0 | ) | (18.1 | ) | ||||
Other | (2.4 | ) | (2.2 | ) | ||||
Net cash provided by financing activities | 118.5 | 22.0 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 10.4 | (17.0 | ) | |||||
Net increase in cash and cash equivalents | 77.8 | 8.1 | ||||||
Cash and cash equivalents at beginning of period | 111.5 | 103.4 | ||||||
Cash and cash equivalents at end of period | $ | 189.3 | $ | 111.5 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 46.4 | $ | 41.0 | ||||
Income taxes | $ | 5.3 | $ | 19.6 | ||||
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EnPro Industries, Inc.
Consolidated Balance Sheets (Unaudited)
As of December 31, 2017 and 2016
(Stated in Millions of Dollars)
2017 | 2016 | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 189.3 | $ | 111.5 | |||
Accounts receivable | 261.7 | 208.1 | |||||
Inventories | 204.1 | 175.4 | |||||
Income tax receivable | 113.2 | 6.5 | |||||
Other current assets | 51.3 | 23.4 | |||||
Total current assets | 819.6 | 524.9 | |||||
Property, plant and equipment | 296.9 | 215.4 | |||||
Goodwill | 336.1 | 201.5 | |||||
Other intangible assets | 347.0 | 176.9 | |||||
Investment in GST | — | 236.9 | |||||
Deferred income taxes and income tax receivable | 24.8 | 152.6 | |||||
Other assets | 61.7 | 38.2 | |||||
Total assets | $ | 1,886.1 | $ | 1,546.4 | |||
Current liabilities: | |||||||
Short-term borrowings from GST | $ | — | $ | 26.2 | |||
Notes payable to GST | — | 12.7 | |||||
Current maturities of long-term debt | 0.2 | 0.2 | |||||
Accounts payable | 130.7 | 102.9 | |||||
Asbestos liability - current | 0.6 | 30.0 | |||||
Accrued expenses | 136.6 | 131.0 | |||||
Total current liabilities | 268.1 | 303.0 | |||||
Long-term debt | 618.3 | 424.8 | |||||
Notes payable to GST | — | 283.2 | |||||
Asbestos liability | — | 80.0 | |||||
Other liabilities | 96.9 | 96.9 | |||||
Total liabilities | 983.3 | 1,187.9 | |||||
Shareholders' equity: | |||||||
Common stock | 0.2 | 0.2 | |||||
Additional paid-in capital | 347.9 | 346.5 | |||||
Retained earnings | 604.4 | 84.0 | |||||
Accumulated other comprehensive loss | (48.4 | ) | (70.9 | ) | |||
Common stock held in treasury, at cost | (1.3 | ) | (1.3 | ) | |||
Total shareholders' equity | 902.8 | 358.5 | |||||
Total liabilities and equity | $ | 1,886.1 | $ | 1,546.4 | |||
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