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8-K - FORM 8-K - SCHULMAN A INCd329410d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

A. SCHULMAN REPORTS FISCAL 2012 SECOND-QUARTER RESULTS

 

   

Net income increased to $9.1 million, or $0.31 per diluted share, compared with $7.1 million, or $0.23 per diluted share, last year

 

   

Excluding certain items, second-quarter net income was $11.2 million, or $0.38 per diluted share, compared with $12.1 million, or $0.39 per diluted share, last year

 

   

Gross profit per pound, excluding certain items, rose 6% to 14.2 cents compared with 13.4 cents for the same period last year

 

   

On a non-GAAP basis, the Company expects full-year net income for fiscal 2012 to exceed fiscal 2011 net income

AKRON, Ohio – April 4, 2012 – A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal 2012 second quarter ended February 29, 2012. The Company reported net income for the second quarter of $9.1 million, or $0.31 per diluted share, compared with net income of $7.1 million, or $0.23 per diluted share, for the comparable period last year. The translation effect of foreign currencies negatively impacted net income for the quarter by $0.5 million.

The fiscal 2012 second quarter included certain after-tax charges of $2.1 million primarily related to restructuring expenses and acquisition-related costs. Last year’s second quarter included certain after-tax charges of $5.0 million primarily related to restructuring expenses, asset impairments, and acquisition-related costs. Excluding these charges, net income for the fiscal 2012 second quarter was $11.2 million, or $0.38 per diluted share, compared with net income of $12.1 million or $0.39 per diluted share, for the prior-year period.

Net sales for the fiscal 2012 second quarter were $495.9 million compared with $508.3 million for the same period last year. The decrease of $12.4 million in net sales was primarily a result of the $11.7 million negative impact of foreign currency translation. Volume was 458.7 million pounds in the second quarter of fiscal 2012, down 7.8% from 497.3 million pounds reported last year. The decrease in volume was partially offset by a 5.8% increase in the average selling price per pound.

The Company uses the following non-GAAP financial measures of net income excluding certain items, net income per diluted share excluding certain items and EBITDA excluding certain items. These financial measures are used by management to monitor and evaluate the ongoing performance of the Company and to allocate resources. The Company believes that the additional measures are useful to investors for financial analysis. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Please see the table in this release for reconciliation of non-GAAP measures to the nearest comparable GAAP results. Results in the following discussion are presented on a non-GAAP basis excluding certain items.


Gross profit for the quarter was $65.1 million, compared with $66.8 million last year. Foreign currency translation adversely impacted gross profit by $1.5 million. Overall gross profit per pound for the quarter was 14.2 cents, a 6% increase compared with gross profit per pound of 13.4 cents in the second quarter of fiscal 2011, reflecting improved pricing and product mix.

Selling, general and administrative (SG&A) expense for the fiscal 2012 second quarter decreased $0.4 million compared with the same period in the prior year. While foreign currency translation favorably impacted SG&A expense by $0.8 million, incentive compensation expense increased by $0.7 million compared with the second quarter of fiscal 2011.

Second quarter operating income was $16.4 million, a decrease of $1.3 million compared with last year. Foreign currency translation had a negative impact of $0.7 million on operating income.

Year-To-Date Results

Net sales for the six months ended February 29, 2012 increased $9.5 million to $1.013 billion compared with $1.004 billion in the prior year. Selling price per pound increased 10.4%, which was partially offset by an 8.6% decrease in volume. Foreign currency translation adversely impacted consolidated net sales by $10.0 million.

For the fiscal 2012 year-to-date results, the Company reported net income of $22.7 million, or $0.77 per diluted share, compared with net income of $16.4 million, or $0.52 per diluted share, for the same period last year. Excluding the effect of certain items including restructuring-related charges, asset impairments and acquisition-related costs, year-to-date net income was $26.5 million, or $0.90 per diluted share, compared with $22.7 million, or $0.73 per diluted share, a year ago.

“Traditionally, our second quarter tends to be less profitable than the first quarter due to the holiday season, but beyond that the first half of fiscal 2012 has been challenging given the economic environment in Europe,” said Joseph M. Gingo, Chairman, President and Chief Executive Officer. “Despite these factors, our experienced global team has remained focused on successfully maintaining our market leadership position and controlling costs resulting in improved operating income despite volume declines.

Europe, Middle East and Africa (“EMEA”) – In the fiscal 2012 second quarter, EMEA net sales were $332.6 million, a decrease of 6.7% compared with the prior-year period. The decrease in net sales resulted from 8.8% lower volumes in the second quarter compared with the prior-year period due to the economic climate in Europe. This was partially offset by an increase of 2.3% in price per pound. Foreign currency translation negatively impacted net sales by $10.5 million.

EMEA gross profit was $40.1 million in the second quarter of fiscal 2012, a decrease of $7.4 million from the prior-year period. This decrease was primarily related to decreases in volume and a decrease of 7.3% in gross profit per pound. Foreign currency translation negatively impacted EMEA gross profit by $1.2 million.

EMEA operating income for the fiscal 2012 second quarter was $15.3 million, a decrease of $6.4 million compared with the fiscal 2011 second quarter. The decrease in operating income was primarily due to the decrease in gross profit offset by an improvement in selling, general and administrative expense cost control. Foreign currency translation negatively impacted operating income by $0.5 million.

 

2


The Americas – In the fiscal 2012 second quarter, net sales for the Americas were $129.6 million, a 9.4% increase compared with the prior-year period. The increase in net sales was a result of $4.1 million of incremental fiscal 2012 net sales from acquisitions completed during the prior year and a 15% increase in price per pound. Price per pound improvement was primarily attributable to higher prices in the specialty powders and masterbatch product families. Volume decreased by 7.3 million pounds in the second quarter of fiscal 2012 compared with the prior period, primarily related to lower volume in the masterbatch product family, which was partially offset by increased volume in the engineered plastics product family. Foreign currency translation negatively impacted net sales by $2.3 million.

Gross profit was $19.6 million for the quarter, an increase of $3.7 million from the comparable period last year. The increases in gross profit and gross profit per pound of 23.5% and 29.2%, respectively, were primarily in the specialty powders and engineered plastics product families. The Company was able to improve margins in light of rising raw material costs by improving product mix and implementing operational efficiencies. The fiscal 2011 acquisitions contributed $0.6 million of incremental fiscal 2012 gross profit. Foreign currency translation negatively impacted gross profit by $0.5 million.

Operating income for the quarter was $5.3 million compared with $3.3 million last year. Operating income increased primarily due to improved gross profit per pound, which was partially offset by an increase in selling, general and administrative expenses. Foreign currency translation negatively impacted operating income by $0.4 million.

Asia Pacific (“APAC”) In the fiscal 2012 second quarter, APAC net sales were $33.7 million, an increase of $0.4 million compared with the same prior-year period. Foreign currency translation favorably impacted net sales by $1.1 million. The favorable increase of 14.2% in selling price per pound was partially offset by an 11.3% decrease in volume.

Gross profit for APAC for the three months ended February 29, 2012 was $5.4 million, an increase of $2.1 million compared with last year. The increase in gross profit and gross profit per pound were primarily due to reduced costs resulting from previous restructuring initiatives that have improved the cost structure and a focus on products with higher technical requirements.

APAC operating income for the quarter was $2.5 million compared with $0.4 million last year. The increase in profitability was principally due to the increase in gross profit and a slight decrease in selling, general and administrative expenses.

Liquidity, Cash Flow From Operations and Working Capital

Working capital was 71 days at the end of the fiscal 2012 second quarter, flat with 71 days at the end of the fiscal 2012 first quarter.

At the end of the fiscal 2012 second quarter, the Company’s net debt, defined as total debt minus cash and cash equivalents, was $143.6 million compared with $40.4 million at the end of the fiscal year 2011. The change in net debt of $103.2 million during the first six months of fiscal 2012 was primarily the result of using $62.8 million of net cash consideration to acquire Elian SAS, $10.0 million in dividend payments, net share repurchases of $21.2 million and $19.2 million in capital expenditures, offset by cash flow provided by operations of $12.7 million. Upon completion of the acquisition of Elian, the Company’s leverage at February 29, 2012 is 1.14, and net available funds from credit lines and notes is $201.5 million.

 

3


Fiscal 2012 Business Outlook

“We are pleased with our first-half results, which were accomplished under challenging conditions. With our demonstrated ability to shift to higher-value products and control costs, we expect full-year net income for fiscal 2012 to exceed the levels we posted during fiscal 2011,” Gingo said.

“Our experienced management team continues to execute our long-term strategic plan. Our strong operating profit per pound is the result of our successful restructuring initiatives we have implemented in recent years, as well as the dedication of our associates.”

Gingo continued, “Our leverage and availability under our credit facility remain strong, and we expect these metrics to improve as we progress through the year, allowing for a continued focus on our acquisition strategy. In addition, our strong balance sheet allows us to create further value for our shareholders through potential share appreciation and a prudent return of cash. Based on these strengths and our confidence in the future cash generation ability of the business, our Board decided to increase our dividend by 11.8% to $0.19 per share on a quarterly basis or $0.76 per share annually, as announced on March 29, 2012. This increase represents an annual yield of approximately 2.8% and coupled with our aggressive acquisition strategy, demonstrates our excitement about the future of A. Schulman.”

Conference Call on the Web

A live Internet broadcast of A. Schulman’s conference call regarding fiscal 2012 second-quarter earnings can be accessed at 10:00 a.m. Eastern Time on April 5, 2012, on the Company’s website, www.aschulman.com. An archived replay of the call will also be available on the website.

About A. Schulman, Inc.

A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. The Company’s customers span a wide range of markets such as packaging, consumer products, industrial and automotive, among others. The Company employs about 3,100 people and has 36 manufacturing facilities globally. A. Schulman reported net sales of $2.2 billion for the fiscal year ended August 31, 2011. 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, net income per diluted share excluding certain items and EBITDA 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 income before taxes, 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.

 

4


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 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, 2011. 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.

3550 W. Market St.

Akron, Ohio 44333

Tel: 330-668-7346

email: Jennifer_Beeman@us.aschulman.com

 

5


A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three months ended     Six months ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 
    

Unaudited

(In thousands, except per share data)

 

Net sales

   $ 495,911      $ 508,343      $ 1,013,200      $ 1,003,726   

Cost of sales

     431,362        441,731        879,155        868,113   

Selling, general and administrative expenses

     49,416        49,430        96,831        102,335   

Restructuring expense

     1,597        3,385        4,841        3,936   

Asset impairment

     —          1,800        —          1,800   

Curtailment (gain) loss

     (209     —          (209     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     13,745        11,997        32,582        27,542   

Interest expense

     2,453        1,642        4,579        2,927   

Interest income

     (125     (191     (357     (391

Foreign currency transaction (gains) losses

     17        667        516        1,338   

Other (income) expense, net

     (883     (433     (1,053     (437
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     12,283        10,312        28,897        24,105   

Provision (benefit) for U.S. and foreign income taxes

     2,993        3,033        5,644        7,450   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     9,290        7,279        23,253        16,655   

Noncontrolling interests

     (217     (138     (598     (271
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to A. Schulman, Inc.

   $ 9,073      $ 7,141      $ 22,655      $ 16,384   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of shares outstanding:

        

Basic

     29,374        31,091        29,396        31,212   

Diluted

     29,651        31,181        29,588        31,245   

Earnings per share of common stock attributable to A. Schulman, Inc.:

        

Basic

   $ 0.31      $ 0.23      $ 0.77      $ 0.52   

Diluted

   $ 0.31      $ 0.23      $ 0.77      $ 0.52   

Cash dividends per common share

   $ 0.170      $ 0.155      $ 0.340      $ 0.310   

 

6


A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS

 

     February 29,
2012
    August 31,
2011
 
    

Unaudited

(In thousands)

 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 95,760      $ 155,753   

Accounts receivable, less allowance for doubtful accounts of $9,384 at February 29, 2012 and $9,475 at August 31, 2011

     319,913        347,036   

Inventories, average cost or market, whichever is lower

     290,293        264,747   

Prepaid expenses and other current assets

     32,237        34,376   
  

 

 

   

 

 

 

Total current assets

     738,203        801,912   
  

 

 

   

 

 

 

Property, plant and equipment, at cost:

    

Land and improvements

     29,845        30,826   

Buildings and leasehold improvements

     162,136        165,267   

Machinery and equipment

     380,329        382,828   

Furniture and fixtures

     40,527        41,860   

Construction in progress

     18,579        12,967   
  

 

 

   

 

 

 

Gross property, plant and equipment

     631,416        633,748   

Accumulated depreciation and investment grants of $688 at February 29, 2012 and $815 at August 31, 2011

     394,734        399,448   
  

 

 

   

 

 

 

Net property, plant and equipment

     236,682        234,300   
  

 

 

   

 

 

 

Other assets:

    

Deferred charges and other noncurrent assets

     37,217        35,947   

Goodwill

     131,933        91,753   

Intangible assets

     98,968        76,075   
  

 

 

   

 

 

 

Total other assets

     268,118        203,775   
  

 

 

   

 

 

 

Total assets

   $ 1,243,003      $ 1,239,987   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Accounts payable

   $ 254,707      $ 254,405   

U.S. and foreign income taxes payable

     5,553        11,072   

Accrued payrolls, taxes and related benefits

     36,940        44,560   

Other accrued liabilities

     48,634        50,608   

Short-term debt

     9,212        11,550   
  

 

 

   

 

 

 

Total current liabilities

     355,046        372,195   

Long-term debt

     230,155        184,598   

Pension plans

     80,402        84,673   

Other long-term liabilities

     23,604        24,161   

Deferred income taxes

     27,348        20,055   
  

 

 

   

 

 

 

Total liabilities

     716,555        685,682   
  

 

 

   

 

 

 

Commitments and contingencies

     —          —     

Stockholders’ equity:

    

Common stock, $1 par value, authorized—75,000 shares, issued—47,928 shares at February 29, 2012 and 47,816 shares at August 31, 2011

     47,928        47,816   

Other capital

     256,858        254,184   

Accumulated other comprehensive income (loss)

     27,861        50,007   

Retained earnings

     553,957        541,256   

Treasury stock, at cost, 18,411 shares at February 29, 2012 and 17,207 shares at August 31, 2011

     (365,935     (344,759
  

 

 

   

 

 

 

Total A. Schulman, Inc.’s stockholders’ equity

     520,669        548,504   
  

 

 

   

 

 

 

Noncontrolling interests

     5,779        5,801   
  

 

 

   

 

 

 

Total equity

     526,448        554,305   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,243,003      $ 1,239,987   
  

 

 

   

 

 

 

 

7


A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Six months ended  
     February 29,
2012
    February 28,
2011
 
    

Unaudited

(In thousands)

 

Operating:

    

Net income

   $ 23,253      $ 16,655   

Adjustments to reconcile net income to net cash provided from (used in) operating activities:

    

Depreciation and amortization

     18,809        19,703   

Deferred tax provision

     (4,655     (1,923

Pension, postretirement benefits and other deferred compensation

     2,984        3,597   

Net (gains) losses on asset sales

     —          262   

Asset impairment

     —          1,800   

Curtailment (gains) losses

     (209     —     

Changes in assets and liabilities, net of acquisitions:

    

Accounts receivable

     17,398        (34,077

Inventories

     (35,107     (39,331

Accounts payable

     5,301        25,958   

Income taxes

     (3,716     3,130   

Accrued payrolls and other accrued liabilities

     (10,294     (7,963

Other assets and long-term liabilities

     (1,050     (4,333
  

 

 

   

 

 

 

Net cash provided from (used in) operating activities

     12,714        (16,522
  

 

 

   

 

 

 

Investing:

    

Expenditures for property, plant and equipment

     (19,170     (11,060

Proceeds from the sale of assets

     1,072        1,139   

Business acquisitions, net of cash acquired

     (62,762     (15,071
  

 

 

   

 

 

 

Net cash provided from (used in) investing activities

     (80,860     (24,992
  

 

 

   

 

 

 

Financing:

    

Cash dividends paid

     (9,954     (9,733

Increase (decrease) in notes payable

     (2,464     (3,178

Borrowings on revolving credit facilities

     142,980        181,000   

Repayments on revolving credit facilities

     (92,783     (141,500

Repayments on long-term debt

     (44     (26

Payment of debt issuance costs

     —          (2,220

Cash distributions to noncontrolling interests

     (580     (700

Common stock issued (redeemed), net

     345        (780

Issuances (purchases) of treasury stock, net

     (21,176     (13,500
  

 

 

   

 

 

 

Net cash provided from (used in) financing activities

     16,324        9,363   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (8,171     5,747   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (59,993     (26,404
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     155,753        122,754   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 95,760      $ 96,350   
  

 

 

   

 

 

 

 

8


A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

 

Three months ended February 29, 2012    As Reported     Asset
Write-downs
    Costs
Related to
Acquisitions
    Restructuring
Related
    Inventory
Step-up
    Tax
Benefits
(Charges)
    Before
Certain
Items
 
     (In thousands, except per share data)  

Net sales

   $ 495,911      $ —        $ —        $ —        $ —        $ —        $ 495,911   

Cost of sales

     431,362        —          —          —          (597     —          430,765   

Selling, general and administrative expenses

     49,416        —          (656     —          —          —          48,760   

Restructuring expense

     1,597        —          —          (1,597     —          —          —     

Curtailment (gain) loss

     (209     —          —          209        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     13,745        —          656        1,388        597        —          16,386   

Interest expense, net

     2,328        —          —          —          —          —          2,328   

Foreign currency transaction (gains) losses

     17        —          —          —          —          —          17   

Other (income) expense, net

     (883     —          —          —          —          —          (883
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     12,283        —          656        1,388        597        —          14,924   

Provision (benefit) for U.S. and foreign income taxes

     2,993        —          41        320        199        (40     3,513   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     9,290        —          615        1,068        398        40        11,411   

Noncontrolling interests

     (217     —          —          —          —          —          (217
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to A. Schulman, Inc.

   $ 9,073      $ —        $ 615      $ 1,068      $ 398      $ 40      $ 11,194   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS

   $ 0.31                $ 0.38   
  

 

 

             

 

 

 

Weighted-average number of shares outstanding-diluted

     29,651                  29,651   
Three months ended February 28, 2011    As Reported     Asset Write-
downs
    Costs
Related to
Acquisitions
    Restructuring
Related
    Inventory
Step-up
    Tax
Benefits
(Charges)
    Before
Certain
Items
 
     (In thousands, except per share data)  

Net sales

   $ 508,343        —        $ —        $ —        $ —        $ —        $ 508,343   

Cost of sales

     441,731        —          —          —          (162     —          441,569   

Selling, general and administrative expenses

     49,430        —          (314     —          —          —          49,116   

Restructuring expense

     3,385        —          —          (3,385     —          —          —     

Asset impairment

     1,800        (1,800     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     11,997        1,800        314        3,385        162        —          17,658   

Interest expense, net

     1,451        —          —          —          —          —          1,451   

Foreign currency transaction (gains) losses

     667        —          —          —          —          —          667   

Other (income) expense, net

     (433     —          —          —          —          —          (433
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     10,312        1,800        314        3,385        162        —          15,973   

Provision (benefit) for U.S. and foreign income taxes

     3,033        —          —          613        58        —          3,704   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     7,279        1,800        314        2,772        104        —          12,269   

Noncontrolling interests

     (138     —          —          —          —          —          (138
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to A. Schulman, Inc.

   $ 7,141        1,800      $ 314      $ 2,772      $ 104      $ —        $ 12,131   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS

   $ 0.23                $ 0.39   
  

 

 

             

 

 

 

Weighted-average number of shares outstanding-diluted

     31,181                  31,181   

 

9


A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited

 

Six months ended February 29, 2012    As Reported     Asset
Write-downs
    Costs
Related to
Acquisitions
    Restructuring
Related
    Inventory
Step-up
    Tax
Benefits
(Charges)
    Before
Certain
Items
 
     (In thousands, except per share data)  

Net sales

   $ 1,013,200      $ —        $ —        $ —        $ —        $ —        $ 1,013,200   

Cost of sales

     879,155        —          —          —          (597     —          878,558   

Selling, general and administrative expenses

     96,831        —          (874     —          —          —          95,957   

Restructuring expense

     4,841        —          —          (4,841     —          —          —     

Curtailment (gain) losses

     (209     —          —          209        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     32,582        —          874        4,632        597        —          38,685   

Interest expense, net

     4,222        —          —          —          —          —          4,222   

Foreign currency transaction (gains) losses

     516        —          —          —          —          —          516   

Other (income) expense, net

     (1,053     —          —          —          —          —          (1,053
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     28,897        —          874        4,632        597        —          35,000   

Provision (benefit) for U.S. and foreign income taxes

     5,644        —          69        1,284        199        707        7,903   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     23,253        —          805        3,348        398        (707     27,097   

Noncontrolling interests

     (598     —          —          —          —          —          (598
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to A. Schulman, Inc.

   $ 22,655      $ —        $ 805      $ 3,348      $ 398      $ (707   $ 26,499   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS

   $ 0.77                $ 0.90   
  

 

 

             

 

 

 

Weighted-average number of shares outstanding-diluted

     29,588                  29,588   
Six months ended February 28, 2011    As Reported     Asset Write-
downs
    Costs
Related to
Acquisitions
    Restructuring
Related
    Inventory
Step-up
    Tax
Benefits
(Charges)
    Before
Certain
Items
 
     (In thousands, except per share data)  

Net sales

   $ 1,003,726        —        $ —        $ —        $ —        $ —        $ 1,003,726   

Cost of sales

     868,113        —          —          —          (283     —          867,830   

Selling, general and administrative expenses

     102,335        —          (1,195     —          —          —          101,140   

Restructuring expense

     3,936        —          —          (3,936     —          —          —     

Asset impairment

     1,800        (1,800             —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     27,542        1,800        1,195        3,936        283        —          34,756   

Interest expense, net

     2,536        —          —          —          —          —          2,536   

Foreign currency transaction (gains) losses

     1,338        —          —          —          —          —          1,338   

Other (income) expense, net

     (437     —          —          —          —          —          (437
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     24,105        1,800        1,195        3,936        283        —          31,319   

Provision (benefit) for U.S. and foreign income taxes

     7,450        —          —          729        99        65        8,343   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     16,655        1,800        1,195        3,207        184        (65     22,976   

Noncontrolling interests

     (271     —          —          —          —          —          (271
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to A. Schulman, Inc.

   $ 16,384        1,800      $ 1,195      $ 3,207      $ 184      $ (65   $ 22,705   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS

   $ 0.52                $ 0.73   
  

 

 

             

 

 

 

Weighted-average number of shares outstanding-diluted

     31,245                  31,245   

 

10


A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION

 

     Three months ended     Six months ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 
    

Unaudited

(In thousands, except for %)

 

Pounds sold to unaffiliated customers

        

EMEA

     286,795        314,359        573,092        630,840   

Americas

     143,209        150,550        283,710        304,130   

APAC

     28,712        32,353        58,196        66,250   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total pounds sold to unaffiliated customers

     458,716        497,262        914,998        1,001,220   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales to unaffiliated customers

        

EMEA

   $ 332,561      $ 356,533      $ 685,452      $ 703,215   

Americas

     129,646        118,550        257,626        233,671   

APAC

     33,704        33,260        70,122        66,840   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales to unaffiliated customers

   $ 495,911      $ 508,343      $ 1,013,200      $ 1,003,726   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment gross profit

        

EMEA

   $ 40,076      $ 47,487      $ 84,314      $ 95,572   

Americas

     19,644        15,911        39,523        32,386   

APAC

     5,426        3,376        10,805        7,938   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment gross profit

     65,146        66,774        134,642        135,896   

Inventory step-up

     (597     (162     (597     (283
  

 

 

   

 

 

   

 

 

   

 

 

 

Total gross profit

   $ 64,549      $ 66,612      $ 134,045      $ 135,613   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income

        

EMEA

   $ 15,305      $ 21,722      $ 34,540      $ 41,124   

Americas

     5,343        3,340        11,454        7,199   

APAC

     2,530        384        5,063        2,192   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment operating income

     23,178        25,446        51,057        50,515   

Corporate and other

     (6,792     (7,788     (12,372     (15,759

Costs related to acquisitions

     (656     (314     (874     (1,195

Restructuring related

     (1,597     (3,385     (4,841     (3,936

Asset write-downs

     —          (1,800     —          (1,800

Curtailment gain (loss)

     209        —          209        —     

Inventory step-up

     (597     (162     (597     (283
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     13,745        11,997        32,582        27,542   

Interest expense, net

     (2,328     (1,451     (4,222     (2,536

Foreign currency transaction gains (losses)

     (17     (667     (516     (1,338

Other income (expense), net

     883        433        1,053        437   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

   $ 12,283      $ 10,312      $ 28,897      $ 24,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Capacity utilization

        

EMEA

     74     73     78     77

Americas

     67     62     65     63

APAC

     76     90     81     89

Worldwide

     71     70     72     72

 

11


A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

EBITDA Excluding Certain Items Reconciliation

Unaudited

(In thousands)

 

     Three months ended      Six months ended  
     February 29,
2012
    February 28,
2011
     February 29,
2012
    February 28,
2011
 

Income before taxes

   $ 12,283      $ 10,312       $ 28,897      $ 24,105   

Adjustments (pretax):

         

Depreciation and amortization

     9,745        10,049         18,809        19,703   

Interest expense, net

     2,328        1,451         4,222        2,536   

Costs related to acquisitions

     656        314         874        1,195   

Restructuring related

     1,597        3,385         4,841        3,936   

Asset write-downs

     —          1,800         —          1,800   

Curtailment (gain) loss

     (209     —           (209     —     

Inventory step-up

     597        162         597        283   
  

 

 

   

 

 

    

 

 

   

 

 

 

EBITDA excluding certain items

   $ 26,997      $ 27,473       $ 58,031      $ 53,558   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

12