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| 8-K - 8-K - OM GROUP INC | thirdquarter2013earningsre.htm |
PRESS RELEASE
OM GROUP ANNOUNCES THIRD QUARTER 2013 FINANCIAL RESULTS
Debt-free balance sheet; Strong cash flows; Higher cost-reduction benefits
CLEVELAND - November 1, 2013 - OM Group, Inc. (NYSE: OMG) today announced financial results for the third quarter ended September 30, 2013. The Company reported adjusted EBITDA of $32 million, excluding $2 million of charges related to cost-reduction initiatives and the results of its divested Advanced Materials cobalt business. The Company also reported income from continuing operations of $0.39 per diluted share, or $0.47 per diluted share excluding the special charges and the divested business. The Company achieved $6 million of cost savings in the quarter, and cash flows from operating activities of $36 million.
"Our third quarter performance highlights our ability to deliver solid results despite continued soft economic conditions in many of our key markets,” said Joe Scaminace, Chairman and Chief Executive Officer of OM Group, Inc. “Our portfolio of value-added businesses is more predictable, and we have more levers we can pull to create value. Throughout this year, we have developed and executed cost-reduction initiatives to improve productivity and increase profits, returns and cash flow.”
The Company ended the quarter with $116 million of cash and no debt outstanding. There were no borrowings under the Company's new $350 million revolving credit facility at September 30, 2013.
Third quarter 2013 sales were $266 million. Excluding the Advanced Materials business and the effects of rare earth pricing in the Magnetic Technologies business, net sales were $244 million, up 2% quarter-over-quarter versus the comparable figure a year ago that included a $26 million higher rare earth pass-through pricing effect. Excluding the rare earth pricing effects, Magnetic Technologies sales were higher due to the stronger Euro in the current year period and increased volumes. As expected, sales in Battery Technologies were lower due to timing after record sales levels in the first half of 2013. Specialty Chemicals sales were slightly higher due primarily to stronger sales volumes in electronic chemicals, driven by increased demand for consumer electronics.
At the beginning of the year, the Company announced a broad range of cost-reduction initiatives to improve financial performance and optimize its cost structure. These initiatives are now expected to contribute $15-20 million of savings in 2013, and will better position the Company for expanded profitability as macroeconomic conditions improve. Through the first nine months of 2013, the Company realized savings of $11 million and incurred charges of $8 million related to these initiatives, with $6 million of savings and $2 million of charges in the third quarter.
The Company continues to expect 2013 adjusted EBITDA levels at the lower end of its original forecast of $120-140 million, primarily due to the second quarter divestiture of its UPC product lines, which were expected to contribute approximately $10 million of EBITDA in 2013. The divestiture resulted in the business being treated as a discontinued operation for the full year. The Company's forecast excludes Advanced Materials, UPC and charges related to divestitures and cost-reduction initiatives.
Mr. Scaminace concluded, “With a strong, debt-free balance sheet and new credit agreement in place, we are well-positioned to execute our strategy of organic and strategic growth. We remain focused on operating execution and cost reductions to deliver higher profits, while continuing to pursue synergistic acquisitions to build out our business platforms. We are confident in our ability to deliver growth, increasing margins and higher returns for our shareholders.”
Webcast Information
OM Group has scheduled a conference call and live audio broadcast on the Web for 10 AM EDT today. Investors may access the live audio broadcast by logging on to http://investor.omgi.com. A copy of management's presentation materials will be available on OM Group's website before the call. The company recommends visiting the website at least 15 minutes prior to the webcast to download and install any necessary software. A webcast audio replay will be available on the “Investor Relations - Webcasts” page of the company's website three hours after the call.
About OM Group
OM Group is a technology-driven industrial company serving attractive global markets, including automotive systems, electronic devices, aerospace, industrial and renewable energy. Its business platforms use innovative technologies and expertise to address customers' complex applications and demanding requirements. For more information, visit the Company's website at www.omgi.com.
Forward-Looking Statements
The foregoing discussion may include forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions and are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the company. These uncertainties and factors could cause actual results of the company to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. Such uncertainties and factors include: uncertainty in worldwide economic conditions; extended business interruption at our facilities; fluctuations in the price and uncertainties in the supply of rare earth materials and other raw materials; our ability to identify, complete and integrate acquisitions aligned with our strategy; changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns; the majority of our operations are outside the United States, which subjects us to risks that may adversely affect our operating results; level of returns on pension plan assets and changes in the actuarial assumptions; the majority of our cash is generated and held outside the United States; the timing and amount of common share repurchases, if any; fluctuations in foreign exchange rates; unanticipated costs or liabilities for compliance with environmental regulation; changes in environmental, health and safety regulatory requirements; technological changes in our industry or in our customers' products; our ability to adequately
protect or enforce our intellectual property rights; disruption of our relationship with key customers or any material adverse change in their businesses; successful execution of the GTL supply agreement signed in connection with the Advanced Materials sale; 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, 2012.
# # #
OM Group Contact: Rob Pierce, Vice President, Finance, +1.216.263.7489
OM Group, Inc. and Subsidiaries | ||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||
September 30, 2013 | December 31, 2012 | |||||||
(in thousands) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 116,453 | $ | 227,612 | ||||
Accounts receivable, net | 151,861 | 160,122 | ||||||
Inventories | 248,326 | 452,699 | ||||||
Other current assets | 17,432 | 66,018 | ||||||
Current assets - discontinued operations (excluding cash) | — | 33,126 | ||||||
Total current assets | 534,072 | 939,577 | ||||||
Property, plant and equipment, net | 326,948 | 474,346 | ||||||
Goodwill | 428,212 | 528,312 | ||||||
Intangible assets, net | 403,390 | 417,110 | ||||||
Other non-current assets | 60,481 | 86,879 | ||||||
Non-current assets - discontinued operations | — | 53,203 | ||||||
Total assets | $ | 1,753,103 | $ | 2,499,427 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | — | $ | 13,309 | ||||
Accounts payable | 85,739 | 116,991 | ||||||
Purchase price of VAC payable to seller | 52,456 | 75,351 | ||||||
Other current liabilities | 96,785 | 152,867 | ||||||
Current liabilities - discontinued operations | — | 20,726 | ||||||
Total current liabilities | 234,980 | 379,244 | ||||||
Long-term debt | — | 454,054 | ||||||
Deferred income taxes | 107,998 | 117,739 | ||||||
Pension liabilities | 233,317 | 232,867 | ||||||
Purchase price of VAC payable to seller | 11,278 | 11,259 | ||||||
Other non-current liabilities | 53,569 | 55,383 | ||||||
Non-current liabilities - discontinued operations | — | 4,733 | ||||||
Stockholders’ equity: | ||||||||
Total OM Group, Inc. stockholders’ equity | 1,111,961 | 1,206,709 | ||||||
Noncontrolling interests | — | 37,439 | ||||||
Total equity | 1,111,961 | 1,244,148 | ||||||
Total liabilities and equity | $ | 1,753,103 | $ | 2,499,427 | ||||
OM Group, Inc. and Subsidiaries | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 265,932 | $ | 371,366 | $ | 887,058 | $ | 1,227,184 | ||||||||
Cost of goods sold | 200,064 | 290,197 | 683,167 | 1,010,121 | ||||||||||||
Gross profit | 65,868 | 81,169 | 203,891 | 217,063 | ||||||||||||
Selling, general and administrative expenses | 53,828 | 60,679 | 168,568 | 186,233 | ||||||||||||
Operating profit | 12,040 | 20,490 | 35,323 | 30,830 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (1,732 | ) | (12,571 | ) | (11,195 | ) | (35,303 | ) | ||||||||
Foreign exchange gain (loss) | 4,583 | (2,661 | ) | 4,747 | (1,763 | ) | ||||||||||
Loss on divestiture of Advanced Materials business | (61 | ) | — | (112,122 | ) | — | ||||||||||
Other, net | (473 | ) | 1,641 | (860 | ) | 1,783 | ||||||||||
Income (loss) from continuing operations before income tax expense | 14,357 | 6,899 | (84,107 | ) | (4,453 | ) | ||||||||||
Income tax expense | 1,925 | 1,807 | 6,380 | 1,486 | ||||||||||||
Income (loss) from continuing operations, net of tax | 12,432 | 5,092 | (90,487 | ) | (5,939 | ) | ||||||||||
Income (loss) from discontinued operations, net of tax | (256 | ) | 1 | (12,125 | ) | 297 | ||||||||||
Consolidated net income (loss) | 12,176 | 5,093 | (102,612 | ) | (5,642 | ) | ||||||||||
Net (loss) attributable to noncontrolling interests | — | (415 | ) | (1,749 | ) | (760 | ) | |||||||||
Net income (loss) attributable to OM Group, Inc. common stockholders | $ | 12,176 | $ | 5,508 | $ | (100,863 | ) | $ | (4,882 | ) | ||||||
Earnings (loss) per common share — basic: | ||||||||||||||||
Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders | $ | 0.40 | $ | 0.17 | $ | (2.81 | ) | $ | (0.16 | ) | ||||||
Income (loss) from discontinued operations attributable to OM Group, Inc. common stockholders | (0.01 | ) | — | (0.38 | ) | 0.01 | ||||||||||
Net income (loss) attributable to OM Group, Inc. common stockholders | $ | 0.39 | $ | 0.17 | $ | (3.19 | ) | $ | (0.15 | ) | ||||||
Earnings (loss) per common share — assuming dilution: | ||||||||||||||||
Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders | $ | 0.39 | $ | 0.17 | $ | (2.81 | ) | $ | (0.16 | ) | ||||||
Income (loss) from discontinued operations attributable to OM Group, Inc. common stockholders | (0.01 | ) | — | (0.38 | ) | 0.01 | ||||||||||
Net income (loss) attributable to OM Group, Inc. common stockholders | $ | 0.38 | $ | 0.17 | $ | (3.19 | ) | $ | (0.15 | ) | ||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 31,442 | 31,889 | 31,592 | 31,882 | ||||||||||||
Assuming dilution | 31,664 | 32,004 | 31,592 | 31,882 | ||||||||||||
Amounts attributable to OM Group, Inc. common stockholders: | ||||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 12,432 | $ | 5,507 | $ | (88,738 | ) | $ | (5,179 | ) | ||||||
Income (loss) from discontinued operations, net of tax | (256 | ) | 1 | (12,125 | ) | 297 | ||||||||||
Net income (loss) | $ | 12,176 | $ | 5,508 | $ | (100,863 | ) | $ | (4,882 | ) | ||||||
OM Group, Inc. and Subsidiaries | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating activities | ||||||||||||||||
Consolidated net income (loss) | $ | 12,176 | $ | 5,093 | $ | (102,612 | ) | $ | (5,642 | ) | ||||||
Adjustments to reconcile consolidated net income (loss) to net cash used for operating activities: | ||||||||||||||||
Loss (income) from discontinued operations | 256 | (1 | ) | 12,125 | (297 | ) | ||||||||||
Depreciation and amortization | 17,529 | 20,761 | 55,592 | 62,603 | ||||||||||||
Amortization of deferred financing fees | 824 | 2,639 | 2,824 | 5,387 | ||||||||||||
Share-based compensation expense | 1,727 | 1,353 | 4,884 | 5,285 | ||||||||||||
VAC lower of cost or market charges | — | — | — | 53,751 | ||||||||||||
Loss on divestiture of Advanced Materials business | 61 | — | 112,122 | — | ||||||||||||
Other non-cash items | (3,140 | ) | (4,493 | ) | 2,509 | (24,280 | ) | |||||||||
Changes in operating assets and liabilities, excluding the effect of divestitures: | ||||||||||||||||
Accounts receivable | 9,984 | 22,715 | (24,681 | ) | 8,467 | |||||||||||
Inventories (a) | (2,574 | ) | 11,945 | 14,235 | 88,069 | |||||||||||
Accounts payable | 3,666 | 13,576 | 5,279 | (47,129 | ) | |||||||||||
Accrued tax | (591 | ) | 5,133 | (24,463 | ) | 5,397 | ||||||||||
Other, net | (3,436 | ) | 19,786 | (28,127 | ) | 10,079 | ||||||||||
Net cash provided by operating activities | 36,482 | 98,507 | 29,687 | 161,690 | ||||||||||||
Investing activities | ||||||||||||||||
Expenditures for property, plant and equipment | (7,174 | ) | (16,515 | ) | (28,435 | ) | (44,244 | ) | ||||||||
Proceeds from divestiture of Advanced Materials business | 26,583 | — | 328,669 | — | ||||||||||||
Proceeds from divestiture of UPC business | — | — | 63,300 | — | ||||||||||||
Payment of VAC purchase price payable to seller | (23,028 | ) | — | (23,028 | ) | — | ||||||||||
Proceeds from sale of property | — | — | — | 5,138 | ||||||||||||
Net cash provided by (used for) investing activities | (3,619 | ) | (16,515 | ) | 340,506 | (39,106 | ) | |||||||||
Financing activities | ||||||||||||||||
Payments of long-term debt | — | (74,627 | ) | (466,538 | ) | (82,654 | ) | |||||||||
Debt issuance costs | (1,860 | ) | — | (1,860 | ) | — | ||||||||||
Proceeds from exercise of stock options | 1,107 | — | 2,112 | — | ||||||||||||
Payment related to surrendered shares | — | — | (554 | ) | (254 | ) | ||||||||||
Share repurchases | — | — | (14,083 | ) | — | |||||||||||
Net cash used for financing activities | (753 | ) | (74,627 | ) | (480,923 | ) | (82,908 | ) | ||||||||
Effect of exchange rate changes on cash | 3,794 | 4,247 | 2,291 | 439 | ||||||||||||
Cash and cash equivalents | ||||||||||||||||
Increase (decrease) in cash and cash equivalents | 35,904 | 11,612 | (108,439 | ) | 40,115 | |||||||||||
Discontinued operations - net cash used for operating activities | (19 | ) | (2,446 | ) | (301 | ) | (4,137 | ) | ||||||||
Discontinued operations - net cash used for investing activities | — | (1,373 | ) | (2,419 | ) | (2,771 | ) | |||||||||
Balance at the beginning of the period | 80,568 | 317,560 | 227,612 | 292,146 | ||||||||||||
Balance at the end of the period | $ | 116,453 | $ | 325,353 | $ | 116,453 | $ | 325,353 | ||||||||
(a) Includes $0.2 million and $16.1 million related to purchase accounting step-up of inventory in the three and nine months ended September 30, 2012, respectively. | ||||||||||||||||
OM Group, Inc. and Subsidiaries | |||||||||||||||
Unaudited Segment Information | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net Sales | |||||||||||||||
Magnetic Technologies | $ | 128,089 | $ | 144,411 | $ | 394,102 | $ | 502,925 | |||||||
Battery Technologies | 33,926 | 39,157 | 115,165 | 111,394 | |||||||||||
Specialty Chemicals (a) | 81,615 | 80,270 | 242,364 | 248,569 | |||||||||||
Advanced Materials | 22,302 | 107,655 | 135,615 | 364,891 | |||||||||||
Intersegment items | — | (127 | ) | (188 | ) | (595 | ) | ||||||||
$ | 265,932 | $ | 371,366 | $ | 887,058 | $ | 1,227,184 | ||||||||
Operating profit (loss) | |||||||||||||||
Magnetic Technologies (b)(c) | $ | 10,034 | $ | 15,969 | $ | 17,545 | $ | (274 | ) | ||||||
Battery Technologies (b) | 2,850 | 5,927 | 19,323 | 17,644 | |||||||||||
Specialty Chemicals (a)(b)(d) | 10,242 | 8,088 | 25,454 | 30,373 | |||||||||||
Advanced Materials | (498 | ) | 3,659 | 868 | 15,693 | ||||||||||
Corporate (b)(e) | (10,588 | ) | (13,153 | ) | (27,867 | ) | (32,606 | ) | |||||||
$ | 12,040 | $ | 20,490 | $ | 35,323 | $ | 30,830 | ||||||||
(a) All results related to the UPC business are excluded from the Specialty Chemicals segment for all periods presented. (b) The three and nine months ended September 30, 2013 include costs related to cost-reduction initiatives of $0.7 million and $4.9 million in Magnetic Technologies, $0.1 million and $0.8 million in Battery Technologies, and $1.0 million and $1.0 million in Corporate, respectively. The nine months ended September 30, 2013 include costs related to cost-reduction initiatives of $1.1 million in Specialty Chemicals. (c) The three and nine months ended September 30, 2012 include inventory step-up and LCM charges of $0.2 million and $47.5 million, respectively, resulting from purchase accounting for the VAC acquisition. (d) The nine months ended September 30, 2012 includes a $2.9 million property sale gain. (e) The three and nine months ended September 30, 2012 include a $2.5 million charge associated with the lump-sum cash settlement to certain participants in one of our U.S. defined benefit pension plans. | |||||||||||||||
OM Group, Inc. and Subsidiaries | |||||||||||||||||||||||||||
Unaudited Non-U.S. GAAP Financial Measures, Adjusted Operating Profit and Adjusted EBITDA | |||||||||||||||||||||||||||
Three Months Ended September 30, 2013 | |||||||||||||||||||||||||||
(in thousands) | Magnetic Technologies | Battery Technologies | Specialty Chemicals | Corporate | Subtotal | Advanced Materials | Consolidated | ||||||||||||||||||||
Operating profit (loss) - as reported | $ | 10,034 | $ | 2,850 | $ | 10,242 | $ | (10,588 | ) | $ | 12,538 | $ | (498 | ) | $ | 12,040 | |||||||||||
Charges related to cost-reduction initiatives | 656 | 118 | — | 1,000 | 1,774 | — | 1,774 | ||||||||||||||||||||
Adjusted operating profit | 10,690 | 2,968 | 10,242 | (9,588 | ) | 14,312 | (498 | ) | 13,814 | ||||||||||||||||||
Depreciation and amortization | 11,106 | 2,522 | 3,681 | 220 | 17,529 | — | 17,529 | ||||||||||||||||||||
Adjusted EBITDA | 21,796 | 5,490 | 13,923 | (9,368 | ) | 31,841 | (498 | ) | 31,343 | ||||||||||||||||||
Three Months Ended September 30, 2012 | |||||||||||||||||||||||||||
(in thousands) | Magnetic Technologies | Battery Technologies | Specialty Chemicals | Corporate | Subtotal | Advanced Materials | Consolidated | ||||||||||||||||||||
Operating profit (loss) - as reported | $ | 15,969 | $ | 5,927 | $ | 8,088 | $ | (13,153 | ) | $ | 16,831 | $ | 3,659 | $ | 20,490 | ||||||||||||
Total VAC inventory purchase accounting step-up and LCM charges | 224 | — | — | 224 | — | 224 | |||||||||||||||||||||
Pension settlement expense | — | — | — | 2,469 | 2,469 | — | 2,469 | ||||||||||||||||||||
Adjusted operating profit | 16,193 | 5,927 | 8,088 | (10,684 | ) | 19,524 | 3,659 | 23,183 | |||||||||||||||||||
Depreciation and amortization | 9,833 | 2,526 | 3,947 | 226 | 16,532 | 4,229 | 20,761 | ||||||||||||||||||||
Adjusted EBITDA | $ | 26,026 | $ | 8,453 | $ | 12,035 | $ | (10,458 | ) | $ | 36,056 | $ | 7,888 | $ | 43,944 | ||||||||||||
Nine Months Ended September 30, 2013 | |||||||||||||||||||||||||||
(in thousands) | Magnetic Technologies | Battery Technologies | Specialty Chemicals | Corporate | Subtotal | Advanced Materials | Consolidated | ||||||||||||||||||||
Operating profit (loss) - as reported | $ | 17,545 | $ | 19,323 | $ | 25,454 | $ | (27,867 | ) | $ | 34,455 | $ | 868 | $ | 35,323 | ||||||||||||
Charges related to cost-reduction initiatives | 4,881 | 804 | 1,135 | 1,000 | 7,820 | — | 7,820 | ||||||||||||||||||||
Adjusted operating profit | 22,426 | 20,127 | 26,589 | (26,867 | ) | 42,275 | 868 | 43,143 | |||||||||||||||||||
Depreciation and amortization | 32,575 | 7,556 | 11,097 | 493 | 51,721 | 3,871 | 55,592 | ||||||||||||||||||||
Adjusted EBITDA | $ | 55,001 | $ | 27,683 | $ | 37,686 | $ | (26,374 | ) | $ | 93,996 | $ | 4,739 | $ | 98,735 | ||||||||||||
Nine Months Ended September 30, 2012 | |||||||||||||||||||||||||||
(in thousands) | Magnetic Technologies | Battery Technologies | Specialty Chemicals | Corporate | Subtotal | Advanced Materials | Consolidated | ||||||||||||||||||||
Operating profit (loss) - as reported | $ | (274 | ) | $ | 17,644 | $ | 30,373 | $ | (32,606 | ) | $ | 15,137 | $ | 15,693 | $ | 30,830 | |||||||||||
Total VAC inventory purchase accounting step-up and LCM charges | 47,497 | — | — | — | 47,497 | — | 47,497 | ||||||||||||||||||||
Pension settlement expense | — | — | — | 2,469 | 2,469 | — | 2,469 | ||||||||||||||||||||
Gain on sale of property | — | — | (2,857 | ) | — | (2,857 | ) | — | (2,857 | ) | |||||||||||||||||
Adjusted operating profit | 47,223 | 17,644 | 27,516 | (30,137 | ) | 62,246 | 15,693 | 77,939 | |||||||||||||||||||
Depreciation and amortization | 30,055 | 7,537 | 11,799 | 489 | 49,880 | 12,723 | 62,603 | ||||||||||||||||||||
Adjusted EBITDA | $ | 77,278 | $ | 25,181 | $ | 39,315 | $ | (29,648 | ) | $ | 112,126 | $ | 28,416 | $ | 140,542 | ||||||||||||
In order to assist readers of our financial statements in understanding the operating results that the Company's management uses to evaluate the business, we are providing adjusted operating profit and adjusted EBITDA, both of which are non-U.S. GAAP financial measures. The Company's management believes that these are important metrics in evaluating the performance of the Company's business, providing a baseline for evaluating and comparing our operating results and isolating the impact of certain items on our results. The table above presents a reconciliation of the Company's U.S. GAAP operating profit - as reported to adjusted operating profit and adjusted EBITDA. The non-U.S. GAAP financial information set forth in the table above should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. | |||||||||||||||||||||||||||
OM Group, Inc. and Subsidiaries | |||||||||||||||
Unaudited Non-U.S. GAAP Financial Measures | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||||
(in thousands, except per share data) | $ | Diluted EPS | $ | Diluted EPS | |||||||||||
Income from continuing operations attributable to OM Group, Inc. common stockholders - as reported | $ | 12,432 | $ | 0.39 | $ | 5,507 | $ | 0.17 | |||||||
Loss on Advanced Materials divestiture | 61 | — | — | — | |||||||||||
Charges related to cost-reduction initiatives | 1,774 | 0.06 | — | — | |||||||||||
VAC inventory purchase accounting step-up and lower of cost or market charges | — | — | 224 | — | |||||||||||
Pension settlement expense | — | — | 2,469 | 0.08 | |||||||||||
Acceleration of deferred financing fees | 512 | 0.02 | 1,249 | 0.04 | |||||||||||
Tax effect of special items | (324 | ) | (0.01 | ) | (1,706 | ) | (0.05 | ) | |||||||
Adjusted income from continuing operations attributable to OM Group, Inc. common stockholders | $ | 14,455 | $ | 0.46 | $ | 7,743 | $ | 0.24 | |||||||
Exclude: Operating results from divested Advanced Materials business, net of tax | (498 | ) | (0.01 | ) | 1,399 | 0.04 | |||||||||
Adjusted income from continuing operations attributable to OM Group, Inc. common stockholders - pro forma excluding Advanced Materials | $ | 14,953 | $ | 0.47 | $ | 6,344 | $ | 0.20 | |||||||
Weighted average shares outstanding - diluted | 31,664 | 32,004 | |||||||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||||
(in thousands, except per share data) | $ | Diluted EPS | $ | Diluted EPS | |||||||||||
Loss from continuing operations attributable to OM Group, Inc. common stockholders - as reported | $ | (88,738 | ) | $ | (2.79 | ) | $ | (5,179 | ) | $ | (0.16 | ) | |||
Loss on Advanced Materials divestiture | 112,122 | 3.53 | — | — | |||||||||||
Charges related to cost-reduction initiatives | 7,820 | 0.25 | — | — | |||||||||||
VAC inventory purchase accounting step-up and lower of cost or market charges | — | — | 47,497 | 1.47 | |||||||||||
Gain on sale of land | — | — | (2,857 | ) | (0.09 | ) | |||||||||
Pension settlement expense | — | — | 2,469 | 0.08 | |||||||||||
Acceleration of deferred financing fees | 974 | 0.03 | 1,249 | 0.04 | |||||||||||
Tax effect of special items | (1,259 | ) | (0.05 | ) | (12,976 | ) | (0.40 | ) | |||||||
Adjusted income from continuing operations attributable to OM Group, Inc. common stockholders | $ | 30,919 | $ | 0.97 | $ | 30,203 | $ | 0.94 | |||||||
Exclude: Operating results from divested Advanced Materials business, net of tax | (548 | ) | (0.02 | ) | 7,581 | 0.23 | |||||||||
Adjusted income from continuing operations attributable to OM Group, Inc. common stockholders - pro forma excluding Advanced Materials | $ | 31,467 | $ | 0.99 | $ | 22,622 | $ | 0.71 | |||||||
Weighted average shares outstanding - diluted (a) | 31,761 | 32,012 | |||||||||||||
(a) For the nine months ended September 30, 2013 and 2012, because the reported loss from continuing operations is income on an adjusted basis, we used diluted shares to calculate EPS. | |||||||||||||||
In order to assist readers of our financial statements in understanding the operating results that the Company's management uses to evaluate the business, we are providing adjusted income from continuing operations attributable to OM Group, Inc. common stockholders and adjusted earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution, both of which are non-U.S. GAAP financial measures. We are also providing the amounts as pro forma adjusted to exclude the results of the divested Advanced Materials business. The Company's management believes that these are important metrics in evaluating the performance of the Company's business, providing a baseline for evaluating and comparing our operating results and isolating the impact of certain items on our results. The table above presents a reconciliation of the Company's U.S. GAAP income from continuing operations attributable to OM Group, Inc. common stockholders - as reported to adjusted income from continuing operations attributable to OM Group, Inc. common stockholders and earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution, adjusted for both special items as identified in the table and to exclude the results of the divested Advanced Materials business. The non-U.S. GAAP financial information set forth in the table above should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. | |||||||||||||||