Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ENPRO INDUSTRIES, INC | form8-kxq12014.htm |
| EX-99.1 - EXHIBIT - ENPRO INDUSTRIES, INC | a8-kearningsreleaseforq120.htm |
EnPro Industries, Inc.
Consolidated Statements of Operations (Unaudited)
For the Quarters Ended March 31, 2014 and 2013
(Stated in Millions of Dollars, Except Per Share Data)
2014 | 2013 | |||||||
Net sales | $ | 287.2 | $ | 286.9 | ||||
Cost of sales | 190.7 | 192.7 | ||||||
Gross profit | 96.5 | 94.2 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 78.9 | 72.6 | ||||||
Other | 0.2 | 0.9 | ||||||
Total operating expenses | 79.1 | 73.5 | ||||||
Operating income | 17.4 | 20.7 | ||||||
Interest expense | (11.1 | ) | (11.1 | ) | ||||
Interest income | 0.2 | 0.1 | ||||||
Other expense | (4.2 | ) | — | |||||
Income before income taxes | 2.3 | 9.7 | ||||||
Income tax expense | (1.0 | ) | (1.1 | ) | ||||
Net income | $ | 1.3 | $ | 8.6 | ||||
Basic earnings per share | $ | 0.06 | $ | 0.41 | ||||
Average common shares outstanding (millions) | 21.3 | 20.7 | ||||||
Diluted earnings per share | $ | 0.05 | $ | 0.39 | ||||
Average common shares outstanding (millions) | 25.1 | 22.3 | ||||||
5
EnPro Industries, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2014 and 2013
(Stated in Millions of Dollars)
2014 | 2013 | |||||||
Operating activities | ||||||||
Net income | $ | 1.3 | $ | 8.6 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation | 7.5 | 7.4 | ||||||
Amortization | 6.7 | 6.7 | ||||||
Accretion of debt discount | 1.8 | 1.8 | ||||||
Loss on exchange of debt | 3.6 | — | ||||||
Deferred income taxes | (12.3 | ) | (4.3 | ) | ||||
Stock-based compensation | 2.2 | (1.8 | ) | |||||
Excess tax benefits from stock-based compensation | (0.6 | ) | (2.0 | ) | ||||
Change in assets and liabilities, net of effects of acquisitions of businesses: | ||||||||
Accounts receivable | (21.0 | ) | (19.5 | ) | ||||
Inventories | (9.3 | ) | (2.3 | ) | ||||
Accounts payable | 2.8 | 4.2 | ||||||
Other current assets and liabilities | (10.5 | ) | (8.3 | ) | ||||
Other non-current assets and liabilities | 2.8 | (8.3 | ) | |||||
Net cash used in operating activities | (25.0 | ) | (17.8 | ) | ||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (6.7 | ) | (9.8 | ) | ||||
Payments for capitalized internal-use software | (2.8 | ) | (3.5 | ) | ||||
Acquisitions, net of cash acquired | (1.9 | ) | (2.2 | ) | ||||
Other | 0.1 | 0.1 | ||||||
Net cash used in investing activities | (11.3 | ) | (15.4 | ) | ||||
Financing activities | ||||||||
Net proceeds from short-term borrowings | 0.7 | 7.4 | ||||||
Proceeds from debt | 70.3 | 63.3 | ||||||
Repayments of debt | (34.5 | ) | (42.5 | ) | ||||
Other | (4.7 | ) | 2.0 | |||||
Net cash provided by financing activities | 31.8 | 30.2 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (0.1 | ) | (2.4 | ) | ||||
Net decrease in cash and cash equivalents | (4.6 | ) | (5.4 | ) | ||||
Cash and cash equivalents at beginning of period | 64.4 | 53.9 | ||||||
Cash and cash equivalents at end of period | $ | 59.8 | $ | 48.5 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 18.1 | $ | 16.7 | ||||
Income taxes | $ | 13.3 | $ | 5.4 | ||||
6
EnPro Industries, Inc.
Consolidated Balance Sheets (Unaudited)
As of March 31, 2014 and December 31, 2013
(Stated in Millions of Dollars)
March 31, 2014 | December 31, 2013 | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 59.8 | $ | 64.4 | |||
Accounts receivable | 215.7 | 193.1 | |||||
Inventories | 160.6 | 149.1 | |||||
Other current assets | 47.5 | 41.0 | |||||
Total current assets | 483.6 | 447.6 | |||||
Property, plant and equipment | 186.0 | 187.5 | |||||
Goodwill | 219.6 | 220.2 | |||||
Other intangible assets | 198.4 | 200.1 | |||||
Investment in GST | 236.9 | 236.9 | |||||
Other assets | 104.0 | 100.4 | |||||
Total assets | $ | 1,428.5 | $ | 1,392.7 | |||
Current liabilities | |||||||
Short-term borrowings from GST | $ | 23.1 | $ | 22.0 | |||
Notes payable to GST | 11.7 | 11.2 | |||||
Current maturities of long-term debt | 107.1 | 156.6 | |||||
Accounts payable | 90.4 | 86.8 | |||||
Accrued expenses | 121.7 | 140.9 | |||||
Total current liabilities | 354.0 | 417.5 | |||||
Long-term debt | 44.3 | 8.5 | |||||
Notes payable to GST | 259.3 | 248.1 | |||||
Pension liability | 42.9 | 47.4 | |||||
Other liabilities | 61.1 | 57.8 | |||||
Total liabilities | 761.6 | 779.3 | |||||
Temporary equity | 9.4 | 15.9 | |||||
Shareholders' equity | |||||||
Common stock | 0.2 | 0.2 | |||||
Additional paid-in capital | 470.6 | 410.9 | |||||
Retained earnings | 174.6 | 173.3 | |||||
Accumulated other comprehensive income | 13.4 | 14.4 | |||||
Common stock held in treasury, at cost | (1.3 | ) | (1.3 | ) | |||
Total shareholders' equity | 657.5 | 597.5 | |||||
Total liabilities and equity | $ | 1,428.5 | $ | 1,392.7 | |||
7
EnPro Industries, Inc.
Segment Information (Unaudited)
For the Quarters Ended March 31, 2014 and 2013
(Stated in Millions of Dollars)
Sales | ||||||||
2014 | 2013 | |||||||
Sealing Products | $ | 155.0 | $ | 146.6 | ||||
Engineered Products | 91.8 | 91.8 | ||||||
Power Systems | 41.1 | 49.4 | ||||||
287.9 | 287.8 | |||||||
Less intersegment sales | (0.7 | ) | (0.9 | ) | ||||
$ | 287.2 | $ | 286.9 | |||||
Segment Profit | ||||||||
2014 | 2013 | |||||||
Sealing Products | $ | 17.1 | $ | 21.3 | ||||
Engineered Products | 8.7 | 5.8 | ||||||
Power Systems | 3.3 | 4.8 | ||||||
$ | 29.1 | $ | 31.9 | |||||
Segment Margin | ||||||
2014 | 2013 | |||||
Sealing Products | 11.0 | % | 14.5 | % | ||
Engineered Products | 9.5 | % | 6.3 | % | ||
Power Systems | 8.0 | % | 9.7 | % | ||
10.1 | % | 11.1 | % | |||
Reconciliation of Segment Profit to Net Income | ||||||||
2014 | 2013 | |||||||
Segment profit | $ | 29.1 | $ | 31.9 | ||||
Corporate expenses | (10.1 | ) | (9.1 | ) | ||||
Interest expense, net | (10.9 | ) | (11.0 | ) | ||||
Other expense, net | (5.8 | ) | (2.1 | ) | ||||
Income before income taxes | 2.3 | 9.7 | ||||||
Income tax expense | (1.0 | ) | (1.1 | ) | ||||
Net income | $ | 1.3 | $ | 8.6 | ||||
Segment profit is total segment revenue reduced by operating expenses and restructuring and other costs identifiable with the segment. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments, corporate expenses, net interest expense, gains/losses related to the sale of assets and income taxes are not included in the computation of segment profit. The accounting policies of the reportable segments are the same as those for the Company.
8
EnPro Industries, Inc.
Reconciliation of Income Before Selected Items to Net Income (Unaudited)
For the Quarters Ended March 31, 2014 and 2013
(Stated in Millions of Dollars, Except Per Share Data)
2014 | 2013 | ||||||||||||||
$ | Per share | $ | Per share | ||||||||||||
Income before selected items | $ | 9.8 | $ | 0.39 | $ | 12.5 | $ | 0.56 | |||||||
Adjustments (net of tax): | |||||||||||||||
Restructuring costs | (0.1 | ) | — | (0.6 | ) | (0.02 | ) | ||||||||
Loss on exchange of debt | (2.3 | ) | (0.09 | ) | — | — | |||||||||
Interest expense and royalties with GST | (4.8 | ) | (0.19 | ) | (4.7 | ) | (0.21 | ) | |||||||
Other | (0.4 | ) | (0.02 | ) | — | — | |||||||||
Tax accrual adjustments | (0.9 | ) | (0.04 | ) | 1.4 | 0.06 | |||||||||
Impact | (8.5 | ) | (0.34 | ) | (3.9 | ) | (0.17 | ) | |||||||
Net income | $ | 1.3 | $ | 0.05 | $ | 8.6 | $ | 0.39 | |||||||
Management of the Company believes that it would be helpful to the readers of the financial statements to understand the impact of certain selected items on the Company's reported net income and earnings per share, including items that may recur from time to time. This presentation enables readers to better compare EnPro Industries, Inc. to other diversified industrial manufacturing companies that do not incur the sporadic impact of restructuring activities or other selected items. Management acknowledges that there are many items that impact a company's reported results and this list is not intended to present all items that may have impacted these results.
The amounts above, which may be considered non-GAAP financial measures, are shown on an after-tax basis and have been calculated by applying the Company's tax rate to the pre-tax amount. The interest expense with GST is included in interest expense, and the restructuring costs, loss on exchange of debt and other are included as part of other operating expense and other expense. Per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods.
9
EnPro Industries, Inc.
Reconciliation of EBITDA to Segment Profit (Unaudited)
For the Quarters Ended March 31, 2014 and 2013
(Stated in Millions of Dollars)
Quarter Ended March 31, 2014 | |||||||||||||
Sealing | Engineered | Power | Total | ||||||||||
Products | Products | Systems | Segments | ||||||||||
Earnings before interest, income taxes, depreciation | |||||||||||||
and amortization (EBITDA) | $ | 24.7 | $ | 14.3 | $ | 4.2 | $ | 43.2 | |||||
Deduct depreciation and amortization expense | (7.6 | ) | (5.6 | ) | (0.9 | ) | (14.1 | ) | |||||
Segment profit | $ | 17.1 | $ | 8.7 | $ | 3.3 | $ | 29.1 | |||||
EBITDA margin | 15.9 | % | 15.6 | % | 10.2 | % | 15.0 | % | |||||
Quarter Ended March 31, 2013 | |||||||||||||
Sealing | Engineered | Power | Total | ||||||||||
Products | Products | Systems | Segments | ||||||||||
Earnings before interest, income taxes, depreciation | |||||||||||||
and amortization (EBITDA) | $ | 29.1 | $ | 11.3 | $ | 5.6 | $ | 46.0 | |||||
Deduct depreciation and amortization expense | (7.8 | ) | (5.5 | ) | (0.8 | ) | (14.1 | ) | |||||
Segment profit | $ | 21.3 | $ | 5.8 | $ | 4.8 | $ | 31.9 | |||||
EBITDA margin | 19.8 | % | 12.3 | % | 11.3 | % | 16.0 | % | |||||
For a reconciliation of segment profit to net income, please refer to the Segment Information (Unaudited) schedule.
10
EnPro Industries, Inc.
Reconciliation of Adjusted EBITDA to Net Income (Unaudited)
For the Quarter Ended March 31, 2014 and 2013
(Stated in Millions of Dollars)
2014 | 2013 | ||||||
Earnings before interest, income taxes, depreciation, | |||||||
amortization, and other selected items (adjusted EBITDA) | $ | 32.2 | $ | 36.2 | |||
Adjustments: | |||||||
Interest expense, net | (10.9 | ) | (11.0 | ) | |||
Income tax expense | (1.0 | ) | (1.1 | ) | |||
Depreciation and amortization expense | (14.2 | ) | (14.1 | ) | |||
Restructuring costs | (0.1 | ) | (0.9 | ) | |||
Environmental reserve adjustment | (0.6 | ) | — | ||||
Loss on debt exchange | (3.6 | ) | — | ||||
Other | (0.5 | ) | (0.5 | ) | |||
Impact | (30.9 | ) | (27.6 | ) | |||
Net income | $ | 1.3 | $ | 8.6 | |||
11
EnPro Industries, Inc.
Selected Results Reflecting Deconsolidation of GST (Unaudited)
(Stated in Millions of Dollars)
Quarter Ended | Quarter Ended | |||||||||||||
March 31, 2014 | March 31, 2013 | |||||||||||||
EnPro | GST | EnPro | GST | |||||||||||
Adjusted net sales * | $ | 280.3 | $ | 52.8 | $ | 280.8 | $ | 56.5 | ||||||
Segment profit/operating profit | $ | 29.1 | $ | 11.8 | $ | 31.9 | $ | 12.7 | ||||||
Adjusted EBITDA | $ | 32.2 | $ | 13.5 | $ | 36.2 | $ | 14.2 | ||||||
Income before selected items | $ | 9.8 | $ | 8.2 | $ | 12.5 | $ | 8.6 | ||||||
* Adjusted net sales reflect third party sales only, which differ from the sales reported on the accompanying consolidated statements of operations which include intercompany sales from EnPro to GST.
12