AKRON, Ohio, June 28, 2017 /PRNewswire/
-- A. Schulman, Inc. (Nasdaq: SHLM) today announced
earnings for the quarter ended May 31, 2017 of $0.47 per
diluted share, compared with $0.53 per diluted share in the prior year
period. On an adjusted basis, reported earnings per share
were $0.63 in the third quarter of fiscal 2017, compared with
$0.79 in the third quarter of
fiscal 2016. The fiscal 2017 third quarter adjusted earnings per
diluted share of $0.63 includes
the negative effect of foreign currency of $0.04 over the prior year period.
Joseph M. Gingo, chairman,
president and chief executive officer stated, "I am very pleased
with our strong performance in Asia-Pacific, Latin
America and Engineered Composites. Our consolidated
results were largely influenced by two factors. In our U.S and
Canada region, while operations
improved, our sales and profitability are still hampered by the
complexity of the business consolidation in Evansville, Indiana. In Europe, a significant mid-quarter drop in
polyolefin raw material prices interrupted our sales cycle and
adversely impacted profitability. We have seen our sales cycle
normalize in May and continue into June."
Consolidated net sales for the fiscal 2017 third quarter were
$645.8 million, compared
with $650.4 million in the same prior-year quarter.
Excluding the negative impact of foreign currency translation in
the third quarter of fiscal 2017 of $16.3 million, net sales
rose 1.8 percent from a year ago.
GAAP operating income in the third quarter of fiscal 2017
was $32.2 million, compared with $31.6 million in
the prior year period. Adjusted operating income margin was 5.7
percent in the third quarter of fiscal 2017, compared with 7
percent in the third quarter of fiscal 2016. On a year-to-date
basis, the adjusted operating margin was 5.5 percent compared with
5.9 percent in the prior year.
Net income in the fiscal 2017 third quarter was $13.9 million, compared with $15.5
million in the year-ago period. On an adjusted basis, net
income for the third quarter of fiscal 2017 was $18.5 million,
compared with $25.2 million in the prior year period.
Fiscal 2017 third-quarter adjusted EBITDA was $56 million,
compared with $66.9 million in the third quarter of
fiscal 2016.
Cash Flow/Debt Reduction
Cash provided from operations
was $73.6 million in the nine months
ended May 31, 2017. During the
quarter, the Company reduced its net debt position by $20.3 million to a balance of $880.4 million as of May
31, 2017. Net leverage at the end of the third quarter of
fiscal 2017 was 4.13x.
Business Update and Outlook
Gingo stated, "Currency translation, although improving, is a
continuing headwind. If the dollar stays at the end-of-May level
for the duration of the fourth quarter this would further impact
the Company's earnings by as much as two
cents in the quarter and would result in 12 cents for currency impact compared with the
Company's guidance for the full fiscal year.
"With the return to a more normal sales pattern in Europe and strong performances in Latin America, Asia-Pacific and Engineered Composites, we
foresee stronger year-over-year performance in our fiscal 2017
fourth quarter as we anticipate operational improvement in the U.S.
and Canada region. Therefore,
excluding the potential 2017 currency translation as noted above,
we are maintaining our initial fiscal 2017 guidance of $2.5 billion to $2.6 billion in sales, adjusted
EBITDA of $225 million to $230
million, adjusted earnings per diluted share in the range of
$2.08 to $2.18 on an operating basis.
Likewise, we continue to expect to achieve a return on invested
capital of 11 percent to 12.5 percent in fiscal 2017.
"The trends that are starting to take shape in the fourth
quarter are encouraging and will create added momentum as we
progress into fiscal 2018," he said.
Please refer to the reconciliation of GAAP and Non-GAAP
financial measures for the types of items excluded from the
Company's business outlook.
Conference Call on the Web
A live Internet broadcast of A.
Schulman's conference call regarding fiscal 2017 third-quarter
earnings can be accessed at 10:00 a.m. Eastern Time
on June 29, 2017, on the Company's
website, www.aschulman.com. An archived replay of the call
will also be available on the website.
Investor Presentation Materials
Senior executives of the Company may participate in meetings with
analysts and investors throughout the fiscal year. The Company has
posted presentation materials, portions of which may be used during
such meetings, in the Investors section of its website
at www.aschulman.com. The presentation will remain on the
website as long as it is in use.
About A. Schulman, Inc.
A. Schulman, Inc. is a leading international supplier of
high-performance plastic compounds and resins headquartered
in Akron, Ohio. Since 1928, the Company has been
providing innovative solutions to meet its customers' demanding
requirements. The Company's customers span a wide range of markets
such as packaging, mobility, building & construction,
electronics & electrical, agriculture, personal care &
hygiene, sports, leisure & home, custom services and others.
The Company employs approximately 4,900 people and has 53
manufacturing facilities globally. A. Schulman reported
net sales of approximately $2.5 billion for the fiscal
year ended August 31, 2016. 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 segment gross profit, SG&A
expenses excluding certain items, segment operating income,
operating income before certain items, net income excluding certain
items, net income per diluted share excluding certain items and
adjusted EBITDA, as discussed further in the Reconciliation of GAAP
and Non-GAAP Financial Measures below. These non-GAAP financial
measures are considered relevant to aid analysis and understanding
of the Company's results and business trends. 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 gross profit, SG&A expenses,
operating income, 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.
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 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 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 the integration thereof, joint
ventures 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 as well as
other markets served;
- further adverse changes in economic or industry conditions,
including global supply and demand conditions and prices for
products;
- operating problems with our information systems as a result of
system security failures such as viruses, cyber-attacks or other
causes;
- our current debt position could adversely affect our financial
health and prevent us from fulfilling our financial obligations;
and
- failure of counterparties to perform under the terms and
conditions of contractual arrangements, including suppliers,
customers, buyers and sellers of a business and other third parties
with which the Company contracts.
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, 2016. 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
A. SCHULMAN,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In thousands, except
per share data)
|
Net
sales
|
$
|
645,795
|
|
|
$
|
650,439
|
|
|
$
|
1,814,473
|
|
|
$
|
1,891,419
|
|
Cost of
sales
|
547,368
|
|
|
540,965
|
|
|
1,525,845
|
|
|
1,587,192
|
|
Selling, general and
administrative expenses
|
65,266
|
|
|
73,641
|
|
|
203,608
|
|
|
222,482
|
|
Restructuring
expense
|
939
|
|
|
4,245
|
|
|
12,361
|
|
|
8,005
|
|
Operating income
(loss)
|
32,222
|
|
|
31,588
|
|
|
72,659
|
|
|
73,740
|
|
Interest
expense
|
13,179
|
|
|
13,557
|
|
|
39,450
|
|
|
40,965
|
|
Foreign currency
transaction (gains) losses
|
(68)
|
|
|
392
|
|
|
1,575
|
|
|
2,071
|
|
Other (income)
expense, net
|
(682)
|
|
|
(311)
|
|
|
(1,138)
|
|
|
(529)
|
|
Income (loss)
before taxes
|
19,793
|
|
|
17,950
|
|
|
32,772
|
|
|
31,233
|
|
Provision (benefit)
for U.S. and foreign income taxes
|
3,695
|
|
|
312
|
|
|
8,157
|
|
|
4,076
|
|
Net income
(loss)
|
16,098
|
|
|
17,638
|
|
|
24,615
|
|
|
27,157
|
|
Noncontrolling
interests
|
(320)
|
|
|
(241)
|
|
|
(868)
|
|
|
(1,075)
|
|
Net income (loss)
attributable to A. Schulman, Inc.
|
15,778
|
|
|
17,397
|
|
|
23,747
|
|
|
26,082
|
|
Convertible special
stock dividends
|
1,875
|
|
|
1,875
|
|
|
5,625
|
|
|
5,625
|
|
Net income (loss)
available to A.
Schulman, Inc. common stockholders
|
$
|
13,903
|
|
|
$
|
15,522
|
|
|
$
|
18,122
|
|
|
$
|
20,457
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
29,421
|
|
|
29,339
|
|
|
29,392
|
|
|
29,284
|
|
Diluted
|
29,530
|
|
|
29,474
|
|
|
29,496
|
|
|
29,459
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share
available to A. Schulman, Inc. common
stockholders
|
|
|
|
|
|
|
|
Basic
|
$
|
0.47
|
|
|
$
|
0.53
|
|
|
$
|
0.62
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.47
|
|
|
$
|
0.53
|
|
|
$
|
0.61
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.205
|
|
|
$
|
0.205
|
|
|
$
|
0.615
|
|
|
$
|
0.615
|
|
Cash dividends per
share of convertible
special stock
|
$
|
15.00
|
|
|
$
|
15.00
|
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
A. SCHULMAN,
INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
|
|
|
May 31,
2017
|
|
August 31,
2016
|
|
(In
thousands)
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
50,130
|
|
|
$
|
35,260
|
|
Restricted
cash
|
1,068
|
|
|
8,143
|
|
Accounts receivable,
less allowance for doubtful accounts of $10,415 at May 31, 2017
and
$11,341 at August 31, 2016
|
411,004
|
|
|
376,786
|
|
Inventories
|
297,104
|
|
|
263,617
|
|
Prepaid expenses and
other current assets
|
38,783
|
|
|
40,263
|
|
Assets held for
sale
|
6,586
|
|
|
—
|
|
Total current
assets
|
804,675
|
|
|
724,069
|
|
Property, plant
and equipment, at cost:
|
|
|
|
Land and
improvements
|
31,218
|
|
|
32,957
|
|
Buildings and
leasehold improvements
|
177,468
|
|
|
184,291
|
|
Machinery and
equipment
|
450,250
|
|
|
447,932
|
|
Furniture and
fixtures
|
34,361
|
|
|
34,457
|
|
Construction in
progress
|
28,674
|
|
|
20,431
|
|
Gross property,
plant and equipment
|
721,971
|
|
|
720,068
|
|
Accumulated
depreciation
|
425,486
|
|
|
405,246
|
|
Net property,
plant and equipment
|
296,485
|
|
|
314,822
|
|
Deferred charges and
other noncurrent assets
|
87,141
|
|
|
88,161
|
|
Goodwill
|
260,768
|
|
|
257,773
|
|
Intangible assets,
net
|
338,304
|
|
|
362,614
|
|
Total
assets
|
$
|
1,787,373
|
|
|
$
|
1,747,439
|
|
LIABILITIES AND
EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
339,566
|
|
|
$
|
280,060
|
|
U.S. and foreign
income taxes payable
|
3,783
|
|
|
8,985
|
|
Accrued payroll,
taxes and related benefits
|
44,458
|
|
|
47,569
|
|
Other accrued
liabilities
|
69,661
|
|
|
67,704
|
|
Short-term
debt
|
21,453
|
|
|
25,447
|
|
Total current
liabilities
|
478,921
|
|
|
429,765
|
|
Long-term
debt
|
910,132
|
|
|
919,349
|
|
Pension
plans
|
147,017
|
|
|
145,108
|
|
Deferred income
taxes
|
49,873
|
|
|
59,013
|
|
Other long-term
liabilities
|
24,270
|
|
|
25,844
|
|
Total
liabilities
|
1,610,213
|
|
|
1,579,079
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Convertible special
stock, no par value
|
120,289
|
|
|
120,289
|
|
Common stock, $1 par
value, authorized - 75,000 shares, issued - 48,529 shares at May
31,
2017 and 48,510 shares at August 31, 2016
|
48,529
|
|
|
48,510
|
|
Additional paid-in
capital
|
277,867
|
|
|
275,115
|
|
Accumulated other
comprehensive income (loss)
|
(115,501)
|
|
|
(120,721)
|
|
Retained
earnings
|
219,032
|
|
|
219,039
|
|
Treasury stock, at
cost, 19,064 shares at May 31, 2017 and 19,069 shares at August 31,
2016
|
(382,871)
|
|
|
(382,963)
|
|
Total A. Schulman,
Inc.'s stockholders' equity
|
167,345
|
|
|
159,269
|
|
Noncontrolling
interests
|
9,815
|
|
|
9,091
|
|
Total
equity
|
177,160
|
|
|
168,360
|
|
Total liabilities
and equity
|
$
|
1,787,373
|
|
|
$
|
1,747,439
|
|
A. SCHULMAN,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine months ended
May 31,
|
|
2017
|
|
2016
|
|
(In
thousands)
|
Operating
activities:
|
|
|
|
Net income
|
$
|
24,615
|
|
|
$
|
27,157
|
|
Adjustments to
reconcile net income to net cash provided from (used in)
operating activities:
|
|
|
|
Depreciation
|
32,455
|
|
|
37,347
|
|
Amortization
|
26,381
|
|
|
30,163
|
|
Deferred tax
provision (benefit)
|
(9,539)
|
|
|
(2,395)
|
|
Pension,
postretirement benefits and other compensation
|
5,302
|
|
|
3,161
|
|
Changes in assets and
liabilities, net of acquisitions:
|
|
|
|
Accounts
receivable
|
(32,841)
|
|
|
2,574
|
|
Inventories
|
(32,694)
|
|
|
19,900
|
|
Accounts
payable
|
64,795
|
|
|
(8,145)
|
|
Income
taxes
|
(5,122)
|
|
|
(9,955)
|
|
Accrued payroll and
other accrued liabilities
|
(1,131)
|
|
|
2,583
|
|
Other assets and
long-term liabilities
|
1,345
|
|
|
(6,718)
|
|
Net cash provided
from (used in) operating activities
|
73,566
|
|
|
95,672
|
|
Investing
activities
|
|
|
|
Expenditures for
property, plant and equipment
|
(30,719)
|
|
|
(34,618)
|
|
Proceeds from the
sale of assets
|
2,750
|
|
|
1,184
|
|
Other investing
activities
|
125
|
|
|
—
|
|
Net cash provided
from (used in) investing activities
|
(27,844)
|
|
|
(33,434)
|
|
Financing
activities:
|
|
|
|
Cash dividends paid
to special stockholders
|
(5,625)
|
|
|
(5,625)
|
|
Cash dividends paid
to common stockholders
|
(18,129)
|
|
|
(18,012)
|
|
Increase (decrease)
in short-term debt
|
(2,283)
|
|
|
2,780
|
|
Borrowings on
revolving credit facility
|
283,943
|
|
|
124,671
|
|
Repayments of
revolving credit facility
|
(228,973)
|
|
|
(112,470)
|
|
Repayments of other
long-term debt and capital leases
|
(66,735)
|
|
|
(97,978)
|
|
Noncontrolling
interests' distributions
|
(53)
|
|
|
—
|
|
Issuances of stock,
common and treasury
|
143
|
|
|
213
|
|
Redemptions of common
stock
|
(711)
|
|
|
(1,077)
|
|
Purchases of treasury
stock
|
—
|
|
|
—
|
|
Net cash provided
from (used in) financing activities
|
(38,423)
|
|
|
(107,498)
|
|
Effect of exchange
rate changes on cash
|
496
|
|
|
(2,186)
|
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
7,795
|
|
|
(47,446)
|
|
Cash, cash
equivalents, and restricted cash at beginning of
period
|
43,403
|
|
|
96,872
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
51,198
|
|
|
$
|
49,426
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
50,130
|
|
|
$
|
47,019
|
|
Restricted
cash
|
1,068
|
|
|
2,407
|
|
Total cash, cash
equivalents, and restricted cash
|
$
|
51,198
|
|
|
$
|
49,426
|
|
A. SCHULMAN,
INC.
Reconciliation of
GAAP and Non-GAAP Financial Measures
Unaudited
|
|
Three months ended
May 31, 2017
|
|
Cost of
Sales
|
|
Gross
Margin
|
|
SG&A
|
|
Restructuring
Expense
|
|
Operating
Income
|
|
Non
Operating
(Income)
Expense
|
|
Income
Tax
Expense
(Benefit)
|
|
Net Income
Available to
ASI Common
Stockholders
|
|
Diluted
EPS
|
|
|
(In thousands, except
for %'s and per share data)
|
As
reported
|
|
$
|
547,368
|
|
|
15.2
|
%
|
|
$
|
65,266
|
|
|
$
|
939
|
|
|
$
|
32,222
|
|
|
$
|
12,429
|
|
|
$
|
3,695
|
|
|
$
|
13,903
|
|
|
$
|
0.47
|
|
Certain
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
depreciation (1)
|
|
(236)
|
|
|
|
|
(1)
|
|
|
—
|
|
|
237
|
|
|
—
|
|
|
49
|
|
|
188
|
|
|
0.01
|
|
Restructuring and
related costs (3)
|
|
—
|
|
|
|
|
(1,993)
|
|
|
(939)
|
|
|
2,932
|
|
|
—
|
|
|
604
|
|
|
2,328
|
|
|
0.07
|
|
Lucent costs
(4)
|
|
(104)
|
|
|
|
|
(1,626)
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
356
|
|
|
1,374
|
|
|
0.05
|
|
Tax (benefits)
charges (7)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(890)
|
|
|
890
|
|
|
0.03
|
|
Gain on asset sale
(10)
|
|
|
|
|
|
|
|
|
|
—
|
|
|
169
|
|
|
(35)
|
|
|
(134)
|
|
|
—
|
|
Total certain
items
|
|
(340)
|
|
|
0.1
|
%
|
|
(3,620)
|
|
|
(939)
|
|
|
4,899
|
|
|
169
|
|
|
84
|
|
|
4,646
|
|
|
0.16
|
|
As
Adjusted
|
|
$
|
547,028
|
|
|
15.3
|
%
|
|
$
|
61,646
|
|
|
$
|
—
|
|
|
$
|
37,121
|
|
|
$
|
12,598
|
|
|
$
|
3,779
|
|
|
$
|
18,549
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Revenue
|
|
|
|
|
|
9.5
|
%
|
|
|
|
5.7
|
%
|
|
|
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
May 31, 2016
|
|
Cost of
Sales
|
|
Gross
Margin
|
|
SG&A
|
|
Restructuring
Expense
|
|
Operating
Income
|
|
Non
Operating
(Income)
Expense
|
|
Income
Tax
Expense
(Benefit)
|
|
Net Income
Available to
ASI Common
Stockholders
|
|
Diluted
EPS
|
|
|
(In thousands, except
for %'s and per share data)
|
As
reported
|
|
$
|
540,965
|
|
|
16.8
|
%
|
|
$
|
73,641
|
|
|
$
|
4,245
|
|
|
$
|
31,588
|
|
|
$
|
13,638
|
|
|
$
|
312
|
|
|
$
|
15,522
|
|
|
$
|
0.53
|
|
Convertible special
stock dividends (9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,875
|
|
|
0.03
|
|
Certain
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
depreciation (1)
|
|
(1,283)
|
|
|
|
|
(3)
|
|
|
—
|
|
|
1,286
|
|
|
—
|
|
|
243
|
|
|
1,043
|
|
|
0.03
|
|
Costs related to
acquisitions and integrations (2)
|
|
(423)
|
|
|
|
|
(1,020)
|
|
|
—
|
|
|
1,443
|
|
|
—
|
|
|
235
|
|
|
1,208
|
|
|
0.04
|
|
Restructuring and
related costs (3)
|
|
(1,647)
|
|
|
|
|
(3,628)
|
|
|
(4,245)
|
|
|
9,520
|
|
|
(127)
|
|
|
2,099
|
|
|
7,548
|
|
|
0.23
|
|
Lucent costs
(4)
|
|
(466)
|
|
|
|
|
(1,485)
|
|
|
—
|
|
|
1,951
|
|
|
—
|
|
|
385
|
|
|
1,566
|
|
|
0.05
|
|
Accelerated
amortization of debt issuance costs (6)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(163)
|
|
|
34
|
|
|
129
|
|
|
—
|
|
Tax (benefits)
charges (7)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,664
|
|
|
(3,664)
|
|
|
(0.12)
|
|
Total certain
items
|
|
(3,819)
|
|
|
0.6
|
%
|
|
(6,136)
|
|
|
(4,245)
|
|
|
14,200
|
|
|
(290)
|
|
|
6,660
|
|
|
9,705
|
|
|
0.26
|
|
As
Adjusted
|
|
$
|
537,146
|
|
|
17.4
|
%
|
|
$
|
67,505
|
|
|
$
|
—
|
|
|
$
|
45,788
|
|
|
$
|
13,348
|
|
|
$
|
6,972
|
|
|
$
|
25,227
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Revenue
|
|
|
|
|
|
10.4
|
%
|
|
|
|
7.0
|
%
|
|
|
|
—
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.5
|
%
|
|
|
|
|
Nine months ended
May 31, 2017
|
|
Cost of
Sales
|
|
Gross
Margin
|
|
SG&A
|
|
Restructuring
Expense
|
|
Operating
Income
|
|
Non
Operating
(Income)
Expense
|
|
Income
Tax
Expense
(Benefit)
|
|
Net Income
Available to
ASI Common
Stockholders
|
|
Diluted
EPS
|
|
|
(In thousands, except
for %'s and per share data)
|
As
reported
|
|
$
|
1,525,845
|
|
|
15.9
|
%
|
|
$
|
203,608
|
|
|
$
|
12,361
|
|
|
$
|
72,659
|
|
|
$
|
39,887
|
|
|
$
|
8,157
|
|
|
$
|
18,122
|
|
|
$
|
0.61
|
|
Certain
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment
(8)
|
|
—
|
|
|
|
|
(678)
|
|
|
—
|
|
|
678
|
|
|
(1,623)
|
|
|
474
|
|
|
1,827
|
|
|
0.06
|
|
Accelerated
depreciation (1)
|
|
(1,059)
|
|
|
|
|
(1)
|
|
|
—
|
|
|
1,060
|
|
|
—
|
|
|
218
|
|
|
842
|
|
|
0.03
|
|
Costs related to
acquisitions and integrations (2)
|
|
(57)
|
|
|
|
|
(548)
|
|
|
—
|
|
|
605
|
|
|
—
|
|
|
125
|
|
|
480
|
|
|
0.02
|
|
Restructuring and
related costs (3)
|
|
(1,042)
|
|
|
|
|
(7,773)
|
|
|
(12,361)
|
|
|
21,176
|
|
|
—
|
|
|
4,362
|
|
|
16,814
|
|
|
0.56
|
|
Lucent costs
(4)
|
|
(190)
|
|
|
|
|
(2,945)
|
|
|
—
|
|
|
3,135
|
|
|
—
|
|
|
646
|
|
|
2,489
|
|
|
0.08
|
|
CEO transition costs
(5)
|
|
—
|
|
|
|
|
(196)
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
40
|
|
|
156
|
|
|
0.01
|
|
Accelerated
amortization of debt issuance costs (6)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(227)
|
|
|
47
|
|
|
180
|
|
|
0.01
|
|
Tax (benefits)
charges (7)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,428)
|
|
|
1,428
|
|
|
0.05
|
|
Gain on asset sale
(10)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|
(35)
|
|
|
(134)
|
|
|
—
|
|
Total certain
items
|
|
(2,348)
|
|
|
0.1
|
%
|
|
(12,141)
|
|
|
(12,361)
|
|
|
26,850
|
|
|
(1,681)
|
|
|
4,449
|
|
|
24,082
|
|
|
0.82
|
|
As
Adjusted
|
|
$
|
1,523,497
|
|
|
16.0
|
%
|
|
$
|
191,467
|
|
|
$
|
—
|
|
|
$
|
99,509
|
|
|
$
|
38,206
|
|
|
$
|
12,606
|
|
|
$
|
42,204
|
|
|
$
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Revenue
|
|
|
|
|
|
10.6
|
%
|
|
|
|
5.5
|
%
|
|
|
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
May 31, 2016
|
|
Cost of
Sales
|
|
Gross
Margin
|
|
SG&A
|
|
Restructuring
Expense
|
|
Operating
Income
|
|
Non
Operating
(Income)
Expense
|
|
Income
Tax
Expense
(Benefit)
|
|
Net Income
Available to
ASI Common
Stockholders
|
|
Diluted
EPS
|
|
|
(In thousands, except
for %'s and per share data)
|
As
reported
|
|
$
|
1,587,192
|
|
|
16.1
|
%
|
|
$
|
222,482
|
|
|
$
|
8,005
|
|
|
$
|
73,740
|
|
|
$
|
42,507
|
|
|
$
|
4,076
|
|
|
$
|
20,457
|
|
|
$
|
0.69
|
|
Certain
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
depreciation (1)
|
|
(4,779)
|
|
|
|
|
(17)
|
|
|
—
|
|
|
4,796
|
|
|
—
|
|
|
1,127
|
|
|
3,669
|
|
|
0.12
|
|
Costs related to
acquisitions and integrations (2)
|
|
(2,522)
|
|
|
|
|
(5,048)
|
|
|
—
|
|
|
7,570
|
|
|
—
|
|
|
1,779
|
|
|
5,791
|
|
|
0.19
|
|
Restructuring and
related costs (3)
|
|
(2,532)
|
|
|
|
|
(9,422)
|
|
|
(8,005)
|
|
|
19,959
|
|
|
(488)
|
|
|
4,872
|
|
|
15,575
|
|
|
0.54
|
|
Lucent costs
(4)
|
|
(1,844)
|
|
|
|
|
(4,424)
|
|
|
—
|
|
|
6,268
|
|
|
—
|
|
|
1,473
|
|
|
4,795
|
|
|
0.17
|
|
Accelerated
amortization of debt issuance costs (6)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(437)
|
|
|
103
|
|
|
334
|
|
|
0.01
|
|
Tax (benefits)
charges (7)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,197
|
|
|
(3,197)
|
|
|
(0.11)
|
|
Total certain
items
|
|
(11,677)
|
|
|
0.6
|
%
|
|
(18,911)
|
|
|
(8,005)
|
|
|
38,593
|
|
|
(925)
|
|
|
12,551
|
|
|
26,967
|
|
|
0.92
|
|
As
Adjusted
|
|
$
|
1,575,515
|
|
|
16.7
|
%
|
|
$
|
203,571
|
|
|
$
|
—
|
|
|
$
|
112,333
|
|
|
$
|
41,582
|
|
|
$
|
16,627
|
|
|
$
|
47,424
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Revenue
|
|
|
|
|
|
10.8
|
%
|
|
|
|
5.9
|
%
|
|
|
|
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.5
|
%
|
|
|
|
|
1 - Accelerated depreciation is related to restructuring plans
in the Company's USCAN and EMEA segments.
2 - Costs related to acquisitions and integrations primarily
include third party professional, legal, IT and other expenses
associated with successful and unsuccessful full or partial
acquisition and divestiture/dissolution transactions, as well as
certain employee-related expenses such as travel, one-time bonuses
and post-acquisition severance separate from a formal restructuring
plan.
3 - Restructuring and related costs include items such as
employee severance charges, lease termination charges, curtailment
gains/losses, other employee termination costs and charges related
to the reorganization of the legal entity structure. Refer to Note
12 in the Company's Quarterly Report on Form 10-Q for further
discussion.
4 - Lucent costs primarily represent legal and investigation
costs related to resolving the Lucent matter, product manufacturing
costs for reworking existing Lucent inventory, obsolete Lucent
inventory reserve costs, and dedicated internal personnel costs
that would have otherwise been focused on normal operations.
5 - CEO transition costs represent charges for deferred
compensation granted to Bernard
Rzepka.
6 - Write off of debt issuance costs are related to prepayments
of $56.0 million of Term Loan B.
Refer to Note 3 in the Company's Quarterly Report on Form 10-Q for
further discussion.
7 - Tax (benefits) charges represent the Company's quarterly
non-GAAP tax based on the overall estimated annual non-GAAP
effective tax rates.
8 - Asset impairment relates to the discontinuation of
information technology assets in the USCAN segment and future cash
settlement of a commitment to a local government.
9 - Convertible special stock dividends have been added back as
the 2.4 million shares of convertible special stock were considered
dilutive to the third quarter of fiscal 2016.
10 - Gain related to sale of assets that had previously been
classified as held for sale.
A. SCHULMAN,
INC.
ADJUSTED EBITDA
RECONCILIATION
(Unaudited)
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Net income
available to A. Schulman, Inc.
common stockholders
|
$
|
13,903
|
|
|
$
|
15,522
|
|
|
$
|
18,122
|
|
|
$
|
20,457
|
|
Interest expense
|
13,179
|
|
|
13,557
|
|
|
39,450
|
|
|
40,965
|
|
Provision for U.S. and
foreign income taxes
|
3,695
|
|
|
312
|
|
|
8,157
|
|
|
4,076
|
|
Depreciation and
amortization
|
18,977
|
|
|
22,409
|
|
|
58,836
|
|
|
67,510
|
|
Noncontrolling
interests
|
320
|
|
|
241
|
|
|
868
|
|
|
1,075
|
|
Convertible special stock
dividends
|
1,875
|
|
|
1,875
|
|
|
5,625
|
|
|
5,625
|
|
Other (1)
|
(750)
|
|
|
163
|
|
|
437
|
|
|
1,825
|
|
EBITDA, as
calculated
|
$
|
51,199
|
|
|
$
|
54,079
|
|
|
$
|
131,495
|
|
|
$
|
141,533
|
|
Non-GAAP Adjustments
(2)
|
4,765
|
|
|
12,832
|
|
|
25,790
|
|
|
33,501
|
|
EBITDA, as
adjusted
|
$
|
55,964
|
|
|
$
|
66,911
|
|
|
$
|
157,285
|
|
|
$
|
175,034
|
|
|
|
|
|
|
|
|
|
(1) - Other includes Foreign currency transaction (gains) losses
and Other (income) expense, net.
(2) - For details on Non-GAAP adjustments, refer to
"Reconciliation of GAAP and Non-GAAP Financial Measures", items (2)
- (8). Amounts are included in Operating Income. Accelerated
depreciation on the "Reconciliation of GAAP and Non-GAAP Financial
Measures" has been excluded as it is already included in
Depreciation and amortization above. The three months ended
May 31, 2017 exclude additional
depreciation expense which is in restructuring and related costs as
it has already been included in Depreciation and amortization
above. The nine months ended May 31,
2016 also include additional amortization expense which is
in SG&A in the "Reconciliation of GAAP and Non-GAAP Financial
Measures". This expense has been added back to adjusted
EBITDA.
A. SCHULMAN,
INC.
SUPPLEMENTAL
SEGMENT INFORMATION
(Unaudited)
|
|
|
|
Net
Sales
|
|
Net
Sales
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
EMEA
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
Custom
Concentrates
and Services
|
|
$
|
174,394
|
|
|
$
|
177,863
|
|
|
$
|
(3,469)
|
|
|
(2.0)
|
%
|
|
$
|
481,512
|
|
|
$
|
506,773
|
|
|
$
|
(25,261)
|
|
|
(5.0)
|
%
|
Performance
Materials
|
|
143,632
|
|
|
144,505
|
|
|
(873)
|
|
|
(0.6)
|
%
|
|
409,488
|
|
|
434,021
|
|
|
(24,533)
|
|
|
(5.7)
|
%
|
Total EMEA
|
|
$
|
318,026
|
|
|
$
|
322,368
|
|
|
$
|
(4,342)
|
|
|
(1.3)
|
%
|
|
$
|
891,000
|
|
|
$
|
940,794
|
|
|
$
|
(49,794)
|
|
|
(5.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Net
Sales
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
USCAN
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
Custom
Concentrates
and Services
|
|
$
|
65,613
|
|
|
$
|
66,841
|
|
|
$
|
(1,228)
|
|
|
(1.8)
|
%
|
|
$
|
188,496
|
|
|
$
|
194,153
|
|
|
$
|
(5,657)
|
|
|
(2.9)
|
%
|
Performance
Materials
|
|
102,268
|
|
|
116,497
|
|
|
(14,229)
|
|
|
(12.2)
|
%
|
|
287,721
|
|
|
338,284
|
|
|
(50,563)
|
|
|
(14.9)
|
%
|
Total
USCAN
|
|
$
|
167,881
|
|
|
$
|
183,338
|
|
|
$
|
(15,457)
|
|
|
(8.4)
|
%
|
|
$
|
476,217
|
|
|
$
|
532,437
|
|
|
$
|
(56,220)
|
|
|
(10.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Net
Sales
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
LATAM
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
Custom
Concentrates
and Services
|
|
$
|
32,396
|
|
|
$
|
32,156
|
|
|
$
|
240
|
|
|
0.7
|
%
|
|
$
|
89,739
|
|
|
$
|
94,568
|
|
|
$
|
(4,829)
|
|
|
(5.1)
|
%
|
Performance
Materials
|
|
15,012
|
|
|
11,221
|
|
|
3,791
|
|
|
33.8
|
%
|
|
39,547
|
|
|
32,170
|
|
|
7,377
|
|
|
22.9
|
%
|
Total
LATAM
|
|
$
|
47,408
|
|
|
$
|
43,377
|
|
|
$
|
4,031
|
|
|
9.3
|
%
|
|
$
|
129,286
|
|
|
$
|
126,738
|
|
|
$
|
2,548
|
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Net
Sales
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
APAC
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
Custom
Concentrates
and Services
|
|
$
|
24,514
|
|
|
$
|
23,531
|
|
|
$
|
983
|
|
|
4.2
|
%
|
|
$
|
72,677
|
|
|
$
|
69,191
|
|
|
$
|
3,486
|
|
|
5.0
|
%
|
Performance
Materials
|
|
28,714
|
|
|
23,349
|
|
|
5,365
|
|
|
23.0
|
%
|
|
80,202
|
|
|
68,444
|
|
|
11,758
|
|
|
17.2
|
%
|
Total APAC
|
|
$
|
53,228
|
|
|
$
|
46,880
|
|
|
$
|
6,348
|
|
|
13.5
|
%
|
|
$
|
152,879
|
|
|
$
|
137,635
|
|
|
$
|
15,244
|
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Net
Sales
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
Consolidated
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
Engineered
Composites
|
|
$
|
59,252
|
|
|
$
|
54,476
|
|
|
$
|
4,776
|
|
|
8.8
|
%
|
|
$
|
165,091
|
|
|
$
|
153,815
|
|
|
$
|
11,276
|
|
|
7.3
|
%
|
Custom
Concentrates
and Services
|
|
296,917
|
|
|
300,391
|
|
|
(3,474)
|
|
|
(1.2)
|
%
|
|
832,424
|
|
|
864,685
|
|
|
(32,261)
|
|
|
(3.7)
|
%
|
Performance
Materials
|
|
289,626
|
|
|
295,572
|
|
|
(5,946)
|
|
|
(2.0)
|
%
|
|
816,958
|
|
|
872,919
|
|
|
(55,961)
|
|
|
(6.4)
|
%
|
Total
Consolidated
|
|
$
|
645,795
|
|
|
$
|
650,439
|
|
|
$
|
(4,644)
|
|
|
(0.7)
|
%
|
|
$
|
1,814,473
|
|
|
$
|
1,891,419
|
|
|
$
|
(76,946)
|
|
|
(4.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross
Profit
|
|
Segment Gross
Profit
|
|
|
Three months ended
May 31,
|
|
Nine months ended
May 31,
|
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|
(In thousands, except
for %'s)
|
|
|
|
|
|
|
|
|
EMEA
|
|
$
|
42,509
|
|
|
$
|
49,852
|
|
|
$
|
(7,343)
|
|
|
(14.7)
|
%
|
|
$
|
126,297
|
|
|
$
|
136,489
|
|
|
$
|
(10,192)
|
|
|
(7.5)
|
%
|
USCAN
|
|
21,844
|
|
|
32,560
|
|
|
(10,716)
|
|
|
(32.9)
|
%
|
|
66,420
|
|
|
90,095
|
|
|
(23,675)
|
|
|
(26.3)
|
%
|
LATAM
|
|
9,928
|
|
|
9,055
|
|
|
873
|
|
|
9.6
|
%
|
|
28,940
|
|
|
27,226
|
|
|
1,714
|
|
|
6.3
|
%
|
APAC
|
|
9,155
|
|
|
8,080
|
|
|
1,075
|
|
|
13.3
|
%
|
|
27,189
|
|
|
24,153
|
|
|
3,036
|
|
|
12.6
|
%
|
EC
|
|
15,331
|
|
|
13,746
|
|
|
1,585
|
|
|
11.5
|
%
|
|
42,130
|
|
|
37,941
|
|
|
4,189
|
|
|
11.0
|
%
|
Total segment gross
profit
|
|
$
|
98,767
|
|
|
$
|
113,293
|
|
|
$
|
(14,526)
|
|
|
(12.8)
|
%
|
|
$
|
290,976
|
|
|
$
|
315,904
|
|
|
$
|
(24,928)
|
|
|
(7.9)
|
%
|
Accelerated
depreciation and
restructuring related costs
|
|
(236)
|
|
|
(2,930)
|
|
|
2,694
|
|
|
(91.9)
|
%
|
|
(2,101)
|
|
|
(7,311)
|
|
|
5,210
|
|
|
(71.3)
|
%
|
Costs related to
acquisitions
and integrations
|
|
—
|
|
|
(423)
|
|
|
423
|
|
|
—
|
%
|
|
(57)
|
|
|
(2,522)
|
|
|
2,465
|
|
|
(97.7)
|
%
|
Lucent costs
(1)
|
|
(104)
|
|
|
(466)
|
|
|
362
|
|
|
—
|
%
|
|
(190)
|
|
|
(1,844)
|
|
|
1,654
|
|
|
(89.7)
|
%
|
Total gross
profit
|
|
$
|
98,427
|
|
|
$
|
109,474
|
|
|
$
|
(11,047)
|
|
|
(10.1)%
|
|
|
$
|
288,628
|
|
|
$
|
304,227
|
|
|
$
|
(15,599)
|
|
|
(5.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Refer to Note 13, Commitments and Contingencies, for
additional discussion on this matter. Lucent costs in cost of sales
include additional product and manufacturing operational costs for
reworking inventory. Lucent costs in selling, general and
administrative expenses include legal and investigative costs. In
addition, in the three and nine months ended May 31, 2016, Lucent costs in SG&A also
include dedicated internal personnel costs that would have
otherwise been focused on normal operations.
(2)Retructuring related costs for the three and nine months
ended May 31, 2017 of $2.0 million and $8.8
million, respectively, and for the three and nine months
ended May 31, 2016 of $5.3 million and $12.0
million, respectively, primarily included in selling,
general and administrative expenses in the Company's statements of
operations, are costs associated with professional fees for outside
strategic consultants regarding actions to improve the
profitability of the organization and efficiency of its operations,
and costs associated with reorganizations of the legal entity
structure of the Company. Restructuring expenses included in
restructuring expense in the Company's statement of operations
include costs permitted under ASC 420, Exit or Disposal
Obligations, such as severance costs, outplacement services and
contract termination costs.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/a-schulman-reports-fiscal-2017-third-quarter-results-300481451.html
SOURCE A. Schulman, Inc.