A. Schulman, Inc. (Nasdaq:SHLM) today announced its financial
results for the fiscal 2017 fourth quarter and full-year results
for the year ended August 31, 2017.
For fiscal 2017, the Company reported net income of $25.5
million, or $0.86 per diluted share. Net income in the fourth
quarter was $7.4 million, or $0.25 per diluted share. On an
adjusted basis, net income for fiscal 2017 was $51.8 million, or
$1.75 per diluted share, and $9.6 million, or $0.32 per diluted
share, for the fourth quarter. Last year on an adjusted basis, the
Company reported full-year net income of $61.2 million,
or $2.08 per share, and fourth-quarter net income
of $13.7 million, or $0.47 per diluted
share.
“In fiscal 2017, our goal was to reset the business, setting the
stage for the progressive, long-term shareholder value creation our
investors expect from A. Schulman,” said Joseph M. Gingo, chairman,
president and chief executive officer. “I am proud of the progress
our team has made this past year. We have simplified our product
family structure, and tackled several difficult operational and
consolidation issues we faced. Further, we enhanced our sales
resources and improved our pricing processes to drive improving
operational and financial performance in fiscal 2018 and beyond. We
have more work and opportunities ahead of us.”
Consolidated net sales for fiscal 2017 was $2.5 billion,
flat with the prior year. In the fourth quarter, consolidated net
sales were $646.7 million, up approximately 7 percent from last
year’s fourth-quarter consolidated net sales of $604.6 million.
Operating income was $85.8 million and $13.1 million, for the full
year and fourth quarter of fiscal 2017, respectively. Operating
income, on an adjusted basis, was $126.5 million for fiscal 2017
and $27.0 million in the fourth quarter. On an adjusted basis,
operating income in fiscal 2016 was $145.9 million for the full
year and $33.6 million in the fourth quarter.
Working Capital/Cash Flow Cash provided
from operations was $104.7 million in the twelve months
ended August 31, 2017. Working capital days totaled 45 at
fiscal year-end 2017, compared with 48 days at fiscal year-end
2016. Cash flow was used to reduce total debt by $27.6
million in fiscal 2017, to a net leverage ratio of 4.15x.
Since the purchase of Citadel in mid-fiscal 2015, the Company has
paid down approximately $200 million of debt.
Capital expenditures for fiscal 2017 were $36.9 million,
compared with $51.2 million last year. Finally, during fiscal
2017, the Company declared and paid quarterly cash dividends to
common shareholders of $24.2 million, or $0.82 per
common share. Additional dividends of $7.5 million were
paid to holders of the convertible special stock.
Business Outlook Gingo stated, “Our businesses
in Latin America and Asia-Pacific are strong and growing – as is
our global Engineered Composites business. In fact, our Latin
American region had a record level of operating income for the year
while our Asia-Pacific region reported, excluding foreign currency,
a double-digit increase in operating income. Engineered Composite
growth was driven by Quantum®, our strong carbon fiber sheet
molding business. We will continue to invest in growth platforms
while building positive sales momentum in Europe. Lastly, we have
stabilized our U.S. and Canada business which will drive future
profitability,” he said.
The Company anticipates adjusted earnings before interest, tax,
depreciation and amortization (“EBITDA”) for fiscal 2018 to be in
the range of $220 million to $230 million. Fiscal 2018 adjusted
earnings per share (“EPS”) are expected to be between $2.00 and
$2.20 per diluted share. The mid-point of the EPS estimate
represents a 20% increase on a year-over-year basis.
“I believe fiscal 2018 will be the first year in our recovery as
we deliver growth that generates strong cash flows and drives
profit,” said Gingo. “If we execute our plan properly and capture
the opportunities we’ve created for ourselves, we will return A.
Schulman to a sustainable growth and profitability trajectory that
we experienced prior to fiscal 2015.”
Conference Call on the Web A
live Internet broadcast of A.
Schulman’s conference call regarding fiscal 2017
fourth-quarter earnings can be accessed at 9:00 a.m. Eastern
Time on October 26, 2017 on the Company’
website, www.aschulman.com. An archived replay of the call
will also be available on the website.
Investor Presentation Materials Senior
executives 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 54
manufacturing facilities globally. A. Schulman reported
net sales of approximately $2.5 billion for the fiscal
year ended August 31, 2017. 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 and unanticipated developments regarding
contingencies, such as pending and future litigation and other
claims, including developments that would require increases in our
costs and/or reserves for such contingencies;
- 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, 2017.
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
ContactJennifer K. BeemanVice
President, Corporate Communications & Investor RelationsA.
Schulman, Inc.3637 Ridgewood RoadFairlawn, Ohio 44333Tel:
330-668-7346Email: Jennifer.Beeman@aschulman.com
www.aschulman.com
A. SCHULMAN,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
Three months ended August 31, |
|
Year ended August 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Unaudited(In thousands, except per share data) |
Net
sales |
$ |
646,651 |
|
|
$ |
604,586 |
|
|
$ |
2,461,124 |
|
|
$ |
2,496,005 |
|
Cost of sales |
555,516 |
|
|
507,893 |
|
|
2,081,361 |
|
|
2,095,085 |
|
Selling, general and
administrative expenses |
74,813 |
|
|
74,243 |
|
|
277,365 |
|
|
296,725 |
|
Restructuring
expense |
1,159 |
|
|
3,763 |
|
|
13,520 |
|
|
11,768 |
|
Asset impairment |
— |
|
|
401,667 |
|
|
1,053 |
|
|
401,667 |
|
Curtailment and
settlement (gains) losses |
2,029 |
|
|
— |
|
|
2,029 |
|
|
— |
|
Operating income (loss) |
13,134 |
|
|
(382,980 |
) |
|
85,796 |
|
|
(309,240 |
) |
Interest expense |
13,745 |
|
|
13,583 |
|
|
53,195 |
|
|
54,548 |
|
Foreign currency
transaction (gains) losses |
206 |
|
|
1,420 |
|
|
1,781 |
|
|
3,491 |
|
Other (income) expense,
net |
(375 |
) |
|
(528 |
) |
|
(1,513 |
) |
|
(774 |
) |
Income (loss) from continuing operations before
taxes |
(442 |
) |
|
(397,455 |
) |
|
32,333 |
|
|
(366,505 |
) |
Provision (benefit) for
U.S. and foreign income taxes |
(9,997 |
) |
|
(12,716 |
) |
|
(1,840 |
) |
|
(8,640 |
) |
Income (loss) from continuing operations |
9,555 |
|
|
(384,739 |
) |
|
34,173 |
|
|
(357,865 |
) |
Income (loss) from
discontinued operations, net of tax |
— |
|
|
1,578 |
|
|
— |
|
|
1,861 |
|
Net income (loss) |
9,555 |
|
|
(383,161 |
) |
|
34,173 |
|
|
(356,004 |
) |
Noncontrolling
interests |
(280 |
) |
|
(43 |
) |
|
(1,147 |
) |
|
(1,118 |
) |
Net income (loss) attributable to A. Schulman,
Inc. |
9,275 |
|
|
(383,204 |
) |
|
33,026 |
|
|
(357,122 |
) |
Convertible special
stock dividends |
1,875 |
|
|
1,875 |
|
|
7,500 |
|
|
7,500 |
|
Net income (loss) available to A. Schulman, Inc. common
stockholders |
$ |
7,400 |
|
|
$ |
(385,079 |
) |
|
$ |
25,526 |
|
|
$ |
(364,622 |
) |
|
|
|
|
|
|
|
|
Weighted-average number of shares
outstanding: |
|
|
|
|
|
|
|
Basic |
29,428 |
|
|
29,347 |
|
|
29,401 |
|
|
29,300 |
|
Diluted |
29,560 |
|
|
29,347 |
|
|
29,515 |
|
|
29,300 |
|
|
|
|
|
|
|
|
|
Basic earnings per share available to A. Schulman, Inc.
common stockholders |
|
|
|
|
|
|
Income
(loss) from continuing operations |
$ |
0.25 |
|
|
$ |
(13.18 |
) |
|
$ |
0.87 |
|
|
$ |
(12.51 |
) |
Income
(loss) from discontinued operations |
$ |
— |
|
|
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.07 |
|
Net
income (loss) available to A. Schulman, Inc. common
stockholders |
$ |
0.25 |
|
|
$ |
(13.12 |
) |
|
$ |
0.87 |
|
|
$ |
(12.44 |
) |
|
|
|
|
|
|
|
|
Diluted earnings per share available to A. Schulman, Inc.
common stockholders |
|
|
|
|
|
|
Income
(loss) from continuing operations |
$ |
0.25 |
|
|
$ |
(13.18 |
) |
|
$ |
0.86 |
|
|
$ |
(12.51 |
) |
Income
(loss) from discontinued operations |
$ |
— |
|
|
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.07 |
|
Net
income (loss) available to A. Schulman, Inc. common
stockholders |
$ |
0.25 |
|
|
$ |
(13.12 |
) |
|
$ |
0.86 |
|
|
$ |
(12.44 |
) |
|
|
|
|
|
|
|
|
Cash dividends
per common share |
$ |
0.205 |
|
|
$ |
0.205 |
|
|
$ |
0.820 |
|
|
$ |
0.820 |
|
Cash dividends
per share of convertible special stock |
$ |
15.00 |
|
|
$ |
15.00 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
A. SCHULMAN, INC.CONSOLIDATED
BALANCE SHEETS |
|
|
August 31, 2017 |
|
August 31, 2016 |
|
Unaudited(In thousands) |
ASSETS |
Current
assets: |
|
|
|
Cash and cash
equivalents |
$ |
53,251 |
|
|
$ |
35,260 |
|
Restricted cash |
768 |
|
|
8,143 |
|
Accounts receivable,
net |
408,439 |
|
|
376,786 |
|
Inventories |
276,459 |
|
|
263,617 |
|
Prepaid expenses and
other current assets |
36,712 |
|
|
40,263 |
|
Assets held for
sale |
5,676 |
|
|
— |
|
Total current assets |
781,305 |
|
|
724,069 |
|
Net property, plant and
equipment |
298,703 |
|
|
314,822 |
|
Deferred charges and
other noncurrent assets |
77,847 |
|
|
88,161 |
|
Goodwill |
263,735 |
|
|
257,773 |
|
Intangible assets,
net |
332,190 |
|
|
362,614 |
|
Total assets |
$ |
1,753,780 |
|
|
$ |
1,747,439 |
|
LIABILITIES AND EQUITY |
Current
liabilities: |
|
|
|
Accounts payable |
$ |
318,820 |
|
|
$ |
280,060 |
|
U.S. and foreign income
taxes payable |
4,900 |
|
|
8,985 |
|
Accrued payroll, taxes
and related benefits |
46,951 |
|
|
47,569 |
|
Other accrued
liabilities |
61,761 |
|
|
67,704 |
|
Short-term debt |
32,013 |
|
|
25,447 |
|
Total current liabilities |
464,445 |
|
|
429,765 |
|
Long-term debt |
885,178 |
|
|
919,349 |
|
Pension plans |
135,691 |
|
|
145,108 |
|
Deferred income
taxes |
37,699 |
|
|
59,013 |
|
Other long-term
liabilities |
23,735 |
|
|
25,844 |
|
Total liabilities |
1,546,748 |
|
|
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 in 2017
and 48,510 shares in 2016 |
48,529 |
|
|
48,510 |
|
Additional paid-in
capital |
279,207 |
|
|
275,115 |
|
Accumulated other
comprehensive income (loss) |
(88,523 |
) |
|
(120,721 |
) |
Retained earnings |
220,357 |
|
|
219,039 |
|
Treasury stock, at
cost, 19,063 shares in 2017 and 19,069 shares in 2016 |
(382,841 |
) |
|
(382,963 |
) |
Total A. Schulman, Inc.’s stockholders’
equity |
197,018 |
|
|
159,269 |
|
Noncontrolling
interests |
10,014 |
|
|
9,091 |
|
Total equity |
207,032 |
|
|
168,360 |
|
Total liabilities and equity |
$ |
1,753,780 |
|
|
$ |
1,747,439 |
|
A. SCHULMAN, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
|
Year ended August 31, |
|
2017 |
|
2016 |
|
Unaudited |
|
(In thousands) |
Operating from
continuing and discontinued operations: |
|
|
|
Net
income (loss) |
$ |
34,173 |
|
|
$ |
(356,004 |
) |
Adjustments to
reconcile net income to net cash provided from (used in) operating
activities: |
|
|
|
Depreciation |
43,768 |
|
|
49,925 |
|
Amortization |
35,038 |
|
|
39,339 |
|
Deferred
tax provision |
(21,970 |
) |
|
(37,919 |
) |
Pension,
postretirement benefits and other compensation |
9,520 |
|
|
3,516 |
|
Asset
impairment |
1,053 |
|
|
401,667 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
Accounts
receivable |
(19,077 |
) |
|
28,227 |
|
Inventories |
(3,911 |
) |
|
44,627 |
|
Accounts
payable |
33,806 |
|
|
(27,465 |
) |
Income
taxes |
(2,793 |
) |
|
12,549 |
|
Accrued
payroll and other accrued liabilities |
(9,360 |
) |
|
(9,319 |
) |
Other
assets and long-term liabilities |
4,471 |
|
|
(1,016 |
) |
Net cash
provided from (used in) operating activities |
104,718 |
|
|
148,127 |
|
Investing from
continuing and discontinued operations: |
|
|
|
Expenditures for property, plant and equipment |
(36,866 |
) |
|
(51,238 |
) |
Proceeds
from the sale of assets |
4,401 |
|
|
1,366 |
|
Distributions from (investments in) equity investees |
250 |
|
|
— |
|
Net cash
provided from (used in) investing activities |
(32,215 |
) |
|
(49,872 |
) |
Financing from
continuing and discontinued operations: |
|
|
|
Cash
dividends paid to common stockholders |
(24,208 |
) |
|
(24,029 |
) |
Cash
dividends paid to special stockholders |
(7,500 |
) |
|
(7,500 |
) |
Increase
(decrease) in short-term debt |
6,328 |
|
|
2,945 |
|
Borrowings on long-term debt |
392,593 |
|
|
244,231 |
|
Repayments on long-term debt including current portion |
(429,187 |
) |
|
(362,002 |
) |
Noncontrolling interests' distributions |
(53 |
) |
|
— |
|
Issuances
of common stock, common and treasury |
191 |
|
|
258 |
|
Redemptions of common stock |
(711 |
) |
|
(1,139 |
) |
Net cash
provided from (used in) financing activities |
(62,547 |
) |
|
(147,236 |
) |
Effect of
exchange rate changes on cash |
660 |
|
|
(4,488 |
) |
Net increase
(decrease) in cash, cash equivalents, and restricted
cash |
10,616 |
|
|
(53,469 |
) |
Cash, cash
equivalents, and restricted cash at beginning of year |
43,403 |
|
|
96,872 |
|
Cash, cash
equivalents, and restricted cash at end of year |
$ |
54,019 |
|
|
$ |
43,403 |
|
|
|
|
|
Cash paid
during the year for: |
|
|
|
Interest |
$ |
49,044 |
|
|
$ |
54,432 |
|
Income
taxes |
$ |
20,932 |
|
|
$ |
22,392 |
|
A. SCHULMAN,
INC.Reconciliation of GAAP and Non-GAAP Financial
MeasuresUnaudited |
|
Three months ended August 31,
2017 |
|
Cost of Sales |
|
Gross Margin |
|
SG&A |
|
Restructuring Expense |
|
Asset Impairment |
|
Operating Income (Loss) |
|
Non Operating (Income) Expense |
|
Income tax expense (benefit) |
|
Net Income Available to ASI Common
Stockholders |
|
Diluted EPS |
|
|
|
(In thousands, except for %'s, per pound and per share
data) |
As
reported |
|
$ |
555,516 |
|
|
14.1 |
% |
|
$ |
74,813 |
|
|
$ |
1,159 |
|
|
$ |
— |
|
|
$ |
13,134 |
|
|
$ |
13,576 |
|
|
$ |
(9,997 |
) |
|
$ |
7,400 |
|
|
$ |
0.25 |
|
Certain items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments (1) |
|
— |
|
|
|
|
(375 |
) |
|
— |
|
|
— |
|
|
375 |
|
|
(1,265 |
) |
|
188 |
|
|
1,452 |
|
|
0.05 |
|
Accelerated depreciation (2) |
|
(588 |
) |
|
|
|
(243 |
) |
|
— |
|
|
— |
|
|
831 |
|
|
— |
|
|
279 |
|
|
552 |
|
|
0.02 |
|
Restructuring & related costs (4) |
|
(408 |
) |
|
|
|
(6,229 |
) |
|
(1,159 |
) |
|
— |
|
|
7,796 |
|
|
— |
|
|
2,912 |
|
|
4,884 |
|
|
0.16 |
|
Lucent costs (5) |
|
— |
|
|
|
|
(2,830 |
) |
|
— |
|
|
— |
|
|
2,830 |
|
|
— |
|
|
1,070 |
|
|
1,760 |
|
|
0.06 |
|
Curtailment loss |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
2,029 |
|
|
— |
|
|
699 |
|
|
1,330 |
|
|
0.04 |
|
Gain on asset sale (9) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,036 |
|
|
(343 |
) |
|
(693 |
) |
|
(0.02 |
) |
Tax (benefits) charges (8) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7,127 |
|
|
(7,127 |
) |
|
(0.24 |
) |
Total certain items |
|
(996 |
) |
|
0.1 |
% |
|
(9,677 |
) |
|
(1,159 |
) |
|
— |
|
|
13,861 |
|
|
(229 |
) |
|
11,932 |
|
|
2,158 |
|
|
0.07 |
|
As
Adjusted |
|
$ |
554,520 |
|
|
14.2 |
% |
|
$ |
65,136 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,995 |
|
|
$ |
13,347 |
|
|
$ |
1,935 |
|
|
$ |
9,558 |
|
|
$ |
0.32 |
|
Percentage of Revenue |
|
|
|
|
|
10.1 |
% |
|
|
|
|
|
4.2 |
% |
|
|
|
|
|
1.5 |
% |
|
|
Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended August 31,
2016 |
|
Cost of Sales |
|
Gross Margin |
|
SG&A |
|
Restructuring Expense |
|
Asset Impairment |
|
Operating Income |
|
Non Operating (Income) Expense |
|
Income tax expense (benefit) |
|
Net Income Available to ASI Common
Stockholders |
|
Diluted EPS |
|
|
|
(In thousands, except for %'s, per pound and per share
data) |
As
reported |
|
$ |
507,893 |
|
|
16.0 |
% |
|
$ |
74,243 |
|
|
$ |
3,763 |
|
|
401,667 |
|
|
$ |
(382,980 |
) |
|
$ |
14,475 |
|
|
$ |
(12,716 |
) |
|
$ |
(385,079 |
) |
|
$ |
(13.12 |
) |
Certain items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments (1) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
(401,667 |
) |
|
401,667 |
|
|
— |
|
|
90,375 |
|
|
311,292 |
|
|
10.62 |
|
Accelerated depreciation (2) |
|
(1,509 |
) |
|
|
|
(4 |
) |
|
— |
|
|
— |
|
|
1,513 |
|
|
|
|
292 |
|
|
1,221 |
|
|
0.04 |
|
Costs related to acquisitions & integrations (3)
|
|
(247 |
) |
|
|
|
(972 |
) |
|
— |
|
|
— |
|
|
1,219 |
|
|
— |
|
|
199 |
|
|
1,020 |
|
|
0.03 |
|
Restructuring & related costs (4) |
|
1,249 |
|
|
|
|
(5,289 |
) |
|
(3,763 |
) |
|
— |
|
|
7,803 |
|
|
1 |
|
|
1,548 |
|
|
6,254 |
|
|
0.22 |
|
Lucent costs (5) |
|
(241 |
) |
|
|
|
(752 |
) |
|
— |
|
|
— |
|
|
993 |
|
|
— |
|
|
161 |
|
|
832 |
|
|
0.03 |
|
Deferred financing fees (6) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(165 |
) |
|
33 |
|
|
132 |
|
|
— |
|
CEO transition costs (7) |
|
— |
|
|
|
|
(3,399 |
) |
|
— |
|
|
— |
|
|
3,399 |
|
|
|
|
765 |
|
|
2,634 |
|
|
0.09 |
|
Tax (benefits) charges (8) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(77,021 |
) |
|
77,021 |
|
|
2.62 |
|
Loss (income) from discontinued operations |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,578 |
) |
|
(0.06 |
) |
Total certain items |
|
(748 |
) |
|
0.1 |
% |
|
(10,416 |
) |
— |
|
(3,763 |
) |
|
(401,667 |
) |
— |
|
416,594 |
|
|
(164 |
) |
|
16,352 |
|
|
398,828 |
|
|
13.59 |
|
As
Adjusted |
|
$ |
507,145 |
|
|
16.1 |
% |
|
$ |
63,827 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
33,614 |
|
|
$ |
14,311 |
|
|
$ |
3,636 |
|
|
$ |
13,749 |
|
|
$ |
0.47 |
|
Percentage of Revenue |
|
|
|
|
|
10.6 |
% |
|
|
|
|
|
5.6 |
% |
|
|
|
|
|
2.3 |
% |
|
|
Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.8 |
% |
|
|
|
|
A. SCHULMAN,
INC.Reconciliation of GAAP and Non-GAAP Financial
Measures |
|
Year Ended August 31, 2017 |
|
Cost of Sales |
|
Gross Margin |
|
SG&A |
|
Restructuring Expense |
|
Asset Impairment |
|
Operating Income (Loss) |
|
Non Operating (Income) Expense |
|
Income tax expense (benefit) |
|
Net Income Available to ASI Common
Stockholders |
|
Diluted EPS |
|
|
|
(In thousands, except for %'s, per pound and per share
data) |
As
reported |
|
$ |
2,081,361 |
|
|
15.4 |
% |
|
$ |
277,365 |
|
|
$ |
13,520 |
|
|
$ |
1,053 |
|
|
$ |
85,796 |
|
|
$ |
53,463 |
|
|
$ |
(1,840 |
) |
|
$ |
25,526 |
|
|
$ |
0.86 |
|
Certain items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments (1) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
(1,053 |
) |
|
1,053 |
|
|
(2,888 |
) |
|
662 |
|
|
3,279 |
|
|
0.11 |
|
Accelerated depreciation (2) |
|
(1,647 |
) |
|
|
|
(244 |
) |
|
— |
|
|
— |
|
|
1,891 |
|
|
— |
|
|
497 |
|
|
1,394 |
|
|
0.05 |
|
Costs related to acquisitions & integrations (3) |
|
(57 |
) |
|
|
|
(548 |
) |
|
— |
|
|
— |
|
|
605 |
|
|
— |
|
|
125 |
|
|
480 |
|
|
0.02 |
|
Restructuring & related costs (4) |
|
(1,450 |
) |
|
|
|
(14,002 |
) |
|
(13,520 |
) |
|
— |
|
|
28,972 |
|
|
— |
|
|
7,274 |
|
|
21,698 |
|
|
0.73 |
|
Lucent costs (5) |
|
(190 |
) |
|
|
|
(5,775 |
) |
|
— |
|
|
— |
|
|
5,965 |
|
|
— |
|
|
1,716 |
|
|
4,249 |
|
|
0.14 |
|
Curtailment loss |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
2,029 |
|
|
— |
|
|
699 |
|
|
1,330 |
|
|
0.05 |
|
Accelerated amortization of debt issuance costs (6) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(227 |
) |
|
47 |
|
|
180 |
|
|
0.01 |
|
CEO transition costs (7) |
|
— |
|
|
|
|
(196 |
) |
|
— |
|
|
— |
|
|
196 |
|
|
— |
|
|
40 |
|
|
156 |
|
|
0.01 |
|
Gain on asset sale (9) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,205 |
|
|
(378 |
) |
|
(827 |
) |
|
(0.03 |
) |
Tax (benefits) charges (8) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,693 |
|
|
(5,693 |
) |
|
(0.20 |
) |
Total certain items |
|
(3,344 |
) |
|
0.2 |
% |
|
(20,765 |
) |
|
(13,520 |
) |
|
(1,053 |
) |
|
40,711 |
|
|
(1,910 |
) |
|
16,375 |
|
|
26,246 |
|
|
0.89 |
|
As
Adjusted |
|
$ |
2,078,017 |
|
|
15.6 |
% |
|
$ |
256,600 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
126,507 |
|
|
$ |
51,553 |
|
|
$ |
14,535 |
|
|
$ |
51,772 |
|
|
$ |
1.75 |
|
Percentage of Revenue |
|
|
|
|
|
10.4 |
% |
|
|
|
|
|
5.1 |
% |
|
|
|
|
|
2.1 |
% |
|
|
Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 31, 2016 |
|
Cost of Sales |
|
Gross Margin |
|
SG&A |
|
Restructuring Expense |
|
Asset Impairment |
|
Operating Income |
|
Non Operating (Income) Expense |
|
Income tax expense (benefit) |
|
Net Income Available to ASI Common
Stockholders |
|
Diluted EPS |
|
|
|
(In thousands, except for %'s, per pound and per share
data) |
As
reported |
|
$ |
2,095,085 |
|
|
16.1 |
% |
|
$ |
296,725 |
|
|
$ |
11,768 |
|
|
$ |
401,667 |
|
|
$ |
(309,240 |
) |
|
$ |
57,265 |
|
|
$ |
(8,640 |
) |
|
$ |
(364,622 |
) |
|
$ |
(12.44 |
) |
Certain items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments (1) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
(401,667 |
) |
|
401,667 |
|
|
— |
|
|
90,375 |
|
|
311,292 |
|
|
10.59 |
|
Accelerated depreciation (2) |
|
(6,288 |
) |
|
|
|
(21 |
) |
|
— |
|
|
— |
|
|
6,309 |
|
|
— |
|
|
1,420 |
|
|
4,889 |
|
|
0.17 |
|
Costs related to acquisitions & integrations (3) |
|
(2,769 |
) |
|
|
|
(6,020 |
) |
|
— |
|
|
— |
|
|
8,789 |
|
|
— |
|
|
1,978 |
|
|
6,811 |
|
|
0.24 |
|
Restructuring and related costs (4) |
|
(1,283 |
) |
|
|
|
(14,711 |
) |
|
(11,768 |
) |
|
— |
|
|
27,762 |
|
|
(770 |
) |
|
6,420 |
|
|
22,113 |
|
|
0.76 |
|
Lucent costs (5) |
|
(2,085 |
) |
|
|
|
(5,176 |
) |
|
— |
|
|
— |
|
|
7,261 |
|
|
— |
|
|
1,634 |
|
|
5,627 |
|
|
0.19 |
|
Deferred financing fees (6) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(600 |
) |
|
135 |
|
|
465 |
|
|
0.02 |
|
CEO transition costs (7) |
|
— |
|
|
|
|
(3,399 |
) |
|
— |
|
|
— |
|
|
3,399 |
|
|
— |
|
|
765 |
|
|
2,634 |
|
|
0.09 |
|
Tax (benefits) charges (8) |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(73,824 |
) |
|
73,824 |
|
|
2.53 |
|
Loss (income) from discontinued operations |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,861 |
) |
|
(0.07 |
) |
Total certain items |
|
(12,425 |
) |
|
0.5 |
% |
|
(29,327 |
) |
|
(11,768 |
) |
|
(401,667 |
) |
|
455,187 |
|
|
(1,370 |
) |
|
28,903 |
|
|
425,794 |
|
|
14.52 |
|
As
Adjusted |
|
$ |
2,082,660 |
|
|
16.6 |
% |
|
$ |
267,398 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
145,947 |
|
|
$ |
55,895 |
|
|
$ |
20,263 |
|
|
$ |
61,172 |
|
|
$ |
2.08 |
|
Percentage of Revenue |
|
|
|
|
|
10.7 |
% |
|
|
|
|
|
5.8 |
% |
|
|
|
|
|
2.5 |
% |
|
|
Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.5 |
% |
|
|
|
|
1 - Asset impairments are related to goodwill and intangible
assets, and also include information technology assets, in the
Company's USCAN, EC and EMEA segments. Refer to Note 4 and
Note 19 of the 2017 Annual Report on Form 10-K for further
discussion.2 - Accelerated depreciation is related to restructuring
plans in the Company's USCAN, LATAM and EMEA segments. Refer to
Note 16 of the 2017 Annual Report on Form 10-K for further
discussion.3 - 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, bonuses
and post-acquisition severance separate from a formal restructuring
plan.4 - Restructuring and related costs include items such as
employee severance charges, lease termination charges, curtailment
gains/losses, other employee termination costs, and professional
fees related to the reorganization of the Company’s legal entity
structure, facility operations and compliance with new legislation,
and costs associated with new software implementation that are not
eligible for capitalization. Refer to Note 14 of the 2017 Annual
Report on Form 10-K for further discussion.5 - 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 in fiscal 2016.6 -
Accelerated amortization of deferred financing costs related to
Term Loan B prepayments. Refer to Note 5 of the 2017 Annual Report
on Form 10-K for further discussion.7 - CEO transition costs
represent charges related to the separation of the Company's
previous CEO, Bernard Rzepka.8 - Tax (benefits) charges represent
the Company's adjustment of reported tax expense to non-GAAP tax
based on the overall estimated annual non-GAAP effective tax
rates.9 - Gain related to sale of assets that had previously been
classified as held for sale.
A. SCHULMAN, INC.ADJUSTED
EBITDA RECONCILIATION |
|
|
Three months ended August 31, |
|
Year ended August 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Unaudited(In thousands) |
|
|
|
|
|
|
|
|
Net income
available to A. Schulman, Inc. commonstockholders |
$ |
7,400 |
|
|
$ |
(385,079 |
) |
|
$ |
25,526 |
|
|
$ |
(364,622 |
) |
Interest
expense |
13,745 |
|
|
13,583 |
|
|
53,195 |
|
|
54,548 |
|
Provision for
U.S. and foreign income taxes |
(9,997 |
) |
|
(12,716 |
) |
|
(1,840 |
) |
|
(8,640 |
) |
Depreciation and
Amortization |
19,970 |
|
|
21,754 |
|
|
78,806 |
|
|
89,264 |
|
Noncontrolling
interests |
280 |
|
|
43 |
|
|
1,147 |
|
|
1,118 |
|
Convertible
special stock dividends |
1,875 |
|
|
1,875 |
|
|
7,500 |
|
|
7,500 |
|
Other (1) |
(169 |
) |
|
892 |
|
|
268 |
|
|
2,717 |
|
EBITDA, as
calculated |
$ |
33,104 |
|
|
$ |
(359,648 |
) |
|
$ |
164,602 |
|
|
$ |
(218,115 |
) |
Non-GAAP
Adjustments (2) |
12,999 |
|
|
413,505 |
|
|
38,787 |
|
|
447,006 |
|
EBITDA, as
adjusted |
$ |
46,103 |
|
|
$ |
53,857 |
|
|
$ |
203,389 |
|
|
$ |
228,891 |
|
(1) - Other includes Foreign currency transaction (gains)
losses, Other (income) expense, net, and Gain on early
extinguishment of debt.
(2) - For details on Non-GAAP adjustments, refer to
"Reconciliation of GAAP and Non-GAAP Financial Measures", items
(1), (3) - (9) and Loss (income) from discontinued
operations. Amounts are included in Operating Income (Loss)
and Loss (income) from discontinued operations. 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.
A. SCHULMAN, INC.SUPPLEMENTAL
SEGMENT INFORMATION |
|
|
|
Net Sales |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
EMEA |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
Custom
Concentrates and Services |
|
$ |
170,423 |
|
|
$ |
157,266 |
|
|
$ |
13,157 |
|
|
8.4 |
% |
|
$ |
651,935 |
|
|
$ |
664,026 |
|
|
$ |
(12,091 |
) |
|
(1.8 |
)% |
Performance Materials |
|
147,396 |
|
|
141,903 |
|
|
5,493 |
|
|
3.9 |
% |
|
556,883 |
|
|
575,937 |
|
|
(19,054 |
) |
|
(3.3 |
)% |
Total
EMEA |
|
$ |
317,819 |
|
|
$ |
299,169 |
|
|
$ |
18,650 |
|
|
6.2 |
% |
|
$ |
1,208,818 |
|
|
$ |
1,239,963 |
|
|
$ |
(31,145 |
) |
|
(2.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
USCAN |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
Custom
Concentrates and Services |
|
$ |
70,151 |
|
|
$ |
61,420 |
|
|
$ |
8,731 |
|
|
14.2 |
% |
|
$ |
258,646 |
|
|
$ |
255,581 |
|
|
$ |
3,065 |
|
|
1.2 |
% |
Performance Materials |
|
94,073 |
|
|
97,512 |
|
|
(3,439 |
) |
|
(3.5 |
)% |
|
381,795 |
|
|
435,788 |
|
|
(53,993 |
) |
|
(12.4 |
)% |
Total
USCAN |
|
$ |
164,224 |
|
|
$ |
158,932 |
|
|
$ |
5,292 |
|
|
3.3 |
% |
|
$ |
640,441 |
|
|
$ |
691,369 |
|
|
$ |
(50,928 |
) |
|
(7.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
LATAM |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
Custom
Concentrates and Services |
|
$ |
35,346 |
|
|
$ |
32,616 |
|
|
$ |
2,730 |
|
|
8.4 |
% |
|
$ |
125,087 |
|
|
$ |
127,184 |
|
|
$ |
(2,097 |
) |
|
(1.6 |
)% |
Performance Materials |
|
14,719 |
|
|
12,296 |
|
|
2,423 |
|
|
19.7 |
% |
|
54,265 |
|
|
44,466 |
|
|
9,799 |
|
|
22.0 |
% |
Total
LATAM |
|
$ |
50,065 |
|
|
$ |
44,912 |
|
|
$ |
5,153 |
|
|
11.5 |
% |
|
$ |
179,352 |
|
|
$ |
171,650 |
|
|
$ |
7,702 |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
APAC |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
Custom
Concentrates and Services |
|
$ |
25,961 |
|
|
$ |
24,833 |
|
|
$ |
1,128 |
|
|
4.5 |
% |
|
$ |
98,637 |
|
|
$ |
94,023 |
|
|
$ |
4,614 |
|
|
4.9 |
% |
Performance Materials |
|
29,667 |
|
|
24,443 |
|
|
5,224 |
|
|
21.4 |
% |
|
109,870 |
|
|
92,888 |
|
|
16,982 |
|
|
18.3 |
% |
Total
APAC |
|
$ |
55,628 |
|
|
$ |
49,276 |
|
|
$ |
6,352 |
|
|
12.9 |
% |
|
$ |
208,507 |
|
|
$ |
186,911 |
|
|
$ |
21,596 |
|
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
Consolidated |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
Engineered Composites |
|
$ |
58,915 |
|
|
$ |
52,297 |
|
|
$ |
6,618 |
|
|
12.7 |
% |
|
224,006 |
|
|
206,112 |
|
|
$ |
17,894 |
|
|
8.7 |
% |
Custom
Concentrates and Services |
|
301,881 |
|
|
276,135 |
|
|
25,746 |
|
|
9.3 |
% |
|
1,134,305 |
|
|
1,140,814 |
|
|
(6,509 |
) |
|
(0.6 |
)% |
Performance Materials |
|
285,855 |
|
|
276,154 |
|
|
9,701 |
|
|
3.5 |
% |
|
1,102,813 |
|
|
1,149,079 |
|
|
(46,266 |
) |
|
(4.0 |
)% |
Total
Consolidated |
|
$ |
646,651 |
|
|
$ |
604,586 |
|
|
$ |
42,065 |
|
|
7.0 |
% |
|
$ |
2,461,124 |
|
|
$ |
2,496,005 |
|
|
$ |
(34,881 |
) |
|
(1.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. SCHULMAN, INC.SUPPLEMENTAL
SEGMENT INFORMATION(continued) |
|
|
|
Segment Gross Profit |
|
|
Three months ended August 31, |
|
Twelve months ended August 31, |
|
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
2017 |
|
2016 |
|
$ Change |
|
% Change |
|
|
(In thousands, except for %'s) |
EMEA |
|
$ |
34,887 |
|
|
$ |
41,887 |
|
|
(7,000 |
) |
|
(16.7 |
)% |
|
$ |
161,184 |
|
|
$ |
178,376 |
|
|
(17,192 |
) |
|
(9.6 |
)% |
USCAN |
|
25,348 |
|
|
25,234 |
|
|
114 |
|
|
0.5 |
% |
|
91,768 |
|
|
115,329 |
|
|
(23,561 |
) |
|
(20.4 |
)% |
LATAM |
|
9,625 |
|
|
9,660 |
|
|
(35 |
) |
|
(0.4 |
)% |
|
38,565 |
|
|
36,886 |
|
|
1,679 |
|
|
4.6 |
% |
APAC |
|
8,398 |
|
|
8,140 |
|
|
258 |
|
|
3.2 |
% |
|
35,587 |
|
|
32,293 |
|
|
3,294 |
|
|
10.2 |
% |
EC |
|
13,873 |
|
|
12,520 |
|
|
1,353 |
|
|
10.8 |
% |
|
56,003 |
|
|
50,461 |
|
|
5,542 |
|
|
11.0 |
% |
Total
segment gross profit |
|
92,131 |
|
|
97,441 |
|
|
(5,310 |
) |
|
(5.4 |
)% |
|
383,107 |
|
|
413,345 |
|
|
(30,238 |
) |
|
(7.3 |
)% |
Accelerated
depreciation and restructuring related costs (1) |
|
(996 |
) |
|
(260 |
) |
|
(736 |
) |
|
283.1 |
% |
|
(3,097 |
) |
|
(7,571 |
) |
|
4,474 |
|
|
(59.1 |
)% |
Costs related to
acquisitions |
|
— |
|
|
(247 |
) |
|
247 |
|
|
(100.0 |
)% |
|
(57 |
) |
|
(2,769 |
) |
|
2,712 |
|
|
(97.9 |
)% |
Lucent costs (2) |
|
— |
|
|
(241 |
) |
|
241 |
|
|
(100.0 |
)% |
|
(190 |
) |
|
(2,085 |
) |
|
1,895 |
|
|
(90.9 |
)% |
Total
gross profit |
|
$ |
91,135 |
|
|
$ |
96,693 |
|
|
(5,558 |
) |
|
(5.7 |
)% |
|
$ |
379,763 |
|
|
$ |
400,920 |
|
|
(21,157 |
) |
|
(5.3 |
)% |
(1) Restructuring related costs for the three
and twelve months ended August 31, 2017 of $6.6 million and $15.5
million, respectively, and for the three and twelve months ended
August 31, 2016 of $4.0 million and $16.0 million, respectively,
are costs associated with professional fees for outside strategic
consultants regarding actions to improve the profitability, improve
efficiency of its operations, comply with new legislation, costs
associated with new software implementation that are not eligible
for capitalization, and costs associated with reorganizations of
the legal entity structure of the Company. Restructuring expenses
for the three and twelve months ended August 31, 2017 and 2016
included in restructuring expense in the Company’s statements of
operations include costs permitted under ASC 420, Exit or Disposal
Obligations, such as severance costs, outplacement services and
contract termination costs.
(2) Refer to Note 17, Contingencies and Claims,
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 twelve months ended August 31,
2016, Lucent costs in SG&A also include dedicated internal
personnel costs that would have otherwise been focused on normal
operations.
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