CLEVELAND, July 24, 2018 /PRNewswire/ -- PolyOne
Corporation (NYSE: POL) today reported its second quarter results
for 2018. GAAP earnings per share was $0.64 in the second quarter of 2018 compared to
$0.60 in the second quarter of 2017.
Adjusted earnings per share expanded to $0.71 in the second quarter of 2018 from
$0.63 in the second quarter of 2017.
Special items for the second quarter of 2018, which primarily
included environmental remediation and legal costs, resulted in a
net after-tax charge of $5.9 million,
or $0.07 per share (see Attachment
1). In the prior year, second quarter special items after-tax were
$2.2 million, or $0.03 per share.
"Our investments in commercial resources and specialty
acquisitions continue to drive our growth as we reported a 13%
increase in adjusted EPS to $0.71 for
the second quarter," said Robert M.
Patterson, chairman, president and chief executive officer,
PolyOne Corporation. "Our Color, Additives & Inks segment
led the way with record operating income, driven by both organic
gains and the acquisitions of Rutland, Mesa and IQAP."
Mr. Patterson continued, "I'm particularly pleased with our
results when you consider that all of our businesses continue to
experience higher raw material and freight costs. In addition,
certain raw materials such as nylon 6/6 and fluoropolymers continue
to be in short supply."
"Under the circumstances, we are doing an exemplary job serving
our customers and improving profitability at the same time.
Our Specialty Engineered Materials segment was no exception with
operating income expanding 8% over the prior year," Mr. Patterson
added.
"We have a track record of generating strong free cash flow, and
this was once again the case in the second quarter," said
Bradley C. Richardson, executive
vice president and chief financial officer, PolyOne Corporation.
"We generated over $60 million of
free cash flow during the quarter, allowing us to fund the
acquisition of PlastiComp, while strengthening our balance sheet,
as we ended the quarter with nearly $485
million of available liquidity."
"We were thrilled to welcome the PlastiComp team to PolyOne this
quarter," Mr. Patterson added. "With its advanced composite
solutions, PlastiComp is a fantastic business that has steadily
grown through its ability to replace metal with lighter weight
polymer solutions. We seek to capitalize on this important
megatrend with additional investments in commercial and operational
resources, and integration is off to a great start."
"As we discussed at our Investor Day in May, we are laying the
foundation for sustainable long-term growth with our investments in
sales, marketing and technology resources and our proven M&A
strategy. Over the last three years, we have increased the
number of commercial associates by over 20% and acquired 10
specialty companies," added Mr. Patterson. "This quarter
illustrates our capabilities as we delivered organic sales
expansion of 6.5% and recent specialty acquisitions added
4%." The company noted favorable foreign exchange added
1.5%.
"These investments and world-class service continue to
differentiate PolyOne in the marketplace and enable us to better
serve our customers in new and existing markets and applications.
In doing so, we can accelerate sales growth and expand margins to
deliver sustainable double-digit EPS growth and increase return on
invested capital as we outlined in May," Mr. Patterson
concluded.
Conference Call
The company will conduct a conference call at 9:00 a.m. Eastern Time on Tuesday, July 24,
2018. To participate in the conference call, dial
1-844-835-7433 (domestic) or 1-914-495-8589 (international) and
provide conference ID number 3076438. A simultaneous webcast
of the call will be accessible via the company's website at
www.polyone.com/investor.
A recording of the call will also be available for one week,
beginning at 12:00 p.m. Eastern Time
on July 24, 2018. To listen to
this recording, dial 1-855-859-2056 (domestic) or 1-404-537-3406
(international) and enter conference ID number 3076438.
About PolyOne
PolyOne Corporation (NYSE: POL), with 2017 revenues of
$3.2 billion, is a premier provider
of specialized polymer materials, services and solutions. The
company is dedicated to serving customers in diverse industries
around the globe, by creating value through collaboration,
innovation and an unwavering commitment to excellence. Guided by
its Core Values, Sustainability Promise and No Surprises
PledgeSM, PolyOne is an ACC Responsible Care® certified
company committed to its customers, employees, communities and
shareholders through ethical, sustainable and fiscally responsible
principles. For more information, visit www.polyone.com.
To access PolyOne's news library online, please visit
www.polyone.com/news.
Forward-looking Statements
In this press release, statements that are not reported
financial results or other historical information are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements give current expectations or forecasts of future events
and are not guarantees of future performance. They are based on
management's expectations that involve a number of business risks
and uncertainties, any of which could cause actual results to
differ materially from those expressed in or implied by the
forward-looking statements. They use words such as "will,"
"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
condition, performance and/or sales. Factors that could cause
actual results to differ materially from those implied by these
forward-looking statements include, but are not limited to:
disruptions, uncertainty or volatility in the credit markets that
could adversely impact the availability of credit already arranged
and the availability and cost of credit in the future; the effect
on foreign operations of currency fluctuations, tariffs and other
political, economic and regulatory risks; changes in polymer
consumption growth rates and laws and regulations regarding the
disposal of plastic in jurisdictions where we conduct business;
changes in global industry capacity or in the rate at which
anticipated changes in industry capacity come online; fluctuations
in raw material prices, quality and supply and in energy prices and
supply; production outages or material costs associated with
scheduled or unscheduled maintenance programs; unanticipated
developments that could occur with respect to contingencies such as
litigation and environmental matters; an inability to raise or
sustain prices for products or services; information systems
failures and cyberattacks; and other factors affecting our business
beyond our control, including, without limitation, changes in the
general economy, changes in interest rates and changes in the rate
of inflation. The above list of factors is not exhaustive.
We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events
or otherwise. You are advised to consult any further disclosures we
make on related subjects in our reports on Form 10-Q, 8-K and 10-K
that we provide to the Securities and Exchange Commission.
Attachment
1
|
PolyOne
Corporation
|
Summary of
Condensed Consolidated Statements of Income
(Unaudited)
|
(In millions, except
per share data)
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Sales
|
$
|
914.8
|
|
$
|
814.1
|
|
$
|
1,816.4
|
|
$
|
1,610.8
|
Operating
income
|
77.4
|
|
78.0
|
|
156.2
|
|
160.0
|
Net income from
continuing operations attributable to PolyOne
shareholders
|
51.6
|
|
49.6
|
|
99.3
|
|
97.9
|
Basic earnings per
share from continuing operations attributable to
PolyOne shareholders
|
$
|
0.65
|
|
$
|
0.61
|
|
$
|
1.24
|
|
$
|
1.20
|
Diluted earnings per
share from continuing operations attributable to
PolyOne shareholders
|
$
|
0.64
|
|
$
|
0.60
|
|
$
|
1.23
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior management
uses comparisons of adjusted net income from continuing operations
attributable to PolyOne shareholders and diluted adjusted earnings
per share (EPS) from continuing operations attributable to PolyOne
shareholders, excluding special items, to assess performance and
facilitate comparability of results. Senior management believes
these measures are useful to investors because they allow for
comparison to PolyOne's performance in prior periods without the
effect of items that, by their nature, tend to obscure PolyOne's
operating results due to the potential variability across periods
based on timing, frequency and magnitude. Non-GAAP financial
measures have limitations as analytical tools and should not be
considered in isolation from, or solely as alternatives to,
financial measures prepared in accordance with GAAP. Below is a
reconciliation of these non-GAAP financial measures to their most
directly comparable financial measures calculated and presented in
accordance with GAAP. See Attachment 3 for a definition and
summary of special items.
|
|
|
Three Months
Ended
June 30, 2018
|
|
Three Months
Ended
June 30, 2017
|
Reconciliation to
Condensed Consolidated Statements of Income
|
$
|
|
EPS
|
|
$
|
|
EPS
|
|
|
|
|
|
|
|
|
Net income from
continuing operations attributable to PolyOne
shareholders
|
$
|
51.6
|
|
$
|
0.64
|
|
$
|
49.6
|
|
$
|
0.60
|
Special items, after
tax (Attachment 3)
|
5.9
|
|
0.07
|
|
2.2
|
|
0.03
|
Adjusted net income /
EPS - excluding special items
|
$
|
57.5
|
|
$
|
0.71
|
|
$
|
51.8
|
|
$
|
0.63
|
|
|
|
Six Months
Ended
June 30, 2018
|
|
Six Months
Ended
June 30, 2017
|
Reconciliation to
Condensed Consolidated Statements of Income
|
$
|
|
EPS
|
|
$
|
|
EPS
|
|
|
|
|
|
|
|
|
Net income from
continuing operations attributable to PolyOne
shareholders
|
$
|
99.3
|
|
$
|
1.23
|
|
$
|
97.9
|
|
$
|
1.19
|
Special items, after
tax (Attachment 3)
|
13.3
|
|
0.16
|
|
3.1
|
|
0.03
|
Adjusted net income /
EPS - excluding special items
|
$
|
112.6
|
|
$
|
1.39
|
|
$
|
101.0
|
|
$
|
1.22
|
Attachment
2
|
PolyOne
Corporation
|
Condensed
Consolidated Statements of Income (Unaudited)
|
(In millions, except
per share data)
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Sales
|
$
|
914.8
|
|
$
|
814.1
|
|
$
|
1,816.4
|
|
$
|
1,610.8
|
Cost of
sales
|
718.3
|
|
626.2
|
|
1,421.4
|
|
1,240.7
|
Gross
margin
|
196.5
|
|
187.9
|
|
395.0
|
|
370.1
|
Selling and
administrative expense
|
119.1
|
|
109.9
|
|
238.8
|
|
210.1
|
Operating
income
|
77.4
|
|
78.0
|
|
156.2
|
|
160.0
|
Interest expense,
net
|
(16.1)
|
|
(15.2)
|
|
(31.6)
|
|
(29.8)
|
Debt extinguishment
costs
|
(0.1)
|
|
—
|
|
(0.1)
|
|
(0.3)
|
Other income,
net
|
0.4
|
|
0.6
|
|
1.5
|
|
1.5
|
Income from
continuing operations before income taxes
|
61.6
|
|
63.4
|
|
126.0
|
|
131.4
|
Income tax
expense
|
(10.1)
|
|
(13.8)
|
|
(26.8)
|
|
(33.5)
|
Net income from
continuing operations
|
51.5
|
|
49.6
|
|
99.2
|
|
97.9
|
Loss from
discontinued operations, net of income taxes
|
(0.3)
|
|
(231.0)
|
|
(1.1)
|
|
(232.4)
|
Net income
(loss)
|
$
|
51.2
|
|
$
|
(181.4)
|
|
$
|
98.1
|
|
$
|
(134.5)
|
Net loss attributable
to noncontrolling interests
|
0.1
|
|
—
|
|
0.1
|
|
—
|
Net income (loss)
attributable to PolyOne common shareholders
|
$
|
51.3
|
|
$
|
(181.4)
|
|
$
|
98.2
|
|
$
|
(134.5)
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share attributable to PolyOne common shareholders -
Basic:
|
|
|
|
|
Continuing
operations
|
$
|
0.65
|
|
$
|
0.61
|
|
$
|
1.24
|
|
$
|
1.20
|
Discontinued
operations
|
(0.01)
|
|
(2.83)
|
|
(0.02)
|
|
(2.84)
|
Total
|
$
|
0.64
|
|
$
|
(2.22)
|
|
$
|
1.22
|
|
$
|
(1.64)
|
Earnings (loss) per
common share attributable to PolyOne common shareholders -
Diluted:
|
|
|
|
|
Continuing
operations
|
$
|
0.64
|
|
$
|
0.60
|
|
$
|
1.23
|
|
$
|
1.19
|
Discontinued
operations
|
(0.01)
|
|
(2.80)
|
|
(0.02)
|
|
(2.82)
|
Total
|
$
|
0.63
|
|
$
|
(2.20)
|
|
$
|
1.21
|
|
$
|
(1.63)
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share of common stock
|
$
|
0.175
|
|
$
|
0.135
|
|
$
|
0.350
|
|
$
|
0.270
|
|
|
|
|
|
|
|
|
Weighted-average
shares used to compute earnings per common share:
|
|
|
|
|
Basic
|
79.9
|
|
81.8
|
|
80.2
|
|
81.9
|
Diluted
|
80.8
|
|
82.5
|
|
81.0
|
|
82.6
|
Attachment
3
|
PolyOne
Corporation
|
Summary of Special
Items (Unaudited)
|
(In millions, except
per share data)
|
|
|
Special items
(1)
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cost of
sales:
|
|
|
|
|
|
|
|
Restructuring costs
|
$
|
(0.2)
|
|
$
|
2.7
|
|
$
|
(0.4)
|
|
$
|
2.7
|
Environmental remediation costs
|
(8.7)
|
|
(5.0)
|
|
(11.8)
|
|
(7.2)
|
Reimbursement of previously incurred environmental costs
|
1.6
|
|
3.8
|
|
2.3
|
|
3.8
|
Acquisition related costs
|
(0.7)
|
|
(1.3)
|
|
(1.8)
|
|
(1.5)
|
Impact on cost of
sales
|
(8.0)
|
|
0.2
|
|
(11.7)
|
|
(2.2)
|
|
|
|
|
|
|
|
|
Selling and
administrative expense:
|
|
|
|
|
|
|
|
Restructuring, legal and other
|
(5.8)
|
|
(7.1)
|
|
(10.7)
|
|
(5.7)
|
Acquisition related costs
|
(1.2)
|
|
(0.3)
|
|
(2.0)
|
|
(1.0)
|
Impact on selling and
administrative expense
|
(7.0)
|
|
(7.4)
|
|
(12.7)
|
|
(6.7)
|
|
|
|
|
|
|
|
|
Impact on operating
income
|
(15.0)
|
|
(7.2)
|
|
(24.4)
|
|
(8.9)
|
|
|
|
|
|
|
|
|
Debt
extinguishment costs
|
(0.1)
|
|
—
|
|
(0.1)
|
|
(0.3)
|
Other
income (expense), net
|
0.1
|
|
(0.4)
|
|
0.2
|
|
(0.3)
|
Impact on income from
continuing operations before income taxes
|
(15.0)
|
|
(7.6)
|
|
(24.3)
|
|
(9.5)
|
Income tax benefit on
above special items
|
3.9
|
|
2.6
|
|
6.3
|
|
3.5
|
Tax
adjustments(2)
|
5.2
|
|
2.8
|
|
4.7
|
|
2.9
|
Impact of special items
on net income (loss) from continuing operations
attributable to PolyOne
Shareholders
|
$
|
(5.9)
|
|
$
|
(2.2)
|
|
$
|
(13.3)
|
|
$
|
(3.1)
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share impact
|
$
|
(0.07)
|
|
$
|
(0.03)
|
|
$
|
(0.16)
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
Weighted average shares
used to compute adjusted earnings per share:
|
|
|
|
|
|
|
Diluted
|
80.8
|
|
82.5
|
|
81.0
|
|
82.6
|
|
|
(1)
|
Special items include
charges related to specific strategic initiatives or financial
restructuring such as: consolidation of operations; debt
extinguishment costs; costs incurred directly in relation to
acquisitions or divestitures; employee separation costs resulting
from personnel reduction programs, plant realignment costs,
executive separation agreements; asset impairments; mark-to-market
adjustments associated with actuarial gains and losses on pension
and other post-retirement benefit plans; environmental remediation
costs, fines, penalties and related insurance recoveries related to
facilities no longer owned or closed in prior years; gains and
losses on the divestiture of operating businesses, joint ventures
and equity investments; gains and losses on facility or property
sales or disposals; results of litigation, fines or penalties,
where such litigation (or action relating to the fines or
penalties) arose prior to the commencement of the performance
period; one-time, non-recurring items; and the effect of changes in
accounting principles or other such laws or provisions affecting
reported results.
|
|
|
(2)
|
Tax adjustments
include the net tax benefit/(expense) from one-time income tax
items, the set-up or reversal of uncertain tax position reserves
and deferred income tax valuation allowance adjustments.
|
Attachment
4
|
PolyOne
Corporation
|
Condensed
Consolidated Balance Sheets
|
(In
millions)
|
|
|
|
(Unaudited)
June 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
158.6
|
|
$
|
243.6
|
Accounts receivable,
net
|
490.0
|
|
392.4
|
Inventories,
net
|
321.0
|
|
327.8
|
Other current
assets
|
67.6
|
|
102.8
|
Total current
assets
|
1,037.2
|
|
1,066.6
|
Property,
net
|
486.3
|
|
461.6
|
Goodwill
|
651.6
|
|
610.5
|
Intangible assets,
net
|
437.0
|
|
400.0
|
Other non-current
assets
|
156.4
|
|
166.6
|
Total
assets
|
$
|
2,768.5
|
|
$
|
2,705.3
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term and
current portion of long-term debt
|
$
|
34.6
|
|
$
|
32.6
|
Accounts
payable
|
427.5
|
|
388.9
|
Accrued expenses and
other current liabilities
|
126.7
|
|
149.1
|
Total current
liabilities
|
588.8
|
|
570.6
|
Non-current
liabilities:
|
|
|
|
Long-term
debt
|
1,296.6
|
|
1,276.4
|
Pension and other
post-retirement benefits
|
60.9
|
|
62.3
|
Other non-current
liabilities
|
227.5
|
|
196.6
|
Total non-current
liabilities
|
1,585.0
|
|
1,535.3
|
Equity:
|
|
|
|
PolyOne shareholders'
equity
|
593.9
|
|
598.5
|
Noncontrolling
interests
|
0.8
|
|
0.9
|
Total
equity
|
594.7
|
|
599.4
|
Total liabilities
and equity
|
$
|
2,768.5
|
|
$
|
2,705.3
|
Attachment
5
|
PolyOne
Corporation
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(In
millions)
|
|
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
Operating
Activities
|
|
|
|
Net income
(loss)
|
$
|
98.1
|
|
$
|
(134.5)
|
Adjustments to
reconcile net income to net cash used by operating
activities:
|
|
|
|
Loss from
classification to held for sale, net of tax
|
—
|
|
229.3
|
Depreciation and
amortization
|
45.0
|
|
52.6
|
Accelerated
depreciation and fixed asset charges associated with
restructuring
activities
|
—
|
|
0.9
|
Gain from sale of
closed facilities
|
—
|
|
(3.1)
|
Debt extinguishment
costs
|
0.1
|
|
0.3
|
Share-based
compensation expense
|
5.5
|
|
5.7
|
Change in assets and
liabilities, net of the effect of acquisitions:
|
|
|
|
Increase in accounts
receivable
|
(87.0)
|
|
(98.5)
|
Decrease (increase)
in inventories
|
15.5
|
|
(17.8)
|
Increase in accounts
payable
|
34.0
|
|
39.5
|
Decrease in pension
and other post-retirement benefits
|
(5.0)
|
|
(6.7)
|
Increase (decrease)
in accrued expenses and other assets and liabilities -
net
|
2.7
|
|
(24.0)
|
Net cash provided by
operating activities
|
108.9
|
|
43.7
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(31.5)
|
|
(34.1)
|
Business
acquisitions, net of cash acquired
|
(98.6)
|
|
(137.9)
|
Sale of and proceeds
from other assets
|
—
|
|
9.8
|
Net cash used by
investing activities
|
(130.1)
|
|
(162.2)
|
Financing
Activities
|
|
|
|
Borrowings under
credit facilities
|
552.8
|
|
699.6
|
Repayments under
credit facilities
|
(535.9)
|
|
(555.0)
|
Purchase of common
shares for treasury
|
(45.3)
|
|
(34.3)
|
Cash dividends
paid
|
(28.2)
|
|
(22.2)
|
Repayment of
long-term debt
|
(3.3)
|
|
(3.3)
|
Payments of
withholding tax on share awards
|
(2.4)
|
|
(2.7)
|
Debt financing
costs
|
(0.5)
|
|
(1.9)
|
Net cash (used)
provided by financing activities
|
(62.8)
|
|
80.2
|
Effect of exchange
rate changes on cash
|
(1.0)
|
|
2.7
|
Decrease in cash and
cash equivalents
|
(85.0)
|
|
(35.6)
|
Cash and cash
equivalents at beginning of period
|
243.6
|
|
226.7
|
Cash and cash
equivalents at end of period
|
$
|
158.6
|
|
$
|
191.1
|
Attachment
6
|
PolyOne
Corporation
|
Business Segment
Operations (Unaudited)
|
(In
millions)
|
|
Operating income at
the segment level does not include: special items as defined in
Attachment 3; corporate general and administration costs
that are not allocated to segments; intersegment sales and profit
eliminations; share-based compensation costs; and certain other
items that are not included in the measure of segment profit and
loss that is reported to and reviewed by the chief operating
decision maker. These costs are included in Corporate and
eliminations.
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Sales:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
|
273.7
|
|
$
|
223.7
|
|
$
|
544.6
|
|
$
|
435.5
|
Specialty Engineered Materials
|
165.5
|
|
158.7
|
|
328.6
|
|
317.8
|
Performance Products and Solutions
|
191.9
|
|
184.2
|
|
382.9
|
|
367.9
|
PolyOne
Distribution
|
323.3
|
|
290.8
|
|
638.8
|
|
576.9
|
Corporate and eliminations
|
(39.6)
|
|
(43.3)
|
|
(78.5)
|
|
(87.3)
|
Sales
|
$
|
914.8
|
|
$
|
814.1
|
|
$
|
1,816.4
|
|
$
|
1,610.8
|
|
|
|
|
|
|
|
|
Gross
margin:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
|
94.3
|
|
$
|
80.1
|
|
$
|
186.5
|
|
$
|
155.3
|
Specialty Engineered Materials
|
45.6
|
|
42.2
|
|
90.4
|
|
88.3
|
Performance Products and Solutions
|
34.1
|
|
33.7
|
|
68.7
|
|
67.6
|
PolyOne
Distribution
|
32.1
|
|
33.5
|
|
63.8
|
|
64.9
|
Corporate and eliminations
|
(9.6)
|
|
(1.6)
|
|
(14.4)
|
|
(6.0)
|
Gross
margin
|
$
|
196.5
|
|
$
|
187.9
|
|
$
|
395.0
|
|
$
|
370.1
|
|
|
|
|
|
|
|
|
Selling and
administrative expense:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
|
49.0
|
|
$
|
41.5
|
|
$
|
99.1
|
|
$
|
81.6
|
Specialty Engineered Materials
|
24.5
|
|
22.6
|
|
49.2
|
|
45.8
|
Performance Products and Solutions
|
11.5
|
|
11.4
|
|
23.4
|
|
23.2
|
PolyOne
Distribution
|
13.4
|
|
13.2
|
|
26.9
|
|
26.0
|
Corporate and eliminations
|
20.7
|
|
21.2
|
|
40.2
|
|
33.5
|
Selling and
administrative expense
|
$
|
119.1
|
|
$
|
109.9
|
|
$
|
238.8
|
|
$
|
210.1
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
|
45.3
|
|
$
|
38.6
|
|
$
|
87.4
|
|
$
|
73.7
|
Specialty Engineered Materials
|
21.1
|
|
19.6
|
|
41.2
|
|
42.5
|
Performance Products and Solutions
|
22.6
|
|
22.3
|
|
45.3
|
|
44.4
|
PolyOne
Distribution
|
18.7
|
|
20.3
|
|
36.9
|
|
38.9
|
Corporate and eliminations
|
(30.3)
|
|
(22.8)
|
|
(54.6)
|
|
(39.5)
|
Operating
income
|
$
|
77.4
|
|
$
|
78.0
|
|
$
|
156.2
|
|
$
|
160.0
|
Attachment
7
|
PolyOne
Corporation
|
Reconciliation of
Non-GAAP Financial Measures (Unaudited)
|
(In millions, except
per share data)
|
|
Senior management
uses gross margin before special items and operating income before
special items to assess performance and allocate resources because
senior management believes that these measures are useful in
understanding current profitability levels and how it may serve as
a basis for future performance. In addition, operating income
before the effect of special items is a component of PolyOne annual
and long-term employee incentive plans and is used in debt covenant
computations. Senior management believes these measures are useful
to investors because they allow for comparison to PolyOne's
performance in prior periods without the effect of items that, by
their nature, tend to obscure PolyOne's operating results due to
the potential variability across periods based on timing, frequency
and magnitude. Non-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation from, or
solely as alternatives to, financial measures prepared in
accordance with GAAP. Below is a reconciliation of these non-GAAP
financial measures to their most directly comparable financial
measures calculated and presented in accordance with GAAP. See
Attachment 3 for a definition and summary of special
items.
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
Reconciliation to
Consolidated Statements of Income
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
914.8
|
|
$
|
814.1
|
|
$
|
1,816.4
|
|
$
|
1,610.8
|
|
|
|
|
|
|
|
|
|
Gross margin -
GAAP
|
|
196.5
|
|
187.9
|
|
395.0
|
|
370.1
|
Special items in
gross margin (Attachment 3)
|
|
8.0
|
|
(0.2)
|
|
11.7
|
|
2.2
|
Adjusted Gross
margin
|
|
$
|
204.5
|
|
$
|
187.7
|
|
$
|
406.7
|
|
$
|
372.3
|
|
|
|
|
|
|
|
|
|
Adjusted Gross margin
as a percent of sales
|
|
22.4%
|
|
23.1%
|
|
22.4%
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
Operating income -
GAAP
|
|
77.4
|
|
78.0
|
|
156.2
|
|
160.0
|
Special items in
operating income (Attachment 3)
|
|
15.0
|
|
7.2
|
|
24.4
|
|
8.9
|
Adjusted
Operating income
|
|
$
|
92.4
|
|
$
|
85.2
|
|
$
|
180.6
|
|
$
|
168.9
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
income as a percent of sales
|
|
|
10.1%
|
|
10.5%
|
|
9.9%
|
|
10.5%
|
|
The table below
reconciles pre-special income tax expense and the pre-special
effective tax rate to their most comparable US GAAP
figures.
|
|
|
Three Months
Ended
June 30, 2018
|
|
Three Months
Ended
June 30, 2017
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income
taxes
|
$
|
61.6
|
|
$
|
15.0
|
|
$
|
76.6
|
|
$
|
63.4
|
|
$
|
7.6
|
|
$
|
71.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense -
GAAP
|
(10.1)
|
|
—
|
|
(10.1)
|
|
(13.8)
|
|
—
|
|
(13.8)
|
Income tax impact of
special items (Attachment 3)
|
—
|
|
(3.9)
|
|
(3.9)
|
|
—
|
|
(2.6)
|
|
(2.6)
|
Tax adjustments
(Attachment 3)
|
—
|
|
(5.2)
|
|
(5.2)
|
|
—
|
|
(2.8)
|
|
(2.8)
|
Income tax
expense
|
$
|
(10.1)
|
|
$
|
(9.1)
|
|
$
|
(19.2)
|
|
$
|
(13.8)
|
|
$
|
(5.4)
|
|
$
|
(19.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
16.4%
|
|
|
|
25.1%
|
|
21.8%
|
|
|
|
27.0%
|
|
|
Six Months
Ended
June 30, 2018
|
|
Six Months
Ended
June 30, 2017
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
$
|
126.0
|
|
$
|
24.3
|
|
$
|
150.3
|
|
$
|
131.4
|
|
$
|
9.5
|
|
$
|
140.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense -
GAAP
|
(26.8)
|
|
—
|
|
(26.8)
|
|
(33.5)
|
|
—
|
|
(33.5)
|
Income tax impact of
special items (Attachment 3)
|
—
|
|
(6.3)
|
|
(6.3)
|
|
—
|
|
(3.5)
|
|
(3.5)
|
Tax adjustments
(Attachment 3)
|
—
|
|
(4.7)
|
|
(4.7)
|
|
—
|
|
(2.9)
|
|
(2.9)
|
Income tax
expense
|
$
|
(26.8)
|
|
$
|
(11.0)
|
|
$
|
(37.8)
|
|
$
|
(33.5)
|
|
$
|
(6.4)
|
|
$
|
(39.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
21.3%
|
|
|
|
25.1%
|
|
25.5%
|
|
|
|
28.3%
|
|
The following table
summarizes our liquidity as of June 30, 2018:
|
|
(In
millions)
|
June 30,
2018
|
Cash and cash
equivalents
|
$
|
158.6
|
Revolving credit
availability
|
325.5
|
Liquidity
|
$
|
484.1
|
View original
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SOURCE PolyOne Corporation