Chase Corporation (NYSE American: CCF), a global specialty
chemicals company that is a leading manufacturer of protective
materials for high-reliability applications across diverse market
sectors, today announced financial results for the quarter ended
November 30, 2019, the first quarter of its fiscal 2020.
FIRST QUARTER
- Revenue decreased 8% to $66.80M
- Operating income decreased 13% to
$10.73M
- Net income decreased 17% to $7.36M
- Diluted EPS decreased 17% to $0.77
- Net cash provided by operating activities
increased 57% to $18.15M
- EBITDA decreased 14% to $14.09M*
- Adjusted EBITDA decreased 12% to
$14.74M*
- Adjusted diluted EPS decreased 14% to
$0.83*
- Free cash flow increased 60% to
$17.45M*
* Reconciliations of the non-GAAP financial measures to Chase’s
GAAP financial results are included at the end of this release. See
also “Use of Non-GAAP Financial Measures” below.
Adam P. Chase, President and Chief Executive Officer, commented,
“In the first quarter of fiscal 2020, prior year macroeconomic
challenges to our top-line persisted, but so too did many of the
improvements realized in the second half of fiscal 2019. Our focus
and discipline on executing operational initiatives enabled us to
achieve a period-over-period increase in relative gross margin and
growth in cash flows from operations.
“Revenue volume for the quarter compared unfavorably to the
prior year. This was driven internationally by continued tightness
in Asian and Middle Eastern markets, and domestically by a current
quarter slowdown in demand for wire and cable materials and toll
manufacturing services, as well as the non-repeating of large-scale
infrastructure projects observed in the prior year.
“Despite the sales volume challenges, the quarter saw
improvement in gross margin as a percentage of revenue over the
prior year due to efficiencies realized through our facility
consolidation and rationalization efforts, an improved sales mix
bolstered by a planned reduction in low-margin tolling services,
and price increases enacted in the prior fiscal year.”
Adhesives, Sealants and Additives:
For the Three Months Ended
November 30,
2019
2018
Revenue
$
25,822
$
26,698
Cost of products and services sold
14,532
14,992
Gross Margin
$
11,290
$
11,706
Gross Margin %
44%
44%
“Revenue for the Adhesives, Sealants and Additives segment
compared unfavorably for the first quarter of fiscal 2020, driven
by sales volume decreases in our electronic and industrial coatings
product line, which bore the brunt of the slowdown in Asian
markets. The segment benefited from a favorable revenue performance
by the specialty chemical intermediates product line, which, given
its robust sales in North American markets, helped to partially
offset the Asian shortfalls of the segment’s other product
line.”
Industrial Tapes:
For the Three Months Ended
November 30,
2019
2018
Revenue
$
30,124
$
33,462
Cost of products and services sold
21,319
24,618
Gross Margin
$
8,805
$
8,844
Gross Margin %
29%
26%
“The first quarter saw tempered demand in volume for our cable
materials product line, negatively impacting revenue for the
Industrial Tapes segment. The reduced revenue in the current year
was also attributable to the challenges faced by our electronic
materials product line, which has heavy exposure to Asian
end-markets. Positively impacting the segment, the quarter did see
a strong performance by the pulling and detection product line’s
North American-focused sales, which have benefited from the 5G
network build-out macrotrend.
“Additionally, the segment’s gross margin as a percentage of
revenue improved compared to the prior year — a benefit of the
prior year’s strategic consolidation of wire and cable materials
manufacturing previously housed in our Pawtucket, RI plant into our
Oxford, MA and Lenoir, NC locations. Also helping to drive an
improved margin percentage was a more favorable sales mix, as we
transition away from providing low-margin toll manufacturing
services provided to the buyer of certain of our recently divested
businesses.”
Corrosion Protection and Waterproofing:
For the Three Months Ended
November 30,
2019
2018
Revenue
$
10,856
$
12,343
Cost of products and services sold
5,932
6,965
Gross Margin
$
4,924
$
5,378
Gross Margin %
45%
44%
“In the Corrosion Protection and Waterproofing segment, first
quarter revenue was unfavorable to the prior year, most
significantly impacted by sales volume decreases in the bridge and
highway, pipeline coatings, and coating and lining systems product
lines. In comparison to the prior year, the first quarter of fiscal
2020 was characterized by fewer large-scale bridge projects in the
U.S. and continued slow construction starts in the Middle East.
Partially mitigating the decline was the strength of our building
envelope product line sales, which surpassed prior year
revenue.”
Other Matters:
Christian J. Talma, Chief Financial Officer, added, “In the
first quarter of fiscal 2020, our strong operational cash flows
continued, with free cash flow for the period exceeding the prior
year by 60%. With our debt paid off in full in the prior year,
these results have allowed us to increase our cash balance to
$66.06 million — providing us improved liquidity and complementing
our strong balance sheet. While no acquisition event was
consummated in the current period, we did utilize cash on hand to
continue our operations optimization efforts — continuing the
process of consolidating our pulling and detection operations into
our Hickory, NC facility, and beginning an exploratory process into
upgrading our companywide ERP system.
“We also recognized a foreign exchange loss in the quarter of
$0.50 million, mainly on the strengthening British pound sterling
and representing a swing from the nominal gain recognized in the
prior year to other income (expense) on our statement of
operations.”
Mr. Chase also commented, “We continue to be very active in
exploring, evaluating and pursuing potential acquisition targets,
while staying true to our intentionally deliberate and disciplined
approach. We are currently well-positioned to capitalize on
right-fit target opportunities as they become available. M&A,
along with product and market development and our plant
rationalization and consolidation initiatives, will remain our
strategy and our focus throughout 2020, as we work to grow our
profit margin and our business as a whole.”
The following table summarizes the Company’s unaudited financial
results for the three months ended November 30, 2019 and 2018.
For the Three Months Ended
November 30,
All figures in thousands, except per
share figures
2019
2018
Revenue
$
66,802
$
72,503
Costs and Expenses
Cost of products and services sold
41,783
46,575
Selling, general and administrative
expenses
13,640
13,362
Operations optimization costs
649
260
Operating income
10,730
12,306
Interest expense
(55)
(204)
Other income (expense)
(604)
(294)
Income before income taxes
10,071
11,808
Income taxes
2,709
2,985
Net income
$
7,362
$
8,823
Net income per diluted share
$
0.77
$
0.93
Weighted average diluted shares
outstanding
9,434
9,381
Reconciliation of net income to EBITDA and
adjusted EBITDA
Net income
$
7,362
$
8,823
Interest expense
55
204
Income taxes
2,709
2,985
Depreciation expense
1,053
1,238
Amortization expense
2,914
3,113
EBITDA
$
14,093
$
16,363
Operations optimization costs
649
260
Pension settlement costs
—
200
Adjusted EBITDA
$
14,742
$
16,823
For the Three Months Ended
November 30,
2019
2018
Reconciliation of net income to adjusted
net income
Net income
$
7,362
$
8,823
Operations optimization costs
649
260
Pension settlement costs
—
200
Income taxes **
(136)
(97)
Adjusted net income
$
7,875
$
9,186
Adjusted net income per diluted share
(Adjusted diluted EPS)
$
0.83
$
0.97
For the Three Months Ended
November 30,
2019
2018
Reconciliation of cash provided by
operations to free cash flow
Net cash provided by operating
activities
$
18,153
$
11,577
Purchases of property, plant and
equipment
(699)
(639)
Free cash flow
$
17,454
$
10,938
** For the three months ended November 30, 2019 and 2018
represents the aggregate tax effect assuming a 21% tax rate for the
items impacting pre-tax income, which is our estimated effective
U.S. statutory Federal tax rate for fiscal 2020 and which was our
effective U.S. statutory Federal tax rate for fiscal year 2019
.
Chase Corporation, a global specialty chemicals company that was
founded in 1946, is a leading manufacturer of protective materials
for high-reliability applications throughout the world.
Use of Non-GAAP Financial Measures
The Company has used non-GAAP financial measures in this press
release. Adjusted net income, Adjusted diluted EPS, EBITDA,
Adjusted EBITDA and Free cash flow are non-GAAP financial measures.
The Company believes that Adjusted net income, Adjusted diluted
EPS, EBITDA, Adjusted EBITDA and Free cash flow are useful
performance measures as they are used by its executive management
team to measure operating performance, to allocate resources to
enhance the financial performance of its business, to evaluate the
effectiveness of its business strategies and to communicate with
its board of directors and investors concerning its financial
performance. The Company believes Adjusted net income, Adjusted
diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are
commonly used by financial analysts and others in the industries in
which the Company operates, and thus provide useful information to
investors. However, Chase’s calculation of Adjusted net income,
Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow
may not be comparable to similarly-titled measures published by
others. Non-GAAP financial measures should be considered in
addition to, and not as an alternative to, the Company’s reported
results prepared in accordance with GAAP.
Cautionary Note Concerning Forward-Looking Statements
Certain statements in this press release are forward-looking.
These may be identified by the use of forward-looking words or
phrases such as “believe”; “expect”; “anticipate”; “should”;
“planned”; “estimated” and “potential”, among others. These
forward-looking statements are based on Chase Corporation’s current
expectations. The Private Securities Litigation Reform Act of 1995
provides a “safe harbor” for such forward-looking statements. To
comply with the terms of the safe harbor, the Company cautions
investors that any forward-looking statements made by the Company
are not guarantees of future performance and that a variety of
factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements.
The risks and uncertainties which may affect the operations,
performance, development and results of the Company's business
include, but are not limited to, the following: uncertainties
relating to economic conditions; uncertainties relating to customer
plans and commitments; the pricing and availability of equipment,
materials and inventories; technological developments; performance
issues with suppliers and subcontractors; economic growth; delays
in testing of new products; the Company’s ability to successfully
integrate acquired operations; the effectiveness of cost-reduction
plans; rapid technology changes; and the highly competitive
environment in which the Company operates. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date the statement was made.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200108005858/en/
Ruthanne Hawkins Shareholder & Investor Relations Department
Phone: (781) 332-0700 E-mail: investorrelations@chasecorp.com
Website: www.chasecorp.com
Chase (AMEX:CCF)
Historical Stock Chart
From Jul 2024 to Aug 2024
Chase (AMEX:CCF)
Historical Stock Chart
From Aug 2023 to Aug 2024