Revenue of $261.2 Million, Earnings Per Diluted
Share of $3.59 for the Full Year
Prudent Cost Control Supported Record Cash
Balance of $99.1 Million
Declares Dividend of $0.80 Per Share
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
fiscal year and fourth quarter ended August 31, 2020. The Company
also announced a cash dividend of $0.80 per share to shareholders
of record on November 27, 2020 payable on December 7, 2020.
Full Year 2020 Financial & Recent Operational
Highlights
- Total Revenue of $261.2 million, compared to $281.4 million in
the prior year
- Gross Margin of 38%, compared to 36% in the prior year
- Net Income of $34.2 million, compared to $32.7 million in the
prior year
- Adjusted EBITDA of $60.2 million, compared to $65.2 million in
the prior year
- Free Cash Flow of $54.4 million, compared to $47.0 million in
the prior year
- Ended fiscal year 2020 with a cash balance of $99.1
million
- Completed the sale of two properties in Massachusetts and Rhode
Island
- Acquired ABchimie for $21.4 million using cash on hand on
September 1, 2020 (fiscal 2021)
“Our disciplined focus on margins and cash flow drove solid
results for both the quarter and fiscal year despite revenue
headwinds resulting from the COVID-19 pandemic. Thanks to the
efforts of our dedicated employees, we were safely able to continue
meeting the needs of our customers during this challenging time,”
said Adam P. Chase, President and Chief Executive Officer of Chase
Corporation.
Mr. Chase continued, “Progress was made on all of our core
strategic drivers. The ABchimie acquisition demonstrated our
commitment to inorganic growth initiatives. This acquisition
broadens our electronics coatings product portfolio within the
Adhesives, Sealants and Additives reporting segment with high
performance, environmentally-friendly technologies that are
complementary to our product offerings. ABchimie’s UV LED coating
technology provides an exciting low-energy curing solution for this
emerging industry trend. The transaction is expected to be
immediately accretive to our results but does not represent a
significant business combination.”
Added Mr. Chase, “We continue to benefit from our strategic
diversification, strength in 5G related demand and an increase in
sales of products for electronics applications including new
electric vehicle qualifications. This was offset by weakness in oil
& gas related products given reduced market activity in this
sector. Our product mix was more favorable in the second half of
the year and in combination with productivity improvements resulted
in a boost to relative gross margins in both the fourth quarter and
full fiscal year. Additionally, we were successful in selling our
Randolph, MA property in the fourth quarter following last
quarter’s Pawtucket, RI facility sale transaction, fully completing
these site consolidation initiatives.”
Fiscal Fourth Quarter Financial Highlights
- Total Revenue fell 9% to $63.9 million, compared to Q4
FY19
- Gross Margin of 38%, compared to 37% in Q4 FY19, due in part to
operational efficiencies and sales mix
- Selling, General and Administrative expenses increased 2% to
$12.3 million from the year-ago period
- Income Tax expense of $2.9 million, compared to $2.6 million in
the year-ago period
- Other Expense totaled $579,000, compared to other income of
$113,000 in the year-ago period
- Net Income for the fiscal fourth quarter of 2020 was $9.0
million, or $0.95 per diluted share, compared to a Net Income of
$10.1 million, or $1.07 per diluted share, for the fiscal fourth
quarter of 2019. Adjusted EPS for the quarter was $0.83 per diluted
share
- Adjusted EBITDA for the fiscal fourth quarter of 2020 was $14.5
million, compared to Adjusted EBITDA of $17.5 million in the
prior-year quarter. The reconciliation of Net Income to Adjusted
EBITDA is included at the end of this news release
- Free Cash Flow in the fiscal fourth quarter of 2020 was $12.7
million, compared to Free Cash Flow of $18.6 million in the
prior-year quarter
“We continue to focus on our controllable expenses to mitigate
the impact from declining revenue. I am pleased with our financial
discipline and ability to drive higher margins and generate cash in
this environment,” said Christian J. Talma, Treasurer and Chief
Financial Officer of Chase Corporation. “We remain free of debt
with a record cash balance of $99.1 million and fully available
$150 million credit facility which provide capital for
opportunistic investments to bring value to Chase Corporation. This
was demonstrated most recently with our all-cash purchase of
ABchimie. Our announced dividend of $0.80 per share, which will be
paid this coming December, is consistent with that distributed for
the prior year.”
Adhesives, Sealants and Additives
For the Three Months Ended
August 31,
For the Year Ended August
31,
2020
2019
2020
2019
Revenue
$
23,024
$
25,983
$
96,208
$
104,796
Cost of products and services sold
14,071
15,006
55,902
60,345
Gross Margin
$
8,953
$
10,977
$
40,306
$
44,451
Gross Margin %
39%
42%
42%
42%
Adhesives, Sealants and Additives segment revenue decreased $8.6
million or 8% to $96.2 million for the year ended August 31, 2020
compared to $104.8 million in fiscal 2019. The year-over-year
decline was primarily due to the electronic and industrial coatings
product line’s sales volume decrease. Contributing factors to this
decline included North American, European, and Asian automotive and
industrial weakness which was exacerbated by COVID-19. The market
downturn also affected the royalty received from our licensed
manufacturer in Asia. Revenue attributable to the segment’s North
American-focused specialty chemical intermediates product line was
also down in fiscal 2020.
Industrial Tapes
For the Three Months Ended
August 31,
For the Year Ended August
31,
2020
2019
2020
2019
Revenue
$
27,029
$
31,520
$
118,960
$
129,845
Cost of products and services sold
17,711
21,956
80,351
93,299
Gross Margin
$
9,318
$
9,564
$
38,609
$
36,546
Gross Margin %
34%
30%
32%
28%
Revenue in the Industrial Tapes segment decreased $10.9 million
or 8% to $119.0 million for the year ended August 31, 2020 compared
to $129.8 million in fiscal 2019. The decline in revenue was
primarily due to lower volume from the North American-focused cable
materials product line and the Company’s decision to end an
arrangement in which it provided low-margin transitional toll
manufacturing services. The decline was partially offset by a
volume-driven sales increase in electronic materials into the Asian
market, and increased sales of pulling and detection tapes
primarily into the North American telecommunication and utility
industries.
Corrosion Protection and Waterproofing
For the Three Months Ended
August 31,
For the Year Ended August
31,
2020
2019
2020
2019
Revenue
$
13,854
$
12,602
$
45,994
$
46,710
Cost of products and services sold
7,695
7,007
25,362
26,519
Gross Margin
$
6,159
$
5,595
$
20,632
$
20,191
Gross Margin %
44%
44%
45%
43%
Sales from the Corrosion Protection and Waterproofing segment
decreased $0.7 million or 2% to $46.0 million for the year ended
August 31, 2020 compared to $46.7 million for fiscal 2019. This
year-over-year reduction was driven by lower sales of the Company’s
building envelope products. Partially offsetting the revenue
decline were volume and price driven increases in the coating and
lining systems product line, and increased sales in both the bridge
and highway and pipeline coatings product lines, including sales of
our Rye U.K.-produced pipeline products.
More information on COVID-19 updates can be found at the Company
website: www.chasecorp.com
About Chase Corporation
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. More
information can be found on our website https://chasecorp.com/
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. This press release
provides reconciliations from the most directly comparable
financial measure presented in accordance with U.S. GAAP to each
non-GAAP financial measure.
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; the highly competitive environment
in which the Company operates; as well as expected impact of the
coronavirus disease (COVID-19) pandemic on the Company's
businesses. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
the statement was made.
The following table summarizes the Company’s unaudited financial
results for the three months and years ended August 31, 2020 and
2019.
For the Three Months Ended
August 31,
For the Year Ended August
31,
All figures in thousands, except per
share figures
2020
2019
2020
2019
Revenue
$
63,907
$
70,105
$
261,162
$
281,351
Costs and Expenses
Cost of products and services sold
39,477
43,969
161,615
180,163
Selling, general and administrative
expenses
12,338
12,091
49,364
48,707
Research and product development costs
963
938
4,007
4,021
Operations optimization costs
(170)
533
807
986
Acquisition-related costs
121
—
274
—
Gain on sale of real estate
(1,791)
—
(2,551)
—
Write-down on certain assets under
construction
405
—
405
—
Loss on impairment of goodwill
—
—
—
2,410
Operating income
12,564
12,574
47,241
45,064
Interest expense
(68)
(62)
(246)
(519)
Other income (expense)
(579)
113
(1,675)
(992)
Income before income taxes
11,917
12,625
45,320
43,553
Income taxes
2,909
2,551
11,163
10,842
Net income
$
9,008
$
10,074
$
34,157
$
32,711
Net income per diluted share
$
0.95
$
1.07
$
3.59
$
3.46
Weighted average diluted shares
outstanding
9,451
9,384
9,440
9,379
Reconciliation of net income to EBITDA and
adjusted EBITDA
Net income
$
9,008
$
10,074
$
34,157
$
32,711
Interest expense
68
62
246
519
Income taxes
2,909
2,551
11,163
10,842
Depreciation expense
1,026
1,128
4,015
4,762
Amortization expense
2,852
3,106
11,576
12,445
EBITDA
$
15,863
$
16,921
$
61,157
$
61,279
Operations optimization costs
(170)
533
807
986
Acquisition-related costs
121
—
274
—
Gain on sale of real estate
(1,791)
—
(2,551)
—
Write-down of certain assets under
construction
405
—
405
—
Loss on impairment of goodwill
—
—
—
2,410
Pension settlement costs
80
27
155
511
Adjusted EBITDA
$
14,508
$
17,481
$
60,247
$
65,186
For the Three Months Ended
August 31,
For the Year Ended August
31,
2020
2019
2020
2019
Reconciliation of net income to adjusted
net income
Net income
$
9,008
$
10,074
$
34,157
$
32,711
Transitional impact of the Tax Cuts and
Jobs Act, net
—
—
—
(140)
Excess tax benefit related to ASU No.
2016-09
(1)
(157)
(149)
(157)
Operations optimization costs
(170)
533
807
986
Acquisition-related costs
121
—
274
—
Gain on sale of real estate
(1,791)
—
(2,551)
—
Write-down of certain assets under
construction
405
—
405
—
Loss on impairment of goodwill
—
—
—
2,410
Pension settlement costs
80
27
155
511
Income taxes *
285
(118)
191
(821)
Adjusted net income
$
7,937
$
10,359
$
33,289
$
35,500
Adjusted net income per diluted share
(Adjusted diluted EPS)
$
0.83
$
1.10
$
3.50
$
3.76
* For the years ended August 31, 2020 and 2019 represents the
aggregate tax effect assuming a 21% tax rate for the items
impacting pre-tax income, which is our effective U.S. statutory
Federal tax rate for fiscal 2020 and 2019.
For the Three Months Ended
August 31,
For the Year Ended August
31,
2020
2019
2020
2019
Reconciliation of cash provided by
operations to free cash flow
Net cash provided by operating
activities
$
13,069
$
19,260
$
55,734
$
49,535
Purchases of property, plant and
equipment
(327)
(647)
(1,371)
(2,488)
Free cash flow
$
12,742
$
18,613
$
54,363
$
47,047
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201112006078/en/
Investor & Media Contact: Michael Cummings or Jackie
Marcus Alpha IR Group Phone: (617) 982-0475 E-mail:
CCF@alpha-ir.com or Shareholder & Investor Relations Department
Phone: (781) 332-0700 E-mail: investorrelations@chasecorp.com
Website: www.chasecorp.com
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