Revenue of $68.4 Million, Earnings Per Diluted
Share of $0.97
Acquires Emerging Technologies, Inc. (ETi),
Expands Superabsorbents Offerings
Strength in International Markets Continues
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
February 28, 2021, the second quarter of its fiscal year 2021.
Fiscal Second Quarter Key Highlights
- Total Revenue of $68.4 million, up 4% compared to $65.6 million
in the prior year.
- Gross Margin of 40%, compared to 38% in the prior year.
- Net Income of $9.2 million, up 16% compared to $7.9 million in
the prior year.
- Adjusted EBITDA of $18.0 million, up 20% compared to $15.0
million in the prior year.
- Free Cash Flow of $11.9 million, up 30% compared to $9.2
million in the prior year.
- Ended fiscal second quarter of 2021 with a cash balance of
$86.2 million.
- Acquired Emerging Technologies, Inc. for $10.0 million on
February 5, 2021 using cash on hand.
“The positive trends reflected in our second quarter results
demonstrated a net rebound in demand for our products and the
success that can be achieved through the continued execution of our
key strategic growth drivers,” said Adam P. Chase, President and
Chief Executive Officer of Chase Corporation. “We were encouraged
by the returning demand levels from Asian and European customers
which drove our Adhesives, Sealants and Additives segment’s
performance. However, the Industrial Tapes and the Corrosion
Protection and Waterproofing segments have not recovered as quickly
due to disruptions from both the coronavirus pandemic and
heightened exposure to headwinds in the oil and gas markets. The
extreme weather event in Texas created an additional challenge for
our Corrosion Protection and Waterproofing segment in the final
month of the quarter, typically its lowest due to seasonality. Our
Industrial Tapes segment, however, improved its relative gross
margin on a favorable sales mix and operating efficiencies realized
over the prior year.”
Mr. Chase continued, “Our ongoing cost structure improvements,
including our efforts to consolidate facilities, progressed further
as we announced the closing of our Newark, CA sealant systems
production facility and planned relocation to Hickory, NC. The
facility consolidation is in line with Chase’s ongoing effort to
streamline its existing processes and achieve greater operational
efficiency.”
Mr. Chase added, “Our team has made significant strides in
expanding our organic and inorganic growth initiatives within the
challenging environment of the last twelve months. Commitment to
specification work for electric vehicle applications, leveraging
our long-term success in providing reliable product solutions,
contributed to our favorable results. Our recent acquisition of the
superabsorbent polymers solution provider Emerging Technologies,
Inc. (ETi), coupled with the prior addition of ABchimie to our
portfolio, broadens our specialty chemical offerings as well as
expands our market reach within the Adhesives, Sealants and
Additives segment. These two acquisitions provide us with
high-performance, environmentally friendly technologies which will
complement our existing product offerings. I want to thank our
global employees, as the success of our business is directly
attributable to their hard work and resolve to meet the needs of
our customers.”
Fiscal Second Quarter Financial Highlights
- Total Revenue grew 4% to $68.4 million, compared to Q2
FY20.
- Gross Margin of 40%, compared to 38% in Q2 FY20, due in part to
sales mix and operational efficiencies, including site
consolidation.
- Selling, General and Administrative expenses decreased 2% to
$12.3 million from the year-ago period.
- Effective Income Tax Rate of 28.7%, compared to 27.1% in the
year-ago period.
- Net Income for the fiscal second quarter of 2021 was $9.2
million, or $0.97 per diluted share, compared to a Net Income of
$7.9 million, or $0.83 per diluted share, for the fiscal second
quarter of 2020.
- Adjusted EBITDA for the fiscal second quarter of 2021 was $18.0
million, compared to Adjusted EBITDA of $15.0 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 second quarter of 2021 was $11.9
million, compared to Free Cash Flow of $9.2 million in the
prior-year quarter.
“Our business continues to capture both organic and inorganic
growth opportunities, execute on strategic top line expansion and
generate strong cash flow. We are pleased to see our combined
investment in ABchimie and ETi is already accretive to our
Adhesives, Sealants and Additives segment, and we are confident
these businesses will further enhance our ability to achieve our
forward-looking initiatives in a cost-efficient manner," said
Michael J. Bourque, Treasurer and Chief Financial Officer of Chase
Corporation. “We remain debt-free, with an overall cash balance of
$86.2 million, and our $150 million credit facility is available to
invest in growth. We intend to renew this facility prior to its
December 2021 maturity date to further support core growth
initiatives and capital projects.”
Adhesives, Sealants and
Additives
For the Three Months
Ended
For the Six Months
Ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Revenue
$
31,575
$
24,440
$
61,646
$
50,262
Cost of products and services sold
16,998
14,255
33,611
28,787
Gross Margin
$
14,577
$
10,185
$
28,035
$
21,475
Gross Margin %
46
%
42
%
45
%
43
%
Revenue in the Company’s Adhesives, Sealants and Additives
segment increased $7.1 million or 29% in the second fiscal quarter,
with $5.4 million from organic revenue growth. The revenue
improvement was largely attributed to electronic and industrial
coatings product line sales to Asian and European customers and
contributions from ABchimie. The Company’s functional additives
product line sales, which have a North American concentration, also
experienced volume growth with the operations of ETi added to the
product line following its February 5, 2021 acquisition.
Industrial Tapes
For the Three Months
Ended
For the Six Months
Ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Revenue
$
28,345
$
30,055
$
54,836
$
60,179
Cost of products and services sold
18,693
20,203
35,810
41,522
Gross Margin
$
9,652
$
9,852
$
19,026
$
18,657
Gross Margin %
34
%
33
%
35
%
31
%
Revenue in the Industrial Tapes segment declined $1.7 million or
6% in the second fiscal quarter. The decrease in revenue was a
result of declining cable materials and specialty products product
line sales. Comparatively low global oil and gas prices have
reduced activity in energy markets where our cable material
products are utilized. Both the pulling and detection product line
and the electronic materials product line realized growth for the
quarter which helped offset declining sales from other products in
the segment. The segment also achieved relative gross margin
improvement for both the quarter and year-to-date period, with a
favorable product mix and operational efficiencies gained over the
prior year.
Corrosion Protection and
Waterproofing
For the Three Months
Ended
For the Six Months
Ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Revenue
$
8,527
$
11,087
$
19,141
$
21,943
Cost of products and services sold
5,224
6,208
11,099
12,140
Gross Margin
$
3,303
$
4,879
$
8,042
$
9,803
Gross Margin %
39
%
44
%
42
%
45
%
Revenue from the Corrosion Protection and Waterproofing segment
declined $2.6 million or 23% compared to the year-ago period. The
pipeline coatings, coating and lining systems, and bridge and
highway product lines sales were unfavorable in the second quarter
due to the lingering impact of the COVID-19 challenges, including
those in the oil and gas industry. The segment was further impacted
in the quarter by the winter weather event in the region
surrounding our Houston, TX location, with shipments deferred to
later periods. Despite this, the building envelope product line
achieved volume growth, which partially offset the segment’s net
decline.
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; expectations relating to the renewal
of its credit facility; 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 and six months ended February 28, 2021 and
February 29, 2020.
For the Three Months
Ended
For the Six Months
Ended
All figures in thousands, except per
share figures
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Revenue
$
68,447
$
65,582
$
135,623
$
132,384
Costs and Expenses
Cost of products and services sold
40,915
40,666
80,520
82,449
Selling, general and administrative
expenses
12,331
12,608
24,591
25,230
Research and product development costs
1,026
1,069
2,077
2,087
Operations optimization costs
98
60
98
709
Acquisition-related costs
128
133
128
133
Loss (gain) on contingent
consideration
733
—
733
—
Operating income
13,216
11,046
27,476
21,776
Interest expense
(67
)
(56
)
(136
)
(111
)
Other income (expense)
(284
)
(185
)
(498
)
(789
)
Income before income taxes
12,865
10,805
26,842
20,876
Income taxes
3,694
2,926
6,834
5,635
Net income
$
9,171
$
7,879
$
20,008
$
15,241
Net income per diluted share
$
0.97
$
0.83
$
2.11
$
1.60
Weighted average diluted shares
outstanding
9,427
9,444
9,423
9,439
Reconciliation of net income to EBITDA and
adjusted EBITDA
Net income
$
9,171
$
7,879
$
20,008
$
15,241
Interest expense
67
56
136
111
Income taxes
3,694
2,926
6,834
5,635
Depreciation expense
949
988
1,952
2,041
Amortization expense
3,119
2,912
6,190
5,826
EBITDA
$
17,000
$
14,761
$
35,120
$
28,854
Loss (gain) on contingent
consideration
733
—
733
—
Operations optimization costs
98
60
98
709
Acquisition-related costs
128
133
128
133
Adjusted EBITDA
$
17,959
$
14,954
$
36,079
$
29,696
For the Three Months
Ended
For the Six Months
Ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Reconciliation of net income to adjusted
net income
Net income
$
9,171
$
7,879
$
20,008
$
15,241
Excess tax benefit related to ASU No.
2016-09
(146
)
—
(146
)
—
Loss (gain) on contingent
consideration
733
—
733
—
Operations optimization costs
98
60
98
709
Acquisition-related costs
128
133
128
133
Income taxes *
(201
)
(41
)
(201
)
(177
)
Adjusted net income
$
9,783
$
8,031
$
20,620
$
15,906
Adjusted net income per diluted share
(Adjusted diluted EPS)
$
1.03
$
0.85
$
2.17
$
1.68
* For the three and six months ended February 28, 2021 and
February 29, 2020, 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 2021 and
2020.
For the Three Months
Ended
For the Six Months
Ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Reconciliation of cash provided by
operating activities to free cash flow
Net cash provided by operating
activities
$
12,334
$
9,308
$
26,386
$
27,461
Purchases of property, plant and
equipment
(400
)
(128
)
(1,060
)
(827
)
Free cash flow
$
11,934
$
9,180
$
25,326
$
26,634
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210408005924/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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