Revenue of $79.6 Million, Earnings Per Diluted
Share of $1.50 Revenue Gains Achieved for All Segments Progress
Made on Relocation of Newark, CA Facility, Consolidation of Woburn,
MA Announced
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
May 31, 2021, the third quarter of its fiscal year 2021.
Fiscal Third Quarter Key Highlights
- Total Revenue of $79.6 million, up 23% compared to $64.9
million in the prior year.
- Gross Margin of 42%, compared to 39% in the prior year.
- Net Income of $14.3 million, up 44% compared to $9.9 million in
the prior year.
- Adjusted EBITDA of $22.4 million, up 40% compared to $16.0
million in the prior year.
- Free Cash Flow of $15.9 million, up 6% compared to $15.0
million in the prior year.
- Ended fiscal third quarter of 2021 with a cash balance of
$102.9 million.
- Progress made on consolidation of Newark, CA facility,
consolidation of Woburn, MA announced.
“The recovering demand across our segments and our third quarter
performance are testaments to the resiliency of our business, the
loyalty of our customers, and our ability to execute on our
strategic growth drivers,” said Adam P. Chase, President and Chief
Executive Officer of Chase Corporation. “The Adhesives, Sealants
and Additives segment led the Company’s top-line improvement in the
third quarter, with significant momentum in international markets,
as well as the successful integrations of the recent acquisitions
of ABchimie and the operations of Emerging Technologies, Inc
(“ETi”). The Industrial Tapes and Corrosion Protection and
Waterproofing segments also achieved a recovery in demand over the
COVID-19 impacted prior year, with domestic waterproofing project
work leading the Corrosion Protection and Waterproofing
rebound.”
Mr. Chase added, “We made additional progress in our efforts to
streamline our operations, optimize our footprint and drive greater
efficiency within our portfolio during the third quarter. We
advanced on the previously announced movement of our Newark, CA
production plant to our Hickory, NC facility. Additionally, we
announced that our adhesives systems production facility in Woburn,
MA will be consolidating into our existing O’Hara Township, PA
location. We believe these consolidation initiatives will allow us
to more effectively meet customer requirements.”
Mr. Chase continued, “Over the last nine months, the Company has
labored tirelessly to keep our employees and our communities safe,
while continuing to work to exceed the expectations of our
customers in this difficult time. We made significant strides in
improving our operational efficiencies and expanding margins, and
believe we are well-positioned to drive top- and bottom-line growth
through organic and inorganic opportunities in the coming quarters.
Our business model and suite of products allows us to serve high
growth trends including 5G, electric vehicles, and Internet of
Things (IoT) technologies, while consistently reviewing and
refining our current portfolio of companies, end markets and
segments to achieve optimal operational and cost efficiencies.”
“As we move forward into the fourth quarter, we continue to face
global raw material inflationary pressures and supply chain
challenges. Chase continues to meet its customers’ increasing
demand by leveraging our global network, partnering with customers
and suppliers and driving further efficiencies throughout our
production and logistics processes. While we look to drive cost
savings, we will also continue to institute customer price
adjustments as needed across all affected product lines to protect
gross margins.”
Fiscal Third Quarter Financial Highlights
- Total Revenue grew 23% to $79.6 million, compared to Q3
FY20.
- Gross Margin of 42%, compared to 39% in Q3 FY20, due in part to
sales mix and operational efficiencies, including site
consolidation.
- Selling, General and Administrative expenses increased 18% to
$14.0 million from the year-ago period.
- Effective Income Tax Rate of 19.5%, compared to 20.9% in the
year-ago period.
- Net Income for the fiscal third quarter of 2021 was $14.3
million, or $1.50 per diluted share, compared to a Net Income of
$9.9 million, or $1.04 per diluted share, for the fiscal third
quarter of 2020.
- Adjusted EBITDA for the fiscal third quarter of 2021 was $22.4
million, compared to Adjusted EBITDA of $16.0 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 third quarter of 2021 was $15.9
million, compared to Free Cash Flow of $15.0 million in the
prior-year quarter.
“We are encouraged to see each of our operating segments achieve
top-line expansion year-over-year, as our recent acquisitions,
ABchimie and ETi, helped drive our performance for the third
quarter as well as establish a strong footing for future growth in
the coming quarters. We are pleased with the synergy these
acquisitions have had amongst our product portfolio, further
attesting to our ability to drive operational efficiencies and
inorganic growth," said Michael J. Bourque, Treasurer and Chief
Financial Officer of Chase Corporation. “We finished the quarter
with no debt, an overall cash balance of $102.9 million, and have
full access to our $150 million credit facility to invest in
growth, as needed. To further support growth initiatives and
maintain financial flexibility, we plan to enter into a new
facility prior to our current facility’s December 2021 maturity
date.”
Adhesives, Sealants and Additives
For the Three Months Ended May
31,
For the Nine Months Ended May
31,
2021
2020
2021
2020
Revenue
$
33,861
$
22,922
$
95,507
$
73,184
Cost of products and services sold
18,850
13,044
52,461
41,831
Gross Margin
$
15,011
$
9,878
$
43,046
$
31,353
Gross Margin %
44%
43%
45%
43%
Revenue in the Company’s Adhesives, Sealants and Additives
segment increased $10.9 million or 48% in the third fiscal quarter,
with $7.2 million from organic revenue growth. The revenue
expansion was largely driven by growth in Asian and European
markets, as well as inorganic growth provided by the acquired
operations of ABchimie, as sales within the electronic and
industrial coatings product line increased. The functional
additives product line also experienced both organic and inorganic
volume growth over the period, with the acquired operations of ETi
supporting the product line.
Industrial Tapes
For the Three Months Ended May
31,
For the Nine Months Ended May
31,
2021
2020
2021
2020
Revenue
$
32,249
$
31,752
$
87,085
$
91,931
Cost of products and services sold
20,043
21,118
55,853
62,640
Gross Margin
$
12,206
$
10,634
$
31,232
$
29,291
Gross Margin %
38%
33%
36%
32%
Revenue in the Industrial Tapes segment increased $497,000 or 2%
in the third fiscal quarter. In the period, the specialty products,
pulling and detection and cable materials product lines each had
sales slightly ahead of the prior year’s COVID-19 impacted quarter.
In the trailing nine-month period ended May 31, 2021, the
Industrial Tapes segment, driven by residual COVID-19 effects on
cable materials as well as top-line decreases in specialty products
and pulling and detection product lines, underperformed compared to
the prior year. The electronic materials product line, which sells
nearly exclusively to Asian markets, reported a decline in the
third fiscal quarter. However, electronic materials sales remain
above the previous year on a year-to-date basis.
Corrosion Protection and Waterproofing
For the Three Months Ended May
31,
For the Nine Months Ended May
31,
2021
2020
2021
2020
Revenue
$
13,483
$
10,197
$
32,624
$
32,140
Cost of products and services sold
7,419
5,527
18,518
17,667
Gross Margin
$
6,064
$
4,670
$
14,106
$
14,473
Gross Margin %
45%
46%
43%
45%
Revenue from the Corrosion Protection and Waterproofing segment
increased $3.3 million or 32% compared to the year-ago period. The
segment’s growth was primarily driven by the coating and lining
systems and building envelope product lines, which were favorable
in both the year-over-year and year-to-date periods, as well as
recovery and growth achieved following winter weather events which
took place in Houston, TX during the second quarter. The pipeline
coatings product line performed favorable for the quarter, however,
trailed on a year-to-date basis. Bridge and highway product line
sales were unfavorable in both the quarter and year-to-date
period.
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 including, but not limited to “believe,” “expect,”
“anticipate,” “should,” “planned,” “estimated” and “potential.”
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 nine months ended May 31, 2021 and
2020.
For the Three Months Ended May
31,
For the Nine Months Ended May
31,
All figures in thousands, except per
share figures
2021
2020
2021
2020
Revenue
$
79,593
$
64,871
$
215,216
$
197,255
Costs and Expenses
Cost of products and services sold
46,312
39,689
126,832
122,138
Selling, general and administrative
expenses
13,969
11,795
38,560
37,025
Research and product development costs
957
958
3,034
3,045
Operations optimization costs
22
268
120
977
Acquisition-related costs
—
20
128
153
Gain on sale of real estate
—
(760
)
—
(760
)
Loss (gain) on contingent
consideration
262
—
995
—
Operating income
18,071
12,901
45,547
34,677
Interest expense
(68
)
(67
)
(204
)
(178
)
Other income (expense)
(260
)
(307
)
(758
)
(1,096
)
Income before income taxes
17,743
12,527
44,585
33,403
Income taxes
3,454
2,619
10,288
8,254
Net income
$
14,289
$
9,908
$
34,297
$
25,149
Net income per diluted share
$
1.50
$
1.04
$
3.61
$
2.64
Weighted average diluted shares
outstanding
9,435
9,429
9,424
9,436
Reconciliation of net income to EBITDA and
adjusted EBITDA
Net income
$
14,289
$
9,908
$
34,297
$
25,149
Interest expense
68
67
204
178
Income taxes
3,454
2,619
10,288
8,254
Depreciation expense
973
948
2,925
2,989
Amortization expense
3,376
2,898
9,566
8,724
EBITDA
$
22,160
$
16,440
$
57,280
$
45,294
Loss (gain) on contingent
consideration
262
—
995
—
Operations optimization costs
22
268
120
977
Acquisition-related costs
—
20
128
153
Gain on sale of real estate
—
(760
)
—
(760
)
Pension settlement costs
—
75
—
75
Adjusted EBITDA
$
22,444
$
16,043
$
58,523
$
45,739
For the Three Months Ended May
31,
For the Nine Months Ended May
31,
2021
2020
2021
2020
Reconciliation of net income to adjusted
net income
Net income
$
14,289
$
9,908
$
34,297
$
25,149
Excess tax benefit related to ASU No.
2016-09
(15
)
(148
)
(161
)
(148
)
Loss (gain) on contingent
consideration
262
—
995
—
Operations optimization costs
22
268
120
977
Acquisition-related costs
—
20
128
153
Gain on sale of real estate
—
(760
)
—
(760
)
Pension settlement costs
—
75
—
75
Income taxes *
(60
)
83
(261
)
(93
)
Adjusted net income
$
14,498
$
9,446
$
35,118
$
25,353
Adjusted net income per diluted share
(Adjusted diluted EPS)
$
1.53
$
1.00
$
3.70
$
2.67
* For the three and nine months ended May 31, 2021 and 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 May
31,
For the Nine Months Ended May
31,
2021
2020
2021
2020
Reconciliation of cash provided by
operating activities to free cash flow
Net cash provided by operating
activities
$
16,614
$
15,204
$
43,000
$
42,665
Purchases of property, plant and
equipment
(689
)
(217
)
(1,749
)
(1,044
)
Free cash flow
$
15,925
$
14,987
$
41,251
$
41,621
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version on businesswire.com: https://www.businesswire.com/news/home/20210712005788/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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