In its first public earnings release since becoming a publicly
traded company, Diversey Holdings, Ltd. ("Diversey") announced that
its 2021 first quarter results were in-line with its expectations
despite heavy lockdowns in most parts of the world.
CEO commentPhil Wieland, Diversey’s Chief
Executive Officer said, “We are excited to share our first earnings
update as a public company and report strong first quarter results.
Our net promoter scores are at record levels and we're continuing
to win new business. Our focus remains on the fundamentals of
delivering great product and service for our customers, managing
costs and passing through price as appropriate. We are seeing the
fruits of our strategic initiatives and believe we are well
positioned to take advantage of significant tailwinds as markets
reopen.”
First Quarter 2021 Consolidated Results
Net sales grew 2% as reported, compared to pre-COVID Q1 2019.
Net sales were down 4% compared to pre-lockdown Q1 2020 reflective
of strict global lockdowns that have been extended and more
restrictive than expected.
Loss before income taxes of $98 million in the first quarter of
2021 included amortization and Special Items (as defined below) of
$123 million, the majority of which related to the IPO and compared
to income before taxes of $15 million in Q1 2020. Adjusted net
income in Q1 2021 was $27 million compared to $23 million in Q1
2020.
Adjusted EBITDA for the first quarter of 2021 was $93 million,
representing continued growth compared to the prior year despite
lower net sales, and a 78% improvement compared to Q1 2019.
Adjusted EBITDA margin expanded 630 basis points compared to 2019
and 60 basis points compared to 2020, due to growth in infection
prevention, pricing and cost control.
Segment Review
Institutional
Unaudited |
First Quarter Ended March 31 |
(millions) |
2021 |
2020 |
% Change |
2019 |
% Change |
Net sales |
$ |
467.9 |
|
$ |
493.4 |
|
(5.2 |
) |
% |
$ |
460.1 |
|
1.7 |
% |
Adjusted EBITDA |
71.1 |
|
81.0 |
|
(12.2 |
) |
% |
45.1 |
|
57.6 |
% |
% Margin |
15.2 |
% |
16.4 |
% |
(120) bps |
|
|
9.8 |
% |
540 bps |
|
Net sales in the Institutional segment of $468 million were 2%
above Q1 2019 and adjusted EBITDA was 58% above Q1 2019, with gains
in infection prevention more than offsetting the negative impact
from lockdowns, related to the COVID-19 pandemic. Versus Q1 2020,
net sales declined 5% and Adjusted EBITDA declined 12%, reflecting
the impact of global shutdowns on foodservice and hospitality
sectors, offset by continued strength in North America infection
prevention products. Acquisitions contributed $2 million to sales
growth and less than $1 million to Adjusted EBITDA.
Food & Beverage
Unaudited |
First Quarter Ended March 31 |
(millions) |
2021 |
2020 |
% Change |
2019 |
% Change |
Net sales |
$ |
163.6 |
|
$ |
161.5 |
|
1.3 |
% |
$ |
157.8 |
|
3.7 |
% |
Adjusted EBITDA |
31.9 |
|
25.9 |
|
23.2 |
% |
21.9 |
|
45.7 |
% |
% Margin |
19.5 |
% |
16.0 |
% |
350 bps |
|
13.9 |
% |
560 bps |
|
In the Food & Beverage segment, net sales of $164 million in
the first quarter of 2021 were up 1% versus prior year and 4%
versus Q1 2019, while Adjusted EBITDA of $32 million grew 23%
versus Q1 2020 and 46% versus Q1 2019. Acquisitions contributed $3
million to sales growth and approximately $1 million to Adjusted
EBITDA. Margin improvement of 350 basis points versus the prior
year reflected pricing actions and cost control measures in
response to the global pandemic.
Corporate
Unaudited |
First Quarter Ended March 31 |
(millions) |
2021 |
2020 |
% Change |
2019 |
% Change |
Adjusted EBITDA |
$ |
(10.3 |
) |
|
$ |
(14.7 |
) |
|
29.9 |
% |
$ |
(14.9 |
) |
|
30.9 |
% |
% Net Sales |
(1.6 |
) |
% |
(2.2 |
) |
% |
60 bps |
|
(2.4 |
) |
% |
80 bps |
|
Corporate costs fell from $15 million in Q1 2020 to $10 million
in Q1 2021 primarily driven by cost reduction initiatives and
controlled discretionary spend in response to the global
pandemic.
Outlook
In 2020, Adjusted EBITDA grew despite the challenges brought on
by the pandemic. We believe our 2021 full year will be in line with
expectations at the time of the IPO. While some markets opened a
little earlier than expected, helping Q1, other markets have been
slower to open, which will negatively impact Q2, bringing our first
half expectations back in line with our original plan. We expect
the second half of 2021 to also be in line with our original plan
at the time of the IPO. Our outlook with respect to market share
gains, growth initiatives and focus on commercial excellence leaves
us positioned to take advantage of market recovery and potential
tailwinds in the back half of 2021. We expect our Adjusted EBITDA
to grow throughout 2021 on a quarter-on-quarter basis, assuming
markets open as expected. We remain committed to margin expansion
in this business and expect to show margin accretion in 2021.
About Diversey
Diversey’s mission is to protect and care for people through
leading hygiene, infection prevention, and cleaning solutions. We
develop and deliver innovative products, services, and technologies
that save lives and protect our environment. Over the course of 95
years, the Diversey brand has become synonymous with product
quality, service, and innovation.
For more information, visit www.diversey.com or follow us on
LinkedIn, Facebook, or Twitter @diversey.
Diversey Holdings, Ltd.Media Contact:Vani
Chokramediarelations@diversey.com
Investor Contact:Grant Graverir@diversey.com
Conference Call and Webcast Information
Management will host a conference call today, May 14, 2021 at
8:30 am ET to discuss the results for Q1 2021.
Interested parties may access the conference call live over the
phone by dialing 1-877-407-0784 (Toll Free) or 1-201-689-8560
(Toll/International) and requesting the Diversey First Quarter 2021
Earnings Conference Call. Participants are asked to dial in a few
minutes prior to the call to register for the event. Related
materials that will be referenced on the call are available to the
public at ir.diversey.com. The event will also be available live
via webcast which can be accessed here.
An audio replay of the conference call will be available
approximately three hours after the conference call until 11:59 pm
ET on May 28, 2021 and can be accessed by dialing 1-844-512-2921
(domestic) or 1-412-317-6671 (international), and providing the
passcode 13719093.
Cautionary Statements Regarding Forward-Looking
Information
This communication contains forward-looking statements that are
subject to risks and uncertainties. All statements other than
statements of historical fact included herein are forward-looking
statements. Forward-looking statements give our current
expectations and projections relating to our financial condition,
results of operations, plans, objectives, future performance,
business and growth. You can identify forward-looking statements by
the fact that they do not relate strictly to historical or current
facts. These statements may include words such as “anticipate”,
“estimate”, “expect”, “project”, “plan”, “intend”, “believe”,
“may”, “will”, “should”, “can have”, “likely” and other words and
terms of similar meaning in connection with any discussion of the
timing or nature of future operating or financial performance or
other events. For example, all statements we make relating to our
estimated and projected costs, expenditures, cash flows, growth
rates, margins and financial results or our plans and objectives
for future operations, growth initiatives, or strategies are
forward-looking statements. All forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially from those that we expected, including:
- the continuation of the COVID-19 pandemic may cause disruptions
to our operations, customer demand, and our suppliers’ ability to
support us;
- uncertain global economic conditions which have had and could
continue to have an adverse effect on our consolidated financial
condition and results of operations;
- the global nature of our operations exposes us to numerous
risks that could materially adversely affect our consolidated
financial condition and results of operations;
- fluctuations between non-U.S. currencies and the U.S. dollar
could materially impact our consolidated financial condition or
results of operations;
- political and economic instability and risk of government
actions affecting our business and our customers or suppliers may
adversely impact our business, results of operations and cash
flows;
- raw material pricing, availability and allocation by suppliers
as well as energy-related costs may negatively impact our results
of operations, including our profit margins;
- if we do not develop new and innovative products or if
customers in our markets do not accept them, our results would be
negatively affected;
- cyber risks and the failure to maintain the integrity of our
operational or security systems or infrastructure;
- the introduction of the Organization for Economic Cooperation
and Development’s Base Erosion and Profit Shifting may adversely
affect our effective rate of tax in future periods;
- the consolidation of customers may adversely affect our
business, consolidated financial condition or results of
operations;
- we experience competition in the markets for our products and
services and in the geographic areas in which we operate;
- instability and uncertainty in the credit and financial markets
could adversely impact the availability of credit that we and our
customers need to operate our business;
- new and stricter regulations may affect our business and
consolidated condition and results of operations; and
- the other risks described under “Risk Factors” in Diversey’s
prospectus dated March 24, 2021 filed with the Securities and
Exchange Commission in connection with our recently completed
IPO.
We derive many of our forward-looking statements from our
operating budgets and forecasts, which are based on many detailed
assumptions. While we believe that our assumptions are reasonable,
we caution that it is very difficult to predict the impact of known
factors, and it is impossible for us to anticipate all factors that
could affect our actual results. All written and oral
forward-looking statements attributable to us, or persons acting on
our behalf, are expressly qualified in their entirety by these
cautionary statements as well as other cautionary statements that
are made from time to time in our other SEC filings and public
communications. You should evaluate all forward-looking statements
in the context of these risks and uncertainties.
We caution you that the important factors referenced above may
not contain all of the factors that are important to you. In
addition, we cannot assure you that we will realize the results or
developments we expect or anticipate or, even if substantially
realized, that they will result in the consequences or affect us or
our operations in the way we expect. The forward-looking statements
included herein are made only as of the date hereof. We undertake
no obligation to update or revise any forward-looking statement as
a result of new information, future events or otherwise, except as
otherwise required by law.
Non-GAAP Financial Information
We present financial information that conforms to generally
accepted accounting principles in the United States (“U.S. GAAP").
We also present financial information that does not conform to U.S.
GAAP ("Non-GAAP"), as our management believes it is useful to
investors.
The Non-GAAP financial metrics exclude items that we consider to
be certain specified items (“Special Items”), such as restructuring
charges, transition and transformation costs, certain transaction
and other charges related to acquisitions and divestitures, gains
and losses related to acquisitions and divestitures, and certain
other items. We evaluate unusual or Special Items on an individual
basis. Our evaluation of whether to exclude an unusual or Special
Item for purposes of determining our Non-GAAP financial measures
considers both the quantitative and qualitative aspects of the
item, including among other things (i) its nature, (ii) whether or
not it relates to our ongoing business operations, and (iii)
whether or not we expect it to occur as part of our normal business
on a regular basis.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are supplemental measures that are
not required by, or presented in accordance with, U.S. GAAP. We
define EBITDA as income (loss) before income tax provisions
(benefit), interest expense, and depreciation and amortization, and
Adjusted EBITDA, as EBITDA adjusted for other items to (i)
eliminate certain non-operating income or expense items, (ii)
eliminate the impact of certain non-cash and other items that are
included in net income (loss) that we do not consider indicative of
our ongoing operating performance, and (iii) eliminate certain
unusual and non-recurring items impacting results in a particular
period.
EBITDA and Adjusted EBITDA are not measures of our financial
performance under U.S. GAAP and should not be considered as an
alternative to revenues, net income (loss), income (loss) before
income tax provision or any other performance measures derived in
accordance with U.S. GAAP, nor should they be considered as
alternatives to cash flows from operating activities as a measure
of liquidity in accordance with U.S. GAAP. In addition, our method
of calculating EBITDA and Adjusted EBITDA may vary from the methods
used by other companies.Our management considers EBITDA and
Adjusted EBITDA to be key indicators of our financial performance.
Additionally, we believe EBITDA and Adjusted EBITDA are frequently
used by securities analysts, investors and other interested parties
in the evaluation of companies in our industry. We also believe
that investors, analysts and rating agencies consider EBITDA and
Adjusted EBITDA useful means of measuring our ability to meet our
debt service obligations and evaluating our financial performance,
and management uses these measures for one or more of these
purposes. Our presentation of EBITDA and Adjusted EBITDA should not
be construed as an inference that our future results will be
unaffected by unusual or nonrecurring items. EBITDA and Adjusted
EBITDA have important limitations as analytical tools and you
should not consider them in isolation or as a substitute for
analysis of our results as reported under U.S. GAAP. The use of
EBITDA and Adjusted EBITDA instead of net income has limitations as
an analytical tool.
Adjusted Net Income
Adjusted Net Income (as defined below) and Adjusted Earnings
(Loss) Per Share (“Adjusted EPS”) are Non-GAAP financial measures.
We define Adjusted Net Income as net income (loss) adjusted to (i)
eliminate certain non-operating income or expense items, (ii)
eliminate the impact of certain non-cash and other items that are
included in net income that we do not consider indicative of our
ongoing operating performance, (iii) eliminate certain unusual and
non-recurring items impacting results in a particular period, and
(iv) reflect the tax effect of items (i) through (iii) and other
tax special items.
We believe that in addition to our results determined in
accordance with GAAP, Adjusted Net Income and Adjusted EPS are
useful in evaluating our business, results of operations and
financial condition. We believe that Adjusted Net Income and
Adjusted EPS may be helpful to investors because they provide
consistency and comparability with past financial performance and
facilitate period to period comparisons of our operations and
financial results, as they eliminate the effects of certain
variables from period to period for reasons that we do not believe
reflect our underlying operating performance or are unusual or
infrequent in nature. However, Adjusted Net Income and Adjusted EPS
are presented for supplemental informational purposes only and
should not be considered in isolation or as a substitute or
alternative for financial information presented in accordance with
GAAP.
Adjusted Net Income and Adjusted EPS have limitations as
analytical tools.
Diversey Holdings,
Ltd.Condensed Consolidated Balance
Sheets(Unaudited)
(in
millions except per share amounts) |
March 31,2021 |
December 31,2020 |
Assets |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
113.0 |
|
$ |
192.9 |
|
|
Trade receivables, net of
allowance for doubtful accounts of $27.1 and $28.7 |
332.8 |
|
342.0 |
|
|
Other receivables |
60.8 |
|
71.0 |
|
|
Inventories |
317.5 |
|
282.4 |
|
|
Prepaid expenses and other
current assets |
79.0 |
|
62.0 |
|
|
Total current assets |
903.1 |
|
950.3 |
|
Property and
equipment, net |
186.5 |
|
188.3 |
|
Goodwill |
459.3 |
|
467.0 |
|
Intangible assets,
net |
2,236.0 |
|
2,311.4 |
|
Other non-current
assets |
352.6 |
|
369.1 |
|
|
Total assets |
$ |
4,137.5 |
|
$ |
4,286.1 |
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
Current liabilities: |
|
|
|
Short-term borrowings |
$ |
0.4 |
|
$ |
0.4 |
|
|
Current portion of long-term
debt |
14.5 |
|
13.2 |
|
|
Accounts payable |
444.2 |
|
404.6 |
|
|
Accrued restructuring
costs |
19.6 |
|
26.3 |
|
|
Other current liabilities |
407.4 |
|
512.4 |
|
|
Total current liabilities |
886.1 |
|
956.9 |
|
Long-term debt,
less current portion |
1,991.3 |
|
2,686.7 |
|
Preferred
equity certificates |
0 |
|
641.7 |
|
Deferred
taxes |
178.7 |
|
181.1 |
|
Other non-current
liabilities |
565.8 |
|
328.3 |
|
|
Total liabilities |
3,621.9 |
|
4,794.7 |
|
Commitments and
contingencies |
|
|
Stockholders' equity: |
|
|
|
Common stock, $0.01 par value
per share, 0 and 195,800,697 shares authorizedand outstanding in
2021 and 2020, respectively |
— |
|
2.2 |
|
|
Ordinary shares, $0.0001 par
value per share; 1,000,000,000 and 0 sharesauthorized, 296,245,126
and 0 shares outstanding in 2021 and 2020, respectively |
0.0 |
|
— |
|
|
Preferred shares, $0.0001 par
value per share, 200,000,000 and 0 sharesauthorized, 0 and 0 shares
outstanding in 2021 and 2020, respectively |
— |
|
— |
|
|
Additional paid-in
capital |
1332.7 |
|
247.2 |
|
|
Accumulated deficit |
(641.0 |
) |
(545.3 |
) |
|
Accumulated other
comprehensive loss |
(176.1 |
) |
(212.7 |
) |
|
Total stockholders' equity |
515.6 |
|
(508.6 |
) |
|
Total liabilities and stockholders' equity |
$ |
4,137.5 |
|
$ |
4,286.1 |
|
Diversey Holdings,
Ltd.Condensed Consolidated Statements of
Operations(Unaudited)
(in millions except
per share amounts) |
Three Months EndedMarch 31, 2021 |
Three Months EndedMarch 31, 2020 |
Net sales |
$ |
631.5 |
|
|
$ |
654.9 |
|
Cost of sales |
385.1 |
|
|
373.6 |
|
Gross profit |
246.4 |
|
|
281.3 |
|
Selling, general and
administrative expenses |
243.1 |
|
|
214.1 |
|
Transition and transformation
costs |
15.4 |
|
|
5.0 |
|
Management fee |
19.4 |
|
|
1.9 |
|
Amortization of intangible
assets |
24.3 |
|
|
24.6 |
|
Restructuring costs |
0.5 |
|
|
1.4 |
|
Operating income (loss) |
(56.3 |
) |
|
34.3 |
|
Interest expense |
43.7 |
|
|
31.6 |
|
Foreign currency (gain) loss
related to Argentina subsidiaries |
(2.0 |
) |
|
0.9 |
|
Other (income) expense,
net |
0.1 |
|
|
(13.3 |
) |
Income (loss) before income tax provision (benefit) |
(98.1 |
) |
|
15.1 |
|
Income tax provision
(benefit) |
(2.4 |
) |
|
11.2 |
|
Net income (loss) |
$ |
(95.7 |
) |
|
3.9 |
|
|
|
|
Basic income (loss) per
share |
$ |
(0.39 |
) |
|
$ |
0.02 |
|
Diluted income (loss) per
share |
$ |
(0.39 |
) |
|
$ |
0.02 |
|
Basic weighted average shares
outstanding |
247.3 |
|
|
243.2 |
|
Diluted weighted average
shares outstanding |
247.3 |
|
|
243.2 |
|
Diversey Holdings,
Ltd.Condensed Consolidated Statements of Cash
Flows(Unaudited)
(in
millions) |
Three Months EndedMarch 31, 2021 |
Three Months EndedMarch 31, 2020 |
Operating
activities: |
|
|
|
Net income (loss) |
$ |
(95.7 |
) |
|
$ |
3.9 |
|
|
Adjustments to reconcile net
income (loss) to cash used in operating activities: |
|
|
|
Depreciation and
amortization |
47.1 |
|
|
48.4 |
|
|
Amortization of deferred financing costs and original issue
discount |
14.9 |
|
|
2.6 |
|
|
(Gain) loss on cash flow
hedges |
0.2 |
|
|
(1.0 |
) |
|
Deferred taxes |
0.8 |
|
|
(1.1 |
) |
|
Non-cash foreign currency
exchange (gain) loss |
1.5 |
|
|
(9.0 |
) |
|
Share-based compensation |
37.5 |
|
|
0.3 |
|
|
Impact of highly inflationary
economy - Argentina |
(2.0 |
) |
|
0.9 |
|
|
Provision for bad debts |
2.0 |
|
|
5.5 |
|
|
Provision for slow moving
inventory |
3.0 |
|
|
1.1 |
|
|
Other non-cash, net |
(3.7 |
) |
|
0.3 |
|
|
Changes in operating assets and liabilities: |
|
|
|
Trade receivables, net |
(28.0 |
) |
|
(73.6 |
) |
|
Inventories, net |
(41.2 |
) |
|
(28.5 |
) |
|
Accounts payable |
46.5 |
|
|
13.0 |
|
|
Income taxes, net |
(11.6 |
) |
|
6.7 |
|
|
Other assets and liabilities, net |
(50.0 |
) |
|
(25.7 |
) |
Cash used
in operating activities |
(78.7 |
) |
|
(56.2 |
) |
Investing
activities: |
|
|
|
Dosing and dispensing equipment |
(12.0 |
) |
|
(14.6 |
) |
|
Capital expenditures |
(6.4 |
) |
|
(7.3 |
) |
|
Collection of deferred factored receivables |
24.4 |
|
|
18.0 |
|
Cash
provided by (used in) investing activities |
6.0 |
|
|
(3.9 |
) |
Financing
activities: |
|
|
|
Contingent consideration payments |
(0.1 |
) |
|
— |
|
|
Proceeds from short-term borrowings |
0.4 |
|
|
0.1 |
|
|
Proceeds from revolving credit facility |
— |
|
|
60.0 |
|
|
Payments on revolving credit facility |
— |
|
|
(52.0 |
) |
|
Proceeds from long-term borrowings |
— |
|
|
22.9 |
|
|
Payments on long-term borrowings |
(656.0 |
) |
|
(6.2 |
) |
|
Payment of deferred financing costs |
(2.5 |
) |
|
— |
|
|
Issuance of ordinary shares sold in IPO, net of offering costs |
654.3 |
|
|
— |
|
Cash
provided by (used in) financing activities |
(3.9 |
) |
|
24.8 |
|
Exchange rate
changes on cash |
(3.9 |
) |
|
(3.5 |
) |
|
Decrease in cash, cash equivalents and restricted cash |
(80.5 |
) |
|
(38.8 |
) |
Cash, cash
equivalents and restricted cash at beginning of period |
201.7 |
|
|
142.3 |
|
Cash, cash
equivalents and restricted cash at end of period |
$ |
121.2 |
|
|
$ |
103.5 |
|
|
|
|
Supplemental Cash
Flow Information: |
|
|
|
Interest payments |
$ |
49.0 |
|
|
$ |
36.8 |
|
|
Income tax payments |
$ |
8.4 |
|
|
$ |
6.7 |
|
|
Conversion of preferred equity securities to equity |
$ |
620.9 |
|
|
$ |
114.3 |
|
|
Beneficial interest obtained for factored receivables |
$ |
6.9 |
|
|
$ |
13.6 |
|
The following table reconciles net income (loss) before income
tax provision (benefit) to EBITDA and Adjusted EBITDA for the
periods presented:
(in
millions) |
Three MonthsEnded March 31,2021 |
Three MonthsEnded March 31,2020 |
Three MonthsEnded March 31,2019 |
Income (loss) before income tax provision (benefit) |
$ |
(98.1 |
) |
|
$ |
15.1 |
|
|
$ |
(45.5 |
) |
Interest expense |
43.7 |
|
|
31.6 |
|
|
34.1 |
|
Interest income |
(0.9 |
) |
|
(2.2 |
) |
|
(1.6 |
) |
Amortization expense of
intangible assets |
24.3 |
|
|
24.6 |
|
|
22.9 |
|
Depreciation expense included
in cost of sales |
20.8 |
|
|
21.8 |
|
|
19.7 |
|
Depreciation expense included
in selling, general andadministrative expenses |
2.0 |
|
|
2.0 |
|
|
1.3 |
|
EBITDA |
(8.2 |
) |
|
92.9 |
|
|
30.9 |
|
Transition and transformation
costs and non-recurring costs(1) |
15.4 |
|
|
5.0 |
|
|
14.7 |
|
Restructuring costs(2) |
0.5 |
|
|
1.4 |
|
|
— |
|
Foreign currency loss (gain)
related to Argentina subsidiaries(3) |
(2.0 |
) |
|
0.9 |
|
|
1.0 |
|
Acquisition accounting
adjustments (4) |
— |
|
|
— |
|
|
0.7 |
|
Bain Capital management
fee(5) |
19.4 |
|
|
1.9 |
|
|
1.9 |
|
Non-cash pension and other
post-employment benefit plan(6) |
(3.8 |
) |
|
(3.1 |
) |
|
(2.4 |
) |
Non-cash foreign currency
exchange loss (gain)(7) |
5.9 |
|
|
(8.3 |
) |
|
4.3 |
|
Factoring and securitization
fees(9) |
1.0 |
|
|
0.7 |
|
|
0.9 |
|
Share-based
compensation(10) |
63.5 |
|
|
0.3 |
|
|
— |
|
Other items |
1.0 |
|
|
0.5 |
|
|
0.1 |
|
Non-GAAP consolidated
Adjusted EBITDA |
$ |
92.7 |
|
|
$ |
92.2 |
|
|
$ |
52.1 |
|
The following table reconciles net income (loss) to Adjusted Net
Income and basic and diluted earnings (loss) per share to Adjusted
EPS for the periods presented:
|
Three Months EndedMarch 31, 2021 |
Three Months EndedMarch 31, 2020 |
Three Months EndedMarch 31, 2019 |
(in millions, except
per share amounts) |
Net Income(Loss) |
Basic anddilutedEPS(12) |
Net Income(Loss) |
Basic anddilutedEPS(12) |
Net Income(Loss) |
Basic anddilutedEPS(12) |
Reported (GAAP) |
$ |
(95.7 |
) |
|
$ |
(0.39 |
) |
|
$ |
3.9 |
|
|
$ |
0.02 |
|
|
$ |
(44.5 |
) |
|
$ |
(0.18 |
) |
Amortization expense of
intangible assets acquired |
24.3 |
|
|
0.10 |
|
|
24.6 |
|
|
0.10 |
|
|
22.9 |
|
|
0.09 |
|
Transition and transformation
costs and non-recurring costs(1) |
15.4 |
|
|
0.06 |
|
|
5.0 |
|
|
0.02 |
|
|
14.7 |
|
|
0.06 |
|
Restructuring costs(2) |
0.5 |
|
|
— |
|
|
1.4 |
|
|
0.01 |
|
|
— |
|
|
— |
|
Foreign currency loss (gain)
related to Argentina subsidiaries(3) |
(2.0 |
) |
|
(0.01 |
) |
|
0.9 |
|
|
— |
|
|
1.0 |
|
|
— |
|
Acquisition accounting
adjustments(4) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
Bain Capital management
fee(5) |
19.4 |
|
|
0.08 |
|
|
1.9 |
|
|
0.01 |
|
|
1.9 |
|
|
0.01 |
|
Non-cash pension and other
post-employment benefit plan(6) |
(3.8 |
) |
|
(0.02 |
) |
|
(3.1 |
) |
|
(0.01 |
) |
|
(2.4 |
) |
|
(0.01 |
) |
Non-cash foreign currency
exchange loss (gain)(7) |
5.9 |
|
|
0.02 |
|
|
(8.3 |
) |
|
(0.03 |
) |
|
4.3 |
|
|
0.02 |
|
Factoring and securitization
fees(8) |
1.0 |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Share-based
compensation(9) |
63.5 |
|
|
0.26 |
|
|
0.3 |
|
|
— |
|
|
— |
|
|
— |
|
Accelerated expense of
deferred financing and original issue discount costs |
11.9 |
|
|
0.05 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other items |
1.0 |
|
|
— |
|
|
0.5 |
|
|
— |
|
|
0.1 |
|
|
— |
|
Tax effects related to
non-GAAP adjustments(10) |
(15.7 |
) |
|
(0.05 |
) |
|
(5.3 |
) |
|
(0.03 |
) |
|
(9.7 |
) |
|
(0.03 |
) |
Discrete tax
adjustments(11) |
1.5 |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted
(Non-GAAP) |
$ |
27.2 |
|
|
$ |
0.11 |
|
|
$ |
22.5 |
|
|
$ |
0.09 |
|
|
$ |
(10.1 |
) |
|
$ |
(0.04 |
) |
(1) |
In the period following the Diversey Acquisition, we incurred costs
primarily consisting of professional and consulting services in
such areas as information technology, controllership, tax,
treasury, transformation services, human resources, procurement and
supply chain in establishing ourselves as a standalone company and
to position ourselves for future growth. Costs incurred in 2021
include those necessary to become a publicly traded Company. |
(2) |
Includes costs related to restructuring programs including expenses
mainly related to reduction in headcount. |
(3) |
Effective July 1, 2018, Argentina was deemed to have a highly
inflationary economy and the functional currency for our Argentina
operations was changed from the Argentinian Peso to the United
States dollar and remeasurement charges/credits are recorded in our
Condensed Consolidated Statements of Operations rather than as a
component of Cumulative Translation Adjustment on our Condensed
Consolidated Balance Sheets. |
(4) |
In connection with the 2017 Acquisition, Twister Acquisition and
Zenith Acquisition, we recorded fair value increases to our
inventory. These amounts represent the amortization of this
increase. |
(5) |
Represents fees paid to Bain Capital pursuant a management
agreement whereby we have received general business consulting
services; financial, managerial and operational advice; advisory
and consulting services with respect to selection of advisors;
advice in different fields; and financial and strategic planning
and analysis. The management agreement was terminated in March 2021
pursuant to its terms upon the consummation of the IPO, and we
recorded a termination fee of $17.5 million during the three months
ended March 31, 2021. |
(6) |
Represents the net impact of the expected return on plan assets,
interest cost, and settlement cost components of net periodic
defined benefit income related to our defined benefit pension
plans. |
(7) |
Represents the non-cash foreign currency exchange impact on our
operations, primarily attributed to the valuation of the U.S.
Dollar-denominated debt held by our European entity. |
(8) |
On November 15, 2018, we entered into a factoring Master Agreement
with Factofrance, S.A. Additionally, on April 22, 2020, the Company
entered into a securitization arrangement with PNC Bank (“PNC”) to
sell certain North American customer receivables without recourse
on a revolving basis. This amount represents the fees to complete
the sale of the receivables without recourse. Refer to Note 5 —
Financial Statement Details in the Notes to our Condensed
Consolidated Financial Statements included in our Quarterly Report
on Form 10-Q for additional information. |
(9) |
Represents compensation expense associated with our Management
Equity Incentive Plan and Long-Term Incentive Plan awards. See Note
19 — Share-Based Compensation in the Notes to our Condensed
Consolidated Financial Statements included in our Quarterly Report
on Form 10-Q for additional information. |
(10) |
The tax rate used to calculate the tax impact of the pre-tax
adjustments is based on the jurisdiction in which the charge was
recorded. |
(11) |
Represents adjustments related to discrete tax items including
uncertain tax provisions, impacts from rate changes in certain
jurisdictions and changes in our valuation allowance. |
(12) |
For purposes of calculating earnings (loss) per share the Company
has retrospectively presented earnings (loss) per share as if the
Reorganization Transactions had occurred at the beginning of the
earliest period presented. Such retrospective presentation reflects
an increase of approximately 47.4 million shares due to the
exchange of shares in Constellation for shares in the Company. |
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