Financial Condition
Liquidity and Capital Resources
Cash provided by operating activities totaled $196.3 million for the first three months of 2019, an increase of $18.9 million or
10.6%, compared with $177.4 million for the first three months of 2018. The increase in cash provided by operating activities for the first three months of 2019 was primarily due to higher net income, partially offset by higher overall
operating working capital levels.
Free cash flow (cash flow provided by operating activities less capital expenditures) was
$174.8 million for the first three months of 2019, compared with $165.1 million for the first three months of 2018. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $336.7 million for the first three
months of 2019, compared with $306.0 million for the first three months of 2018. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.
Cash used for investing activities totaled $17.8 million for the first three months of 2019, compared with $253.6 million for the
first three months of 2018. For the first three months of 2018, the Company paid $242.1 million, net of cash acquired, to acquire FMH in January 2018. Additions to property, plant and equipment totaled $21.4 million for the first
three months of 2019, compared with $12.3 million for the first three months of 2018.
Cash used for financing activities totaled
$165.9 million for the first three months of 2019, compared with $27.1 million of cash used for financing activities for the first three months of 2018. At March 31, 2019, total debt, net was $2,472.4 million, compared with
$2,632.7 million at December 31, 2018. For the first three months of 2019, short term borrowings decreased by $256.3 million, compared with no change in short-term borrowings for the first three months of 2018. At March 31,
2019, the Company had available borrowing capacity of $1,965.0 million under its revolving credit facility, including the $500 million accordion feature.
In December 2018, the Company completed the 2018 private placement agreement to sell $575 million and 75 million Euros in
senior notes to a group of institutional investors utilizing two funding dates. The first funding occurred in December 2018 for $475 million and 75 million Euros ($85.1 million). The second funding occurred in January 2019
for $100 million. The 2018 Private Placement senior notes carry a weighted average interest rate of 3.93% and are subject to certain customary covenants, including financial covenants that, among other things, require the Company to
maintain
certain debt-to-EBITDA (earnings
before interest, income taxes, depreciation and amortization) and interest coverage ratios. The proceeds from the
fundings from the 2018 Private Placement were used to pay down domestic borrowings under the Companys revolving credit facility.
In the third quarter of 2018, $80 million of 6.35% senior notes and $160 million of 7.08% senior notes matured and were paid. In the
fourth quarter of 2018, $65 million of 7.18% senior notes matured and were paid. The
debt-to-capital
ratio was 35.7% at March 31, 2019, compared with 38.3% at
December 31, 2018. The net
debt-to-capital
ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders equity) was
32.1% at March 31, 2019, compared with 34.9% at December 31, 2018. The net
debt-to-capital
ratio is presented because the Company is aware that this measure is
used by third parties in evaluating the Company.
Additional financing activities for the first three months of 2019 included cash
dividends paid of $31.8 million, compared with $32.3 million for the first three months of 2018. Effective February 12, 2019, the Companys Board of Directors approved an increase of $500 million in the authorization for the
repurchase of the Companys common stock. Proceeds from stock option exercises were $24.9 million for the first three months of 2019, compared with $9.6 million for the first three months of 2018.
As a result of all of the Companys cash flow activities for the first three months of 2019, cash and cash equivalents at March 31,
2019 totaled $368.1 million, compared with $354.0 million at December 31, 2018. At March 31, 2019, the Company had $281.7 million in cash outside the United States, compared with $311.2 million at December 31,
2018. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company
believes it has sufficient cash-generating capabilities from domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations in the
foreseeable future.
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