- Separations Media and Transportation and Industrial segments
generate solid performance
- Electronics and Electric Drive Vehicles ("EDVs") segment
experiences very weak lithium battery separator demand in January
and February, followed by marked improvement in March which
continued into the second quarter
- Recent ramp-up of two new battery production facilities and new
vehicle launches in the EDV end market reinforce confidence in
improved performance as the year progresses
Polypore International, Inc. (NYSE:PPO) today reported its
financial results for the first quarter ended March 30, 2013:
- Sales were $163.5 million compared with $173.7 million in the
prior-year period.
- Segment Operating Income was $28.3 million compared with $42.0
million in the prior-year period. A table showing the
reconciliation of Segment Operating Income to U.S. GAAP amounts is
included in this release.
- Adjusted Net Income and Adjusted EPS were $12.9 million and
$0.27 per diluted share, compared with $22.3 million and $0.47 per
diluted share in the prior-year period. Net income was $9.0
million or $0.19 per diluted share, compared with $18.8
million or $0.40 per diluted share in the prior-year period. A
table showing the reconciliation of Adjusted Net Income and
Adjusted EPS to U.S. GAAP amounts is included in this release.
Commenting on the first quarter, Robert B. Toth, President and
Chief Executive Officer, said, "Our Separations Media and
Transportation and Industrial segments, which represent the
majority of Polypore, delivered solid performance in the quarter.
Sales in the Electronics and EDVs segment were challenging, with
added pressure from customers carefully managing inventory in what
was – for many – their fourth fiscal quarter of the year. Following
a very weak January and February, we experienced improved order
patterns in March and April and anticipate improving performance
through the course of the year."
Adjusted EBITDA
Adjusted EBITDA was $42.5 million in the first quarter of 2013
compared with $55.7 million in the first quarter of 2012. For the
twelve months ended March 30, 2013, Adjusted EBITDA was $200.9
million. Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA"), as defined in Polypore's senior
secured credit agreement, is reconciled to net income in the
attached table.
Energy Storage Business
Transportation and Industrial Segment
- Sales of lead-acid battery separators were $93.7 million, up 9%
compared with $86.2 million in the prior-year period. This increase
reflects strong growth in Asia and a more typical winter battery
restocking season in North America and Europe.
- Segment Operating Income was $21.3 million and 23% of sales
compared with $20.0 million and 23% of sales for the prior-year
period. The increase in segment operating income was due to higher
sales volumes.
Electronics and Electric Drive Vehicles ("EDVs") Segment
- Sales of lithium battery separators were $24.4 million compared
with $42.4 million in the prior-year period. The decrease was
primarily volume-related, reflecting weak demand in consumer
electronics applications and EDVs early in the quarter, as well as
customers reducing inventories associated with their fiscal
year-ends.
- Segment Operating Loss was $2.5 million compared with Segment
Operating Income of $16.8 million for the prior-year period,
reflecting the lack of operating leverage from lower sales as well
as higher year-over-year costs associated with added capacity
investments.
Separations Media Segment
Sales were $45.4 million, up 1% compared with $45.1 million in
the prior-year period.
- Sales of healthcare products were $29.5 million, up 7% compared
with $27.5 million in the prior-year period due to higher
hemodialysis volumes.
- Sales of filtration and specialty products were $15.9 million
compared with $17.6 million in the prior-year period due to
continued weakness in microelectronics end-market demand.
- Segment Operating Income of $15.5 million was very strong at
34% of sales compared with $13.9 million and 31% of sales in the
prior-year period. The increase was primarily due to production
timing and efficiencies.
Share Repurchase Update
As of March 30, 2013, the Company had repurchased 6,800 shares
of common stock for a total cost of approximately $272,000, leaving
3,993,200 shares remaining under its recently announced repurchase
authorization of 4 million shares.
Outlook
"We have a strong portfolio of businesses, with performance in
lead-acid separators, healthcare, and filtration on track, and our
growth expectations for our lithium separator business remain
unchanged. The ramp-up of EDV battery and production facilities in
the quarter—combined with new vehicle introductions and the
improvement in order patterns experienced in March and April—give
us confidence that sales of lithium battery separators will improve
over the course of the year," Toth added. "We are also pleased that
our strong cash position allowed us to pay down $25 million in
debt, and we remain focused on creating shareholder value as our
lithium business improves and as we drive growth."
Conference Call
Polypore International, Inc. will hold a conference call to
discuss the Company's first quarter 2013 financial results and
business outlook today, Wednesday May 8, 2013, at 4:45 p.m. Eastern
time. The number to call for this interactive teleconference is
(631) 291-4526. Enter code 30374202. A replay of the conference
call will be available through May 15, 2013, via telephone at (404)
537-3406. Enter code 30374202. The call will also be webcast live
and archived for 30 days in the Investor Relations section of the
Company's website at http://investor.polypore.net/.
In addition, the Company filed a Current Report on Form 8-K with
the Securities and Exchange Commission with Supplemental Financial
Information that is located on the Company's website.
Non-GAAP Supplemental Information
Adjusted EBITDA, Adjusted Net Income and Adjusted EPS (earnings
per share) are non-GAAP financial measures presented in this press
release as supplemental disclosures to net income and reported
results. Adjusted EBITDA is defined in our credit agreement and
represents earnings before interest, taxes, depreciation and
amortization and certain non-operating items, stock-based
compensation and other non-cash or non-recurring charges.
We define Adjusted Net Income as income from continuing
operations excluding certain items. We define Adjusted EPS as
Adjusted Net Income divided by the number of diluted shares of
common stock outstanding. The adjustments used in calculating
Adjusted Net Income and Adjusted EPS are consistent with the
adjustments used in calculating Adjusted EBITDA, as defined in our
credit agreement.
For more information regarding the computation of Adjusted
EBITDA, Adjusted Net Income and Adjusted EPS, the reconciliation of
Adjusted EBITDA to net income, Adjusted Net Income to net income
and Adjusted EPS to earnings per share, please see the attached
financial tables.
We present these non-GAAP financial measures because we believe
that they are useful indicators of our operating performance and
facilitate the comparison of results between periods. Adjusted
EBITDA is a measure used in calculating covenant compliance under
the terms of our credit agreement. We also use Adjusted EBITDA to
review and assess our operating performance in connection with
employee incentive programs and the preparation of our annual
budget and financial projections. Adjusted Net Income and Adjusted
EPS exclude amounts we do not consider part of our ongoing
operating results when assessing performance and are calculated
consistent with the calculation of Adjusted EBITDA.
Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are not
measurements of financial performance under GAAP and such financial
measures should not be considered as an alternative to net income,
cash flows from operating activities or other measures of
performance determined in accordance with GAAP. In addition, our
calculation of these non-GAAP financial measures may not be
comparable to the calculation of similarly titled measures reported
by other companies.
Forward-Looking Statements
This release contains statements that are forward-looking in
nature. Statements that are predictive in nature, that depend upon
or refer to future events or conditions or that include words such
as "expects," "anticipates," "intends," "plans," "believes,"
"estimates," and similar expressions are forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results
and performance to be materially different from any future results
or performance expressed or implied by these forward-looking
statements. These factors include the following: the highly
competitive nature of the markets in which we sell our products;
the failure to continue to develop innovative products; the loss of
our customers; the vertical integration by our customers of the
production of our products into their own manufacturing process;
increases in prices for raw materials or the loss of key supplier
contracts; our substantial indebtedness; interest rate risk related
to our variable rate indebtedness; our inability to generate cash;
restrictions related to the senior secured credit agreement;
employee slowdowns, strikes or similar actions; product liability
claims exposure; risks in connection with our operations outside
the United States, including compliance with applicable
anti-corruption laws; the incurrence of substantial costs to comply
with, or as a result of violations of, or liabilities under,
environmental laws; the failure to protect our intellectual
property; the loss of senior management; the incurrence of
additional debt, contingent liabilities and expenses in connection
with future acquisitions; the failure to effectively integrate
newly acquired operations; lithium market demand does not
materialize as anticipated; the absence of expected returns from
the intangible assets we have recorded; the adverse impact from
legal proceedings on our financial condition; and natural
disasters, epidemics, terrorist acts and other events beyond our
control. Additional information concerning these and other
important factors can be found in Item 1A. "Risk Factors" of our
most recent Annual Report on Form 10-K and subsequent reports filed
with the Securities and Exchange Commission. Such forward-looking
statements speak only as of the date of this press release.
Polypore expressly disclaims any obligation to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in Polypore's expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Polypore International,
Inc. |
Condensed consolidated
statements of income |
(unaudited) |
(in millions, except per share
data) |
|
Three Months
Ended |
|
March 30, 2013 |
March 31, 2012 |
Net sales |
$ 163.5 |
$ 173.7 |
Cost of goods sold |
108.7 |
102.7 |
Gross profit |
54.8 |
71.0 |
Selling, general and administrative
expenses |
31.4 |
33.9 |
Operating income |
23.4 |
37.1 |
Other (income) expense: |
|
|
Interest expense, net |
9.8 |
8.8 |
Foreign currency and other |
0.6 |
0.4 |
|
10.4 |
9.2 |
Income before income taxes |
13.0 |
27.9 |
Income taxes |
4.0 |
9.1 |
Net income |
$ 9.0 |
$ 18.8 |
|
|
|
Net income per share - basic and diluted |
$ 0.19 |
$ 0.40 |
|
|
|
Weighted average shares outstanding -
basic |
46,613,321 |
46,497,701 |
Weighted average shares outstanding -
diluted |
47,295,430 |
47,215,006 |
|
Polypore International,
Inc. |
Condensed consolidated
balance sheets |
(in millions) |
|
|
|
|
March 30, 2013 |
December 29, 2012
(a) |
Assets: |
|
|
Cash and cash equivalents |
$ 43.2 |
$ 44.9 |
Accounts receivable, net |
124.0 |
137.3 |
Inventories |
124.7 |
119.9 |
Other |
44.4 |
45.2 |
Current assets |
336.3 |
347.3 |
|
|
|
Property, plant and equipment, net |
628.6 |
638.8 |
Goodwill |
469.3 |
469.3 |
Intangibles and loan acquisition costs,
net |
117.8 |
121.7 |
Other |
8.7 |
9.0 |
Total assets |
$ 1,560.7 |
$ 1,586.1 |
|
|
|
Liabilities and shareholders'
equity: |
|
|
Accounts payable and accrued liabilities |
$ 79.4 |
$ 78.2 |
Income taxes payable |
1.8 |
1.6 |
Current portion of debt |
25.0 |
50.0 |
Current liabilities |
106.2 |
129.8 |
|
|
|
Debt, less current portion |
638.8 |
646.3 |
Other |
221.2 |
227.2 |
Shareholders' equity |
594.5 |
582.8 |
Total liabilities and shareholders'
equity |
$ 1,560.7 |
$ 1,586.1 |
|
|
|
(a) Derived from audited
consolidated financial statements. |
|
Polypore International,
Inc. |
Condensed consolidated
statements of cash flows |
(unaudited, in millions) |
|
|
|
|
Three Months
Ended |
|
March 30, 2013 |
March 31, 2012 |
Operating activities: |
|
|
Net income |
$ 9.0 |
$ 18.8 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
Depreciation and amortization
expense |
14.3 |
13.5 |
Stock-based compensation |
4.5 |
4.3 |
Deferred income taxes |
(2.8) |
4.1 |
Other |
1.2 |
2.0 |
Changes in operating assets and
liabilities |
10.0 |
(12.5) |
Net cash provided by operating
activities |
36.2 |
30.2 |
Investing activities: |
|
|
Purchases of property, plant and equipment,
net |
(6.2) |
(45.4) |
Net cash used in investing
activities |
(6.2) |
(45.4) |
Financing activities: |
|
|
Principal payments on debt |
(7.5) |
(0.9) |
Payments on revolving credit facility |
(25.0) |
-- |
Other |
0.6 |
0.3 |
Net cash used in financing
activities |
(31.9) |
(0.6) |
Effect of exchange rate changes on cash and
cash equivalents |
0.2 |
2.2 |
Net decrease in cash and cash
equivalents |
(1.7) |
(13.6) |
Cash and cash equivalents at beginning of
period |
44.9 |
92.6 |
Cash and cash equivalents at end of
period |
$ 43.2 |
$ 79.0 |
|
Polypore International,
Inc. |
Supplemental
Information |
Reconciliation of
Adjusted EBITDA |
(unaudited, in millions) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
March 30, 2013 |
March 31, 2012 |
March 30, 2013 |
March 31, 2012 |
Net income |
$ 9.0 |
$ 18.8 |
$ 61.2 |
$ 98.3 |
Add: |
|
|
|
|
Depreciation and amortization
expense |
14.3 |
13.5 |
56.5 |
52.8 |
Interest expense, net |
9.8 |
8.8 |
37.0 |
34.3 |
Income taxes |
4.0 |
9.1 |
25.4 |
48.2 |
EBITDA |
37.1 |
50.2 |
180.1 |
233.6 |
Adjustments: |
|
|
|
|
Stock-based compensation |
4.5 |
4.3 |
16.5 |
12.6 |
Foreign currency (gain) loss |
0.7 |
0.6 |
0.6 |
(3.0) |
Loss on disposal of property, plant and
equipment |
-- |
0.3 |
0.7 |
0.5 |
Costs related to the FTC litigation |
0.1 |
0.2 |
0.3 |
0.4 |
Write-off of loan acquisition costs
associated with refinancing of senior credit agreement |
-- |
-- |
2.5 |
-- |
Other non-cash or non-recurring
items |
0.1 |
0.1 |
0.2 |
0.1 |
Adjusted EBITDA |
$ 42.5 |
$ 55.7 |
$ 200.9 |
$ 244.2 |
|
Polypore International,
Inc. |
Supplemental
Information |
Reconciliation of
Adjusted Net Income and Adjusted EPS |
(unaudited) |
(in millions, except per share
data) |
|
Three Months
Ended |
|
March 30, 2013 |
March 31, 2012 |
Net income |
$ 9.0 |
$ 18.8 |
Adjustments: |
|
|
Stock-based compensation |
4.5 |
4.3 |
Foreign currency loss |
0.7 |
0.6 |
Loss on disposal of property, plant and
equipment |
-- |
0.3 |
Costs related to the FTC litigation |
0.1 |
0.2 |
Other non-cash or non-recurring
items |
0.3 |
0.1 |
Impact of adjustments on income
taxes |
(1.7) |
(2.0) |
Adjusted net income |
$ 12.9 |
$ 22.3 |
|
|
|
Net income per share - diluted |
$ 0.19 |
$ 0.40 |
Impact of adjustments on net income per
share |
0.08 |
0.07 |
Adjusted earnings per share - diluted |
$ 0.27 |
$ 0.47 |
|
|
|
Weighted average shares outstanding -
diluted |
47,295,430 |
47,215,006 |
|
Polypore International,
Inc. |
Supplemental
Information |
Reconciliation of Segment
Operating Income to Income Before Income Taxes |
(unaudited, in millions) |
|
|
|
|
Three Months
Ended |
|
March 30, 2013 |
March 31, 2012 |
Operating income: |
|
|
Electronics and EDVs |
$ (2.5) |
$ 16.8 |
Transportation and industrial |
21.3 |
20.0 |
Energy storage |
18.8 |
36.8 |
Separations media |
15.5 |
13.9 |
Corporate and other |
(6.0) |
(8.7) |
Segment operating income |
28.3 |
42.0 |
Stock-based compensation |
4.5 |
4.3 |
Non-recurring and other costs |
0.4 |
0.6 |
Total operating income |
23.4 |
37.1 |
Reconciling items: |
|
|
Interest expense, net |
9.8 |
8.8 |
Foreign currency and other |
0.6 |
0.4 |
Income before income taxes |
$ 13.0 |
$ 27.9 |
CONTACT: Polypore International, Inc.
Investor Relations
(704) 587-8886
investorrelations@polypore.net