UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 6, 2014
POLYPORE INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware |
(State or Other Jurisdiction of Incorporation) |
1-32266 |
|
43-2049334 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
11430 North Community House Road, Suite 350,
Charlotte, North Carolina
(Address of Principal Executive Offices) |
|
28277
(Zip Code) |
(704) 587-8409
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
Today, August 6, 2014, Polypore International, Inc. (Polypore) issued a press release announcing its financial results for the second quarter ended June 28, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Polypore will host a conference call to discuss these financial results today, August 6, 2014, at 4:45 p.m. Eastern Time. By press release dated July 8, 2014, the public was invited to listen to the conference call by live webcast accessed through the Investor Relations section of Polypores website at http://investor.polypore.net/. The dial-in number for the conference call is (631) 291-4526, access code 66190513. A replay of the call will be available through August 13, 2014 by telephone at (404) 537-3406, access number 66190513. The call will also be archived for 30 days at http://investor.polypore.net/.
Polypore posted to the Investor Relations section of Polypores website at http://investor.polypore.net/ a slide presentation of supplemental financial information for its second quarter ended June 28, 2014. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release of Polypore International, Inc., dated August 6, 2014 |
99.2 |
|
Slide Presentation of Second Quarter 2014 Supplemental Financial Information of Polypore International, Inc. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
POLYPORE INTERNATIONAL, INC. |
|
|
|
|
|
|
Date: August 6, 2014 |
By: |
/s/ Lynn Amos |
|
|
Lynn Amos |
|
|
Chief Financial Officer |
3
Exhibit 99.1
|
Polypore International, Inc. |
The Gibson Building |
11430 N. Community House Rd, Suite 350 |
Charlotte, N.C. 28277 |
Tel: (704) 587-8886 |
investorrelations@polypore.net |
www.polypore.net |
|
|
|
PRESS RELEASE |
Polypore Reports Second Quarter 2014 Results
· Polypore continues to deliver solid performance and reports Adjusted EPS of $0.35
· New vehicle model introductions continue to show promise for additional growth in Electronics and Electric Drive Vehicles (EDVs) segment later in 2014 and in 2015
· Company completes refinancing and debt reduction in the quarter
CHARLOTTE, N.C. August 6, 2014 Polypore International, Inc. (NYSE: PPO), a global high technology filtration company specializing in microporous membranes, today reported its financial results for the second quarter ended June 28, 2014.
For the second quarter:
· Sales were $166.6 million compared with $168.9 million in the prior-year period. Excluding the effect of foreign currency translation, sales declined $4.3 million, or 3%. Sales grew in all businesses except Electronics and EDVs which declined primarily due to large purchases of separator by LG Chem, Ltd. (LG) of $14.2 million in the second quarter of 2013 prior to the end of our relationship as previously disclosed.
· Segment Operating Income was $29.1 million compared with $34.2 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 $15.9 million and $0.35 per diluted share, respectively, compared with $16.1 million and $0.35 per diluted share in the prior-year period. In connection with the debt reduction and refinancing that occurred during the quarter, the company recorded approximately $26.0 million of non-recurring costs, partially offset by a $9.6 million associated tax benefit, which resulted in a loss from continuing operations of $4.6 million, or $0.10 per diluted share, compared with income from continuing operations of $12.5 million, or $0.27 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.
1
Our Separations Media and Transportation and Industrial businesses continue to perform well, said Robert B. Toth, President and Chief Executive Officer. In the Electronics and EDVs segment, new vehicle model introductions, as well as input from our customers, suggest higher lithium-ion separator sales beginning in later 2014 and in 2015. Additionally, the recent favorable development in our ceramic coating patent infringement litigation with LG, our licensing agreement with Sumitomo, and our long-term supply agreements with Panasonic and Samsung demonstrate the value of our intellectual property and technology leadership.
For the six months ended June 28, 2014:
· Sales were $327.6 million, compared with $314.8 million (which included $19.7 million of LG purchases) in the first six months of 2013. Excluding the effect of foreign currency translation, sales increased $10.0 million, or 3%.
· Segment Operating Income was $58.5 million compared with $58.1 million in the prior-year period.
· Adjusted Net Income was $29.6 million, or $0.65 per diluted share, compared with $25.9 million, or $0.55 per diluted share, in the prior-year period. Income from Continuing Operations was $3.8 million, or $0.08 per diluted share, compared with $18.2 million, or $0.39 per diluted share, in the prior-year period.
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $42.2 million in the second quarter of 2014 and $166.0 million for the 12 months ended June 28, 2014. Adjusted EBITDA, as defined in Polypores senior secured credit agreement, is reconciled to Income (Loss) from Continuing Operations in the attached table.
2
Energy Storage Business
For the second quarter:
Transportation and Industrial Segment
· Sales of lead-acid battery separators were $82.6 million, up 3% compared with $80.4 million in the prior-year period, as higher sales in Asia and Europe were partially offset by lower sales in the Americas.
· Segment Operating Income was $17.4 million compared with $16.8 million in the prior-year period, and 21% of sales, similar to the prior-year period.
Electronics and EDVs Segment
· Sales of lithium battery separators were $31.7 million, down 25% compared with $42.2 million in the prior-year period. The decrease was primarily associated with LGs large purchases in the prior year and a decline in consumer electronics, partially offset by meaningful growth with our EDV customers.
· Segment Operating Income was $3.8 million compared with $11.2 million in the prior-year period, and 12% of sales compared with 27% in the prior-year period. The decline was due to lower sales.
Separations Media Segment
For the second quarter:
Sales were $52.3 million compared with $46.3 million in the prior-year period. Excluding the effect of foreign currency translation, sales increased $4.1 million, or 9%.
· Sales of healthcare products were $32.8 million, up 9% compared with $30.0 million in the prior-year period. The increase was primarily associated with higher volumes, as well as the positive effect of foreign currency translation.
· Sales of filtration and specialty products were $19.5 million, up 20% compared with $16.3 million in the prior-year period, primarily associated with higher volumes across all major applications, as well as the positive effect of foreign currency translation.
· Segment Operating Income was $16.4 million compared with $13.8 million in the prior-year period, and 31% of sales, modestly improved from the prior-year period.
3
Debt Reduction and Refinancing
On May 8, 2014, Polypore completed a debt reduction and refinancing, using cash and proceeds from our new senior secured credit agreement to repay all outstanding obligations under the Companys prior senior secured credit agreement and to redeem its 7.5% senior notes. In connection with the debt reduction and refinancing, the Company recorded approximately $26.0 million of non-recurring costs, including $20.5 million of redemption premiums related to the purchase of the 7.5% senior notes and the write-off of unamortized loan acquisition costs.
Share Repurchase Update
As of June 28, 2014, the Company had repurchased 200,000 shares of common stock at an average share price of $45.86 for a total cost of approximately $9.2 million year-to-date, with 4.3 million shares remaining under its current repurchase authorization of 4.5 million shares.
Conference Call
Polypore International, Inc. will hold a conference call to discuss the Companys second quarter 2014 financial results and business outlook today, Wednesday, August 6, 2014, at 4:45 p.m. Eastern time. The dial-in number for the conference call is (631) 291-4526. Enter code 66190513. A replay of the conference call will be available through Wednesday, August 13, 2014 via telephone at (404) 537-3406. Enter code 66190513. The call will also be webcast live and archived for 30 days in the Investor Relations section of the Companys 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 Companys website.
About Polypore International, Inc.
Polypore International, Inc. is a global high technology filtration company specializing in microporous membranes. Polypores flat sheet and hollow fiber membranes are used in specialized applications that require the removal or separation of various materials from liquids, primarily in the ultrafiltration and microfiltration markets. Based in Charlotte, N.C., Polypore International, Inc. is a market leader with manufacturing facilities or sales offices in nine countries serving six continents. See www.polypore.net.
4
CONTACT:
Polypore International, Inc.
Investor Relations
(704) 587-8886
investorrelations@polypore.net
Non-GAAP Supplemental Information
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS (earnings per share) and Segment Operating Income 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 senior secured 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. We define Segment Operating Income as operating income before stock-based compensation and certain non-recurring and other costs. 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, Adjusted EPS and Segment Operating Income, the reconciliation of Adjusted EBITDA to income (loss) from continuing operations, the reconciliation of Adjusted Net Income to income (loss) from continuing operations, the reconciliation of Adjusted EPS to earnings (loss) per share from continuing operations and the reconciliation of Segment Operating Income to income (loss) from continuing operations before income taxes, 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. We use Segment Operating Income to evaluate business segment performance and allocate resources. 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, as defined in our credit agreement.
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Segment Operating Income are not measurements of financial performance under GAAP and such financial measures should not be considered as an alternative to net income, income from continuing operations, 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.
5
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 processes; 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 contained in our 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 not materializing as anticipated; the absence of expected returns from the intangible assets we have recorded; and natural disasters, epidemics, terrorist acts and other events beyond our control. Additional information concerning these and other important factors can be found in the Risk Factors section 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 Polypores expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
6
Polypore International, Inc.
Condensed consolidated statements of operations
(unaudited)
(in millions, except per share data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 28, 2014 |
|
June 29, 2013 |
|
June 28, 2014 |
|
June 29, 2013 |
|
Net sales |
|
$ |
166.6 |
|
$ |
168.9 |
|
$ |
327.6 |
|
$ |
314.8 |
|
Cost of goods sold |
|
108.0 |
|
108.5 |
|
210.4 |
|
205.2 |
|
Gross profit |
|
58.6 |
|
60.4 |
|
117.2 |
|
109.6 |
|
Selling, general and administrative expenses |
|
38.2 |
|
32.4 |
|
74.4 |
|
63.1 |
|
Operating income |
|
20.4 |
|
28.0 |
|
42.8 |
|
46.5 |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
5.6 |
|
9.9 |
|
15.2 |
|
19.7 |
|
Foreign currency and other |
|
(1.7 |
) |
(0.3 |
) |
(1.0 |
) |
0.3 |
|
Costs related to purchase of 7.5% senior notes |
|
24.9 |
|
|
|
24.9 |
|
|
|
Write-off of loan acquisition costs and other expenses associated with refinancing of senior credit agreement |
|
1.1 |
|
|
|
1.1 |
|
|
|
|
|
29.9 |
|
9.6 |
|
40.2 |
|
20.0 |
|
Income (loss) from continuing operations before income taxes |
|
(9.5 |
) |
18.4 |
|
2.6 |
|
26.5 |
|
Income taxes |
|
(5.1 |
) |
5.7 |
|
(1.8 |
) |
7.9 |
|
Income (loss) from continuing operations |
|
(4.4 |
) |
12.7 |
|
4.4 |
|
18.6 |
|
Income (loss) from discontinued operations, net of income taxes |
|
(0.3 |
) |
2.9 |
|
(0.3 |
) |
6.3 |
|
Net income (loss) |
|
(4.7 |
) |
15.6 |
|
4.1 |
|
24.9 |
|
Less: Net income attributable to noncontrolling interest |
|
0.2 |
|
0.2 |
|
0.6 |
|
0.4 |
|
Net income (loss) attributable to Polypore International, Inc. |
|
$ |
(4.9 |
) |
$ |
15.4 |
|
$ |
3.5 |
|
$ |
24.5 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Polypore International, Inc.: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(4.6 |
) |
$ |
12.5 |
|
$ |
3.8 |
|
$ |
18.2 |
|
Income (loss) from discontinued operations |
|
(0.3 |
) |
2.9 |
|
(0.3 |
) |
6.3 |
|
Net income (loss) attributable to Polypore International, Inc. |
|
$ |
(4.9 |
) |
$ |
15.4 |
|
$ |
3.5 |
|
$ |
24.5 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Polypore International, Inc. per share - basic: |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.10 |
) |
$ |
0.27 |
|
$ |
0.09 |
|
$ |
0.39 |
|
Discontinued operations |
|
(0.01 |
) |
0.06 |
|
(0.01 |
) |
0.14 |
|
Net income (loss) attributable to Polypore International, Inc. per share |
|
$ |
(0.11 |
) |
$ |
0.33 |
|
$ |
0.08 |
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Polypore International, Inc. per share - diluted: |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.10 |
) |
$ |
0.27 |
|
$ |
0.08 |
|
$ |
0.39 |
|
Discontinued operations |
|
(0.01 |
) |
0.06 |
|
|
|
0.13 |
|
Net income (loss) attributable to Polypore International, Inc. per share |
|
$ |
(0.11 |
) |
$ |
0.33 |
|
$ |
0.08 |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
44,886,206 |
|
46,269,885 |
|
44,885,467 |
|
46,441,603 |
|
Weighted average shares outstanding - diluted |
|
44,886,206 |
|
46,917,077 |
|
45,469,493 |
|
47,106,282 |
|
Polypore International, Inc.
Condensed consolidated balance sheets
(in millions)
|
|
June 28, 2014 |
|
December 28, 2013 (a) |
|
Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
37.2 |
|
$ |
163.4 |
|
Accounts receivable, net |
|
122.6 |
|
113.5 |
|
Inventories |
|
115.8 |
|
113.9 |
|
Other |
|
18.7 |
|
18.1 |
|
Current assets |
|
294.3 |
|
408.9 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
582.5 |
|
595.4 |
|
Goodwill |
|
444.5 |
|
444.5 |
|
Intangibles and loan acquisition costs, net |
|
85.6 |
|
93.8 |
|
Other |
|
7.0 |
|
7.6 |
|
Total assets |
|
$ |
1,413.9 |
|
$ |
1,550.2 |
|
|
|
|
|
|
|
Liabilities and shareholders equity: |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
68.6 |
|
$ |
81.0 |
|
Income taxes payable |
|
7.6 |
|
4.1 |
|
Current portion of debt |
|
44.0 |
|
16.9 |
|
Current liabilities |
|
120.2 |
|
102.0 |
|
|
|
|
|
|
|
Debt, less current portion |
|
475.0 |
|
629.4 |
|
Other |
|
192.0 |
|
199.2 |
|
Shareholders equity |
|
626.7 |
|
619.6 |
|
Total liabilities and shareholders equity |
|
$ |
1,413.9 |
|
$ |
1,550.2 |
|
(a) Derived from audited consolidated financial statements.
Polypore International, Inc.
Condensed consolidated statements of cash flows
(unaudited, in millions)
|
|
Six Months Ended |
|
|
|
June 28, 2014 |
|
June 29, 2013 |
|
Operating activities: |
|
|
|
|
|
Net income |
|
$ |
4.1 |
|
$ |
24.9 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization expense |
|
27.7 |
|
28.8 |
|
Stock-based compensation |
|
11.5 |
|
9.3 |
|
Deferred income taxes |
|
(13.0 |
) |
(0.7 |
) |
Costs related to purchase of 7.5% senior notes |
|
24.9 |
|
|
|
Changes in operating assets and liabilities |
|
(11.9 |
) |
4.7 |
|
Other |
|
1.2 |
|
2.7 |
|
Net cash provided by operating activities |
|
44.5 |
|
69.7 |
|
Investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment, net |
|
(8.9 |
) |
(13.6 |
) |
Net cash used in investing activities |
|
(8.9 |
) |
(13.6 |
) |
Financing activities: |
|
|
|
|
|
Proceeds from new senior credit agreement |
|
500.0 |
|
|
|
Principal payments in connection with refinancing of senior credit agreement |
|
(273.8 |
) |
|
|
Purchase of 7.5% senior notes |
|
(385.5 |
) |
|
|
Loan acquisition costs |
|
(4.0 |
) |
|
|
Principal payments on debt |
|
(7.5 |
) |
(11.3 |
) |
Net proceeds from revolving credit facility |
|
19.0 |
|
19.2 |
|
Repurchases of common stock |
|
(9.5 |
) |
(79.9 |
) |
Other |
|
1.0 |
|
2.4 |
|
Net cash used in financing activities |
|
(160.3 |
) |
(69.6 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(1.5 |
) |
0.9 |
|
Net decrease in cash and cash equivalents |
|
(126.2 |
) |
(12.6 |
) |
Cash and cash equivalents at beginning of period |
|
163.4 |
|
44.9 |
|
Cash and cash equivalents at end of period |
|
$ |
37.2 |
|
$ |
32.3 |
|
Polypore International, Inc.
Supplemental Information
Reconciliation of Adjusted EBITDA (1)
(unaudited, in millions)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
June 28, 2014 |
|
June 29, 2013 |
|
June 28, 2014 |
|
June 29, 2013 |
|
Income (loss) from continuing operations attributable to Polypore International, Inc. |
|
$ |
(4.6 |
) |
$ |
12.5 |
|
$ |
19.1 |
|
$ |
44.8 |
|
Add: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
13.9 |
|
13.6 |
|
55.1 |
|
53.4 |
|
Interest expense, net |
|
5.6 |
|
9.9 |
|
35.0 |
|
38.8 |
|
Income taxes |
|
(5.1 |
) |
5.7 |
|
4.7 |
|
18.0 |
|
EBITDA |
|
9.8 |
|
41.7 |
|
113.9 |
|
155.0 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
6.1 |
|
4.8 |
|
22.9 |
|
17.1 |
|
Costs related to purchase of 7.5% senior notes |
|
24.9 |
|
|
|
24.9 |
|
|
|
Write-off of loan acquisition costs and other expenses associated with refinancing of senior credit agreement |
|
1.1 |
|
|
|
1.1 |
|
|
|
Foreign currency (gain) loss |
|
(1.7 |
) |
(0.3 |
) |
(1.0 |
) |
1.8 |
|
Litigation costs associated with patent enforcement |
|
2.5 |
|
0.4 |
|
5.4 |
|
1.0 |
|
Loss on disposal of property, plant and equipment |
|
|
|
0.9 |
|
0.3 |
|
1.0 |
|
Other non-cash or non-recurring items |
|
(0.5 |
) |
|
|
(1.5 |
) |
0.3 |
|
Adjusted EBITDA |
|
$ |
42.2 |
|
$ |
47.5 |
|
$ |
166.0 |
|
$ |
176.2 |
|
(1) The Company entered into a new senior secured credit agreement on April 8, 2014. Adjusted EBITDA for all periods presented is calculated in accordance with the definition of Adjusted EBITDA per the Companys new credit agreement, which includes an adjustment for litigation costs associated with patent enforcement. Amounts previously reported for the three and twelve months ended June 29, 2013 have been conformed to the current year presentation and the impact on the prior period is not significant.
Polypore International, Inc.
Supplemental Information
Reconciliation of Adjusted Net Income and Adjusted EPS (1)
(unaudited)
(in millions, except per share data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 28, 2014 |
|
June 29, 2013 |
|
June 28, 2014 |
|
June 29, 2013 |
|
Income (loss) from continuing operations attributable to Polypore International, Inc. |
|
$ |
(4.6 |
) |
$ |
12.5 |
|
$ |
3.8 |
|
$ |
18.2 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
6.1 |
|
4.8 |
|
11.5 |
|
9.3 |
|
Costs related to purchase of 7.5% senior notes |
|
24.9 |
|
|
|
24.9 |
|
|
|
Write-off of loan acquisition costs and other expenses associated with refinancing of senior credit agreement |
|
1.1 |
|
|
|
1.1 |
|
|
|
Foreign currency (gain) loss |
|
(1.7 |
) |
(0.3 |
) |
(0.8 |
) |
0.5 |
|
Litigation costs associated with patent enforcement |
|
2.5 |
|
0.4 |
|
4.1 |
|
0.9 |
|
Loss on disposal of property, plant and equipment |
|
|
|
0.9 |
|
|
|
0.8 |
|
Other non-cash or non-recurring items |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.6 |
|
Impact of adjustments on income taxes |
|
(12.5 |
) |
(2.3 |
) |
(15.1 |
) |
(4.4 |
) |
Adjusted net income |
|
$ |
15.9 |
|
$ |
16.1 |
|
$ |
29.6 |
|
$ |
25.9 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share - diluted: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(0.10 |
) |
$ |
0.27 |
|
$ |
0.08 |
|
$ |
0.39 |
|
Impact of adjustments on income (loss) from continuing operations |
|
0.45 |
|
0.08 |
|
0.57 |
|
0.16 |
|
Adjusted earnings per share from continuing operations |
|
0.35 |
|
0.35 |
|
0.65 |
|
0.55 |
|
Adjusted earnings per share from discontinued operations |
|
|
|
0.06 |
|
|
|
0.13 |
|
Adjusted earnings per share |
|
$ |
0.35 |
|
$ |
0.41 |
|
$ |
0.65 |
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted (2) |
|
45,488,536 |
|
46,917,077 |
|
45,469,493 |
|
47,106,282 |
|
(1) The Company entered into a new senior secured credit agreement on April 8, 2014. The adjustments used in calculating Adjusted Net Income and Adjusted EPS were modified to be consistent with the adjustments used in calculating Adjusted EBITDA, as defined in the Companys new credit agreement, which includes an adjustment for litigation costs associated with patent enforcement. Amounts previously reported for the three and six months ended June 29, 2013 have been conformed to the current year presentation and the impact on the prior period is not significant.
(2) For the three months ended June 28, 2014, potential common shares for stock options and unvested restricted stock shares that would decrease net loss per common share are antidilutive and excluded from diluted net (loss) per share. For the calculation of adjusted earnings per share, we have included the impact of dilution from stock options and unvested restricted stock shares as measured under the treasury stock method.
Polypore International, Inc.
Supplemental Information
Reconciliation of Segment Operating Income to Income (Loss) from Continuing Operations Before Income Taxes
(unaudited, in millions)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 28, 2014 |
|
June 29, 2013 |
|
June 28, 2014 |
|
June 29, 2013 |
|
Operating income: |
|
|
|
|
|
|
|
|
|
Electronics and EDVs |
|
$ |
3.8 |
|
$ |
11.2 |
|
$ |
6.9 |
|
$ |
9.2 |
|
Transportation and industrial |
|
17.4 |
|
16.8 |
|
34.3 |
|
33.0 |
|
Energy storage |
|
21.2 |
|
28.0 |
|
41.2 |
|
42.2 |
|
Separations media |
|
16.4 |
|
13.8 |
|
34.2 |
|
29.3 |
|
Corporate and other |
|
(8.5 |
) |
(7.6 |
) |
(16.9 |
) |
(13.4 |
) |
Segment operating income |
|
29.1 |
|
34.2 |
|
58.5 |
|
58.1 |
|
Stock-based compensation |
|
6.1 |
|
4.8 |
|
11.5 |
|
9.3 |
|
Non-recurring and other costs |
|
2.6 |
|
1.4 |
|
4.2 |
|
2.3 |
|
Total operating income |
|
20.4 |
|
28.0 |
|
42.8 |
|
46.5 |
|
Reconciling items: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
5.6 |
|
9.9 |
|
15.2 |
|
19.7 |
|
Foreign currency and other |
|
(1.7 |
) |
(0.3 |
) |
(1.0 |
) |
0.3 |
|
Costs related to purchase of 7.5% senior notes |
|
24.9 |
|
|
|
24.9 |
|
|
|
Write-off of loan acquisition costs and other expenses associated with refinancing of senior credit agreement |
|
1.1 |
|
|
|
1.1 |
|
|
|
Income (loss) from continuing operations before income taxes |
|
$ |
(9.5 |
) |
$ |
18.4 |
|
$ |
2.6 |
|
$ |
26.5 |
|
Exhibit 99.2
|
(NYSE Listed:
PPO) Second Quarter 2014 Supplemental Financial Information
|
|
These materials
include "forward-looking statements." All statements other than
statements of historical facts included in these materials that address
activities, events or developments that we expect, believe or anticipate will
or may occur in the future are forward-looking statements including, in
particular, the statements about Polypore International's plans, objectives,
strategies and prospects regarding, among other things, the financial
condition, results of operations and business of Polypore International. We
have identified some of these forward-looking statements with words like
"believe," "may," "will," "should,"
"expect," "intend," "plan,"
"predict," "anticipate," "estimate" or
"continue" and other words and terms of similar meaning. These
forward-looking statements are based on current expectations about future
events affecting us and are subject to uncertainties and factors relating to
our operations and business environment, all of which are difficult to
predict and many of which are beyond our control. Many factors mentioned in
our discussion in these materials will be important in determining future
results. Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we do not know whether our
expectations will prove correct. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties,
including with respect to Polypore International, the following, among other
things: 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 processes; 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 contained in our 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 not materializing as anticipated; the
absence of expected returns from the intangible assets we have recorded; and
natural disasters, epidemics, terrorist acts and other events beyond our
control. Because our actual results, performance or achievements could differ
materially from those expressed in, or implied by, the forward-looking
statements, we cannot give any assurance that any of the events anticipated
by the forward-looking statements will occur or, if any of them do, what
impact they will have on Polypore International's results of operations and
financial condition. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of these
materials. We do not undertake any obligation to update these forward-looking
statements in these materials to reflect new information, future events or
otherwise, except as may be required under federal securities laws.
Forward-Looking Statements 2
|
|
3 Segment
Results Segment Operating Income represents non-GAAP financial information.
Refer to Exhibit B for a reconciliation of Segment Operating Income to Income
(Loss) from Continuing Operations Before Income Taxes. (unaudited, in
millions) Sales June 28, 2014 June 29, 2013 Change June 28, 2014 June 29,
2013 Change Energy storage: Electronics and EDVs 31.7 $ 42.2 $ (24.9%) 61.8 $ 66.6 $ (7.2%) Transportation and industrial 82.6 80.4 2.7% 161.7 156.4 3.4%
Total 114.3 122.6 (6.8%) 223.5 223.0 0.2% Separations media: Healthcare 32.8
30.0 9.3% 65.0 59.5 9.2% Filtration and specialty 19.5 16.3 19.6% 39.1 32.3
21.1% Total 52.3 46.3 13.0% 104.1 91.8 13.4% Total 166.6 $ 168.9 $ (1.4%)
327.6 $ 314.8 $ 4.1% Segment Operating Income (1) Electronics and EDVs - $ 3.8 $ 11.2 $ (66.1%) 6.9 $ 9.2 $ (25.0%) % sales 12.0% 26.5% 11.2% 13.8%
Transportation and industrial - $ 17.4 16.8 3.6% 34.3 33.0 3.9% % sales 21.1%
20.9% 21.2% 21.1% Separations media - $ 16.4 13.8 18.8% 34.2 29.3 16.7% %
sales 31.4% 29.8% 32.9% 31.9% Corporate and other - $ (8.5) (7.6) (11.8%)
(16.9) (13.4) (26.1%) % sales (5.1%) (4.5%) (5.2%) (4.3%) Segment operating
income 29.1 $ 34.2 $ (14.9%) 58.5 $ 58.1 $ 0.7% Segment operating income %
17.5% 20.2% 17.9% 18.5% Three Months Ended Six Months Ended
|
|
4 Second
Quarter 2014 Results Please see Exhibit A for description of adjustments. For
the three months ended June 28, 2014, potential common shares for stock
options and unvested restricted stock shares that would decrease net loss per
common share are antidilutive and excluded from diluted net (loss) per share.
For the calculation of adjusted earnings per share, we have included the
impact of dilution from stock options and unvested restricted stock shares as
measured under the treasury stock method. (unaudited) (in millions, except
per share data) Reported Adjustments (1) Adjusted Net sales 166.6 $ - $ 166.6
$ Cost of goods sold 108.0 - 108.0 Gross profit 58.6 - 58.6 Selling, general
and administrative expenses 38.2 (8.7) a,c,d 29.5 Operating income 20.4 8.7
29.1 Other (income) expense: Interest expense, net 5.6 - 5.6 Foreign currency
and other (1.7) 1.7 b - Costs related to purchase of 7.5% senior notes 24.9
(24.9) g - Write-off of loan acquisition costs and other expenses associated
with refinancing of senior credit agreement 1.1 (1.1) h - 29.9 (24.3) 5.6
Income (loss) from continuing operations before income taxes (9.5) 33.0 23.5
Income taxes (5.1) 12.5 i 7.4 Income (loss) from continuing operations (4.4)
20.5 16.1 Loss from discontinued operations, net of income taxes (0.3) 0.3 j
- Net income (loss) (4.7) 20.8 16.1 Less: Net income attributable to
noncontrolling interest 0.2 - 0.2 Net income (loss) attributable to Polypore
International, Inc. (4.9) $ 20.8 $ 15.9 $ Net income (loss) attributable to
Polypore International, Inc.: Income (loss) from continuing operations (4.6)
$ 20.5 $ 15.9 $ Loss from discontinued operations (0.3) 0.3 - Net income
(loss) attributable to Polypore International, Inc.: (4.9) $ 20.8 $ 15.9 $ Net income (loss) attributable to Polypore International, Inc. per share -
diluted Continuing operations (0.10) $ 0.45 $ 0.35 $ Discontinued operations
(0.01) 0.01 - Net income (loss) per share attributable to Polypore
International, Inc. per share (0.11) $ 0.46 $ 0.35 $ Weighted average shares
outstanding - diluted (2) 44.9 45.5 Three Months Ended June 28, 2014
|
|
5 Second
Quarter YTD 2014 Results Please see Exhibit A for description of adjustments.
(unaudited) (in millions, except per share data) Reported Adjustments (1)
Adjusted Net sales 327.6 $ - $ 327.6 $ Cost of goods sold 210.4 - 210.4 Gross
profit 117.2 - 117.2 Selling, general and administrative expenses 74.4 (15.7)
a,c,d 58.7 Operating income 42.8 15.7 58.5 Other (income) expense: Interest
expense, net 15.2 - 15.2 Foreign currency and other (1.0) 0.8 b (0.2) Costs
related to purchase of 7.5% senior notes 24.9 (24.9) g - Write-off of loan
acquisition costs and other expenses associated with refinancing of senior
credit agreement 1.1 (1.1) h - 40.2 (25.2) 15.0 Income from continuing
operations before income taxes 2.6 40.9 43.5 Income taxes (1.8) 15.1 i 13.3
Income from continuing operations 4.4 25.8 30.2 Loss from discontinued
operations, net of income taxes (0.3) 0.3 j - Net income 4.1 26.1 30.2 Less:
Net income attributable to noncontrolling interest 0.6 - 0.6 Net income
attributable to Polypore International, Inc. 3.5 $ 26.1 $ 29.6 $ Net income
attributable to Polypore International, Inc.: Income from continuing
operations 3.8 $ 25.8 $ 29.6 $ Loss from discontinued operations (0.3) 0.3 -
Net income attributable to Polypore International, Inc.: 3.5 $ 26.1 $ 29.6 $ Net income attributable to Polypore International, Inc. per share - diluted
Continuing operations 0.08 $ 0.57 $ 0.65 $ Discontinued operations - - - Net
income per share attributable to Polypore International, Inc. per share 0.08
$ 0.57 $ 0.65 $ Weighted average shares outstanding - diluted 45.5 45.5 Six
Months Ended June 28, 2014
|
|
6 Second
Quarter 2013 Results Please see Exhibit A for description of adjustments. (unaudited)
(in millions, except per share data) Reported Adjustments (1) Adjusted Net
sales 168.9 $ - $ 168.9 $ Cost of goods sold 108.5 (0.9) e 107.6 Gross profit
60.4 0.9 61.3 Selling, general and administrative expenses 32.4 (5.3) a,c,d
27.1 Operating income 28.0 6.2 34.2 Other (income) expense: Interest expense,
net 9.9 - 9.9 Foreign currency and other (0.3) 0.3 b - 9.6 0.3 9.9 Income from
continuing operations before income taxes 18.4 5.9 24.3 Income taxes 5.7 2.3
i 8.0 Income from continuing operations 12.7 3.6 16.3 Income from
discontinued operations, net of income taxes 2.9 - 2.9 Net income 15.6 3.6
19.2 Less: Net income attributable to noncontrolling interest 0.2 - 0.2 Net
income attributable to Polypore International, Inc. 15.4 $ 3.6 $ 19.0 $ Net
income attributable to Polypore International, Inc.: Income from continuing
operations 12.5 $ 3.6 $ 16.1 $ Income from discontinued operations 2.9 - 2.9
Net income attributable to Polypore International, Inc.: 15.4 $ 3.6 $ 19.0 $ Net income attributable to Polypore International, Inc. per share - diluted:
Continuing operations 0.27 $ 0.08 $ 0.35 $ Discontinued operations 0.06 -
0.06 Net income attributable to Polypore International, Inc. per share 0.33 $ 0.08 $ 0.41 $ Weighted average shares outstanding - diluted 46.9 46.9 Three
Months Ended June 29, 2013
|
|
7 Second
Quarter YTD 2013 Results Please see Exhibit A for description of adjustments.
(unaudited) (in millions, except per share data) Reported Adjustments (1)
Adjusted Net sales 314.8 $ - $ 314.8 $ Cost of goods sold 205.2 (0.8) e 204.4
Gross profit 109.6 0.8 110.4 Selling, general and administrative expenses
63.1 (10.8) a,c,d,f 52.3 Operating income 46.5 11.6 58.1 Other (income)
expense: Interest expense, net 19.7 - 19.7 Foreign currency and other 0.3
(0.5) b (0.2) 20.0 (0.5) 19.5 Income from continuing operations before income
taxes 26.5 12.1 38.6 Income taxes 7.9 4.4 i 12.3 Income from continuing
operations 18.6 7.7 26.3 Income from discontinued operations, net of income
taxes 6.3 - 6.3 Net income 24.9 7.7 32.6 Less: Net income attributable to
noncontrolling interest 0.4 - 0.4 Net income attributable to Polypore
International, Inc. 24.5 $ 7.7 $ 32.2 $ Net income attributable to Polypore
International, Inc.: Income from continuing operations 18.2 $ 7.7 $ 25.9 $ Income from discontinued operations 6.3 - 6.3 Net income attributable to
Polypore International, Inc.: 24.5 $ 7.7 $ 32.2 $ Net income attributable to
Polypore International, Inc. per share - diluted: Continuing operations 0.39
$ 0.16 $ 0.55 $ Discontinued operations 0.13 - 0.13 Net income attributable
to Polypore International, Inc. per share 0.52 $ 0.16 $ 0.68 $ Weighted average
shares outstanding - diluted 47.1 47.1 Six Months Ended June 29, 2013
|
|
8 EXHIBITS
|
|
9 Exhibit A
Description of adjustments Note: The Company entered into a new senior
secured credit agreement on April 8, 2014. The adjustments used in
calculating the Adjusted results were modified to be consistent with the
adjustments used in calculating Adjusted EBITDA, as defined in the Companys
new credit agreement, which includes an adjustment for litigation costs
associated with patent enforcement. Amounts previously reported for the three
and six months ended June 29, 2013 have been conformed to the current year
presentation and the impact on the prior period is not significant. Three
Months Ended Six Months Ended June 28, 2014 June 29, 2013 June 28, 2014 June
29, 2013 a Stock-based compensation (6.1) $ (4.8) $ (11.5) (9.3) b Foreign
currency gain (loss) 1.7 0.3 0.8 (0.5) c Litigation costs associated with
patent enforcement (2.5) (0.4) (4.1) (0.9) d FTC-related costs incurred due
to the Microporous litigation and order compliance (0.1) (0.1) (0.1) (0.3) e
Loss on disposal of property, plant and equipment - (0.9) - (0.8) f Other
non-cash or non-recurring items - - - (0.3) g Costs related to purchase of
7.5% senior notes (24.9) - (24.9) - h Write-off of loan acquisition costs and
other expenses associated with refinancing of senior credit agreement (1.1) -
(1.1) - i Impact of above adjustments on income taxes 12.5 2.3 15.1 4.4 j
Adjustment to gain on sale of discontinued operations, net of income taxes
0.3 - 0.3 -
|
|
10 Exhibit B
Reconciliation of Segment Operating Income Reconciliation of Segment
Operating Income to Income (Loss) from Continuing Operations Before Income
Taxes (unaudited, in millions) June 28, 2014 June 29, 2013 June 28, 2014 June
29, 2013 Operating income: Electronics and EDVs 3.8 $ 11.2 $ 6.9 $ 9.2 $ Transportation and industrial 17.4 16.8 34.3 33.0 Energy storage 21.2 28.0
41.2 42.2 Separations media 16.4 13.8 34.2 29.3 Corporate and other (8.5)
(7.6) (16.9) (13.4) Segment operating income 29.1 34.2 58.5 58.1 Stock-based
compensation 6.1 4.8 11.5 9.3 Non-recurring and other costs 2.6 1.4 4.2 2.3
Total operating income 20.4 28.0 42.8 46.5 Reconciling items: Interest
expense, net 5.6 9.9 15.2 19.7 Costs related to purchase of 7.5% senior notes
24.9 - 24.9 - Write-off of loan acquisition costs and other expenses
associated with refinancing of senior credit agreement 1.1 - 1.1 - Foreign
currency and other (1.7) (0.3) (1.0) 0.3 Income (loss) from continuing
operations before income taxes (9.5) $ 18.4 $ 2.6 $ 26.5 $ Three Months Ended
Six Months Ended
|