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 October 20, 2015 - 5:27 PM EDT
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A. Schulman Reports Fiscal 2015 Fourth Quarter And Full Year Results

- Fiscal fourth quarter adjusted net income, excluding certain items, was $18.8 million or $0.64 per diluted share - Company achieved record fiscal 2015 adjusted net income, excluding certain items, of $69.9 million or $2.37 per diluted share, net of $0.24 per share unfavorable foreign currency exchange impact - Company announces fiscal 2016 adjusted net income guidance of $2.80 to $2.85 per diluted share, an approximate 20% increase compared with fiscal 2015 results - Company continues its specialization transformation resulting in another significant improvement of adjusted operating margin

AKRON, Ohio, Oct. 20, 2015 /PRNewswire/ -- A. Schulman, Inc. (Nasdaq: SHLM) today announced earnings for the fiscal 2015 fourth quarter ended August 31, 2015.

Bernard Rzepka, president and chief executive officer, said, "Through our transformational acquisition of Citadel, we made significant strides toward our strategic vision of becoming the premier plastics solutions provider. At the same time, we continued to deliver strong operational and financial results.  For three consecutive years, excluding the impact from foreign currency, we achieved year-over-year growth in sales, gross margin and EBITDA. These results give us confidence that we have the team and the tools in place to deliver further profitable growth in fiscal 2016 and beyond."

Joseph Levanduski, executive vice president & chief financial officer, said, "Through our intense efforts, we overcame significant foreign currency headwinds and improved our adjusted consolidated gross profit by 10% for the year and 28% for the quarter. Our operational focus, acquisitions and organic growth initiatives collectively delivered these strong results. Since the acquisition of Citadel, we have made steady progress in debt reduction and have succeeded in lowering debt levels from the June opening balance sheet by $64 million. We are on track to achieve a 2.5x net leverage within fiscal 2017, while supporting our growth initiatives."

Engineered Plastics Consolidation
As part of the integration of its Citadel Plastics acquisition announced earlier this year, the Company is consolidating its United States and Canada ("USCAN") production facilities. The Company will close three facilities in Evansville, Indiana and the production from these facilities will be consolidated into other facilities in Evansville to improve our capacity utilization. Additionally, the Company will relocate production of its Engineered Plastics products from its Akron, Ohio plant to one of the Evansville facilities. The Company intends to invest in our Akron plant in order to grow our Masterbatch product family. Overall, the Company expects to reduce headcount by approximately 26 people.

On a pre-tax basis, the Company expects the Engineered Plastic consolidation to deliver approximately $9.5 million in annual savings, of which approximately $4 million is expected in fiscal 2016 and the remainder will be recognized in fiscal year 2017. The Company expects approximately $2 to $3 million of pretax employee-related cash and other charges as well as approximately $5 to $6 million of pretax machinery and equipment accelerated depreciation. Costs associated with the plan are expected to be recognized through December 2016 as the Company completes the facility consolidation activities.

"We are swiftly executing our integration of Citadel," said Rzepka. "While these decisions are not easy for those impacted, the additional Citadel plants in the Evansville area required that we evaluate capacity utilization and manufacturing capabilities and achieve efficiencies and cost savings. The consolidation of our Engineered Plastics business illustrates our continuing commitment to right-sizing our capacity and affirms our commitment to capturing our stated synergy savings of $25 million by the end of 2016."

Fiscal Fourth-Quarter Results
Consolidated net sales for the fiscal 2015 fourth quarter were $674.0 million, compared with $627.4 million in the same prior-year quarter. Net sales from Citadel and prior 2014 acquisitions, which includes legacy volume consolidated during the integration process, contributed $128.5 million of revenue during the quarter.  These contributions were partially offset by $79.8 million of unfavorable foreign currency translation. Adjusted gross margin in the fourth quarter as a percent of net sales improved to 16.2% compared with 13.6% in the prior-year period.

The Company reported profit from continuing operations of $0.75 per diluted share. On an adjusted basis, excluding financing, restructuring and acquisitions-related costs, the Company generated net income of $0.64 per diluted share.

Europe, Middle East and Africa ('EMEA") net sales were $326.7 million compared with $388.6 million in the same prior-year period. The unfavorable impact of foreign currency translation was $64.1 million. EMEA adjusted gross profit was $44 million. Excluding the negative impact of foreign currency translation of $8.3 million, adjusted gross profit increased by $2.2 million, or 4.5%, primarily due to improved product mix as well as the incremental contribution of the Specialty Plastics acquisition.

Net sales for the U.S. and Canada ("USCAN") were $195.3 million in the fourth quarter, an increase of 41% compared with the same prior-year period primarily as a result of the Citadel acquisition. USCAN adjusted gross profit was $34.1 million, an increase of $11.7 million from the same prior-year period. The strong gross margin gains came both from Citadel's contribution, and improvements across A. Schulman's legacy businesses.

Latin America's ("LATAM") net sales for the quarter were $45.3 million, a decrease of $4.2 million compared with the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $10.5 million, core revenue growth accelerated to 12.7%. LATAM adjusted gross profit was $9.9 million, an increase of $3.7 million primarily due to the benefits of improved product mix and operations. Operating margins improved from 4.2% to 12.1% during the quarter.

Asia Pacific ("APAC") reported net sales were $49.5 million, which included acquisition contribution of $2.8 million, and a negative foreign exchange impact of $4.5 million. APAC adjusted gross profit was $6.8 million, an increase of $0.3 million compared with the prior-year period. Gross profit benefited from smart savings initiatives and increased organic volume. Operating margins improved from 5.3% to 7.1% during the quarter.

Engineered Composites ("EC") net sales for the quarter were $57.1 million from the acquisition date of June 1, 2015. Organic volumes in the legacy EC business improved over historical levels. EC gross profit for the quarter was $14.5 million, or 25.4% of net sales.

Working Capital/Cash Flow
Cash provided from operations was $60.2 million in the twelve months ended August 31, 2015. Working capital days were 64 days in the fourth quarter of fiscal 2015 versus 57 days at the end of the comparable period.

Capital expenditures for fiscal 2015 were $42.6 million compared with $35.1 million last year. These expenditures were primarily related to strategic investments in the Company's global manufacturing facilities and technical innovation and collaboration centers focused on organic growth and new product development. During the year, the Company declared and paid quarterly cash dividends to common shareholders of $24.0 million, or $0.82 per common share consistent with our past strategy of providing an attractive yield to shareholders in addition to share price appreciation.

Year-to-Date Results
Net sales for the year were $2.4 billion, compared with $2.5 billion for the same prior-year period. Fiscal year net sales results included a negative foreign currency translation of $257.1 million, and contributions from acquisitions of $258.3 million.

Operating income was $70.4 million, a decrease of $11.9 million compared with the same prior-year period. Total operating income before certain items was $120.7 million, an increase of $20.9 million or 21% compared with last year. Excluding the negative impact of foreign currency translation of $11.8 million, total operating income before certain items increased 33% versus the comparable period. Organic growth contributed an incremental $10.3 million while recent acquisitions added $22.4 million.

Business Outlook
The Company initiates a fiscal 2016 adjusted net income guidance range of $2.80 to $2.85 per diluted share including the accretive impact of the Citadel acquisition.

"We are excited about the opportunities that Citadel brings to us. We've taken a transformative step forward in achieving our long-term strategic goals, one of them being rebalancing our regional footprint. Given the current volatile markets, we expect another challenging year; however, we are committed to achieving further profitable growth through a focus on execution, including the continued seamless integration of Citadel," Rzepka added.

Conference Call on the Web
A live Internet broadcast of A. Schulman's conference call regarding fiscal 2015 fourth-quarter earnings can be accessed at 10:00 a.m. Eastern Time on October 21, 2015, on the Company's website, www.aschulman.com. An archived replay of the call will also be available on the website.

Investor Presentation Materials
Senior executives of the Company may participate in meetings with analysts and investors throughout the fiscal year. The Company has posted presentation materials, portions of which may be used during such meetings, in the Investors section of its website at www.aschulman.com. The presentation will remain on the website as long as it is in use.

About A. Schulman, Inc.
A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. Since 1928, the Company has been providing innovative solutions to meet its customers' demanding requirements. The Company's customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, sports, leisure & home, custom services and others. The Company employs approximately 5,000 people and has 58 manufacturing facilities globally. A. Schulman reported net sales of approximately $2.4 billion for the fiscal year ended August 31, 2015. Additional information about A. Schulman can be found at www.aschulman.com.

Use of Non-GAAP Financial Measures
This release includes certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures include segment gross profit, SG&A expenses excluding certain items, segment operating income, operating income before certain items, net income excluding certain items, net income per diluted share excluding certain items and adjusted EBITDA, as discussed further in the Reconciliation of GAAP and Non-GAAP Financial Measures below. These non-GAAP financial measures are considered relevant to aid analysis and understanding of the Company's results and business trends. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures, and tables included in this release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure. The most directly comparable GAAP financial measures for these purposes are gross profit, SG&A expenses, operating income, net income and net income per diluted share. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

While the Company believes that these non-GAAP financial measures provide useful supplemental information to investors, there are very significant limitations associated with their use. These non-GAAP financial measures are not prepared in accordance with GAAP, August not be reported by all of the Company's competitors and August not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

Cautionary Statements
A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and August constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that August cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:

  • worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company's major product markets or countries where the Company has operations;
  • the effectiveness of the Company's efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
  • competitive factors, including intense price competition;
  • fluctuations in the value of currencies in areas where the Company operates;
  • volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company's products, particularly plastic resins derived from oil and natural gas;
  • changes in customer demand and requirements;
  • effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions, joint ventures and restructuring initiatives;
  • escalation in the cost of providing employee health care;
  • uncertainties regarding the resolution of pending and future litigation and other claims;
  • the performance of the global automotive market as well as other markets served;
  • further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products;
  • operating problems with our information systems as a result of system security failures such as viruses, cyber-attacks or other causes;
  • the impact of the indebtedness incurred to finance the Citadel acquisition;
  • integration of the business of Citadel with our existing business, including the risk that the integration will be more costly or more time consuming and complex than anticipated;
  • our ability to achieve the anticipated synergies, cost savings and other benefits from the Citadel acquisition;
  • transaction and acquisition-related costs incurred in connection with the Citadel acquisition and related transactions; and
  • substantial time devoted by management to the integration of the Citadel acquisition.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2015. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations.

SHLM_ALL

 

 


A. SCHULMAN, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS








Three months ended August 31,



Year ended August 31,



2015



2014



2015



2014



Unaudited

(In thousands, except per share data)


Net sales

$

674,019



$

627,358



$

2,392,225



$

2,446,998


Cost of sales

568,684



542,721



2,031,215



2,116,990


Selling, general and administrative expenses

80,762



60,838



276,244



242,486


Restructuring expense

3,808



300



14,338



4,883


Asset impairment







104


Curtailment and settlement (gains) losses



214





214


Operating income

20,765



23,285



70,428



82,321


Interest expense

15,325



2,391



22,613



8,503


Bridge financing fees





18,750




Foreign currency transaction (gains) losses

266



86



3,363



2,206


Other (income) expense, net

(538)



(242)



(1,438)



(720)


Gain on early extinguishment of debt





(1,290)




Income (loss) from continuing operations before taxes

5,712



21,050



28,430



72,332


Provision (benefit) for U.S. and foreign income taxes

(18,302)



5,886



499



18,542


Income (loss) from continuing operations

24,014



15,164



27,931



53,790


Income (loss) from discontinued operations, net of tax

(47)



223



(133)



3,202


Net income (loss)

23,967



15,387



27,798



56,992


Noncontrolling interests

(279)



(215)



(1,169)



(799)


Net income (loss) attributable to A. Schulman, Inc.

23,688



15,172



26,629



56,193


Convertible special stock dividends

(1,875)





(2,438)




Net income (loss) available to A. Schulman, Inc. common stockholders

$

21,813



$

15,172



$

24,191



$

56,193










Weighted-average number of shares outstanding:








Basic

29,220



29,088



29,149



29,061


Diluted

29,486



29,517



29,483



29,362










Basic earnings per share available to A. Schulman, Inc. common stockholders







Income (loss) from continuing operations

$

0.75



$

0.51



$

0.83



$

1.82


Income (loss) from discontinued operations

$



$

0.01



$



$

0.11


Net income (loss) available to A. Schulman, Inc. common stockholders

$

0.75



$

0.52



$

0.83



$

1.93










Diluted earnings per share available to A. Schulman, Inc. common stockholders







Income (loss) from continuing operations

$

0.75



$

0.51



$

0.83



$

1.80


Income (loss) from discontinued operations

$

(0.01)



$

0.01



$

(0.01)



$

0.11


Net income (loss) available to A. Schulman, Inc. common stockholders

$

0.74



$

0.52



$

0.82



$

1.91










Cash dividends per common share

$

0.205



$

0.200



$

0.820



$

0.800


Cash dividends per share of convertible special stock

$

14.500



$



$

14.500



$


 

 


A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS






August 31,
 2015


August 31,
 2014


Unaudited

(In thousands)

ASSETS

Current assets:




Cash and cash equivalents

$

96,872



$

135,493


Accounts receivable, net

413,943



384,444


Inventories

317,328



292,141


Prepaid expenses and other current assets

60,205



40,473


Total current assets

888,348



852,551


Property, plant and equipment, at cost:




Land and improvements

31,674



28,439


Buildings and leasehold improvements

164,759



160,858


Machinery and equipment

427,183



398,563


Furniture and fixtures

34,393



41,255


Construction in progress

23,866



16,718


Gross property, plant and equipment

681,875



645,833


Accumulated depreciation

367,381



391,912


Net property, plant and equipment

314,494



253,921


Deferred charges and other noncurrent assets

90,749



65,079


Goodwill

623,583



202,299


Intangible assets, net

434,537



138,634


Total assets

$

2,351,711



$

1,512,484


LIABILITIES AND EQUITY

Current liabilities:




Accounts payable

$

305,385



$

314,957


U.S. and foreign income taxes payable

4,205



6,385


Accrued payroll, taxes and related benefits

56,192



54,199


Other accrued liabilities

70,824



46,054


Short-term debt

20,710



31,748


Total current liabilities

457,316



453,343


Long-term debt

1,045,349



339,546


Pension plans

117,889



129,949


Deferred income taxes

115,537



23,826


Other long-term liabilities

22,885



29,369


Total liabilities

1,758,976



976,033


Commitments and contingencies




Stockholders' equity:




Convertible special stock, no par value

120,289




Common stock, $1 par value, authorized - 75,000 shares, issued - 48,369 shares in 2015 and 48,185 shares in 2014

48,369



48,185


Additional paid-in capital

274,319



268,545


Accumulated other comprehensive income (loss)

(83,460)



(16,691)


Retained earnings

607,690



606,898


Treasury stock, at cost, 19,077 shares in 2015 and 18,973 shares in 2014

(383,121)



(379,894)


Total A. Schulman, Inc.'s stockholders' equity

584,086



527,043


Noncontrolling interests

8,649



9,408


Total equity

592,735



536,451


Total liabilities and equity

$

2,351,711



$

1,512,484


 

 


A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS




Year ended August 31,


2015


2014


Unaudited


(In thousands)

Operating from continuing and discontinued operations:




Net income

$

27,798



$

56,992


Adjustments to reconcile net income to net cash provided from (used in) operating activities:




Depreciation

37,257



33,697


Amortization

21,983



14,207


Deferred tax provision

(19,253)



(3,007)


Pension, postretirement benefits and other compensation

7,560



10,802


Restricted stock compensation - CEO transition costs, net of cash

4,789




Asset impairment



104


Curtailment and settlement (gains) losses



214


Gain on sale of assets from discontinued operations



(3,365)


Changes in assets and liabilities, net of acquisitions:




Accounts receivable

(2,395)



(5,875)


Inventories

(17,382)



7,099


Accounts payable

(8,139)



(3,497)


Income taxes

(3,342)



(1,372)


Tax (windfall) shortfall related to share-based incentive compensation

(506)




Accrued payroll and other accrued liabilities

18,359



5,189


Other assets and long-term liabilities

(6,559)



1,954


Net cash provided from (used in) operating activities

60,170



113,142


Investing from continuing and discontinued operations:




Expenditures for property, plant and equipment

(42,587)



(35,089)


Proceeds from the sale of assets

1,985



6,004


Investment in equity investees

(12,456)




Business acquisitions, net of cash

(808,258)



(206,625)


Net cash provided from (used in) investing activities

(861,316)



(235,710)


Financing from continuing and discontinued operations:




Cash dividends paid to common stockholders

(24,024)



(23,665)


Cash dividends paid to special stockholders

(1,813)




Increase (decrease) in short-term debt

(8,759)



13,774


Borrowings on long-term debt

1,430,513



795,745


Repayments on long-term debt including current portion

(713,717)



(653,894)


Payment of debt issuance costs

(15,007)



(1,782)


Noncontrolling interests' contributions (distributions)

(1,750)



600


Tax windfall (shortfall) related to share-based incentive compensation

506




Issuances of common stock, common and treasury

289



487


Issuances of convertible special stock, net

120,289




Redemptions of common stock

(4,999)



(361)


Purchases of treasury stock

(3,335)



(1,116)


Net cash provided from (used in) financing activities

778,193



129,788


Effect of exchange rate changes on cash

(15,668)



(5,781)


Net increase (decrease) in cash and cash equivalents

(38,621)



1,439


Cash and cash equivalents at beginning of year

135,493



134,054


Cash and cash equivalents at end of year

$

96,872



$

135,493






Cash paid during the year for:




Interest

$

11,187



$

7,578


Income taxes

$

22,651



$

21,720


 

 

A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Unaudited






















Three months ended August 31, 2015


Cost of Sales


Gross Margin


SG&A


Restructuring Expense


Operating Income


Operating Income per Pound


Non Operating (income) Expense


Income tax expense (benefit)


Net Income Available to ASI Common Stockholders


Diluted EPS



(In thousands, except for %'s, per pound and per share data)

As reported


$

568,684



15.6

%


$

80,762



$

3,808



$

20,765



$

0.032



$

15,053



$

(18,302)



$

21,813



$

0.74


Certain items:





















Asset write-downs (1)


(81)









81







28



53




Costs related to acquisitions (2)


(93)





(9,143)





9,236





(80)



116



9,200



0.31


Restructuring and related costs (3)


(1,041)





(3,259)



(3,808)



8,108







1,181



6,927



0.23


Inventory step-up (4)


(2,741)









2,741







110



2,631



0.09


Acquisition-related interest (5)














(1,312)



122



1,190



0.05


Tax benefits (charges) (6)
















23,106



(23,106)



(0.78)


Loss (income) from discontinued operations


















47




Total certain items


(3,956)



0.6

%


(12,402)



(3,808)



20,166



0.031



(1,392)



24,663



(3,058)



(0.10)


As Adjusted


$

564,728



16.2

%


$

68,360



$



$

40,931



$

0.063



$

13,661



$

6,361



$

18,755



$

0.64























Percentage of Revenue






10.1

%




6.1

%








2.8

%
























Effective Tax Rate
















23.3

%


























Three months ended August 31, 2014


Cost of Sales


Gross Margin


SG&A


Restructuring Expense


Operating Income


Operating Income per Pound


Non Operating (income) Expense


Income tax expense (benefit)


Net Income Available to ASI Common Stockholders


Diluted EPS



(In thousands, except for %'s, per pound and per share data)

As reported


$

542,721



13.5

%


$

60,838



$

300



$

23,285



$

0.043



$

2,235



$

5,886



$

15,172



$

0.52


Certain items:





















Costs related to acquisitions (2)






(2,644)





2,644







9



2,635



0.09


Restructuring and related costs (3)


(285)





(710)



(300)



1,509







46



1,463



0.05


Inventory step-up (4)


(269)









269







(54)



323



0.01


Tax benefits (charges) (6)
















(110)



110




Loss (income) from discontinued operations


















(222)



(0.01)


Total certain items


(554)



0.1

%


(3,354)



(300)



4,422



0.009





(109)



4,309



0.14


As Adjusted


$

542,167



13.6

%


$

57,484



$



$

27,707



$

0.052



$

2,235



$

5,777



$

19,481



$

0.66























Percentage of Revenue






9.2

%




4.4

%








3.1

%
























Effective Tax Rate
















22.7

%













































 

 


A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures.

Con't






















Year Ended August 31, 2015


Cost of Sales


Gross Margin


SG&A


Restructuring Expense


Operating Income


Operating Income per Pound


Non Operating (income) Expense


Income tax expense (benefit)


Net Income Available to ASI Common Stockholders


Diluted EPS



(In thousands, except for %'s, per pound and per share data)

As reported


$

2,031,215



15.1

%


$

276,244



$

14,338



$

70,428



$

0.031



$

41,998



$

499



$

24,191



$

0.82


Certain items:





















Asset write-downs (1)


(408)









408







28



380



0.01


Costs related to acquisitions (2)


(267)





(16,941)





17,208





(81)



417



16,872



0.57


Restructuring and related costs (3)


(1,388)





(7,685)



(14,338)



23,411







4,335



19,076



0.65


Gain on early extinguishment of debt (7)














1,290



(427)



(863)



(0.03)


CEO transition costs (8)






(6,167)





6,167









6,167



0.21


Inventory step-up (4)


(3,082)









3,082







212



2,870



0.10


Acquisition-related interest (5)














(20,445)



121



20,324



0.69


Tax benefits (charges) (6)
















19,265



(19,265)



(0.65)


Loss (income) from discontinued operations


















133




Total certain items


(5,145)



0.2

%


(30,793)



(14,338)



50,276



0.023



(19,236)



23,951



45,694



1.55


As Adjusted


$

2,026,070



15.3

%


$

245,451



$



$

120,704



$

0.054



$

22,762



$

24,450



$

69,885



$

2.37























Percentage of Revenue






10.3

%




5.0

%








2.9

%
























Effective Tax Rate
















25.0

%


























Year Ended August 31, 2014


Cost of Sales


Gross Margin


SG&A


Restructuring Expense


Operating Income


Operating Income per Pound


Non Operating (income) Expense


Income tax expense (benefit)


Net Income Available to ASI Common Stockholders


Diluted EPS



(In thousands, except for %'s, per pound and per share data)

As reported


$

2,116,990



13.5

%


$

242,486



$

4,883



$

82,321



$

0.039



$

9,989



$

18,542



$

56,193



$

1.91


Certain items:





















Asset write-downs (1)


(107)









211







34



177



0.01


Costs related to acquisitions (2)


(34)





(5,987)





6,021





(8)



154



5,875



0.20


Restructuring and related costs (3)


(935)





(3,800)



(4,883)



9,832





(287)



963



9,156



0.31


Inventory step-up (4)


(1,468)









1,468







44



1,424



0.05


Tax benefits (charges) (6)
















316



(316)



(0.01)


Loss (income) from discontinued operations


















(3,202)



(0.11)


Total certain items


(2,544)



0.1

%


(9,787)



(4,883)



17,532



0.009



(295)



1,511



13,114



0.45


As Adjusted


$

2,114,446



13.6

%


$

232,699



$



$

99,853



$

0.048



$

9,694



$

20,053



$

69,307



$

2.36























Percentage of Revenue






9.5

%




4.1

%








2.8

%
























Effective Tax Rate
















22.2

%













































1 - Asset write-downs primarily relate to asset impairments and accelerated depreciation.

2 - Costs related to acquisitions primarily include third party professional, legal, IT and other expenses associated with successful and unsuccessful full or partial acquisition and divestiture/dissolution transactions, as well as certain employee-related expenses such as travel, one-time bonuses and post-acquisition severance separate from a formal restructuring plan.

3 - Restructuring and related costs include items such as employee severance charges, lease termination charges, curtailment gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure.

4 - Inventory step-up costs represent the amortization of adjustments to fair value of inventory acquired for acquisition purchase accounting.

5 - Primarily relates to bridge financing fees.

6 - Tax benefits (charges) represent the Company's adjustment of reported tax expense to non-GAAP tax expense based on the overall annual non-GAAP effective tax rate.

7 - Represents a pre-tax net gain of $1.3 million on the early extinguishment of euro notes repaid in February 2015.

8 - CEO transition costs represent a one-time charge for the modification and accelerated vesting upon retirement of the outstanding equity compensation awards granted to Joseph M. Gingo in 2013 and 2014.

 

 


A. SCHULMAN, INC.

ADJUSTED EBITDA RECONCILIATION






Three months ended August 31,


Year ended August 31,


2015


2014


2015


2014


Unaudited

(In thousands)









Net income available to A. Schulman, Inc. common stockholders, as adjusted (1)

$

18,755



$

19,481



$

69,885



$

69,307


Interest expense, as adjusted (2)

14,014



2,392



20,918



8,216


Provision for U.S. and foreign income taxes, as adjusted (1)

6,361



5,777



24,450



20,053


Depreciation, as adjusted (3)

10,664



8,945



36,821



33,589


Amortization

10,096



3,864



21,983



14,172


Minority Interest

279



215



1,169



799


Special Stock Dividends

1,875





2,438




EBITDA, as adjusted

$

62,044



$

40,674



$

177,664



$

146,136










1 - For a list of certain items to reconcile between "net income available to A. Schulman, Inc. common stockholders" and "net income available to A. Schulman, Inc. common stockholders, as adjusted", refer to the reconciliation of GAAP and non-GAAP financial measures.


2 - Adjusted interest expense excludes bridge financing fees and the write-off of deferred financing costs related to obtaining new financing during the third quarter of fiscal 2015.


3 - Adjusted depreciation excludes accelerated depreciation charges as they are already included in (1).

 

 

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION








Net Sales


Pounds Sold



Three months ended August 31,

EMEA


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

29,253



$

35,138



$

(5,885)



(16.7)

%


11,768



11,514



254



2.2

%

Masterbatch solutions


100,787



115,889



(15,102)



(13.0)

%


99,920



91,599



8,321



9.1

%

Engineered plastics


96,201



114,033



(17,832)



(15.6)

%


70,895



71,881



(986)



(1.4)

%

Specialty powders


40,062



43,211



(3,149)



(7.3)

%


43,576



44,873



(1,297)



(2.9)

%

Distribution services


60,460



80,322



(19,862)



(24.7)

%


78,873



94,941



(16,068)



(16.9)

%

Total EMEA


$

326,763



$

388,593



$

(61,830)



(15.9)

%


305,032



314,808



(9,776)



(3.1)

%




















Net Sales


Pounds Sold



Three months ended August 31,

USCAN


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

12,734



$

9,757



$

2,977



30.5

%


4,358



3,020



1,338



44.3

%

Masterbatch solutions


37,033



41,567



(4,534)



(10.9)

%


53,061



54,473



(1,412)



(2.6)

%

Engineered plastics


104,158



42,336



61,822



146.0

%


101,198



27,084



74,114



273.6

%

Specialty powders


22,692



28,526



(5,834)



(20.5)

%


33,776



43,895



(10,119)



(23.1)

%

Distribution services


18,655



16,587



2,068



12.5

%


23,403



17,036



6,367



37.4

%

Total USCAN


$

195,272



$

138,773



$

56,499



40.7

%


215,796



145,508



70,288



48.3

%




















Net Sales


Pounds Sold



Three months ended August 31,

LATAM


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

1,129



$

1,061



$

68



6.4

%


488



441



47



10.7

%

Masterbatch solutions


25,232



24,592



640



2.6

%


17,895



16,394



1,501



9.2

%

Engineered plastics


11,363



13,055



(1,692)



(13.0)

%


9,137



9,454



(317)



(3.4)

%

Specialty powders


7,604



10,857



(3,253)



(30.0)

%


7,607



9,728



(2,121)



(21.8)

%

Distribution services








N/A








N/A

Total LATAM


$

45,328



$

49,565



$

(4,237)



(8.5)

%


35,127



36,017



(890)



(2.5)

%




















Net Sales


Pounds Sold



Three months ended August 31,

APAC


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

2,544



$

1,346



$

1,198



89.0

%


2,826



1,048



1,778



169.7

%

Masterbatch solutions


20,070



19,991



79



0.4

%


20,907



18,442



2,465



13.4

%

Engineered plastics


25,433



24,906



527



2.1

%


20,444



16,640



3,804



22.9

%

Specialty powders


1,148



3,984



(2,836)



(71.2)

%


1,195



3,625



(2,430)



(67.0)

%

Distribution services


328



200



128



64.0

%


506



241



265



110.0

%

Total APAC


$

49,523



$

50,427



$

(904)



(1.8)

%


45,878



39,996



5,882



14.7

%


















 

 

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION








Net Sales


Pounds Sold



Year ended August 31,

EMEA


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

131,565



$

146,629



$

(15,064)



(10.3)

%


50,088



48,600



1,488



3.1

%

Masterbatch solutions


412,501



452,865



(40,364)



(8.9)

%


392,522



354,384



38,138



10.8

%

Engineered plastics


391,406



475,015



(83,609)



(17.6)

%


278,038



294,292



(16,254)



(5.5)

%

Specialty powders


154,701



181,153



(26,452)



(14.6)

%


177,618



181,533



(3,915)



(2.2)

%

Distribution services


249,182



322,205



(73,023)



(22.7)

%


354,973



383,218



(28,245)



(7.4)

%

Total EMEA


$

1,339,355



$

1,577,867



$

(238,512)



(15.1)

%


1,253,239



1,262,027



(8,788)



(0.7)

%




















Net Sales


Pounds Sold



Year ended August 31,

USCAN


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

44,258



$

34,131



$

10,127



29.7

%


15,099



10,666



4,433



41.6

%

Masterbatch solutions


156,541



137,031



19,510



14.2

%


213,413



200,283



13,130



6.6

%

Engineered plastics


245,004



133,552



111,452



83.5

%


191,150



85,735



105,415



123.0

%

Specialty powders


94,265



106,305



(12,040)



(11.3)

%


145,159



163,279



(18,120)



(11.1)

%

Distribution services


70,425



64,031



6,394



10.0

%


79,890



66,882



13,008



19.4

%

Total USCAN


$

610,493



$

475,050



$

135,443



28.5

%


644,711



526,845



117,866



22.4

%




















Net Sales


Pounds Sold



Year ended August 31,

LATAM


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

4,586



$

3,966



$

620



15.6

%


1,834



1,712



122



7.1

%

Masterbatch solutions


91,204



95,220



(4,016)



(4.2)

%


64,211



62,666



1,545



2.5

%

Engineered plastics


46,220



51,170



(4,950)



(9.7)

%


34,912



36,349



(1,437)



(4.0)

%

Specialty powders


35,453



47,957



(12,504)



(26.1)

%


31,064



41,445



(10,381)



(25.0)

%

Distribution services








N/A








N/A

Total LATAM


$

177,463



$

198,313



$

(20,850)



(10.5)

%


132,021



142,172



(10,151)



(7.1)

%




















Net Sales


Pounds Sold



Year ended August 31,

APAC


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

11,044



$

3,495



$

7,549



216.0

%


8,636



2,748



5,888



214.3

%

Masterbatch solutions


81,108



81,672



(564)



(0.7)

%


81,807



73,568



8,239



11.2

%

Engineered plastics


104,628



93,991



10,637



11.3

%


76,251



62,021



14,230



22.9

%

Specialty powders


9,809



15,095



(5,286)



(35.0)

%


10,279



13,699



(3,420)



(25.0)

%

Distribution services


1,192



1,515



(323)



(21.3)

%


1,569



1,863



(294)



(15.8)

%

Total APAC


$

207,781



$

195,768



$

12,013



6.1

%


178,542



153,899



24,643



16.0

%






















































Net Sales


Pounds Sold



Three months ended August 31,

Consolidated


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

45,660



$

47,302



$

(1,642)



(3.5)

%


19,440



16,023



3,417



21.3

%

Engineered composites


57,133





57,133



N/A


46,082





46,082



N/A

Masterbatch solutions


183,122



202,039



(18,917)



(9.4)

%


191,783



180,908



10,875



6.0

%

Engineered plastics


237,155



194,330



42,825



22.0

%


201,674



125,059



76,615



61.3

%

Specialty powders


71,506



86,578



(15,072)



(17.4)

%


86,154



102,121



(15,967)



(15.6)

%

Distribution services


79,443



97,109



(17,666)



(18.2)

%


102,782



112,218



(9,436)



(8.4)

%

Total Consolidated


$

674,019



$

627,358



$

46,661



7.4

%


647,915



536,329



111,586



20.8

%




















Net Sales


Pounds Sold



Year ended August 31,

Consolidated


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom performance colors


$

191,453



$

188,221



$

3,232



1.7

%


75,657



63,726



11,931



18.7

%

Engineered composites


57,133





57,133



N/A


46,082





46,082



N/A

Masterbatch solutions


741,354



766,788



(25,434)



(3.3)

%


751,953



690,901



61,052



8.8

%

Engineered plastics


787,258



753,728



33,530



4.4

%


580,351



478,397



101,954



21.3

%

Specialty powders


294,228



350,510



(56,282)



(16.1)

%


364,120



399,956



(35,836)



(9.0)

%

Distribution services


320,799



387,751



(66,952)



(17.3)

%


436,432



451,963



(15,531)



(3.4)

%

Total Consolidated


$

2,392,225



$

2,446,998



$

(54,773)



(2.2)

%


2,254,595



2,084,943



169,652



8.1

%

 

 


A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION

(continued)








Three months ended August 31,


Year ended August 31,



2015


2014


2015


2014



Unaudited

(In thousands, except for %'s)










Segment gross profit









EMEA


$

43,952



$

50,031



$

189,860



$

206,268


USCAN


34,072



22,367



100,550



73,278


LATAM


9,896



6,228



31,971



26,239


APAC


6,835



6,565



29,238



26,767


EC


14,536





14,536




Total segment gross profit


109,291



85,191



366,155



332,552


Inventory step-up


(2,741)



(269)



(3,082)



(1,468)


Accelerated depreciation and restructuring related costs


(1,122)



(251)



(1,796)



(1,042)


Costs related to acquisitions


(93)



(34)



(267)



(34)


Total gross profit


$

105,335



$

84,637



$

361,010



$

330,008











Segment operating income









EMEA


$

17,281



$

19,153



$

78,313



$

80,690


USCAN


15,414



11,815



40,713



30,418


LATAM


5,530



2,102



13,061



8,388


APAC


3,498



2,656



14,401



12,527


EC


5,454





5,454




Total segment operating income


47,177



35,726



151,942



132,023


Corporate


(6,246)



(8,019)



(31,238)



(32,170)


Costs related to acquisitions


(9,236)



(2,644)



(17,208)



(6,021)


Restructuring and related costs


(8,108)



(1,295)



(23,411)



(9,618)


Accelerated depreciation


(81)





(408)



(107)


CEO transition costs






(6,167)




Asset impairment








(104)


Curtailment and settlement gains (losses)




(214)





(214)


Inventory step-up


(2,741)



(269)



(3,082)



(1,468)


Operating income


20,765



23,285



70,428



82,321


Interest expense


(15,325)



(2,391)



(22,613)



(8,503)


Bridge financing fees






(18,750)




Foreign currency transaction gains (losses)


(266)



(86)



(3,363)



(2,206)


Other income (expense), net


538



242



1,438



720


Gain on early extinguishment of debt






1,290




Income from continuing operations before taxes


$

5,712



$

21,050



$

28,430



$

72,332











Capacity Utilization









EMEA


83

%


78

%


87

%


84

%

USCAN


71

%


65

%


66

%


64

%

LATAM


81

%


79

%


73

%


76

%

APAC


61

%


69

%


64

%


70

%

EC


57

%


%


57

%


%

Worldwide


73

%


73

%


74

%


75

%

 

 

A. SCHULMAN, INC.

Sales by Geographical Region






Three months ended August 31, 2015



Unaudited (In thousands, except for %'s)






Thermoplastics


Engineered Composites


Total

Geographical Region


Sales by Region


% of TP


Sales by Region


% of EC


Total Sales


Total %

United States / Canada


$

195,272



31.7

%


$

41,831



73.2

%


$

237,103



35.2

%

Europe


326,763



53.0

%


5,892



10.3

%


332,655



49.4

%

Mexico / South America


45,328



7.3

%


9,410



16.5

%


54,738



8.1

%

Asia Pacific


49,523



8.0

%




%


49,523



7.3

%

Total


$

616,886



100.0

%


$

57,133



100.0

%


$

674,019



100.0

%





























Three months ended August 31, 2014



Unaudited (In thousands, except for %'s)






Thermoplastics


Engineered Composites


Total

Geographical Region


Sales by Region


% of TP


Sales by Region


% of EC


Total Sales


Total %

United States / Canada


$

138,773



22.1

%


$



%


$

138,773



22.1

%

Europe


388,593



62.0

%




%


388,593



62.0

%

Mexico / South America


49,565



7.9

%




%


49,565



7.9

%

Asia Pacific


50,427



8.0

%




%


50,427



8.0

%

Total


$

627,358



100.0

%


$



%


$

627,358



100.0

%



























 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/a-schulman-reports-fiscal-2015-fourth-quarter-and-full-year-results-300163399.html

SOURCE A. Schulman, Inc.


Source: PR Newswire (October 20, 2015 - 5:27 PM EDT)

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