July 6, 2015

A. Schulman Reports Fiscal 2015 Third Quarter Results

- Adjusted operating income growth grew by 32.1%, excluding the impact of foreign currency, in the Company's fiscal 2015 third quarter
- Quarterly cash flow from operating activities improved by 26% compared with the prior year period
- On June 1, the acquisition of HGGC Citadel Plastics Holdings, Inc. ("Citadel"), for approximately $800 million was completed; the transaction:
- - Almost doubles U.S. revenue, thus balancing Company's geographic footprint
- - Provides a new growth platform with industry-leading, high-margin specialty engineered composites business
- - Is expected to be accretive in the first 12 months of ownership
- - Will achieve approximately $25 million in synergies within 18 months
- Fiscal 2015 adjusted net income guidance range updated to reflect the Citadel acquisition and related financing activities

AKRON, Ohio, July 6, 2015 /PRNewswire/ -- A. Schulman, Inc. (Nasdaq: SHLM) announced today earnings for the fiscal 2015 third quarter ended May 31, 2015.

Bernard Rzepka, president and chief executive officer, said, "I am excited to report another quarter of improved operating profitability at A. Schulman, a clear sign that our strategic initiatives to transform our Company into a specialty plastics materials leader are bearing fruit. In 2010 we set a challenging target of 6.2 cents of operating profit per pound by the end of fiscal 2015 to reflect our commitment to this transformational process. In the third quarter we achieved adjusted operating profit per pound of 6 cents, and if we held the Euro to USD currency rate at the same level that was in place when the target was established this metric would have been 7 cents. We continue to overcome the slow growth and foreign exchange environment by controlling what we can control and by focusing on our strategic initiatives, and as a result we were able to sequentially boost our gross margins across nearly every segment to deliver near record results. The steady performance improvement that we've accomplished this year, despite the many external challenges, gives us considerable confidence that our dedicated team will execute our strategy, deliver further profitable growth, and achieve our long term earnings goals.

"We are excited to have completed the acquisition of Citadel on June 1, and welcome their 1,200 talented associates to the A. Schulman team. This strategic acquisition greatly enhances our product scope, regional scale and efficiencies, and provides balance to our geographic footprint. With Citadel on board we are focused on leveraging the strength of the combined business, and expanding our growth potential," added Rzepka.

Joseph Levanduski, executive vice president & chief financial officer, said, "We have put in place a new capital structure that provides flexibility, while taking advantage of the favorable conditions that currently exist in the financial markets. This structure puts us in a leverage environment that will be higher than we have experienced in the recent past, but we are confident in our ability to de-lever in a prudent and timely fashion. By combining two organizations that generate strong cash flow from operations, while driving synergies and executing our Smart Savings program, we will not only be able to de-lever to our stated goal of 2.5x net leverage within a reasonable period of time, but we will also be able to support our strategic and organic growth initiatives."

Fiscal Third-Quarter Results
Consolidated net sales for the fiscal 2015 third quarter were $560.9 million, compared with $645.7 million in the same prior-year quarter. Of the $84.8 million change, foreign currency translation accounted for $91.4 million of the decrease. Net sales from plants acquired in 2014, which includes A. Schulman's legacy volume consolidated during the integration process, contributed $33.9 million of revenue during the quarter. Adjusted gross margin in the third quarter as a percent of net sales improved to 16.2% compared with 14.3% in the prior-year period.

The Company reported a net loss from continuing operations of $0.34 per diluted share. On an adjusted basis, excluding financing, restructuring and acquisitions-related costs, the Company generated net income of $0.72 per diluted share.

Europe, Middle East and Africa ('EMEA") net sales were $326.3 million compared with $413.8 million in the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $79.7 million, net sales declined by 1.9%, primarily due to lower volumes in the engineered plastics and distribution services product families, partially offset by double digit volume growth in the masterbatch solutions product family. EMEA adjusted gross profit was $51.7 million. Excluding the negative impact of foreign currency translation of $11.3 million, adjusted gross profit increased by $6.2 million, or 10.9%, 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 $137.1 million, an increase of 4.1% in the third quarter compared with the same prior-year period. The incremental net sales were partially offset by lower net sales of $11.6 million in the specialty powders product family as a result of weaker oilfield services demand. The Specialty Plastics acquisition contributed $19.6 million of net sales growth during the quarter. USCAN adjusted gross profit was $22.1 million, a decrease of $1.7 million from the same prior-year period. The benefits of the recent Specialty Plastics acquisition and related integration were more than offset by unfavorable product mix.

Latin America's ("LATAM") net sales for the quarter were $44.8 million, a decrease of $4.9 million compared with the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $8.5 million, net sales increased 7.2%. LATAM adjusted gross profit was $9.3 million, an increase of $4.9 million or 108.5% from the comparable period last year primarily due to the benefits of improved product mix and operating cost.

Asia Pacific ("APAC") net sales were $52.7 million, an increase of $2.2 million or 4.3% compared with the same prior-year period. Incremental sales from the 2014 Compco acquisition were offset by the negative impact from foreign currency translation. APAC adjusted gross profit was $7.8 million, an increase of $0.7 million compared with the prior-year period. Gross profit benefited from the positive contribution of the Compco acquisition and increased organic volume.

Working Capital/Cash Flow
Cash provided from operations was $56.3 million in the nine months ended May 31, 2015, an improvement of $21.2 million or 60.6% over the comparable prior year period. Working capital days decreased by one day to 59 days in the third quarter of fiscal 2015 versus the comparable period in the prior year, and representing an 8-day improvement from the end of the second quarter of fiscal 2015.

Capital expenditures for the nine months ended May 31, 2015 were $32.7 million compared with $24.1 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 nine months ended May 31, 2015, the Company declared and paid quarterly cash dividends of $18.1 million, or $0.615 per common share consistent with its ongoing strategy of providing an attractive yield to shareholders in addition to share price appreciation.

Year-to-Date Results
Net sales for the nine months ended May 31, 2015 were $1.7 billion, compared with $1.8 billion for the same prior-year period. Of the $101.4 million decrease in net sales, foreign currency translation accounted for $177.3 million of this change. Acquisitions contributed $130.0 million in net sales during the nine month period.

Operating income was $49.7 million, a decrease of $9.4 million compared with the same prior-year period. Total operating income before certain items was $79.8 million, an increase of $7.6 million or 10.6% compared with last year. Excluding the negative impact of foreign currency translation, total operating income before certain items increased 23.5% versus the comparable period. The growth in total operating income before certain items included the contribution from recent acquisitions of $12.4 million and the strategic focus on improving operating profit per pound, partially offset by the negative impact of foreign currency translation of $9.3 million.

Citadel and Refinancing Actions
On June 1, 2015, A. Schulman completed the previously announced acquisition of HGGC Citadel Plastics Holdings, Inc. for approximately $800 million. The Company anticipates the transaction will be accretive in the first 12 months of ownership and expects to realize approximately $25 million in synergies within the next 18 months. The Company financed the acquisition, with a component of this financing occurring in the third quarter in anticipation of the June 1 close. The third quarter of fiscal 2015 included interest expense of approximately $0.4 million or a $0.01 per diluted share impact resulting from the issuance of $375 million of Senior Notes. The cash raised during the third quarter from the Senior Notes is reflected as restricted cash on the Company's balance sheet as of May 31, 2015.

Additionally, the Company elected to restructure its capital structure in tandem with this acquisition financing.  As a component of this action, on May 4, 2015, the Company issued $125 million of convertible special stock bearing a 6% dividend rate. Earnings per diluted share for the third quarter of fiscal 2015 included $0.6 million of dividends or approximately $0.02 per diluted share impact related to the convertible special stock.

Business Outlook
Rzepka stated, "Our fiscal 2015 adjusted net income guidance previously provided of $2.50 to $2.55 per diluted share represented significant growth over our fiscal 2014 results, excluding any impact from the then pending acquisition of Citadel. While the Citadel acquisition has occurred, and related financing actions taken, it is important to take note that the previous guidance range is achievable excluding the dilution expected in our fourth quarter related to these strategic long-term actions.

"We believe that the fiscal 2015 dilution related to the Citadel acquisition, including the $0.01 per diluted share negative impact on our third quarter results, will be approximately $0.05 per diluted share. Additionally, the dividend on the convertible special stock will impact the calculation of diluted earnings per share by approximately $0.08 per share in fiscal 2015, including the $0.02 impact on our third quarter results," he noted.

"The combination of our previous guidance, updated for the fiscal 2015 dilution from the Citadel acquisition and convertible special stock dividend results in our adjusted guidance range of $2.37 to $2.42 per diluted share.

"Our team is committed to profitable growth and achieving our fiscal 2018 targets. As we integrate Citadel, and meet or exceed our $25 million synergy target, we are confident that the accretive nature of this acquisition, combined with our operating income growth, will provide a significant return to our shareholders. We look forward to reporting our fiscal 2015 results, and providing fiscal 2016 earnings guidance, at the end of October. We are focused and committed to achieving our long-term strategic goals," Rzepka added.

Conference Call on the Web
A live Internet broadcast of A. Schulman's conference call regarding fiscal 2015 third-quarter earnings can be accessed at 10:00 a.m. Eastern Time on Tuesday, July 7, 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 60 manufacturing facilities globally. A. Schulman reported net sales of approximately $2.5 billion for the fiscal year ended August 31, 2014. 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, may not be reported by all of the Company's competitors and may 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 may 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 may 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 and retirement benefits;
  • 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 transaction;
  • 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 acquisition of Citadel;
  • transaction and acquisition-related costs incurred in connection with the acquisition of Citadel 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, 2014, as amended and superseded in part by the Company's Current Report on Form 8-K filed on April 27, 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 May 31,


Nine months ended May 31,


2015


2014


2015


2014


Unaudited

(In thousands, except per share data)

Net sales

$

560,858



$

645,735



$

1,718,206



$

1,819,640


Cost of sales

470,101



553,771



1,462,531



1,574,269


Selling, general and administrative expenses

64,842



65,536



195,482



181,647


Restructuring expense

2,649



1,078



10,530



4,583


Asset impairment







104


Operating income

23,266



25,350



49,663



59,037


Interest expense

2,618



1,433



7,288



6,112


Bridge financing fees

18,750





18,750




Foreign currency transaction (gains) losses

857



(28)



3,097



2,120


Other (income) expense, net

(335)



(64)



(900)



(478)


Gain on early extinguishment of debt





(1,290)




Income (loss) from continuing operations before taxes

1,376



24,009



22,718



51,283


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

10,344



4,662



18,801



12,657


Income (loss) from continuing operations

(8,968)



19,347



3,917



38,626


Income (loss) from discontinued operations, net of tax

(18)



(23)



(86)



2,979


Net income (loss)

(8,986)



19,324



3,831



41,605


Noncontrolling interests

(343)



(233)



(890)



(584)


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

(9,329)



19,091



2,941



41,021


Convertible special stock dividends

(563)





(563)




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

$

(9,892)



$

19,091



$

2,378



$

41,021










Weighted-average number of shares outstanding:








Basic

29,219



29,081



29,125



29,052


Diluted

29,219



29,375



29,547



29,300










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








Income (loss) from continuing operations

$

(0.34)



$

0.66



$

0.08



$

1.31


Income (loss) from discontinued operations







0.10


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

$

(0.34)



$

0.66



$

0.08



$

1.41










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








Income (loss) from continuing operations

$

(0.34)



$

0.65



$

0.08



$

1.30


Income (loss) from discontinued operations







0.10


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

$

(0.34)



$

0.65



$

0.08



$

1.40










Cash dividends per common share

$

0.205



$

0.200



$

0.615



$

0.600


     

A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS



May 31,
 2015


August 31,
 2014


Unaudited 

(In thousands)

ASSETS

Current assets:




Cash and cash equivalents

$

107,043



$

135,493


Restricted cash

378,509




Accounts receivable, less allowance for doubtful accounts of $9,537 at May 31, 2015 and $10,844
at August 31, 2014

357,688



384,444


Inventories

270,227



292,141


Prepaid expenses and other current assets

38,867



40,473


Total current assets

1,152,334



852,551


Property, plant and equipment, at cost:




Land and improvements

25,568



28,439


Buildings and leasehold improvements

143,002



160,858


Machinery and equipment

372,030



398,563


Furniture and fixtures

31,896



41,255


Construction in progress

23,015



16,718


Gross property, plant and equipment

595,511



645,833


Accumulated depreciation

358,979



391,912


Net property, plant and equipment

236,532



253,921


Deferred charges and other noncurrent assets

83,149



65,079


Goodwill

191,489



202,299


Intangible assets, net

119,508



138,634


Total assets

$

1,783,012



$

1,512,484


LIABILITIES AND EQUITY

Current liabilities:




Accounts payable

$

293,203



$

314,957


U.S. and foreign income taxes payable

7,350



6,385


Accrued payroll, taxes and related benefits

46,513



54,199


Other accrued liabilities

78,558



46,054


Short-term debt

14,290



31,748


Total current liabilities

439,914



453,343


Long-term debt

607,585



339,546


Pension plans

110,498



129,949


Deferred income taxes

20,681



23,826


Other long-term liabilities

25,571



29,369


Total liabilities

1,204,249



976,033


Commitments and contingencies




Stockholders' equity:




Common stock, $1 par value, authorized - 75,000 shares, issued - 48,367 shares at May 31, 2015 and 48,185 shares at August 31, 2014

48,367



48,185


Convertible special stock, no par value

120,296




Additional paid-in capital

274,138



268,545


Accumulated other comprehensive income (loss)

(81,097)



(16,691)


Retained earnings

591,781



606,898


Treasury stock, at cost, 19,078 shares at May 31, 2015 and 18,973 shares at August 31, 2014

(383,148)



(379,894)


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

570,337



527,043


Noncontrolling interests

8,426



9,408


Total equity

578,763



536,451


Total liabilities and equity

$

1,783,012



$

1,512,484


      

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



Nine months ended May 31,


2015


2014


Unaudited

(In thousands)

Operating from continuing and discontinued operations:




Net income

$

3,831



$

41,605


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




Depreciation

26,481



24,751


Amortization

11,899



10,308


Bridge financing fees

18,750




Deferred tax provision (benefit)

(1,143)



(3,182)


Pension, postretirement benefits and other compensation

8,318



9,157


Restricted stock compensation - CEO transition costs, net of cash

4,789




Asset impairment



104


Gain on sale of assets from discontinued operations



(3,344)


Changes in assets and liabilities, net of acquisitions:




Accounts receivable

(13,610)



(26,048)


Inventories

(13,309)



(15,330)


Accounts payable

9,599



2,847


Income taxes

2,598



204


Accrued payroll and other accrued liabilities

4,776



260


Other assets and long-term liabilities

(6,698)



(6,296)


Net cash provided from (used in) operating activities

56,281



35,036


Investing from continuing and discontinued operations:




Expenditures for property, plant and equipment

(32,662)



(24,126)


Investment in equity investees

(12,456)




Proceeds from the sale of assets

1,411



5,255


Restricted cash

(3,509)




Business acquisitions, net of cash

(6,698)



(115,624)


Net cash provided from (used in) investing activities

(53,914)



(134,495)


Financing from continuing and discontinued operations:




Cash dividends paid to common stockholders

(18,058)



(17,717)


Increase (decrease) in short-term debt

(12,995)



3,747


Borrowings on long-term debt

255,196



703,141


Repayments on long-term debt including current portion

(353,647)



(609,501)


Payment of debt issuance costs



(1,782)


Noncontrolling interests' contributions (distributions)

(1,750)




Issuances of stock, common and treasury

231



403


Issuances of convertible special stock, net

120,296




Redemptions of common stock

(4,999)



(361)


Purchases of treasury stock

(3,335)



(1,116)


Net cash provided from (used in) financing activities

(19,061)



76,814


Effect of exchange rate changes on cash

(11,756)



(605)


Net increase (decrease) in cash and cash equivalents

(28,450)



(23,250)


Cash and cash equivalents at beginning of period

135,493



134,054


Cash and cash equivalents at end of period

$

107,043



$

110,804






Non-cash Activity:

Senior Notes funding held in restricted cash

$

375,000



$


Unpaid debt issuance costs

$

11,116



$


     

A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures


Three months ended May 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 A. Schulman, Inc. Common Stockholders


Diluted
EPS



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

As reported


$

470,101



16.2

%


$

64,842



$

2,649



$

23,266



$

0.043



$

21,890



$

10,344



$

(9,892)



$

(0.34)


Certain items:





















Acquisition related interest expenses (1)














(19,134)





19,134



0.66


Accelerated depreciation (5)


(29)









29









29




Costs related to acquisitions and integrations (2)


(59)





(3,531)





3,590







29



3,561



0.12


Restructuring and related costs (3)


(49)





(3,239)



(2,649)



5,937







1,144



4,793



0.16


Tax benefits (charges) (8)
















(3,559)



3,559



0.12


Loss (income) from discontinued operations


















18




Total certain items


(137)



%


(6,770)



(2,649)



9,556



0.017



(19,134)



(2,386)



31,094



1.06


As Adjusted


$

469,964



16.2

%


$

58,072



$



$

32,822



$

0.060



$

2,756



$

7,958



$

21,202



$

0.72























Percentage of Revenue






10.4

%




5.9

%








3.8

%
























Effective Tax Rate
















26.5

%


























Three months ended May 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 A. Schulman, Inc. Common Stockholders


Diluted
EPS



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

As reported


$

553,771



14.2

%


$

65,536



$

1,078



$

25,350



$

0.046



$

1,341



$

4,662



$

19,091



$

0.65


Certain items:





















Costs related to acquisitions and integrations (2)






(888)





888







16



872



0.03


Restructuring and related costs (3)


(149)





(933)



(1,078)



2,160







320



1,840



0.06


Loss (income) from discontinued operations


















23




Total certain items


(149)



0.1

%


(1,821)



(1,078)



3,048



0.006





336



2,735



0.09


As Adjusted


$

553,622



14.3

%


$

63,715



$



$

28,398



$

0.052



$

1,341



$

4,998



$

21,826



$

0.74























Percentage of Revenue






9.9

%




4.4

%








3.4

%
























Effective Tax Rate
















18.5

%






      

Nine months ended May 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 A. Schulman, Inc. Common Stockholders


Diluted
EPS



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

As reported


$

1,462,531



14.9

%


$

195,482



$

10,530



$

49,663



$

0.031



$

26,945



$

18,801



$

2,378



$

0.08


Certain items:





















Acquisition related interest expenses (1)














(19,134)





19,134



0.65


Accelerated depreciation (5)


(327)









327









327



0.01


Costs related to acquisitions and integrations (2)


(174)





(7,798)





7,972







307



7,665



0.26


Restructuring and related costs (3)


(347)





(4,426)



(10,530)



15,303







3,146



12,157



0.41


CEO transition costs (4)






(6,167)





6,167









6,167



0.21


Inventory step-up (6)


(341)









341







102



239



0.01


Gain on early extinguishment of debt (7)














1,290



(428)



(862)



(0.03)


Tax benefits (charges) (8)
















(3,841)



3,841



0.13


Loss (income) from discontinued operations


















86




Total certain items


(1,189)



%


(18,391)



(10,530)



30,110



0.019



(17,844)



(714)



48,754



1.65


As Adjusted


$

1,461,342



14.9

%


$

177,091



$



$

79,773



$

0.050



$

9,101



$

18,087



$

51,132



$

1.73























Percentage of Revenue






10.3

%




4.6

%








3.0

%
























Effective Tax Rate
















20.4

%


























Nine months ended May 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 A. Schulman, Inc. Common Stockholders


Diluted
EPS



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

As reported


$

1,574,269



13.5

%


$

181,647



$

4,583



$

59,037



$

0.038



$

7,754



$

12,657



$

41,021



$

1.40


Certain items:





















Costs related to acquisitions and integrations (2)


(34)





(3,343)





3,377





(8)



141



3,244



0.11


Restructuring and related costs (3)


(649)





(3,090)



(4,583)



8,322





(290)



920



7,692



0.26


Asset write-downs (5)


(108)





(104)





212







34



178



0.01


Inventory step-up (6)


(1,199)









1,199







98



1,101



0.04


Tax benefits (charges) (8)
















427



(427)



(0.02)


Loss (income) from discontinued operations


















(2,979)



(0.10)


Total certain items


(1,990)



0.1

%


(6,537)



(4,583)



13,110



0.009



(298)



1,620



8,809



0.30


As Adjusted


$

1,572,279



13.6

%


$

175,110



$



$

72,147



$

0.047



$

7,457



$

14,277



$

49,830



$

1.70























Percentage of Revenue






9.6

%




4.0

%








2.7

%
























Effective Tax Rate
















17.9

%






1 - Primarily relates to $18.8 million in bridge financing fees.

2 - Costs related to acquisitions and integrations 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 - 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.

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

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

7 - Represents a pre-tax net gain of $1.3 million on the early extinguishment of debt.

8 - Tax benefits (charges) represent the Company's quarterly non-GAAP tax based on the overall estimated annual non-GAAP effective tax rates.

     

A. SCHULMAN, INC.

ADJUSTED EBITDA RECONCILIATION



Three months ended May 31,


Nine months ended May 31,


2015


2014


2015


2014


Unaudited

(In thousands)









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

$

21,202



$

21,826



$

51,132



$

49,830


Interest expense

2,618



1,433



7,288



6,112


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

7,958



4,998



18,087



14,277


Depreciation

8,491



8,332



26,481



24,751


Amortization

3,628



3,639



11,899



10,308


EBITDA, as adjusted

$

43,897



$

40,228



$

114,887



$

105,278










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.

     

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION




Net Sales


Pounds Sold



Three months ended May 31,

EMEA


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

30,475



$

39,505



$

(9,030)



(22.9)

%


12,473



13,114



(641)



(4.9)

%

Masterbatch Solutions


105,706



122,450



(16,744)



(13.7)

%


105,809



94,228



11,581



12.3

%

Engineered Plastics


95,210



123,634



(28,424)



(23.0)

%


71,923



77,649



(5,726)



(7.4)

%

Specialty Powders


37,903



47,533



(9,630)



(20.3)

%


46,997



47,193



(196)



(0.4)

%

Distribution Services


56,961



80,666



(23,705)



(29.4)

%


85,689



96,600



(10,911)



(11.3)

%

Total EMEA


$

326,255



$

413,788



$

(87,533)



(21.2)

%


322,891



328,784



(5,893)



(1.8)

%




















Net Sales


Pounds Sold



Three months ended May 31,

USCAN


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

11,209



$

8,817



$

2,392



27.1

%


3,925



2,619



1,306



49.9

%

Masterbatch Solutions


37,077



34,369



2,708



7.9

%


51,659



53,248



(1,589)



(3.0)

%

Engineered Plastics


48,172



34,617



13,555



39.2

%


31,897



21,248



10,649



50.1

%

Specialty Powders


22,914



34,552



(11,638)



(33.7)

%


33,563



44,139



(10,576)



(24.0)

%

Distribution Services


17,708



19,290



(1,582)



(8.2)

%


21,437



19,735



1,702



8.6

%

Total USCAN


$

137,080



$

131,645



$

5,435



4.1

%


142,481



140,989



1,492



1.1

%




















Net Sales


Pounds Sold



Three months ended May 31,

LATAM


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

1,054



$

1,014



$

40



3.9

%


395



502



(107)



(21.3)

%

Masterbatch Solutions


23,769



24,182



(413)



(1.7)

%


16,789



15,648



1,141



7.3

%

Engineered Plastics


11,889



13,607



(1,718)



(12.6)

%


9,196



9,614



(418)



(4.3)

%

Specialty Powders


8,109



10,951



(2,842)



(26.0)

%


7,177



9,270



(2,093)



(22.6)

%

Distribution Services








N/A








N/A

Total LATAM


$

44,821



$

49,754



$

(4,933)



(9.9)

%


33,557



35,034



(1,477)



(4.2)

%




















Net Sales


Pounds Sold



Three months ended May 31,

APAC


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

2,567



$

876



$

1,691



193.0

%


1,615



738



877



118.8

%

Masterbatch Solutions


21,375



21,272



103



0.5

%


22,331



19,651



2,680



13.6

%

Engineered Plastics


26,454



23,803



2,651



11.1

%


19,479



15,788



3,691



23.4

%

Specialty Powders


2,207



4,085



(1,878)



(46.0)

%


2,617



3,651



(1,034)



(28.3)

%

Distribution Services


99



512



(413)



(80.7)

%


135



619



(484)



(78.2)

%

Total APAC


$

52,702



$

50,548



$

2,154



4.3

%


46,177



40,447



5,730



14.2

%



































    



Net Sales


Pounds Sold



Nine months ended May 31,

EMEA


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

93,168



$

111,490



$

(18,322)



(16.4)%



34,752



37,086



(2,334)



(6.3)

%

Masterbatch Solutions


321,885



336,977



(15,092)



(4.5)%



296,207



262,785



33,422



12.7

%

Engineered Plastics


294,179



360,983



(66,804)



(18.5)%



207,104



222,411



(15,307)



(6.9)

%

Specialty Powders


114,637



137,941



(23,304)



(16.9)%



134,043



136,660



(2,617)



(1.9)

%

Distribution Services


188,723



241,883



(53,160)



(22.0)%



276,101



288,278



(12,177)



(4.2)

%

Total EMEA


$

1,012,592



$

1,189,274



$

(176,682)



(14.9)%



948,207



947,220



987



0.1

%




















Net Sales


Pounds Sold



Nine months ended May 31,

USCAN


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

31,524



$

24,374



$

7,150



29.3

%


10,742



7,647



3,095



40.5

%

Masterbatch Solutions


119,514



95,464



24,050



25.2

%


160,352



145,813



14,539



10.0

%

Engineered Plastics


140,840



91,215



49,625



54.4

%


89,950



58,648



31,302



53.4

%

Specialty Powders


71,574



77,780



(6,206)



(8.0)

%


111,383



119,384



(8,001)



(6.7)

%

Distribution Services


51,769



47,444



4,325



9.1

%


56,487



49,845



6,642



13.3

%

Total USCAN


$

415,221



$

336,277



$

78,944



23.5

%


428,914



381,337



47,577



12.5

%




















Net Sales


Pounds Sold



Nine months ended May 31,

LATAM


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

3,457



$

2,905



$

552



19.0

%


1,347



1,271



76



6.0

%

Masterbatch Solutions


65,971



70,628



(4,657)



(6.6)

%


46,316



46,272



44



0.1

%

Engineered Plastics


34,857



38,116



(3,259)



(8.6)

%


25,775



26,894



(1,119)



(4.2)

%

Specialty Powders


27,850



37,099



(9,249)



(24.9)

%


23,456



31,717



(8,261)



(26.0)

%

Distribution Services








N/A








N/A

Total LATAM


$

132,135



$

148,748



$

(16,613)



(11.2)

%


96,894



106,154



(9,260)



(8.7)

%




















Net Sales


Pounds Sold



Nine months ended May 31,

APAC


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

8,500



$

2,149



$

6,351



295.5

%


5,809



1,700



4,109



241.7

%

Masterbatch Solutions


61,038



61,681



(643)



(1.0)

%


60,900



55,126



5,774



10.5

%

Engineered Plastics


79,196



69,085



10,111



14.6

%


55,809



45,381



10,428



23.0

%

Specialty Powders


8,661



11,111



(2,450)



(22.1)

%


9,084



10,074



(990)



(9.8)

%

Distribution Services


863



1,315



(452)



(34.4)

%


1,062



1,622



(560)



(34.5)

%

Total APAC


$

158,258



$

145,341



$

12,917



8.9

%


132,664



113,903



18,761



16.5

%





































































    



Net Sales


Pounds Sold



Three months ended May 31,

Consolidated


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

45,305



$

50,212



$

(4,907)



(9.8)%



18,408



16,973



1,435



8.5

%

Masterbatch Solutions


187,927



202,273



(14,346)



(7.1)%



196,588



182,775



13,813



7.6

%

Engineered Plastics


181,725



195,661



(13,936)



(7.1)%



132,495



124,299



8,196



6.6

%

Specialty Powders


71,133



97,121



(25,988)



(26.8)%



90,354



104,253



(13,899)



(13.3)

%

Distribution Services


74,768



100,468



(25,700)



(25.6)%



107,261



116,954



(9,693)



(8.3)

%

Total Consolidated


$

560,858



$

645,735



$

(84,877)



(13.1)%



545,106



545,254



(148)



%

      



Net Sales


Pounds Sold



Nine months ended May 31,

Consolidated


2015


2014


$ Change


% Change


2015


2014


Lbs. Change


% Change



(In thousands, except for %'s)

Custom Performance Color


$

136,649



$

140,918



$

(4,269)



(3.0)

%


52,650



47,704



4,946



10.4

%

Masterbatch Solutions


568,408



564,750



3,658



0.6

%


563,775



509,996



53,779



10.5

%

Engineered Plastics


549,072



559,399



(10,327)



(1.8)

%


378,638



353,334



25,304



7.2

%

Specialty Powders


222,722



263,931



(41,209)



(15.6)

%


277,966



297,835



(19,869)



(6.7)

%

Distribution Services


241,355



290,642



(49,287)



(17.0)

%


333,650



339,745



(6,095)



(1.8)

%

Total Consolidated


$

1,718,206



$

1,819,640



$

(101,434)



(5.6)

%


1,606,679



1,548,614



58,065



3.7

%

     

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION

(continued)




Three months ended May 31,


Nine months ended May 31,



2015


2014


2015


2014



Unaudited

(In thousands, except for %'s)

Segment gross profit









EMEA


$

51,695



$

56,798



$

145,908



$

156,237


USCAN


22,104



23,791



66,478



50,911


LATAM


9,324



4,472



22,075



20,011


APAC


7,771



7,052



22,403



20,202


     Total segment gross profit


90,894



92,113



256,864



247,361


Inventory step-up






(341)



(1,199)


Accelerated depreciation, restructuring and related costs


(78)



(149)



(674)



(791)


Costs related to acquisitions and integrations


(59)





(174)




     Total gross profit


$

90,757



$

91,964



$

255,675



$

245,371











Segment operating income









EMEA


$

24,716



$

23,565



$

61,032



$

61,537


USCAN


7,982



11,906



25,299



18,603


LATAM


4,654



(649)



7,531



6,286


APAC


3,972



3,328



10,903



9,870


Total segment operating income


41,324



38,150



104,765



96,296


Corporate


(8,502)



(9,752)



(24,992)



(24,149)


Costs related to acquisitions and integrations


(3,590)



(888)



(7,972)



(3,377)


Restructuring and related costs


(5,937)



(2,160)



(15,303)



(8,322)


CEO transition costs






(6,167)




Asset impairment








(104)


Accelerated depreciation


(29)





(327)



(108)


Inventory step-up






(341)



(1,199)


Operating income


23,266



25,350



49,663



59,037


Interest expense


(2,618)



(1,433)



(7,288)



(6,112)


Bridge financing fees


(18,750)





(18,750)




Foreign currency transaction gains (losses)


(857)



28



(3,097)



(2,120)


Other income (expense), net


335



64



900



478


Gain on early extinguishment of debt






1,290




Income from continuing operations before taxes


$

1,376



$

24,009



$

22,718



$

51,283











Capacity utilization









EMEA


90

%


87

%


84

%


84

%

USCAN


61

%


67

%


63

%


62

%

LATAM


76

%


68

%


71

%


76

%

APAC


67

%


73

%


65

%


71

%

Worldwide


76

%


77

%


73

%


74

%

       

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/a-schulman-reports-fiscal-2015-third-quarter-results-300109202.html

SOURCE A. Schulman, Inc.

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