AKRON, Ohio, Oct. 22, 2014 /PRNewswire/ --
-- Full-year fiscal 2014 net income from continuing operations was $53.0 million, or $1.80 per diluted share, compared with $32.8 million, or $1.12 per diluted share, in fiscal 2013 -- Adjusted net income from continuing operations for fiscal 2014, excluding certain items, was $69.3 million, or $2.36 per diluted share, a 29% improvement over the prior year -- Company announces fiscal 2015 adjusted net income guidance of $2.60 to $2.65 per diluted share, a double-digit increase compared with fiscal 2014 results
A. Schulman, Inc. (Nasdaq-GS: SHLM) announced today earnings for the fiscal fourth quarter and full fiscal year ended August 31, 2014.
Joseph M. Gingo, Chairman, President and Chief Executive Officer, said, "I want to thank our global teams in helping us to achieve a record year in fiscal 2014. Our successful acquisitions and organic growth strategy, combined with our ongoing focus on improving operational performance and efficiency, enabled us to deliver strong double-digit sales and income growth in 2014. While we are very pleased with these results, our focus is on the future. Despite anticipated slow growth globally, I am very confident that our seasoned team, which has weathered many challenging conditions in Europe and other parts of the world in the recent past, will take the proactive steps necessary to drive double-digit adjusted earnings-per-share growth in fiscal 2015. I am also encouraged that our recent acquisitions over the past year in the U.S. are performing well and are helping us offset global economic slowdowns. Through successful execution of our strategy, we are improving our position in target markets, diversifying our product mix and increasing our prospects for sustainable and profitable growth."
Bernard Rzepka, Chief Operating Officer, stated, "Net sales and operating income increased for the full year in each of our operating regions, as our recent acquisitions and organic growth contributed to our improved results in all three regions. Our team is highly focused and executing on our safety, smart sales, smart savings initiatives and our 2014 results demonstrate what we can achieve. Our acquisition of Compco in September and the recently announced restructuring program in Europe are examples of the proactive actions we are taking to drive profitable growth."
Fiscal Fourth-Quarter Results
Net sales for the fiscal 2014 fourth quarter were $627.4 million, an increase of 16.8% compared with $537.3 million in the prior-year quarter.
Net sales in the EMEA segment were $388.6 million, an increase of 11.2% or $39.2 million in the fourth quarter compared with the same period last year. Volume increased 7.7% or 22.6 million pounds for the quarter to 314.8 million pounds in the fourth quarter of 2014. During the quarter, the incremental contribution of the two acquisitions in the EMEA segment was $26.6 million and 17.4 million pounds in net sales and volume, respectively. Foreign currency translation favorably impacted the segment's net sales by $9.6 million. EMEA gross profit was $50.0 million for the quarter, an increase of $4.5 million or 9.9% compared with the same three-month period last year. Foreign currency translation positively impacted EMEA gross profit by $1.2 million.
Net sales for the Americas were $188.3 million, an increase of 21.9% or $33.8 million in the fourth quarter compared with the prior-year period. Volume increased 3.8% or 6.7 million pounds during the quarter. During the quarter, the incremental net sales and volume contribution of the three acquisitions in the Americas segment was $32.9 million and 21.2 million pounds, respectively. Foreign currency translation negatively impacted the segment's net sales by $2.3 million. Gross profit for the Americas was $28.6 million in the quarter, an increase of $7.4 million or 35.1% compared with the same period last year.
Net sales for APAC were $50.4 million, an increase of 50.8% or $17.0 million in the fourth quarter compared with the prior-year period. Volume increased 52.6% or 13.8 million pounds during the quarter. The contribution of the Perrite acquisition in APAC was $14.9 million and 11.1 million pounds in net sales and volume, respectively. Gross profit for APAC for the quarter increased $0.4 million or 6.5% compared with the prior-year period.
Fiscal 2014 Results
Net sales for the fiscal year ended August 31, 2014, were approximately $2.5 billion, an increase of $313.6 million or 14.7% compared with fiscal 2013. Volume increased 8.7% or 167.4 million pounds during the year. Incremental net sales and volume from the Company's recent acquisitions contributed $217.0 million and 147.8 million pounds, respectively, in fiscal 2014. Excluding the impact of recent acquisitions, net sales were positively affected by a 3.5% increase in price per pound and a 1% increase in volume. Foreign currency translation favorably impacted net sales by $38.1 million.
The Company's SG&A expenses, excluding certain items, increased $32.7 million compared with the prior year, to $232.7 million. The increase was primarily attributable to incremental SG&A expense of $12.1 million from recent acquisitions, higher variable incentive compensation expense of $11.5 million attributable to the Company's fiscal performance and unfavorable foreign currency translation of $3.0 million. SG&A expense, excluding certain items, was 9.5% of net sales for fiscal 2014. Operating income increased $19.2 million for fiscal 2014 compared with the prior year. Total operating income, before certain items, was $99.9 million, an increase of $17.0 million or 20.5% compared with fiscal 2013.
Working Capital/Cash Flow From Operations
Cash provided from operations was $113.1 million in fiscal 2014 compared with $83.7 million in fiscal 2013. Working capital was 57 days at the end of fiscal 2014 compared with 58 days at the end of fiscal 2013.
Capital expenditures for fiscal 2014 were $35.1 million compared with $26.6 million for the prior year, and were primarily related to the regular and ongoing investment in the Company's global manufacturing facilities.
During the fourth quarter and full year ended August 31, 2014, the Company declared and paid cash dividends of $0.20 and $0.80 per common share, respectively. The total amount of these dividends was $5.9 million for the fourth quarter and $23.7 million for the full year.
Business Outlook
Rzepka said, "With 10 acquisitions in the past four years and our numerous value-added organic growth initiatives, we continue to aggressively drive profits. We are actively focusing on pricing, cross-selling, attractive markets and driving profitable new products. Through our acquisition strategy, we will continue to expand our footprint, engage new customers and strengthen our ability to serve local and global customers. In combination, we believe we can be successful despite weak macroeconomic conditions especially in Europe. As we continue to focus on execution, we expect this progress to continue in fiscal 2015."
Rzepka continued, "Our goal remains to control what we can control, manage our operational footprint proactively and efficiently, execute on our acquisition strategy, support sales and marketing initiatives, and drive year-over-year growth in adjusted earnings per diluted share. As a result, we anticipate that our fiscal 2015 adjusted net income will increase to a range of $2.60 to $2.65 per diluted share."
Conference Call on the Web
A live Internet broadcast of A. Schulman's conference call regarding fiscal 2014 fourth-quarter and full-year earnings can be accessed at 10:00 a.m. Eastern Time on Thursday, October 23, 2014, 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 3,900 people and has 42 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, operating income excluding certain items, net income excluding certain items and net income per diluted share excluding certain items, 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 major 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; and -- operating problems with our information systems as a result of system security failures such as viruses, computer "hackers" or other causes.
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. 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, ----------------------------- --------------------- 2014 2013 2014 2013 ---- ---- ---- ---- Unaudited (In thousands, except per share data) Net sales $627,358 $537,288 $2,446,998 $2,133,402 Cost of sales 542,721 465,019 2,116,990 1,852,223 Selling, general and administrative expenses 60,838 47,627 242,486 205,370 Restructuring expense 300 5,087 4,883 10,500 Asset impairment - 254 104 1,873 Curtailment and settlement (gains) losses 214 - 214 333 --- --- --- --- Operating income 23,285 19,301 82,321 63,103 Interest expense 2,391 2,098 8,503 7,657 Interest income (75) (87) (286) (495) Foreign currency transaction (gains) losses 86 1,747 2,206 2,426 Other (income) expense, net (167) 156 (434) (217) ---- --- ---- ---- Income from continuing operations before taxes 21,050 15,387 72,332 53,732 Provision (benefit) for U.S. and foreign income taxes 5,886 16,149 18,542 19,733 ----- ------ ------ ------ Income from continuing operations 15,164 (762) 53,790 33,999 Income (loss) from discontinued operations, net of tax 223 (1,571) 3,202 (6,671) --- ------ ----- ------ Net income 15,387 (2,333) 56,992 27,328 Noncontrolling interests (215) (349) (799) (1,229) Net income attributable to A. Schulman, Inc. $15,172 $(2,682) $56,193 $26,099 ======= ======= ======= ======= Weighted-average number of shares outstanding: Basic 29,088 29,213 29,061 29,260 Diluted 29,517 29,295 29,362 29,337 Basic earnings per share attributable to A. Schulman, Inc. Income from continuing operations $0.51 $(0.04) $1.82 $1.12 Income (loss) from discontinued operations $0.01 $(0.05) $0.11 $(0.23) ----- ------ ----- ------ Net income attributable to A. Schulman, Inc. $0.52 $(0.09) $1.93 $0.89 ===== ====== ===== ===== Diluted earnings per share attributable to A. Schulman, Inc. Income from continuing operations $0.51 $(0.04) $1.80 $1.12 Income (loss) from discontinued operations $0.01 $(0.05) $0.11 $(0.23) ----- ------ ----- ------ Net income attributable to A. Schulman, Inc. $0.52 $(0.09) $1.91 $0.89 ===== ====== ===== ===== Cash dividends per common share $0.200 $0.195 $0.800 $0.780
A. SCHULMAN, INC. CONSOLIDATED BALANCE SHEETS August 31, August 31, 2014 2013 ---- ---- Unaudited (In thousands) ASSETS Current assets: Cash and cash equivalents $135,493 $134,054 Accounts receivable, net 384,444 310,749 Inventories 292,141 261,658 Prepaid expenses and other current assets 40,473 41,224 ------ ------ Total current assets 852,551 747,685 ------- ------- Property, plant and equipment, at cost: Land and improvements 28,439 27,954 Buildings and leasehold improvements 160,858 146,647 Machinery and equipment 398,563 356,144 Furniture and fixtures 41,255 39,065 Construction in progress 16,718 7,149 ------ ----- Gross property, plant and equipment 645,833 576,959 Accumulated depreciation 391,912 366,438 Net property, plant and equipment 253,921 210,521 ------- ------- Deferred charges and other noncurrent assets 65,079 48,723 Goodwill 202,299 139,526 Intangible assets, net 138,634 91,887 ------- ------ Total assets $1,512,484 $1,238,342 ========== ========== LIABILITIES AND EQUITY Current liabilities: Accounts payable $314,957 $265,477 U.S. and foreign income taxes payable 6,385 6,423 Accrued payroll, taxes and related benefits 54,199 40,759 Other accrued liabilities 46,054 48,689 Short-term debt 31,748 8,373 ------ ----- Total current liabilities 453,343 369,721 Long-term debt 339,546 207,435 Pension plans 129,949 98,599 Deferred income taxes 23,826 20,873 Other long-term liabilities 29,369 26,970 Total liabilities 976,033 723,598 ------- ------- Commitments and contingencies Stockholders' equity: Common stock, $1 par value, authorized -75,000 shares, issued - 48,185 shares in 2014 and 48,094 shares in 2013 48,185 48,094 Additional paid-in capital 268,545 263,158 Accumulated other comprehensive income (loss) (16,691) 682 Retained earnings 606,898 574,370 Treasury stock, at cost, 18,973 shares in 2014 and 18,940 shares in 2013 (379,894) (378,927) -------- -------- Total A. Schulman, Inc.'s stockholders' equity 527,043 507,377 ------- ------- Noncontrolling interests 9,408 7,367 ----- ----- Total equity 536,451 514,744 Total liabilities and equity $1,512,484 $1,238,342 ========== ==========
A. SCHULMAN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended August 31, --------------------- 2014 2013 ---- ---- Unaudited (In thousands) Operating from continuing and discontinued operations: Net income $56,992 $27,328 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation 33,697 29,982 Amortization 14,207 11,469 Deferred tax provision (3,007) (1,194) Pension, postretirement benefits and other compensation 10,802 6,282 Asset impairment 104 5,873 Curtailment and settlement (gains) losses 214 333 Gain on sale of assets from discontinued operations (3,365) - Changes in assets and liabilities, net of acquisitions: Accounts receivable (5,875) 1,790 Inventories 7,099 (6,376) Accounts payable (3,497) 8,924 Income taxes (1,372) (320) Accrued payroll and other accrued liabilities 5,189 5,415 Other assets and long-term liabilities 1,954 (5,793) ----- ------ Net cash provided from (used in) operating activities 113,142 83,713 ------- ------ Investing from continuing and discontinued operations: Expenditures for property, plant and equipment (35,089) (26,568) Proceeds from the sale of assets 6,004 13,886 Business acquisitions, net of cash (206,625) (36,805) -------- ------- Net cash provided from (used in) investing activities (235,710) (49,487) -------- ------- Financing from continuing and discontinued operations: Cash dividends paid (23,665) (22,934) Increase (decrease) in short- term debt 13,774 3,324 Borrowings on long-term debt 795,745 264,908 Repayments on long-term debt and current portion (653,894) (264,613) Payment of debt issuance costs (1,782) - Noncontrolling interests' contributions (distributions) 600 - Issuances of stock, common and treasury 487 1,561 Redemptions of common stock (361) (396) Purchases of treasury stock (1,116) (8,091) ------ ------ Net cash provided from (used in) financing activities 129,788 (26,241) ------- ------- Effect of exchange rate changes on cash (5,781) 2,038 ------ ----- Net increase (decrease) in cash and cash equivalents 1,439 10,023 ----- ------ Cash and cash equivalents at beginning of year 134,054 124,031 Cash and cash equivalents at end of year $135,493 $134,054 ======== ======== Cash paid during the year for: Interest $7,578 $5,487 Income taxes $21,720 $15,598
A. SCHULMAN, INC. Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) Three months ended August 31, Cost of Sales Gross SG&A Restructuring Asset Operating income Operating Income tax Net income 2014 margin expense impairment income per expense attributable to pound (benefit) A. Schulman, Inc. 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 $5,886 $15,172 $0.52 Certain items: Asset write-downs (1) - - - - - - - - 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) - - - - - (110) 110 - Loss (income) from discontinued operations (222) (0.01) ---- ----- Total certain items (554) 1.0% (3,354) (300) - 4,422 0.009 (109) 4,309 0.14 ---- --- ------ ---- --- ----- ----- ---- ----- ---- As Adjusted $542,167 13.6% $57,484 $ - $ - $27,707 $0.052 $5,777 $19,481 $0.66 ======== ==== ======= === === === === ======= ====== ====== ======= ===== Percentage of Revenue 9.2% 4.4% 3.1% === === === Three months ended August 31, Cost of Sales Gross SG&A Restructuring Asset Operating income Operating Income tax Net income 2013 margin expense impairment income per expense attributable to pound (benefit) A. Schulman, Inc. Diluted EPS ----------------------------- ------------- ------ ---- -------------- ----------- ---------------- ---------- ----------- ---------------- ----------- (In thousands, except for %'s, per pound and per share data) As reported $465,019 13.5% $47,627 $5,087 $254 $19,301 $0.039 $16,149 $(2,682) $(0.09) Certain items: Asset write-downs (1) (111) - - (254) 365 - 365 0.01 Costs related to acquisitions (2) - (824) - - 824 88 736 0.03 Restructuring and related costs (3) (471) (1,357) (5,087) - 6,915 1,338 5,577 0.19 Inventory step-up (4) - - - - - - - - Tax benefits (charges) (5) - - - - - (10,595) 10,595 0.36 Loss (income) from discontinued operations 1,571 0.05 ----- Total certain items (582) 0.1% (2,181) - (5,087) - (254) 8,104 0.016 (9,169) 18,844 0.64 ---- --- ------ ------ ---- ----- ----- ------ ------ ---- As Adjusted $464,437 13.6% $45,446 $ - $ - $27,405 $0.055 $6,980 $16,162 $0.55 ======== ==== ======= === === === === ======= ====== ====== ======= ===== Percentage of Revenue 8.5% 5.1% 3.0% === === === 1 - Asset write-downs primarily relate to asset impairments and accelerated depreciation. 2 - Costs related to acquisitions include third party professional, legal 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 and settlement gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure. 4 - Inventory step-up costs include the adjustment for fair value of inventory acquired as a result of acquisition purchase accounting. 5 - Tax benefits (charges) include the effect of the adjustments to the Germany and Brazil valuation allowances in fiscal 2013.
A. SCHULMAN, INC. Reconciliation of GAAP and Non-GAAP Financial Measures (continued) Year ended August 31, 2014 Cost of Sales Gross SG&A Restructuring Asset Operating income Operating Income tax Net income margin expense impairment income per expense attributable to pound (benefit) A. Schulman, Inc. Diluted EPS -------------------------- ------------- ------ ---- -------------- ----------- ---------------- ---------- ----------- ---------------- ----------- (In thousands, except for %'s, per pound and per share data) As reported $2,116,990 13.5% $242,486 $4,883 $104 $82,321 $0.039 $18,542 $56,193 $1.91 Certain items: Asset write-downs (1) (107) - - (104) 211 34 177 0.01 Costs related to acquisitions (2) (34) (5,987) - - 6,021 154 5,875 0.20 Restructuring and related costs (3) (935) (3,800) (4,883) 9,832 963 9,156 0.31 Inventory step-up (4) (1,468) - - - 1,468 44 1,424 0.05 Tax benefits (charges) - - - - - 316 (316) (0.01) Loss (income) from discontinued operations (3,202) (0.11) ------ ----- Total certain items (2,544) 0.1% (9,787) (4,883) (104) 17,532 0.009 1,511 13,114 0.45 ------ --- ------ ------ ---- ------ ----- ----- ------ ---- As Adjusted $2,114,446 13.6% $232,699 $ - $ - $99,853 $0.048 $20,053 $69,307 $2.36 ========== ==== ======== === === === === ======= ====== ======= ======= ===== Percentage of Revenue 9.5% 4.1% 2.8% === === === Year ended August 31, 2013 Cost of Sales Gross SG&A Restructuring Asset Operating income Operating Income tax Net income margin expense impairment income per expense attributable to pound (benefit) A. Schulman, Inc. Diluted EPS -------------------------- ------------- ------ ---- -------------- ----------- ---------------- ---------- ----------- ---------------- ----------- (In thousands, except for %'s, per pound and per share data) As reported $1,852,223 13.2% $205,370 $10,500 $1,873 $63,103 $0.033 $19,733 $26,099 $0.89 Certain items: Asset write-downs (1) (1,058) - - (1,873) 2,931 148 2,783 0.09 Costs related to acquisitions (2) - (2,661) - - 2,661 126 2,535 0.09 Restructuring and related costs (3) (527) (2,660) (10,500) - 14,020 2,889 11,131 0.38 Inventory step-up (4) (138) - - - 138 - 138 - Tax benefits (charges) (5) - - - - - (4,418) 4,418 0.15 Loss (income) from discontinued operations 6,671 0.23 ----- Total certain items (1,723) 0.1% (5,321) - (10,500) - (1,873) 19,750 0.010 (1,255) 27,676 0.94 ------ --- ------ ------- ------ ------ ----- ------ ------ ---- As Adjusted $1,850,500 13.3% $200,049 $ - $ - $82,853 $0.043 $18,478 $53,775 $1.83 ========== ==== ======== === === === === ======= ====== ======= ======= ===== Percentage of Revenue 9.4% 3.9% 2.5% === === === 1 - Asset write-downs primarily relate to asset impairments and accelerated depreciation. 2 - Costs related to acquisitions include third party professional, legal 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 and settlement gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure. 4 - Inventory step-up costs include the adjustment for fair value of inventory acquired as a result of acquisition purchase accounting. 5 - Tax benefits (charges) include the effect of the adjustments to the Germany and Brazil valuation allowances in fiscal 2013.
A. SCHULMAN, INC. SUPPLEMENTAL SEGMENT INFORMATION Net Sales Pounds Sold --------- ----------- Three months ended August 31, ----------------------------- EMEA 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ---- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $33,584 $31,212 $2,372 7.6% 10,943 10,933 10 0.1% Masterbatch solutions 118,153 105,853 12,300 11.6% 92,267 85,097 7,170 8.4% Engineered plastics 113,322 96,354 16,968 17.6% 71,785 59,960 11,825 19.7% Specialty powders 43,212 41,353 1,859 4.5% 44,873 43,889 984 2.2% Distribution services 80,322 74,577 5,745 7.7% 94,940 92,331 2,609 2.8% ------ ------ ----- --- ------ ------ ----- --- Total EMEA $388,593 $349,349 $39,244 11.2% 314,808 292,210 22,598 7.7% ======== ======== ======= ==== ======= ======= ====== === Net Sales Pounds Sold --------- ----------- Three months ended August 31, ----------------------------- Americas 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change -------- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $7,860 $4,296 $3,564 83.0% 2,964 1,543 1,421 92.1% Masterbatch solutions 75,406 70,126 5,280 7.5% 77,021 82,422 (5,401) (6.6)% Engineered plastics 52,921 31,372 21,549 68.7% 34,200 18,666 15,534 83.2% Specialty powders 39,383 36,949 2,434 6.6% 53,623 58,919 (5,296) (9.0)% Distribution services 12,768 11,767 1,001 8.5% 13,717 13,304 413 3.1% ------ ------ ----- --- ------ ------ --- --- Total Americas $188,338 $154,510 $33,828 21.9% 181,525 174,854 6,671 3.8% ======== ======== ======= ==== ======= ======= ===== === Net Sales Pounds Sold --------- ----------- Three months ended August 31, ----------------------------- APAC 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ---- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $1,346 $54 $1,292 N/A 1,048 21 1,027 N/A Masterbatch solutions 19,991 20,250 (259) (1.3)% 18,442 18,028 414 2.3% Engineered plastics 24,906 9,755 15,151 155.3% 16,640 4,848 11,792 243.2% Specialty powders 3,984 3,361 623 18.5% 3,625 3,312 313 9.5% Distribution services 200 9 191 N/A 241 6 235 N/A --- --- --- --- --- --- --- --- Total APAC $50,427 $33,429 $16,998 50.8% 39,996 26,215 13,781 52.6% ======= ======= ======= ==== ====== ====== ====== ==== Net Sales Pounds Sold --------- ----------- Three months ended August 31, ----------------------------- Consolidated 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ------------ ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $42,790 $35,562 $7,228 20.3% 14,955 12,497 2,458 19.7% Masterbatch solutions 213,550 196,229 17,321 8.8% 187,730 185,547 2,183 1.2% Engineered plastics 191,149 137,481 53,668 39.0% 122,625 83,474 39,151 46.9% Specialty powders 86,579 81,663 4,916 6.0% 102,121 106,120 (3,999) (3.8)% Distribution services 93,290 86,353 6,937 8.0% 108,898 105,641 3,257 3.1% ------ ------ ----- --- ------- ------- ----- --- Total Consolidated $627,358 $537,288 $90,070 16.8% 536,329 493,279 43,050 8.7% ======== ======== ======= ==== ======= ======= ====== ===
A. SCHULMAN, INC. SUPPLEMENTAL SEGMENT INFORMATION (continued) Net Sales Pounds Sold --------- ----------- Year ended August 31, --------------------- EMEA 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ---- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $145,074 $131,762 $13,312 10.1% 48,028 45,524 2,504 5.5% Masterbatch solutions 455,130 439,678 15,452 3.5% 355,052 347,052 8,000 2.3% Engineered plastics 474,305 364,131 110,174 30.3% 294,196 225,708 68,488 30.3% Specialty powders 181,153 158,572 22,581 14.2% 181,533 169,247 12,286 7.3% Distribution services 322,205 311,739 10,466 3.4% 383,218 380,072 3,146 0.8% ------- ------- ------ --- ------- ------- ----- --- Total EMEA $1,577,867 $1,405,882 $171,985 12.2% 1,262,027 1,167,603 94,424 8.1% ========== ========== ======== ==== ========= ========= ====== === Net Sales Pounds Sold --------- ----------- Year ended August 31, --------------------- Americas 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change -------- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $25,438 $18,826 $6,612 35.1% 9,590 6,996 2,594 37.1% Masterbatch solutions 268,996 264,705 4,291 1.6% 290,922 301,729 (10,807) (3.6)% Engineered plastics 177,197 135,335 41,862 30.9% 112,396 81,325 31,071 38.2% Specialty powders 154,262 136,398 17,864 13.1% 204,725 210,598 (5,873) (2.8)% Distribution services 47,470 45,560 1,910 4.2% 51,384 53,266 (1,882) (3.5)% ------ ------ ----- --- ------ ------ ------ ----- Total Americas $673,363 $600,824 $72,539 12.1% 669,017 653,914 15,103 2.3% ======== ======== ======= ==== ======= ======= ====== === Net Sales Pounds Sold --------- ----------- Year ended August 31, --------------------- APAC 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ---- ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $3,495 $302 $3,193 N/A 2,748 102 2,646 N/A Masterbatch solutions 81,672 77,387 4,285 5.5% 73,568 63,958 9,610 15.0% Engineered plastics 93,991 35,311 58,680 166.2% 62,021 18,537 43,484 234.6% Specialty powders 15,095 13,649 1,446 10.6% 13,699 13,365 334 2.5% Distribution services 1,515 47 1,468 N/A 1,863 32 1,831 N/A ----- --- ----- --- ----- --- ----- --- Total APAC $195,768 $126,696 $69,072 54.5% 153,899 95,994 57,905 60.3% ======== ======== ======= ==== ======= ====== ====== ==== Net Sales Pounds Sold --------- ----------- Year ended August 31, --------------------- Consolidated 2014 2013 $ Change % Change 2014 2013 Lbs. Change % Change ------------ ---- ---- -------- -------- ---- ---- ----------- -------- (In thousands, except for %'s) Custom performance colors $174,007 $150,890 $23,117 15.3% 60,366 52,622 7,744 14.7% Masterbatch solutions 805,798 781,770 24,028 3.1% 719,542 712,739 6,803 1.0% Engineered plastics 745,493 534,777 210,716 39.4% 468,613 325,570 143,043 43.9% Specialty powders 350,510 308,619 41,891 13.6% 399,957 393,210 6,747 1.7% Distribution services 371,190 357,346 13,844 3.9% 436,465 433,370 3,095 0.7% ------- ------- ------ --- ------- ------- ----- --- Total Consolidated $2,446,998 $2,133,402 $313,596 14.7% 2,084,943 1,917,511 167,432 8.7% ========== ========== ======== ==== ========= ========= ======= ===
A. SCHULMAN, INC. SUPPLEMENTAL SEGMENT INFORMATION (continued) Three months ended August 31, Year ended August 31, ----------------------------- --------------------- 2014 2013 2014 2013 ---- ---- ---- ---- Unaudited (In thousands, except for %'s) Segment gross profit EMEA $50,031 $45,525 $206,268 $179,242 Americas 28,595 21,160 99,517 81,315 APAC 6,565 6,166 26,767 22,345 ----- ----- ------ ------ Total segment gross profit 85,191 72,851 332,552 282,902 Inventory step-up (269) - (1,468) (138) Accelerated depreciation and restructuring related costs (285) (582) (1,076) (1,585) ---- ---- ------ ------ Total gross profit $84,637 $72,269 $330,008 $281,179 ======= ======= ======== ======== Segment operating income EMEA $19,153 $19,432 $80,690 $67,320 Americas 13,917 9,374 38,806 28,351 APAC 2,656 3,877 12,527 12,108 Total segment operating income 35,726 32,683 132,023 107,779 Corporate (8,021) (5,278) (32,170) (24,926) Costs related to acquisitions (2,644) (824) (6,021) (2,661) Restructuring and related costs (1,295) (6,915) (9,618) (13,687) Accelerated depreciation - (111) (107) (1,058) Asset impairment - (254) (104) (1,873) Curtailment and settlement gains (losses) (214) - (214) (333) Inventory step-up (269) - (1,468) (138) ---- --- ------ ---- Operating income 23,283 19,301 82,321 63,103 Interest expense, net (2,316) (2,011) (8,217) (7,162) Foreign currency transaction gains (losses) (86) (1,747) (2,206) (2,426) Other income (expense), net 167 (156) 434 217 ---- --- Income from continuing operations before taxes $21,048 $15,387 $72,332 $53,732 ======= ======= ======= ======= Capacity Utilization EMEA 75% 75% 82% 77% Americas 67% 73% 65% 67% APAC 69% 68% 70% 68% Worldwide 71% 73% 73% 72%
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SOURCE A. Schulman, Inc.