Platform Specialty Products Corporation Announces First Quarter of 2018 Financial Results

• Net sales increased 12% on a reported basis to $964 million; increased 5% on an organic basis
  
  
• GAAP diluted earnings per share of $0.13; adjusted earnings per share increased 31% to $0.21
  
  
• Reported net income attributable to common stockholders of $37 million
  
  
• Adjusted EBITDA increased 7% to $207 million
  
  
• Reaffirming full year 2018 adjusted EBITDA guidance of $870 million to $900 million
  
  
• Separation plan on track for 2018

WEST PALM BEACH, Fla., May 03, 2018 (GLOBE NEWSWIRE) -- Platform Specialty Products Corporation (NYSE:PAH) (“Platform” or the “Company”), a global and diversified specialty chemicals company, today announced its financial results for the first quarter ended March 31, 2018.

Executive Commentary

Chief Executive Officer Rakesh Sachdev said, “Our first quarter results demonstrated strong sales growth bolstered by healthy end-markets, solid execution and a translational currency tailwind.  In our Performance Solutions business, net sales grew as our end-markets are generally robust and our teams continue to execute well.  In our Ag business, we saw a strong continuation of the season in Brazil and a healthy start of the season in North America and Southern Europe, offset partially by a cold spring in Eastern Europe.  In both businesses, we saw margin pressure from product mix and inflation in our raw materials.  We have seen the inflationary commodity environment in late 2017 continue into 2018, and our businesses continue to take actions to offset this pressure.  We remain confident with respect to our adjusted EBITDA margin expansion goals for 2018."

Mr. Sachdev continued, “Our outlook for the remainder of the year is optimistic given healthy end-markets in our Performance Solutions segment and improving end-markets in Agricultural Solutions.  We are reaffirming our full year adjusted EBITDA guidance in the range of $870 million to $900 million in that context.”

“Progress against our separation continues with momentum.  We remain committed to this path to create two standalone businesses with terrific market positions, growth trajectories and management teams.  Strategically, we believe each of these companies will be better positioned to deliver value to their customers, and we remain confident that our shareholders should benefit from value creation from the separation.”

First quarter 2018 Income Statement Highlights (compared with first quarter 2017):

• Net sales on a reported basis for the first quarter of 2018 were $964 million, an increase of 12%.  Organic sales, which exclude the impact of currency changes and certain metal prices, increased 5%.
  - MacDermid Performance Solutions (the Performance Solutions segment): net sales increased 10% to $492 million.  Organic sales increased 4%.
  - Arysta LifeScience (the Agricultural Solutions segment): net sales increased 14% to $472 million.  Organic sales increased 6%.
• First quarter 2018 earnings per share performance:
  - GAAP diluted earnings per share was $0.13, as compared to a loss of $0.09.
  - Adjusted earnings per share was $0.21, an improvement of $0.05 per share.
• Reported net income attributable to common stockholders for the first quarter of 2018 was $37 million, as compared to a net loss of $24 million.
• Adjusted EBITDA for the first quarter of 2018 was $207 million, an increase of 7%.  On a constant currency basis, adjusted EBITDA decreased 3%.
  - MacDermid Performance Solutions: Adjusted EBITDA was $112 million, an increase of 9%.  On a constant currency basis, adjusted EBITDA increased 2%.
  - Arysta LifeScience: Adjusted EBITDA was $95 million, an increase of 5%.  On a constant currency basis, adjusted EBITDA decreased 8%.
  - Adjusted EBITDA margin for the combined company decreased by 90 basis points to 21.5%.  On a constant currency basis, adjusted EBITDA margin decreased by 160 basis points.

2018 Guidance Reaffirmed

Platform reaffirms its previously-provided adjusted EBITDA guidance for 2018 in the range of $870 million to $900 million.  The mid-point of the guidance represents an increase of 8% over 2017.  This guidance for 2018 is based on foreign exchange rates as of March 31, 2018.

Conference Call

Platform will host a webcast/dial-in conference call to discuss its first quarter of 2018 financial results at 8:30 a.m. (Eastern Time) on Thursday, May 3, 2018.  Participants on the call will include Rakesh Sachdev, Chief Executive Officer; John P. Connolly, Chief Financial Officer; Benjamin Gliklich, Executive Vice President - Operations and Strategy; Scot R. Benson, President - Performance Solutions and Diego Lopez Casanello, President - Agricultural Solutions.

To listen to the call by telephone, please dial (855) 357-3116 (domestic) or (484) 365-2867 (international) and provide the Conference ID: 7338228.  The call will be simultaneously webcast at www.platformspecialtyproducts.com.  A replay of the webcast will be available for three weeks shortly after completion of the live call at www.platformspecialtyproducts.com.

About Platform

Platform is a global and diversified producer of high-technology specialty chemicals and provider of technical services.  The business involves the formulation of a broad range of solutions-oriented specialty chemicals, which are sold into multiple industries, including automotive, agriculture, animal health, electronics, graphic arts, and offshore oil and gas production and drilling.  More information on Platform is available at www.platformspecialtyproducts.com.

Forward-Looking Statements

This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains "forward-looking statements" within the meaning of the federal securities laws. These statements will often contain words such as "expect," "anticipate," "project," "will," "should," "believe," "intend," "plan," "estimate," "predict," "seek," "continue," "outlook," "may," "might," "should," "can have," "likely," "potential," "target," and variations of such words and similar expressions. Examples of forward-looking statements include, but are not limited to, statements, beliefs, projections and expectations regarding the proposed separation of our businesses, the expected form, structure and timing of the proposed separation and its anticipated benefits, as well as Platform's adjusted EBITDA and adjusted earnings per share, expected or estimated organic and net sales, meeting financial and/or strategic goals and objectives, including Platform's full year 2018 guidance and adjusted EBITDA margin expansion goals, segment adjusted EBITDA, net interest expense, income tax provision, cash flow from operations, full year cash interest, taxes and capital expenditures, restructuring costs and other non-cash charges, free cash flow, outlook for Platform's markets and the demand for its products, and the anticipated impact of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Reform”) on the Company’s future earnings and effective tax rate. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance, and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors, which include, among others, Platform’s ability to successfully complete the proposed separation and realize the anticipated benefits from it, the final form, structure and timing for completion of the proposed separation, adverse effects on the two companies’ business operations or financial results and the market price of Platform's shares as a result of the completion of the proposed separation and/or announcement and completion of related transactions, market volatility, legal, tax and regulatory requirements, the impact of the Tax Reform on the proposed separation and on our businesses, unanticipated delays and transaction expenses, the impact of the proposed separation on Platform's employees, customers and suppliers, the ability of the two companies to operate independently following the proposed separation, the diverting of management’s attention from Platform’s ongoing business operations, overall global economic and business conditions impacting the businesses of the two companies, as well as capital markets and liquidity, the possibility of more attractive strategic options arising in the future, and the impact of any future acquisitions or additional divestitures, restructurings, refinancings, and other unusual items, including Platform's ability to raise new debt and equity and to integrate and obtain the anticipated benefits, results and synergies from these items or other related strategic initiatives. Forward-looking statements regarding the anticipated impact of the Tax Reform on the Company's businesses consist of preliminary estimates, which are based on currently available information as well as management's current interpretations, assumptions and expectations relating to the Tax Reform, and subject to change, possibly materially, as the Company completes its analysis. Additional information concerning these and other factors that could cause actual results to vary is, or will be, included in Platform's periodic and other reports filed with the Securities and Exchange Commission. Platform undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

PLATFORM SPECIALTY PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

PLATFORM SPECIALTY PRODUCTS CORPORATION
ADDITIONAL FINANCIAL INFORMATION
(Unaudited)

IV.  NON-GAAP MEASURES

For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets or statements of cash flows of the company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

To supplement the financial measures prepared in accordance with GAAP, Platform has provided in this release the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA guidance, adjusted earnings (loss) per share, and organic sales growth.  Platform also evaluates and presents its results of operations on a constant currency basis.  Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to the Company’s business, and believes that these non-GAAP measures provide investors with an additional perspective on trends and underlying operating results on a period-to-period comparable basis.  Platform also believes that investors find this information helpful in understanding the ongoing performance of its operations separate from items that may have a disproportionate positive or negative impact on Platform's financial results in any particular period.  These non-GAAP financial measures, however, have limitations as analytical tools, and should not be considered in isolation from, a substitute for, or superior to, the related financial information that Platform reports in accordance with GAAP.  The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements, and may not be completely comparable to similarly titled measures of other companies due to potential differences in the method of calculation between companies.  In addition, these measures are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-GAAP financial measures.  Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate Platform’s businesses.

The Company only provides adjusted EBITDA guidance and organic sales growth expectations on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for restructurings, refinancings, divestitures, integration and acquisition-related expenses, share-based compensation amounts, non-recurring, unusual or unanticipated charges, expenses or gains, adjustments to inventory and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

Constant Currency:

The Company discloses operating results from net sales through operating profit on a constant currency basis by adjusting to exclude the impact of changes due to the translation of foreign currencies of its international locations into U.S. dollar.  Management believes this non-GAAP financial information facilitates period-to-period comparison in the analysis of trends in business performance, thereby providing valuable supplemental information regarding its results of operations, consistent with how the Company internally evaluates its financial results.

The impact of foreign currency translation is calculated by converting the Company's current-period local currency financial results into U.S. dollar using the prior period's exchange rates and comparing these adjusted amounts to its prior period reported results.  The difference between actual growth rates and constant currency growth rates represents the impact of foreign currency translation.

Organic Sales Growth:

Organic sales growth is defined as net sales excluding the impact of foreign currency translation, changes due to the price of certain metals, and acquisitions and/or divestitures, as applicable. Management believes this non-GAAP financial measure provides investors with a more complete understanding of the underlying net sales trends by providing comparable sales over differing periods on a consistent basis.

The following tables reconcile GAAP net sales growth to organic sales growth for the three months ended March 31, 2018:

For the three months ended March 31, 2018, metals pricing had a negative impact of $2.6 million on Performance Solutions' and our consolidated results. 

Adjusted Earnings Per Share:

Adjusted earnings per share is defined as net loss attributable to common stockholders adjusted to reflect adjustments consistent with our definition of adjusted EBITDA.  Additionally, the Company eliminates the amortization associated with (i) intangibles assets recognized in purchase accounting for acquisitions and (ii) costs capitalized in connection with obtaining regulatory approval of its products (“registration rights”) as part of ongoing operations, and deducts capital expenditures associated with obtaining these registration rights.  Further, the Company adjusts its effective tax rate to 34% for the first quarter of 2018 and 35% for the first quarter of 2017, as described in footnote (11) under the reconciliation table below.  The resulting adjusted net income attributable to common stockholders is then divided by Platform's outstanding number of shares of common stock plus the number of shares that would be issued if all Platform's convertible stock was converted to common stock, stock options were vested and exercised, and awarded equity grants were vested at each period presented.  Adjusted earnings per share is a key metric used by management to measure operating performance and trends as it believes the exclusion of certain expenses in calculating adjusted earnings per share facilitates operating performance comparisons on a period-to-period basis.

The following table reconciles GAAP "Net income (loss) attributable to common stockholders" to "Adjusted net income attributable to common stockholders" and presents the adjusted number of common shares used in calculating adjusted earnings per share for each period presented below:

NON-GAAP ADJUSTED COMMON SHARES AT MARCH 31, 2018 AND 2017 (Unaudited)

The following table shows Platform's adjusted common shares outstanding at each period presented which consists of Platform's outstanding number of shares of common stock plus the number of shares that would be issued if all Platform's convertible stock was converted to common stock, stock options were vested and exercised, and awarded equity grants were vested at each period presented:

EBITDA and Adjusted EBITDA:

EBITDA represents earnings before interest, provision for income taxes, depreciation and amortization.  Adjusted EBITDA is defined as EBITDA, excluding the impact of additional items, which the Company believes are not representative or indicative of its ongoing business or are considered to be part of its capital structure, as described in the footnotes located under the Adjusted Earnings Per Share reconciliation table above.  Adjusted EBITDA for each segment also includes an allocation of corporate costs, such as compensation expense and professional fees, as indicated in this press release under "I. Unaudited Segment Results."  Management believes adjusted EBITDA and adjusted EBITDA margin provide investors with a more complete understanding of the long-term profitability trends of Platform’s business, and facilitate comparisons of its profitability to prior and future periods.  However, these measures, which do not consider certain cash requirements, should not be construed as an alternative to net income or cash flow from operations as a measure of profitability or liquidity.

The following table reconciles GAAP "Net income (loss) attributable to common stockholders" to Adjusted EBITDA:

NOTE: For the footnote descriptions, please refer to the footnotes located under the Adjusted Earnings Per Share reconciliation table above.

CONTACT:

Investor Relations Contact:

Carey Dorman
Senior Director - Corporate Development
Platform Specialty Products Corporation
1-561-406-8465