Revenue increased by 22% to $78.1 Million,
Earnings Per Diluted Share increased by 18% to $1.12
Robust Product Demand Continued
Increased Borrowing Capacity with New Amended
Debt Facility
Declares Dividend Increase of 25% to $1.00 Per
Share
Chase Corporation (NYSE American: CCF), a global specialty
chemicals company that is a leading manufacturer of protective
materials for high-reliability applications across diverse market
sectors, today announced financial results for the fourth fiscal
quarter ended August 31, 2021, and for the full fiscal year 2021.
The Company also announced a cash dividend of $1.00 per share to
shareholders of record on November 30, 2021, payable on December 9,
2021.
Fiscal Fourth Quarter Financial and Recent Operational
Highlights
- Total Revenue grew 22% to $78.1 million, compared to Q4
FY20
- Gross Margin of 39%, compared to 38% in Q4 FY20, due in part to
sales mix and operational efficiencies, including site
consolidation, tempered by certain material cost inflationary
increases
- Effective Income Tax Rate of 24.2%, compared to 24.4% in the
year-ago period
- Net Income for the fiscal fourth quarter of 2021 was $10.6
million, or $1.12 per diluted share, compared to a Net Income of
$9.0 million, or $0.95 per diluted share, for the fiscal fourth
quarter of 2020 (which included a gain on the sale of our Randolph,
MA property of approximately $0.14 per diluted share)
- Adjusted EBITDA for the fiscal fourth quarter of 2021 was $20.0
million, compared to Adjusted EBITDA of $14.5 million in the
prior-year quarter
- Free Cash Flow in the fiscal fourth quarter of 2021 was $17.5
million, compared to Free Cash Flow of $12.7 million in the
prior-year quarter
- Ended fiscal year 2021 with a cash balance of $119.4
million
- Entered an amended and restated credit agreement in July 2021,
expanding our borrowing capacity to $200 million with an additional
$100 million accordion feature
- Consolidation of Newark, CA facility completed (Q4 FY21),
consolidation of Woburn, MA announced (Q3 FY21)
- Acquired ABchimie (September 2020) and Emerging Technologies,
Inc (“ETi”) (February 2021)
“Our disciplined focus on our core strategies, margin expansion,
and long-term growth drove a strong performance for the quarter and
record results for the year. This was accomplished despite
difficulties resulting from raw material cost increases, supply
chain disruptions and a more competitive labor market,” said Adam
P. Chase, President and Chief Executive Officer of Chase
Corporation. “We remain steadfast in meeting our customers’ needs
while progressing on our strategic growth initiatives and achieving
strong margins. Chase is proud of its dedicated workforce that
allowed us to achieve these results, and remains committed to their
health and safety as we continue to operate in a challenging
environment.”
Mr. Chase continued, “The Adhesives, Sealants and Additives
segments led the Company’s revenue growth this year, supported by
the positive trajectory in international markets, as well as our
accretive acquisitions of ABchimie and the operations of ETi. The
Industrial Tapes segment also continued its recovery in sales
versus the pandemic-impacted prior year, with a notably strong
fourth fiscal quarter performance. Corrosion Protection and
Waterproofing, however, slightly declined over the prior year due
to softer demand in the fourth fiscal quarter within pipeline and
infrastructure markets.”
Mr. Chase added, “Over the last year, we made significant
strides driving both organic and inorganic growth, implementing our
consolidation and optimization initiatives, and achieving strong
results despite pandemic and global supply chain-related headwinds.
Increasing input costs impacted gross margins in the latter part of
our fiscal year, most specifically for our Adhesives, Sealants and
Additives segment in the fourth quarter. We continue to take steps
to counteract margin compression with benefits lagging.”
“Additionally, we are very pleased with our successful
integrations of ABchimie and ETi, which further attests to our
ability to drive inorganic growth and leverage operational
commonalities. As we look to the future, our portfolio business
model gives us the unique advantage to serve high growth and
emerging market trends while evaluating additional strategic
diversification opportunities and consistently refining our product
suite.”
“As we progress into the next fiscal year, Chase will strive to
effectively navigate current global raw material inflationary
pressures, labor shortages and supply chain constraints. While
anticipating these challenges will persist in fiscal year 2022, we
continue to implement solutions to satisfy the needs of our
customers. Chase continues to prioritize our customers, and will
further leverage our global network, strategic partnerships, and
efficiency initiatives throughout our organization ensuring demand
is met. We will continue to implement our cost saving strategies in
conjunction with pricing adjustments as necessary, responsibly
balancing short- and long-term needs to drive shareholder
value.”
Full Year 2021 Financial Highlights
- Total Revenue of $293.3 million, up 12% compared to $261.2
million in the prior year
- Gross Margin of 40%, compared to 38% in the prior year
- Net Income of $44.9 million, up 32% compared to $34.2 million
in the prior year
- Adjusted EBITDA of $78.6 million, up 30% compared to $60.2
million in the prior year (the reconciliation of Net Income to
Adjusted EBITDA is included at the end of this news release)
- Free Cash Flow of $58.8 million, up 8% compared to $54.4
million in the prior year
“We are pleased with our ability to execute and drive margin
expansion and generate free cash flow given the current constrained
environment. We are extremely encouraged to see our recent
acquisitions, ABchimie and ETi, prove to be immediately accretive,
synergistic, and contribute to top-line growth within the
Adhesives, Sealants and Additives segment," said Michael J.
Bourque, Treasurer and Chief Financial Officer of Chase
Corporation. “We remain debt free, with an overall cash balance of
$119.4 million and have a fully available credit facility. In the
fourth fiscal quarter, we amended and restated our revolving credit
facility to support future growth initiatives. The new facility
increased our borrowing capacity to $200 million from $150 million
(and includes an accordion option that could allow us access to an
additional $100 million in borrowing capacity) and its maturity
date is now extended through July 2026. Continuing our longstanding
commitment to returning capital to shareholders, the announced
dividend is $1.00 per share, an increase from $0.80 in the prior
year, and will be paid in December.”
Segment Results
Adhesives, Sealants and
Additives
For the Three Months Ended
August 31,
For the Year Ended August
31,
2021
2020
2021
2020
Revenue
$
31,357
$
23,024
$
126,864
$
96,208
Cost of products and services sold
19,344
14,071
71,805
55,902
Gross Margin
$
12,013
$
8,953
$
55,059
$
40,306
Gross Margin %
38
%
39
%
43
%
42
%
Revenue in the Company’s Adhesives, Sealants and Additives
segment increased $8.3 million or 36% for the quarter ended August
31, 2021, with $4.9 million from organic revenue growth. The
revenue growth within the electronic and industrial coatings
product line was largely driven by further expansion in Asian and
European markets, as well as inorganic growth provided by the first
quarter acquired operations of ABchimie. The North American focused
functional additives product line also experienced both organic and
inorganic volume and price growth in the period, with the second
quarter acquired operations of ETi adding to the product line.
Increased input costs impacted the segment’s gross margin in the
fourth fiscal quarter due to global supply chain-related headwinds,
with price increase lag given logistics challenges.
Industrial Tapes
For the Three Months Ended
August 31,
For the Year Ended August
31,
2021
2020
2021
2020
Revenue
$
33,788
$
27,029
$
120,873
$
118,960
Cost of products and services sold
21,160
17,711
77,013
80,351
Gross Margin
$
12,628
$
9,318
$
43,860
$
38,609
Gross Margin %
37
%
34
%
36
%
32
%
Revenue in the Industrial Tapes segment increased $6.8 million
or 25% for the quarter ended August 31, 2021. In the fourth fiscal
quarter, the segment’s cable materials, specialty products,
electronic materials and pulling and detection product lines
reported combined volume and price expansion and drove the
segment’s period-over-period growth. For the year, the pulling and
detection, electronic materials and specialty products product
lines drove net sales growth over the prior pandemic-impacted
year.
Corrosion Protection and
Waterproofing
For the Three Months Ended
August 31,
For the Year Ended August
31,
2021
2020
2021
2020
Revenue
$
12,975
$
13,854
$
45,599
$
45,994
Cost of products and services sold
7,324
7,695
25,842
25,362
Gross Margin
$
5,651
$
6,159
$
19,757
$
20,632
Gross Margin %
44
%
44
%
43
%
45
%
Revenue from the Corrosion Protection and Waterproofing segment
decreased $0.9 million or 6% for the quarter ended August 31, 2021.
While the coating and lining systems and building envelope product
lines were positive compared to the prior fiscal year, the decrease
in revenue was primarily driven by declines in both domestic and
international infrastructure markets, further tempered by material
shortages and logistic issues facing the sectors in the latter part
of the year, which resulted in decreased project demand and sales
volumes for the segment.
About Chase Corporation
Chase Corporation, a global specialty chemicals company that was
founded in 1946, is a leading manufacturer of protective materials
for high-reliability applications throughout the world. More
information can be found on our website https://chasecorp.com/
Use of Non-GAAP Financial Measures
The Company has used non-GAAP financial measures in this press
release. Adjusted net income, Adjusted diluted EPS, EBITDA,
Adjusted EBITDA and Free cash flow are non-GAAP financial measures.
The Company believes that Adjusted net income, Adjusted diluted
EPS, EBITDA, Adjusted EBITDA and Free cash flow are useful
performance measures as they are used by its executive management
team to measure operating performance, to allocate resources to
enhance the financial performance of its business, to evaluate the
effectiveness of its business strategies and to communicate with
its board of directors and investors concerning its financial
performance. The Company believes Adjusted net income, Adjusted
diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow are
commonly used by financial analysts and others in the industries in
which the Company operates, and thus provide useful information to
investors. However, Chase’s calculation of Adjusted net income,
Adjusted diluted EPS, EBITDA, Adjusted EBITDA and Free cash flow
may not be comparable to similarly-titled measures published by
others. Non-GAAP financial measures should be considered in
addition to, and not as an alternative to, the Company’s reported
results prepared in accordance with GAAP. This press release
provides reconciliations from the most directly comparable
financial measure presented in accordance with U.S. GAAP to each
non-GAAP financial measure.
Cautionary Note Concerning Forward-Looking Statements
Certain statements in this press release are forward-looking.
These may be identified by the use of forward-looking words or
phrases including, but not limited to “believe,” “expect,”
“anticipate,” “should,” “planned,” “estimated” and “potential.”
These forward-looking statements are based on Chase Corporation’s
current expectations. The Private Securities Litigation Reform Act
of 1995 provides a “safe harbor” for such forward-looking
statements. To comply with the terms of the safe harbor, the
Company cautions investors that any forward-looking statements made
by the Company are not guarantees of future performance and that a
variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking
statements. The risks and uncertainties which may affect the
operations, performance, development and results of the Company's
business include, but are not limited to, the following:
uncertainties relating to economic conditions; uncertainties
relating to customer plans and commitments; the pricing and
availability of equipment, materials and inventories; technological
developments; performance issues with suppliers and subcontractors;
economic growth; delays in testing of new products; the Company’s
ability to successfully integrate acquired operations; the
effectiveness of cost-reduction plans; rapid technology changes;
the highly competitive environment in which the Company operates;
as well as expected impact of the coronavirus disease (COVID-19)
pandemic on the Company's businesses. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date the statement was made.
The following table summarizes the Company’s unaudited financial
results for the three months and year ended August 31, 2021 and
2020.
For the Three Months Ended
August 31,
For the Year Ended August
31,
All figures in thousands, except per
share figures
2021
2020
2021
2020
Revenue
$
78,120
$
63,907
$
293,336
$
261,162
Costs and Expenses
Cost of products and services sold
47,828
39,477
174,660
161,615
Selling, general and administrative
expenses
13,540
12,338
52,100
49,364
Research and product development costs
1,022
963
4,056
4,007
Operations optimization costs
857
(170
)
977
807
Acquisition-related costs
—
121
128
274
Gain on sale of real estate
—
(1,791
)
—
(2,551
)
Write-down on certain assets under
construction
100
405
100
405
Loss on contingent consideration
669
—
1,664
—
Operating income
14,104
12,564
59,651
47,241
Interest expense
(93
)
(68
)
(297
)
(246
)
Other income (expense)
(2
)
(579
)
(760
)
(1,675
)
Income before income taxes
14,009
11,917
58,594
45,320
Income taxes
3,386
2,909
13,674
11,163
Net income
$
10,623
$
9,008
$
44,920
$
34,157
Net income per diluted share
$
1.12
$
0.95
$
4.73
$
3.59
Weighted average diluted shares
outstanding
9,433
9,451
9,428
9,440
Reconciliation of net income to EBITDA and
adjusted EBITDA
Net income
$
10,623
$
9,008
$
44,920
$
34,157
Interest expense
93
68
297
246
Income taxes
3,386
2,909
13,674
11,163
Depreciation expense
1,021
1,026
3,946
4,015
Amortization expense
3,292
2,852
12,858
11,576
EBITDA
$
18,415
$
15,863
$
75,695
$
61,157
Loss on contingent consideration
669
—
1,664
—
Operations optimization costs
857
(170
)
977
807
Acquisition-related costs
—
121
128
274
Gain on sale of real estate
—
(1,791
)
—
(2,551
)
Write-down of certain assets under
construction
100
405
100
405
Pension settlement costs
—
80
—
155
Adjusted EBITDA
$
20,041
$
14,508
$
78,564
$
60,247
For the Three Months Ended
August 31,
For the Year Ended August
31,
2021
2020
2021
2020
Reconciliation of net income to adjusted
net income
Net income
$
10,623
$
9,008
$
44,920
$
34,157
Excess tax benefit related to ASU No.
2016-09
47
(1
)
(114
)
(149
)
Loss on contingent consideration
669
—
1,664
—
Operations optimization costs
857
(170
)
977
807
Acquisition-related costs
—
121
128
274
Gain on sale of real estate
—
(1,791
)
—
(2,551
)
Write-down of certain assets under
construction
100
405
100
405
Pension settlement costs
—
80
—
155
Income taxes *
(341
)
285
(602
)
191
Adjusted net income
$
11,955
$
7,937
$
47,073
$
33,289
Adjusted net income per diluted share
(Adjusted diluted EPS)
$
1.26
$
0.83
$
4.96
$
3.50
* For the three months and year ended August 31, 2021 and 2020,
represents the aggregate tax effect assuming a 21% tax rate for the
items impacting pre-tax income, which is our effective U.S.
statutory Federal tax rate for fiscal 2021 and 2020.
For the Three Months Ended
August 31,
For the Year Ended August
31,
2021
2020
2021
2020
Reconciliation of cash provided by
operating activities to free cash flow
Net cash provided by operating
activities
$
18,217
$
13,069
$
61,217
$
55,734
Purchases of property, plant and
equipment
(692
)
(327
)
(2,441
)
(1,371
)
Free cash flow
$
17,525
$
12,742
$
58,776
$
54,363
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211115006327/en/
Investors & Media:
Michael Cummings or Jackie Marcus Alpha IR Group Phone: (617)
982-0475 E-mail: CCF@alpha-ir.com
or
Shareholder & Investor Relations Department Phone: (781)
332-0700 E-mail: investorrelations@chasecorp.com Website:
www.chasecorp.com
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