Schweitzer-Mauduit International, Inc. ("SWM" or the "Company")
(NYSE: SWM) reported earnings results for the three month period
ended June 30, 2019.
Adjusted measures are reconciled to GAAP at the
end of this release. Financial and operating comparisons are
versus the prior year period and are from continuing
operations. Figures may not sum to total due to
rounding. Definitions: Advanced Materials & Structures
(AMS), reverse osmosis (RO), Engineered Papers (EP), low ignition
propensity (LIP), reconstituted tobacco leaf (RTL), heat-not-burn
(HnB)
Second Quarter 2019 Financial Results
Summary
- Total sales were $269.9 million, flat versus prior year;
increased 2% excluding currency impact
- GAAP operating profit was $44.2 million, or 16.4% of sales, up
5%
- Adjusted operating profit was $50.6 million, or 18.7% of sales,
up 6%
- GAAP EPS was $0.66; Adjusted EPS was $1.06, up 6%
Second Quarter 2019 Business Highlights
- AMS segment sales increased 2%, or 3% absent currency impacts,
driven by continued growth in transportation and filtration
products
- AMS GAAP and adjusted operating profit margin expanded 240 and
190 basis points, respectively, due to organic sales growth, fixed
cost reductions, and favorable resin prices
- EP segment sales decreased 2%, but increased 2% absent currency
impacts; positive price/mix performance more than offset lower
volumes
- EP GAAP operating profit margin was flat while adjusted
operating profit margin was up 70 basis points, due primarily to
favorable price/mix
Dr. Jeff Kramer, Chief Executive Officer,
commented, "Second quarter Adjusted EPS was up 6%, with both
segments delivering increased profits and margin expansion.
Strong price/mix benefits more than offset volume pressure in our
paper business, and continued growth in our transportation and
filtration products and easing raw materials costs in AMS drove
performance. In addition, we made two recent announcements
regarding international capacity investments and new products in
these key strategic end-markets to support our positive long-term
outlook."
"AMS segment profits grew 13%, with continued
sales gains in transportation and filtration end-markets leading
the way. Strong demand for auto paint protection and glass
lamination films continue to bolster AMS sales, and we have
announced new capacity investments at our existing site in China to
support growing regional demand for these high-performance
specialty films. This investment follows the 2018 capacity
investments we made in Europe and underscores our commitment to
leadership in this product area and our strategy to
internationalize the AMS business. Within filtration, we
continue to see robust sales in RO water filtration due to strong
end-market demand. Furthermore, in July we officially
announced the launch of our filtration paper to service this
industry, expanding our RO product portfolio and bundling
opportunities. This paper, produced by our EP division and
sold by our AMS commercial team, expands our current offering and
further solidifies SWM as a leading supplier of multiple components
for RO filtration devices. Organic sales growth, site closure
cost savings, and lower polypropylene resin costs, combined to
boost margins and drive double-digit segment profit growth with
operating margin exceeding 20%."
"EP segment results reflected similar patterns
to the first quarter, with our tobacco paper portfolio stable, a
decrease in recon, and a deliberate reduction in lower-margin
non-tobacco filler volume. However, strong price/mix
performance more than offset our volume pressure, resulting in
sales growth when adjusting for currency impacts, and drove segment
profits up 1%."
Dr. Kramer concluded, "For the full year, we are
progressing as planned, and look forward to executing on multiple
strategic growth initiatives in our fastest growing markets and
cost reduction projects across the business to drive long-term
consolidated earnings growth."
Second Quarter 2019 Financial Results
Advanced Materials &
Structures segment sales were $126.7 million, up 2%, or 3%
absent negative Euro-driven currency impacts. Solid growth in
transportation driven by paint protection films and glass
lamination products, and filtration sales largely due to RO water
applications, continued to drive organic sales growth.
Medical products sales decreased in the quarter (though remain up
YTD), and infrastructure and construction and industrial sales also
declined modestly. GAAP operating profit was $20.4 million,
up 20%. Adjusted operating profit was $25.5 million, up 13%,
with margin expanding 190 basis points to 20.1%. Organic
sales growth, reduced fixed costs, and lower resin input costs
drove the increased profitability.
Engineered Papers segment sales
were $143.2 million, down 2%, but up 2% absent negative currency
impacts due mostly to a lower Euro. Positive price/mix
performance of 11% was partially offset by a volume decline of
9%. Price/mix benefited from contractual wood pulp-based
price escalators on tobacco papers as well as a higher mix of LIP
and wrapper and binder volumes compared to the prior year
period. The volume decline was driven primarily by lower
traditional RTL and HnB products, in part due to a difficult HnB
comparison to the second quarter of 2018 when customers were
launching new products, and the continued de-emphasis of lower
margin printing and writing products. GAAP operating profit
was $32.5 million, down 2%. Adjusted operating profit was
$33.8 million, up 1%, with adjusted operating margin expanding 70
basis points to 23.6%. Margins increased primarily due to
price/mix benefits as the decline of lower-margin products had
minimal impact on profits. Currency movements resulted in a
negative $1.6 million impact to operating profit.
Unallocated GAAP and adjusted
expenses were each $8.7 million, up $0.5 million, and were 3.2% of
total sales, up 20 basis points.
Consolidated sales were $269.9
million, flat with the prior year period. GAAP operating profit was
$44.2 million, up 5%, and GAAP operating profit margin was
16.4%. Adjusted operating profit was $50.6 million, up 6%,
and adjusted operating profit margin was 18.7%, up 100 basis
points. Adjusted EBITDA was $60.2 million, up 4%, and adjusted
EBITDA margin was 22.3%, up 90 basis points.
GAAP income was $20.5 million, versus $25.8
million, and included $7.7 million of net tax assessment expenses
in Brazil (detailed below); GAAP EPS was $0.66. Adjusted
income was $32.9 million, up 7%; Adjusted EPS was $1.06.
Interest expense was $15.1 million, up from $6.6 million,
reflecting $7.8 million of interest related to the Brazil tax
assessments and higher effective interest rates on debt as a result
of the bond issuance during the third quarter of 2018. Other
expense was $2.7 million, up $2.2 million due to penalties related
to the Brazil tax assessments. The Company reported a tax
rate of 19.7%, versus 24.9% in the prior year period, due to a
favorable geographic mix of earnings and the Brazil tax
assessments. Absent discrete items, the second quarter 2019
tax rate would have been approximately 21.6%. The Company's
Chinese JVs generated a $0.02 loss for both GAAP and adjusted EPS,
consistent with historical seasonal pattern and flat with the prior
year period. Net currency movements had a 3% negative impact
on sales and a $1.8 million negative impact on operating profits;
the translation impact of net currency movements was negative $0.03
to both GAAP EPS and Adjusted EPS.
Non-GAAP Adjustments reflect
items included in GAAP operating profit, income, and EPS, but
excluded from adjusted operating profit, income, and EPS. The most
significant item in the quarter was a negative $0.24 per share tax
assessment from pre-2000 activities in Brazil related to raw
material imports/exports (unfavorable) and social security taxes
(favorable partial offset). The majority of the expenses
consist of interest and penalties. See non-GAAP
reconciliation tables for additional details. The other
significant adjustment to second quarter 2019 results was purchase
accounting expenses of $0.14 per share (purchase accounting
expenses reflect the ongoing non-cash intangible asset amortization
associated with AMS acquisitions).
2019 Year-to-Date Financial
Results
Advanced Materials &
Structures segment sales were $247.2 million, up 3%, or 4%
absent Euro-driven negative currency impacts. Consistent with
second quarter results, strong increases in transportation
products, driven by paint protection films and glass lamination,
and filtration sales largely driven by RO water applications,
continued to drive organic sales growth. Medical products
sales also increased, led by the consumer finger bandage category
and certain specialty films for hospital products.
Infrastructure and construction and industrial sales both declined
in the period compared to prior year. GAAP operating profit
was $35.3 million, up 28%. Adjusted operating profit was
$45.5 million, up 17%, with margin expanding 220 basis points to
18.4%. Sales growth, reduced fixed costs, and lower resin
input costs drove the increased profitability.
Engineered Papers segment sales
were $280.7 million, down 4%, but flat with the prior year period
absent negative currency impacts due mostly to a lower Euro.
Positive price/mix performance of 9% offset a volume decline of
9%. Price/mix benefited from contractual wood pulp-based
price escalators on tobacco papers as well as a higher mix of LIP
and wrapper and binder volumes compared to the prior year
period. The volume decline was driven primarily by lower
traditional RTL and HnB products, in part due to a difficult HnB
comparison to the first half of 2018 when customers were launching
new products, and the continued de-emphasis of lower margin
non-tobacco products. GAAP operating profit was $61.2
million, down 9%. Adjusted operating profit was $62.5
million, down 7%, with adjusted operating margin contracting 70
basis points to 22.3%. Year-to-date margins decreased mainly
due to soft first quarter 2019 performance from higher raw material
costs and manufacturing inefficiencies; second quarter results
showed significant sequential improvement over the first
quarter. Currency movements resulted in a negative $2.5
million impact to operating profit.
Unallocated GAAP and adjusted
expenses were each $21.9 million, up $4.2 million, and were 4.2% of
total sales, up 90 basis points. The primary drivers of the
increase were higher deferred compensation expense, which resulted
from the increase in SWM's stock price during the first quarter
following significant volatility during the fourth quarter of 2018,
and higher IT expenses.
Consolidated sales were $527.9
million, down 1%. GAAP operating profit was $74.6 million, down 3%,
and GAAP operating profit margin was 14.1%. Adjusted
operating profit was $86.1 million, also down 3%, and adjusted
operating profit margin was 16.3%, down 30 basis points.
Adjusted EBITDA was $104.9 million, down 3%, and adjusted EBITDA
margin was 19.9%, down 50 basis points.
GAAP income was $37.9 million, versus $46.7
million, and included $7.7 million of net tax assessment expenses
in Brazil; this equated to GAAP EPS of $1.22. Adjusted income
was $53.9 million, down 4%; this equated to Adjusted EPS of
$1.74. Interest expense was $22.9 million, up $10.1 million,
reflecting $7.8 million of interest related to the Brazil tax
assessments and higher effective interest rates on debt as a result
of the bond issuance during the third quarter of 2018. Other
expense was $3.3 million, up $2.5 million due primarily to
penalties related to the Brazil tax assessments. The Company
reported a tax rate of 19.8%, versus 25.2% in the prior year
period, due to a favorable geographic mix of earnings and the
Brazil tax assessments. Absent discrete items, the
year-to-date 2019 tax rate would have been approximately
21.9%. The Company's Chinese JVs generated a $0.03 loss for
both GAAP and adjusted EPS, consistent with historical seasonal
pattern and flat with the prior year period. Net currency
movements had a 3% negative impact on sales and a $2.8 million
negative impact on operating profits; the translation impact of net
currency movements was negative $0.06 to both GAAP EPS and Adjusted
EPS.
Non-GAAP Adjustments reflect
items included in GAAP operating profit, income, and EPS, but
excluded from adjusted operating profit, income, and EPS. The
year-to-date 2019 adjustments (see non-GAAP reconciliation tables
for additional details) were the $0.24 per share tax assessment
referenced above and purchase accounting expenses of $0.28 per
share (purchase accounting expenses reflect the ongoing non-cash
intangible asset amortization associated with AMS
acquisitions).
Cash Flow, Debt, & Dividend
Year-to-date 2019 cash provided by operating
activities was $55.0 million, versus $55.9 million in the prior
year period. The Company's working capital-related cash outflows
were $27.6 million, compared to $30.7 million in 2018 due primarily
to favorable accounts receivables balances. Capital spending
and capitalized software totaled $18.0 million, up $3.7 million,
due primarily to planned capacity expansions for our filtration and
transportation products and IT investments to support growth.
Free cash flow was $37.0 million, down from $41.6 million, due
mainly to the higher capital spending. Year-to-date, the Company
has paid dividends to stockholders totaling $27.2 million.
Total debt was $606.6 million on June 30,
2019, down $15.5 million from year end 2018; net debt was $518.8
million on June 30, 2019, down $9.5 million from year end
2018. Pursuant to the debt covenants, the Company's net debt
to adjusted EBITDA was approximately 2.5x as of June 30, 2019,
unchanged compared to year end 2018.
The Company announced a quarterly cash dividend
of $0.44 per share. The dividend will be payable on
September 20, 2019 to stockholders of record as of
August 23, 2019.
Conference Call
SWM will hold a conference call to review second
quarter 2019 results with investors and analysts at 8:30 a.m.
Eastern time on Thursday, August 8, 2019. The earnings conference
call will be simultaneously broadcast over the Internet at
www.swmintl.com. To listen to the call, please go to the
Company’s Web site at least 15 minutes prior to the call to
register and to download and install any necessary audio software.
For those unable to listen to the live broadcast, a replay will be
available on the Company’s Web site shortly after the call.
SWM will use a presentation in conjunction with
its conference call. The presentation can be found on the
Company's Web site under the Investor Relations section in advance
of the earnings conference call. The presentation can also be
accessed via the earnings conference call webcast.
About SWM
SWM is a leading global performance materials company. Our
highly engineered papers, films, nets and nonwovens are designed
and manufactured using natural fibers and polymers for a variety of
industries and applications. We provide our customers with critical
components that enhance the performance of their products. End
markets served include filtration, transportation, infrastructure
and construction, medical, industrial, tobacco, energy, food
services and home décor. SWM and its subsidiaries manufacture on
four continents conduct business in over 90 countries and employ
approximately 3,400 people worldwide. For further information,
please visit SWM’s web site at www.swmintl.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and other federal securities laws that are
subject to the safe harbor created by such laws and other legal
protections. Forward-looking statements include, without
limitation, those regarding 2019 guidance and future performance,
2019 capital expenditures, future market and EPS trends,
sales and volume trends, growth prospects, capital spending,
currency rates and trends and impact on EPS, future cash
flows, the Tax Act, effective tax rates, diversification
efforts of our AMS segment, future results of AMS operations,
future growth of non-tobacco sales, and other statements generally
identified by words such as "believe," "expect," "intend,"
"guidance," "plan," "forecast," "potential," "anticipate,"
"confident," "project," "appear," "future," "should," "likely,"
"could," "may," "typically," "will," and similar words. These
statements are not guarantees of future performance and certain
risks, uncertainties (some of which are beyond the Company’s
control) and assumptions that may cause actual results to differ
materially from our expectations as of the date of this
release. These risks include, among other things, those
set forth in Part I, Item 1A. Risk Factors of our Annual Report on
Form 10-K for the year ended December 31, 2018, which can be
found at the SEC’s website www.sec.gov, as well as the following
factors:
- Recent changes to U.S. federal income tax law, the overall
impact and interpretation of which remain uncertain and could be
material, in addition to the extent to which states may conform to
the newly enacted federal tax law as well as the impact of the tax
reform on holders of our common stock;
- Changes in sales or production volumes, pricing and/or
manufacturing costs of Recon products, cigarette paper (including
for LIP cigarettes), including any change by our customers in their
tobacco and tobacco-related blends for their cigarettes, their
target inventory levels and/or the overall demand for their
products, new technologies such as e-cigarettes, inventory
adjustments and rebalancings in our EP segment. Additionally,
competition and changes in AMS end-market products due to changing
customer demands;
- Changes in the Chinese economy, including relating to the
demand for reconstituted tobacco, premium cigarettes and
netting;
- Risks associated with the implementation of our strategic
growth initiatives, including diversification, and the Company's
understanding of, and entry into, new industries and
technologies;
- Changes in the source and intensity of competition in our
commercial segments. We operate in highly competitive markets
in which alternative supplies and technologies may attract our
customers away from our products. In additional, our
customers may, in some cases, produce for themselves the components
that the Company sells to them for incorporation into their
products, thus reducing or eliminating their purchases from
us;
- Our ability to attract and retain key personnel, due to our
prior restructuring actions, the tobacco industry in which we
operate or otherwise;
- Weather conditions, including potential impacts, if any, from
climate change, known and unknown, seasonality factors that affect
the demand for virgin tobacco leaf and natural disasters or unusual
weather events;
- Seasonal or cyclical market and industry fluctuations which may
result in reduced net sales and operating profits during certain
periods;
- Increases in commodity prices and lack of availability of such
commodities, including energy, wood pulp and resins, could impact
the sales and profitability of our products;
- Adverse changes in the oil, gas, automotive, construction and
infrastructure, and mining sectors impacting key AMS segment
customers;
- Increases in operating costs due to inflation or otherwise,
such as labor expense, compensation and benefits costs;
- Employee retention and labor shortages;
- Changes in employment, wage and hour laws and regulations in
the U.S., France and elsewhere, including loi de Securisation de
l'emploi, unionization rule and regulations by the National Labor
Relations Board, equal pay initiatives, additional
anti-discrimination rules or tests and different interpretations of
exemptions from overtime laws;
- Labor strikes, stoppages, disruptions or other disruptions at
our facilities;
- The impact of tariffs, and the imposition of any future tariffs
and other trade barriers, and the effects of retaliatory trade
measures;
- Existing and future governmental regulation and the enforcement
thereof, for example relating to the tobacco industry, taxation and
the environment (including the impact thereof on our Chinese joint
ventures);
- New reports as to the effect of smoking on human health or the
environment;
- Changes in general economic, financial and credit conditions in
the U.S., Europe, China and elsewhere, including the impact thereof
on currency exchange rates (including any weakening of the euro and
Real) and on interest rates;
- Changes in the method pursuant to which LIBOR rates are
determined and the potential phasing out of LIBOR after
2021;
- Changes in the manner in which we finance our debt and future
capital needs, including potential acquisitions;
- The success of, and costs associated with, our current or
future restructuring initiatives, including the granting of any
needed governmental approvals and the occurrence of work stoppages
or other labor disruptions;
- Changes in the discount rates, revenue growth, cash flow growth
rates or other assumptions used by the Company in its assessment
for impairment of assets and adverse economic conditions or other
factors that would result in significant impairment
charges;
- The failure of one or more material suppliers, including
energy, resin and pulp suppliers, to supply materials as needed to
maintain our product plans and cost structure;
- International conflicts and disputes, such as those involving
the Russian Federation, Korea and the Middle East, which restrict
our ability to supply products into affected regions, due to the
corresponding effects on demand, the application of international
sanctions, or practical consequences on transportation, banking
transactions, and other commercial activities in troubled
regions;
- Compliance with the FCPA and other anti-corruption laws or
trade control laws, as well as other laws governing our
operations;
- The pace and extent of further international adoption of LIP
cigarette standards and the nature of standards so
adopted;
- Risks associated with our 50%-owned, non-U.S. joint ventures
relating to control and decision-making, compliance, accounting
standards, transparency and customer relations, among
others;
- A failure in our risk management and/or currency or interest
rate swaps and hedging programs, including the failures of any
insurance company or counterparty;
- The number, type, outcomes (by judgment or settlement) and
costs of legal, tax, regulatory or administrative proceedings,
litigation and/or amnesty programs, including those in Brazil,
France and Germany;
- The outcome and cost of LIP-related intellectual property
infringement and validity litigation in Europe and the Glatz's
German Patent Court invalidation proceedings;
- Risks associated with our technological advantages in our
intellectual property and the likelihood that our current
technological advantages are unable to continue
indefinitely;
- Risks associated with acquisitions or other strategic
transactions, including acquired liabilities and restrictions,
retaining customers from businesses acquired, achieving any
expected results or synergies from acquired businesses, complying
with new regulatory frameworks, difficulties in integrating
acquired businesses or implementing strategic transactions
generally and risks associated with international acquisition
transactions, including in countries where we do not currently have
a material presence;
- Risks associated with dispositions, including post-closing
claims being made against us, disruption to our other businesses
during a sale process or thereafter, credit risks associated with
any buyer of such disposed assets and our ability to collect funds
due from any such buyer;
- Risks associated with our global asset realignment initiatives,
including: changes in tax law, treaties, interpretations, or
regulatory determinations; audits made by applicable regulatory
authorities and/or our auditor; and our ability to operate our
business in a manner consistent with the regulatory requirements
for such realignment;
- Increased taxation on tobacco-related products;
- Costs and timing of implementation of any upgrades or changes
to our information technology systems;
- Failure by us to comply with any privacy or data security laws
or to protect against theft of customer, employee and corporate
sensitive information;
- Changes in tax rates, the adoption of new U.S. or international
tax legislation or exposure to additional tax
liabilities;
- Changes in construction and infrastructure spending and its
impact on demand for certain products;
- Potential loss of consumer awareness and demand for acquired
companies’ products if it is decided to rebrand those products
under the Company’s legacy brand names; and
- Other factors described elsewhere in this document and from
time to time in documents that we file with the SEC.
All forward-looking statements made in this
document are qualified by these cautionary statements. These
forward-looking statements are made only as of the date of this
document, and we do not undertake any obligation, other than as may
be required by law, to update or revise any forward-looking or
cautionary statements to reflect changes in assumptions, the
occurrence of events, unanticipated or otherwise, or changes in
future operating results over time or otherwise.
Comparisons of results for current and any prior
periods are not intended to express any future trends or
indications of future performance unless expressed as such, and
should only be viewed as historical data.
For additional factors and further discussion of
these factors, please see SWM's Annual Report on Form 10-K for the
period ended December 31, 2018, and other reports we file from
time to time, which can be found at the SEC’s website www.sec.gov.
The discussion of these risks is specifically incorporated by
reference into this release. The financial results reported in this
release are unaudited.
Non-GAAP Financial Measures
Certain financial measures and comments
contained in this press release exclude restructuring expenses,
certain purchase accounting adjustments related to AMS segment
acquisitions, interest expense, income tax provision, capital
spending, capitalized software, and depreciation and
amortization. This press release also provides certain
information regarding the Company's financial results excluding
currency impacts. This information estimates the impact of
changes in foreign currency rates on the translation of the
Company's current financial results as compared to the applicable
comparable period and is derived by translating the current local
currency results into U.S. Dollars based upon the foreign currency
exchange rates for the applicable comparable period.
Financial measures which exclude or include these items have not
been determined in accordance with accounting principles generally
accepted in the United States (GAAP) and are therefore "non-GAAP"
financial measures. Reconciliations of these non-GAAP financial
measures to the most closely analogous measure determined in
accordance with GAAP are included in the financial schedules
attached to this release.
The Company believes that the presentation of
non-GAAP financial measures in addition to the related GAAP
measures provides investors with greater transparency to the
information used by the Company’s management in its financial and
operational decision-making. Management also believes that
the non-GAAP financial measures provide additional insight for
analysts and investors in evaluating the Company’s financial and
operational performance in the same way that management evaluates
the Company's financial performance. Management believes that
providing this information enables investors to better understand
the Company’s operating performance and financial condition.
These non-GAAP financial measures are not calculated or presented
in accordance with, and are not intended to be considered in
isolation or as alternatives or substitutes for, or superior to,
financial measures prepared and presented in accordance with GAAP,
and should be read only in conjunction with the Company's financial
measures prepared and presented in accordance with GAAP. The
non-GAAP financial measures used in this release may be different
from the measures used by other companies.
(Tables to Follow)
SOURCE SWM:
CONTACT
Andrew WamserChief Financial
Officer+1-770-569-4271
Or
Mark ChekanowDirector of Investor
Relations+1-770-569-4229
Web site: http://www.swmintl.com
SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND
SUBSIDIARIESBUSINESS SEGMENT
REPORTING(Dollars in
millions)(Unaudited)
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
AMS |
$ |
126.7 |
|
|
$ |
124.0 |
|
|
2.2 |
% |
|
$ |
247.2 |
|
|
$ |
239.3 |
|
|
3.3 |
% |
EP |
143.2 |
|
|
146.4 |
|
|
(2.2 |
)% |
|
280.7 |
|
|
293.0 |
|
|
(4.2 |
)% |
Total Consolidated |
$ |
269.9 |
|
|
$ |
270.4 |
|
|
(0.2 |
)% |
|
$ |
527.9 |
|
|
$ |
532.3 |
|
|
(0.8 |
)% |
Operating
Profit (Loss) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
Return on Net Sales |
|
|
|
|
|
Return on Net Sales |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
AMS |
$ |
20.4 |
|
|
$ |
17.0 |
|
|
16.1 |
% |
|
13.7 |
% |
|
$ |
35.3 |
|
|
$ |
27.6 |
|
|
14.3 |
% |
|
11.5 |
% |
EP |
32.5 |
|
|
33.3 |
|
|
22.7 |
% |
|
22.7 |
% |
|
61.2 |
|
|
67.2 |
|
|
21.8 |
% |
|
22.9 |
% |
Unallocated |
(8.7 |
) |
|
(8.2 |
) |
|
|
|
|
|
(21.9 |
) |
|
(17.7 |
) |
|
|
|
|
Total Consolidated |
$ |
44.2 |
|
|
$ |
42.1 |
|
|
16.4 |
% |
|
15.6 |
% |
|
$ |
74.6 |
|
|
$ |
77.1 |
|
|
14.1 |
% |
|
14.5 |
% |
Non-GAAP
Adjustments to Operating Profit (Loss) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
AMS - Restructuring &
Impairment Expenses |
$ |
— |
|
|
$ |
0.4 |
|
|
$ |
— |
|
|
$ |
0.8 |
|
AMS - Purchase Accounting
Adjustments |
5.1 |
|
|
5.2 |
|
|
10.2 |
|
|
10.4 |
|
EP - Restructuring &
Impairment Expenses and Tax Assessment |
1.3 |
|
|
0.2 |
|
|
1.3 |
|
|
0.2 |
|
Total Consolidated |
$ |
6.4 |
|
|
$ |
5.8 |
|
|
$ |
11.5 |
|
|
$ |
11.4 |
|
Adjusted
Operating Profit (Loss) * |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
Return on Net Sales |
|
|
|
|
|
Return on Net Sales |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
AMS |
$ |
25.5 |
|
|
$ |
22.6 |
|
|
20.1 |
% |
|
18.2 |
% |
|
$ |
45.5 |
|
|
$ |
38.8 |
|
|
18.4 |
% |
|
16.2 |
% |
EP |
33.8 |
|
|
33.5 |
|
|
23.6 |
% |
|
22.9 |
% |
|
62.5 |
|
|
67.4 |
|
|
22.3 |
% |
|
23.0 |
% |
Unallocated |
(8.7 |
) |
|
(8.2 |
) |
|
|
|
|
|
(21.9 |
) |
|
(17.7 |
) |
|
|
|
|
Total Consolidated |
$ |
50.6 |
|
|
$ |
47.9 |
|
|
18.7 |
% |
|
17.7 |
% |
|
$ |
86.1 |
|
|
$ |
88.5 |
|
|
16.3 |
% |
|
16.6 |
% |
* Adjusted Operating Profit (Loss), a non-GAAP
financial measure, is calculated by adding Restructuring &
Impairment Expenses and Purchase Accounting Adjustments to
Operating Profit.
SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND SUPPLEMENTAL DATA(Dollars in
millions, except per share amounts)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Operating profit |
$ |
44.2 |
|
|
$ |
42.1 |
|
|
$ |
74.6 |
|
|
$ |
77.1 |
|
Plus: Restructuring and
impairment expense |
0.4 |
|
|
0.6 |
|
|
0.4 |
|
|
1.0 |
|
Plus: Purchase accounting
adjustments |
5.1 |
|
|
5.2 |
|
|
10.2 |
|
|
10.4 |
|
Plus: Brazil tax
assessments |
0.9 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Adjusted Operating Profit |
$ |
50.6 |
|
|
$ |
47.9 |
|
|
$ |
86.1 |
|
|
$ |
88.5 |
|
|
|
|
|
|
|
|
|
Income |
$ |
20.5 |
|
|
$ |
25.8 |
|
|
$ |
37.9 |
|
|
$ |
46.7 |
|
Plus: Restructuring and
impairment expense |
0.4 |
|
|
0.6 |
|
|
0.4 |
|
|
1.0 |
|
Less: Tax impact of
restructuring and impairment expense |
(0.1 |
) |
|
(0.2 |
) |
|
(0.1 |
) |
|
(0.3 |
) |
Plus: Purchase accounting
adjustments |
5.1 |
|
|
5.5 |
|
|
10.2 |
|
|
10.9 |
|
Less: Tax impact of purchase
accounting adjustments |
(1.0 |
) |
|
(1.0 |
) |
|
(1.9 |
) |
|
(2.0 |
) |
Plus: Brazil tax
assessments |
10.8 |
|
|
— |
|
|
10.8 |
|
|
— |
|
Less: Tax impact of Brazil tax
assessments |
(3.1 |
) |
|
— |
|
|
(3.1 |
) |
|
— |
|
Less: Tax legislative changes,
net of other discrete items |
0.3 |
|
|
— |
|
|
(0.3 |
) |
|
— |
|
Adjusted Income |
$ |
32.9 |
|
|
$ |
30.7 |
|
|
$ |
53.9 |
|
|
$ |
56.3 |
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted |
$ |
0.66 |
|
|
$ |
0.83 |
|
|
$ |
1.22 |
|
|
$ |
1.50 |
|
Plus: Loss per share from
discontinued operations |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Earnings per share from
continuing operations |
0.66 |
|
|
0.83 |
|
|
1.22 |
|
|
1.51 |
|
Plus: Restructuring and
impairment expense |
0.01 |
|
|
0.02 |
|
|
0.01 |
|
|
0.03 |
|
Less: Tax impact of
restructuring and impairment expense |
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.01 |
) |
Plus: Purchase accounting
adjustments |
0.17 |
|
|
0.18 |
|
|
0.34 |
|
|
0.36 |
|
Less: Tax impact of purchase
accounting adjustment |
(0.03 |
) |
|
(0.02 |
) |
|
(0.06 |
) |
|
(0.06 |
) |
Plus: Brazil tax
assessments |
0.35 |
|
|
— |
|
|
0.35 |
|
|
— |
|
Less: Tax impact of Brazil tax
assessments |
(0.11 |
) |
|
— |
|
|
(0.11 |
) |
|
— |
|
Less: Tax legislative changes,
net of other discrete items |
0.01 |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
Adjusted Earnings Per Share -
Diluted |
$ |
1.06 |
|
|
$ |
1.00 |
|
|
$ |
1.74 |
|
|
$ |
1.83 |
|
Brazil Tax Assessments - Financial Statement
Classification and Impact
Income
Statement Classification |
(Expense)Benefit |
Diluted Earnings per Share |
Cost of products sold 1 |
$ |
(0.9 |
) |
$ |
(0.03 |
) |
Operating profit 1 |
(0.9 |
) |
(0.03 |
) |
Other expense 2 |
(2.1 |
) |
(0.07 |
) |
Interest expense 2 |
(7.8 |
) |
(0.25 |
) |
Income from continuing operations
before income taxes |
(10.8 |
) |
(0.35 |
) |
Provision for income taxes |
3.1 |
|
0.11 |
|
Net income |
$ |
(7.7 |
) |
$ |
(0.24 |
) |
1 Cost of products sold reflects the net of $2.0
million of expense associated with the Raw Materials Assessment and
$1.1 million benefit associated with the Social Security
Assessment. Amounts are reflected in Engineered Papers
reporting segment in segment disclosures.2 Other expense includes
penalties and fees associated with the Raw Materials
Assessment. Interest expense relates to the Raw Materials
Assessment.
SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND SUPPLEMENTAL DATA(Dollars in
millions, except per share amounts)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income |
$ |
20.5 |
|
|
$ |
25.8 |
|
|
$ |
37.9 |
|
|
$ |
46.3 |
|
Plus: Loss from discontinued
operations |
— |
|
|
— |
|
|
— |
|
|
0.4 |
|
Income from continuing
operations |
20.5 |
|
|
25.8 |
|
|
37.9 |
|
|
46.7 |
|
Plus: Interest expense on
debt |
7.3 |
|
|
6.6 |
|
|
15.1 |
|
|
12.8 |
|
Plus: Interest expense on
Brazil tax assessments |
7.8 |
|
|
— |
|
|
7.8 |
|
|
— |
|
Plus: Provision for income
taxes |
5.2 |
|
|
8.7 |
|
|
9.6 |
|
|
16.0 |
|
Plus: Depreciation &
amortization |
14.7 |
|
|
15.2 |
|
|
29.0 |
|
|
30.5 |
|
Plus: Restructuring and
impairment expense |
0.4 |
|
|
0.6 |
|
|
0.4 |
|
|
1.0 |
|
Plus: Loss from equity
affiliates |
0.7 |
|
|
0.5 |
|
|
0.9 |
|
|
0.8 |
|
Plus: Other expense, net |
2.7 |
|
|
0.5 |
|
|
3.3 |
|
|
0.8 |
|
Plus: Brazil tax
assessments |
0.9 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Adjusted EBITDA from
continuing operations |
$ |
60.2 |
|
|
$ |
57.9 |
|
|
$ |
104.9 |
|
|
$ |
108.6 |
|
|
|
|
|
|
|
|
|
AMS adjusted EBITDA |
$ |
28.8 |
|
|
$ |
26.4 |
|
|
$ |
52.1 |
|
|
$ |
46.6 |
|
EP adjusted EBITDA |
39.7 |
|
|
39.5 |
|
|
74.2 |
|
|
79.6 |
|
Unallocated adjusted
EBITDA |
(8.3 |
) |
|
(8.0 |
) |
|
(21.4 |
) |
|
(17.6 |
) |
Adjusted EBITDA from
continuing operations |
$ |
60.2 |
|
|
$ |
57.9 |
|
|
$ |
104.9 |
|
|
$ |
108.6 |
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities |
$ |
42.0 |
|
|
$ |
33.9 |
|
|
$ |
55.0 |
|
|
$ |
55.9 |
|
Less: Capital spending |
(7.9 |
) |
|
(7.7 |
) |
|
(15.2 |
) |
|
(13.7 |
) |
Less: Capitalized software
costs |
(1.4 |
) |
|
(0.2 |
) |
|
(2.8 |
) |
|
(0.6 |
) |
Free Cash Flow |
$ |
32.7 |
|
|
$ |
26.0 |
|
|
$ |
37.0 |
|
|
$ |
41.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
|
Total Debt |
|
|
|
|
$ |
606.6 |
|
|
$ |
622.1 |
|
Less: Cash |
|
|
|
|
87.8 |
|
|
93.8 |
|
Net Debt |
|
|
|
|
$ |
518.8 |
|
|
$ |
528.3 |
|
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