CLEVELAND, Feb. 28 /PRNewswire/ -- Noveon, Inc. today reported selected
financial results for the fourth quarter and full year of 2002.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010523/CLW011LOGO-b )
Three Months Ended Twelve Months Ended
December 31 December 31
Actual Actual Actual Pro forma(1)
2002 2001 2002 2001
($M) Unaudited Unaudited
Sales $255.8 $247.1 $1,069.3 $1,062.3
Gross Profit $76.5 $79.0 $342.5 $296.8
Operating Income $20.1 $21.1 $120.9 $66.2
Net Income (Loss) ($1.9) ($7.1) $34.7 ($29.3)
Adjusted EBITDA(2) $47.6 $44.8 $215.4 $175.5
Free Cash Flow(3) $39.4 $64.4 $171.4 $192.5
(1) The pro forma amounts reflect the effect of the acquisition of the
Performance Materials Segment of Goodrich Corporation on
February 28, 2001 as if the acquisition occurred on January 1, 2001.
(2) Adjusted EBITDA is defined as income from continuing operations
before interest and taxes plus depreciation and amortization,
investor management fees, restructuring and consolidation costs and
non-cash cost of sales impact of inventory write-up from purchase
accounting. Adjusted EBITDA (unaudited) is not a measure of
operating income, net income, operating performance or liquidity
under GAAP.
(3) Free cash flow (unaudited) is adjusted EBITDA less capex plus/less
changes in accounts receivable, inventory and accounts payable.
Fourth Quarter 2002
For the quarter ended December 31, 2002, Noveon reported sales of
$255.8 million, adjusted EBITDA of $47.6 million and a net loss of $1.9
million. For the fourth quarter of 2001, Noveon reported sales of $247.1
million, adjusted EBITDA of $44.8 million and a net loss of $7.1 million.
Sales increased 4% from the prior year reflecting stronger volumes within
Noveon's personal care, Estane(R) TPU and TempRite(R) CPVC product lines,
incremental acquisition-related revenue and the impact of the stronger Euro;
partially offset by lower volumes within the textile coatings, pharmaceutical
and polymer additives product lines. Adjusted EBITDA increased 6% over the
prior year primarily due to higher sales volumes in personal care, Estane(R)
TPU and TempRite(R) CPVC product lines and the impact of the stronger Euro;
partially offset by higher selling, general and administrative expenses from
the addition of resources in sales and marketing as well as higher costs
associated with our variable incentive plans and higher raw material and
utility costs. Free cash flow decreased 39% from $64.4 million to $39.4
million as higher adjusted EBITDA was more than offset by increased capital
spending and lower cash generation from working capital in 2002 versus the
significant cash generated from working capital reductions in the fourth
quarter of 2001. During the quarter, total debt decreased $40.4 million
resulting from the prepayment of outstanding debt.
Full Year 2002
For the year ended December 31, 2002, Noveon reported sales of
$1,069.3 million, adjusted EBITDA of $215.4 million and net income of
$34.7 million. For the pro forma year ended December 31, 2001, Noveon
reported sales of $1,062.3 million, adjusted EBITDA of $175.5 million and a
net loss of $29.3 million. Pro forma 2001 results reflect the effects of the
acquisition of the Performance Materials Segment of Goodrich Corporation on
February 28, 2001 as if the acquisition occurred on January 1, 2001.
Sales increased 1% or $7.0 million from the pro forma year ended
December 31, 2001 to the year ended December 31, 2002, reflecting strong
volume growth within our TempRite(R) CPVC and personal care product lines, the
incremental impact of acquisitions made during the year and the impact of the
stronger Euro; partially offset by lower volumes in textile coatings and
polymer additive product lines, competitive pricing pressure and the impact of
the discontinued product lines at our Cincinnati colorants operation.
Adjusted EBITDA increased 23% from the prior year pro forma period due to
lower raw material and utility costs, lower manufacturing spending from
productivity initiatives and the impact of higher volumes in TempRite(R) CPVC
and personal care. Net income improved $64.0 million from a pro forma net loss
of $29.3 million to net income of $34.7 million. Free cash flow decreased 11%
from $192.5 million from pro forma 2001 to $171.4 million in 2002 as higher
adjusted EBITDA was offset by higher capital spending and lower cash generated
from working capital versus the significant cash generated from working
capital in 2001. Total debt decreased $53.2 million since December 31, 2001
due to continued strong cash generation, debt prepayments and scheduled
amortization.
Steve Demetriou, Noveon president and chief executive officer, said, "We
are very pleased with our 2002 results despite the sluggishness in the
industrial economy. We now have had three consecutive quarters of sales
growth over the prior year, driven by double-digit sales growth within our
personal care and TempRite(R) CPVC product lines and the resurgence of our
Estane(R) TPU product lines in the second half. Our productivity initiatives
reduced manufacturing costs by $8 million from 2001 and in the fourth quarter
we launched a Six Sigma program aimed at generating further productivity
benefits. In addition, our continued strong cash flow has enabled us to
prepay debt, reduce our leverage and invest in growth opportunities in the
form of bolt-on acquisitions, sales, marketing and R&D resources and global
expansion. Going into 2003, we are faced with challenges and uncertainties
related to the global economic and political situation. Therefore, we will
continue to focus aggressively on improving our effectiveness and factors
within our control. We remain focused on driving productivity improvements,
generating strong free cash flow and investing in growth opportunities around
the globe."
Fourth Quarter 2002
Consumer Specialties
Noveon's Consumer Specialties segment reported a sales increase of 10%
from $66.5 million to $72.9 million compared with the prior year fourth
quarter driven by incremental sales volume from acquisitions, higher
Carbopol(R) acrylic thickener volume and the impact of new product
introductions within the personal care product lines, and the impact of the
stronger Euro; partially offset by the impact of lower pharmaceutical volumes
and discontinued product lines at our Cincinnati colorants operation.
Adjusted EBITDA increased by 1% or $0.2 million from $15.8 million in the
fourth quarter of 2001 to $16.0 million in the fourth quarter of 2002,
principally due to higher Carbopol(R) sales; partially offset by higher raw
material and utility costs and tolling expenses related to acquisition
integration.
Specialty Materials
The Specialty Materials segment reported a sales increase of 4% from
$93.1 million to $96.6 million compared to the fourth quarter of the prior
year due to higher volume in TempRite(R) CPVC plumbing and fire sprinkler
applications, Estane(R) TPU product lines and the impact of the stronger Euro;
partially offset by competitive pricing pressure within our Estane(R) TPU and
polymer additives product lines and lower volumes in polymer additive's rubber
chemical and antioxidant product lines. Adjusted EBITDA increased by $0.1
million from $25.3 million in the fourth quarter of 2001 to $25.4 million in
the fourth quarter of 2002 due to higher volumes and lower raw material and
utility costs; partially offset by lower pricing and higher selling general
and administrative costs due to increased growth resources.
Performance Coatings
Performance Coatings sales decreased by 1% from $87.5 million to
$86.3 million compared to the fourth quarter of the prior year due to lower
volume in textile coatings applications; partially offset by higher volumes in
specialty coatings and graphic arts applications and the impact of the
stronger Euro. Adjusted EBITDA increased by 8% or $1.4 million from
$16.5 million in the fourth quarter of 2002 to $17.9 million in the fourth
quarter of 2001 due to higher volumes in specialty coatings and graphic arts
applications; partially offset by higher raw material and utility costs and
lower textile coatings volume.
Corporate
In the fourth quarter, corporate overhead expenses excluding depreciation,
management fees and restructuring costs decreased by $1.1 million from
$12.8 million in 2001 to $11.7 million in 2002. The decrease is primarily the
result of continued cost controls.
Noveon will be hosting a conference call to discuss fourth quarter results
today, February 28, 2003 at 10:00 AM ET. Domestic callers should dial 1 (800)
446-1671 and international callers should dial 1 (847) 413-3362 and ask to be
connected to the Noveon fourth quarter earnings call (confirmation code
6838474). A replay of the call will be available through Wednesday, March 5
by calling (domestic) 1 (888) 843-8996 or (international) 1 (630) 652-3044
with the above confirmation code.
Noveon is a leading global producer and marketer of technologically
advanced specialty chemicals for a broad range of consumer and industrial
applications with revenues in 2002 of $1.1 billion. Noveon is headquartered in
Cleveland, Ohio, with regional centers in Brussels, Belgium, and Hong Kong.
This release contains forward-looking statements that relate to future
events or performance. These statements reflect the Company's current
expectations, and the Company does not undertake to update or revise these
forward-looking statements, even if experience or future changes make it clear
that any projected results express or implied in this or other Company
statements will not be realized. Furthermore, investors are cautioned that
these statements involve risks and uncertainties, many of which are beyond the
Company's control, which could cause actual results to differ materially from
the forward-looking statements. Important factors that may affect our
expectations, estimates or projections include:
-- the effects of the substantial debt we have incurred in connection
with our acquisition of the Performance Materials Segment of Goodrich
and our ability to refinance or repay that debt;
-- changes in customer requirements in markets or industries we serve;
-- general economic and market conditions;
-- our access to capital markets and any restrictions placed on us by any
current or future financing arrangements;
-- the effect of risks of investing in and conducting operations in
foreign countries, including political, social, economic, currency and
regulatory factors;
-- changes in the price and supply of major raw materials; and
-- the effect of fluctuations in currency exchange rates on our
international operations.
Further information about these risks can be found in the Company's
filings with the Securities and Exchange Commission.
Investors are cautioned not to place undue reliance on any forward-looking
statements contained herein, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Noveon, Inc.
Consolidated Statement of Operations
(dollars in millions)
(unaudited)
Three Months Ended
December 31
2002 2001
Sales $ 255.8 $ 247.1
Cost of sales 179.3 168.1
Gross profit 76.5 79.0
Selling and administrative expenses 49.8 49.1
Amortization expense 3.4 7.1
Restructuring and consolidation costs 3.2 1.7
Operating income 20.1 21.1
Interest (expense) income-net (18.3) (18.9)
Other (expense) income -net (2.2) 1.2
Income (loss) before income taxes (0.4) 3.4
Income tax expense (1.5) (10.5)
Net (loss) $ (1.9) $ (7.1)
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Consolidated Statement of Operations
(dollars in millions)
BFGoodrich
Noveon, Inc. Performance Materials
Ten Months Two Months
Year Ended Ended Ended Year Ended
December 31 December 31 February 28 December 31
2002 2001 2001 2000
Sales $ 1,069.3 $ 876.4 $ 187.0 $ 1,167.7
Cost of sales 726.8 628.1 137.3 819.5
Gross profit 342.5 248.3 49.7 348.2
Selling and
administrative expenses 201.6 160.5 35.2 201.1
Amortization expense 13.9 26.5 4.0 24.4
Restructuring and
consolidation costs 6.1 3.1 - 40.5
Operating income 120.9 58.2 10.5 82.2
Interest (expense)
income-net (75.6) (73.5) 0.6 4.4
Other (expense) income -net (2.4) (0.7) (1.5) (0.4)
Income (loss) before
income taxes 42.9 (16.0) 9.6 86.2
Income tax expense (8.2) (4.6) (4.0) (35.9)
Net income (loss) $ 34.7 $ (20.6) $ 5.6 $ 50.3
Noveon, Inc.
Consolidated Balance Sheet
(dollars in millions, except share amounts)
December 31
2002 2001
ASSETS
Current assets
Cash and cash equivalents $ 79.5 $ 120.0
Accounts and notes receivable,
net of allowances ($9.0 and $8.7
at December 31, 2002 and 2001,
respectively) 135.7 133.8
Inventories 144.1 140.2
Prepaid expenses and other current assets 7.2 4.5
Total current assets 366.5 398.5
Property, plant and equipment-net 670.7 672.5
Goodwill 365.5 346.9
Technology intangible assets-net 139.7 148.2
Other identifiable intangible assets-net 42.4 43.8
Receivable from Parent 1.2 -
Other assets 43.1 51.9
Total assets $ 1,629.1 $ 1,661.8
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term bank debt $ 0.4 $ 1.3
Accounts payable 111.2 97.1
Accrued expenses 70.6 74.2
Income taxes payable 5.3 1.0
Current maturities of long-term debt - 23.2
Total current liabilities 187.5 196.8
Long-term debt 847.1 876.2
Postretirement benefits other than pensions 5.8 5.3
Accrued pensions 34.9 32.8
Deferred income taxes 18.1 24.6
Accrued environmental 18.2 20.7
Other non-current liabilities 17.8 9.2
Stockholder's equity
Common stock ($.01 par value, 1,000
shares authorized, 1 share issued
and outstanding at December 31, 2002
and 2001, respectively) - -
Paid in capital 498.0 527.0
Retained deficit (1.9) (20.6)
Accumulated other comprehensive income (loss) 3.6 (10.2)
Total stockholder's equity 499.7 496.2
Total liabilities and stockholder's
equity $ 1,629.1 $ 1,661.8
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Consolidated Statement of Cash Flows
(dollars in millions)
BFGoodrich
Noveon, Inc. Performance Materials
Ten Months Two Months
Year Ended Ended Ended Year Ended
December 31 December 31 February 28 December 31
2002 2001 2001 2000
Operating activities
Net income (loss) $ 34.7 $ (20.6) $ 5.6 $ 50.3
Adjustments to
reconcile net income
(loss) to net cash
provided (used)
by operating activities:
Consolidation costs:
Expenses 6.1 3.1 - 40.5
Payments (8.5) (11.8) (2.0) (4.9)
Depreciation
and amortization 84.7 83.0 14.4 86.7
Deferred income taxes (0.6) 0.4 (5.2) (1.2)
Debt issuance cost
amortization
in interest expense 5.6 6.8 - -
Change in assets and
liabilities, net of
effects of acquisitions
and dispositions
of businesses:
Receivables 2.2 45.9 (7.2) (1.5)
Inventories 3.4 35.8 (3.1) (2.8)
Other current assets (2.6) 0.9 (0.1) 1.9
Accounts payable 9.2 (4.0) (16.8) (1.0)
Accrued expenses (0.7) 13.4 5.7 1.5
Income taxes payable 5.4 - (27.9) 5.2
Other non-current
assets
and liabilities 4.0 1.0 5.0 6.2
Net cash provided (used)
by operating activities 142.9 153.9 (31.6) 180.9
Investing activities
Purchases of property,
plant and equipment (52.3) (28.5) (7.6) (64.0)
Proceeds from sale
of property and business - 0.9 - 0.3
Payments made in
connection with
acquisitions,
net of cash acquired (27.4) (1,191.1) - (11.6)
Net cash (used)
by investing activities (79.7) (1,218.7) (7.6) (75.3)
Financing activities
Decrease in short-term
debt (0.2) (25.8) (3.7) (11.3)
Proceeds from issuance
of long-term debt - 910.0 - -
Repayments of long-term
debt (63.9) (8.5) - (0.3)
Proceeds from sale
of receivables, net 2.2 (1.9) 0.5 (1.9)
Debt issuance costs (0.6) (44.4) - -
Equity contribution
from stockholder - 355.0 - -
Dividend to Parent (45.0) - - -
Transfers (to) /from
BFGoodrich - - 40.7 (86.7)
Net cash (used)
provided by financing
activities (107.5) 1,184.4 37.5 (100.2)
Effect of exchange
rate changes on cash
and cash equivalents 3.8 0.4 - (0.3)
Net (decrease) increase
in cash and cash
equivalents (40.5) 120.0 (1.7) 5.1
Cash and cash
equivalents at beginning
of period 120.0 - 15.7 10.6
Cash and cash equivalents
at end of period $ 79.5 $ 120.0 $ 14.0 $ 15.7
SOURCE Noveon, Inc.
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