CLEVELAND, April 13 /PRNewswire/ -- Noveon, Inc. today reported selected
financial results for the first quarter of 2004.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010523/CLW011LOGO-b )
Three Months Ended
March 31
2004 2003
($M) (unaudited)
Sales $321.6 $282.3
Gross profit $94.0 $81.8
Operating income $31.7 $25.8
Net income $12.3 $5.3
Net income excluding special items $14.4 $7.4
EBITDA $55.9 $47.7
EBITDA excluding special items $58.0 $49.7
Free cash flow $14.3 $21.9
In this press release, Noveon refers to various non-GAAP (generally
accepted accounting principles) financial measures including net income
excluding special items, EBITDA, EBITDA excluding special items and free cash
flow. The methods used to compute these measures are likely to differ from
the methods used by other companies. These non-GAAP measures should not be
regarded as replacements for corresponding GAAP measures. Investors are
encouraged to review the accompanying tables reconciling the non-GAAP
financial measures to comparable GAAP amounts. "EBITDA" is defined as net
income before cumulative effect of accounting change, interest, taxes,
depreciation and amortization. "Free cash flow" is defined as EBITDA less
capital expenditures plus or minus changes in accounts receivable, inventory
and accounts payable, net of the impact from acquisitions and foreign currency
translation. In addition, our reference to Segment EBITDA excludes any
corporate overhead allocations. Management uses EBITDA and free cash flow as
performance metrics and believes these measures provide additional information
commonly used by our stakeholders with respect to both the performance of our
fundamental business activities, as well as our ability to meet our future
debt service, capital expenditures and working capital needs.
Noveon has provided financial information for the first quarter of 2004
and 2003 for the results of operations as reported, as well as for results of
operations as reported excluding special items of restructuring and severance
costs, the cumulative effect of an accounting change and one-time gains and
losses. Noveon believes this information is useful to our stakeholders in
understanding our operating results and the ongoing performance of our
underlying businesses without the impact of these special items.
First Quarter Results
For the quarter ended March 31, 2004, Noveon reported sales of $321.6
million, EBITDA of $55.9 million and net income of $12.3 million. For the
first quarter of 2003, Noveon reported sales of $282.3 million, EBITDA of
$47.7 million and net income of $5.3 million.
EBITDA excluding special items in the first quarter of 2004 was $58.0
million. Net income excluding special items for the first quarter of 2004 was
$14.4 million. EBITDA excluding special items in the first quarter of 2003
was $49.7 million. Net income excluding special items in the first quarter of
2003 was $7.4 million.
Sales increased 14% to $321.6 million in the first quarter of 2004 from
$282.3 million in the first quarter of 2003. The increase in sales was driven
by volume growth of approximately 7% led by our Specialty Materials and
Consumer Specialties product lines including Estane(R) TPU, TempRite(R) CPVC,
personal care and pharmaceuticals. In addition, the strength of the euro and
the impact of acquisitions each contributed approximately 3% to our top line
growth. Finally, improved selling prices also increased sales growth. EBITDA
excluding special items increased by 17% to $58.0 million in the first quarter
of 2004 from $49.7 million in the first quarter of the prior year, mainly due
to higher volumes. In addition, productivity, the impact of acquisitions and
higher selling prices all combined to offset higher raw material cost and our
continued investment in sales, marketing and R&D resources. Free cash flow
decreased to $14.3 million in the first quarter of 2004 from $21.9 million in
the first quarter of 2003 mainly due to working capital increases associated
with higher sales.
Steve Demetriou, Noveon president and chief executive officer, said, "We
are extremely pleased with our first quarter results which demonstrate the
strength of our portfolio with double digit volume growth in personal care,
Estane(R) TPU and TempRite(R) CPVC. In addition, we saw solid performance in
most of the remaining product lines across Noveon. Our results are indicative
of a pick-up in economic activity, the stronger euro and our recent bolt-on
acquisitions, but more importantly, we are seeing underlying organic growth
associated with our new product development initiatives and increased sales,
marketing and R&D resources." Demetriou went on to say, "Higher sales volumes
drove improved EBITDA in the quarter despite an increase in raw material
costs, as we benefited from leverage on our cost base and a stronger sales mix
due to significant growth in our higher margin product lines."
Consumer Specialties
Sales increased 15% to $95.4 million in the first quarter of 2004 from
$82.9 million in the first quarter of the prior year in our Consumer
Specialties segment. Personal care product lines drove the segment sales
increase with double digit volume growth led by Carbopol(R) acrylic thickener
sales as well as the continued impact of new products including Carbopol(R)
Aqua SF1, a liquid thickener, Fixate(TM), a hair fixative and specialty
silicones used in hair care applications. Also contributing to higher
personal care sales were the emollients for skin care product lines recently
acquired from Scher Chemicals. Finally, the stronger euro also contributed to
the increase in sales. Segment EBITDA increased 19% to $21.3 million in the
first quarter of 2004 from $17.9 million in the first quarter of 2003 as
higher personal care volumes, the stronger euro and the favorable impact of
acquisitions more than offset record high toluene costs within our food and
beverage product lines.
Specialty Materials
The Specialty Materials segment reported a sales increase of 21% to $126.2
million in the first quarter of 2004 from $104.7 million in the first quarter
of 2003 due to the impact of higher volume in each product line within the
segment led by double digit growth in Estane(R) TPU and TempRite(R) CPVC.
Estane(R) TPU benefited from strong North American demand associated with a
pick-up in economic activity, continued growth in Asia and the impact from new
products including TPU for spandex fibers. TempRite(R) CPVC benefited from
increased plumbing volume due to strong building activity. In addition, sales
were positively impacted by our fourth quarter 2003 aliphatic TPU acquisition
and the stronger euro. Segment EBITDA increased by 13% to $32.3 million in
the first quarter of 2004 from $28.6 million in the first quarter of 2003
principally due to higher volumes across the segment, partially offset by
higher raw material and utility costs and additional growth resources.
Performance Coatings
Performance Coatings' sales increased 6% to $100.0 million in the first
quarter of 2004 from $94.7 million in the first quarter of 2003 as the
benefits of our February 2003 graphic arts overprint coatings product line
acquisition, the strength of the euro and favorable selling prices more than
offset a nominal volume decline in the segment. Segment EBITDA increased by
7% to $17.1 million in the first quarter of 2004 from $16.0 million in the
first quarter of 2003 due to the impact of higher selling prices and
productivity, partially offset by higher raw material and utility costs.
Corporate
In the first quarter of 2004, corporate overhead expenses excluding
depreciation and amortization were essentially flat at $12.7 million compared
with $12.8 million in 2003.
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 2003 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 Noveon'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;
- competition within our industry;
- our access to capital markets and any restrictions placed on us by any
current or future financing arrangements;
- environmental and government regulations;
- 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.
Condensed Consolidated Statement of Operations
(dollars in millions)
Three Months Ended
March 31,
2004 2003
(unaudited)
Sales $321.6 $282.3
Cost of sales 227.6 200.5
Gross profit 94.0 81.8
Selling and administrative expenses 55.7 50.4
Amortization expense 3.8 3.6
Restructuring and severance costs 2.8 2.0
Operating income 31.7 25.8
Interest expense-net 17.1 18.0
Other income-net (0.6) (0.1)
Income before income taxes and
cumulative effect of accounting change 15.2 7.9
Income tax expense 2.9 2.1
Income before cumulative effect
of accounting change 12.3 5.8
Cumulative effect of accounting
change-net of tax - 0.5
Net income $12.3 $5.3
Noveon, Inc.
Condensed Consolidated Balance Sheet
(dollars in millions)
March 31, December 31,
2004 2003
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $93.6 $115.6
Accounts and notes receivable, net of
allowances ($7.7 and $7.5 at March
31, 2004 and December 31, 2003, respectively) 180.9 149.8
Inventories 164.7 161.7
Deferred income taxes 11.5 11.5
Prepaid expenses and other current assets 12.2 7.9
Total current assets 462.9 446.5
Property, plant and equipment-net 671.7 682.9
Goodwill 420.7 414.2
Identifiable intangible assets-net 170.2 172.9
Receivable from Parent 1.4 1.4
Other assets 40.4 41.3
Total assets $1,767.3 $1,759.2
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Short-term bank debt $- $-
Accounts payable 134.2 130.1
Accrued expenses 63.1 73.1
Income taxes payable 8.8 6.7
Current maturities of long-term debt 16.2 15.8
Total current liabilities 222.3 225.7
Long-term debt 853.8 848.6
Postretirement benefits other than pensions 5.8 5.7
Accrued pensions 32.5 31.0
Deferred income taxes 29.6 29.6
Accrued environmental 18.6 18.2
Other non-current liabilities 14.5 15.4
Stockholder's equity
Common stock - -
Paid in capital 498.0 498.0
Retained earnings 22.9 10.6
Accumulated other comprehensive income 69.3 76.4
Total stockholder's equity 590.2 585.0
Total liabilities and stockholder's equity $1,767.3 $1,759.2
Noveon, Inc.
Condensed Consolidated Statement of Cash Flows
(dollars in millions)
Three Months Ended
March 31,
2004 2003
(unaudited)
Operating activities
Net income $12.3 $5.3
Adjustments to reconcile net income
to net cash (used) provided by
operating activities:
Depreciation and amortization 23.6 21.8
Deferred income taxes - (0.1)
Gain on sale of assets (0.7) -
Debt issuance cost amortization
in interest expense 1.3 1.4
Cumulative effect of accounting
change-net of tax - 0.5
Change in operating assets and
liabilities, net of effects of acquisitions
of businesses (41.2) (28.6)
Net cash (used) provided by operating activities (4.7) 0.3
Investing activities
Purchases of property, plant and equipment (11.8) (16.5)
Payments made in connection with
acquisitions, net of cash acquired (13.3) (10.7)
Proceeds from sale of assets 0.8 -
Net cash (used) by investing activities (24.3) (27.2)
Financing activities
Decrease in short-term debt - (0.3)
Net proceeds from borrowings on
revolving credit facility 13.3 18.5
Payments on long-term borrowings (4.8) -
Net cash provided by financing activities 8.5 18.2
Effect of exchange rate changes
on cash and cash equivalents (1.5) (0.1)
Net decrease in cash and cash equivalents (22.0) (8.8)
Cash and cash equivalents at beginning of period 115.6 79.5
Cash and cash equivalents at end of period $93.6 $70.7
Noveon, Inc.
Reconciliation of Net Income to EBITDA and Free Cash Flow
(dollars in millions)
Three Months Ended
March 31,
2004 2003
(unaudited)
Net income $12.3 $5.3
Cumulative effect of accounting
change -- net of tax - 0.5
Income tax expense 2.9 2.1
Interest expense -- net 17.1 18.0
Depreciation and amortization expense 23.6 21.8
EBITDA $55.9 $47.7
EBITDA from above $55.9 $47.7
Purchases of property, plant and equipment (11.8) (16.5)
Changes in accounts receivable, inventory and
accounts payable (29.8) (9.3)
Free cash flow $14.3 $21.9
Reconciliation of Net Income to EBITDA Excluding Special Items
(dollars in millions)
Three Months Ended
March 31,
2004 2003
(unaudited)
Net income $12.3 $5.3
Cumulative effect of accounting
change -- net of tax - 0.5
Income tax expense 2.9 2.1
Interest expense -- net 17.1 18.0
Depreciation and amortization expense 23.6 21.8
Restructuring and severance costs 2.8 2.0
Gain on sale of assets (0.7) -
EBITDA excluding special items $58.0 $49.7
Noveon, Inc.
Consolidated Statement of Operations
Reconciliation of Results as Reported to Results Excluding Special Items
Three Months Ended March 31, 2004 and 2003
(dollars in millions) (unaudited)
2004
Excluding
Reported Special Items Special Items
Sales $321.6 $ - $321.6
Cost of sales 227.6 - 227.6
Gross profit 94.0 - 94.0
Selling and administrative
expenses
55.7 - 55.7
Amortization expense 3.8 - 3.8
Restructuring and severance costs 2.8 (2.8) -
Operating income 31.7 2.8 34.5
Interest expense -- net 17.1 - 17.1
Other (income) expense -- net (0.6) 0.7 0.1
Income before income taxes 15.2 2.1 17.3
Income tax expense 2.9 - 2.9
Net income $12.3 $2.1 14.4
2003
Excluding
Reported Special Items Special Items
Sales $282.3 $- $282.3
Cost of sales 200.5 - 200.5
Gross profit 81.8 - 81.8
Selling and administrative
expenses
50.4 - 50.4
Amortization expense 3.6 - 3.6
Restructuring and severance costs 2.0 (2.0) -
Operating income 25.8 2.0 27.8
Interest expense -- net 18.0 - 18.0
Other income -- net (0.1) - (0.1)
Income before income taxes 7.9 2.0 9.9
Income tax expense 2.1 0.4 2.5
Income before cumulative
effect of accounting change 5.8 1.6 7.4
Cumulative effect of accounting
change -- net of tax 0.5 (0.5) -
Net income $5.3 $2.1 $7.4
Note: The special items include the restructuring and severance costs in
2004 and 2003, the gain on sale of assets in 2004 and the cumulative effect of
accounting change in 2003.
SOURCE Noveon, Inc.
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