CLEVELAND, Nov. 14 /PRNewswire/ -- Noveon, Inc. today reports selected
financial results for the third quarter of 2002.
Three Months Ended Nine Months Ended
September 30 September 30
Actual Actual Pro forma(1) Actual
2001 2002 2001 2002
Unaudited Unaudited
Sales $262.4 $273.2 $815.2 $813.5
Gross Profit $70.8 $89.0 $217.8 $266.0
Operating Income $15.0 $33.1 $45.1 $100.9
Net Income (Loss) $(6.0) $12.3 $(32.0) $36.6
Adjusted EBITDA(2) $44.3 $56.2 $130.7 $167.8
Free Cash Flow(3) $69.7 $47.5 $128.1 $132.0
Cash Balance $78.5 $151.9 $78.5 $151.9
(1) The pro forma amounts reflect the effect of the acquisition of the
Performance Materials Segment of Goodrich 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, 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.
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Third Quarter 2002
For the quarter, Noveon reports sales of $273.2 million, adjusted EBITDA
of $56.2 million and net income of $12.3 million. For the third quarter of
2001, Noveon reported sales of $262.4 million, adjusted EBITDA of
$44.3 million and a net loss of $6.0 million.
Sales increased 4% from the prior year reflecting stronger volumes within
Noveon's personal care, Estane(R) TPU and specialty coatings product lines,
incremental acquisition-related revenue and the impact of the stronger Euro;
partially offset by the impact of discontinued product lines at our Cincinnati
colorants operation and a product mix shift coupled with competitive pricing
pressure within our Estane(R) TPU product line. Adjusted EBITDA increased 27%
over the prior year primarily due to lower raw material and utility costs,
higher sales volumes and lower manufacturing costs resulting from productivity
initiatives; 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 due to improved
financial performance and the participation of substantially all employees.
Net income increased by $18.3 million from a loss of $6.0 million in 2001 to
income of $12.3 million in 2002. Also, free cash flow decreased 32% from
$69.7 million to $47.5 million as higher adjusted EBITDA was 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 third quarter of 2001. During the quarter, net debt decreased $19.6
million due to continued cash generation and debt repayment.
Steve Demetriou, Noveon president and chief executive officer, said, "We
are very pleased with our third quarter results despite the weakness in the
overall economy. Our growth is indicative of the diversity of Noveon's
portfolio. Our personal care product lines continue to grow as we focus on
expanding uses for Carbopol(R) and successfully add new products to the
line-up. Despite continued slow industrial demand, Estane(R) TPU demonstrated
year-over-year improvements in the quarter, capitalizing on share shift
opportunities and solid growth in Asia. Going into the fourth quarter, I
would characterize our customer base as hesitant given the ongoing economic
uncertainty, but we will continue to drive productivity improvements, focus on
generating strong free cash flow and invest in growth opportunities."
Consumer Specialties
Noveon's Consumer Specialties segment reported a sales increase of 5% from
$72.9 million to $76.4 million compared with the prior year third quarter
driven by higher Carbopol(R) acrylic thickener volume and the impact of new
product introductions within the personal care product lines, a better product
mix within pharmaceuticals and the impact of the stronger Euro; partially
offset by the impact of discontinued product lines at our Cincinnati colorants
operation. Adjusted EBITDA increased by 30% or $4.5 million from $14.8
million in 2001 to $19.3 million in 2002, principally due to higher
Carbopol(R) sales, favorable raw material and utility costs and productivity
benefits.
Specialty Materials
Noveon's Specialty Materials segment reported a sales increase of 5% from
$97.1 million to $101.7 million compared to the third quarter of the prior
year due to higher volume in Estane(R) TPU, TempRite's(R) BlazeMaster(R) fire
sprinkler and flexible piping applications, polymer additives' reactive liquid
polymer product lines and the impact of the stronger Euro; partially offset by
a product mix shift along with competitive pricing pressure within our
Estane(R) TPU product lines and lower volumes and pricing in polymer
additives' rubber chemical and antioxidant product lines. Adjusted EBITDA
increased by 30% or $7.4 million from $25.0 million in 2001 to $32.4 million
in 2002 due to lower raw material and utility costs and higher volume;
partially offset by higher selling general and administrative costs due to
increased growth resources.
Performance Coatings
Performance Coatings sales increased by 3% from $92.4 million to $95.1
million compared to the third quarter of the prior year due to higher volume
within the specialty coatings and graphic arts product lines and the impact of
the stronger Euro; partially offset by volume declines in textile related
applications. Adjusted EBITDA increased by 13% or $2.1 million from $16.0
million to $18.1 million due to lower raw material and utility costs and
higher volume.
Corporate
In the third quarter, corporate overhead expenses excluding depreciation,
management fees and restructuring costs increased by $2.1 million from $11.5
million in 2001 to $13.6 million in 2002. The increase is primarily the
result of the costs associated with variable incentive compensation plans
driven by Noveon's improved financial performance and the participation of
substantially all employees.
Nine-Month Results
For the nine months ended September 30, 2002, Noveon reports sales of
$813.5 million, adjusted EBITDA of $167.8 million and net income of $36.6
million. For the pro forma nine months ended September 30, 2001, Noveon
reported sales of $815.2 million, adjusted EBITDA of $130.7 million and a net
loss of $32.0 million. Pro forma nine-month results for 2001 reflect the
effects of the acquisition of the Performance Materials Segment of Goodrich on
February 28, 2001 as if the acquisition occurred on January 1, 2001.
Sales decreased $1.7 million from the prior year pro forma period for the
nine months ended September 30, 2002, reflecting lower volumes in textile
coatings and other industrial and automotive related applications, lower
European demand, competitive pricing pressure and the impact of the
discontinued product lines at our Cincinnati colorants operation; partially
offset by strong volume growth within our TempRite(R) and personal care
product lines and the incremental impact of acquisitions. Adjusted EBITDA
increased 28% 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) and personal care. Net income
improved $68.6 million from a pro forma net loss of $32.0 million to net
income of $36.6 million. Free cash flow improved by 3% from $128.1 million
from pro forma 2001 to $132.0 million in 2002 due primarily to higher adjusted
EBITDA; partially offset by higher capital spending and incremental working
capital related to improved sales in the third quarter versus the significant
cash generated from working capital in 2001. Net debt decreased $44.7 million
since December 31, 2001 due to continued strong cash generations and debt
reductions.
Noveon will be hosting a conference call to discuss third quarter results
today, November 14, 2002 at 3:00 PM 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 third quarter earnings call (confirmation
code 6423081). A replay of the call will be available through Thursday,
November 21 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. 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. 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)
(unaudited)
Three Months Ended
September 30,
2001 2002
Sales $262.4 $273.2
Cost of sales 191.6 184.2
Gross profit 70.8 89.0
Selling and administrative expenses 46.7 51.3
Amortization expense 8.4 3.5
Consolidation costs 0.7 1.1
Operating income 15.0 33.1
Interest income (expense)-net (21.7) (18.9)
Other income (expense)-net (0.2) (0.1)
Income (loss) before income taxes (6.9) 14.1
Income tax benefit (expense) 0.9 (1.8)
Net income (loss) $(6.0) $12.3
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Condensed Consolidated Statement of Operations
(dollars in millions)
BFGoodrich
Performance
Materials Noveon, Inc.
Actual Actual Pro Forma Actual
Two Months Seven Months Nine Months Nine Months
Ended Ended Ended Ended
February 28, September 30, September 30, September 30,
2001 2001 2001 2002
(unaudited)
Sales $187.0 $629.3 $815.2 $813.5
Cost of sales 137.3 460.0 597.4 547.5
Gross profit 49.7 169.3 217.8 266.0
Selling and
administrative expenses 35.2 111.4 146.6 151.7
Amortization expense 4.0 19.4 24.7 10.5
Consolidation costs -- 1.4 1.4 2.9
Operating income 10.5 37.1 45.1 100.9
Interest income
(expense)-net 0.6 (54.6) (69.9) (57.4)
Other income
(expense)-net (1.5) (1.9) (3.4) (0.2)
Income (loss) before
income taxes 9.6 (19.4) (28.2) 43.3
Income tax
benefit (expense) (4.0) 5.9 (3.8) (6.7)
Net income (loss) $5.6 $(13.5) $(32.0) $36.6
Note: The pro forma results for the nine months ended September 30, 2001
reflect the effect of the acquisition of the Performance Materials Segment of
Goodrich on February 28, 2001 as if the acquisition occurred on January 1,
2001.
Noveon, Inc.
Condensed Consolidated Balance Sheet
(dollars in millions)
December 31, September 30,
2001 2002
(unaudited)
Current assets
Cash and cash equivalents $120.0 $151.9
Accounts and notes receivable,
less allowances for doubtful receivables
($8.7 and $8.9 at December 31, 2001 and
September 30, 2002, respectively) 133.8 153.9
Inventories 140.2 136.9
Prepaid expenses and other current assets 4.5 6.9
Total current assets 398.5 449.6
Property, plant and equipment-net 672.5 656.4
Goodwill-net 346.9 369.6
Identifiable intangible assets-net 192.0 183.0
Other assets 51.9 45.7
Total assets $1,661.8 $1,704.3
Current liabilities
Short-term bank debt $1.3 $0.1
Accounts payable 97.1 105.8
Accrued expenses 74.2 67.9
Income taxes payable 1.0 4.0
Current maturities of long-term debt 23.2 24.0
Total current liabilities 196.8 201.8
Long-term debt 876.2 863.8
Postretirement benefits other than pensions 5.3 5.7
Accrued pensions 32.8 32.4
Deferred income taxes 24.6 26.8
Accrued environmental 20.7 20.8
Other non-current liabilities 9.2 17.7
Stockholder's equity
Common stock -- --
Paid in capital 527.0 527.0
Retained earnings (deficit) (20.6) 16.0
Accumulated other comprehensive loss (10.2) (7.7)
Total stockholder's equity 496.2 535.3
Total liabilities and stockholder's equity $1,661.8 $1,704.3
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Condensed Consolidated Statement of Cash Flows
(dollars in millions)
BFGoodrich
Performance
Materials Noveon, Inc.
Two Months Seven Months Nine Months
Ended Ended Ended
February 28, September 30, September 30,
2001 2001 2002
(unaudited)
Operating activities
Net income (loss) $5.6 $(13.5) $36.6
Adjustments to reconcile net
income (loss) to net cash
provided (used) by
operating activities:
Depreciation and amortization 14.4 62.5 61.3
Deferred income taxes (5.2) (10.4) 2.2
Debt issuance cost amortization
in interest expense -- 5.2 4.2
Change in assets and liabilities,
net of effects of acquisitions
and dispositions of businesses (46.4) 48.2 (7.5)
Net cash provided (used)
by operating activities (31.6) 92.0 96.8
Investing activities
Purchases of property,
plant and equipment (7.6) (16.0) (27.7)
Payments made in connection
with acquisitions,
net of cash acquired -- (1,187.3) (20.6)
Net cash (used)
by investing activities (7.6) (1,203.3) (48.3)
Financing activities
Decrease in short-term debt (3.7) (25.9) (0.4)
Payments on long-term borrowings -- (5.2) (18.9)
Proceeds from issuance
of long-term debt -- 910.0 --
Proceeds from sale of
receivables, net 0.5 -- --
Debt issuance costs -- (44.3) --
Equity contribution
from stockholder -- 355.0 --
Transfers from Parent 40.7 -- --
Net cash provided (used)
by financing activities 37.5 1,189.6 (19.3)
Effect of exchange rate changes
on cash and cash equivalents -- 0.2 2.7
Net increase (decrease) in
cash and cash equivalents (1.7) 78.5 31.9
Cash and cash equivalents
at beginning of period 15.7 -- 120.0
Cash and cash equivalents
at end of period $14.0 $78.5 $151.9
Non-cash transactions
Equity contribution $ -- $172.0 $ --
SOURCE Noveon, Inc.
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CONTACT:
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Inc.
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