Spartech Announces First Quarter 2012 Results
(Thomson Reuters ONE) -
St. Louis, Missouri, March 14, 2012 - Spartech Corporation (NYSE:SEH), a leading
producer of plastic sheet, compounds, and packaging solutions, announced today
operating results for its 2012 first quarter.
First Quarter 2012 Financial Results
* Net sales of $281.8 million for the first quarter of 2012 increased compared
to $234.8 million in 2011, representing 9% from price/mix changes, 8% impact
from an extra week in the current fiscal year quarter, and a 3% increase in
underlying volume.
* Operating losses excluding special items decreased to $0.5 million for the
first quarter of 2012 from $1.0 million in the prior year first quarter
representing a shift to higher margin products and increased volume.
* Excluding special items, diluted loss per share from continuing operations
was $(0.07) compared to $(0.04) in the first quarter of the prior year.
* The operations used $6.7 million of cash in the first quarter of 2012 to
fund an increase in net working capital.
Note: The Company's fiscal year ends on the Saturday closest to October 31st
and fiscal years generally contain 52 weeks. However, because of this accounting
convention, every fifth or sixth fiscal year has an additional week, and 2012
will be reported as a 53-week fiscal year. The Company's first quarter ended
February 4, 2012, and included 14 weeks compared to 13 weeks in the first
quarter of the prior year. Please see the reconciliation tables and narrative
below for adjustments to GAAP and discussion of special items affecting
results. Special items include restructuring and exit costs.
Spartech's President and Chief Executive Officer, Vicki Holt stated, "While our
first quarter is our seasonally low demand period, we gained momentum through
the quarter in our turnaround improvement efforts. We continued to see progress
in our key operating metrics and organic growth initiatives, but are not yet
pleased with our pace of change and we are increasing our efforts to execute
fundamental operational improvements."
Additionally, Holt stated, "Color and Specialty Compounds realized 13%
underlying volume growth as a result of improved service and Packaging
Technologies grew 2% as the development of new customer relationships are
starting to generate higher sales. The turnaround efforts in our Color and
Specialty Compounds segment have resulted in significant earnings improvement,
but more is being done to support further growth and continuous
improvement. Our Custom Sheet and Rollstock segment is committed to earnings
improvement in the year as we continue implementing change and
institutionalizing a culture and business processes focused on driving operating
improvements. Overall we are focused on service excellence and innovative
solutions, while enhancing margins through reduced waste and improved material
utilization."
Consolidated Results
Net sales were $281.8 million for the first quarter of 2012, representing a 9%
increase from price/mix, an 8% increase in volume from the impact of an extra
week and a 3% increase in underlying volume. The increase in underlying volume
is primarily attributed to the higher volume in our Color and Specialty
Compounds segment related to the construction, automotive and packaging end
markets, increased volume to the automotive sector in our Custom Sheet and
Rollstock segment, and increased volume in our Packaging Technologies segment
related to food packaging. These increases were somewhat offset by a decrease
in sales volume to the material handling and appliance and electronics end
markets in the Custom Sheet and Rollstock segment. The price/mix increase was
primarily related to a product mix that included a greater percentage of higher
priced products.
Gross margin per pound sold increased from 9.1 cents for the three months ended
January 29, 2011 to 9.7 cents for the three months ended February 4, 2012. The
increase primarily reflects improved material margin from an improved mix of
high material margin products somewhat offset by increased costs. Cost
increases compared to last year are the result of start up costs associated with
accelerating production on our first Packaging Technologies line in Mexico and
increases in repairs and maintenance, freight costs, labor and benefit expenses,
including health care and training costs.
Selling, general and administrative expenses were $21.8 million in the first
quarter of 2012 compared to $19.0 million in the prior year. The increase
reflects the impact of an additional week, which accounts for approximately $1.6
million of the total change. The remaining $1.2 million is primarily attributed
to higher consulting costs to initiate our turnaround effort, compensation and
benefit expenses, including health care costs.
The Company completed its previously announced restructuring efforts in 2011 and
therefore did not record any restructuring and exit costs in the first quarter
of 2012 compared to $0.8 million in the same period of the prior
year. Restructuring and exit costs were comprised of employee severance,
facility consolidation and shut-down costs and fixed asset valuation adjustments
for assets related to restructured facilities.
Interest expense, net of interest income, was $3.0 million in the first quarter
of 2012 compared to $2.6 million in the same period of the prior year. The
increase was primarily due to the extra week combined with an increase in
interest rates on existing debt.
Income tax benefit was $1.3 million in the first quarter of 2012 compared to a
$2.6 million benefit in the first quarter of 2011. Income tax benefit in the
first quarter of 2012 and 2011 reflects the losses reported in each period. The
additional benefit in the first quarter of 2011 can be attributed to a
reorganization of the Company's legal entities which resulted in a one-time $0.8
million deferred benefit.
We reported a net loss from continuing operations of $2.3 million or $(0.07) per
diluted share for the first quarter of 2012, compared to a net loss from
continuing operations of $1.8 million or $(0.06) per diluted share in the prior
year. Excluding special items (restructuring and exit costs), we reported net
loss from continuing operations of $2.3 million or $(0.07) per diluted share for
the first quarter of 2012, compared to a net loss of $1.3 million or $(0.04) per
diluted share in the prior year.
Net earnings from discontinued operations were negligible in the first three
months of 2012 compared to $2.9 million in the first quarter of 2011, which
mainly resulted from the settlement agreement for the breach of a contract by a
third party that led to $4.8 million in total cash proceeds.
Net cash used by operating activities was $6.7 million in the first three months
of 2012 compared to cash provided of $7.7 million in the prior year. The
decrease reflects the impact of a $3.3 million change in net earnings including
earnings from discontinued operations in 2011 and an increased investment in net
working capital in 2012. The increase in net working capital can be attributed
to receipts of a federal income tax refund of $5.7 million and payment on a note
receivable of $2.0 million in the first quarter of 2011, combined with a greater
relative decrease in accounts payable and lower relative increase in accrued
liabilities in the first quarter of 2012 compared to the first quarter of the
prior year.
Segment Results
The results of our three operating segments are discussed below. A table is
presented at the end of this release to reconcile amounts excluding special
items to comparable GAAP measures.
Custom Sheet and Rollstock - Net sales were $145.6 million for the three months
ended February 4, 2012, representing an 11% increase from price/mix, an 8%
increase in volume from the impact of an additional week, offset by a decrease
in other underlying volume of 5% when compared to 2011. The underlying sales
volume in this segment declined for the three months ended February 4, 2012
compared to the prior year, reflecting a decrease in sales volume to the
material handling and appliance and electronics end markets. These decreases
were somewhat offset by an increase in sales to the automotive sector and
recreation and leisure end markets. The price/mix increase was mostly caused by
a product mix that included a greater percentage of higher priced
products. Operating earnings excluding special items were $3.2 million for the
three months ended February 4, 2012 compared to $5.1 million for the three
months ended January 29, 2011. The decrease in earnings can be attributed to
increased costs related to compensation, repairs and maintenance, utilities,
freight and consulting costs to initiate our turnaround effort. The increased
costs were somewhat offset by higher volume and a greater mix of high margin
products. Both costs and volume were increased by the inclusion of an extra
week during the first quarter of 2012 compared to the same period last year.
Packaging Technologies - Net sales were $62.2 million for the three months ended
February 4, 2012, representing a 10% increase from price/mix, an 8% increase in
volume from the impact of an additional week, and an increase in other
underlying volume of 2% when compared to 2011. Underlying sales volume in this
segment was up due to an increase in volume to the food packaging market and
other packaging applications. The price/mix increase was primarily related to a
product mix that included a greater percentage of higher priced
products. Operating earnings excluding special items were $3.7 million for the
three months ended February 4, 2012 compared to $4.8 million for the three
months ended January 29, 2011. The decrease in earnings can be attributed to
increased costs related to compensation, depreciation expenses and freight, in
addition to start up costs associated with accelerating production on our first
Packaging Technologies line in Mexico. The increased costs were somewhat offset
by a greater mix of high material margin product compared to the prior
year. Both costs and volume were increased by the inclusion of an extra week
during the first quarter of 2012 compared to the same period last year.
Color and Specialty Compounds - Net sales were $73.9 million for the three
months ended February 4, 2012, representing a 12% increase from price/mix, an
8% increase in volume from the impact of an additional week, and an increase in
other underlying volume of 13% when compared to 2011. Underlying sales volume
for this segment was up due to a significant increase in sales to the commercial
construction market, automotive sector of the transportation market and
packaging market. The price/mix increase was mostly caused by a product mix that
included a greater percentage of higher priced products. Operating earnings
excluding special items were $0.8 million for the three months ended
February 4, 2012 compared to operating losses of $2.5 million in the same period
of the prior year. The increase in operating earnings was due to the increase
in sales volume, benefits from improvements on our key operating metrics and
greater mix of high material margin product compared to the prior year, which
more than offset the impact of cost increases related to repairs and maintenance
and compensation. Both cost and volume were increased by the inclusion of an
extra week during the first quarter of 2012 compared to the same period last
year.
Outlook
Although we expect our second quarter earnings will be comparable to the prior
year second quarter, we believe our second half of the year will build on our
foundation from the turnaround efforts over the last several quarters and
support an improvement in our annual earnings per share over the prior year.
Opportunity exists for additional margin improvement as we continue to execute
the turnaround in our Custom Sheet and Rollstock and Color and Specialty
Compounds segments. Slow and uncertain demand recovery in the markets we serve,
coupled with a dynamic raw materials market may impact our financial results in
future periods. We continue developing a back to basics culture as we move
forward in the execution of our key operating priorities. Using these
priorities as a foundation, we expect to execute on our organic growth strategy
and focus on shifting our product mix toward more specialized and higher margin
products. We are focused on providing innovative and sustainable plastics
solutions to our customers as we position ourselves as strategic partners within
the markets we serve.
Special Items and Discontinued Operations
The Company completed its previously announced restructuring efforts and
therefore did not record any restructuring and exit costs in the first quarter
of 2012 compared to $0.8 million in the prior year. Restructuring and exit
costs were comprised of employee severance, facility consolidation and shut-down
costs and fixed asset valuation adjustments for assets related to restructured
facilities.
Discontinued operations include our former marine business, sheet business in
Donchery, France, and toll compounding business in Arlington, Texas, which were
all shutdown in 2009 and the wheels and profiles businesses that were divested
in 2009.
**********
Spartech will hold a conference call with investors and financial analysts at
11:00 a.m. EST on Thursday, March 15, 2012, to discuss Spartech's first quarter
2012 financial results. Prior to this call, the Company will provide
supplemental slides on its website at www.spartech.com (under Presentations in
the Investor Relations menu). Investors can listen to the call live via webcast
by logging onto www.spartech.com, or via phone by dialing (877) 724-7545 and
providing the Conference ID #: 40095998. International callers may dial (832)
900-4628.
Spartech Corporation is a leading producer of plastic products including
polymeric compounds, concentrates, custom extruded sheet and rollstock products
and packaging technologies for a wide spectrum of customers. The Company's
three business segments, which operate facilities in the United States, Mexico,
Canada, and France, annually process approximately one billion pounds of plastic
resins, specialty plastic alloys, and color and specialty compounds.
Cautionary Statements Concerning Forward-Looking Statements
Statements in this press release that are not purely historical, including
statements that express the Company's belief, anticipation or expectation about
future events, are forward-looking statements. "Forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
relate to future events and expectations and include statements containing such
words as "anticipates," "believes," "estimates," "expects," "would," "should,"
"will," "will likely result," "forecast," "outlook," "projects," and similar
expressions. Forward-looking statements are based on management's current
expectations and include known and unknown risks, uncertainties and other
factors, many of which management is unable to predict or control, that may
cause actual results, performance or achievements to differ materially from
those expressed or implied in the forward-looking statements. Important factors
that could cause actual results to differ from our forward-looking statements
are as follows:
a) Adverse changes in economic or industry conditions, including global supply
and demand conditions and prices for products of the types we produce
b) Our ability to compete effectively on product performance, quality, price,
availability, product development, and customer service
c) Adverse changes in the markets we serve, including the packaging,
transportation, building and construction, recreation and leisure, and other
markets, some of which tend to be cyclical
d) Volatility of prices and availability of supply of energy and raw materials
that are critical to the manufacture of our products, particularly plastic
resins derived from oil and natural gas, including future impacts of natural
disasters
e) Our inability to manage or pass through to customers an adequate level of
increases in the costs of materials, freight, utilities, or other conversion
costs
f) Our inability to achieve and sustain the level of cost savings, productivity
improvements, gross margin enhancements, growth or other benefits anticipated
from our improvement initiatives
g) Our inability to collect all or a portion of our receivables with large
customers or a number of customers
h) Loss of business with a limited number of customers that represent a
significant percentage of our revenues
i) Restrictions imposed on us by instruments governing our indebtedness, the
possible inability to comply with requirements of those instruments and
inability to access capital markets
j) Possible asset impairments
k) Our inability to predict accurately the costs to be incurred, time taken to
complete, operating disruptions therefrom, potential loss of business or
savings to be achieved in connection with announced production plant
consolidations and line moves
l) Adverse findings in significant legal or environmental proceedings or our
inability to comply with applicable environmental laws and regulations
m) Our inability to develop and launch new products successfully
n) Possible weaknesses in internal controls
We assume no responsibility to update our forward-looking statements.
Spartech Corporation and Subsidiaries
Consolidated Condensed Statements of Operations
Three Months Ended
----------------------------
February 4, January 29,
(Unaudited and dollars in thousands, except per 2012 2011
share data)
--------------------------------------------------------------------------------
Net sales $ 281,781 $ 234,783
Costs and expenses
Cost of sales 260,109 216,377
Selling, general and administrative expenses 21,776 18,974
Amortization of intangibles 422 422
Restructuring and exit costs - 828
--------------------------------------------------------------------------------
Total costs and expenses 282,306 236,601
--------------------------------------------------------------------------------
Operating loss (526) (1,818)
Interest expense, net of interest income 3,020 2,571
--------------------------------------------------------------------------------
Loss from continuing operations before income (3,546) (4,389)
taxes
Income tax benefit (1,276) (2,551)
--------------------------------------------------------------------------------
Net loss from continuing operations (2,270) (1,838)
Net earnings from discontinued operations, 21 2,871
net of tax
--------------------------------------------------------------------------------
Net (loss) earnings $ (2,249) $ 1,033
--------------------------------------------------------------------------------
Basic (loss) earnings per share:
Loss from continuing operations $ (0.07) $ (0.06)
Earnings from discontinued operations, net of tax 0.00 0.09
--------------------------------------------------------------------------------
Net (loss) earnings per share $ (0.07) $ 0.03
--------------------------------------------------------------------------------
Diluted (loss) earnings per share:
Loss from continuing operations $ (0.07) $ (0.06)
Earnings from discontinued operations, net of tax 0.00 0.09
--------------------------------------------------------------------------------
Net (loss) earnings per share $ (0.07) $ 0.03
--------------------------------------------------------------------------------
Spartech Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited) October 29,
February 4,
(Dollars in thousands, except share data) 2012 2011
--------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 728 $ 877
Trade receivables, net of allowances of $2,544 and 140,146 156,432
$2,437, respectively
Inventories, net of inventory reserves of $9,579 and 102,450 91,186
$9,152, respectively
Prepaid expenses and other current assets, net 30,704 26,367
Assets held for sale 2,624 2,744
--------------------------------------------------------------------------------
Total current assets 276,652 277,606
Property, plant, and equipment, net 203,775 208,074
Goodwill 47,466 47,466
Other intangible assets, net 12,449 12,872
Other long-term assets 4,018 3,684
--------------------------------------------------------------------------------
Total assets $ 544,360 $ 549,702
--------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt $ 25,066 $ 25,211
Accounts payable 125,499 140,628
Accrued liabilities 31,755 30,919
--------------------------------------------------------------------------------
Total current liabilities 182,320 196,758
Long-term debt, less current maturities 142,764 132,000
Other long-term liabilities:
Deferred taxes 41,678 41,676
Other long-term liabilities 5,981 6,336
--------------------------------------------------------------------------------
Total liabilities 372,743 376,770
Shareholders' equity
Preferred stock (authorized: 4,000,000 shares, par - -
value $1.00)
Issued: None
Common stock (authorized: 55,000,000 shares, par 24,849 24,849
value $0.75)
Issued: 33,131,846 shares; outstanding: 30,805,528
and
30,831,919 shares, respectively
Contributed capital 202,179 201,945
Accumulated loss (13,280) (11,031)
Treasury stock, at cost, 2,326,318 and 2,299,927 (48,641) (49,286)
shares, respectively
Accumulated other comprehensive income 6,510 6,455
--------------------------------------------------------------------------------
Total shareholders' equity 171,617 172,932
--------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 544,360 $ 549,702
--------------------------------------------------------------------------------
Spartech Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
Three Months Ended
--------------------------
February 4, January 29,
(Unaudited and dollars in thousands) 2012 2011
--------------------------------------------------------------------------------
Cash flows from operating activities
Net (loss) earnings $ (2,249) $ 1,033
Adjustments to reconcile net (loss) earnings to net
cash (used)
provided by operating activities:
Depreciation and amortization 8,227 8,101
Stock-based compensation expense 943 893
Restructuring and exit costs - 76
Loss on disposition of assets, net 53 124
Provision for bad debt expense 282 207
Change in current assets and liabilities (13,793) (1,329)
Other, net (177) (1,394)
--------------------------------------------------------------------------------
Net cash (used) provided by operating activities (6,714) 7,711
Cash flows from investing activities
Capital expenditures (3,884) (7,986)
Proceeds from the disposition of assets 105 -
--------------------------------------------------------------------------------
Net cash used by investing activities (3,779) (7,986)
Cash flows from financing activities
Bank credit facility borrowings, net 11,009 800
Payments on bonds and leases (122) (119)
Debt issuance costs (485) (1,595)
Stock-based compensation exercised (62) (180)
--------------------------------------------------------------------------------
Net cash provided (used) by financing activities 10,340 (1,094)
Effect of exchange rates on cash and cash equivalents 4 4
--------------------------------------------------------------------------------
Decrease in cash and cash equivalents (149) (1,365)
Cash and cash equivalents at beginning of year 877 4,900
--------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 728 $ 3,535
--------------------------------------------------------------------------------
Non-GAAP Reconciliations
Within this press release we have included operating loss (GAAP) to operating
loss excluding special items (Non-GAAP), net loss from continuing operations
(GAAP) to net loss from continuing operations excluding special items (Non-GAAP)
and net loss from continuing operations per diluted share (GAAP) to net loss
from continuing operations per diluted share excluding special items (Non-
GAAP). We have also excluded the operations of our discontinued wheels,
profiles, marine, Donchery sheet and Arlington, Texas compounding operations
throughout this press release and in the presentation below.
We use these measurements to assess our ongoing operating results without the
effect of these adjustments and compare such results to our historical and
planned operating results. We believe these measurements are useful to help
investors to compare our results to previous periods and provide an indication
of underlying trends in the business. Such non-GAAP measurements are not
recognized in accordance with generally accepted accounting principles (GAAP)
and should not be viewed as an alternative to GAAP measures of performance.
The following tables reconcile (GAAP) to (Non-GAAP) measures:
Three Months Ended
---------------------------
February 4, January 29,
(unaudited and in thousands, except per share data) 2012 2011
--------------------------------------------------------------------------------
Operating loss (GAAP) $ (526) $ (1,818)
Restructuring and exit costs - 828
--------------------------------------------------------------------------------
Operating loss excluding special items (Non-GAAP) $ (526) $ (990)
--------------------------------------------------------------------------------
Net loss from continuing operations (GAAP) $ (2,270) $ (1,838)
Restructuring and exit costs, net of tax - 513
--------------------------------------------------------------------------------
Net loss from continuing operations $ (2,270) $ (1,325)
excluding special items (Non-GAAP)
--------------------------------------------------------------------------------
Net loss from continuing operations $ (0.07) $ (0.06)
per diluted share (GAAP)
Restructuring and exit costs, net of tax (0.00) 0.02
--------------------------------------------------------------------------------
Net loss from continuing operations per diluted $ (0.07) $ (0.04)
share
excluding special items (Non-GAAP)
--------------------------------------------------------------------------------
The following table reconciles operating (loss) earnings (GAAP) to operating
earnings (loss) excluding special items (Non-GAAP) by segment (in thousands):
Three Months Ended February Three Months Ended January
4, 2012 29, 2011
------------------------------------------------- ----------------------------------
Segment Operating Special Operating Operating Special Operating
Earnings Items Earnings Earnings Items Earnings
(Loss) (Loss) (Loss) (Loss)
(GAAP) Excluding (GAAP) Excluding
Special Special
Items Items
(Non- (Non-
GAAP) GAAP)
------------------------------------------------------------------------------------
Custom Sheet $ 3,214 $ - $ 3,214 $ 4,777 $ 350 $ 5,127
and
Rollstock
Packaging 3,706 - 3,706 4,642 116 4,758
Technologies
Color and 821 - 821 (2,892) 356 (2,536)
Specialty
Compounds
Corporate (8,267) - (8,267) (8,345) 6 (8,339)
Total $ (526) $ - $ (526) $ (1,818) $ 828 $ (990)
COMPANY CONTACTS:
Victoria M. Holt
President and Chief Executive Officer
(314) 721-4242
Randy C. Martin
Executive Vice President Corporate Development
and Chief Financial Officer
(314) 721-4242
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Spartech Corporation via Thomson Reuters ONE
[HUG#1592711]
Unternehmensinformation / Kurzprofil:
Datum: 14.03.2012 - 22:15 Uhr
Sprache: Deutsch
News-ID 125011
Anzahl Zeichen: 36558
contact information:
Town:
Clayton, Missouri
Kategorie:
Business News
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