Platform Specialty Products Corporation (NYSE: PAH) (“Platform” or
the “Company”), a global and diversified specialty chemicals
company, today announced financial results from continuing
operations for the third quarter ended September 30, 2018.
Unless otherwise specified, the results
presented in this press release exclude discontinued
operations. Discontinued operations relate to Platform's
Agricultural Solutions business, which consists of Arysta
LifeScience Inc. and its subsidiaries. On July 20,
2018, Platform entered into a definitive agreement to sell Arysta
LifeScience Inc. to UPL Corporation Ltd. for $4.2
billion in cash, subject to adjustments. The Company's
continuing operations include the existing senior notes and term
loans and the related liabilities and interest expense. For
unaudited recasted consolidated financial statements illustrating
the impact of the sale of Agricultural Solutions on Platform's
historical results, see Platform's Current Report on Form 8-K dated
November 1, 2018.
Executive Commentary
Platform’s CEO Rakesh Sachdev said, “Our third
quarter results demonstrate another quarter of growth in both net
sales and adjusted EBITDA. The Performance Solutions
businesses in continuing operations - the Element Solutions
portfolio - achieved positive organic sales growth in all end
markets, despite macro challenges. We experienced softness in
certain of our end-markets, particularly in Asia, and we see this
trend continuing in the fourth quarter. On a reported basis,
currency fluctuations, particularly the Brazilian Real and Chinese
Yuan, had a negative impact on our results. From an Adjusted
EBITDA perspective, our positive topline growth was partially
offset by unfavorable product mix pressure as the higher margin
Asian electronics end-market experienced slower growth.
Despite these pressures and some increased raw material prices, the
business showed resilience around the world. This resilience
is a testament to the quality of the businesses and the strength of
our diversified business model.”
“We are pleased to report that we have made
significant progress towards completing the announced sale of our
Agricultural Solutions segment, Arysta. In coordination with
UPL, we have filed with all necessary regulatory bodies and have
already received several key merger control approvals including in
the United States (“HSR”) and Brazil. Both parties are
hopeful that we will be able to close the transaction on December
31, 2018, although the exact timing will be controlled by the
outstanding regulatory clearances. In addition to regulatory
filings, both sides have been working expeditiously to prepare for
a smooth transition and integration. There is a lot of
excitement for the next chapter within both companies. For
our Performance Solutions segment, which will form the foundation
of the new Element Solutions, we are well advanced with our
targeted initiatives including a comprehensive strategy
review and the transition to a one company structure with its
associated efficiencies and cost savings. We have already
begun realizing a portion of these savings and are enthusiastic
about the more nimble company we will become. We look forward
to sharing our progress on this further in the coming weeks and
months.”
Sachdev continued, “We are reaffirming our
previously announced adjusted EBITDA guidance range, excluding
Arysta, of $425 million to $445 million, which includes $5 million
of savings that will be realized in 2018 associated with the
reorganization into a one-company structure. We expect the
remaining $20 million of estimated savings we communicated when we
announced the Arysta sale to be realized on a run-rate basis in
2019. Given the significant realized and anticipated currency
headwinds and a degree of market softness, particularly in Asia, we
currently expect to be at the lower-end of our 2018 guidance
range. Achieving our expected financial and operating results
and finalizing our restructuring plans are key priorities for the
rest of the year.”
Third Quarter 2018 Income Statement
Highlights (Compared with Third Quarter 2017) for Continuing
Operations:
- Net sales on a reported basis for the third quarter of 2018
were $489 million, an increase of 2%.- Organic sales, which
exclude the impact of currency changes, certain pass-through metals
pricing and acquisitions, increased 3%.
- Third quarter 2018 earnings per share performance:- GAAP
diluted loss per share from continuing operations was $0.02,
compared to a loss of $0.13.- Adjusted earnings per share
were $0.04, an improvement of $0.02 per share.
- Reported net loss from continuing operations for the third
quarter of 2018 was $4.3 million, compared to a net loss of $36.9
million.
- Adjusted EBITDA for the third quarter of 2018 was $108 million,
an increase of 1%.- On a constant currency basis, adjusted
EBITDA increased 3%.
2018 Guidance Reaffirmed
Platform reaffirmed its prior 2018 adjusted
EBITDA guidance, excluding Arysta LifeScience, of $425 million to
$445 million. This guidance range includes $5 million of
savings expected to be realized in 2018 in connection with the
reorganization of Platform into the new Element Solutions
one-company structure. Platform expects to realize the
remaining $20 million of run-rate savings in 2019.
Update on Announced Arysta Sale
Transaction
Platform is currently targeting to complete the sale of Arysta
LifeScience at year end 2018. Regulatory clearances and
approvals are believed to be the key remaining items to ensure a
timely closing and the parties are working diligently to obtain
them by year end. Several key approvals have already been
received including in the United States (“HSR”) and Brazil.
Conference Call
Platform will host a webcast/dial-in conference
call to discuss its third quarter of 2018 financial results at 8:30
a.m. (Eastern Time) on Thursday, November 1, 2018.
Participants on the call will include Rakesh Sachdev, Chief
Executive Officer; John P. Connolly, Chief Financial Officer;
Benjamin Gliklich, Executive Vice President - Operations and
Strategy; Scot R. Benson, President - Performance Solutions and
Diego Lopez Casanello, President - Agricultural Solutions.
To listen to the call by telephone, please dial
877-876-9173 (domestic) or 785-424-1667 (international) and provide
the Conference ID: PAHQ318 or Program Title: Third Quarter 2018
Earnings. The call will be simultaneously webcast
at www.platformspecialtyproducts.com. A replay of the
webcast will be available for three weeks shortly after completion
of the live call at www.platformspecialtyproducts.com.
About Platform
Platform is a global and diversified producer of
high-technology specialty chemicals and provider of technical
services. The business involves the formulation of a broad
range of solutions-oriented specialty chemicals, which are sold
into multiple industries, including automotive, electronics,
graphic arts, and offshore oil and gas production and
drilling. More information on Platform is available at
www.platformspecialtyproducts.com.
Forward-Looking Statements
This release is intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995 as it contains "forward-looking
statements" within the meaning of the federal securities laws.
These statements will often contain words such as "expect,"
"anticipate," "project," "will," "should," "believe," "intend,"
"plan," "estimate," "predict," "seek," "continue," "outlook,"
"may," "might," "should," "can have," "likely," "potential,"
"target," "hope" or "hopeful" and variations of such words and
similar expressions. Examples of forward-looking statements
include, but are not limited to, statements, beliefs, projections
and expectations regarding the announced sale of Arysta LifeScience
and the timing for completion of this transaction; the ability of
the parties to close this transaction, including obtaining the
outstanding regulatory clearances and meeting other closing
conditions for the transaction; targeted initiative related to
future strategy, the transition to one-company model and the
associated efficiencies and cost savings, including the remaining
$20 million of estimated savings expected to be realized on a
run-rate basis in 2019; the amount of any impairment charge
required to be recorded and the effect on Platform’s results of
operations; target leverage ratio and 2018 adjusted EBITDA guidance
for Platform's continuing operations; achieving expected financial
and operating results and finalizing restructuring plans for and by
the end of the year. These projections and statements are based on
management's estimates, assumptions or expectations with respect to
future events and financial performance, and are believed to be
reasonable, though are inherently uncertain and difficult to
predict. Actual results could differ materially from those
expressed or implied in the forward-looking statements if one or
more of the underlying estimates, assumptions or expectations prove
to be inaccurate or are unrealized. Important factors that
could cause actual results to differ materially from those
suggested by the forward-looking statements include, but are not
limited to, the occurrence of any event, change or other
circumstances that could give rise to the termination of the Arysta
transaction; the risk that the outstanding regulatory clearances
may not be obtained or may be delayed or obtained subject to
conditions that are not anticipated; the risk that the transaction
will not be consummated in a timely manner or by the targeted date;
the risk that Platform will experience unanticipated delays or
difficulties and transaction costs in consummating the transaction;
the risk that any of the closing conditions to the transaction may
not be satisfied in a timely manner or at all; the risk related to
disruption from the transaction and the related diverting of
management’s attention making it more difficult to maintain
business and operational relationships; the failure to realize the
benefits, efficiencies and cost savings expected from the
transaction or related strategic initiatives; the impact of the
transaction on Platform's share price and market volatility; the
effect of the announcement of the transaction on the ability of
Platform to retain customers and suppliers, retain or hire key
personnel, and maintain relationships with customers, suppliers and
lenders; the effect of the transaction or the announcement and
completion of related transactions on Platform’s operating results
and businesses generally; the impact of the Tax Reform on
Platform’s businesses; the impact of any future acquisitions or
additional divestitures, restructurings, refinancings, and other
unusual items, including Platform's ability to raise or retire debt
or equity and to integrate and obtain the anticipated benefits,
results and/or synergies from these items or other related
strategic initiatives; and the possibility of more attractive
strategic options arising in the future. Additional
information concerning these and other factors that could cause
actual results to vary is, or will be, included in Platform's
periodic and other reports filed with the Securities and Exchange
Commission. Platform undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited) |
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in millions, except
per share amounts) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
sales |
$ |
488.5 |
|
|
$ |
480.6 |
|
|
$ |
1,482.6 |
|
|
$ |
1,390.0 |
|
Cost of
sales |
278.9 |
|
|
272.4 |
|
|
847.2 |
|
|
788.4 |
|
Gross
profit |
209.6 |
|
|
208.2 |
|
|
635.4 |
|
|
601.6 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
technical, general and administrative |
139.5 |
|
|
140.2 |
|
|
424.6 |
|
|
420.2 |
|
Research
and development |
10.5 |
|
|
11.2 |
|
|
33.1 |
|
|
33.8 |
|
Total operating
expenses |
150.0 |
|
|
151.4 |
|
|
457.7 |
|
|
454.0 |
|
Operating
profit |
59.6 |
|
|
56.8 |
|
|
177.7 |
|
|
147.6 |
|
Other expense: |
|
|
|
|
|
|
|
Interest
expense, net |
(77.9 |
) |
|
(84.7 |
) |
|
(233.4 |
) |
|
(256.3 |
) |
Foreign
exchange (loss) gain |
(4.7 |
) |
|
(11.2 |
) |
|
0.4 |
|
|
(47.5 |
) |
Other
(expense) income, net |
(0.1 |
) |
|
0.6 |
|
|
13.6 |
|
|
3.4 |
|
Total other
expense |
(82.7 |
) |
|
(95.3 |
) |
|
(219.4 |
) |
|
(300.4 |
) |
Loss before
income taxes and non-controlling interests |
(23.1 |
) |
|
(38.5 |
) |
|
(41.7 |
) |
|
(152.8 |
) |
Income
tax benefit (expense) |
18.8 |
|
|
1.6 |
|
|
(21.1 |
) |
|
(20.2 |
) |
Net loss from
continuing operations |
(4.3 |
) |
|
(36.9 |
) |
|
(62.8 |
) |
|
(173.0 |
) |
(Loss)
income from discontinued operations, net of tax |
(401.6 |
) |
|
(29.4 |
) |
|
(293.3 |
) |
|
23.1 |
|
Net
loss |
(405.9 |
) |
|
(66.3 |
) |
|
(356.1 |
) |
|
(149.9 |
) |
Net
income attributable to the non-controlling interests |
(3.0 |
) |
|
(2.9 |
) |
|
(3.5 |
) |
|
(4.8 |
) |
Net loss
attributable to common stockholders |
$ |
(408.9 |
) |
|
$ |
(69.2 |
) |
|
$ |
(359.6 |
) |
|
$ |
(154.7 |
) |
(Loss) earnings
per share |
|
|
|
|
|
|
|
Basic
from continuing operations |
$ |
(0.02 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.62 |
) |
Basic
from discontinued operations |
(1.40 |
) |
|
(0.11 |
) |
|
(1.02 |
) |
|
0.08 |
|
Basic attributable to common stockholders |
$ |
(1.42 |
) |
|
$ |
(0.24 |
) |
|
$ |
(1.25 |
) |
|
$ |
(0.54 |
) |
|
|
|
|
|
|
|
|
Diluted
from continuing operations |
$ |
(0.02 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.62 |
) |
Diluted
from discontinued operations |
(1.40 |
) |
|
(0.11 |
) |
|
(1.02 |
) |
|
0.08 |
|
Diluted attributable to common stockholders |
$ |
(1.42 |
) |
|
$ |
(0.24 |
) |
|
$ |
(1.25 |
) |
|
$ |
(0.54 |
) |
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
|
|
|
Basic |
288.2 |
|
|
286.7 |
|
|
288.1 |
|
|
285.8 |
|
Diluted |
288.2 |
|
|
286.7 |
|
|
288.1 |
|
|
285.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited) |
|
|
September 30, |
|
December 31, |
(in millions) |
2018 |
|
2017 |
Assets |
|
|
|
Cash and cash
equivalents |
$ |
252.2 |
|
|
$ |
258.4 |
|
Accounts receivable,
net of allowance for doubtful accounts of $7.8 and $8.2 at
September 30, 2018 and December 31, 2017, respectively |
400.3 |
|
|
399.8 |
|
Inventories |
210.2 |
|
|
186.4 |
|
Prepaid expenses and
other current assets |
59.6 |
|
|
63.9 |
|
Current assets of
discontinued operations |
1,545.0 |
|
|
1,432.1 |
|
Total current assets |
2,467.3 |
|
|
2,340.6 |
|
Property, plant and
equipment, net |
270.1 |
|
|
287.4 |
|
Goodwill |
2,187.4 |
|
|
2,252.6 |
|
Intangible assets,
net |
1,054.4 |
|
|
1,160.8 |
|
Other assets |
28.8 |
|
|
42.4 |
|
Non-current assets of
discontinued operations |
3,383.5 |
|
|
4,168.6 |
|
Total assets |
$ |
9,391.5 |
|
|
$ |
10,252.4 |
|
Liabilities
& stockholders' equity |
|
|
|
Accounts payable |
$ |
112.7 |
|
|
$ |
111.2 |
|
Accrued expenses and
other current liabilities |
171.5 |
|
|
215.6 |
|
Current liabilities of
discontinued operations |
842.4 |
|
|
764.9 |
|
Total current liabilities |
1,126.6 |
|
|
1,091.7 |
|
Debt and capital lease
obligations |
5,389.9 |
|
|
5,437.1 |
|
Pension and
post-retirement benefits |
53.4 |
|
|
56.3 |
|
Deferred income
taxes |
145.3 |
|
|
170.0 |
|
Contingent
consideration |
81.7 |
|
|
79.2 |
|
Other liabilities |
76.9 |
|
|
85.5 |
|
Non-current liabilities
of discontinued operations |
406.4 |
|
|
472.6 |
|
Total liabilities |
7,280.2 |
|
|
7,392.4 |
|
Stockholders'
equity |
|
|
|
Preferred stock -
Series A |
— |
|
|
— |
|
Common stock: 400.0
shares authorized (2018: 288.3 shares issued; 2017: 287.4 shares
issued) |
2.9 |
|
|
2.9 |
|
Additional paid-in
capital |
4,054.0 |
|
|
4,032.0 |
|
Treasury stock (2018
and 2017: 0.0 shares) |
(0.1 |
) |
|
(0.1 |
) |
Accumulated
deficit |
(1,230.6 |
) |
|
(871.0 |
) |
Accumulated other
comprehensive loss |
(780.0 |
) |
|
(420.7 |
) |
Total stockholders' equity |
2,046.2 |
|
|
2,743.1 |
|
Non-controlling
interests |
65.1 |
|
|
116.9 |
|
Total equity |
2,111.3 |
|
|
2,860.0 |
|
Total liabilities and stockholders' equity |
$ |
9,391.5 |
|
|
$ |
10,252.4 |
|
|
|
|
|
|
|
|
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited) |
|
|
Three Months Ended |
|
|
Nine Months Ended |
(in millions) |
September 30,2018 |
|
June 30,2018 |
|
March 31,2018 |
|
|
September 30,2018 |
|
September 30,2017 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(405.9 |
) |
|
$ |
11.8 |
|
|
$ |
38.0 |
|
|
|
$ |
(356.1 |
) |
|
$ |
(149.9 |
) |
(Loss)
income from discontinued operations, net of tax |
(401.6 |
) |
|
61.4 |
|
|
46.9 |
|
|
|
(293.3 |
) |
|
23.1 |
|
Net loss
from continuing operations |
(4.3 |
) |
|
(49.6 |
) |
|
(8.9 |
) |
|
|
(62.8 |
) |
|
(173.0 |
) |
Reconciliation of net
loss to net cash flows used in operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
38.7 |
|
|
39.6 |
|
|
40.2 |
|
|
|
118.5 |
|
|
116.5 |
|
Deferred
income taxes |
5.2 |
|
|
(17.4 |
) |
|
(0.6 |
) |
|
|
(12.8 |
) |
|
(32.9 |
) |
Foreign
exchange loss (gain) |
4.3 |
|
|
0.9 |
|
|
(8.6 |
) |
|
|
(3.4 |
) |
|
40.6 |
|
Other,
net |
12.6 |
|
|
10.1 |
|
|
(4.5 |
) |
|
|
18.2 |
|
|
36.9 |
|
Changes in assets and
liabilities (net of acquisitions): |
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
(4.4 |
) |
|
0.4 |
|
|
(11.7 |
) |
|
|
(15.7 |
) |
|
(26.7 |
) |
Inventories |
(3.7 |
) |
|
(10.1 |
) |
|
(17.0 |
) |
|
|
(30.8 |
) |
|
(22.8 |
) |
Accounts
payable |
(7.4 |
) |
|
7.3 |
|
|
4.9 |
|
|
|
4.8 |
|
|
6.7 |
|
Accrued
expenses |
(40.9 |
) |
|
40.5 |
|
|
(39.5 |
) |
|
|
(39.9 |
) |
|
(9.9 |
) |
Prepaid
expenses and other current assets |
(6.8 |
) |
|
11.4 |
|
|
6.1 |
|
|
|
10.7 |
|
|
(15.2 |
) |
Other
assets and liabilities |
(7.0 |
) |
|
3.6 |
|
|
(9.8 |
) |
|
|
(13.2 |
) |
|
14.8 |
|
Net cash
flows (used in) provided by operating activities |
(13.7 |
) |
|
36.7 |
|
|
(49.4 |
) |
|
|
(26.4 |
) |
|
(65.0 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
(8.6 |
) |
|
(6.2 |
) |
|
(4.8 |
) |
|
|
(19.6 |
) |
|
(24.5 |
) |
Proceeds from disposal
of property, plant and equipment |
0.1 |
|
|
1.6 |
|
|
— |
|
|
|
1.7 |
|
|
14.2 |
|
Proceeds from the sale
of equity investment |
— |
|
|
— |
|
|
25.0 |
|
|
|
25.0 |
|
|
— |
|
Acquisition of
business, net of cash acquired |
— |
|
|
(28.2 |
) |
|
— |
|
|
|
(28.2 |
) |
|
— |
|
Other, net |
2.3 |
|
|
1.6 |
|
|
(0.8 |
) |
|
|
3.1 |
|
|
(4.2 |
) |
Net cash
flows (used in) provided by investing activities |
(6.2 |
) |
|
(31.2 |
) |
|
19.4 |
|
|
|
(18.0 |
) |
|
(14.5 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
Change in lines of
credit, net |
(60.0 |
) |
|
8.0 |
|
|
52.0 |
|
|
|
— |
|
|
25.6 |
|
Debt proceeds, net of
discount and premium |
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
1,927.2 |
|
Repayments of
borrowings |
(0.2 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
|
(0.4 |
) |
|
(1,955.5 |
) |
Debt prepayment and
debt extinguishment costs |
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(6.1 |
) |
Other, net |
0.3 |
|
|
(0.3 |
) |
|
(0.4 |
) |
|
|
(0.4 |
) |
|
(0.3 |
) |
Net cash
flows (used in) provided by financing activities |
(59.9 |
) |
|
7.6 |
|
|
51.5 |
|
|
|
(0.8 |
) |
|
(9.1 |
) |
Cash flows from
discontinued operations: |
|
|
|
|
|
|
|
|
|
|
Net cash flows provided
by (used in) operating activities |
42.0 |
|
|
32.7 |
|
|
(111.7 |
) |
|
|
(37.0 |
) |
|
133.3 |
|
Net cash flows used in
investing activities |
(11.6 |
) |
|
(8.3 |
) |
|
(12.6 |
) |
|
|
(32.5 |
) |
|
(20.7 |
) |
Net cash flows provided
by (used in) financing activities |
17.9 |
|
|
21.4 |
|
|
22.7 |
|
|
|
62.0 |
|
|
(66.5 |
) |
Net cash
flows provided by (used in) discontinued operations |
48.3 |
|
|
45.8 |
|
|
(101.6 |
) |
|
|
(7.5 |
) |
|
46.1 |
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
(7.8 |
) |
|
(29.9 |
) |
|
14.1 |
|
|
|
(23.6 |
) |
|
27.3 |
|
Net (decrease) increase in cash, cash equivalents and
restricted cash |
(39.3 |
) |
|
29.0 |
|
|
(66.0 |
) |
|
|
(76.3 |
) |
|
(15.2 |
) |
Cash, cash equivalents
and restricted cash atbeginning of period (1) |
446.9 |
|
|
417.9 |
|
|
483.9 |
|
|
|
483.9 |
|
|
423.5 |
|
Cash, cash equivalents and restricted cash
atend of period (2) |
$ |
407.6 |
|
|
$ |
446.9 |
|
|
$ |
417.9 |
|
|
|
$ |
407.6 |
|
|
$ |
408.3 |
|
(1) Includes cash, cash equivalents and
restricted cash of discontinued operations of $225.4 million and
$187.4 million at December 31, 2017 and 2016,
respectively.(2) Includes cash, cash equivalents and
restricted cash of discontinued operations of $155.4 million and
$203.7 million at September 30, 2018 and 2017, respectively.
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONADDITIONAL FINANCIAL
INFORMATION(Unaudited) |
|
I.
UNAUDITED RESULTS - CONTINUING OPERATIONS |
|
|
Three Months EndedSeptember 30, |
|
|
Nine Months EndedSeptember 30, |
($ amounts in
millions) |
2018 |
|
2017 |
|
|
Reported |
|
Constant Currency |
|
Organic |
|
|
2018 |
|
2017 |
|
Reported |
|
Constant Currency |
|
Organic |
Net Sales |
$ |
488.5 |
|
$ |
480.6 |
|
2% |
|
4% |
|
3% |
|
|
$ |
1,482.6 |
|
$ |
1,390.0 |
|
7% |
|
4% |
|
4% |
Adjusted EBITDA |
$ |
108.3 |
|
$ |
107.8 |
|
1% |
|
3% |
|
|
|
|
$ |
321.8 |
|
$ |
297.7 |
|
8% |
|
5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
Constant Currency |
|
|
Reported |
|
Constant Currency |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
Change |
|
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
Change |
Adjusted EBITDA
Margin |
22.2% |
|
22.4% |
|
(20) bps |
|
22.2% |
|
(20) bps |
|
|
21.7% |
|
21.4% |
|
30 bps |
|
21.6% |
|
20 bps |
II. UNAUDITED
CAPITAL STRUCTURE |
|
|
|
|
|
|
|
(in millions) |
|
|
Maturity |
|
Coupon |
|
September 30, 2018 |
Instrument |
|
|
|
|
|
|
|
Corporate Revolver |
|
|
6/7/2020 |
|
|
|
$ |
— |
|
Term Loan B6 - USD |
(1)
(2) |
|
6/7/2023 |
|
L + 300 |
|
1,135.3 |
|
Term Loan B7 - USD |
(1) |
|
6/7/2020 |
|
L + 250 |
|
630.3 |
|
Term Loan C5 - EUR |
(1)
(2) |
|
6/7/2023 |
|
E + 275 |
|
695.9 |
|
Term Loan C6 - EUR |
(1) |
|
6/7/2020 |
|
E + 250 |
|
677.8 |
|
Other Secured Debt |
|
|
|
|
|
|
10.5 |
|
Other Secured Debt -
discontinued operations |
|
|
|
|
|
|
5.0 |
|
Total First Lien Debt |
|
|
|
|
|
|
3,154.8 |
|
Senior Notes due
2022 |
|
|
2/1/2022 |
|
6.5% |
|
1,100.0 |
|
Senior Notes due 2023
(Euro) |
|
|
2/1/2023 |
|
6% |
|
406.3 |
|
Senior Notes due
2025 |
|
|
12/1/2025 |
|
5.875% |
|
800.0 |
|
Other Unsecured
Debt - discontinued operations |
|
|
|
|
|
|
71.5 |
|
Total Unsecured Debt |
|
|
|
|
|
|
2,377.8 |
|
Total Debt |
|
|
|
|
|
|
5,532.6 |
|
Cash Balance -
continuing operations |
|
|
|
|
|
|
252.2 |
|
Cash Balance -
discontinued operations |
|
|
|
|
|
|
151.2 |
|
Net Debt |
|
|
|
|
|
|
$ |
5,129.2 |
|
Adjusted Shares
Outstanding |
(3) |
|
|
|
|
|
302.1 |
|
Market
Capitalization |
(4) |
|
|
|
|
|
$ |
3,767.2 |
|
Total Capitalization |
|
|
|
|
|
|
$ |
8,896.4 |
|
(1 |
) |
Platform swapped certain of its floating term
loans to fixed rate including $1.13 billion of its USD tranches and
€277 million of its Euro tranches. At September 30, 2018,
approximately 32% of debt was floating and 68% was fixed. |
(2 |
) |
These term loans mature on June 7, 2023,
provided that the Company prepays, redeems or otherwise retires
and/or refinances in full its 6.50% USD Senior Notes due 2022, as
permitted under its Amended and Restated Credit Agreement, on or
prior to November 2, 2021, otherwise the maturity reverts to
November 2, 2021. |
(3 |
) |
See "Non-GAAP Adjusted Common Shares at
September 30, 2018 and 2017 (Unaudited)" following the Adjusted
Earnings Per Share table below. |
(4 |
) |
Based on Platform's closing price of $12.47 at
September 28, 2018, the last trading day of Q3 2018. |
|
|
|
III. SELECTED FINANCIAL DATA - CONTINUING
OPERATIONS |
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in millions) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Interest expense |
$ |
78.8 |
|
|
$ |
84.9 |
|
|
$ |
235.2 |
|
|
$ |
256.8 |
|
Interest paid |
85.8 |
|
|
89.1 |
|
|
232.8 |
|
|
244.0 |
|
Income tax (benefit)
expense |
(18.8 |
) |
|
(1.6 |
) |
|
21.1 |
|
|
20.2 |
|
Income taxes paid |
18.6 |
|
|
18.1 |
|
|
58.5 |
|
|
54.5 |
|
Capital
expenditures |
8.6 |
|
|
6.7 |
|
|
19.6 |
|
|
24.5 |
|
Proceeds from disposal
of property, plant and equipment |
0.1 |
|
|
10.1 |
|
|
1.7 |
|
|
14.2 |
|
IV. NON-GAAP MEASURES
To supplement the financial measures prepared in
accordance with GAAP, Platform has provided in this release the
following non-GAAP financial measures: EBITDA, adjusted EBITDA,
adjusted EBITDA margin, adjusted earnings (loss) per share and
organic sales growth. Platform also evaluates and presents
its results of operations on a constant currency basis. In
addition, this press release contains certain financial information
related to Element Solutions, including expected 2018 adjusted
EBITDA guidance which includes $5 million of reorganizational cost
savings realized in 2018 with an additional $20 million of run-rate
savings expected from the sale of Arysta LifeScience and the
associated reduction of corporate cost in 2019. This information is
provided for informational purposes only and is not necessarily,
and should not be assumed to be, an indication of the results that
may be achieved in the future.
Management internally reviews each of the
non-GAAP measures mentioned above to evaluate performance on a
comparative period-to-period basis in terms of absolute
performance, trends and expected future performance with respect to
the Company’s business, and believes that these non-GAAP measures
provide investors with an additional perspective on trends and
underlying operating results on a period-to-period comparable
basis. Platform also believes that investors find this
information helpful in understanding the ongoing performance of its
operations separate from items that may have a disproportionate
positive or negative impact on its financial results in any
particular period or are considered to be costs associated with its
capital structure. These non-GAAP financial measures,
however, have limitations as analytical tools, and should not be
considered in isolation from, a substitute for, or superior to, the
related financial information that Platform reports in accordance
with GAAP. The principal limitation of these non-GAAP
financial measures is that they exclude significant expenses and
income that are required by GAAP to be recorded in the Company’s
financial statements, and may not be completely comparable to
similarly titled measures of other companies due to potential
differences in calculation methods. In addition, these
measures are subject to inherent limitations as they reflect the
exercise of judgment by management about which items are excluded
or included in determining these non-GAAP financial measures.
Investors are encouraged to review the reconciliations of these
non-GAAP financial measures to their most comparable GAAP financial
measures included in this press release, and not to rely on any
single financial measure to evaluate Platform’s businesses.
The Company only provides adjusted EBITDA
guidance and organic sales growth on a non-GAAP basis and does not
provide reconciliations of such forward-looking non-GAAP measures
to GAAP due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliations, including adjustments that could be made for
restructurings, refinancings, divestitures, integration and
acquisition-related expenses, share-based compensation amounts,
non-recurring, unusual or unanticipated charges, expenses or gains,
adjustments to inventory and other charges reflected in our
reconciliation of historic numbers, the amount of which, based on
historical experience, could be significant.
Constant Currency:
The Company discloses net sales and adjusted
EBITDA on a constant currency basis by adjusting to exclude the
impact of changes due to the translation of foreign currencies of
its international locations into U.S. dollar. Management
believes this non-GAAP financial information facilitates
period-to-period comparison in the analysis of trends in business
performance, thereby providing valuable supplemental information
regarding its results of operations, consistent with how the
Company internally evaluates its financial results.
The impact of foreign currency translation is
calculated by converting the Company's current-period local
currency financial results into U.S. dollar using the prior
period's exchange rates and comparing these adjusted amounts to its
prior period reported results. The difference between actual
growth rates and constant currency growth rates represents the
impact of foreign currency translation.
Organic Sales Growth:
Organic sales growth is defined as net sales
excluding the impact of foreign currency translation, changes due
to the pass-through pricing of certain metals, and acquisitions
and/or divestitures, as applicable. Management believes this
non-GAAP financial measure provides investors with a more complete
understanding of the underlying net sales trends by providing
comparable sales over differing periods on a consistent basis.
The following tables reconcile GAAP reported net
sales growth to organic sales growth for the three and nine months
ended September 30, 2018:
|
Reported Net Sales Growth |
|
Impact of Currency |
|
Constant Currency |
|
Change in Pass-Through Metals Pricing |
|
Acquisitions/ (Divestitures) |
|
Organic Sales Growth |
Three Months Ended
September 30, 2018 |
2% |
|
2% |
|
4% |
|
—% |
|
—% |
|
3% |
Nine Months Ended
September 30, 2018 |
7% |
|
(3)% |
|
4% |
|
—% |
|
—% |
|
4% |
NOTE: totals may not sum due to rounding
For the three months ended September 30,
2018, pass-through metals pricing had a positive impact of $0.6
million and acquisitions had a positive impact of $2.3 million on
net sales.
For the nine months ended September 30,
2018, pass-through metals pricing had a negative impact of $2.0
million and acquisitions had a positive impact of $3.5 million on
net sales.
Adjusted Earnings Per
Share:
Adjusted earnings per share is defined as net
loss from continuing operations attributable to common stockholders
adjusted to reflect adjustments consistent with the Company's
definition of adjusted EBITDA. Additionally, the Company
eliminates the amortization associated with intangibles assets
recognized in purchase accounting for acquisitions. Further,
the Company adjusts its effective tax rate to 34% for the three and
nine months ended September 30, 2018 and 35% for the three and
nine months ended September 30, 2017, as described in footnote
(9) under the reconciliation table below. The resulting
adjusted net income from continuing operations is then divided by
Platform's outstanding number of shares of common stock plus the
number of shares that would be issued if all Platform's convertible
stock was converted to common stock, stock options were vested and
exercised, and awarded equity grants were vested at each period
presented. Adjusted earnings per share is a key metric used
by management to measure operating performance and trends as
management believes the exclusion of certain expenses in
calculating adjusted earnings per share facilitates operating
performance comparisons on a period-to-period basis.
The following table reconciles GAAP "Net loss
attributable to common stockholders" to "Adjusted net income from
continuing operations attributable to common stockholders" and
presents the adjusted number of common shares used in calculating
adjusted earnings per share for each period presented below:
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in millions, except
per share amounts) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss
attributable to common stockholders |
|
$ |
(408.9 |
) |
|
$ |
(69.2 |
) |
|
$ |
(359.6 |
) |
|
$ |
(154.7 |
) |
Net loss
(income) from discontinued operations attributable to common
stockholders |
|
402.6 |
|
|
31.5 |
|
|
294.1 |
|
|
(21.1 |
) |
Net loss from
continuing operations attributable to common
stockholders |
|
(6.3 |
) |
|
(37.7 |
) |
|
(65.5 |
) |
|
(175.8 |
) |
Reversal
of amortization expense |
(1) |
27.8 |
|
|
27.7 |
|
|
84.7 |
|
|
81.7 |
|
Restructuring expense |
(2) |
1.0 |
|
|
8.9 |
|
|
4.3 |
|
|
16.2 |
|
Acquisition and integration costs |
(3) |
5.2 |
|
|
0.4 |
|
|
9.7 |
|
|
3.9 |
|
Legal
settlement |
(4) |
— |
|
|
— |
|
|
— |
|
|
(10.6 |
) |
Foreign
exchange loss on foreign denominated external and internal
long-term debt |
(5) |
3.8 |
|
|
11.5 |
|
|
0.7 |
|
|
49.3 |
|
Debt
refinancing costs |
(6) |
— |
|
|
0.8 |
|
|
— |
|
|
14.6 |
|
Gain on
sale of equity investment |
(7) |
— |
|
|
— |
|
|
(11.3 |
) |
|
— |
|
Other,
net |
(8) |
4.8 |
|
|
— |
|
|
8.2 |
|
|
4.3 |
|
Tax
effect of pre-tax non-GAAP adjustments |
(9) |
(14.4 |
) |
|
(17.3 |
) |
|
(32.7 |
) |
|
(55.8 |
) |
Adjustment to estimated effective tax rate |
(9) |
(11.1 |
) |
|
11.9 |
|
|
35.2 |
|
|
73.7 |
|
Adjustment to reverse income attributable to certain
non-controlling interests |
(10) |
2.0 |
|
|
0.7 |
|
|
2.6 |
|
|
2.6 |
|
Adjusted net income from continuing operations attributable
to common stockholders |
|
$ |
12.8 |
|
|
$ |
6.9 |
|
|
$ |
35.9 |
|
|
$ |
4.1 |
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share from continuing operations |
(11) |
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Adjusted common
shares outstanding |
(11) |
302.1 |
|
|
300.2 |
|
|
302.0 |
|
|
300.3 |
|
(1) The Company eliminates
the amortization associated with intangible assets recognized in
purchase accounting for acquisitions The Company believes
this adjustment provides insight with respect to the cash flows
necessary to maintain and enhance the Company's product
portfolio.
(2) The Company adjusts for
costs of restructuring its operations, including those related to
its acquired businesses. The Company adjusts these costs
because it believes they are not reflective of ongoing
operations.
(3) The Company adjusts for
costs associated with acquisition and integration activity,
including costs of obtaining related financing such as investment
banking, legal and accounting fees, and transfer taxes. The
Company adjusts these costs because it believes they are not
reflective of ongoing operations.
(4) The Company adjusts for
certain legal settlements which it believes are not considered
reflective of ongoing operations, including the 2017 settlement
agreement between MacDermid Printing Solutions LLC (now known as
MacDermid Graphics Solutions LLC) and E.I. du Pont de Nemours and
Company (now known as DowDuPont Inc.) which resulted in a net gain
of $10.6 million in 2017.
(5) The Company adjusts for
foreign exchanges gains and losses on long-term intercompany and
third-party debt because it expects the period-to-period movement
of these currencies to offset on a long-term basis and, due to
their long-term nature, are not fully realized. The Company
does not exclude foreign exchange gains and losses on short-term
intercompany and third-party payables and receivables.
(6) The Company adjusts for
costs related to its 2017 term loans refinancings because it
believes they are not reflective of ongoing operations.
(7) The Company adjusts for a
gain on the sale of an equity investment in 2018 because it
believes it is not reflective of ongoing operations.
(8) The Company's 2018
adjustments include employee expenses associated with the
Announced Arysta Sale that do not qualify for discontinued
operations, non-cash changes in the fair value of contingent
consideration, certain profession consulting fees and hedge
ineffectiveness charges. The Company's 2017 adjustments
include non-cash change in the fair value of contingent
consideration and a non-recurring severance payment to a senior
executive. The Company adjusts these costs because they are
not considered to be reflective of ongoing operations.
(9) The Company adjusts its
effective tax rate to 34% for the three and nine months ended
September 30, 2018. This adjustment does not reflect the
Company’s current or near-term tax structure, including limitations
on its ability to utilize net operating losses and foreign tax
credits in certain jurisdictions. These factors significantly
increase the Company's effective tax rate from 34%. The
Company also applies an effective tax rate of 34% to pre-tax
non-GAAP adjustments. For the three and nine months ended
September 30, 2017, before the enactment of the Tax Reform in
December 2017, the Company adjusted its effective tax rate to
35%. The Company adjusts the effective tax rates because it
believes it provides a meaningful comparison of its performance
between periods.
(10) The Company adjusts for the
income or loss attributable to non-controlling interest created at
the time of the acquisition of MacDermid, Incorporated because
holders of such equity interest are expected to convert their
holdings into shares of Platform's common stock. The Company
adjusts these non-controlling interests because it believes they
are not reflective of ongoing operations.
(11) The Company defines "Adjusted
common shares" as the outstanding shares of Platform's common stock
at September 30, 2018 and 2017 plus the number of shares that
would be issued if all Platform's convertible stock were converted
into common stock, stock options were vested and exercised, and
awarded equity grants were vested at September 30, 2018 and
2017. The Company adjusts the outstanding shares of
Platform's common stock for this calculation to provide an
understanding of the Company’s results of operations on a per share
basis. See table below for further information.
NON-GAAP ADJUSTED COMMON SHARES AT
SEPTEMBER 30, 2018 AND 2017 (Unaudited)
The following table shows Platform's adjusted
common shares outstanding at each period presented which consists
of Platform's outstanding number of shares of common stock plus the
number of shares that would be issued if all Platform's convertible
stock was converted to common stock, stock options were vested and
exercised, and awarded equity grants were vested at each period
presented:
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in millions) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Basic
outstanding common shares |
|
288.3 |
|
|
287.1 |
|
|
288.2 |
|
|
286.3 |
|
Number of
shares issuable upon conversion of PDH Common Stock |
|
4.1 |
|
|
5.1 |
|
|
4.1 |
|
|
5.8 |
|
Number of
shares issuable upon conversion of Series A Preferred Stock |
|
2.0 |
|
|
2.0 |
|
|
2.0 |
|
|
2.0 |
|
Number of
shares issuable upon vesting and exercise of Stock Options |
|
0.7 |
|
|
0.7 |
|
|
0.7 |
|
|
0.7 |
|
Number of
shares issuable upon vesting of granted Equity Awards |
|
7.0 |
|
|
5.3 |
|
|
7.0 |
|
|
5.4 |
|
Adjusted common shares outstanding |
|
302.1 |
|
|
300.2 |
|
|
302.0 |
|
|
300.3 |
|
EBITDA and Adjusted EBITDA:
EBITDA represents earnings before interest,
provision for income taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA excluding the impact of
additional items which the Company believes are not representative
or indicative of its ongoing business, as described in the
footnotes located under the Adjusted Earnings Per Share from
Continuing Operations reconciliation table above. Adjusted
EBITDA also includes an allocation of corporate costs, such as
compensation expense and professional fees. Management
believes adjusted EBITDA and adjusted EBITDA margin provide
investors with a more complete understanding of the long-term
profitability trends of Platform’s business, and facilitate
comparisons of its profitability to prior and future periods.
However, these measures, which do not consider certain cash
requirements, should not be construed as alternatives to net income
or cash flow from operations as measures of profitability or
liquidity.
The following table reconciles GAAP "Net loss attributable to
common stockholders" to Adjusted EBITDA:
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in millions) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss
attributable to common stockholders |
|
$ |
(408.9 |
) |
|
$ |
(69.2 |
) |
|
$ |
(359.6 |
) |
|
$ |
(154.7 |
) |
Add
(subtract): |
|
|
|
|
|
|
|
|
Net
income attributable to the non-controlling interests |
|
3.0 |
|
|
2.9 |
|
|
3.5 |
|
|
4.8 |
|
Loss
(income) from discontinued operations, net of tax |
|
401.6 |
|
|
29.4 |
|
|
293.3 |
|
|
(23.1 |
) |
Income
tax (benefit) expense |
|
(18.8 |
) |
|
(1.6 |
) |
|
21.1 |
|
|
20.2 |
|
Interest
expense, net |
|
77.9 |
|
|
84.7 |
|
|
233.4 |
|
|
256.3 |
|
Depreciation expense |
|
10.9 |
|
|
12.3 |
|
|
33.8 |
|
|
34.8 |
|
Amortization expense |
|
27.8 |
|
|
27.7 |
|
|
84.7 |
|
|
81.7 |
|
EBITDA |
|
93.5 |
|
|
86.2 |
|
|
310.2 |
|
|
220.0 |
|
Adjustments to
reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Restructuring expense |
(2) |
1.0 |
|
|
8.9 |
|
|
4.3 |
|
|
16.2 |
|
Acquisition and integration costs |
(3) |
5.2 |
|
|
0.4 |
|
|
9.7 |
|
|
3.9 |
|
Legal
settlement |
(4) |
— |
|
|
— |
|
|
— |
|
|
(10.6 |
) |
Foreign
exchange loss on foreign denominated external and internal
long-term debt |
(5) |
3.8 |
|
|
11.5 |
|
|
0.7 |
|
|
49.3 |
|
Debt
refinancing costs |
(6) |
— |
|
|
0.8 |
|
|
— |
|
|
14.6 |
|
Gain on
sale of equity investment |
(7) |
— |
|
|
— |
|
|
(11.3 |
) |
|
— |
|
Other,
net |
(8) |
4.8 |
|
|
— |
|
|
8.2 |
|
|
4.3 |
|
Adjusted EBITDA |
|
$ |
108.3 |
|
|
$ |
107.8 |
|
|
$ |
321.8 |
|
|
$ |
297.7 |
|
NOTE: For footnote descriptions, please refer to the footnotes
located under the Adjusted Earnings Per Share reconciliation table
above.
CONTACT:
Investor Relations:Carey DormanCorporate Treasurer and Vice
President, Investor RelationsPlatform Specialty Products
Corporation1-561-406-8465
Media:Liz CohenManaging DirectorKekst CNC1-212-521-4845
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