England and Wales | 001-35370 | 98-1024030 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
• | Net sales of $107.1 million decreased 17.0%, including a 2.3% unfavorable impact from currency rates and a 3.4% decrease due to the divestiture of the Czech recycling operations |
• | GAAP EPS of $0.21, including $5.3 million in restructuring and exceptional expenses, decreased 52%; adjusted EPS of $0.36 decreased 25% |
• | GAAP net income of $5.8 million decreased 52.5%; adjusted net income of $10.0 million decreased 25.4% |
• | Adjusted EBITDA of $16.7 million decreased 27.4%; adjusted EBITDA margin of 15.6% decreased 220 basis points |
• | 2019 FY EPS guidance lowered to $1.41 -$1.47, compared to prior guidance of $1.66 - $1.72 |
• | Net sales of $52.9 million decreased 20.9% from $66.9 million. Foreign currency reduced sales by $1.2 million, or 1.8%, while the divestment of the Czech recycling operations negatively impacted sales by $4.4M, or 6.6%. The sales decrease was driven by lower shipments of SoluMag® alloy, as well as general industrial softness. |
• | Adjusted EBITDA decreased 37.7% to $10.4 million (19.7% of sales) from $16.7 million (25.0% of sales). |
• | Net sales of $54.2 million decreased 12.9% from $62.2 million. Continued growth in alternative fuel cylinder products offset lower sales of industrial aluminum cylinders and Superform products for European luxury automobiles. Foreign currency reduced sales by $1.6 million, or 2.6%. |
• | Adjusted EBITDA remained unchanged at $6.3 million and margin increased by 150 basis points to 11.6% as cost savings offset the impact of lower sales. |
Third Quarter | Year-to-date | |||||||||||||||||
In millions, except share and per-share data | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Net sales | $ | 107.1 | $ | 129.1 | $ | 344.0 | $ | 377.0 | ||||||||||
Cost of goods sold | (81.9 | ) | (95.1 | ) | (257.7 | ) | (279.1 | ) | ||||||||||
Gross profit | 25.2 | 34.0 | 86.3 | 97.9 | ||||||||||||||
Selling, general and administrative expenses | (11.8 | ) | (15.2 | ) | (42.6 | ) | (47.2 | ) | ||||||||||
Research and development | (1.5 | ) | (2.0 | ) | (4.5 | ) | (5.5 | ) | ||||||||||
Restructuring charges | (2.6 | ) | (1.1 | ) | (24.3 | ) | (2.1 | ) | ||||||||||
Impairment charges | — | — | 0.2 | — | ||||||||||||||
Acquisition and disposal related costs | — | — | (1.7 | ) | — | |||||||||||||
Other charges | (2.7 | ) | — | (2.7 | ) | — | ||||||||||||
Operating income | 6.6 | 15.7 | 10.7 | 43.1 | ||||||||||||||
Interest expense | (1.3 | ) | (1.3 | ) | (3.5 | ) | (4.0 | ) | ||||||||||
Interest income | — | 0.1 | — | 0.3 | ||||||||||||||
Defined benefit pension credit | 0.6 | 1.3 | 1.7 | 3.9 | ||||||||||||||
Income before income taxes and equity in net income of affiliates | 5.9 | 15.8 | 8.9 | 43.3 | ||||||||||||||
Provision for income taxes | (0.6 | ) | (3.5 | ) | (4.1 | ) | (9.9 | ) | ||||||||||
Income before equity in net income of affiliates | 5.3 | 12.3 | 4.8 | 33.4 | ||||||||||||||
Equity income / (loss) of affiliates (net of tax) | 0.5 | (0.1 | ) | 0.7 | 0.1 | |||||||||||||
Net income | $ | 5.8 | $ | 12.2 | $ | 5.5 | $ | 33.5 | ||||||||||
Earnings per share | ||||||||||||||||||
Basic | $ | 0.21 | $ | 0.46 | $ | 0.20 | $ | 1.26 | ||||||||||
Diluted | $ | 0.21 | $ | 0.44 | $ | 0.20 | $ | 1.22 | ||||||||||
Weighted average ordinary shares outstanding | ||||||||||||||||||
Basic | 27,393,743 | 26,773,064 | 27,243,638 | 26,614,646 | ||||||||||||||
Diluted | 27,869,416 | 27,657,093 | 27,843,525 | 27,507,527 |
September 29, | December 31, | ||||||||
In millions, except share and per-share data | 2019 | 2018 | |||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 11.9 | $ | 13.8 | |||||
Restricted cash | 0.2 | 0.3 | |||||||
Accounts and other receivables, net of allowances of $1.8 and $2.4, respectively | 73.1 | 62.7 | |||||||
Inventories | 96.2 | 93.6 | |||||||
Other current assets | 5.9 | 10.7 | |||||||
Total current assets | $ | 187.3 | $ | 181.1 | |||||
Non-current assets | |||||||||
Property, plant and equipment, net | $ | 101.5 | $ | 106.9 | |||||
Right-of-use assets from operating leases | 15.1 | 18.4 | |||||||
Goodwill | 66.4 | 67.6 | |||||||
Intangibles, net | 13.4 | 14.6 | |||||||
Deferred tax assets | 16.5 | 18.6 | |||||||
Investments and loans to joint ventures and other affiliates | 2.2 | 1.6 | |||||||
Total assets | $ | 402.4 | $ | 408.8 | |||||
Current liabilities | |||||||||
Current maturities of long-term debt and short-term borrowings | $ | — | $ | 3.5 | |||||
Accounts payable | 35.2 | 36.9 | |||||||
Accrued liabilities | 25.4 | 33.8 | |||||||
Taxes on income | 0.1 | 1.6 | |||||||
Other current liabilities | 11.8 | 15.4 | |||||||
Total current liabilities | $ | 72.5 | $ | 91.2 | |||||
Non-current liabilities | |||||||||
Long-term debt | $ | 105.6 | $ | 73.6 | |||||
Pensions and other retirement benefits | 28.6 | 40.0 | |||||||
Deferred tax liabilities | 3.0 | 3.5 | |||||||
Other non-current liabilities | 13.5 | 16.2 | |||||||
Total liabilities | $ | 223.2 | $ | 224.5 | |||||
Shareholders' equity | |||||||||
Ordinary shares of £0.50 par value; authorized 40,000,000 shares for 2019 and 2018; issued and outstanding 29,000,000 shares for 2019 and 2018 | $ | 26.6 | $ | 26.6 | |||||
Deferred shares of £0.0001 par value; authorized 761,845,318,444; issued and outstanding 761,835,338,444 shares for 2019 and authorized 769,423,688,000; issued and outstanding 769,413,708,000 shares for 2018 | 149.9 | 149.9 | |||||||
Additional paid-in capital | 67.8 | 65.6 | |||||||
Treasury shares | (4.0 | ) | (4.3 | ) | |||||
Own shares held by ESOP | (1.7 | ) | (2.2 | ) | |||||
Retained earnings | 90.6 | 95.3 | |||||||
Accumulated other comprehensive loss | (150.0 | ) | (146.6 | ) | |||||
Total shareholders' equity | $ | 179.2 | $ | 184.3 | |||||
Total liabilities and shareholders' equity | $ | 402.4 | $ | 408.8 |
Year-to-date | ||||||||||
In millions | 2019 | 2018 | ||||||||
Operating activities | ||||||||||
Net income | $ | 5.5 | $ | 33.5 | ||||||
Adjustments to reconcile net income to net cash (used for) / provided by operating activities | ||||||||||
Equity income of unconsolidated affiliates | (0.7 | ) | (0.1 | ) | ||||||
Depreciation | 10.4 | 13.6 | ||||||||
Amortization of purchased intangible assets | 0.9 | 0.9 | ||||||||
Loss on disposal of property, plant and equipment | — | 0.2 | ||||||||
Amortization of debt issuance costs | 0.3 | 0.4 | ||||||||
Share-based compensation charges | 4.0 | 3.1 | ||||||||
Deferred income taxes | 1.5 | 9.9 | ||||||||
Gain on disposal of business | (2.9 | ) | — | |||||||
Asset impairment charges | 4.8 | — | ||||||||
Pension and other post-retirement expense / (credit) | 2.2 | 0.6 | ||||||||
Defined benefit pension contributions | (5.7 | ) | (6.1 | ) | ||||||
Defined contribution pension and other post-retirement contributions | (3.5 | ) | (3.9 | ) | ||||||
Changes in assets and liabilities, net of effects of business acquisitions | ||||||||||
Accounts and notes receivable | (7.2 | ) | (5.3 | ) | ||||||
Inventories | (3.8 | ) | (15.6 | ) | ||||||
Other current assets | (1.9 | ) | 1.2 | |||||||
Accounts payable | (4.8 | ) | 7.7 | |||||||
Accrued liabilities | (8.2 | ) | 7.6 | |||||||
Other current liabilities | (2.2 | ) | (2.7 | ) | ||||||
Other non-current assets and liabilities | (2.3 | ) | (5.1 | ) | ||||||
Net cash (used for) / provided by operating activities | $ | (13.6 | ) | $ | 39.9 | |||||
Investing activities | ||||||||||
Capital expenditures | $ | (10.3 | ) | $ | (8.2 | ) | ||||
Proceeds from sale of property, plant and equipment | 1.2 | — | ||||||||
Proceeds from sale of businesses | 4.6 | — | ||||||||
Investments in unconsolidated affiliates | — | 0.8 | ||||||||
Acquisitions, net of cash acquired | — | (0.5 | ) | |||||||
Net cash used for investing activities | $ | (4.5 | ) | $ | (7.9 | ) | ||||
Financing activities | ||||||||||
Net repayments of short-term borrowings | $ | (3.5 | ) | $ | (19.2 | ) | ||||
Net drawdown / (repayment) of long-term borrowings | 31.7 | (6.1 | ) | |||||||
Deferred consideration paid | (0.5 | ) | — | |||||||
Proceeds from sale of shares | 3.3 | 6.3 | ||||||||
Share-based compensation cash paid | (4.3 | ) | (7.0 | ) | ||||||
Dividends paid | (10.2 | ) | (10.0 | ) | ||||||
Net cash from / (used for) financing activities | $ | 16.5 | $ | (36.0 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (0.4 | ) | (0.4 | ) | ||||||
Net decrease | $ | (2.0 | ) | $ | (4.4 | ) | ||||
Cash, cash equivalents and restricted cash; beginning of year | 14.1 | 13.3 | ||||||||
Cash, cash equivalents and restricted cash; end of the Third Quarter | 12.1 | 8.9 | ||||||||
Supplemental cash flow information: | ||||||||||
Interest payments | $ | 3.5 | $ | 3.8 | ||||||
Income tax payments | 6.6 | 2.8 |
Net sales | Adjusted EBITDA | |||||||||||||||||||||||||||||||||
Third Quarter | Year-to-date | Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Gas Cylinders segment | $ | 54.2 | $ | 62.2 | $ | 170.7 | $ | 181.9 | $ | 6.3 | $ | 6.3 | $ | 17.9 | $ | 17.3 | ||||||||||||||||||
Elektron segment | 52.9 | 66.9 | 173.3 | 195.1 | 10.4 | 16.7 | 37.5 | 46.3 | ||||||||||||||||||||||||||
Consolidated | $ | 107.1 | $ | 129.1 | $ | 344.0 | $ | 377.0 | $ | 16.7 | $ | 23.0 | $ | 55.4 | $ | 63.6 |
Depreciation and amortization | Restructuring charges | |||||||||||||||||||||||||||||||||
Third Quarter | Year-to-date | Third Quarter | Year-to-date | |||||||||||||||||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Gas Cylinders segment | $ | 1.3 | $ | 1.9 | $ | 4.1 | $ | 5.8 | $ | 2.3 | $ | — | $ | 19.5 | $ | 0.1 | ||||||||||||||||||
Elektron segment | 2.3 | 2.8 | 7.2 | 8.7 | 0.3 | 1.1 | 4.8 | 2.0 | ||||||||||||||||||||||||||
Consolidated | $ | 3.6 | $ | 4.7 | $ | 11.3 | $ | 14.5 | $ | 2.6 | $ | 1.1 | $ | 24.3 | $ | 2.1 |
Third Quarter | Year-to-date | ||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Adjusted EBITDA | $ | 16.7 | $ | 23.0 | $ | 55.4 | $ | 63.6 | |||||||||
Other share-based compensation charges | (0.6 | ) | (1.2 | ) | (4.0 | ) | (3.1 | ) | |||||||||
Loss on disposal of property, plant and equipment | — | (0.2 | ) | — | (0.2 | ) | |||||||||||
Depreciation and amortization | (3.6 | ) | (4.7 | ) | (11.3 | ) | (14.5 | ) | |||||||||
Unwind discount on deferred consideration | (0.1 | ) | (0.2 | ) | (0.2 | ) | (0.5 | ) | |||||||||
Restructuring charges | (2.6 | ) | (1.1 | ) | (24.3 | ) | (2.1 | ) | |||||||||
Fair value adjustment to held-for-sale assets | — | — | 0.2 | — | |||||||||||||
Acquisition and disposal related gains / (costs) | — | — | (1.7 | ) | — | ||||||||||||
Other charges (4) | (2.7 | ) | — | (2.7 | ) | — | |||||||||||
Defined benefits pension mark-to-market gain | 0.6 | 1.3 | 1.7 | 3.9 | |||||||||||||
Interest expense, net | (1.3 | ) | (1.2 | ) | (3.5 | ) | (3.7 | ) | |||||||||
Provision for income taxes | (0.6 | ) | (3.5 | ) | (4.1 | ) | (9.9 | ) | |||||||||
Net income | $ | 5.8 | $ | 12.2 | $ | 5.5 | $ | 33.5 |
Third Quarter | Year-to-date | ||||||||||||||||
In millions except per share data | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income / (loss) | $ | 5.8 | $ | 12.2 | $ | 5.5 | $ | 33.5 | |||||||||
Accounting charges relating to acquisitions and disposals of businesses: | |||||||||||||||||
Unwind of discount on deferred consideration | 0.1 | 0.2 | 0.2 | 0.5 | |||||||||||||
Amortization on acquired intangibles | 0.3 | 0.3 | 0.9 | 0.9 | |||||||||||||
Acquisitions and disposals | — | — | 1.7 | — | |||||||||||||
Defined benefit pension credit | (0.6 | ) | (1.3 | ) | (1.7 | ) | (3.9 | ) | |||||||||
Restructuring charges | 2.6 | 1.1 | 24.3 | 2.1 | |||||||||||||
Impairment charges | — | — | (0.2 | ) | — | ||||||||||||
Other charges | 2.7 | — | 2.7 | — | |||||||||||||
Share-based compensation charges | 0.6 | 1.2 | 4.0 | 3.1 | |||||||||||||
Income tax on adjusted items | (1.5 | ) | (0.3 | ) | (3.8 | ) | (0.6 | ) | |||||||||
Adjusted net income | $ | 10.0 | $ | 13.4 | $ | 33.6 | $ | 35.6 | |||||||||
Adjusted earnings per ordinary share | |||||||||||||||||
Diluted earnings per ordinary share | $ | 0.21 | $ | 0.44 | $ | 0.20 | $ | 1.22 | |||||||||
Impact of adjusted items | 0.15 | 0.04 | 1.01 | 0.08 | |||||||||||||
Adjusted diluted earnings per ordinary share | $ | 0.36 | $ | 0.48 | $ | 1.21 | $ | 1.29 |
Third Quarter | Year-to-date | ||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Adjusted net income | $ | 10.0 | $ | 13.4 | $ | 33.6 | $ | 35.6 | |||||||||
Add back: | |||||||||||||||||
Income tax on adjusted items | 1.5 | 0.3 | 3.8 | 0.6 | |||||||||||||
Provision for income taxes | 0.6 | 3.5 | 4.1 | 9.9 | |||||||||||||
Net finance costs | 1.3 | 1.2 | 3.5 | 3.7 | |||||||||||||
Adjusted EBITA | $ | 13.4 | $ | 18.4 | $ | 45.0 | $ | 49.8 | |||||||||
Loss on disposal of PPE | — | 0.2 | — | 0.2 | |||||||||||||
Depreciation | 3.3 | 4.4 | 10.4 | 13.6 | |||||||||||||
Adjusted EBITDA | $ | 16.7 | $ | 23.0 | $ | 55.4 | $ | 63.6 |
Third Quarter | Year-to-date | ||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Adjusted net income | $ | 10.0 | $ | 13.4 | $ | 33.6 | $ | 35.6 | |||||||||
Add back: | |||||||||||||||||
Income tax on adjusted items | 1.5 | 0.3 | 3.8 | 0.6 | |||||||||||||
Provision for income taxes | 0.6 | 3.5 | 4.1 | 9.9 | |||||||||||||
Adjusted income before income taxes | $ | 12.1 | $ | 17.2 | $ | 41.5 | $ | 46.1 | |||||||||
Adjusted provision for income taxes | 2.1 | 3.8 | 7.9 | 10.5 | |||||||||||||
Adjusted effective tax rate | 17.4 | % | 22.1 | % | 19.0 | % | 22.8 | % |
Net Sales | |||||||||||||||||||
2018 | 2019 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | YTD | |||||||||||
Gas Cylinders Segment | 59.3 | 60.4 | 62.2 | 56.2 | 238.1 | 58.4 | 58.1 | 54.2 | 170.7 | ||||||||||
Elektron Segment | 55.1 | 63.0 | 62.5 | 50.8 | 231.4 | 57.5 | 55.3 | 52.9 | 165.7 | ||||||||||
Total excl. Czech | 114.4 | 123.4 | 124.7 | 107.0 | 469.5 | 115.9 | 113.4 | 107.1 | 336.4 | ||||||||||
Czech | 5.3 | 4.8 | 4.4 | 3.9 | 18.4 | 4.5 | 3.1 | — | 7.6 | ||||||||||
119.7 | 128.2 | 129.1 | 110.9 | 487.9 | 120.4 | 116.5 | 107.1 | 344.0 |
Adjusted EBITDA | |||||||||||||||||||
2018 | 2019 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | YTD | |||||||||||
Gas Cylinders Segment | 6.0 | 5.0 | 6.3 | 6.1 | 23.4 | 4.5 | 7.1 | 6.5 | 18.1 | ||||||||||
Elektron Segment | 13.0 | 16.3 | 16.7 | 9.5 | 55.5 | 13.8 | 13.2 | 10.5 | 37.5 | ||||||||||
Total excl. Czech | 19.0 | 21.3 | 23.0 | 15.6 | 78.9 | 18.3 | 20.3 | 17.0 | 55.6 | ||||||||||
Czech | 0.2 | 0.1 | — | 0.4 | 0.7 | 0.2 | (0.1 | ) | — | 0.1 | |||||||||
19.2 | 21.4 | 23.0 | 16.0 | 79.6 | 18.5 | 20.2 | 17.0 | 55.7 |
Geographic Region Net Sales | |||||||||||||||||||
2018 | 2019 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | YTD | |||||||||||
US | 62.2 | 65.9 | 67.2 | 53.8 | 249.1 | 60.3 | 62.6 | 58.0 | 180.9 | ||||||||||
UK | 11.6 | 11.7 | 13.1 | 11.1 | 47.5 | 11.4 | 9.0 | 7.9 | 28.3 | ||||||||||
Germany | 6.7 | 5.4 | 6.6 | 7.0 | 25.7 | 5.5 | 3.7 | 4.2 | 13.4 | ||||||||||
Italy | 5.1 | 4.7 | 6.8 | 6.2 | 22.8 | 6.3 | 5.0 | 5.1 | 16.4 | ||||||||||
France | 4.9 | 4.1 | 3.9 | 4.1 | 17.0 | 5.2 | 4.2 | 3.5 | 12.9 | ||||||||||
Top 5 Countries | 90.5 | 91.8 | 97.6 | 82.2 | 362.1 | 88.7 | 84.5 | 78.7 | 251.9 | ||||||||||
ROE | 7.3 | 9.4 | 7.4 | 7.7 | 31.8 | 11.4 | 9.8 | 8.6 | 29.8 | ||||||||||
Asia | 10.6 | 15.8 | 14.3 | 12.3 | 53.0 | 11.6 | 12.7 | 13.0 | 37.3 | ||||||||||
Other | 6.0 | 6.4 | 5.4 | 4.8 | 22.6 | 4.2 | 6.4 | 6.8 | 17.4 | ||||||||||
Total excl. Czech | 114.4 | 123.4 | 124.7 | 107.0 | 469.5 | 115.9 | 113.4 | 107.1 | 336.4 |
Disaggregated Net Sales | |||||||||||||||||||
2018 | 2019 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | YTD | |||||||||||
General industrial | 41.4 | 46.4 | 51.7 | 35.1 | 174.6 | 43.7 | 39.5 | 39.1 | 122.3 | ||||||||||
Transportation | 28.8 | 34.5 | 34.7 | 35.4 | 133.4 | 35.5 | 38.2 | 32.7 | 106.4 | ||||||||||
Defense and emergency | 36.8 | 33.2 | 30.7 | 28.0 | 128.7 | 29.2 | 30.9 | 29.3 | 89.4 | ||||||||||
Healthcare | 7.4 | 9.3 | 7.6 | 8.5 | 32.8 | 7.5 | 4.8 | 6.0 | 18.3 | ||||||||||
Total excl. Czech | 114.4 | 123.4 | 124.7 | 107.0 | 469.5 | 115.9 | 113.4 | 107.1 | 336.4 |