DocumentEXHIBIT 99.1
PRESS RELEASE
CMC Materials Reports Results for Fourth Quarter and Full Year Fiscal 2021, Implements Global Price Increases and Initiates Strategic Cost Optimization Program
Fourth Quarter
•Record Company Revenue of $311.9 Million, 13.8% Higher than Last Year and 0.8% Higher Sequentially
•Electronic Materials Segment Revenue of $254.3 Million, 14.1% Higher than Last Year and 1.3% Higher Sequentially
•Share Repurchases Totaled $104.9 Million During the Quarter
Full Year
•Record Company Revenue of $1,199.8 Million, 7.5% Higher than Last Year
•Electronic Materials Segment Revenue of $984.7 Million, 11.5% Higher than Last Year
AURORA, IL, November 10, 2021 – CMC Materials, Inc. (Nasdaq: CCMP), a leading global supplier of consumable materials primarily to semiconductor manufacturers, today reported financial results for its fourth quarter and full year fiscal 2021, which ended September 30, 2021.
“Today, CMC Materials reported results for fiscal 2021, our fifth consecutive year of record revenue, driven by strong growth in our Electronic Materials segment,” said David Li, President and CEO of CMC Materials. “Our team showed resilience while navigating a challenging operating environment, especially during the second half of our fiscal year.”
“Our CMP slurries business delivered strong performance, with 14% growth over last year, advancing ahead of the market. As previously discussed, we experienced some order pattern variation in China in the third and fourth quarters which we believe has now normalized. In this important region, our slurries business increased nearly 40% in fiscal year 2021, and we continue to expect our business to grow as our participation and customer base expands,” said Mr. Li. “We are well positioned to win new opportunities and support our customers as they expand capacity and transition to the most advanced nodes.”
Global Price Increases and Strategic Cost Optimization Program
To counter the impact of rapidly rising raw materials, freight and logistics costs, the company implemented global price increases, which took effect during the first quarter of fiscal year 2022, and is prepared to implement further pricing actions if needed to offset additional inflationary headwinds.
The company also has initiated a strategic cost optimization program named “Future Forward.” The program is designed to implement structural changes to enhance operational efficiencies, while maintaining strong focus on technology innovation and customer partnerships. “Future Forward” includes targeted position eliminations, footprint optimization and other actions to reduce expenses. This program is targeted to drive savings of approximately $15 million in fiscal year 2022, which should be a direct benefit to the company’s Adjusted EBITDA, and ongoing annualized savings in the range of $20 million-$25 million by approximately the end of fiscal year 2023.
“We are excited about CMC Materials’ future growth opportunities, especially given our advantaged positions and customers’ significant expected additions to semiconductor capacity. We believe the initiatives announced today will position us for critical growth opportunities and contribute to our long track record of financial strength,” said Mr. Li.
Key Financial Highlights
The company’s record quarterly revenue of $311.9 million reflects an increase of 13.8% compared to the same quarter last year, and was driven by continued growth in all businesses in the Electronic Materials segment, which represents more than 80% of the company’s revenue. This strong performance is reflective of the company’s differentiators, including a highly formulated and broad product portfolio, commitment to technological innovation, close customer partnerships, global infrastructure and ability to manage complex requirements across global supply chains.
In the Performance Materials segment, the wood treatment and QED businesses reported strong revenue growth year-over-year. The pipeline and industrial materials (PIM) business increased modestly compared to the same quarter last year but underperformed expectations as the ongoing effects and related factors of the COVID-19 Pandemic (“Pandemic”), logistics constraints and slower than expected ramps of new customer positions negatively impacted the business.
Net income was $16.1 million compared to $36.9 million in the prior year. In the quarter, the company recorded an $11.7 million impairment charge for the wood treatment business related to the previously announced strategic decision to exit this business. Adjusted EBITDA1 was $86.0 million, compared to $84.0 million in the prior year. The company repurchased 822,251 shares of common stock for $104.9 million during the quarter.
Revenue for the company’s fiscal year 2021 was a record $1,199.8 million, an increase of 7.5% compared to the prior year as 11.5% growth in the company’s Electronic Materials segment was partially offset by a 7.9% decline in the Performance Materials segment. Net loss was $68.6 million compared to net income of $142.8 million last year. Adjusted EBITDA1 was $358.3 million, compared to $357.8 million in the prior year. During the year, the company generated $270.6 million in cash flow from operations. The company had $186.0 million of cash on hand and $916.3 million in total debt as of the end of the fiscal year.
Key Financial Information for the Fourth Quarter
•Revenue was $311.9 million, 13.8% higher than the same quarter last year due to growth in both the company’s segments. Revenue was up 0.8% sequentially.
•Net income was $16.1 million compared to $36.9 million in the same quarter last year. Adjusted net income1 was $47.3 million, 18.4% lower compared to the prior year, as higher revenue was more than offset primarily by higher raw materials, freight, and logistics costs.
•Diluted EPS was $0.55 compared to $1.25 in the same quarter last year. Adjusted diluted EPS1 was $1.62, 17.3% lower compared to the same quarter last year.
•Adjusted EBITDA1 was $86.0 million, up 2.3% compared to the same quarter last year. Adjusted EBITDA margin1 for the quarter was 27.6%, compared to adjusted EBITDA margin of 30.6% in the same quarter last year.
1Refer to financial tables and “Use of Certain GAAP, non-GAAP Adjusted Financial Information” below for information about these non-GAAP financial measures and reconciliations of these non-GAAP measures to their most comparable GAAP measure.
Electronic Materials – Revenue was $254.3 million, 14.1% higher than revenue in the same quarter last year due to growth across all businesses. Revenue was 1.3% higher sequentially. Adjusted EBITDA was $79.2 million, or 31.2% of revenue.
Performance Materials – Revenue was $57.6 million for the quarter, 12.2% higher than revenue in the same quarter last year, driven primarily by strength in the QED and wood treatment businesses. Revenue was 1.4% lower sequentially. Adjusted EBITDA was $20.8 million, or 36.0% of revenue.
Key Financial Information for the Full Fiscal Year 2021
•Revenue was $1,199.8 million, 7.5% higher than last year due to growth in both the company’s segments.
•Net loss was $68.6 million compared to net income of $142.8 million last year. In fiscal year 2021, the company recorded $230.4 million in impairment charges for the PIM and wood treatment businesses. Adjusted net income1 was $210.1 million, 4.9% lower compared to the prior year, as higher revenue and lower interest expense were offset by higher costs.
•Diluted loss per share was $2.35 compared to diluted earnings per share of $4.83 last year. Adjusted diluted EPS1 was $7.11, 4.8% lower compared to last year.
•Adjusted EBITDA1 was $358.3 million, up 0.1% compared to last year. Adjusted EBITDA margin1 for the year was 29.9%, compared to adjusted EBITDA margin of 32.1% last year.
1Refer to financial tables and “Use of Certain GAAP, non-GAAP Adjusted Financial Information” below for information about these non-GAAP financial measures and reconciliations of these non-GAAP measures to their most comparable GAAP measure.
Current Financial Guidance
Sequentially, the company currently expects total revenue in the first quarter of fiscal 2022 to be up low to mid single digits compared to revenue in the fourth quarter of fiscal 2021. Electronic Materials revenue is expected to be up low to mid single digits. Primarily because the company is beginning the previously announced exit of the wood treatment business, Performance Materials revenue is expected to be down approximately 10% compared to the fourth quarter of fiscal 2021.
The company currently expects full fiscal year 2022 Adjusted EBITDA to be between $355 million to $385 million.
Factored in the company’s outlook is the exit of the wood treatment business by the end of the second fiscal quarter of 2022, which is expected to negatively impact Adjusted EBITDA by approximately $37 million compared to fiscal year 2021. The company expects to generally offset this impact with organic growth and the initial benefits from the “Future Forward” strategic cost optimization program. Price increases are targeted to offset increased costs for raw materials, freight and logistics.
With respect to this guidance, and additional current expectations provided in the company’s related slide presentation and prepared commentary, the company notes the continued uncertainty as to the ongoing macroeconomic environment and the impact of the Pandemic on the industries in which the company participates.
RELATED SLIDE PRESENTATION AND PREPARED COMMENTARY
A slide presentation and corresponding prepared commentary related to this press release will be available at cmcmaterials.com in the Quarterly Results section of the Investor Relations center at approximately the same time that this press release is issued.
CONFERENCE CALL
CMC Materials’ quarterly earnings conference call will be held at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, November 11. The conference call will be available via live webcast and replay from the company’s website, cmcmaterials.com, or by phone at (833) 714-0937. Callers outside the U.S. may dial (778) 560-2685. The conference code for the call is 7062157. A transcript of the formal comments made during the conference call will also be available in the Investor Relations section of the company’s website.
ABOUT CMC MATERIALS, INC.
CMC Materials, Inc., headquartered in Aurora, Illinois, is a leading global supplier of consumable materials primarily to semiconductor manufacturers. The company’s products play a critical role in the production of advanced semiconductor devices, helping to enable the manufacture of smaller, faster and more complex devices by its customers. CMC Materials, Inc. is also a leading provider of performance materials to pipeline operators. The company's mission is to create value by delivering high-performing and innovative solutions that solve its customers’ challenges. The company has approximately 2,200 employees globally. For more information about CMC Materials, Inc., visit www.cmcmaterials.com, or contact Colleen Mumford, Vice President, Communications and Marketing, at 630-499-2600.
USE OF CERTAIN GAAP AND NON-GAAP ADJUSTED FINANCIAL INFORMATION
The company’s financial results are provided in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the Company presents the following non-GAAP financial measures: adjusted net income, adjusted diluted earnings per share, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and net debt. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and excludes certain items that affect comparability from period to period. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of revenue.
The non-GAAP financial measures provided in this press release are a supplement to, and not a substitute for, the company’s financial results presented in accordance with U.S. GAAP. These non-GAAP financial measures are provided to enhance the investor's understanding about the company's ongoing operations. Specifically, the company believes the impact of the adjustments related to impairment charges, acquisitions, such as expenses incurred to complete an acquisition and related integration and acquisition-related amortization expenses, costs of restructuring related to the wood treatment business, costs incurred related to the COVID-19 pandemic (“Pandemic”) net of grants received, costs related to the KMG-
Bernuth warehouse fire net of insurance recoveries, a charge for an environmental accrual and the effects of Tax Cuts and Jobs Act in December 2017 in the United States (“Tax Act”) and the issued final regulations related to the Tax Act, are not indicative of its core operating results and thus presents these certain measures excluding these effects. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with U.S. GAAP. Reconciliations of non-GAAP measures to their most comparable GAAP measures are included in the financial statements portion of this press release.
Adjusted EBITDA for the Electronic Materials and Performance Materials segments is presented in conformity with Accounting Standards Codification Topic 280, Segment Reporting. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For these reasons, this measure is excluded from the definition of non-GAAP financial measures under the SEC Regulation G and Item 10(e) of Regulation S-K.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, which address a variety of subjects including, for example, future sales and operating results; growth or contraction, and trends in the industries and markets in which the company participates such as the semiconductor, and oil and gas, industries; the acquisition of, investment in, or collaboration with other entities, and the expected benefits and synergies of such transactions; divestment or disposition, or cessation of investment, in certain of the company’s businesses; new product introductions; development of new products, technologies and markets; product performance; the financial conditions of the company's customers; the competitive landscape that relates to the company’s business; the company's supply chain; the targeted benefits of company cost reduction or optimization initiatives; natural disasters; various economic or political factors and international or national events, including related to global public health crises such as the Pandemic, and the enactment of trade sanctions, tariffs, or other similar matters; the generation, protection and acquisition of intellectual property, and litigation related to such intellectual property or third party intellectual property; environmental, health and safety laws and regulations, and related compliance and costs of compliance; the operation of facilities by the company; the company's management; foreign exchange fluctuation; the company's current or future tax rate, including the effects of changes to tax laws in the jurisdictions in which the company operates; cybersecurity threats and vulnerabilities; and, financing facilities and related debt, pay off or payment of principal and interest, and compliance with covenants and other terms, uses and investment of the company's cash balance, including dividends and share repurchases, which may be suspended, terminated or modified at any time for any reason by the company, based on a variety of factors. Statements that are not historical facts, including statements about CMC Materials’ beliefs, plans and expectations, are forward-looking statements. Such statements are based on current expectations of CMC Materials’ management and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. For information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to CMC Materials’ filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in CMC Materials’ Annual Report on Form 10-K for the fiscal year ended September 30, 2021 to be filed by November 12, 2021, its Annual Report on Form 10-K for the fiscal year ended September 30, 2020 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. Except as required by law, CMC Materials undertakes no obligation to update forward-looking statements made by it to reflect new information, subsequent events or circumstances.
Contact:
Colleen Mumford
Vice President, Communications and Marketing
CMC Materials, Inc.
(630) 499-2600
CMC MATERIALS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited and amounts in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Twelve Months Ended |
| September 30, 2021 | | June 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 |
| Revenue | $ | 311,924 | | | $ | 309,516 | | | $ | 274,207 | | | $ | 1,199,831 | | | $ | 1,116,270 | |
| Cost of sales | 189,601 | | | 180,320 | | | 157,144 | | | 701,662 | | | 627,669 | |
| Gross profit | 122,323 | | | 129,196 | | | 117,063 | | | 498,169 | | | 488,601 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | | |
| Research, development and technical | 15,188 | | | 13,654 | | | 14,105 | | | 54,195 | | | 52,311 | |
| Selling, general and administrative | 58,186 | | | 56,242 | | | 54,576 | | | 228,886 | | | 217,071 | |
| Impairment charges | 11,734 | | | 3,090 | | | 2,314 | | | 230,392 | | | 2,314 | |
| Total operating expenses | 85,108 | | | 72,986 | | | 70,995 | | | 513,473 | | | 271,696 | |
| | | | | | | | | |
| Operating income (loss) | 37,215 | | | 56,210 | | | 46,068 | | | (15,304) | | | 216,905 | |
| Interest expense, net | 9,740 | | | 9,540 | | | 9,350 | | | 38,360 | | | 41,840 | |
| Other expense, net | (1,671) | | | (427) | | | (110) | | | (1,130) | | | (1,718) | |
| Income (loss) before income taxes | 25,804 | | | 46,243 | | | 36,608 | | | (54,794) | | | 173,347 | |
| Provision for (benefit from) income taxes | 9,745 | | | 12,601 | | | (247) | | | 13,783 | | | 30,519 | |
| | | | | | | | | |
| Net income (loss) | $ | 16,059 | | | $ | 33,642 | | | $ | 36,855 | | | $ | (68,577) | | | $ | 142,828 | |
| | | | | | | | | |
| Basic earnings (loss) per share | $ | 0.56 | | | $ | 1.15 | | | $ | 1.27 | | | $ | (2.35) | | | $ | 4.90 | |
| | | | | | | | | |
| Diluted earnings (loss) per share | $ | 0.55 | | | $ | 1.13 | | | $ | 1.25 | | | $ | (2.35) | | | $ | 4.83 | |
| | | | | | | | | |
| Weighted average basic shares outstanding | 28,922 | | | 29,260 | | | 29,082 | | | 29,126 | | | 29,136 | |
| | | | | | | | | |
| Weighted average diluted shares outstanding | 29,261 | | | 29,682 | | | 29,520 | | | 29,126 | | | 29,580 | |
CMC MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands) | | | | | | | | | | | |
| September 30, 2021 | | September 30, 2020 |
| ASSETS: | | | |
| | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 185,979 | | | $ | 257,354 | |
| Accounts receivable, net | 150,099 | | | 134,023 | |
| Inventories | 173,464 | | | 159,134 | |
| Prepaid expenses and other current assets | 25,439 | | | 26,558 | |
| Total current assets | 534,981 | | | 577,069 | |
| | | |
| Property, plant and equipment, net | 354,771 | | | 362,067 | |
| Other long-term assets | 1,261,133 | | | 1,437,331 | |
| Total assets | $ | 2,150,885 | | | $ | 2,376,467 | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | | |
| | | |
| Current liabilities: | | | |
| Accounts payable | $ | 52,748 | | | $ | 49,254 | |
| | | |
| Current portion of long-term debt | 13,313 | | | 10,650 | |
| Accrued expenses and other current liabilities | 139,797 | | | 121,442 | |
| Total current liabilities | 205,858 | | | 181,346 | |
| | | |
| Long-term debt, net of current portion | 903,031 | | | 910,764 | |
| Other long-term liabilities | 163,059 | | | 210,044 | |
| Total liabilities | 1,271,948 | | | 1,302,154 | |
| | | |
| Stockholders' equity | 878,937 | | | 1,074,313 | |
| Total liabilities and stockholders' equity | $ | 2,150,885 | | | $ | 2,376,467 | |
CMC MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited and amounts in thousands)
| | | | | | | | | | | |
| Twelve months ended September 30, |
| 2021 | | 2020 |
| Net cash provided by operating activities | $ | 270,613 | | | $ | 287,284 | |
| | | |
| Cash flows from investing activities: | | | |
| Acquisition of a business, net of cash acquired | (126,877) | | | — | |
| Additions to property, plant and equipment | (42,103) | | | (125,839) | |
| Proceeds from the sale of assets | 2,620 | | | 1,587 | |
| Net cash used in investing activities | (166,360) | | | (124,252) | |
| | | |
| Cash flows from financing activities: | | | |
| Repurchases of common stock under Share Repurchase Program | (120,027) | | | (35,009) | |
| Dividends paid | (53,015) | | | (50,383) | |
| Proceeds from issuance of stock | 13,388 | | | 14,427 | |
| Repayment of long-term debt | (7,988) | | | (23,313) | |
| Repurchases of common stock withheld for taxes | (5,560) | | | (3,229) | |
| Debt issuance costs | (1,898) | | | — | |
| Proceeds from revolving line of credit | — | | | 150,000 | |
| Repayment on revolving line of credit | — | | | (150,000) | |
| Other financing activities | (236) | | | (149) | |
| Net cash used in financing activities | (175,336) | | | (97,656) | |
| | | |
| Effect of exchange rate changes on cash | (292) | | | 3,483 | |
| (Decrease) increase in cash and cash equivalents | (71,375) | | | 68,859 | |
| Cash and cash equivalents at beginning of year | 257,354 | | | 188,495 | |
| Cash and cash equivalents at end of year | $ | 185,979 | | | $ | 257,354 | |
CMC MATERIALS, INC.
Unaudited Reconciliation of Certain GAAP Financial Measures to Certain Non-GAAP Financial Measures
(Unaudited and amounts in thousands, except per share and percentage amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Diluted Earnings Per Share |
| Three Months Ended
September 30, | | Twelve Months Ended
September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| Net income (loss) | $ | 16,059 | | | $ | 0.55 | | | $ | 36,855 | | | $ | 1.25 | | | $ | (68,577) | | | $ | (2.35) | | | $ | 142,828 | | | $ | 4.83 | |
| | | | | | | | | | | | | | | |
| Amortization of acquisition related intangibles | 20,567 | | | 0.70 | | | 21,391 | | | 0.72 | | | 81,083 | | | 2.74 | | | 85,550 | | | 2.89 | |
| Acquisition and integration-related expenses | 2,226 | | | 0.08 | | | 3,067 | | | 0.10 | | | 10,115 | | | 0.35 | | | 10,852 | | | 0.37 | |
| Environmental accrual | 2,508 | | | 0.09 | | | — | | | — | | | 2,508 | | | 0.09 | | | — | | | — | |
| Costs related to KMG-Bernuth warehouse fire, net of insurance recovery | — | | | — | | | (137) | | | — | | | (1,050) | | | (0.04) | | | 1,078 | | | 0.04 | |
| Net costs related to restructuring of wood treatment business | 27 | | | — | | | 72 | | | — | | | 123 | | | — | | | (216) | | | (0.01) | |
| Costs related to Pandemic, net of grants received | (152) | | | (0.01) | | | 500 | | | 0.02 | | | 489 | | | 0.01 | | | 849 | | | 0.03 | |
| | | | | | | | | | | | | | | |
| U.S. tax reform | — | | | — | | | 9 | | | — | | | — | | | — | | | 47 | | | — | |
| Impairment charge | 11,734 | | | 0.40 | | | 2,314 | | | 0.08 | | | 230,392 | | | 7.80 | | | 2,314 | | | 0.08 | |
Tax effect on adjustments to net income1 | (5,637) | | | (0.19) | | | (6,092) | | | (0.21) | | | (45,028) | | | (1.52) | | | (22,456) | | | (0.76) | |
| Adjustment for the dilutive impact of shares | | | — | | | | | — | | | | | 0.03 | | | | | — | |
| Adjusted Net income | $ | 47,332 | | | $ | 1.62 | | | $ | 57,979 | | | $ | 1.96 | | | $ | 210,055 | | | $ | 7.11 | | | $ | 220,846 | | | $ | 7.47 | |
| | | | | | | | | | | | | | | |
| Diluted common shares outstanding | | | 29,261 | | | | | 29,520 | | | | | 29,126 | | | | | 29,580 | |
| Effect of dilutive securities | | | — | | | | | — | | | | | 416 | | | | | — | |
| Adjusted diluted common shares outstanding | | | 29,261 | | | | | 29,520 | | | | | 29,542 | | | | | 29,580 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross Profit and Gross Margin |
| Three Months Ended
September 30, | | Twelve Months Ended
September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| Revenue | $ | 311,924 | | | | | $ | 274,207 | | | $ | 1,199,831 | | | $ | 1,116,270 | |
| Cost of sales | 189,601 | | | | | 157,144 | | | 701,662 | | | 627,669 | |
| Gross profit | $ | 122,323 | | | | | $ | 117,063 | | | $ | 498,169 | | | $ | 488,601 | |
| Gross margin | 39.2 | % | | | | 42.7 | % | | 41.5 | % | | 43.8 | % |
| | | | | | | | | |
| Adjustments: | | | | | | | | | |
| Amortization of acquisition related intangibles | 3,761 | | | | | 3,487 | | | 13,877 | | | 13,552 | |
| Costs related to KMG-Bernuth warehouse fire, net of insurance recovery | — | | | | | (137) | | | (1,050) | | | 1,078 | |
| Net costs related to restructuring of wood treatment business | 27 | | | | | 72 | | | 123 | | | (216) | |
| Costs related to the Pandemic, net of grants received | 18 | | | | | 277 | | | 1,196 | | | 506 | |
| | | | | | | | | |
| Adjusted gross profit | $ | 126,129 | | | | | $ | 120,762 | | | $ | 512,315 | | | $ | 503,521 | |
| Adjusted gross margin | 40.4 | % | | | | 44.0 | % | | 42.7 | % | | 45.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Operating expenses to Non-GAAP Adjusted Operating expenses |
| Three Months Ended
September 30, | | Twelve Months Ended
September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| Research, development and technical | $ | 15,188 | | | $ | 14,105 | | | $ | 54,195 | | | $ | 52,311 | |
| Selling, general, and administrative | 58,186 | | | 54,576 | | | 228,886 | | | 217,071 | |
| Impairment charge | 11,734 | | | 2,314 | | | 230,392 | | | 2,314 | |
| Operating expenses | $ | 85,108 | | | $ | 70,995 | | | $ | 513,473 | | | $ | 271,696 | |
| Adjustments: | | | | | | | |
Amortization of acquisition related intangibles2 | (16,806) | | | (17,904) | | | (67,206) | | | (71,998) | |
Acquisition and integration-related expenses2 | (2,226) | | | (3,067) | | | (10,115) | | | (10,852) | |
Environmental accrual2 | (2,508) | | | — | | | (2,508) | | | — | |
| | | | | | | |
Costs related to the Pandemic, net of grants received2 | 170 | | | (223) | | | 707 | | | (343) | |
| Impairment charge | (11,734) | | | (2,314) | | | (230,392) | | | (2,314) | |
| Adjusted operating expenses | $ | 52,004 | | | $ | 47,487 | | | $ | 203,959 | | | $ | 186,189 | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA and EBITDA Margin |
| | Three Months Ended
September 30, | | Twelve Months Ended
September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Net income | | $ | 16,059 | | | | $ | 36,855 | | | | $ | (68,577) | | | $ | 142,828 | |
| Interest expense, net | | 9,740 | | | | 9,350 | | | | 38,360 | | | 41,840 | |
| Provision for income taxes | | 9,745 | | | | (247) | | | | 13,783 | | | 30,519 | |
| Depreciation & amortization | | 34,063 | | | | 32,221 | | | | 132,170 | | | 127,737 | |
| EBITDA | | 69,607 | | | | 78,179 | | | | 115,736 | | | 342,924 | |
| EBITDA margin | | 22.3 | % | | | 28.5 | % | | | 9.6 | % | | 30.7 | % |
| | | | | | | | | | |
| Adjustments (pre-tax): | | | | | | | | | | |
| Acquisition and integration-related expenses | | 2,226 | | | | 3,067 | | | | 10,115 | | | 10,852 | |
| Environmental accrual | | 2,508 | | | | — | | | | 2,508 | | | — | |
| Costs related to KMG-Bernuth warehouse fire, net of insurance recovery | | — | | | | (137) | | | | (1,050) | | | 1,083 | |
| Net costs related to restructuring of wood treatment business | | 27 | | | | 72 | | | | 123 | | | (221) | |
| Costs related to the Pandemic, net of grants received | | (152) | | | | 500 | | | | 489 | | | 849 | |
| | | | | | | | | | |
| Impairment charge | | 11,734 | | | | 2,314 | | | | 230,392 | | | 2,314 | |
| Adjusted EBITDA | | $ | 85,950 | | | | $ | 83,995 | | | | $ | 358,313 | | | $ | 357,801 | |
| Adjusted EBITDA margin | | 27.6 | % | | | 30.6 | % | | | 29.9 | % | | 32.1 | % |
| | | | | | | | | | | |
Fiscal Year 2022 Guidance Reconciliation 3 |
| Fiscal Year 2022 |
| Low | | High |
| Net income | $ | 137,000 | | | $ | 166,000 | |
Interest expense, net5 | 34,000 | | | 34,000 | |
Provision for income taxes4 | 46,000 | | | 47,000 | |
Depreciation4 | 53,000 | | | 53,000 | |
| Amortization | 85,000 | | | 85,000 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Adjusted EBITDA Guidance - Consolidated | $ | 355,000 | | | $ | 385,000 | |
| | | |
|
|
| | | | | | | | | | | |
| Reconciliation of Cash Flow From Operations to Free Cash Flow |
| Twelve Months Ended
September 30, |
| 2021 | | 2020 |
| Net cash provided by operating activities | $ | 270,613 | | | $ | 287,284 | |
| Less: Capital expenditures | 42,103 | | | 125,839 | |
| Free cash flow | $ | 228,510 | | | $ | 161,445 | |
| | | |
| Net cash used in investing activities | $ | (166,360) | | | $ | (124,252) | |
| | | |
| Net cash (used in) provided by financing activities | $ | (175,336) | | | $ | (97,656) | |
| | | | | | | | | | | |
| Reconciliation of GAAP Debt to Net Debt |
| September 30, |
| 2021 | | 2020 |
| Total short-term and long-term debt | $ | 916,344 | | | $ | 921,414 | |
| Less: Cash and cash equivalents | 185,979 | | | 257,354 | |
| Total net debt | $ | 730,365 | | | $ | 664,060 | |
1 Tax effect on the adjustments were calculated using the U.S. Federal and state blended tax rate for the respective periods as the related adjustments are mainly U.S. driven.
2 Adjustment is related to the Selling, general and administrative expenses.
3 This is a reconciliation of our indicated full year net income to our adjusted EBITDA. The amounts above may not reflect certain future charges costs and/or gains that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance, including future impairment charges associated with the anticipated closure of our wood treatment business.
4 Amounts represent the mid-point of the financial guidance provided on November 10, 2021.
5 Amount represents the mid-point of the current financial guidance provided on November 10, 2021.