EX-99.1 2 foe-20180725xex99_1.htm EX-99.1 Exhibit 991

  

Picture 41



FERRO REPORTS SECOND QUARTER 2018 RESULTS; GAAP EPS INCREASED 40% TO $0.35 AND ADJUSTED EPS INCREASED 18.9% TO $0.44

ALSO MAKES ACQUISITIONS THAT SUPPLEMENT AND EXPAND CURRENT PORTFOLIO OF TECHNOLOGIES,

SETTING STAGE FOR FUTURE GROWTH





2018 Second Quarter *







 

 

 

 

    

GAAP EPS increased 40.0% to $0.35

    Picture 6

 

Ferro reported $0.44 of adjusted earnings per share. This was our eighth consecutive quarter of organic growth, and all three business units contributed to the strong results.

 

Ferro’s innovation initiatives resulted in approximately 20% of our revenue in the quarter coming from our new product program pipeline.  And our optimization initiatives helped us offset raw material price inflation through product pricing and reformulation.

 

We also continued our momentum in corporate development, making acquisitions that bring to Ferro products with technologies that are excellent additions to our current portfolio and that expand our opportunities for further dynamic innovation and optimization.

 

Peter Thomas

Chairman, President and CEO, Ferro Corporation

 

 

    

Adjusted EPS increased 18.9% to $0.44

    

Net Sales increased 19.4% to $416.2 million

    

Net Income increased 41.1% to $29.7 million, with EBITDA expanding 17.9% to $75.2 million

 

 

    

Full-year 2018 non-GAAP guidance reaffirmed, despite currency headwinds

 

Picture 5

    

Organic sales grew 5.4% on constant currency

Picture 3    

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Results * (amounts in millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and Gross Profits

Q2 2018

% Change

YTD

% Change

Net Sales

$

416,239

 

19.4%

$

821,771

 

22.8%

Net Sales (Constant Currency)

 

416,239

 

16.4%

 

821,771

 

17.2%

Gross Profit (GAAP)

 

126,645

 

16.9%

 

245,331

 

18.4%

Adjusted Gross Profit (Constant Currency)

 

127,251

 

12.3%

 

 246,916

 

11.1%

 

 

 

 

 

 

 

 

 

Net Income, EBITDA and EPS

Q2 2018

% Change

YTD

% Change

Net Income 1

$

  29,668

 

41.1%

$

53,059

 

23.6%

Adjusted EBITDA

 

75,186

 

17.9%

 

139,210

 

16.3%

GAAP diluted EPS

$

0.35

 

40.0%

$

0.62

 

24.0%

Adjusted diluted EPS

 

0.44

 

  18.9%

 

0.80

 

17.6%

 

 

 

 

 

 

 

 

 





*Comparative information is relative to prior-year second quarter. 

1 Note: Net Income attributable to Ferro Corporation common shareholders.


 

Picture 62



Segment Results * (amounts in millions, except EPS)

 



 

 

 

 

 

 

 

 

 

 

Picture 48

 

Performance Coatings

Q2 2018

% Change

YTD

% Change

 

Net Sales

$

193,449

 

27.5%

$

378,097

 

35.9%

 

Net Sales (Constant Currency)

 

193,449

 

25.2%

 

378,097

 

30.0%

 

Gross Profit (GAAP)

 

  50,297

 

  25.0%

 

94,062

 

  27.6%

 

Adjusted Gross Profit (Constant Currency)

 

  50,205

 

  18.6%

 

93,929

 

  19.1%

 

 

 

 

 

 

 

 

 

 

 

Picture 47

 

Performance Colors & Glass

Q2 2018

% Change

YTD

% Change

 

Net Sales

$

126,027

 

18.2%

$

246,532

 

17.3%

 

Net Sales (Constant Currency)

 

126,027

 

14.3%

 

246,532

 

11.4%

 

Gross Profit (GAAP)

 

  45,362

 

13.2%

 

88,690

 

14.4%

 

Adjusted Gross Profit (Constant Currency)

 

  45,366

 

9.0%

 

88,694

 

7.9%

 

 

 

 

 

 

 

 

 

 

 

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Color Solutions

Q2 2018

% Change

YTD

% Change

 

Net Sales

$

96,763

 

7.2%

$

197,142

 

9.1%

 

Net Sales (Constant Currency)

 

96,763

 

4.2%

 

197,142

 

4.3%

 

Gross Profit (GAAP)

 

31,541

 

11.0%

 

63,690

 

12.5%

 

Adjusted Gross Profit (Constant Currency)

 

31,904

 

7.5%

 

64,643

 

5.0%



*Comparative information is relative to prior-year second quarter.







Technology & Innovation Advancement



Since June 29, 2018, we have completed acquisitions and signed definitive acquisition agreements (subject to customary closing conditions) with purchase prices in the aggregate amount of approximately $80 million.  These transactions are expected to bring into the Ferro portfolio a range of products with technologies that support future growth, including future acquisitions and advancement into adjacent and new high-end markets that place a premium on innovation. Pending purchase accounting, we expect these acquisitions to be immediately accretive to earnings and to deliver on an annual basis approximately $50 - $60 million in revenue and $16 to $18 million in synergy-adjusted EBITDA.





Synergy-adjusted EBITDA for the transactions excludes the impact of certain items, primarily associated with purchase accounting adjustments, transaction-related expenses and acquisition integration costs, restructuring activities, gains and losses on asset sales concluded by the companies being acquired, and other adjustments to harmonize their accounting results to our standard accounting practices. The impact of adjusting for these items cannot be determined because some of the transactions have not been completed and it is not possible at this time to identify the potential amount or significance of these items for the balance of the year, as they have not occurred yet. Therefore, the Company is unable to reconcile the synergy-adjusted EBITDA guidance for the recent pending and completed acquisitions.




 



Picture 4





Full-Year 2018 Guidance





The 2018 guidance is being maintained, despite foreign currency headwinds.  The guidance assumption has been updated to reflect a USD/EUR exchange rate of 1.16, compared to an exchange rate of 1.20 in our prior guidance.  Also, the 2018 guidance assumes no acquisitions, exceptional optimization program spend or divestitures in 2018.







 

 

 



 

 

Adjusted Free Cash



Adjusted

Adjusted

Flow from Operations



EBITDA

EPS

Conversion1

2018 Guidance

$270 - $275M

$1.55 - $1.60

40% - 45%





Currency Exposure 2017 Weighting

 

2018 Guidance FX sensitivity

EUR - Euro

35% to 40%

 

% Change

Operating Profit

CNY -Yuan Renminbi

5% to 7%

 

+1 all FX change

~ $1.4 million to ~$1.6 million

MXN – Mexican Peso

4% to 6%

 

+1 Euro change

~$0.9 million to ~$1.1 million

EGP – Egyptian Pound

2% to 5%

 

 

 



The results and guidance in this release, including in the highlights above, contain references to non-GAAP measures from continuing operations.  Reconciliations of historical GAAP to non-GAAP results can be found at the end of this release.



1 Note: Adjusted free cash flow is defined as GAAP Operating Cash Flow, less Capex, plus cash used for restructuring, acquisition related professional fees, divested businesses and assets, and certain optimization projects (including Capital).

Ferro is providing adjusted diluted EPS, adjusted EBITDA and adjusted free cash flow from operations conversion guidance on a continuing operations basis. While it is likely that Ferro could incur charges for items excluded from adjusted diluted EPS, adjusted EBITDA and adjusted free cash flow from operations conversion such as mark-to-market adjustments of pension and other postretirement benefit obligations, restructuring and impairment charges, and legal and professional expenses related to certain business development activities, it is not possible, without unreasonable effort, to identify the amount or significance of these items or the potential for other transactions that may impact future GAAP net income and cash flow from operating activities. Management does not believe these items to be representative of underlying business performance. Management is unable to reconcile, without unreasonable effort, the Company's forecasted range of these adjusted non-GAAP financial measures to their most directly comparable GAAP financial measures.



Constant Currency

Constant currency results reflect the remeasurement of 2017 reported and adjusted local currency results using 2018 exchange rates, which reproduces constant currency comparative figures to 2018 reported and adjusted results. These non-GAAP financial measures should not be considered as a substitute for the measures of financial performance prepared in accordance with GAAP.

Conference Call

Ferro will conduct an investor teleconference at 10:00 a.m. EDT Thursday, July 26, 2018. Investors can access this conference via any of the following:

• Webcast can be accessed by clicking on the Investor link at the top of Ferro’s website at ferro.com.

• Live telephone: Call 800-909-7944 within the U.S. or +1 212-231-2935 outside the U.S. Please join the call at least 10 minutes before the start time.

• Webcast replay: Available on Ferro’s Investor website at ferro.com beginning at approximately 12:00 noon Eastern Time on July 26, 2018

• Telephone replay: Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the U.S. (for both U.S. and outside the U.S. access code is 21891850).

• Presentation material & podcast: Earnings presentation material and podcasts can be accessed through the Investor Information portion of the Company’s Web site at ferro.com.




 



Picture 8



About Ferro Corporation

Ferro Corporation (www.ferro.com) is a leading global supplier of technology-based functional coatings and color solutions. Ferro supplies functional coatings for glass, metal, ceramic and other substrates and color solutions in the form of specialty pigments and colorants for a broad range of industries and applications. Ferro products are sold into the building and construction, automotive, electronics, industrial products, household furnishings and appliance markets. The Company’s reportable segments include: Performance Coatings (metal and ceramic coatings), Performance Colors and Glass (glass coatings), and Color Solutions. Headquartered in Mayfield Heights, Ohio, the Company has approximately 5,620 associates globally and reported 2017 sales of $1.4 billion.



Cautionary Note on Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of federal securities laws. These statements are subject to a variety of uncertainties, unknown risks, and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following:

·

demand in the industries into which Ferro sells its products may be unpredictable, cyclical, or heavily influenced by consumer spending;

·

Ferro’s ability to successfully implement and/or administer its optimization initiatives, including its investment and restructuring programs, and to produce the desired results;

·

currency conversion rates and economic, social, political, and regulatory conditions in the U.S. and around the world including the impact of tariffs;

·

challenges associated with a multi-national company such as Ferro competing lawfully with local competitors in certain regions of the world;

·

Ferro’s ability to identify suitable acquisition candidates, complete acquisitions (including those pending acquisitions noted in this press release), effectively integrate the acquired businesses and achieve the expected synergies, as well as the acquisitions being accretive and Ferro achieving the expected returns on invested capital;

·

the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;

·

Ferro’s ability to successfully introduce new products and services or enter into new growth markets;

·

the impact of damage to, or the interruption, failure or compromise of the Company’s information systems;

·

the implementation and operations of business information systems and processes;

·

restrictive covenants in the Company’s credit facilities could affect its strategic initiatives and liquidity;

·

Ferro’s ability to access capital markets, borrowings, or financial transactions;

·

the availability of reliable sources of energy and raw materials at a reasonable cost;

·

increasingly aggressive domestic and foreign governmental regulation of hazardous and other materials and regulations affecting health, safety and the environment;

·

competitive factors, including intense price competition;

·

Ferro’s ability to protect its intellectual property, including trade secrets, or to successfully resolve claims of infringement brought against it;

·

sale of products and materials into highly regulated industries;

·

our ability to address safety, human health, product liability and environmental risks associated with our current and historical products, product life cycle and production processes;

·

limited or no redundancy for certain of the Company’s manufacturing facilities and possible interruption of operations at those facilities;

·

management of Ferro’s general and administrative expenses;


 

Picture 7



Cautionary Note on Forward-Looking Statements (continued)



·

Ferro’s multi-jurisdictional tax structure and its ability to reduce its effective tax rate, including the impact of the Company’s performance on its ability to utilize significant deferred tax assets;

·

the effectiveness of strategies to increase Ferro’s return on invested capital, and the short-term impact that acquisitions may have on return on invested capital;

·

stringent labor and employment laws and relationships with the Company’s employees;

·

the impact of requirements to fund employee benefit costs, especially post-retirement costs;

·

implementation of business processes and information systems, including the outsourcing of functions to third parties;

·

risks associated with the manufacture and sale of material into industries making products for sensitive applications;

·

the impact of the Tax Cuts and Jobs Act on our business;

·

exposure to lawsuits governmental investigations and proceedings relating to current and historical operations and products;

·

risks and uncertainties associated with intangible assets;

·

Ferro’s borrowing costs could be affected adversely by interest rate increases;

·

liens on the Company’s assets by its lenders affect its ability to dispose of property and businesses;

·

amount and timing of any repurchase of Ferro’s common stock; and

·

other factors affecting the Company’s business that are beyond its control, including disasters, accidents and governmental actions.



The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations.



This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this release.



Additional information regarding these risks can be found in our Annual Report on Form 10-K for the year ended December 31, 2017.

Ferro Corporation

Investor Contact:

Kevin Cornelius Grant, 216.875.5451

Head of Investor Relations

kevincornelius.grant@ferro.com



or



Media Contact:

Mary Abood, 216.875.5401

Director, Corporate Communications

mary.abood@ferro.com












 





Table 1

Ferro Corporation and Subsidiaries

Consolidated Statements of Operations (unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except per share amounts)

 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017



 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

416,239 

 

$

348,632 

 

$

821,771 

 

$

669,187 

Cost of sales

 

 

289,594 

 

 

240,290 

 

 

576,440 

 

 

462,051 

Gross profit

 

 

126,645 

 

 

108,342 

 

 

245,331 

 

 

207,136 

Selling, general and administrative expenses

 

 

70,124 

 

 

62,981 

 

 

143,216 

 

 

122,427 

Restructuring and impairment charges

 

 

3,768 

 

 

3,224 

 

 

7,874 

 

 

6,242 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

8,200 

 

 

6,449 

 

 

16,162 

 

 

12,673 

Interest earned

 

 

(186)

 

 

(175)

 

 

(387)

 

 

(355)

Foreign currency losses, net

 

 

2,660 

 

 

4,868 

 

 

4,500 

 

 

4,554 

Loss on extinguishment of debt

 

 

3,226 

 

 

 -

 

 

3,226 

 

 

3,905 

Miscellaneous (income) expense, net

 

 

(1,372)

 

 

1,071 

 

 

(597)

 

 

(1,493)

Income before income taxes

 

 

40,225 

 

 

29,924 

 

 

71,337 

 

 

59,183 

Income tax expense

 

 

10,364 

 

 

8,695 

 

 

17,878 

 

 

15,833 

Net income

 

 

29,861 

 

 

21,229 

 

 

53,459 

 

 

43,350 

Less: Net income attributable to noncontrolling interests

 

 

193 

 

 

204 

 

 

400 

 

 

427 

Net income attributable to Ferro Corporation common shareholders

 

$

29,668 

 

$

21,025 

 

$

53,059 

 

$

42,923 

Earnings per share attributable to Ferro Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

0.35 

 

 

0.25 

 

 

0.63 

 

 

0.51 

Diluted earnings per share

 

 

0.35 

 

 

0.25 

 

 

0.62 

 

 

0.50 



 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares

 

 

84,341

 

 

83,673

 

 

84,284

 

 

83,602

Weighted-average diluted shares

 

 

85,589

 

 

85,277

 

 

85,545

 

 

85,080

End-of-period basic shares

 

 

84,137

 

 

83,694

 

 

84,137

 

 

83,694


































































 



Table 2

Ferro Corporation and Subsidiaries

Segment Net Sales and Gross Profit (unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Segment Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

Performance Coatings

 

$

193,449 

 

$

151,746 

 

$

378,097 

 

$

278,311 

Performance Colors and Glass

 

 

126,027 

 

 

106,637 

 

 

246,532 

 

 

210,155 

Color Solutions

 

 

96,763 

 

 

90,249 

 

 

197,142 

 

 

180,721 

Total segment net sales

 

$

416,239 

 

$

348,632 

 

$

821,771 

 

$

669,187 



 

 

 

 

 

 

 

 

 

 

 

 

Segment Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

Performance Coatings

 

$

50,297 

 

$

40,246 

 

$

94,062 

 

$

73,735 

Performance Colors and Glass

 

 

45,362 

 

 

40,087 

 

 

88,690 

 

 

77,505 

Color Solutions

 

 

31,541 

 

 

28,416 

 

 

63,690 

 

 

56,598 

Other costs of sales

 

 

(555)

 

 

(407)

 

 

(1,111)

 

 

(702)

Total gross profit

 

$

126,645 

 

$

108,342 

 

$

245,331 

 

$

207,136 



 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

Strategic services

 

$

39,643 

 

$

33,013 

 

$

80,821 

 

$

64,673 

Functional services

 

 

26,524 

 

 

24,835 

 

 

53,042 

 

 

48,068 

Incentive compensation

 

 

2,531 

 

 

2,465 

 

 

5,497 

 

 

4,295 

Stock-based compensation

 

 

1,426 

 

 

2,668 

 

 

3,856 

 

 

5,391 

Total selling, general and administrative expenses

 

$

70,124 

 

$

62,981 

 

$

143,216 

 

$

122,427 



 

 

 

 

 

 

 

 

 

 

 

 












































































 





Table 3

Ferro Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)







 

 

 

 

 

 



 

 

 

 

 

 

(Dollars in thousands)

 

June 30,

 

December 31,



 

2018

 

2017

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

44,886 

 

$

63,551 

Accounts receivable, net

 

 

395,858 

 

 

354,416 

Inventories

 

 

381,763 

 

 

324,180 

Other receivables

 

 

66,519 

 

 

67,137 

Other current assets

 

 

25,765 

 

 

16,448 

Total current assets

 

 

914,791 

 

 

825,732 

Other assets

 

 

 

 

 

 

Property, plant and equipment, net

 

 

334,997 

 

 

321,742 

Goodwill

 

 

199,172 

 

 

195,369 

Intangible assets, net

 

 

179,154 

 

 

187,616 

Deferred income taxes

 

 

109,404 

 

 

108,025 

Other non-current assets

 

 

36,294 

 

 

43,718 

Total assets

 

$

1,773,812 

 

$

1,682,202 



 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Loans payable and current portion of long-term debt

 

$

25,739 

 

$

25,136 

Accounts payable

 

 

201,380 

 

 

211,711 

Accrued payrolls

 

 

39,904 

 

 

48,201 

Accrued expenses and other current liabilities

 

 

75,114 

 

 

70,151 

Total current liabilities

 

 

342,137 

 

 

355,199 

Other liabilities

 

 

 

 

 

 

Long-term debt, less current portion

 

 

815,015 

 

 

726,491 

Postretirement and pension liabilities

 

 

161,179 

 

 

166,680 

Other non-current liabilities

 

 

71,769 

 

 

77,152 

Total liabilities

 

 

1,390,100 

 

 

1,325,522 

Equity

 

 

 

 

 

 

Total Ferro Corporation shareholders’ equity

 

 

374,628 

 

 

344,814 

Noncontrolling interests

 

 

9,084 

 

 

11,866 

Total liabilities and equity

 

$

1,773,812 

 

$

1,682,202 


















































 







Table 4

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2018

 

2017

 

2018

 

2017

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

29,861 

 

$

21,229 

 

$

53,459 

 

$

43,350 

Gain on sale of assets

 

 

59 

 

 

866 

 

 

288 

 

 

1,285 

Depreciation and amortization

 

 

13,574 

 

 

11,781 

 

 

26,966 

 

 

23,156 

Interest amortization

 

 

903 

 

 

953 

 

 

1,773 

 

 

1,432 

Restructuring and impairment

 

 

3,050 

 

 

1,046 

 

 

5,479 

 

 

3,874 

Loss on extinguishment of debt

 

 

3,226 

 

 

 -

 

 

3,226 

 

 

3,905 

Accounts receivable

 

 

(18,107)

 

 

(21,564)

 

 

(50,764)

 

 

(48,183)

Inventories

 

 

(36,544)

 

 

(11,545)

 

 

(65,364)

 

 

(28,659)

Accounts payable

 

 

5,608 

 

 

5,934 

 

 

(1,531)

 

 

14,122 

Other current assets and liabilities, net

 

 

(12,065)

 

 

(1,846)

 

 

(18,800)

 

 

(5,111)

Other adjustments, net

 

 

7,045 

 

 

6,221 

 

 

7,593 

 

 

5,534 

Net cash (used in) provided by operating activities

 

 

(3,390)

 

 

13,075 

 

 

(37,675)

 

 

14,705 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures for property, plant and equipment and other long lived assets

 

 

(22,887)

 

 

(10,128)

 

 

(43,569)

 

 

(16,894)

Business acquisitions, net of cash acquired

 

 

(2,568)

 

 

(14,752)

 

 

(4,920)

 

 

(14,752)

Other investing activities

 

 

 

 

143 

 

 

31 

 

 

145 

Net cash used in investing activities

 

 

(25,446)

 

 

(24,737)

 

 

(48,458)

 

 

(31,501)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Net (repayments) under loans payable

 

 

(11,570)

 

 

(1,660)

 

 

(1,828)

 

 

(5,645)

Proceeds from revolving credit facility - 2014 Credit Facility

 

 

 -

 

 

 -

 

 

 -

 

 

15,628 

Principal payments on revolving credit facility - 2014 Credit Facility

 

 

 -

 

 

 -

 

 

 -

 

 

(327,183)

Principal payments on term loan facility - 2014 Credit Facility

 

 

 -

 

 

 -

 

 

 -

 

 

(243,250)

Proceeds from term loan facility - Credit Facility

 

 

 -

 

 

 -

 

 

 -

 

 

623,827 

Principal payments on term loan facility - Credit Facility

 

 

(302,396)

 

 

(1,596)

 

 

(304,060)

 

 

(1,596)

Principal payments on term loan facility - Amended Credit Facility

 

 

(2,050)

 

 

 

 

 

(2,050)

 

 

 -

Proceeds from revolving credit facility - Credit Facility

 

 

15,400 

 

 

 -

 

 

134,950 

 

 

 -

Principal payments on revolving credit facility - Credit Facility

 

 

(133,583)

 

 

 -

 

 

(212,950)

 

 

 -

Proceeds from revolving credit facility - Amended Credit Facility

 

 

580 

 

 

 -

 

 

580 

 

 

 -

Proceeds from term loan facility - Amended Credit Facility

 

 

466,075 

 

 

 -

 

 

466,075 

 

 

 -

Payment of debt issuance costs

 

 

(3,466)

 

 

(215)

 

 

(3,466)

 

 

(12,927)

Acquisition related contingent consideration payment

 

 

 -

 

 

 -

 

 

(348)

 

 

 -

Purchase of treasury stock

 

 

(6,014)

 

 

 -

 

 

(6,014)

 

 

 -

Other financing activities

 

 

(254)

 

 

(540)

 

 

(2,387)

 

 

(930)

Net cash provided by financing activities

 

 

22,722 

 

 

(4,011)

 

 

68,502 

 

 

47,924 

Effect of exchange rate changes on cash and cash equivalents

 

 

(2,296)

 

 

1,710 

 

 

(1,034)

 

 

2,156 

(Decrease) increase in cash and cash equivalents

 

 

(8,410)

 

 

(13,963)

 

 

(18,665)

 

 

33,284 

Cash and cash equivalents at beginning of period

 

 

53,296 

 

 

92,829 

 

 

63,551 

 

 

45,582 

Cash and cash equivalents at end of period

 

$

44,886 

 

$

78,866 

 

$

44,886 

 

$

78,866 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

9,136 

 

$

8,179 

 

$

16,450 

 

$

14,714 

Income taxes

 

$

9,803 

 

$

5,416 

 

$

14,378 

 

$

9,513 








































 



Table 5

Ferro Corporation and Subsidiaries

Supplemental Information

Reconciliation of Reported Income to Adjusted Income

For the Three Months Ended June 30 (unaudited)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share amounts)

 

 

Cost of sales

 

 

Selling general and administrative expenses

 

 

Restructuring and impairment charges

 

 

Other expense, net

 

 

Income tax expense3  

 

 

Net income attributable to common shareholders

 

 

Diluted earnings per share



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

2018



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

289,594 

 

$

70,124 

 

$

3,768 

 

$

12,528 

 

$

10,364 

 

$

29,668 

 

$

0.35 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 -

 

 

 -

 

 

(3,768)

 

 

 -

 

 

 -

 

 

3,768 

 

 

0.04 

Acquisition related professional fees

 

 

(364)

 

 

(3,149)

 

 

 -

 

 

 -

 

 

 -

 

 

3,513 

 

 

0.04 

Costs related to optimization projects

 

 

(242)

 

 

(1,467)

 

 

 -

 

 

 -

 

 

 -

 

 

1,709 

 

 

0.02 

Costs related to divested businesses and assets

 

 

 -

 

 

131 

 

 

 -

 

 

 -

 

 

 -

 

 

(131)

 

 

 -

     Other1

 

 

 -

 

 

 -

 

 

 -

 

 

(1,631)

 

 

 -

 

 

1,631 

 

 

0.02 

Tax on special items

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

2,874 

 

 

(2,874)

 

 

(0.03)

Total special items4

 

 

(606)

 

 

(4,485)

 

 

(3,768)

 

 

(1,631)

 

 

2,874 

 

 

7,616 

 

 

0.09 

As adjusted

 

$

288,988 

 

$

65,639 

 

$

 -

 

$

10,897 

 

$

13,238 

 

$

37,284 

 

$

0.44 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

2017



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

240,290 

 

$

62,981 

 

$

3,224 

 

$

12,213 

 

$

8,695 

 

$

21,025 

 

$

0.25 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 -

 

 

 -

 

 

(3,224)

 

 

 -

 

 

 -

 

 

3,224 

 

 

0.04 

Acquisition related professional fees

 

 

(1,508)

 

 

(4,332)

 

 

 -

 

 

 -

 

 

 -

 

 

5,840 

 

 

0.07 

Costs related to optimization projects

 

 

(53)

 

 

(69)

 

 

 -

 

 

 -

 

 

 -

 

 

122 

 

 

 -

Costs related to divested businesses and assets

 

 

(70)

 

 

(622)

 

 

 -

 

 

 -

 

 

 -

 

 

692 

 

 

0.01 

     Other2

 

 

 -

 

 

 -

 

 

 -

 

 

(4,159)

 

 

 -

 

 

4,159 

 

 

0.05 

Tax on special items

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,851 

 

 

(3,851)

 

 

(0.05)

Total special items4

 

 

(1,631)

 

 

(5,023)

 

 

(3,224)

 

 

(4,159)

 

 

3,851 

 

 

10,186 

 

 

0.12 

As adjusted

 

$

238,659 

 

$

57,958 

 

$

 -

 

$

8,054 

 

$

12,546 

 

$

31,211 

 

$

0.37 



(1)

The adjustments to “Other expense, net” primarily relate to debt extinguishment charges, fees expensed associated with the Amended Credit Facility and a gain recognized on increasing our ownership interest in FMU. 

(2)

The adjustments to “Other expense, net” primarily relate to the FX loss incurred on our Euro-denominated term loan, a loss on an equity method investment, and a loss on an asset sale during the quarter.

(3)

The tax rate reflects the reported tax rate, adjusted for special items being tax effected at the respective statutory rate where the item originated.

(4)

Due to rounding, total earnings per share related to special items does not always add to the total adjusted earnings per share.



It should be noted that adjusted income, earnings per share and other adjusted items referred to above are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP).  These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP, and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures is presented.  We believe this data provides investors with additional information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance. 














 





Table 6

Ferro Corporation and Subsidiaries

Supplemental Information

Reconciliation of Reported Income to Adjusted Income

For the Six Months Ended June 30 (unaudited)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share amounts)

 

 

Cost of sales

 

 

Selling general and administrative expenses

 

 

Restructuring and impairment charges

 

 

Other expense, net

 

 

Income tax expense3  

 

 

Net income  attributable to common shareholders

 

 

Diluted earnings per share



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

2018



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

576,440 

 

$

143,216 

 

$

7,874 

 

$

22,904 

 

$

17,878 

 

$

53,059 

 

$

0.62 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 -

 

 

 -

 

 

(7,874)

 

 

 -

 

 

 -

 

 

7,874 

 

 

0.09 

Acquisition related professional fees

 

 

(952)

 

 

(5,795)

 

 

 -

 

 

 -

 

 

 -

 

 

6,747 

 

 

0.08 

Costs related to optimization projects

 

 

(633)

 

 

(2,365)

 

 

 -

 

 

 -

 

 

 -

 

 

2,998 

 

 

0.04 

Costs related to divested businesses and assets

 

 

 -

 

 

(384)

 

 

 -

 

 

 -

 

 

 -

 

 

384 

 

 

 -

Other1

 

 

 -

 

 

 -

 

 

 -

 

 

(2,435)

 

 

 -

 

 

2,435 

 

 

0.03 

Tax on special items

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

5,267 

 

 

(5,267)

 

 

(0.06)

Total special items4

 

 

(1,585)

 

 

(8,544)

 

 

(7,874)

 

 

(2,435)

 

 

5,267 

 

 

15,171 

 

 

0.18 

As adjusted

 

$

574,855 

 

$

134,672 

 

$

 -

 

$

20,469 

 

$

23,145 

 

$

68,230 

 

$

0.80