EX-99.1 2 exhibit99.htm EXHIBIT 99.1 PRESS RELEASE 11-01-2005 Exhibit 99.1 press release 11-01-2005

Earnings Announcement
Denver, Colorado
October 31st, 2005
FOR IMMEDIATE RELEASE


 
Third quarter diluted earnings per share $0.42

 
 
MacDermid, Incorporated a worldwide manufacturer of proprietary specialty chemical products and materials for the electronics, metal finishing and graphic arts industries (NYSE: MRD) today reported third quarter sales of $193.3 million, a 19.6% increase over the same period in 2004. The company’s acquisition of Autotype in June of 2005 contributed $22.3 million to sales in the third quarter. Sales without Autotype increased $9.4 million, or 5.8% over last year. Sales for the nine months ended September 30th were $541.8 million, or 10.9% above the same period in 2004. Autotype contributed $27.2 million to sales year to date. Year to date sales without Autotype would have increased $26.0 million or 5.3% over the prior year to date.

Diluted earnings per share for the quarter of $0.42 were $0.03 more than the $0.39 per share from continuing operations in 2004. Earnings in the quarter were negatively impacted by acquisition and restructuring charges amounting to $0.04. Accordingly earnings before these charges would have been $0.46 per share, an increase of 17.9% over the third quarter last year.

Diluted earnings per share for the nine-month period were $1.19 or $0.05 less than the same period last year. This was offset by the negative impacts of acquisition and restructuring charges of $0.05 per share and by the impact of the litigation settlement in the second quarter amounting to $0.06 per share.

Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were $ 1.8 million for the quarter ended September 30 2005. Owner earnings were negatively impacted by the payment of the litigation settlement of $5.0 million that was accrued that was accrued as of the end of the second quarter and by the semi-annual payment of interest on our bonds amounting to $ 13.8 million. 



Advanced Surface Finishing (ASF) segment

Sales in our ASF segment for the quarter increased by $14.9 million or 15.5% compared with the same quarter last year, of which $10.7 million is attributable to Autotype. Sales excluding Autotype increased $4.2 million, or 4.3%. Sales for the nine months ended September 30th increased $27.5 million, or 9.6% compared to the same nine-month period last year, of which $13.0 million was attributable to Autotype. Sales excluding Autotype increased $14.6 million or 5.1%.

Gross profit for the quarter is down by 3.9 percentage points primarily due to the affect of the lower inherent gross profit margin of Autotype (2.2%), and increased raw material costs and higher overhead costs in percentage terms due in part to lower volumes in Europe and North America. The seasonal summer effect in Europe was particularly pronounced this year.

Operating profit for the quarter was $16.9 million or 4.0% ahead of last year, Asia and Offshore Solutions increased and the Americas and Europe are down from last year. The decrease in the operating profit percentage from 16.9% to 15.2% is entirely attributable to the lower operating margins as a percentage of sales at Autotype. For the nine-month period operating profit was $47.8 million or 2.2% ahead of last year, but down 1.1% as a percent of sales for the same reasons as for the quarter.

 
Printing Solutions Segment
 

The Printing Solutions business increased sales by $16.8 million, or 25.7% for the quarter, of which $11.5 million was attributable to Autotype. Sales excluding Autotype were up $5.3 million or 8.1%. Sales for the nine months increased by $25.7 million, or 12.7%, of which $14.3 million is attributable to Autotype. Sales year to date excluding Autotype increased $11.4 million, or 5.6%. Colorspan had another excellent quarter. MPS Europe was affected by the summer slow down and continued poor underlying performance. As a result a restructuring was announced during the quarter.

The gross profit % is down 4.0 percentage points for the quarter and by 3.0 percentage points year to date. The decline is due in part to the inclusion of Autotype with its inherently lower gross profit percentage.

Operating profit of $7.2 million is down 23.9% in the quarter as compared to last year due to restructuring charges in France of $ 0.7 million, increased selling, technical and R&D costs. Year to date operating profits were $24.4 million, or 24.7% less than last year due to $2.5 million in litigation settlement expenses from the second quarter, restructuring charges in France and increased selling, technical and R & D expenses. MPS France is consolidating its’ manufacturing operations to improve profitability by moving one of three factories it operates in Europe.

 
Autotype
 

Autotype began reorganizing its’ operations to realize synergies brought about by the acquisition by announcing the closing of its’ US plant, which will be merged into an existing MacDermid plant. Management continues to further plan for cost reducing synergies.


Dan Leever Chairman and CEO said “Overall the quarter was satisfactory. MPS North America stabilized this quarter and we are hopeful we will grow from this base. In Europe, the summer effect, which always reduces our August revenues, was more pronounced than normal. We did not see the bounce back in September that we usually do. The challenges in the US automotive industry are not helping ASF North America, but the Asia demand is still robust. We believe our momentum in ASF is building.
 
Offshore Solutions and Colorspan continued their excellent performance.

MacDermid Autotype is off to a poor start. Revenues and profits are already significantly behind our plan. However, we remain confident this business will provide the returns and growth opportunities we envisioned. We understand the business much better than we did before we acquired it, and are much more confident we have cost and synergy levers far beyond the planned levels. We will exercise the appropriate balance between short-term earnings and longer-term growth.

Owner Earnings were below our expectations although the underlying working capital remains in control. Acquisition activity remains high. It is the company’s intent to grow through acquisition in a responsible manner. Although there can be no assurance we will be successful in finding acquisition candidates that meet our criteria, we are optimistic”.
 


Note:
Owner Earnings is calculated as Net Cash flows provided by operating activities (GAAP definition) less net capital expenditures. EBITDA comprises Earnings before Interest, Taxation, Depreciation and Amortization. This press release and additional financial information together with our reconciliation of GAAP to Non-GAAP numbers are available on our website.
Website: http://www.macdermid.com


MacDermid, Incorporated
NYSE - MRD
CUSIP 554273 10 2

October 31, 2005

This report and other Corporation reports and statements describe many of the positive factors affecting the Corporation’s future business prospects. Investors should also be aware of factors that could have a negative impact on those prospects. These include political, economic or other conditions such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the business; competitive products, advertising, promotional and pricing activity; the degree of acceptance of new product introductions in the marketplace; technical difficulties which may arise with new product introductions; and the difficulty of forecasting sales at certain times in certain markets.
 
 

MacDermid, Incorporated
Condensed Consolidated Summary of Earnings
(Unaudited)
$ in thousands, except share and per share amounts
                 
   
Three Months Ended
 
Nine Months Ended
   
Sept 30th
 
Sept 30th
 
Sept 30th
 
Sept 30th
   
2005
 
2004
 
2005
 
2004
                 
Proprietary sales
 
$ 182,445
 
$ 150,969
 
$ 511,903
 
$ 458,121
Other sales
 
10,815
 
10,616
 
29,885
 
30,529
Total net sales
 
$ 193,260
 
$ 161,585
 
$ 541,788
 
$ 488,650
Gross margin
 
83,282
 
76,375
 
240,961
 
231,975
GM %
 
43.1%
 
47.3%
 
44.5%
 
47.5%
                 
Selling, technical and administrative
 
51,387
 
45,254
 
147,581
 
136,841
Research and development
 
6,684
 
5,375
 
19,725
 
15,928
Restructuring/Acquisition
 
1,077
 
0
 
1,462
 
0
Operating profit
 
24,134
 
25,746
 
72,193
 
79,206
                 
Other income (expense), net
 
799
 
92
 
207
 
531
Interest (expense), net
 
(7,101)
 
(7,287)
 
(21,170)
 
(22,542)
                 
Earnings before income taxes
 
17,832
 
18,551
 
51,230
 
57,195
Income tax (expense)
 
(4,915)
 
(6,508)
 
(14,600)
 
(18,874)
Net earnings
 
$ 12,917
 
$ 12,043
 
$ 36,630
 
$ 38,321
                 
Diluted earnings per share
 
$0.42
 
$0.39
 
$1.19
 
$1.24
                 
Diluted average common shares outstanding
30,956,963
 
30,907,677
 
30,865,440
 
30,988,259
 
 

 

Sales and Margins by Region
$ in thousands
                 
   
Three Months Ended
 
Nine Months Ended
   
Sept 30th
 
Sept 30th
 
Sept 30th
 
Sept 30th
   
2005
 
2004
 
2005
 
2004
                 
Americas
               
Total net sales
 
$ 76,194
 
$ 65,801
 
$215,599
 
$ 200,418
Operating profit
 
$ 10,398
 
$ 10,219
 
$ 26,812
 
$ 33,909
OP %
 
13.6%
 
15.5%
 
12.4%
 
16.9%
                 
                 
Europe
               
Total net sales
 
$ 65,836
 
$ 56,877
 
$191,077
 
$ 177,445
Operating profit
 
$ 3,235
 
$ 7,047
 
$ 19,455
 
$ 22,076
OP %
 
4.9%
 
12.4%
 
10.2%
 
12.4%
                 
                 
Asia
               
Total net sales
 
$ 51,230
 
$ 38,907
 
$135,112
 
$ 110,787
Operating profit
 
$ 10,501
 
$ 8,480
 
$ 25,926
 
$ 23,221
OP %
 
20.5%
 
21.8%
 
19.2%
 
21.0%
                 
Consolidated Total
               
Total net sales
 
$193,260
 
$161,585
 
$541,788
 
$ 488,650
Operating profit
 
$ 24,134
 
$ 25,746
 
$ 72,193
 
$ 79,206
OP %
 
12.5%
 
15.9%
 
13.3%
 
16.2%
                 
                 
MacDermid, Incorporated
Sales and Margins by Group
$ in thousands
                 
   
Three Months Ended
 
Nine Months Ended
   
Sept 30th
 
Sept 30th
 
Sept 30th
 
Sept 30th
   
2005
 
2004
 
2005
 
2004
                 
Advanced Surface Finishing
               
Total net sales
 
$111,003
 
$ 96,136
 
$313,476
 
$ 286,000
Operating profit
 
$ 16,925
 
$ 16,276
 
$ 47,764
 
$ 46,742
OP %
 
15.2%
 
16.9%
 
15.2%
 
16.3%
                 
Printing Solutions
               
Total net sales
 
$ 82,257
 
$ 65,449
 
$228,312
 
$ 202,650
Operating profit
 
$ 7,209
 
$ 9,470
 
$ 24,429
 
$ 32,464
OP %
 
8.8%
 
14.5%
 
10.7%
 
16.0%
                 
Consolidated Total
               
Total net sales
 
$193,260
 
$161,585
 
$541,788
 
$ 488,650
Operating profit
 
$ 24,134
 
$ 25,746
 
$ 72,193
 
$ 79,206
OP %
 
12.5%
 
15.9%
 
13.3%
 
16.2%
 
 

 

MacDermid, Incorporated
Condensed Consolidated Balance Sheets
$ in thousands
         
   
Sept 30th
 
Dec. 31st
   
2005
 
2004
   
(Unaudited)
   
         
Cash and cash equivalents
 
$ 60,307
 
$ 137,829
Accounts receivable, net
 
156,817
 
142,455
Inventories, net
 
96,655
 
80,445
Other current assets
 
31,274
 
28,486
Current Assets
 
345,053
 
389,215
         
Property, plant & equipment, net
122,538
 
110,463
Goodwill
 
245,630
 
194,287
Intangibles
 
32,299
 
28,434
Other Assets
 
47,749
 
51,320
         
Total assets
 
$ 793,269
 
$ 773,719
         
         
Payables and accruals
 
$ 126,022
 
$ 128,359
Short-term debt
 
3,554
 
753
Current Liabilities
 
129,576
 
129,112
         
Long-term debt
 
301,288
 
301,077
Other long-term liabilities
 
37,369
 
39,499
Total Liabilities
 
468,233
 
469,688
         
Shareholders' equity
 
325,036
 
304,031
         
Total liabilities & shareholders' equity
$ 793,269
 
$ 773,719
         
Debt to total capital
 
48%
 
50%

 
 

 

Condensed Consolidated Summary of Cash Flows
(Unaudited)
$ in thousands
                 
 
               
   
Three Months Ended
 
Nine Months Ended
   
Sept 30th
 
Sept 30th
 
Sept 30th
 
Sept 30th
   
2005
 
2004
 
2005
 
2004
                 
                 
Net earnings
 
$ 12,917
 
$ 12,043
 
$ 36,630
 
$ 38,321
 
               
Depreciation
 
4,592
 
3,897
 
12,209
 
12,011
Amortization
 
1,008
 
708
 
2,796
 
2,159
Provision for bad debt
 
842
 
1,517
 
1,580
 
3,024
Stock compensation expense
 
1,177
 
1,351
 
5,227
 
4,383
Defered Taxes
 
(1,620)
 
(1,559)
 
(995)
 
(1,431)
Restructuring Charges
 
1,077
 
-
 
1,463
 
-
Working capital changes
 
(15,669)
 
5,021
 
(27,718)
 
(1,359)
Cash from operations
 
4,324
 
22,978
 
31,192
 
57,108
 
               
Capital spending, net
 
(2,517)
 
(768)
 
(9,565)
 
(3,212)
 
               
                 
Owner earnings**
 
1,807
 
22,210
 
21,627
 
53,896
                 
Acquisition of business
 
(3,883)
 
-
 
(93,153)
   
Dividends paid
 
(1,827)
 
(1,211)
 
(4,858)
 
(2,423)
Increase/(decrease) in debt
 
(7,877)
 
(261)
 
2,780
 
(1,001)
Treasury shares
 
-
 
-
 
33
 
31
Other
 
1,973
 
396
 
(3,951)
 
256
 
               
Increase/(decrease) in cash
 
$ (9,807)
 
$ 21,134
 
$ (77,522)
 
$ 50,759
 
               
                 
 
               
**Note: Pro forma owner earnings
 
 
 
 
 
 
 
 
adjusted for semi-annual bond interest
 
$ 6,900
 
$ (6,900)
 
$ 6,900
 
$ 6,900
payments would have been as follows:
$ 8,707
 
$ 15,310
 
$ 28,527
 
$ 60,796
 
 
 
 
 
 
 
 
 
 
 
 

 

MacDermid, Inc.
                   
Regulation G: GAAP to Non-GAAP Reconciliation
 
                     
                     
Gross Profit Before Special Charges (a) (b)
 
 
 
 
 
 
 
 
Year
Year
(In thousands)
Three Months Ended
Ended
Ended
 
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-03
Dec-04
 
               
 
 
Net Sales as reported
162,106
162,012
165,053
161,585
172,135
170,247
178,281
193,260
619,886
660,785
 
 
             
 
 
Gross Profit as reported
74,363
77,526
78,074
76,375
81,266
77,653
80,026
83,282
290,615
313,241
Add: Special Charges
-
-
-
-
-
-
117
418
-
-
Gross Profit Before Special Charges
74,363
77,526
78,074
76,375
81,266
77,653
80,143
83,700
290,615
313,241
 
               
 
 
GP % Before Special Charges
45.9%
47.9%
47.3%
47.3%
47.2%
45.6%
45.0%
43.3%
46.9%
47.4%
 
 
 
 
 
 
 
 
 
 
 
                     
                     
                     
 
 
                 
Operating Profit Before Amortization and Special Charges (a) (b)
(In thousands)
Three Months Ended
Ended
Ended
 
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-03
Dec-04
 
               
 
 
Net Sales per above
162,106
162,012
165,053
161,585
172,135
170,247
178,281
193,260
619,886
660,785
 
               
 
 
Earnings Before Interest and Taxes
27,689
26,551
27,348
25,838
27,615
24,481
22,988
24,536
103,464
107,352
 
               
 
 
Add: Other (Income) Expense
(1,142)
258
(697)
(92)
(1,411)
(30)
622
(799)
(4,314)
(1,942)
Add: Special Charges
-
-
-
-
-
-
503
1,495
-
-
 
               
 
 
Operating Profit Before Special Charges
26,547
26,809
26,651
25,746
26,204
24,451
24,113
25,232
99,150
105,410
 
               
 
 
 
               
 
 
 
               
 
 
% OP Before Special Charges to Net Sales
16.4%
16.5%
16.1%
15.9%
15.2%
14.4%
13.5%
13.1%
16.0%
16.0%
 
 
 
 
 
 
 
 
 
 
 
 

(a)  
as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations.
(b)  
"Gross Profit Before Special Charges" and "Operating Profit Special Charges" are not intended to represent Net Earnings as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time.
 
 

 

MacDermid, Inc.
                   
Regulation G: GAAP to Non-GAAP Reconciliation
 
                     
 
 
               Year   Year
(In thousands, except share and per share amounts)
Three Months Ended
             
Ended
Ended
 
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-03
Dec-04
 
               
 
 
Net Income (Loss) as reported
$19,289
$12,893
$13,385
$12,043
$14,903
$11,785
$11,928
$12,633
$56,426
$53,224
Deduct: Income (Loss) from Discontinued Ops,
               
 
 
net of income taxes
5,632
-
-
-
-
-
-
 
5,592
-
Income (Loss) from Continuing Operations
13,657
12,893
13,385
12,043
14,903
11,785
11,928
12,633
50,834
53,224
 
               
 
 
Change in accounting method
-
-
-
-
-
-
 
 
(1,014)
-
SFAS 150 gain on stock call option
-
-
-
-
-
-
 
 
(2,214)
-
Cost of sales impact of acquisition inventory adj
-
-
-
-
-
 
117
418
-
-
Write-off of In process R&D
-
-
-
-
-
-
386
 
-
-
Restructuring & Other Charges
 
 
 
 
 
 
 
1,077
 
 
Total Special Charges (Income)
-
-
-
-
-
-
503
1,495
(3,228)
-
 
               
 
 
After Tax Effect of Special Charges (Income)
-
-
-
-
-
-
357
1,069
(2,520)
-
 
               
 
 
Net Income from Continuing Operations Before
               
 
 
Tax Effected Special Charges
$13,657
$12,893
$13,385
$12,043
$14,903
$11,785
$12,285
$13,702
$48,314
$53,224
 
               
 
 
Stock Compensation Expense
1,119
1,560
1,472
1,351
2,112
2,177
1,873
1,177
4,219
6,495
After Tax Effect Stock Compensation Expense
761
1,061
1,001
905
1,415
1,361
1,330
842
2,869
4,382
 
               
 
 
Net Income from Continuing Operations Before Tax
               
 
 
Effected Special Charges & Stock Compensation
$14,418
$13,954
$14,386
$12,948
$16,318
$13,146
$13,615
$14,544
$51,183
$57,606
 
               
 
 
Earnings Per Share from Continuing Operations
               
 
 
Before Tax Effected Special Charges
$0.45
$0.42
$0.43
$0.39
$0.48
$0.38
$0.40
$0.44
$1.55
$1.72
 
               
 
 
Earnings Per Share from Continuing Operations
               
 
 
Before Tax Effected Special Charges and Stock
               
 
 
Compensation
$0.47
$0.45
$0.46
$0.42
$0.53
$0.43
$0.44
$0.47
$1.63
$1.86
 
               
 
 
Diluted Average Common Shares Outstanding
30,501,615
31,041,763
31,014,374
30,988,259
30,794,808
30,809,620
30,787,829
30,865,440
31,430,398
30,961,108
 
 
 
               
EBITDA from Continuing Operations Before Special Charges (a) (b)
(In thousands)
               
Year
Year
 
Three Months Ended
           
Ended
Ended
 
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-03
Dec-04
 
               
 
 
Earnings Before Interest and Taxes
$27,689
$26,551
$27,348
$25,838
$27,615
$24,481
$22,988
$24,536
$ 103,464
$ 107,352
 
               
 
 
SFAS 150 gain on stock call option
-
-
-
-
-
-
-
 
(2,214)
-
Cost of sales impact of acquisition inventory adj
-
-
-
-
-
-
117
418
-
-
Write-off of In Process R&D
-
-
-
-
-
-
386
 
-
-
Restructuring & Other Charges
 
 
 
 
 
 
 
1,077
 
 
Total Special Charges
-
-
-
-
-
-
503
1,495
(2,214)
-
 
               
 
 
 
               
 
 
Amortization
889
734
717
708
850
891
897
1,008
3,301
3,009
Depreciation
3,976
4,125
3,989
3,897
4,137
3,846
3,771
4,592
15,793
16,148
 
               
 
 
EBITDA from Continuing Operations Before
 
 
 
 
 
 
 
 
 
 
Special Charges
$32,554
$31,410
$32,054
$30,443
$32,602
$29,218
$28,159
$31,631
$ 120,344
$ 126,509
 
               
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
   
Owners Earnings (b)
 
 
           
 
 
(In thousands)
               
Year
Year
 
Three Months Ended
           
Ended
Ended
 
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-03
Dec-04
 
               
 
 
Net cash flow provided by operating activities
$29,158
$5,977
$28,153
$22,978
$28,169
$2,023
$24,845
$3,927
$ 91,417
$ 85,277
 
               
 
 
Capital expenditures, net
5,213
782
1,662
768
5,322
2,990
4,058
2,120
10,704
8,534
Owner Earnings
$23,945
$5,195
$26,491
$22,210
$22,847
($967)
$20,787
$1,807
$ 80,713
$ 76,743
 
               
 
 
 
               
 
 
Adjustment for Bond Interest assumed to be paid quarterly
 
 
               
 
 
Owner Earnings
$23,945
$5,195
$26,491
$22,210
$22,847
($967)
$20,787
$1,807
$ 80,713
$ 76,743
Assumed if Bond Interest was paid quarterly
(6,900)
6,900
(6,900)
6,900
(6,900)
6,900
(6,900)
6,900
-
-
Adjusted Owner Earnings
$17,045
$12,095
$19,591
$29,110
$15,947
$5,933
$13,887
$8,707
$ 80,713
$ 76,743
                     
 

(a) as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations.

(b) "EPS from Continuing Operations Before Special Charges and Stock Compensation", "EBITDA from Continuing Operations Before Special Charges" and "Owners Earnings" are not
intended to represent Net Earnings (loss) or Net Cash Flow From Operating Activities as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings or Net Cash Flow From Operating Activities as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time.