Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2021 | May 05, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-13948 | |
Entity Registrant Name | SCHWEITZER-MAUDUIT INTERNATIONAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 62-1612879 | |
Entity Address, Address Line One | 100 North Point Center East, | |
Entity Address, Address Line Two | Suite 600 | |
Entity Address, City or Town | Alpharetta, | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30022 | |
City Area Code | 800 | |
Local Phone Number | 514-0186 | |
Title of 12(b) Security | Common stock, $0.10 par value | |
Trading Symbol | SWM | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,409,529 | |
Entity Central Index Key | 0001000623 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net sales | $ 288.2 | $ 261.5 |
Cost of products sold | 207.4 | 187.2 |
Gross profit | 80.8 | 74.3 |
Selling expense | 9.1 | 9.5 |
Research and development expense | 3.8 | 3.2 |
General expense | 32.7 | 27.4 |
Total nonmanufacturing expenses | 45.6 | 40.1 |
Restructuring and impairment expense | 1.7 | 0.1 |
Operating profit | 33.5 | 34.1 |
Interest expense | 2.9 | 6.9 |
Other (expense) income, net | (2.6) | 0.6 |
Income before income taxes and income from equity affiliates | 28 | 27.8 |
Provision for income taxes | 7.4 | 5.3 |
Income from equity affiliates, net of income taxes | 1 | 0 |
Net income | $ 21.6 | $ 22.5 |
Net income per share - basic: | ||
Net income per share - basic (in dollars per share) | $ 0.69 | $ 0.72 |
Net income per share – diluted: | ||
Net income per share - diluted (in dollars per share) | $ 0.68 | $ 0.72 |
Weighted average shares outstanding: | ||
Basic (in shares) | 30,974,200 | 30,712,300 |
Diluted (in shares) | 31,340,500 | 30,910,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 21.6 | $ 22.5 |
Other comprehensive loss, net of tax: | ||
Foreign currency translation adjustments | (9.9) | (3.5) |
Unrealized gain (losses) on derivative instruments | 4.4 | (12.7) |
Net gain from postretirement benefit plans | 0.1 | 0.1 |
Less: amortization of postretirement benefit plans' costs included in net periodic cost | 1.6 | 0.4 |
Other comprehensive loss | (3.8) | (15.7) |
Comprehensive income | $ 17.8 | $ 6.8 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 63.7 | $ 54.7 |
Accounts receivable, net | 172.9 | 148.5 |
Inventories | 173.3 | 179.7 |
Income taxes receivable | 3.3 | 6.2 |
Other current assets | 14.9 | 7.3 |
Total current assets | 428.1 | 396.4 |
Property, plant and equipment, net | 324.1 | 339 |
Deferred income tax benefits | 0.2 | 2.6 |
Investment in equity affiliates | 60 | 59.3 |
Goodwill | 401.8 | 403.7 |
Intangible assets | 304.8 | 314.7 |
Other assets | 68.5 | 69.2 |
Total assets | 1,587.5 | 1,584.9 |
Current liabilities | ||
Current debt | 2.7 | 2.8 |
Accounts payable | 66.6 | 60.5 |
Income taxes payable | 4.9 | 2.7 |
Accrued expenses and other current liabilities | 83.5 | 100.9 |
Total current liabilities | 157.7 | 166.9 |
Long-term debt | 615.2 | 590.5 |
Long-term income tax payable | 17.7 | 17.7 |
Pension and other postretirement benefits | 35.3 | 36.5 |
Deferred income tax liabilities | 45 | 45.1 |
Other liabilities | 63.7 | 78.6 |
Total liabilities | 934.6 | 935.3 |
Stockholders’ equity: | ||
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.10 par value; 100,000,000 shares authorized; 31,407,136 and 31,324,745 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 3.1 | 3.1 |
Additional paid-in-capital | 94.6 | 92.2 |
Retained earnings | 670.9 | 666.2 |
Accumulated other comprehensive loss, net of tax | (115.7) | (111.9) |
Total stockholders’ equity | 652.9 | 649.6 |
Total liabilities and stockholders’ equity | $ 1,587.5 | $ 1,584.9 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred shares issued (in shares) | 0 | 0 |
Preferred shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common shares issued (in shares) | 31,407,136 | 31,324,745 |
Common stock outstanding (in shares) | 31,407,136 | 31,324,745 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance (in shares) at Dec. 31, 2019 | 30,896,661 | ||||
Beginning Balance at Dec. 31, 2019 | $ 597.7 | $ 3.1 | $ 78.8 | $ 638.4 | $ (122.6) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 22.5 | 22.5 | |||
Other comprehensive loss, net of tax | (15.7) | (15.7) | |||
Dividends declared | (13.7) | (13.7) | |||
Restricted stock issuances, net (in shares) | 320,005 | ||||
Stock-based employee compensation expense | 2.1 | 2.1 | |||
Stock issued to directors as compensation (in shares) | 1,130 | ||||
Stock issued to directors as compensation | 0.1 | 0.1 | |||
Purchases and retirement of common stock (in shares) | (25,274) | ||||
Purchases and retirement of common stock | (1) | (1) | |||
Ending Balance (in shares) at Mar. 31, 2020 | 31,192,522 | ||||
Ending Balance at Mar. 31, 2020 | 592 | $ 3.1 | 81 | 646.2 | (138.3) |
Beginning Balance (in shares) at Dec. 31, 2020 | 31,324,745 | ||||
Beginning Balance at Dec. 31, 2020 | 649.6 | $ 3.1 | 92.2 | 666.2 | (111.9) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 21.6 | 21.6 | |||
Other comprehensive loss, net of tax | (3.8) | (3.8) | |||
Dividends declared | (13.8) | (13.8) | |||
Restricted stock issuances, net (in shares) | 148,530 | ||||
Stock-based employee compensation expense | 2.1 | 2.1 | |||
Stock issued to directors as compensation (in shares) | 590 | ||||
Stock issued to directors as compensation | 0.3 | 0.3 | |||
Purchases and retirement of common stock (in shares) | (66,729) | ||||
Purchases and retirement of common stock | (3.1) | (3.1) | |||
Ending Balance (in shares) at Mar. 31, 2021 | 31,407,136 | ||||
Ending Balance at Mar. 31, 2021 | $ 652.9 | $ 3.1 | $ 94.6 | $ 670.9 | $ (115.7) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.44 | $ 0.44 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flow - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating | ||
Net income | $ 21.6 | $ 22.5 |
Non-cash items included in net income: | ||
Depreciation and amortization | 16.9 | 15.3 |
Deferred income tax | 3 | 0.7 |
Pension and other postretirement benefits | 1.1 | 0.8 |
Stock-based compensation | 2.1 | 2.2 |
Income from equity affiliates | (1) | 0 |
Brazil tax assessment accruals, net | (6.1) | 0 |
Other items | 5.6 | (2.7) |
Changes in operating working capital, net of assets acquired: | ||
Accounts receivable | (27.7) | (33.7) |
Inventories | 1.8 | 10.8 |
Prepaid expenses | (4.8) | (3.5) |
Accounts payable | 11.3 | 1.3 |
Accrued expenses and other current liabilities | (13.5) | (10.7) |
Accrued income taxes | 2.4 | 2.1 |
Net changes in operating working capital | (30.5) | (33.7) |
Net cash provided by operations | 12.7 | 5.1 |
Investing | ||
Capital spending | (7.1) | (7.4) |
Capitalized software costs | (0.5) | (0.7) |
Acquisitions, net of cash acquired | 0 | (170.6) |
Other investing | 0.3 | 2.4 |
Net cash used in investing | (7.3) | (176.3) |
Financing | ||
Cash dividends paid to SWM stockholders | (13.8) | (13.7) |
Proceeds from issuances of long-term debt | 25 | 212 |
Payments on long-term debt | (0.6) | (0.4) |
Purchases of common stock | (3.1) | (1) |
Payments for debt issuance costs | (3) | 0 |
Net cash provided by financing | 4.5 | 196.9 |
Effect of exchange rate changes on cash and cash equivalents | (0.9) | (2) |
Increase in cash and cash equivalents | 9 | 23.7 |
Cash and cash equivalents at beginning of period | 54.7 | 103 |
Cash and cash equivalents at end of period | 63.7 | 126.7 |
Supplemental Cash Flow Disclosures | ||
Cash paid for interest, net | 1.4 | 2.3 |
Cash paid for taxes, net | 2 | 2.3 |
Change in capital spending in accounts payable and accrued liabilities | $ 4.9 | $ 2.9 |
General
General | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Nature of Business Schweitzer-Mauduit International, Inc. ("SWM," "we," or the "Company"), headquartered in the United States of America, is a multinational diversified producer of highly engineered solutions and advanced materials for a variety of industries. The Company maintains two operating product line segments: Advanced Materials & Structures and Engineered Papers. The Advanced Materials & Structures ("AMS") segment produces mostly resin-based rolled goods such as nets, films and meltblown materials, typically through an extrusion process or other non-woven technologies. AMS also provides converting and coating services. These products are used in a variety of specialty applications across the filtration, transportation, healthcare, construction, and industrial end-markets. The Engineered Papers ("EP") segment primarily serves the tobacco industry with production of various cigarette papers and reconstituted tobacco products ("Recon"). Traditional reconstituted tobacco leaf ("RTL") is used as a blend with virgin tobacco in cigarettes and used in the production of small cigars. Recon, as well as low ignition propensity ("LIP") cigarette paper, a specialty product with fire-safety features, are two key profit drivers, which together account for more than half of segment net sales. The EP segment also produces non-tobacco papers for premium applications, such as energy storage and industrial commodity paper grades. We conduct business in over 90 countries and operate 23 production locations worldwide, with facilities in the U.S., Canada, United Kingdom, France, Luxembourg, Belgium, Russia, Brazil, China and Poland. We also have a 50% equity interest in two joint ventures in China. The first, China Tobacco Mauduit (Jiangmen) Paper Industry Ltd. ("CTM"), produces various cigarette papers and the second, China Tobacco Schweitzer (Yunnan) Reconstituted Tobacco Co. Ltd. ("CTS"), produces RTL. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements and these notes thereto included herein should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 1, 2021. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned, majority-owned and controlled subsidiaries. The Company’s share of the net income of its 50%-owned joint ventures in China is included in the condensed consolidated statements of income as Income from equity affiliates, net of income taxes. Intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Furthermore, the Company considered the potential impact from the global economic and social disruption caused by the novel coronavirus (“COVID-19”) in estimates used in the Company’s financial statements as of and for the period ended March 31, 2021. The Company determined changes to these estimates did not have a material impact on our assessment of recoverability of our assets, including Accounts receivable, net, Goodwill, Intangible assets or long-lived assets. There may also be long-term undetermined effects on some of our customers and suppliers, and as a result of these uncertainties, actual results could differ materially from these estimates and assumptions. Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The new standard simplifies income tax accounting requirements by removing certain exceptions to the general principles in Topic 740, Income Taxes. The provisions of this ASU were adopted effective January 1, 2021 and did not have a material impact on the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans and requires the amendments to be applied on a retrospective basis for all periods presented. The provisions of this ASU were adopted effective January 1,2021 and the required changes, which are not significant and not expected to have a material impact, will be reflected in the annual financial statements. Recently Issued Accounting Standards In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The new standard provides optional expedients and exceptions for applying generally accepted accounting principles ("GAAP") to contracts, hedging relationships, and other transactions affected by reference rate reform and the anticipated discontinuance of the London Interbank Offered Rate ("LIBOR") if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. The Company does not currently have any contracts that have been changed to a new reference rate but will continue to evaluate the applicability and impact of the guidance. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company has two main sources of revenue: product sales and materials conversion. The Company recognizes product sales revenues when control of a product is transferred to the customer. For the majority of product sales, transfer of control occurs when the products are shipped from one of the Company’s manufacturing facilities to the customer. The cost of delivering finished goods to the Company’s customers is recorded as a component of Cost of products sold. Those costs include the amounts paid to a third party to deliver the finished goods. Any freight costs billed to and paid by a customer are included in net sales. The Company also provides services to customers through the conversion of customer-owned raw materials into processed finished goods. In these transactions, the Company generally recognizes revenue as processing is completed. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Generally, the Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. If collectability is not considered to be probable, the Company defers recognition of revenue on satisfied performance obligations until the uncertainty is resolved. We record estimates for bad debts based on our expectations for the collectability of amounts due from customers, considering historical collection history, expectations for future activity and other discrete events as applicable. Variable consideration, such as discounts or price concessions, is set forth in the terms of the contract at inception and is included in the assessment of the transaction price at the outset of the arrangement. The transaction price is allocated to the individual performance obligations due under the contract based on the relative stand-alone fair value of the performance obligations identified in the contract. The Company typically uses an observable price to determine the stand-alone selling price for separate performance obligations. The Company does not typically include extended payment terms or significant financing components in its contracts with customers. Certain product sales contracts may include cash-based incentives (volume rebates or credits), which are accounted for as variable consideration. We estimate these amounts at least quarterly based on the expected forecast quantities to be provided to customers and reduce revenues recognized accordingly. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. The Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling expenses. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. As a practical expedient, the Company treats shipping and handling activities that occur after control of the good transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation. Following is the Company’s Net sales disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from Net sales. Three Months Ended March 31, 2021 March 31, 2020 AMS EP Total AMS EP Total Product revenues $ 158.3 $ 109.0 $ 267.3 $ 117.0 $ 124.7 $ 241.7 Materials conversion revenues 2.3 15.1 17.4 3.8 12.9 16.7 Other revenues 2.4 1.1 3.5 2.1 1.0 3.1 Total revenues (1) $ 163.0 $ 125.2 $ 288.2 $ 122.9 $ 138.6 $ 261.5 (1) Revenues include net hedging gains and losses for the three months ended March 31, 2021 and 2020. Net sales are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 AMS EP Total AMS EP Total United States $ 105.7 $ 37.4 $ 143.1 $ 83.3 $ 43.9 $ 127.2 Europe and the former Commonwealth of Independent States 17.8 49.4 67.2 12.6 43.5 56.1 Asia/Pacific (including China) 32.4 22.2 54.6 20.7 28.8 49.5 Latin America 2.4 8.8 11.2 2.3 11.0 13.3 Other foreign countries 4.7 7.4 12.1 4.0 11.4 15.4 Total revenues (1) $ 163.0 $ 125.2 $ 288.2 $ 122.9 $ 138.6 $ 261.5 (1) Revenues include net hedging gains and losses for the three months ended March 31, 2021 and 2020. |
Other Comprehensive Loss
Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Other Comprehensive Loss | Other Comprehensive Loss Comprehensive income includes Net income, as well as certain items charged and credited directly to stockholders' equity, which are excluded from net income. The Company has presented Comprehensive income in the condensed consolidated statements of comprehensive income (loss). Reclassification adjustments of derivative instruments are presented in Net sales, Other (expense) income, net, or Interest expense in the condensed consolidated statements of income. See Note 11. Derivatives for additional information. Amortization of accumulated pension and other post-employment benefit ("OPEB") liabilities are included in the computation of net periodic pension and OPEB costs, which are more fully discussed in Note 13. Postretirement and Other Benefits. Components of Accumulated other comprehensive loss, net of tax, were as follows ($ in millions): March 31, 2021 December 31, 2020 Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.2 million and $11.6 million at March 31, 2021 and December 31, 2020, respectively $ (18.8) $ (20.5) Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.8 million and $2.8 million at March 31, 2021 and December 31, 2020, respectively (8.7) (13.1) Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $6.8 million and $10.1 million at March 31, 2021 and December 31, 2020, respectively (88.2) (78.3) Accumulated other comprehensive loss $ (115.7) $ (111.9) Changes in the components of Accumulated other comprehensive (loss) income were as follows ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 Pre-tax Tax Net of Pre-tax Tax Net of Net gain (loss) on pension and OPEB liability adjustments $ 1.1 $ 0.6 $ 1.7 $ 0.7 $ (0.2) $ 0.5 Unrealized gain (loss) on derivative instruments 4.5 (0.1) 4.4 (15.6) 2.9 (12.7) Unrealized (loss) gain on foreign currency translation (6.5) (3.4) (9.9) (4.1) 0.6 (3.5) Total $ (0.9) $ (2.9) $ (3.8) $ (19.0) $ 3.3 $ (15.7) |
Business Acquisitions
Business Acquisitions | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisitions On March 13, 2020, the Company completed the acquisition of 100% of the equity interest in Tekra, LLC and Trient, LLC, “Tekra,” pursuant to the definitive agreement signed as of February 20, 2020. Tekra is a converter of high-performance films and substrates which enhances the Company’s films capabilities. Tekra, part of the AMS segment, operates two manufacturing facilities located in Wisconsin. The consideration transferred to acquire Tekra was $169.3 million, net of $1.6 million cash and cash equivalents acquired, subject to working capital adjustments that were finalized in 2020. The purchase price was funded with borrowings from our Revolving Credit Facility (as described under Note 10. Debt below). The acquisition was accounted for as a business combination with the assets acquired and liabilities assumed measured at their fair values as of the acquisition date, primarily using Level 3 inputs. The estimated purchase price allocation disclosed as of March 31, 2020, was revised during the second and third quarters as new information was received and analyzed resulting in a decrease in net intangible assets of $3.4 million, and other adjustments, consisting primarily of reclassifications within working capital, leading to a net decrease in total consideration of $1.8 million. The consideration paid for Tekra and the final fair values of the assets acquired, and liabilities assumed as of the March 13, 2020 acquisition date are as follows ($ in millions): Fair Value as of March 13, 2020 Cash and cash equivalents $ 1.6 Accounts receivable 8.6 Inventory 14.2 Other current assets 0.2 Property, plant and equipment 7.3 Identifiable intangible assets 81.8 Other noncurrent assets 3.7 Total assets $ 117.4 Accounts payable $ 3.0 Other current liabilities 2.0 Other noncurrent liabilities 2.7 Net assets acquired $ 109.7 Goodwill 61.2 Total consideration $ 170.9 The fair value of receivables acquired approximates the gross contractual value. The contractual amount not expected to be collected is immaterial. Acquired inventory was comprised of finished goods and raw materials. The fair value of finished goods was based on net realizable value adjusted for the costs of selling and a reasonable profit margin on selling effort. The fair value of raw materials was determined to approximate book value. Acquired intangible assets include customer relationships, tradenames and unpatented developed technologies. Intangible assets were valued using the multi-period excess earnings and relief-from-royalty methods, both forms of the income approach which considers a forecast of future cash flows generated from the use of each asset. The following table shows the final fair values assigned to identifiable intangible assets ($ in millions): Fair Value as of March 13, 2020 Weighted-Average Amortization Period (Years) Amortizable intangible assets: Customer relationships $ 63.0 15 Tradenames and other 10.8 15 Developed technology 8.0 10 Total amortizable intangible assets $ 81.8 During the three months ended March 31, 2020, the Company recognized $1.1 million in direct and indirect acquisition-related costs for the Tekra acquisition. Direct and indirect acquisition-related costs were expensed as incurred and are included in the General expense line item in the condensed consolidated statements of income. The amounts of Net sales and Net Income of Tekra included in the Company's condensed consolidated income statement from the acquisition date are as follows ($ in millions): March 13, 2020 - March 31, 2020 Net Sales $ 5.5 Net Income $ 0.4 The amount of unaudited pro forma Net sales for the three months ended March 31, 2020 for the combined entity were $285.4 million. Preparation of pro forma income from continuing operations for the periods presented is impractical given recent changes to the ownership structure of the acquired entities prior to the transaction. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The Company uses the two-class method to calculate earnings per share. The Company has granted restricted stock that contains non-forfeitable rights to dividends on unvested shares. Since these unvested shares are considered participating securities under the two-class method, the Company allocates earnings per share to common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Diluted net income per common share is computed based on Net income divided by the weighted average number of common and potential common shares outstanding. Potential common shares during the respective periods are those related to dilutive stock-based compensation, including long-term stock-based incentive compensation and directors’ accumulated deferred stock compensation, which may be received by the directors in the form of stock or cash. A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows ($ in millions, shares in thousands): Three Months Ended March 31, March 31, Numerator (basic and diluted): Net income $ 21.6 $ 22.5 Less: Dividends paid to participating securities (0.1) (0.3) Less: Undistributed earnings available to participating securities (0.1) — Undistributed and distributed earnings available to common stockholders $ 21.4 $ 22.2 Denominator: Average number of common shares outstanding 30,974.2 30,712.3 Effect of dilutive stock-based compensation 366.3 197.7 Average number of common and potential common shares outstanding 31,340.5 30,910.0 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are valued at the lower of cost (using the First-In, First-Out and weighted average methods) or net realizable value. The Company's costs included in inventory primarily include resins, pulp, chemicals, direct labor, utilities, maintenance, depreciation, finishing supplies and an allocation of certain overhead costs. Machine start-up costs or abnormal machine shutdowns are expensed in the period incurred and are not reflected in inventory. The Company reviews inventories at least quarterly to determine the necessity of write-offs for excess, obsolete or unsalable inventory. The Company estimates write-offs for inventory obsolescence and shrinkage. These reviews require the Company to assess customer and market demand. The following schedule details inventories by major class ($ in millions): March 31, December 31, Raw materials $ 65.2 $ 65.3 Work in process 24.6 23.2 Finished goods 75.5 83.5 Supplies and other 8.0 7.7 Total $ 173.3 $ 179.7 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2021 were as follows ($ in millions): AMS EP Total Goodwill as of December 31, 2020 $ 398.4 $ 5.3 $ 403.7 Foreign currency translation adjustments (1.7) (0.2) (1.9) Goodwill as of March 31, 2021 $ 396.7 $ 5.1 $ 401.8 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The gross carrying amount and accumulated amortization for intangible assets which are in our AMS segment consisted of the following ($ in millions): March 31, 2021 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.2 $ 94.1 $ — $ (1.1) $ 246.2 Developed technology 42.0 14.9 — 0.1 27.0 Trade names 32.7 1.6 20.7 0.3 10.1 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.6 — — 0.9 Total $ 418.3 $ 113.6 $ 20.7 $ (0.7) $ 284.7 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.2) $ 20.1 December 31, 2020 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.8 $ 88.5 $ — $ (2.9) $ 254.2 Developed technology 42.1 14.1 — (0.2) 28.2 Trade names 32.7 1.4 20.7 0.3 10.3 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.5 — — 1.0 Total $ 419.0 $ 106.9 $ 20.7 $ (2.8) $ 294.2 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.6) $ 20.5 |
Restructuring and Impairment Ac
Restructuring and Impairment Activities | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Impairment Activities | Restructuring and Impairment Activities The Company incurred restructuring and impairment expense of $1.7 million and $0.1 million in the three months ended March 31, 2021 and 2020, respectively, in the EP segment. During the third quarter of 2020, we announced plans to shut down the Spotswood, New Jersey facility and shift the production of paper made there to other SWM facilities. This decision was part of our ongoing manufacturing optimization efforts and involved the co-development of a new paper production technology with one of the Company’s key customers. Production of paper at this facility ceased as of December 31, 2020. As a result of this decision, $1.4 million of restructuring and impairment expense was recognized in the three months ended March 31, 2021 related to the costs associated with closing this facility, maintaining the property and preparing it for sale. In addition to restructuring costs relating to the Spotswood facility, the EP segment recognized $0.3 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, related to severance accruals for employees at other manufacturing facilities. These restructuring charges relate to ongoing cost optimization initiatives to remain competitive within the EP segment. The cost optimization initiative project started in 2019 and is expected to be completed in 2022. The EP segment has recognized $7.2 million of restructuring charges cumulatively through March 31, 2021 related to this project. The Company expects to record additional restructuring related costs in the EP segment during 2021 of approximately $1.4 million relating to the shutdown of the Spotswood, New Jersey facility, primarily associated with closing the facility and maintaining the property until it is sold. The Company does not expect to incur significant restructuring expenses related to the cost optimization initiatives in the EP segment during the remainder of 2021. In the AMS segment, there were no restructuring and impairment expenses for the three months ended March 31, 2021 and 2020. The following table summarizes total restructuring and related charges for the three months ended March 31, 2021: Three Months Ended March 31, 2021 March 31, 2020 Restructuring and impairment expense: Severance $ 0.3 $ 0.1 Other 1.4 — Total restructuring and impairment expense $ 1.7 $ 0.1 The following table summarizes changes in restructuring liabilities during the periods ended March 31, 2021 and December 31, 2020. ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 Balance at beginning of year $ 7.4 $ 0.5 Accruals for announced programs 0.3 0.1 Cash payments (2.2) (0.3) Foreign exchange impact (0.1) — Balance at end of period $ 5.4 $ 0.3 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt The components of total debt are summarized in the following table ($ in millions): March 31, December 31, Revolving credit facility - U.S. dollar borrowings $ 75.0 $ 50.0 Term loan facility 195.0 195.5 6.875% senior unsecured notes due October 1, 2026, net of discount of $5.8 million and $6.1 million at March 31, 2021 and December 31, 2020, respectively 344.2 343.9 French employee profit sharing 4.7 5.0 Finance lease obligations 3.3 3.5 Debt issuance costs (4.3) (4.6) Total debt 617.9 593.3 Less: Current debt (2.7) (2.8) Long-term debt $ 615.2 $ 590.5 Credit Facility On September 25, 2018, the Company entered into a $700.0 million credit agreement (the “Credit Agreement”), which replaced the Company’s previous senior secured credit facilities and provides for a five year $500.0 million revolving line of credit (the “Revolving Credit Facility”) and a seven year $200.0 million bank term loan facility (the “Term Loan A Facility”). Subject to certain conditions, including the absence of a default or event of default under the Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or as additional Term Loan Facilities so long as the Company is in pro forma compliance with the financial covenants set forth in the Credit Agreement and the aggregate of such increases does not exceed $400.0 million. On February 10, 2021 we amended our Credit Agreement to, among other things, add a new seven year $350 million Term Loan B Facility (the “Term Loan B Facility”). The balance under the Term Loan B Facility was $0 as of March 31, 2021. Borrowings under the Revolving Credit Facility currently bear interest, at the Company’s option, at either (i) 1.75% in excess of LIBOR or (ii) 0.75% in excess of an alternative base rate. Borrowings under the Term Loan A Facility currently bear interest, at the Company’s option, at either (i) 2.00% in excess of LIBOR or (ii) 1.00% in excess of an alternative base rate. The Term Loan amortizes at the rate of 1.0% per year and will mature on September 25, 2025. Any borrowings under the Term Loan B Facility will bear interest, at the Company's option, at either (i) 4.00% in excess of a reserve adjusted LIBOR rate (subject to a minimum floor of 0.75%) or (ii) 3.00% in excess of an alternative base rate. Under the terms of the amended Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the amended Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than 5.50 and an interest coverage ratio, also as defined in the amended Credit Agreement, of not less than 3.00. The net debt to EBITDA ratio will decrease over the course of 24 months, returning to 4.50x effective as of June 30, 2023. In addition, borrowings and loans made under the amended Credit Agreement are secured by substantially all of the Company’s and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned material domestic subsidiaries and by SWM Luxembourg. The Company was in compliance with all of its covenants under the Credit Agreement at March 31, 2021. Indenture for 6.875% Senior Unsecured Notes Due 2026 On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned subsidiaries that is a borrower under or that guarantees obligations under the Credit Agreement or that guarantees certain other indebtedness, subject to certain exceptions. The Notes were issued pursuant to an Indenture, dated as of September 25, 2018 (the “Indenture”), by and among the Company, the guarantors listed therein and Wilmington Trust, National Association, as trustee. The Indenture provides that interest on the Notes will accrue from September 25, 2018 and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2019, and the Notes mature on October 1, 2026. The Company may redeem some or all of the Notes at any time on or after October 1, 2021, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to October 1, 2021, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in the Indenture. The Company may redeem up to 35% of the original aggregate principal amount of the Notes on or prior to October 1, 2021 with the proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount of the Notes. If the Company sells certain assets or consummates certain change of control transactions, the Company will be required to make an offer to repurchase the Notes, subject to certain conditions. The Indenture contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, make certain dividends, repurchase Company stock or make other distributions, make certain investments, create liens, transfer or sell assets, merge or consolidate and enter into transactions with the Company’s affiliates. Such covenants are subject to a number of exceptions and qualifications set forth in the Indenture. The Indenture also contains certain customary events of default, including failure to make payments in respect of the principal amount of the Notes, failure to make payments of interest on the Notes when due and payable, failure to comply with certain covenants and agreements and certain events of bankruptcy or insolvency. The Company was in compliance with all of its covenants under the Indenture at March 31, 2021. As of March 31, 2021, the average interest rate was 2.33% on outstanding Revolving Credit Facility borrowings and 1.88% on outstanding Term Loan A Facility borrowings. The effective rate on the 6.875% senior unsecured notes due 2026 was 7.248%. The weighted average effective interest rate on the Company's debt facilities, including the impact of interest rate hedges, was approximately 4.03% and 3.84% for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, and December 31, 2020, the Company's total deferred debt issuance costs, net of accumulated amortization, were $4.3 million and $4.6 million, respectively. Amortization expense of $0.3 million and $0.3 million was recorded during the three months ended March 31, 2021 and 2020, respectively, and has been included as a component of Interest expense in the accompanying condensed consolidated statements of income. Principal Repayments Following are the expected maturities for the Company's debt obligations as of March 31, 2021 ($ in millions): 2021 $ 3.4 2022 4.0 2023 78.4 2024 2.6 2025 188.7 Thereafter 345.1 Total $ 622.2 Fair Value of Debt At March 31, 2021 and December 31, 2020, the fair market value of the Company's 6.875% senior unsecured notes was $373.1 million and $371.0 million, respectively. The fair market value for the senior unsecured notes was determined using quoted market prices, which are directly observable Level 1 inputs. The fair market value of all other debt as of March 31, 2021 and December 31, 2020 approximated the respective carrying amounts as the interest rates are variable and based on current market indices. Debt Issuance Costs |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes or derivatives with credit risk-related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities. The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of Accumulated other comprehensive loss and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair values are recorded to net income each period. The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of Accumulated other comprehensive loss and reclassified into earnings when the forecasted transaction affects earnings. The Company also uses cross currency swap contracts to selectively hedge its exposure to foreign currency related changes in our net investments in certain foreign operations. We designate these cross currency swap contracts as net investment hedges. Changes in the fair value of these hedges are deferred within the foreign currency translation component of Accumulated other comprehensive income and reclassified into earnings when the foreign investment is sold or substantially liquidated. On September 11, 2019, the Company entered into a pay-fixed, receive-variable interest rate swap with a maturity date of January 31, 2027. The instrument is a hedge on a portion of the Company’s debt facility through the Credit Agreement. Under the terms of the interest rate swap, SWM will pay a fixed amount of interest each period in an amount equal to 1.724% on a notional amount of $185 million and receive interest payments monthly in an amount equal to the One-Month USD-LIBOR rate on the notional amount. The notional amount will reduce throughout the term of the swap as follows: • September 13, 2019 - December 31, 2020 $185 million notional • December 31, 2020 - December 31, 2021 $150 million notional • December 31, 2021 - January 31, 2027 $100 million notional As with the previous interest rate swap, the terms of the swap mirror the terms of the underlying debt, including timing of the payments and interest rates. On October 24, 2018, the Company entered into a cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €65.4 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 3.6725% per annum. The cross-currency swap will mature on October 1, 2021. On January 29, 2019, the Company entered into a cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €66.0 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 4.0525% per annum. The cross-currency swap will mature on October 1, 2021. On September 11, 2019, the Company entered into a new pay-EUR, receive-USD cross-currency swap arrangement with a major financial institution having a maturity date of April 1, 2023. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €90.9 million at maturity. Under the terms of the new cross-currency swap, SWM will pay a fixed amount of Euro-denominated interest at a rate of 5.638% semiannually and receive USD denominated payments at a rate of 6.875% semiannually on the notional amount of the swap. On January 26, 2021, in anticipation of o ur announcement of our offer to acquire Scapa Group (as defined in and further described under Note 16. Subsequent Events, below), we entered into a currency forward contract with a major financial institution. The terms of the contract provide for an exchange of a notional amount of GBP 439 million for USD, calculated using the contract rate as applicable at the settlement date. An additional currency forward contract with a major financial institution provides for the exchange of a notional amount of GBP 9.6 million for USD, calculated using the contract rate on April 21, 2021. See Note 16. Subsequent Events for additional information on the settlement of these contracts. The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at March 31, 2021 ($ in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Derivatives designated as hedges: Foreign exchange contracts Accounts receivable, net $ 2.6 Accrued expenses and other current liabilities $ 4.9 Foreign exchange contracts Other assets — Other liabilities 7.3 Interest rate contracts Accounts receivable, net — Other liabilities 3.6 Total derivatives designated as hedges 2.6 15.8 Derivatives not designated as hedges: Foreign exchange contracts Accounts receivable, net — Accrued expenses and other current liabilities 5.7 Total derivatives not designated as hedges — 5.7 Total derivatives $ 2.6 $ 21.5 The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at December 31, 2020 ($ in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Derivatives designated as hedges: Foreign exchange contracts Accounts receivable, net $ 0.9 Accrued expenses $ 11.0 Foreign exchange contracts Other assets — Other liabilities 12.3 Interest rate contracts Accounts receivable, net 0.3 Accrued expenses — Interest rate contracts Other assets — Other liabilities 7.8 Total derivatives designated as hedges $ 1.2 $ 31.1 Derivatives not designated as hedges: Foreign exchange contracts Accounts receivable, net — Accounts payable — Total derivatives not designated as hedges $ — $ — Total derivatives $ 1.2 $ 31.1 The following table provides the gross effect that derivative instruments designated in hedging relationships had on Accumulated other comprehensive loss and results of operations ($ in millions): Derivatives Designated in Hedging Relationships Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax Location of (Loss) Gain Reclassified (Loss) Gain Reclassified Three Months Ended Three Months Ended March 31, March 31, 2021 2020 2021 2020 Derivatives designated as cash flow hedge Foreign exchange contracts $ (0.6) $ (5.0) Net sales $ (0.6) $ (0.6) Foreign exchange contracts 0.9 0.5 Other income (expense), net 0.7 0.6 Interest rate contracts 4.1 (8.2) Interest expense — — Derivatives designated as net investment hedge Foreign exchange contracts 7.0 12.0 Other income (expense), net — — Total $ 11.4 $ (0.7) $ 0.1 $ — The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three and three months ended March 31, 2021 or 2020, other than those related to the cross-currency swap, noted below. The Company’s cross currency swaps were designated with terms based on the spot rate of the EUR. Future changes in the components related to the spot change on the notional will be recorded in OCI and remain there until the hedged subsidiaries are substantially liquidated. All coupon payments are recorded in earnings and the initial value of excluded components currently recorded in Accumulated other comprehensive loss as an unrealized translation adjustment are amortized to interest expense over the remaining term of the swap. For the three months ended March 31, 2021 and 2020, respectively, $1.1 million and $2.0 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense. The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions): Derivatives Not Designated as Cash Flow Hedging Instruments Location of Gain Recognized in Income Amount of (Loss) Gain Recognized in Income Three Months Ended March 31, 2021 March 31, 2020 Foreign exchange contracts Other income, net $ (6.6) $ 0.2 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation Brazil Imposto sobre Circulação de Mercadorias e Serviços ("ICMS"), a form of value-added tax in Brazil, was assessed to SWM-B in December of 2000. SWM-B received two assessments from the tax authorities of the State of Rio de Janeiro (the "State") for unpaid ICMS taxes on certain raw materials from January 1995 through October 1998 and from November 1998 through November 2000 (collectively, the "Raw Materials Assessments"). The Raw Materials Assessments concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-tobacco related grades of paper sold domestically. SWM-B contested the Raw Materials Assessments based on Article 150, VI of the Brazilian Federal Constitution of 1988, which grants immunity from ICMS taxes to papers intended for printing books, newspapers and periodicals, on the ground that tax immunity extends to the raw material inputs used to produce such papers. In 2015, the first chamber of the Federal Supreme Court decided the first Raw Materials Assessment in favor of SWM-B. Different chambers of the Federal Supreme Court decided one Raw Materials Assessment in favor of SWM-B and the other against SWM-B. SWM-B recorded a liability of $8.6 million (based on the foreign currency exchange rate at March 31, 2021) in Other Liabilities to satisfy the adverse judgment in the second quarter of 2019 and continued to pursue appeals. On April 9, 2021, SWM-B resolved the remaining Raw Materials Assessment by paying $2.6 million (based on the foreign currency exchange rate at March 31, 2021) under a tax amnesty program which reduced the tax liability by approximately 70%. All litigation is now concluded and this matter is fully resolved. As the result of the favorable settlement, we recognized a total benefit of $6.1 million in the first quarter of 2021, of which $4.6 million was in Interest expense and $1.6 million was in Other expense, net. SWM-B received assessments from the tax authorities of the State for unpaid ICMS and Fundo Estadual de Combate à Pobreza ("FECP," a value-added tax similar to ICMS) taxes on interstate purchases of electricity. The State issued four sets of assessments against SWM-B, one for May 2006 - November 2007, a second for January 2008 - December 2010, a third for September 2011 - September 2013, which was replaced by a smaller assessment for January - June 2013, and a fourth for July 2013 - December 2017 (collectively the "Electricity Assessments"). SWM-B challenged all Electricity Assessments in administrative proceedings before the State tax council (in the first-level court Junta de Revisão Fiscal and the appellate court Conselho de Contribuintes) based on Resolution 1.610/89, which defers these taxes on electricity purchased by an "electricity-intensive consumer." In 2014, a majority of the Conselho de Contribuintes sitting en banc ruled against SWM-B in each of the first and second Electricity Assessments ($3.3 million and $6.3 million, respectively, based on the foreign currency exchange rate at March 31, 2021), and SWM-B is now pursuing challenges to these assessments in the State judicial system where SWM-B obtained preliminary injunctions against enforcement of both assessments. In March 2020, the first-level judicial court ruled in favor of SWM-B in the second Electricity Assessment, a decision that is now on appeal. The third Electricity Assessment was dismissed on technical grounds by the Conselho de Contribuintes in 2018 after the State admitted the tax did not apply as it had asserted. Instead, in August 2018, the State filed a revised third Electricity Assessment in the amount of $0.5 million for ICMS on electricity purchased during part of 2013, and a fourth Electricity Assessment in the amount of $7.0 million pertaining to ICMS and FECP on electricity purchased from July 2013 to December 2017. SWM-B filed challenges to these 2018 assessments in the first-level administrative court on the same grounds as the older cases. The Junta de Revisão Fiscal rejected SWM-B’s challenge to the revised third Electricity Assessment, but the Conselho de Contribuintes agreed with SWM-B that the 2013 claim was time-barred. Both the Junta de Revisão Fiscal and the Conselho de Contribuintes ruled against SWM-B in the fourth Electricity Assessment. Both 2019 decisions from the Conselho de Contribuintes are being appealed to the full bench of the Conselho de Contribuintes. The State issued a new regulation effective January 1, 2018 that only specific industries are “electricity-intensive consumers,” a list that excludes paper manufacturers. SWM-B contends this regulation shows that paper manufacturers were electricity-intensive consumers eligible to defer ICMS before 2018. SWM-B cannot determine the outcome of the Electricity Assessments matters; as such, no loss has been accrued in our condensed consolidated financial statements. Germany In January 2015, the Company initiated patent infringement proceedings in Germany against Glatz under multiple LIP-related patents. In December 2017, the Dusseldorf Appeal Court affirmed the German District Court judgment on infringement of EP1482815 against Glatz. The Company filed an action against Glatz in the German District Court to set the amount of damages for the infringement and Glatz has filed a counterclaim. Glatz has filed an action in the German Patent Court to invalidate the German part of EP1482815. The German Patent Court held that some of the patent claims at issue were invalid and also that another claim at issue was valid. The Company has appealed the portion of the decision with respect to the claims held to be invalid. The hearing on this invalidity appeal has been scheduled for September 2021. The cost, timing and outcome of intellectual property litigation can be unpredictable and thus no assurances can be given as to the outcome or impact on us of such litigation. Environmental Matters The Company's operations are subject to various nations' federal, state and local laws, regulations and ordinances relating to environmental matters. The nature of the Company's operations exposes it to the risk of claims with respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental laws and regulations, it believes that its future cost of compliance with environmental laws, regulations and ordinances, and its exposure to liability for environmental claims and its obligation to participate in the remediation and monitoring of certain hazardous waste disposal sites, will not have a material effect on its financial condition or results of operations. However, future events, such as changes in existing laws and regulations, or unknown contamination or costs of remediation of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material effect on its financial condition or results of operations. General Matters In the ordinary course of conducting business activities, the Company and its subsidiaries become involved in certain other judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured regulatory, employment, intellectual property, general and commercial liability, environmental and other matters. At this time, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial condition, results of operations or cash flows. However, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial condition, results of operations or cash flows. |
Postretirement and Other Benefi
Postretirement and Other Benefits | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Postretirement and Other Benefits | Postretirement and Other BenefitsThe Company sponsors pension benefits in the United States, France and Canada and OPEB benefits related to postretirement healthcare and life insurance in the United States and Canada. The Company’s Canadian pension and OPEB benefits and U.S. OPEB liability are not material and therefore are not included in the following disclosures. Pension and OPEB Benefits The components of net pension benefit costs for U.S. and French employees during the three months ended March 31, 2021 and 2020 were as follows ($ in millions): Three Months Ended March 31, U.S. Pension Benefits French Pension Benefits 2021 2020 2021 2020 Service cost $ — $ — $ 0.3 $ 0.3 Interest cost 0.7 0.9 — — Expected return on plan assets (1.0) (1.2) — — Amortizations and other 0.9 0.8 0.3 0.3 Net periodic benefit cost $ 0.6 $ 0.5 $ 0.6 $ 0.6 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim financial reporting, the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with ASC No. 740-270 "Accounting for Income Taxes in Interim Periods." These interim estimates are subject to variation due to several factors, including the ability of the Company to accurately forecast pre-tax and taxable income and loss by jurisdiction, changes in laws or regulations, and expenses or losses for which tax benefits are not recognized. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective tax rate calculations could result in a higher or lower effective tax rate during a quarter, based upon the mix and timing of actual earnings versus annual projections. As a result of the Tax Cuts and Jobs Act of 2017, the Company has significant previously taxed earnings and profits from its foreign subsidiaries that it is generally able to repatriate free of U.S. federal tax, due to transition tax and global intangible low taxed income (“GILTI”) treatment. Further, to the extent that any untaxed earnings and profits are distributed from foreign subsidiaries, such dividends should be eligible for a 100% dividends received deduction. Therefore, the Company does not assert indefinite reinvestment on earnings generated after December 31, 2017. The Company provides for deferred non-U.S. withholding taxes and U.S. state taxes on hypothetical repatriation of earnings generated after December 31, 2017. All unrecognized tax positions could impact the Company's effective tax rate if recognized. With respect to penalties and interest incurred from income tax assessments or related to unrecognized tax benefits, the Company’s policy is to classify penalties as provision for income taxes and interest as interest expense in its condensed consolidated statement of income. There were no material income tax penalties or interest accrued during the three months ended March 31, 2021 or 2020. The Company's effective tax rate was 26.4% and 19.1% for the three months ended March 31, 2021 and 2020, respectively. The increase was materially due to unfavorable discrete items, mix of earnings by jurisdiction and a reduction in US tax credits due to foreign law changes. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company's two operating product line segments are also the Company's reportable segments: Advanced Materials & Structures and Engineered Papers. The AMS segment primarily produces engineered resin-based rolled goods such as nets, films and other non-wovens for use in high-performance applications in the filtration, transportation, healthcare, construction, and industrial end-markets. It consists of the operations of various acquisitions. The EP segment primarily produces various cigarette papers and Recon for sale to cigarette manufacturers. The EP segment also includes non-tobacco paper for battery separators, printing and writing, drinking straw wrap and furniture laminates. Information about Net Sales and Operating Profit The accounting policies of these segments are the same as those described in Note 2. Summary of Significant Accounting Policies in the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The Company primarily evaluates segment performance and allocates resources based on operating profit. Expense amounts not associated with segments are referred to as unallocated expenses. ($ in millions) Net Sales Three Months Ended March 31, 2021 March 31, 2020 AMS $ 163.0 56.6 % $ 122.9 47.0 % EP 125.2 43.4 138.6 53.0 Total Consolidated $ 288.2 100.0 % $ 261.5 100.0 % ($ in millions) Operating Profit Three Months Ended March 31, 2021 March 31, 2020 AMS $ 21.3 63.6 % $ 13.7 40.2 % EP 29.9 89.2 33.4 97.9 Unallocated (17.7) (52.8) (13.0) (38.1) Total Consolidated $ 33.5 100.0 % $ 34.1 100.0 % |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On January 27, 2021, we issued an announcement pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers disclosing the terms of a recommended cash offer to acquire the entire issued and to be issued ordinary shares of Scapa Group plc, a company incorporated in England and Wales (“Scapa”), to be effected through a scheme of arrangement (the “Scheme”) under Part 26 of the United Kingdom Companies Act 2006, as amended (the “Acquisition”). Scapa is a UK-based innovation, design, and manufacturing solutions provider for healthcare and industrial markets and has operations across North America, Europe and Asia. On April 15, 2021, the Scheme became effective in accordance with its terms following delivery to the Registrar of Companies in England and Wales of the orders of the High Court of Justice of England and Wales sanctioning the Scheme, and the Acquisition was completed. The offer price for the Acquisition was £2.15 (approximately $2.96 based on an exchange rate of $1:£1.3788 on April 15, 2021) in cash for each ordinary share of Scapa, valuing the entire ordinary share capital of Scapa at approximately £412.6 million on a fully-diluted basis (approximately $568.9 million). The Company settled the offer consideration with payment to Scapa shareholders under the Scheme on April 29, 2021. As a result of the Acquisition, Scapa will become wholly-owned subsidiaries of the Company and part of the AMS segment. |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements and these notes thereto included herein should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 1, 2021. |
Principles of Consolidation | Principles of Consolidation |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Furthermore, the Company considered the potential impact from the global economic and social disruption caused by the novel coronavirus (“COVID-19”) in estimates used in the Company’s financial statements as of and for the period ended March 31, 2021. The Company determined changes to these estimates did not have a material impact on our assessment of recoverability of our assets, including Accounts receivable, net, Goodwill, Intangible assets or long-lived assets. There may also be long-term undetermined effects on some of our customers and suppliers, and as a result of these uncertainties, actual results could differ materially from these estimates and assumptions. |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The new standard simplifies income tax accounting requirements by removing certain exceptions to the general principles in Topic 740, Income Taxes. The provisions of this ASU were adopted effective January 1, 2021 and did not have a material impact on the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans and requires the amendments to be applied on a retrospective basis for all periods presented. The provisions of this ASU were adopted effective January 1,2021 and the required changes, which are not significant and not expected to have a material impact, will be reflected in the annual financial statements. Recently Issued Accounting Standards In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The new standard provides optional expedients and exceptions for applying generally accepted accounting principles ("GAAP") to contracts, hedging relationships, and other transactions affected by reference rate reform and the anticipated discontinuance of the London Interbank Offered Rate ("LIBOR") if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. The Company does not currently have any contracts that have been changed to a new reference rate but will continue to evaluate the applicability and impact of the guidance. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Following is the Company’s Net sales disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from Net sales. Three Months Ended March 31, 2021 March 31, 2020 AMS EP Total AMS EP Total Product revenues $ 158.3 $ 109.0 $ 267.3 $ 117.0 $ 124.7 $ 241.7 Materials conversion revenues 2.3 15.1 17.4 3.8 12.9 16.7 Other revenues 2.4 1.1 3.5 2.1 1.0 3.1 Total revenues (1) $ 163.0 $ 125.2 $ 288.2 $ 122.9 $ 138.6 $ 261.5 (1) Revenues include net hedging gains and losses for the three months ended March 31, 2021 and 2020. Net sales are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 AMS EP Total AMS EP Total United States $ 105.7 $ 37.4 $ 143.1 $ 83.3 $ 43.9 $ 127.2 Europe and the former Commonwealth of Independent States 17.8 49.4 67.2 12.6 43.5 56.1 Asia/Pacific (including China) 32.4 22.2 54.6 20.7 28.8 49.5 Latin America 2.4 8.8 11.2 2.3 11.0 13.3 Other foreign countries 4.7 7.4 12.1 4.0 11.4 15.4 Total revenues (1) $ 163.0 $ 125.2 $ 288.2 $ 122.9 $ 138.6 $ 261.5 (1) Revenues include net hedging gains and losses for the three months ended March 31, 2021 and 2020. |
Other Comprehensive Loss (Table
Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income | Components of Accumulated other comprehensive loss, net of tax, were as follows ($ in millions): March 31, 2021 December 31, 2020 Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.2 million and $11.6 million at March 31, 2021 and December 31, 2020, respectively $ (18.8) $ (20.5) Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.8 million and $2.8 million at March 31, 2021 and December 31, 2020, respectively (8.7) (13.1) Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $6.8 million and $10.1 million at March 31, 2021 and December 31, 2020, respectively (88.2) (78.3) Accumulated other comprehensive loss $ (115.7) $ (111.9) |
Changes in Components of Other Comprehensive Income | Changes in the components of Accumulated other comprehensive (loss) income were as follows ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 Pre-tax Tax Net of Pre-tax Tax Net of Net gain (loss) on pension and OPEB liability adjustments $ 1.1 $ 0.6 $ 1.7 $ 0.7 $ (0.2) $ 0.5 Unrealized gain (loss) on derivative instruments 4.5 (0.1) 4.4 (15.6) 2.9 (12.7) Unrealized (loss) gain on foreign currency translation (6.5) (3.4) (9.9) (4.1) 0.6 (3.5) Total $ (0.9) $ (2.9) $ (3.8) $ (19.0) $ 3.3 $ (15.7) |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The consideration paid for Tekra and the final fair values of the assets acquired, and liabilities assumed as of the March 13, 2020 acquisition date are as follows ($ in millions): Fair Value as of March 13, 2020 Cash and cash equivalents $ 1.6 Accounts receivable 8.6 Inventory 14.2 Other current assets 0.2 Property, plant and equipment 7.3 Identifiable intangible assets 81.8 Other noncurrent assets 3.7 Total assets $ 117.4 Accounts payable $ 3.0 Other current liabilities 2.0 Other noncurrent liabilities 2.7 Net assets acquired $ 109.7 Goodwill 61.2 Total consideration $ 170.9 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The following table shows the final fair values assigned to identifiable intangible assets ($ in millions): Fair Value as of March 13, 2020 Weighted-Average Amortization Period (Years) Amortizable intangible assets: Customer relationships $ 63.0 15 Tradenames and other 10.8 15 Developed technology 8.0 10 Total amortizable intangible assets $ 81.8 |
Actual and Pro Forma Net Sales and Income from Continuing Operations | The amounts of Net sales and Net Income of Tekra included in the Company's condensed consolidated income statement from the acquisition date are as follows ($ in millions): March 13, 2020 - March 31, 2020 Net Sales $ 5.5 Net Income $ 0.4 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Common and Potential Common Shares Outstanding Used in Earnings Per Share Calculation | A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows ($ in millions, shares in thousands): Three Months Ended March 31, March 31, Numerator (basic and diluted): Net income $ 21.6 $ 22.5 Less: Dividends paid to participating securities (0.1) (0.3) Less: Undistributed earnings available to participating securities (0.1) — Undistributed and distributed earnings available to common stockholders $ 21.4 $ 22.2 Denominator: Average number of common shares outstanding 30,974.2 30,712.3 Effect of dilutive stock-based compensation 366.3 197.7 Average number of common and potential common shares outstanding 31,340.5 30,910.0 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories by Major Class | The following schedule details inventories by major class ($ in millions): March 31, December 31, Raw materials $ 65.2 $ 65.3 Work in process 24.6 23.2 Finished goods 75.5 83.5 Supplies and other 8.0 7.7 Total $ 173.3 $ 179.7 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2021 were as follows ($ in millions): AMS EP Total Goodwill as of December 31, 2020 $ 398.4 $ 5.3 $ 403.7 Foreign currency translation adjustments (1.7) (0.2) (1.9) Goodwill as of March 31, 2021 $ 396.7 $ 5.1 $ 401.8 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Amortized Intangible Assets | The gross carrying amount and accumulated amortization for intangible assets which are in our AMS segment consisted of the following ($ in millions): March 31, 2021 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.2 $ 94.1 $ — $ (1.1) $ 246.2 Developed technology 42.0 14.9 — 0.1 27.0 Trade names 32.7 1.6 20.7 0.3 10.1 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.6 — — 0.9 Total $ 418.3 $ 113.6 $ 20.7 $ (0.7) $ 284.7 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.2) $ 20.1 December 31, 2020 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.8 $ 88.5 $ — $ (2.9) $ 254.2 Developed technology 42.1 14.1 — (0.2) 28.2 Trade names 32.7 1.4 20.7 0.3 10.3 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.5 — — 1.0 Total $ 419.0 $ 106.9 $ 20.7 $ (2.8) $ 294.2 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.6) $ 20.5 |
Schedule of Unamortized Intangible Assets | The gross carrying amount and accumulated amortization for intangible assets which are in our AMS segment consisted of the following ($ in millions): March 31, 2021 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.2 $ 94.1 $ — $ (1.1) $ 246.2 Developed technology 42.0 14.9 — 0.1 27.0 Trade names 32.7 1.6 20.7 0.3 10.1 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.6 — — 0.9 Total $ 418.3 $ 113.6 $ 20.7 $ (0.7) $ 284.7 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.2) $ 20.1 December 31, 2020 Gross Accumulated Accumulated Impairments Accumulated Foreign Exchange Net Amortized Intangible Assets Customer relationships $ 339.8 $ 88.5 $ — $ (2.9) $ 254.2 Developed technology 42.1 14.1 — (0.2) 28.2 Trade names 32.7 1.4 20.7 0.3 10.3 Non-compete agreements 2.9 2.4 — — 0.5 Patents 1.5 0.5 — — 1.0 Total $ 419.0 $ 106.9 $ 20.7 $ (2.8) $ 294.2 Unamortized Intangible Assets Trade names $ 20.0 $ — $ 0.1 $ (0.6) $ 20.5 |
Restructuring and Impairment _2
Restructuring and Impairment Activities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Changes in Restructuring Liabilities | The following table summarizes total restructuring and related charges for the three months ended March 31, 2021: Three Months Ended March 31, 2021 March 31, 2020 Restructuring and impairment expense: Severance $ 0.3 $ 0.1 Other 1.4 — Total restructuring and impairment expense $ 1.7 $ 0.1 The following table summarizes changes in restructuring liabilities during the periods ended March 31, 2021 and December 31, 2020. ($ in millions): Three Months Ended March 31, 2021 March 31, 2020 Balance at beginning of year $ 7.4 $ 0.5 Accruals for announced programs 0.3 0.1 Cash payments (2.2) (0.3) Foreign exchange impact (0.1) — Balance at end of period $ 5.4 $ 0.3 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Total Debt | The components of total debt are summarized in the following table ($ in millions): March 31, December 31, Revolving credit facility - U.S. dollar borrowings $ 75.0 $ 50.0 Term loan facility 195.0 195.5 6.875% senior unsecured notes due October 1, 2026, net of discount of $5.8 million and $6.1 million at March 31, 2021 and December 31, 2020, respectively 344.2 343.9 French employee profit sharing 4.7 5.0 Finance lease obligations 3.3 3.5 Debt issuance costs (4.3) (4.6) Total debt 617.9 593.3 Less: Current debt (2.7) (2.8) Long-term debt $ 615.2 $ 590.5 |
Schedule of Maturities of Long-term Debt | Following are the expected maturities for the Company's debt obligations as of March 31, 2021 ($ in millions): 2021 $ 3.4 2022 4.0 2023 78.4 2024 2.6 2025 188.7 Thereafter 345.1 Total $ 622.2 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives by Balance Sheet Location | The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at March 31, 2021 ($ in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Derivatives designated as hedges: Foreign exchange contracts Accounts receivable, net $ 2.6 Accrued expenses and other current liabilities $ 4.9 Foreign exchange contracts Other assets — Other liabilities 7.3 Interest rate contracts Accounts receivable, net — Other liabilities 3.6 Total derivatives designated as hedges 2.6 15.8 Derivatives not designated as hedges: Foreign exchange contracts Accounts receivable, net — Accrued expenses and other current liabilities 5.7 Total derivatives not designated as hedges — 5.7 Total derivatives $ 2.6 $ 21.5 The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at December 31, 2020 ($ in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Derivatives designated as hedges: Foreign exchange contracts Accounts receivable, net $ 0.9 Accrued expenses $ 11.0 Foreign exchange contracts Other assets — Other liabilities 12.3 Interest rate contracts Accounts receivable, net 0.3 Accrued expenses — Interest rate contracts Other assets — Other liabilities 7.8 Total derivatives designated as hedges $ 1.2 $ 31.1 Derivatives not designated as hedges: Foreign exchange contracts Accounts receivable, net — Accounts payable — Total derivatives not designated as hedges $ — $ — Total derivatives $ 1.2 $ 31.1 |
Derivatives by Income Statement Location | The following table provides the gross effect that derivative instruments designated in hedging relationships had on Accumulated other comprehensive loss and results of operations ($ in millions): Derivatives Designated in Hedging Relationships Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax Location of (Loss) Gain Reclassified (Loss) Gain Reclassified Three Months Ended Three Months Ended March 31, March 31, 2021 2020 2021 2020 Derivatives designated as cash flow hedge Foreign exchange contracts $ (0.6) $ (5.0) Net sales $ (0.6) $ (0.6) Foreign exchange contracts 0.9 0.5 Other income (expense), net 0.7 0.6 Interest rate contracts 4.1 (8.2) Interest expense — — Derivatives designated as net investment hedge Foreign exchange contracts 7.0 12.0 Other income (expense), net — — Total $ 11.4 $ (0.7) $ 0.1 $ — |
Effect of Derivative Instruments Not Designated As Hedging Instruments | The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions): Derivatives Not Designated as Cash Flow Hedging Instruments Location of Gain Recognized in Income Amount of (Loss) Gain Recognized in Income Three Months Ended March 31, 2021 March 31, 2020 Foreign exchange contracts Other income, net $ (6.6) $ 0.2 |
Postretirement and Other Bene_2
Postretirement and Other Benefits (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit Costs | The components of net pension benefit costs for U.S. and French employees during the three months ended March 31, 2021 and 2020 were as follows ($ in millions): Three Months Ended March 31, U.S. Pension Benefits French Pension Benefits 2021 2020 2021 2020 Service cost $ — $ — $ 0.3 $ 0.3 Interest cost 0.7 0.9 — — Expected return on plan assets (1.0) (1.2) — — Amortizations and other 0.9 0.8 0.3 0.3 Net periodic benefit cost $ 0.6 $ 0.5 $ 0.6 $ 0.6 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales and Operating Profit | The Company primarily evaluates segment performance and allocates resources based on operating profit. Expense amounts not associated with segments are referred to as unallocated expenses. ($ in millions) Net Sales Three Months Ended March 31, 2021 March 31, 2020 AMS $ 163.0 56.6 % $ 122.9 47.0 % EP 125.2 43.4 138.6 53.0 Total Consolidated $ 288.2 100.0 % $ 261.5 100.0 % ($ in millions) Operating Profit Three Months Ended March 31, 2021 March 31, 2020 AMS $ 21.3 63.6 % $ 13.7 40.2 % EP 29.9 89.2 33.4 97.9 Unallocated (17.7) (52.8) (13.0) (38.1) Total Consolidated $ 33.5 100.0 % $ 34.1 100.0 % |
General (Details)
General (Details) | 3 Months Ended |
Mar. 31, 2021segmentproduction_locationjoint_venturecountry | |
Schedule of Equity Method Investments [Line Items] | |
Number of operating segments | segment | 2 |
Number of countries in which entity operates (more than) | country | 90 |
Number of production locations | production_location | 23 |
China | |
Schedule of Equity Method Investments [Line Items] | |
Ownership of joint ventures | 50.00% |
Number of joint ventures | joint_venture | 2 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)revenue_source | Mar. 31, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Number of revenue sources | revenue_source | 2 | |
Revenue from External Customer [Line Items] | ||
Total revenues | $ 288.2 | $ 261.5 |
United States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 143.1 | 127.2 |
Europe and the former Commonwealth of Independent States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 67.2 | 56.1 |
Asia/Pacific (including China) | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 54.6 | 49.5 |
Latin America | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 11.2 | 13.3 |
Other foreign countries | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 12.1 | 15.4 |
Product revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 267.3 | 241.7 |
Materials conversion revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 17.4 | 16.7 |
Other revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 3.5 | 3.1 |
AMS | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 163 | 122.9 |
AMS | United States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 105.7 | 83.3 |
AMS | Europe and the former Commonwealth of Independent States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 17.8 | 12.6 |
AMS | Asia/Pacific (including China) | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 32.4 | 20.7 |
AMS | Latin America | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 2.4 | 2.3 |
AMS | Other foreign countries | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 4.7 | 4 |
AMS | Product revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 158.3 | 117 |
AMS | Materials conversion revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 2.3 | 3.8 |
AMS | Other revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 2.4 | 2.1 |
EP | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 125.2 | 138.6 |
EP | United States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 37.4 | 43.9 |
EP | Europe and the former Commonwealth of Independent States | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 49.4 | 43.5 |
EP | Asia/Pacific (including China) | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 22.2 | 28.8 |
EP | Latin America | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 8.8 | 11 |
EP | Other foreign countries | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 7.4 | 11.4 |
EP | Product revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 109 | 124.7 |
EP | Materials conversion revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 15.1 | 12.9 |
EP | Other revenues | ||
Revenue from External Customer [Line Items] | ||
Total revenues | $ 1.1 | $ 1 |
Other Comprehensive Loss - Comp
Other Comprehensive Loss - Components of Accumulated Comprehensive Income (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | $ 652.9 | $ 649.6 | $ 592 | $ 597.7 |
Accumulated other comprehensive loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (115.7) | (111.9) | $ (138.3) | $ (122.6) |
Net gain (loss) on pension and OPEB liability adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (18.8) | (20.5) | ||
Accumulated other comprehensive loss, tax benefit | 12.2 | 11.6 | ||
Unrealized gain (loss) on derivative instruments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (8.7) | (13.1) | ||
Accumulated other comprehensive loss, tax benefit | 2.8 | 2.8 | ||
Unrealized (loss) gain on foreign currency translation | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive loss | (88.2) | (78.3) | ||
Accumulated other comprehensive loss, tax benefit | $ 6.8 | $ 10.1 |
Other Comprehensive Loss - Chan
Other Comprehensive Loss - Changes in Components of Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Pre-tax | $ (0.9) | $ (19) |
Tax | (2.9) | 3.3 |
Net of Tax | (3.8) | (15.7) |
Net gain (loss) on pension and OPEB liability adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Pre-tax | 1.1 | 0.7 |
Tax | 0.6 | (0.2) |
Net of Tax | 1.7 | 0.5 |
Unrealized gain (loss) on derivative instruments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Pre-tax | 4.5 | (15.6) |
Tax | (0.1) | 2.9 |
Net of Tax | 4.4 | (12.7) |
Unrealized (loss) gain on foreign currency translation | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Pre-tax | (6.5) | (4.1) |
Tax | (3.4) | 0.6 |
Net of Tax | $ (9.9) | $ (3.5) |
Business Acquisitions - Additio
Business Acquisitions - Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Mar. 13, 2020facility | |
Business Acquisition [Line Items] | |||
Pro forma Net sales | $ 285.4 | ||
Tekra | |||
Business Acquisition [Line Items] | |||
Equity interest acquired (percent) | 100.00% | ||
Number of manufacturing facilities | facility | 2 | ||
Consideration transferred | $ 169.3 | ||
Cash acquired | $ 1.6 | ||
Purchase price allocation, subsequent decrease to net intangible assets | 3.4 | ||
Purchase price allocation, subsequent adjustment, net decrease in total consideration | 1.8 | ||
Integration related costs | $ 1.1 |
Business Acquisitions - Schedul
Business Acquisitions - Schedule of Recognized Identifiable Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 13, 2020 |
Fair value of assets acquired and liabilities assumed | |||
Goodwill | $ 401.8 | $ 403.7 | |
Tekra | |||
Fair value of assets acquired and liabilities assumed | |||
Cash and cash equivalents | $ 1.6 | ||
Accounts receivable | 8.6 | ||
Inventory | 14.2 | ||
Other current assets | 0.2 | ||
Property, plant and equipment | 7.3 | ||
Identifiable intangible assets | 81.8 | ||
Other noncurrent assets | 3.7 | ||
Total assets | 117.4 | ||
Accounts payable | 3 | ||
Other current liabilities | 2 | ||
Other noncurrent liabilities | 2.7 | ||
Net assets acquired | 109.7 | ||
Goodwill | 61.2 | ||
Total consideration | $ 170.9 |
Business Acquisitions - Sched_2
Business Acquisitions - Schedule of Intangible Assets (Details) - Tekra $ in Millions | Mar. 13, 2020USD ($) |
Business Acquisition [Line Items] | |
Total amortizable intangible assets | $ 81.8 |
Customer relationships | |
Business Acquisition [Line Items] | |
Total amortizable intangible assets | $ 63 |
Weighted-Average Amortization Period (Years) | 15 years |
Tradenames and other | |
Business Acquisition [Line Items] | |
Total amortizable intangible assets | $ 10.8 |
Weighted-Average Amortization Period (Years) | 15 years |
Developed technology | |
Business Acquisition [Line Items] | |
Total amortizable intangible assets | $ 8 |
Weighted-Average Amortization Period (Years) | 10 years |
Business Acquisitions - Sched_3
Business Acquisitions - Schedule of Sales and Income from Business Combination (Details) - Tekra $ in Millions | 1 Months Ended |
Mar. 31, 2020USD ($) | |
Business Acquisition [Line Items] | |
Net Sales | $ 5.5 |
Net Income | $ 0.4 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator (basic and diluted): | ||
Net income | $ 21.6 | $ 22.5 |
Less: Dividends paid to participating securities | (0.1) | (0.3) |
Less: Undistributed earnings available to participating securities | (0.1) | 0 |
Undistributed and distributed earnings available to common stockholders | $ 21.4 | $ 22.2 |
Denominator: | ||
Average number of common shares outstanding (in shares) | 30,974,200 | 30,712,300 |
Effect of dilutive stock-based compensation (in shares) | 366,300 | 197,700 |
Average number of common and potential common shares outstanding (in shares) | 31,340,500 | 30,910,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 65.2 | $ 65.3 |
Work in process | 24.6 | 23.2 |
Finished goods | 75.5 | 83.5 |
Supplies and other | 8 | 7.7 |
Total | $ 173.3 | $ 179.7 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 403.7 |
Foreign currency translation adjustments | (1.9) |
Goodwill, end of period | 401.8 |
AMS | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | 398.4 |
Foreign currency translation adjustments | (1.7) |
Goodwill, end of period | 396.7 |
EP | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | 5.3 |
Foreign currency translation adjustments | (0.2) |
Goodwill, end of period | $ 5.1 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Unamortized Intangible Assets | |||
Amortization expense of intangible assets | $ 6.5 | $ 5.3 | |
Estimated average amortization, year one | 24.8 | ||
Estimated average amortization, year two | 24.8 | ||
Estimated average amortization, year three | 24.8 | ||
Estimated average amortization, year four | 24.8 | ||
Estimated average amortization, year five | 24.8 | ||
AMS | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 418.3 | $ 419 | |
Accumulated Amortization | 113.6 | 106.9 | |
Accumulated Impairments | 20.7 | 20.7 | |
Accumulated Foreign Exchange | (0.7) | (2.8) | |
Net Carrying Amount | 284.7 | 294.2 | |
AMS | Trade names | |||
Amortized Intangible Assets | |||
Accumulated Impairments | 0.1 | 0.1 | |
Accumulated Foreign Exchange | (0.2) | (0.6) | |
Unamortized Intangible Assets | |||
Gross Carrying Amount | 20 | 20 | |
Net Carrying Amount | 20.1 | 20.5 | |
AMS | Customer relationships | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 339.2 | 339.8 | |
Accumulated Amortization | 94.1 | 88.5 | |
Accumulated Impairments | 0 | 0 | |
Accumulated Foreign Exchange | (1.1) | (2.9) | |
Net Carrying Amount | 246.2 | 254.2 | |
AMS | Developed technology | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 42 | 42.1 | |
Accumulated Amortization | 14.9 | 14.1 | |
Accumulated Impairments | 0 | 0 | |
Accumulated Foreign Exchange | 0.1 | (0.2) | |
Net Carrying Amount | 27 | 28.2 | |
AMS | Trade names | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 32.7 | 32.7 | |
Accumulated Amortization | 1.6 | 1.4 | |
Accumulated Impairments | 20.7 | 20.7 | |
Accumulated Foreign Exchange | 0.3 | 0.3 | |
Net Carrying Amount | 10.1 | 10.3 | |
AMS | Non-compete agreements | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 2.9 | 2.9 | |
Accumulated Amortization | 2.4 | 2.4 | |
Accumulated Impairments | 0 | 0 | |
Accumulated Foreign Exchange | 0 | 0 | |
Net Carrying Amount | 0.5 | 0.5 | |
AMS | Patents | |||
Amortized Intangible Assets | |||
Gross Carrying Amount | 1.5 | 1.5 | |
Accumulated Amortization | 0.6 | 0.5 | |
Accumulated Impairments | 0 | 0 | |
Accumulated Foreign Exchange | 0 | 0 | |
Net Carrying Amount | $ 0.9 | $ 1 |
Restructuring and Impairment _3
Restructuring and Impairment Activities - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | $ 300,000 | $ 100,000 |
Restructuring and impairment expense | 1,700,000 | 100,000 |
Facility Closing | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost remaining | 1,400,000 | |
Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and impairment expense | 300,000 | 100,000 |
EP | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | 1,700,000 | 100,000 |
Restructuring charges cumulatively | 7,200,000 | |
EP | Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | 300,000 | 100,000 |
AMS | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and impairment expense | $ 0 | $ 0 |
Restructuring and Impairment _4
Restructuring and Impairment Activities - Restructuring and Related Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | $ 1.7 | $ 0.1 |
Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | 0.3 | 0.1 |
Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring and impairment expense | $ 1.4 | $ 0 |
Restructuring and Impairment _5
Restructuring and Impairment Activities - Restructuring Activities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | $ 7.4 | $ 0.5 |
Accruals for announced programs | 0.3 | 0.1 |
Cash payments | (2.2) | (0.3) |
Foreign exchange impact | (0.1) | 0 |
Ending balance | $ 5.4 | $ 0.3 |
Debt - Schedule of Debt Summari
Debt - Schedule of Debt Summarized (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Debt | $ 622.2 | |
Debt issuance costs | (4.3) | $ (4.6) |
Total debt | 617.9 | 593.3 |
Less: Current debt | (2.7) | (2.8) |
Long-term debt | 615.2 | 590.5 |
French employee profit sharing | ||
Debt Instrument [Line Items] | ||
Debt | 4.7 | 5 |
Finance lease obligations | ||
Debt Instrument [Line Items] | ||
Finance lease obligations | 3.3 | 3.5 |
Term loan facility | Term loan facility | ||
Debt Instrument [Line Items] | ||
Debt | $ 195 | 195.5 |
6.875% senior unsecured notes due October 1, 2026, net of discount of $5.8 million and $6.1 million at March 31, 2021 and December 31, 2020, respectively | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 6.875% | |
Discount | $ 5.8 | 6.1 |
Debt | 344.2 | 343.9 |
Revolving Credit Facility | Revolving credit facility - U.S. dollar borrowings | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Debt | $ 75 | $ 50 |
Debt - Additional Information (
Debt - Additional Information (Details) | Jun. 30, 2023 | Sep. 25, 2018USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Feb. 10, 2021USD ($) | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Deferred debt issuance costs | $ 4,300,000 | $ 4,600,000 | ||||
Deferred debt issuance costs | $ 4,000,000 | |||||
Interest expense | ||||||
Debt Instrument [Line Items] | ||||||
Amortization of debt issuance costs | 300,000 | $ 300,000 | ||||
Senior unsecured notes | ||||||
Debt Instrument [Line Items] | ||||||
Fair market value | $ 373,100,000 | $ 371,000,000 | ||||
New Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowings under credit facility | $ 700,000,000 | |||||
EBITDA ratio | 5.50 | |||||
Interest coverage ratio | 3 | |||||
Effective interest rate on debt facilities (percent) | 4.03% | 3.84% | ||||
New Credit Facility | Forecast | ||||||
Debt Instrument [Line Items] | ||||||
EBITDA ratio | 4.50 | |||||
EBITDA Ratio decrease over period | 24 months | |||||
New Credit Facility and Bond Indenture | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowings under credit facility | $ 400,000,000 | |||||
Debt instrument term | 5 years | |||||
Revolving line of credit | $ 500,000,000 | |||||
New Credit Facility and Bond Indenture | Revolving Credit Facility | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 1.75% | |||||
New Credit Facility and Bond Indenture | Revolving Credit Facility | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 0.75% | |||||
Term loan A | Term loan facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument term | 7 years | |||||
Face amount | $ 200,000,000 | |||||
Amortization rate (percent) | 1.00% | |||||
Average interest rate on outstanding borrowings (percent) | 1.88% | |||||
Term loan A | Term loan facility | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 2.00% | |||||
Term loan A | Term loan facility | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 1.00% | |||||
Term loan B | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 350,000,000 | |||||
Debt balance | $ 0 | |||||
Term loan B | Term loan facility | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 4.00% | |||||
Term loan B | Term loan facility | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 3.00% | |||||
Term loan B | Term loan facility | Minimum Floor | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate (percent) | 0.75% | |||||
6.875% Senior Unsecured Notes Due 2026 | Senior unsecured notes | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 350,000,000 | |||||
Interest rate (percent) | 6.875% | |||||
Redemption price (percent) | 100.00% | |||||
Amount to be redeemed (percent) | 35.00% | |||||
Redemption price for equity offerings (percentage) | 106.875% | |||||
Effective rate (percent) | 7.248% | |||||
Revolving credit facility - U.S. dollar borrowings | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Average interest rate on outstanding borrowings (percent) | 2.33% |
Debt - Schedule of Principal Re
Debt - Schedule of Principal Repayments (Details) $ in Millions | Mar. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 3.4 |
2022 | 4 |
2023 | 78.4 |
2024 | 2.6 |
2025 | 188.7 |
Thereafter | 345.1 |
Total | $ 622.2 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) £ in Millions | 3 Months Ended | |||||||||
Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Apr. 21, 2021GBP (£) | Jan. 26, 2021GBP (£) | Sep. 11, 2019USD ($) | Sep. 11, 2019EUR (€) | Jan. 29, 2019USD ($) | Jan. 29, 2019EUR (€) | Oct. 24, 2018USD ($) | Oct. 24, 2018EUR (€) | |
Derivative [Line Items] | ||||||||||
Derivative, fixed rate (percent) | 1.724% | 1.724% | ||||||||
Derivative, notional amount | $ 185,000,000 | |||||||||
Cross Currency Interest Rate Contract | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | $ 75,000,000 | € 65,400,000 | ||||||||
Cross Currency Interest Rate Contract | Net Investment Hedging | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative amounts excluded from effectiveness testing as interest expense | $ 1,100,000 | $ 2,000,000 | ||||||||
Cross Currency Interest Rate Contract | Dollars | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, fixed rate (percent) | 6.875% | 6.875% | 4.0525% | 4.0525% | ||||||
Derivative, notional amount | $ 100,000,000 | $ 75,000,000 | ||||||||
Cross Currency Interest Rate Contract | Euro | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, fixed rate (percent) | 5.638% | 5.638% | 6.875% | 6.875% | ||||||
Derivative, notional amount | € | € 90,900,000 | € 66,000,000 | ||||||||
Cross Currency Interest Rate Contract | Long | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, fixed rate (percent) | 6.875% | 6.875% | ||||||||
Cross Currency Interest Rate Contract | Short | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, fixed rate (percent) | 3.6725% | 3.6725% | ||||||||
Foreign Exchange Future | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | £ | £ 439 | |||||||||
Foreign Exchange Future | Subsequent event | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | £ | £ 9.6 | |||||||||
September 13, 2019 - December 31, 2020 | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | 185,000,000 | |||||||||
December 31, 2020 - December 31, 2021 | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | 150,000,000 | |||||||||
December 31, 2021 - January 31, 2027 | ||||||||||
Derivative [Line Items] | ||||||||||
Derivative, notional amount | $ 100,000,000 |
Derivatives - Derivatives by Ba
Derivatives - Derivatives by Balance Sheet Location (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 2.6 | $ 1.2 |
Liability Derivatives | 21.5 | 31.1 |
Derivatives designated as hedges | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 2.6 | 1.2 |
Liability Derivatives | 15.8 | 31.1 |
Derivatives designated as hedges | Foreign exchange contracts | Accounts receivable, net | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 2.6 | 0.9 |
Derivatives designated as hedges | Foreign exchange contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 0 |
Derivatives designated as hedges | Foreign exchange contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 4.9 | 11 |
Derivatives designated as hedges | Foreign exchange contracts | Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 7.3 | 12.3 |
Derivatives designated as hedges | Interest rate contracts | Accounts receivable, net | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 0.3 |
Derivatives designated as hedges | Interest rate contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | |
Derivatives designated as hedges | Interest rate contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 0 | |
Derivatives designated as hedges | Interest rate contracts | Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 3.6 | 7.8 |
Derivatives not designated as hedges | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 0 |
Liability Derivatives | 5.7 | 0 |
Derivatives not designated as hedges | Foreign exchange contracts | Accounts receivable, net | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 0 | 0 |
Derivatives not designated as hedges | Foreign exchange contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 5.7 | |
Derivatives not designated as hedges | Foreign exchange contracts | Accounts payable | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 0 |
Derivatives - Derivatives Instr
Derivatives - Derivatives Instruments Effect on AOCI and Results of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivatives designated as net investment hedge | Foreign exchange contracts | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) Gain Reclassified from AOCI | $ (6.6) | $ 0.2 |
Derivatives Designated in Hedging Relationships | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax | 11.4 | (0.7) |
(Loss) Gain Reclassified from AOCI | 0.1 | 0 |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax | (0.6) | (5) |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Foreign exchange contracts | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) Gain Reclassified from AOCI | (0.6) | (0.6) |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax | 0.9 | 0.5 |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Foreign exchange contracts | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) Gain Reclassified from AOCI | 0.7 | 0.6 |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Interest rate contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax | 4.1 | (8.2) |
Derivatives Designated in Hedging Relationships | Derivatives designated as cash flow hedge | Interest rate contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) Gain Reclassified from AOCI | 0 | 0 |
Derivatives Designated in Hedging Relationships | Derivatives designated as net investment hedge | Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (Loss) Gain Recognized in AOCI on Derivatives, Net of Tax | 7 | 12 |
Derivatives Designated in Hedging Relationships | Derivatives designated as net investment hedge | Foreign exchange contracts | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) Gain Reclassified from AOCI | $ 0 | $ 0 |
Derivatives - Derivatives Desig
Derivatives - Derivatives Designated as Cash Flow Hedges on Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Foreign exchange contracts | Derivatives not designated as hedges | Other income, net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of (Loss) Gain Recognized in Income | $ (6.6) | $ 0.2 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Apr. 09, 2021USD ($) | Mar. 31, 2021USD ($) | Aug. 31, 2018USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2000assessment |
SWM-B Brazilian Mill | Raw Materials Assessment | |||||
Loss Contingencies [Line Items] | |||||
Liability recorded | $ 8,600,000 | ||||
SWM-B Brazilian Mill | Raw Materials Assessment | Subsequent event | |||||
Loss Contingencies [Line Items] | |||||
Loss contingency accrual, payments | $ 2,600,000 | ||||
Reduction of tax liability, percent | 70.00% | ||||
Recognized total benefit on settlement | $ 6,100,000 | ||||
SWM-B Brazilian Mill | Raw Materials Assessment | Subsequent event | Interest expense | |||||
Loss Contingencies [Line Items] | |||||
Recognized total benefit on settlement | 4,600,000 | ||||
SWM-B Brazilian Mill | Raw Materials Assessment | Subsequent event | Other Expense | |||||
Loss Contingencies [Line Items] | |||||
Recognized total benefit on settlement | $ 1,600,000 | ||||
Unfavorable Regulatory Action | Raw Materials Assessment | |||||
Loss Contingencies [Line Items] | |||||
Number of assessments from the tax authorities regarding ICMS taxes | assessment | 2 | ||||
Unfavorable Regulatory Action | Electricity Assessment | |||||
Loss Contingencies [Line Items] | |||||
Number of assessments from the tax authorities regarding ICMS taxes | assessment | 4 | ||||
Unfavorable Regulatory Action | Electricity Assessment One | |||||
Loss Contingencies [Line Items] | |||||
Electricity Assessment | $ 3,300,000 | ||||
Unfavorable Regulatory Action | Second Electricity Assessment | |||||
Loss Contingencies [Line Items] | |||||
Electricity Assessment | $ 6,300,000 | ||||
Unfavorable Regulatory Action | Electricity Assessment Three | |||||
Loss Contingencies [Line Items] | |||||
Electricity Assessment | $ 500,000 | ||||
Unfavorable Regulatory Action | Electricity Assessment Four | |||||
Loss Contingencies [Line Items] | |||||
Electricity Assessment | $ 7,000,000 | ||||
Unfavorable Regulatory Action | Raw Materials Assessment And Remaining Electricity Assessments | |||||
Loss Contingencies [Line Items] | |||||
Liability recorded | $ 0 |
Postretirement and Other Bene_3
Postretirement and Other Benefits (Details) - Pension Benefits - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
U.S. | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | $ 0 | $ 0 |
Interest cost | 0.7 | 0.9 |
Expected return on plan assets | (1) | (1.2) |
Amortizations and other | 0.9 | 0.8 |
Net periodic benefit cost | 0.6 | 0.5 |
French | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | 0.3 | 0.3 |
Interest cost | 0 | 0 |
Expected return on plan assets | 0 | 0 |
Amortizations and other | 0.3 | 0.3 |
Net periodic benefit cost | $ 0.6 | $ 0.6 |
Postretirement and Other Bene_4
Postretirement and Other Benefits - Additional Information (Details) $ in Millions | Mar. 31, 2021USD ($) |
U.S. | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Amortization of accumulated other comprehensive loss related to benefit plans | $ 3.6 |
French | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Amortization of accumulated other comprehensive loss related to benefit plans | $ 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax penalties and interest accrued | $ 0 | $ 0 |
Effective income tax rate from continuing operations (percent) | 26.40% | 19.10% |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 2 | |
Net Sales | ||
Net Sales | $ 288.2 | $ 261.5 |
Percentage of Net Sales | 100.00% | 100.00% |
Operating Profit | ||
Operating Profit | $ 33.5 | $ 34.1 |
Percentage of Operating Profit | 100.00% | 100.00% |
AMS | ||
Net Sales | ||
Net Sales | $ 163 | $ 122.9 |
EP | ||
Net Sales | ||
Net Sales | 125.2 | 138.6 |
Operating Segments | AMS | ||
Net Sales | ||
Net Sales | $ 163 | $ 122.9 |
Percentage of Net Sales | 56.60% | 47.00% |
Operating Profit | ||
Operating Profit | $ 21.3 | $ 13.7 |
Percentage of Operating Profit | 63.60% | 40.20% |
Operating Segments | EP | ||
Net Sales | ||
Net Sales | $ 125.2 | $ 138.6 |
Percentage of Net Sales | 43.40% | 53.00% |
Operating Profit | ||
Operating Profit | $ 29.9 | $ 33.4 |
Percentage of Operating Profit | 89.20% | 97.90% |
Unallocated | ||
Operating Profit | ||
Operating Profit | $ (17.7) | $ (13) |
Percentage of Operating Profit | (52.80%) | (38.10%) |
Subsequent Events (Details)
Subsequent Events (Details) £ / shares in Units, $ / shares in Units, £ in Millions | Apr. 20, 2021GBP (£) | Apr. 15, 2021USD ($)$ / shares | Apr. 15, 2021GBP (£)£ / shares | Mar. 31, 2021USD ($) | Feb. 10, 2021USD ($) | Feb. 09, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 11, 2019USD ($) | Sep. 25, 2018USD ($) |
Subsequent Event [Line Items] | |||||||||
Common stock issued | $ 3,100,000 | $ 3,100,000 | |||||||
Derivative, notional amount | $ 185,000,000 | ||||||||
Subsequent event | Currency forward contract A | |||||||||
Subsequent Event [Line Items] | |||||||||
Derivative, notional amount | £ | £ 439 | ||||||||
Subsequent event | Currency forward contract B | |||||||||
Subsequent Event [Line Items] | |||||||||
Derivative, notional amount | £ | £ 9.6 | ||||||||
Scapa | Subsequent event | |||||||||
Subsequent Event [Line Items] | |||||||||
Share price | (per share) | $ 2.96 | £ 2.15 | |||||||
Exchange rate | 1 | 1 | |||||||
Common stock issued | $ 568,900,000 | £ 412.6 | |||||||
Term loan B | |||||||||
Subsequent Event [Line Items] | |||||||||
Face amount | $ 350,000,000 | ||||||||
Revolving credit facility - U.S. dollar borrowings | Revolving Credit Facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Revolving line of credit | $ 325,000,000 | $ 500,000,000 |