FERRO CORPORATION REPORTS SECOND QUARTER 2021 RESULTS |
Second Quarter Continuing Operations* |
| Year to Date Continuing Operations* | |||||
| Net Sales increased 43.7% to $294.3M, or 37.3% on a constant currency basis |
| | Net Sales increased 27.5% to $582.7M, or 22.4% on a constant currency basis | |||
| Gross Profit increased 48.8% to $94.8M, Gross Profit Margin improved 110 bps to 32.2% |
| | Gross Profit increased 31.5% to $189.9M, Gross Profit Margin improved 100 bps to 32.6% | |||
| Adjusted Gross Profit Margin improved 40 bps to 32.8% |
| | Adjusted Gross Profit Margin improved 90 bps to 33.3% | |||
| GAAP diluted EPS of $0.20, Adjusted diluted EPS of $0.35 |
| | GAAP diluted EPS of $0.42, Adjusted diluted EPS of $0.73 | |||
| Income from continuing operations of $17.4M, Adjusted EBITDA increased 90.1% to $58.7M |
| | Income from continuing operations of $36.0M, Adjusted EBITDA increased 62.6% to $116.5M | |||
| Adjusted EBITDA Margin improved 490 bps to 20.0% |
| | Adjusted EBITDA Margin improved 430 bps to 20.0% |
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*Comparative information is relative to prior-year second quarter and prior-year to June 30 for Continuing Operations
Ferro will not host a Second Quarter 2021 Earnings teleconference call
Key Results from Continuing Operations* (amounts in millions, except EPS) |
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Sales and Gross Profits | Q2 2021 | % Change | YTD 2021 | % Change | |||||
Net Sales | $ | 294,331 |
| 43.7% | $ | 582,689 |
| 27.5% | |
Net Sales (constant currency) |
| 294,331 |
| 37.3% |
| 582,689 |
| 22.4% | |
Gross Profit (GAAP) |
| 94,835 |
| 48.8% |
| 189,938 |
| 31.5% | |
Gross Profit Margin |
| 32.2% |
| 110 bps |
| 32.6% |
| 100 bps | |
Adjusted Gross Profit (constant currency) |
| 96,507 |
| 39.1% |
| 193,788 |
| 25.7% | |
Adjusted Gross Profit Margin |
| 32.8% |
| 40 bps |
| 33.3% |
| 90 bps | |
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Income from Continuing Operations, Adjusted EBITDA and Adjusted EPS | Q2 2021 | % Change | YTD 2021 | % Change | |||||
Income from Continuing Operations | $ | 17,427 |
| NM | $ | 35,985 |
| 157.2% | |
Adjusted EBITDA |
| 58,720 |
| 90.1% |
| 116,487 |
| 62.6% | |
Adjusted EBITDA Margin |
| 20.0% |
| 490 |
| 20.0% |
| 430 bps | |
GAAP diluted EPS | $ | 0.20 |
| NM | $ | 0.42 |
| 162.5% | |
Adjusted EPS |
| 0.35 |
| 191.7% |
| 0.73 |
| 97.3% |
*Comparative information is relative to prior-year second quarter and prior-year to June 30 for Continuing Operations.
Transaction Information |
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On May 11, 2021, Ferro Corporation entered into a definitive agreement to be acquired by an affiliate of Prince International Corporation, a portfolio company of American Securities LLC, in an all-cash transaction valued at approximately $2.1 billion, or 12.4 times TTM Adjusted EBITDA as of March 31, 2021, including the assumption of debt, net of cash.
The transaction is subject to customary closing conditions, including the approval of Ferro’s shareholders and regulatory approvals, and is currently expected to close in the first quarter of 2022. The transaction is not subject to a financing condition. Until such time as the transaction is completed, Ferro Corporation will continue to operate as usual, including all reporting required as a publicly traded company. Upon the completion of the transaction, Ferro Corporation will become a privately held subsidiary of Prince and shares of Ferro common stock will no longer be listed on any public market.
Due to the pending transaction, Ferro will not host a second quarter 2021 earnings teleconference.
Second Quarter 2021 Highlights |
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Net sales in the second quarter of 2021 increased 43.7% to $294.3 million and increased 37.3% on a constant currency basis, primarily due to higher demand across all business segments. For the quarter, gross profit increased 48.8% to $94.8 million and increased 39.1% to $96.5 million on a constant currency basis compared to the prior year quarter. Gross Profit Margin in the second quarter of 2021 increased 110 basis points to 32.2% compared to the prior year. The increase in gross profit was primarily driven by favorable sales volume and mix of $20.1 million, favorable manufacturing costs of $4.2 million, favorable foreign currency impacts of $3.6 million, higher product pricing of $2.0 million and lower raw material costs of $1.2 million.
GAAP diluted EPS from continuing operations improved to $0.20 compared to a loss of $0.03 during the prior year quarter and Adjusted diluted EPS increased by 191.7% to $0.35. Income from continuing operations increased to $17.4 million compared to the prior year quarter loss of $1.9 million. Adjusted EBITDA improved 90.1% to $58.7 million. Adjusted EBITDA margin improved 490 basis points to 20.0% compared to the prior year quarter.
Segment Results Continuing Operations * (amounts in millions, except EPS) |
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| Functional Coatings | Q2 2021 | % Change | YTD 2021 | % Change | |||||||
| Net Sales | $ | 194,909 |
| 48.0% | $ | 379,731 |
| 32.3% | |||
| Net Sales (Constant Currency) |
| 194,909 |
| 41.5% |
| 379,731 |
| 27.0% | |||
| Gross Profit (GAAP) |
| 59,521 |
| 64.8% |
| 121,397 |
| 44.6% | |||
| Gross Profit Margin |
| 30.5% |
| 310 bps |
| 32.0% |
| 280 bps | |||
| Adjusted Gross Profit (Constant Currency) |
| 60,025 |
| 49.6% |
| 124,256 |
| 36.6% | |||
| Adj. Gross Profit Margin (Constant Currency) |
| 30.8% |
| 170 bps |
| 32.7% |
| 230 bps | |||
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| Color Solutions | Q2 2021 | % Change | YTD 2021 | % Change | |||||||
| Net Sales | $ | 99,422 |
| 36.0% | $ | 202,958 |
| 19.4% | |||
| Net Sales (Constant Currency) |
| 99,422 |
| 29.3% |
| 202,958 |
| 14.7% | |||
| Gross Profit (GAAP) |
| 36,692 |
| 36.0% |
| 70,360 |
| 15.8% | |||
| Gross Profit Margin |
| 36.9% |
| 0 bps |
| 34.7% |
| (100) bps | |||
| Adjusted Gross Profit (Constant Currency) |
| 37,001 |
| 29.4% |
| 70,931 |
| 11.9% | |||
| Adj. Gross Profit Margin (Constant Currency) |
| 37.2% |
| (10) bps |
| 34.9% |
| (90) bps |
* Comparative information is relative to prior-year second quarter and prior-year to June 30 for Continuing Operations
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Constant currency
Constant currency results reflect the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, which produces constant currency comparatives for 2021 reported and adjusted results. These non-GAAP financial measures should not be considered as a substitute for the measures of financial performance prepared in accordance with GAAP.
Ferro Corporation (www.ferro.com) is a leading global supplier of technology-based functional coatings and color solutions. Ferro supplies functional coatings for glass, metal, ceramic and other substrates and color solutions in the form of specialty pigments and colorants for a broad range of industries and applications. Ferro products are sold into the building and construction, automotive, electronics, industrial products, household furnishings and appliance markets. The Company’s reportable segments include: Functional Coatings and Color Solutions. Headquartered in Mayfield Heights, Ohio, the Company has approximately 3,600 associates globally and reported 2020 sales of $959 million.
Cautionary Note on Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These forward-looking statements include statements relating to the expected timing, completion and effects of the proposed merger, as well as other statements representing management’s beliefs about, future events, transactions, strategies, operations and financial results, including, without limitation, our expectations with respect to the costs and other anticipated financial impacts of the merger; future financial and operating results of Ferro Corporation (“Ferro”); Ferro’s plans, objectives, expectations and intentions with respect to future operations and services; required approvals to complete the merger by our shareholders and by governmental regulatory authorities, and the timing and conditions for such approvals; the stock price of Ferro prior to the consummation of the transactions; and the satisfaction of the closing conditions to the proposed merger. Such forward-looking statements often contain words such as “assume,” “will,” “anticipate,” “believe,” “predict,” “project,” “potential,” “contemplate,” “plan,” “forecast,” “estimate,” “expect,” “intend,” “is targeting,” “may,” “should,” “would,” “could,” “goal,” “seek,” “hope,” “aim,” “continue” and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are made based upon management’s current expectations and beliefs and are not guarantees of future performance. Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Our actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others, those risks and uncertainties described in any of our filings with the Securities and Exchange Commission (the “SEC”). Certain other factors which may impact our business, financial condition or results of operations or which may cause actual results to differ from such forward-looking statements are discussed or included in our periodic reports filed with the SEC and are available on our website at www.ferro.com under “Investors.” You are urged to carefully consider all such factors. Although it is believed that the expectations reflected in such forward-looking statements are reasonable and are expressed in good faith, such expectations
may not prove to be correct and persons reading this communication are therefore cautioned not to place undue reliance on these forward-looking statements which speak only to expectations as of the date of this communication. We do not undertake or plan to update or revise forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this communication, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If we make any future public statements or disclosures which modify or impact any of the forward-looking statements contained in or accompanying this communication, such statements or disclosures will be deemed to modify or supersede such statements in this communication.
Additional Information and Where to Find It
This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed acquisition of Ferro by Prince. In connection with this proposed acquisition, Ferro has filed one or more proxy statements or other documents with the SEC. This communication is not a substitute for any proxy statement or other document Ferro has filed with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF FERRO ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS THAT HAVE BEEN FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION. The definitive proxy statement has been mailed to shareholders of Ferro. Investors and security holders will be able to obtain free copies of these documents and other documents filed with the SEC by Ferro through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Ferro will be available free of charge on Ferro’s internet website at www.ferro.com or upon written request to: Director of Investor Relations and Corporate Communications, Ferro Corporation, 6060 Parkland Boulevard, Mayfield Heights, Ohio 44144 or by telephone at (216) 875-5451.
Participants in Solicitation
Ferro, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in such solicitation in connection with the proposed merger is set forth in the proxy statement filed with the SEC on July 23, 2021. Information about the directors and executive officers of Ferro is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on March 1, 2021, its proxy statement for its 2021 annual meeting of shareholders, which was filed with the SEC on March 25, 2021, its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, which was filed with the SEC on May 10, 2021, and its Current Reports on Form 8-K, which were filed with the SEC on May 11, 2021 and July 9, 2021.
These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement and other relevant materials filed with the SEC.
Ferro Corporation
6060 Parkland Boulevard
Mayfield Heights, Ohio 44144
Tel. (216) 875-5600
www.ferro.com
Ferro Corporation
Investor & Media Contact:
Kevin Cornelius Grant, 216.875.5451
Director of Investor Relations and Corporate Communications
kevincornelius.grant@ferro.com
Table 1
Ferro Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
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(In thousands, except per share amounts) |
| Three Months Ended |
| Six Months Ended | ||||||||
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| June 30, |
| June 30, | ||||||||
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| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
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Net sales |
| $ | 294,331 |
| $ | 204,801 |
| $ | 582,689 |
| $ | 457,127 |
Cost of sales |
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| 199,496 |
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| 141,057 |
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| 392,751 |
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| 312,645 |
Gross profit |
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| 94,835 |
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| 63,744 |
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| 189,938 |
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| 144,482 |
Selling, general and administrative expenses |
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| 59,026 |
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| 50,541 |
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| 112,864 |
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| 106,587 |
Restructuring and impairment charges |
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| 1,970 |
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| 8,619 |
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| 7,154 |
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| 9,784 |
Other expense (income): |
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Interest expense |
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| 5,006 |
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| 6,177 |
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| 14,443 |
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| 11,707 |
Interest earned |
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| (52) |
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| (307) |
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| (649) |
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| (561) |
Foreign currency losses (gains), net |
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| 3,209 |
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| 1,143 |
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| 4,367 |
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| (172) |
Loss on extinguishment of debt |
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| - |
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| - |
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| 1,981 |
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| - |
Miscellaneous income, net |
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| (253) |
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| (703) |
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| (2,353) |
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| (2,166) |
Income (loss) before income taxes |
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| 25,929 |
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| (1,726) |
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| 52,131 |
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| 19,303 |
Income tax expense |
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| 8,502 |
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| 200 |
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| 16,146 |
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| 5,317 |
Income (loss) from continuing operations |
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| 17,427 |
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| (1,926) |
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| 35,985 |
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| 13,986 |
Income (loss) from discontinued operations, net of income taxes |
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| (1,536) |
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| (3,238) |
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| 88,306 |
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| (3,017) |
Net income (loss) |
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| 15,891 |
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| (5,164) |
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| 124,291 |
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| 10,969 |
Less: Net income attributable to noncontrolling interests |
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| 382 |
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| 376 |
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| 819 |
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| 386 |
Net income (loss) attributable to Ferro Corporation common shareholders |
| $ | 15,509 |
| $ | (5,540) |
| $ | 123,472 |
| $ | 10,583 |
Earnings (loss) per share attributable to Ferro Corporation common shareholders: |
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Basic earnings: |
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Continuing operations |
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| 0.21 |
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| (0.03) |
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| 0.43 |
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| 0.17 |
Discontinued operations |
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| (0.02) |
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| (0.04) |
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| 1.07 |
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| (0.04) |
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Diluted earnings: |
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Continuing operations |
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| 0.20 |
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| (0.03) |
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| 0.42 |
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| 0.16 |
Discontinued operations |
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| (0.02) |
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| (0.04) |
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| 1.06 |
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| (0.04) |
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Shares outstanding: |
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Weighted-average basic shares |
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| 82,665 |
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| 82,246 |
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| 82,581 |
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| 82,171 |
Weighted-average diluted shares |
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| 83,509 |
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| 82,927 |
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| 83,356 |
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| 83,279 |
End-of-period basic shares |
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| 82,704 |
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| 82,251 |
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| 82,704 |
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| 82,251 |
Table 2
Ferro Corporation and Subsidiaries
Segment Net Sales, Gross Profit and SG&A (unaudited)
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(Dollars in thousands) |
| Three Months Ended |
| Six Months Ended | ||||||||
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| June 30, |
| June 30, | ||||||||
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| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Segment Net Sales |
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Functional Coatings |
| $ | 194,909 |
| $ | 131,672 |
| $ | 379,731 |
| $ | 287,107 |
Color Solutions |
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| 99,422 |
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| 73,129 |
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| 202,958 |
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| 170,020 |
Total segment net sales |
| $ | 294,331 |
| $ | 204,801 |
| $ | 582,689 |
| $ | 457,127 |
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Segment Gross Profit |
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Functional Coatings |
| $ | 59,521 |
| $ | 36,119 |
| $ | 121,397 |
| $ | 83,936 |
Color Solutions |
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| 36,692 |
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| 26,985 |
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| 70,360 |
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| 60,772 |
Other costs of sales |
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| (1,378) |
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| 640 |
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| (1,819) |
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| (226) |
Total gross profit |
| $ | 94,835 |
| $ | 63,744 |
| $ | 189,938 |
| $ | 144,482 |
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Selling, general and administrative expenses |
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Strategic services |
| $ | 23,674 |
| $ | 21,495 |
| $ | 48,128 |
| $ | 47,111 |
Functional services |
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| 31,384 |
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| 24,892 |
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| 56,021 |
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| 50,443 |
Incentive compensation |
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| 1,883 |
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| 1,971 |
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| 4,000 |
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| 4,091 |
Stock-based compensation |
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| 2,085 |
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| 2,183 |
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| 4,715 |
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| 4,942 |
Total selling, general and administrative expenses |
| $ | 59,026 |
| $ | 50,541 |
| $ | 112,864 |
| $ | 106,587 |
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Table 3
Ferro Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
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(Dollars in thousands) |
| June 30, |
| December 31, | ||
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| 2021 |
| 2020 | ||
ASSETS |
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Current assets |
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Cash and cash equivalents |
| $ | 143,717 |
| $ | 174,077 |
Accounts receivable, net |
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| 162,375 |
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| 137,008 |
Inventories |
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| 260,237 |
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| 260,332 |
Other receivables |
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| 64,240 |
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| 72,272 |
Other current assets |
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| 20,988 |
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| 18,261 |
Current assets held-for-sale |
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| - |
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| 307,854 |
Total current assets |
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| 651,557 |
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| 969,804 |
Other assets |
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Property, plant and equipment, net |
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| 332,197 |
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| 330,045 |
Goodwill |
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| 174,005 |
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| 175,351 |
Intangible assets, net |
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| 112,545 |
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| 119,500 |
Deferred income taxes |
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| 110,735 |
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| 115,962 |
Operating leased assets |
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| 13,817 |
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| 15,446 |
Other non-current assets |
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| 25,825 |
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| 80,618 |
Non-current assets held-for-sale |
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| - |
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| 154,207 |
Total assets |
| $ | 1,420,681 |
| $ | 1,960,933 |
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LIABILITIES AND EQUITY |
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Current liabilities |
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Loans payable and current portion of long-term debt |
| $ | 8,871 |
| $ | 8,839 |
Accounts payable |
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| 136,303 |
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| 135,296 |
Accrued payrolls |
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| 28,366 |
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| 27,166 |
Accrued expenses and other current liabilities |
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| 150,463 |
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| 124,770 |
Current liabilities held-for-sale |
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| - |
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| 107,545 |
Total current liabilities |
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| 324,003 |
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| 403,616 |
Other liabilities |
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Long-term debt, less current portion |
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| 354,729 |
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| 791,509 |
Postretirement and pension liabilities |
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| 165,951 |
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| 181,610 |
Operating leased non-current liabilities |
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| 8,588 |
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| 10,064 |
Other non-current liabilities |
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| 55,118 |
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| 62,050 |
Non-current liabilities held-for-sale |
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| - |
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| 71,149 |
Total liabilities |
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| 908,389 |
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| 1,519,998 |
Equity |
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Total Ferro Corporation shareholders’ equity |
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| 504,006 |
|
| 429,967 |
Noncontrolling interests |
|
| 8,286 |
|
| 10,968 |
Total liabilities and equity |
| $ | 1,420,681 |
| $ | 1,960,933 |
Table 4
Ferro Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
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(Dollars in thousands) |
| Three Months Ended |
| Six Months Ended | ||||||||
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| June 30, |
| June 30, | ||||||||
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| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Cash flows from operating activities |
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Net income |
| $ | 15,891 |
| $ | (5,164) |
| $ | 124,291 |
| $ | 10,969 |
Loss (gain) on sale of assets |
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| 1,268 |
|
| 19 |
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| (98,746) |
|
| 506 |
Depreciation and amortization |
|
| 8,724 |
|
| 10,403 |
|
| 19,817 |
|
| 20,854 |
Interest amortization |
|
| 498 |
|
| 866 |
|
| 1,102 |
|
| 1,795 |
Restructuring and impairment |
|
| 147 |
|
| 6,609 |
|
| 124 |
|
| 6,916 |
Loss on extinguishment of debt |
|
| - |
|
| - |
|
| 1,981 |
|
| - |
Accounts receivable |
|
| (32,565) |
|
| (476) |
|
| (96,052) |
|
| (51,017) |
Inventories |
|
| (6,688) |
|
| (23,474) |
|
| (9,183) |
|
| (34,771) |
Accounts payable |
|
| 10,428 |
|
| (5,438) |
|
| 7,696 |
|
| (45,089) |
Other current assets and liabilities, net |
|
| (1,847) |
|
| (16,780) |
|
| 25,758 |
|
| (1,646) |
Other adjustments, net |
|
| 3,197 |
|
| 409 |
|
| (23,198) |
|
| (13,078) |
Net cash used in operating activities |
|
| (947) |
|
| (33,026) |
|
| (46,410) |
|
| (104,561) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property, plant and equipment and other long-lived assets |
|
| (9,697) |
|
| (6,666) |
|
| (20,574) |
|
| (14,982) |
Collections of financing receivables |
|
| 31,550 |
|
| 33,753 |
|
| 59,326 |
|
| 62,580 |
Proceeds from sale of businesses, net |
|
| - |
|
| - |
|
| 415,230 |
|
| - |
Business acquisitions, net of cash acquired |
|
| - |
|
| - |
|
| (2,200) |
|
| - |
Other investing activities |
|
| 234 |
|
| 33 |
|
| 236 |
|
| 778 |
Net cash provided by investing activities |
|
| 22,087 |
|
| 27,120 |
|
| 452,018 |
|
| 48,376 |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings under loans payable |
|
| (4,645) |
|
| 11,283 |
|
| (112) |
|
| 11,420 |
Principal payments on term loan facility - Amended Credit Facility |
|
| (2,050) |
|
| (2,050) |
|
| (439,100) |
|
| (4,100) |
Proceeds from revolving credit facility - Amended Credit Facility |
|
| 50,000 |
|
| 180,000 |
|
| 50,000 |
|
| 360,000 |
Principal payments on revolving credit facility - Amended Credit Facility |
|
| (50,000) |
|
| (163,383) |
|
| (50,000) |
|
| (343,383) |
Other financing activities |
|
| 549 |
|
| (1,634) |
|
| (3,551) |
|
| (1,418) |
Net cash provided by (used in) financing activities |
|
| (6,146) |
|
| 24,216 |
|
| (442,763) |
|
| 22,519 |
Effect of exchange rate changes on cash and cash equivalents |
|
| 295 |
|
| 703 |
|
| (1,405) |
|
| (505) |
Increase (decrease) in cash and cash equivalents |
|
| 15,289 |
|
| 19,013 |
|
| (38,560) |
|
| (34,171) |
Cash and cash equivalents at beginning of period |
|
| 128,428 |
|
| 51,218 |
|
| 182,277 |
|
| 104,402 |
Cash and cash equivalents at end of period |
|
| 143,717 |
|
| 70,231 |
|
| 143,717 |
|
| 70,231 |
Less: Cash and cash equivalents of discontinued operations at end of period |
|
| - |
|
| 8,200 |
|
| - |
|
| 8,200 |
Cash and cash equivalents of continuing operations at end of period |
| $ | 143,717 |
| $ | 62,031 |
| $ | 143,717 |
| $ | 62,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
| $ | 5,520 |
| $ | 8,883 |
| $ | 16,438 |
| $ | 16,736 |
Income taxes |
| $ | 8,733 |
| $ | 3,291 |
| $ | 12,751 |
| $ | 7,722 |
Table 5
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income to Adjusted Income
For the Three Months Ended June 30 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share amounts) |
|
| Cost of sales |
|
| Selling general and administrative expenses |
|
| Restructuring and impairment charges |
|
| Other expense, net |
|
| Income tax expense5 |
|
| Net income attributable to common shareholders |
|
| Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
| $ | 199,496 |
| $ | 59,026 |
| $ | 1,970 |
| $ | 7,910 |
| $ | 8,502 |
| $ | 17,045 |
| $ | 0.20 |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
| - |
|
| - |
|
| (1,970) |
|
| - |
|
| - |
|
| 1,970 |
|
| 0.02 |
Acquisition related costs1 |
|
| (779) |
|
| (7,651) |
|
| - |
|
| (541) |
|
| - |
|
| 8,971 |
|
| 0.11 |
Costs related to optimization projects3 |
|
| (894) |
|
| (1,698) |
|
| - |
|
| - |
|
| - |
|
| 2,592 |
|
| 0.03 |
Costs related to divested businesses and assets |
|
| - |
|
| (1,946) |
|
| - |
|
| (886) |
|
| - |
|
| 2,832 |
|
| 0.03 |
Tax on adjustments |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,872 |
|
| (3,872) |
|
| (0.05) |
Total adjustments6 |
|
| (1,673) |
|
| (11,295) |
|
| (1,970) |
|
| (1,427) |
|
| 3,872 |
|
| 12,493 |
|
| 0.15 |
As adjusted |
| $ | 197,823 |
| $ | 47,731 |
| $ | - |
| $ | 6,483 |
| $ | 12,374 |
| $ | 29,538 |
| $ | 0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
| $ | 141,057 |
| $ | 50,541 |
| $ | 8,619 |
| $ | 6,310 |
| $ | 200 |
| $ | (2,302) |
| $ | (0.03) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
| - |
|
| - |
|
| (8,619) |
|
| - |
|
| - |
|
| 8,619 |
|
| 0.10 |
Acquisition related costs2 |
|
| - |
|
| (534) |
|
| - |
|
| - |
|
| - |
|
| 534 |
|
| 0.01 |
Costs related to optimization projects4 |
|
| (1,932) |
|
| (3,307) |
|
| - |
|
| - |
|
| - |
|
| 5,239 |
|
| 0.06 |
Costs related to divested businesses and assets |
|
| - |
|
| (1,517) |
|
| - |
|
| (52) |
|
| - |
|
| 1,569 |
|
| 0.02 |
Tax on adjustments |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 4,031 |
|
| (4,031) |
|
| (0.05) |
Total adjustments6 |
|
| (1,932) |
|
| (5,358) |
|
| (8,619) |
|
| (52) |
|
| 4,031 |
|
| 11,930 |
|
| 0.14 |
As adjusted |
| $ | 139,125 |
| $ | 45,183 |
| $ | - |
| $ | 6,258 |
| $ | 4,231 |
| $ | 9,628 |
| $ | 0.12 |
(1) | The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs. |
(2) | The adjustments to “Cost of Sales” primarily include environmental costs related to our recent acquisitions. The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs. |
(3) | Costs related to Optimization projects of $2.6 million include costs associated with our Americas manufacturing optimization initiative of $1.8 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $0.8 million of costs relate to global optimization projects and discrete projects at our previous acquisitions. |
(4) | Costs related to Optimization projects of $5.2 million include costs associated with our Americas manufacturing optimization initiative of $2.7 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $2.5 million of costs relate to global optimization projects and discrete projects at our previous acquisitions. |
(5) | Income tax expense reflects the reported expense, adjusted for adjustments being tax effected at the respective statutory rate where the item originated. |
(6) | Due to rounding, total earnings per share related to adjustments does not always add to the total adjusted earnings per share. |
It should be noted that adjusted net income, earnings per share and other adjusted items referred to above are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). These Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP, and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures is presented. We believe by excluding these costs, our adjusted earnings per share better reflect our underlying business performance, as well as being considered in our internal evaluation of financial performance. These costs are ones that we have concluded are not normal, recurring cash operating expenses necessary to operate our business, and we believe it is useful to present this non-GAAP financial measure to provide investors greater comparability of our base business.
Table 6
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income to Adjusted Income
For the Six Months Ended June 30 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share amounts) |
|
| Cost of sales |
|
| Selling general and administrative expenses |
|
| Restructuring and impairment charges |
|
| Other expense, net |
|
| Income tax expense5 |
|
| Net income attributable to common shareholders |
|
| Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
| $ | 392,751 |
| $ | 112,864 |
| $ | 7,154 |
| $ | 17,789 |
| $ | 16,146 |
| $ | 35,166 |
| $ | 0.42 |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
| - |
|
| - |
|
| (7,154) |
|
| - |
|
| - |
|
| 7,154 |
|
| 0.09 |
Acquisition related costs1 |
|
| (1,814) |
|
| (8,764) |
|
| - |
|
| (6,975) |
|
| - |
|
| 17,553 |
|
| 0.21 |
Costs related to optimization projects3 |
|
| (2,037) |
|
| (3,136) |
|
| - |
|
| - |
|
| - |
|
| 5,173 |
|
| 0.06 |
Costs related to divested businesses and assets |
|
| - |
|
| (3,826) |
|
| - |
|
| 138 |
|
| - |
|
| 3,688 |
|
| 0.04 |
Tax on adjustments |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 8,300 |
|
| (8,300) |
|
| (0.10) |
Total adjustments6 |
|
| (3,851) |
|
| (15,726) |
|
| (7,154) |
|
| (6,837) |
|
| 8,300 |
|
| 25,268 |
|
| 0.30 |
As adjusted |
| $ | 388,900 |
| $ | 97,138 |
| $ | - |
| $ | 10,952 |
| $ | 24,446 |
| $ | 60,434 |
| $ | 0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
| $ | 312,645 |
| $ | 106,587 |
| $ | 9,784 |
| $ | 8,808 |
| $ | 5,317 |
| $ | 13,600 |
| $ | 0.16 |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
| - |
|
| - |
|
| (9,784) |
|
| - |
|
| - |
|
| 9,784 |
|
| 0.12 |
Acquisition related costs2 |
|
| (9) |
|
| (1,070) |
|
| - |
|
| - |
|
| - |
|
| 1,079 |
|
| 0.01 |
Costs related to optimization projects4 |
|
| (3,103) |
|
| (5,445) |
|
| - |
|
| - |
|
| - |
|
| 8,548 |
|
| 0.10 |
Costs related to divested businesses and assets |
|
| - |
|
| (3,243) |
|
| - |
|
| (107) |
|
| - |
|
| 3,350 |
|
| 0.04 |
Tax on adjustments |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 5,474 |
|
| (5,474) |
|
| (0.07) |
Total adjustments6 |
|
| (3,112) |
|
| (9,758) |
|
| (9,784) |
|
| (107) |
|
| 5,474 |
|
| 17,287 |
|
| 0.21 |
As adjusted |
| $ | 309,533 |
| $ | 96,829 |
| $ | - |
| $ | 8,701 |
| $ | 10,791 |
| $ | 30,887 |
| $ | 0.37 |
(1) | The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs. |
(2) | The adjustments to “Cost of Sales” primarily include the amortization of purchase accounting adjustments related to our recent acquisitions and environmental costs related to our recent acquisitions. The adjustments to “Selling general and administrative expenses” primarily include legal, professional and other expenses related to acquisition costs. The adjustments to “Other expense, net” primarily relate to earn out adjustments related to an acquisition that are beyond the measurement period. |
(3) | Cost related to Optimization projects of $5.1 million includes costs associated with our Americas manufacturing optimization initiative of $3.9 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $1.2 million of costs relate to global optimization projects and discrete projects at our previous acquisitions. |
(4) | Cost related to Optimization projects of $8.5 million includes costs associated with our Americas manufacturing optimization initiative of $5.0 million, which is comprised of costs for process development and production testing, professional fees for legal and tax services, supplies and equipment commissioning, and utility setup and testing. The remaining $3.5million of costs relate to global optimization projects and discrete projects at our previous acquisitions. |
(5) | Income tax expense reflects the reported expense, adjusted for adjustments being tax effected at the respective statutory rate where the item originated. |
(6) | Due to rounding, total earnings per share related to adjustments does not always add to the total adjusted earnings per share. |
It should be noted that adjusted net income, earnings per share and other adjusted items referred to above are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). These Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP, and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures is presented. We believe by excluding these costs, our adjusted earnings per share better reflect our underlying business performance, as well as being considered in our internal evaluation of financial performance. These costs are ones that we have concluded are not normal, recurring cash operating expenses necessary to operate our business, and we believe it is useful to present this non-GAAP financial measure to provide investors greater comparability of our base business.
Table 7
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Adjusted Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
| Three Months Ended |
| Six Months Ended | ||||||||||||
|
| June 30, |
| June 30, | ||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Functional Coatings |
| $ | 194,909 |
|
| $ | 131,672 |
|
| $ | 379,731 |
|
| $ | 287,107 |
|
Color Solutions |
|
| 99,422 |
|
|
| 73,129 |
|
|
| 202,958 |
|
|
| 170,020 |
|
Total net sales |
| $ | 294,331 |
|
| $ | 204,801 |
|
| $ | 582,689 |
|
| $ | 457,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
| $ | 294,331 |
|
| $ | 204,801 |
|
| $ | 582,689 |
|
| $ | 457,127 |
|
Adjusted cost of sales1 |
|
| 197,823 |
|
|
| 139,125 |
|
|
| 388,900 |
|
|
| 309,533 |
|
Adjusted gross profit |
| $ | 96,508 |
|
| $ | 65,676 |
|
| $ | 193,789 |
|
| $ | 147,594 |
|
Adjusted gross profit percentage |
|
| 32.8 | % |
|
| 32.1 | % |
|
| 33.3 | % |
|
| 32.3 | % |
(1) | Refer to Table 5 for the reconciliation of adjusted cost of sales for the three months ended June 30, 2021 and 2020, respectively. Refer to Table 6 for the reconciliation of adjusted cost of sales for the six months ended June 30, 2021 and 2020, respectively. |
It should be noted that adjusted gross profit is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). This Non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.
Table 8
Ferro Corporation and Subsidiaries
Supplemental Information
Constant Currency Schedule of Adjusted Operating Profit (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended | ||||||||||
(Dollars in thousands) |
| June 30, | ||||||||||
|
| 2020 |
| Adjusted 20201 |
| 2021 |
| 2021 vs Adjusted 2020 | ||||
Segment net sales |
|
|
|
|
|
|
|
|
|
|
|
|
Functional Coatings |
| $ | 131,672 |
| $ | 137,767 |
| $ | 194,909 |
| $ | 57,142 |
Color Solutions |
|
| 73,129 |
|
| 76,552 |
|
| 99,422 |
|
| 22,870 |
Total segment net sales |
| $ | 204,801 |
| $ | 214,319 |
| $ | 294,331 |
| $ | 80,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
Functional Coatings |
| $ | 37,847 |
| $ | 40,136 |
| $ | 60,025 |
| $ | 19,889 |
Color Solutions |
|
| 26,985 |
|
| 28,586 |
|
| 37,001 |
|
| 8,415 |
Other costs of sales |
|
| 844 |
|
| 636 |
|
| (519) |
|
| (1,155) |
Total adjusted gross profit2 |
| $ | 65,676 |
| $ | 69,358 |
| $ | 96,507 |
| $ | 27,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Strategic services |
| $ | 21,448 |
| $ | 22,447 |
| $ | 23,473 |
| $ | 1,026 |
Functional services |
|
| 19,626 |
|
| 20,674 |
|
| 20,295 |
|
| (379) |
Incentive compensation |
|
| 1,930 |
|
| 1,990 |
|
| 1,883 |
|
| (107) |
Stock-based compensation |
|
| 2,183 |
|
| 2,183 |
|
| 2,085 |
|
| (98) |
Total adjusted selling, general and administrative expenses3 |
| $ | 45,187 |
| $ | 47,294 |
| $ | 47,736 |
| $ | 442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit |
| $ | 20,489 |
| $ | 22,064 |
| $ | 48,771 |
| $ | 26,707 |
Adjusted operating profit as a % of net sales |
|
| 10.0% |
|
| 10.3% |
|
| 16.6% |
|
|
|
(1) | Reflects the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, resulting in constant currency comparative figures to 2021 reported and adjusted results. See Table 5 for Non-GAAP adjustments applicable to the three month period. |
(2) | Refer to Table 7 for the reconciliation of adjusted gross profit for the three months ended June 30, 2021 and 2020, respectively. |
(3) | Refer to Table 5 for the reconciliation of adjusted SG&A expenses for the three months ended June 30, 2021 and 2020, respectively. |
It should be noted that adjusted net sales, gross profit, SG&A expenses, and operating profit are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). These Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures are presented within this table, as well as Table 5 and Table 7. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.
Table 9
Ferro Corporation and Subsidiaries
Supplemental Information
Constant Currency Schedule of Adjusted Operating Profit (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended | ||||||||||
(Dollars in thousands) |
| June 30, | ||||||||||
|
| 2020 |
| Adjusted 20201 |
| 2021 |
| 2021 vs Adjusted 2020 | ||||
Segment net sales |
|
|
|
|
|
|
|
|
|
|
|
|
Functional Coatings |
| $ | 287,107 |
| $ | 298,994 |
| $ | 379,731 |
| $ | 80,737 |
Color Solutions |
|
| 170,020 |
|
| 176,928 |
|
| 202,958 |
|
| 26,030 |
Total segment net sales |
| $ | 457,127 |
| $ | 475,922 |
| $ | 582,689 |
| $ | 106,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
Functional Coatings |
| $ | 86,722 |
| $ | 90,941 |
| $ | 124,256 |
| $ | 33,315 |
Color Solutions |
|
| 60,795 |
|
| 63,386 |
|
| 70,931 |
|
| 7,545 |
Other costs of sales |
|
| 152 |
|
| (163) |
|
| (1,399) |
|
| (1,236) |
Total adjusted gross profit2 |
| $ | 147,669 |
| $ | 154,164 |
| $ | 193,788 |
| $ | 39,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Strategic services |
| $ | 46,946 |
| $ | 49,069 |
| $ | 47,638 |
| $ | (1,431) |
Functional services |
|
| 40,855 |
|
| 42,411 |
|
| 40,800 |
|
| (1,611) |
Incentive compensation |
|
| 4,094 |
|
| 4,113 |
|
| 4,000 |
|
| (113) |
Stock-based compensation |
|
| 4,942 |
|
| 4,942 |
|
| 4,715 |
|
| (227) |
Total adjusted selling, general and administrative expenses3 |
| $ | 96,837 |
| $ | 100,535 |
| $ | 97,153 |
| $ | (3,382) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit |
| $ | 50,832 |
| $ | 53,629 |
| $ | 96,635 |
| $ | 43,006 |
Adjusted operating profit as a % of net sales |
|
| 11.1% |
|
| 11.3% |
|
| 16.6% |
|
|
|
(1) | Reflects the remeasurement of 2020 reported and adjusted local currency results using 2021 exchange rates, resulting in constant currency comparative figures to 2021 reported and adjusted results. See Table 6 for Non-GAAP adjustments applicable to the six month period. |
(2) | Refer to Table 7 for the reconciliation of adjusted gross profit for the six months ended June 30, 2021 and 2020, respectively. |
(3) | Refer to Table 6 for the reconciliation of adjusted SG&A expenses for the six months ended June 30, 2021 and 2020, respectively. |
It should be noted that adjusted net sales, gross profit, SG&A expenses, and operating profit are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). These Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures are presented within this table, as well as Table 6 and Table 7. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.
Table 10
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net income attributable to Ferro Corporation
common shareholders to Adjusted EBITDA (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
| Three Months Ended |
| Six Months Ended | ||||||||||||
|
| June 30, |
| June 30, | ||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Ferro Corporation common shareholders |
| $ | 17,045 |
|
| $ | (2,302) |
|
| $ | 35,166 |
|
| $ | 13,600 |
|
Net income attributable to noncontrolling interests |
|
| 382 |
|
|
| 376 |
|
|
| 819 |
|
|
| 386 |
|
Restructuring and impairment charges |
|
| 1,970 |
|
|
| 8,619 |
|
|
| 7,154 |
|
|
| 9,784 |
|
Other (income) expense, net |
|
| 2,904 |
|
|
| 133 |
|
|
| 3,346 |
|
|
| (2,899) |
|
Interest expense |
|
| 5,006 |
|
|
| 6,177 |
|
|
| 14,443 |
|
|
| 11,707 |
|
Income tax expense |
|
| 8,502 |
|
|
| 200 |
|
|
| 16,146 |
|
|
| 5,317 |
|
Depreciation and amortization |
|
| 10,441 |
|
|
| 11,269 |
|
|
| 20,938 |
|
|
| 22,650 |
|
Less: interest amortization expense and other |
|
| (498) |
|
|
| (866) |
|
|
| (1,102) |
|
|
| (1,795) |
|
Cost of sales adjustments1 |
|
| 1,673 |
|
|
| 1,932 |
|
|
| 3,851 |
|
|
| 3,112 |
|
SG&A adjustments1 |
|
| 11,295 |
|
|
| 5,358 |
|
|
| 15,726 |
|
|
| 9,758 |
|
Adjusted EBITDA |
| $ | 58,720 |
|
| $ | 30,896 |
|
| $ | 116,487 |
|
| $ | 71,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ | 294,331 |
|
| $ | 204,801 |
|
| $ | 582,689 |
|
| $ | 457,127 |
|
Adjusted EBITDA as a % of net sales |
|
| 20.0 | % |
|
| 15.1 | % |
|
| 20.0 | % |
|
| 15.7 | % |
(1) | For details of Non-GAAP adjustments, refer to Table 5 and Table 6 for the reconciliation of adjusted cost of sales and adjusted SG&A for the three and six months ended June 30, 2021 and 2020, respectively. |
It should be noted that adjusted EBITDA is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). This Non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.
Table 11
Ferro Corporation and Subsidiaries
Supplemental Information
Change in Net Debt (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||
Beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross debt |
| $ | 371,443 |
| $ | 809,868 |
| $ | 804,067 |
| $ | 811,450 |
|
Cash |
|
| 128,428 |
|
| 43,018 |
|
| 174,077 |
|
| 96,202 |
|
Debt, net of cash |
|
| 243,015 |
|
| 766,850 |
|
| 629,990 |
|
| 715,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs |
|
| 1,503 |
|
| 4,121 |
|
| 3,719 |
|
| 3,885 |
|
Debt, net of cash and unamortized debt issuance costs |
|
| 241,512 |
|
| 762,729 |
|
| 626,271 |
|
| 711,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross debt |
|
| 364,972 |
|
| 835,486 |
|
| 364,972 |
|
| 835,486 |
|
Cash |
|
| 143,717 |
|
| 62,031 |
|
| 143,717 |
|
| 62,031 |
|
Debt, net of cash |
|
| 221,255 |
|
| 773,455 |
|
| 221,255 |
|
| 773,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs |
|
| 1,372 |
|
| 4,314 |
|
| 1,372 |
|
| 4,314 |
|
Debt, net of cash and unamortized debt issuance costs |
|
| 219,883 |
|
| 769,141 |
|
| 219,883 |
|
| 769,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs |
|
| (131) |
|
| 193 |
|
| (2,347) |
|
| 429 |
|
FX on cash |
|
| 295 |
|
| 703 |
|
| (1,405) |
|
| (505) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period decrease (increase) in debt, net of cash, unamortized debt issuance costs and FX |
| $ | 21,465 |
| $ | (7,308) |
| $ | 410,140 |
| $ | (57,702) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period decrease (increase) in debt, net of cash and unamortized debt issuance costs |
| $ | 21,629 |
| $ | (6,412) |
| $ | 406,388 |
| $ | (57,778) |
|
It should be noted that the change in net debt is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). This Non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of this financial measure to the most comparable U.S. GAAP financial measure is presented. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.
Table 12
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net Cash Used in Operating Activities (GAAP) to
Adjusted Free Cash Flow (Non-GAAP) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
| Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 15,891 |
| $ | (5,164) |
| $ | 124,291 |
| $ | 10,969 |
Loss (gain) on sale of assets |
|
| 1,268 |
|
| 19 |
|
| (98,746) |
|
| 506 |
Depreciation and amortization |
|
| 8,724 |
|
| 10,403 |
|
| 19,817 |
|
| 20,854 |
Interest amortization |
|
| 498 |
|
| 866 |
|
| 1,102 |
|
| 1,795 |
Restructuring and impairment |
|
| 147 |
|
| 6,609 |
|
| 124 |
|
| 6,916 |
Loss on extinguishment of debt |
|
| - |
|
| - |
|
| 1,981 |
|
| - |
Accounts receivable |
|
| (32,565) |
|
| (476) |
|
| (96,052) |
|
| (51,017) |
Inventories |
|
| (6,688) |
|
| (23,474) |
|
| (9,183) |
|
| (34,771) |
Accounts payable |
|
| 10,428 |
|
| (5,438) |
|
| 7,696 |
|
| (45,089) |
Other current assets and liabilities, net |
|
| (1,847) |
|
| (16,780) |
|
| 25,758 |
|
| (1,646) |
Other adjustments, net |
|
| 3,197 |
|
| 409 |
|
| (23,198) |
|
| (13,078) |
Net cash used in operating activities (GAAP) |
| $ | (947) |
| $ | (33,026) |
| $ | (46,410) |
| $ | (104,561) |
Less: Capital Expenditures |
|
| (9,697) |
|
| (6,666) |
|
| (20,574) |
|
| (14,982) |
Plus: Cash collected for AR securitization |
|
| 31,550 |
|
| 33,753 |
|
| 59,326 |
|
| 62,580 |
Adjusted Free Cash Flow (Non-GAAP) |
|
| 20,906 |
|
| (5,939) |
|
| (7,658) |
|
| (56,963) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Ferro Corporation Common Shareholders |
|
| 15,509 |
|
| (5,540) |
|
| 123,472 |
|
| 10,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow Conversion of Net Income Attributable to Ferro Corporation Common Shareholders |
|
| 134.8% |
|
| 107.2% |
|
| -6.2% |
|
| -538.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
It should be noted that Adjusted Free Cash Flow is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The Non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, the financial measures prepared in accordance with U.S. GAAP and a reconciliation of these financial measures to the most comparable U.S. GAAP financial measures is presented. Adjusted Free Cash Flow (Non-GAAP) is calculated as Cash Flow used in operating activities (GAAP), less capital expenditures and adding cash collected from the Accounts Receivable Securitization program. We believe this data provides investors with additional useful information on the underlying operations and trends of the business and enables period-to-period comparability of financial performance.