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| Spartech Announces Second Quarter Results |
Second Quarter 2009 Financial Highlights
-- Net sales were
Note: Please see reconciliation tables and the narrative below for adjustments to GAAP and discussion of items affecting results. Consolidated Results Net sales for the second quarter of 2009 were The reported operating earnings for the second quarter of 2009 were Cash flow from operations in the second quarter of 2009 of Strategic and Operational Overview The Company continues to make substantive progress on its strategic plan
that was developed early in 2008. This road map resulted in new business
strategies, asset restructurings, organizational enhancements, business
process reengineering, improvements in margin and mix, and a reduction in our
cost footprint focused on facilitating a low cost-to-serve model. Our results
in the second quarter of 2009 reflected cost reductions and other improvement
initiatives which included In addition, we implemented several shorter term improvement initiatives
in the second quarter, including: (i) temporary across-the-board salary
reductions, (ii) suspension of our 401k match and deferred compensation
contributions, (iii) modification of our vacation policy to eliminate the cash
settlement of earned vacation, and (iv) cost containment initiatives to flex
work schedules and reduce the number of days worked per week. The change in
vacation policy resulted in Segment Results The results of our three segments are discussed below and presented in the table at the end of this release to reconcile to amounts excluding restructuring and exit costs to comparable GAAP measures. Custom Sheet & Rollstock -- Net sales of Packaging Technologies -- Net sales of Color & Specialty Compounds -- Net sales of Outlook While end-market demand continues to be weak, volumes in many of the markets we serve started to stabilize during the second quarter, albeit at very low levels. We are encouraged by improved customer sentiment, but our operating plans assume the recessionary effects will continue through 2009 and that end-market demand will remain weak. Our operating plans also reflect specific actions we have taken to manage through the automotive crisis, related bankruptcies, and summer shutdowns which will result in particularly weak demand for this market, but the impact of these developments are uncertain. We will continue to execute our improvement initiatives and focus on maximizing cash flows. These initiatives have included the implementation of many structural cost reductions as well as shorter term measures that have allowed us to continue to support appropriate investments in technology, resources focused on future growth, and other organizational improvements. We expect to emerge from this recessionary environment as a stronger company that is better able to leverage its cost structure and positioned to generate profitable growth and enhanced shareholder returns. Restructuring and Exit Activities Restructuring and exit costs totaled Safe Harbor For Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relate to future events and expectations, include statements containing such words as "anticipates," "believes," "estimates," "expects," "would," "should," "will," "will likely result," "forecast," "outlook," "projects," and similar expressions. Forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that may cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements.
Important factors which have impacted and could impact our
operations and results include, but are not limited to:
(a) further adverse changes in economic or industry conditions,
including global supply and demand conditions and prices for
products of the types we produce;
(b) our ability to compete effectively on product performance,
quality, price, availability, product development, and customer
service;
(c) adverse changes in the markets we serve, including the
packaging, transportation, building and construction,
recreation and leisure, and other markets, some of which tend
to be cyclical;
(d) adverse changes in the domestic automotive markets, including
the bankruptcy filings by the automobile original equipment
manufacturers which could have a cascading effect on our
customers and adversely impact our business;
(e) our inability to achieve the level of cost savings,
productivity improvements, gross margin enhancements, growth or
other benefits anticipated from our planned improvement
initiatives;
(f) volatility of prices and availability of supply of energy and
of the raw materials that are critical to the manufacture of
our products, particularly plastic resins derived from oil and
natural gas, including future effects of natural disasters;
(g) our inability to manage or pass through to customers an
adequate level of increases in the costs of materials, freight,
utilities, or other conversion costs;
(h) restrictions imposed on us by instruments governing our
indebtedness, the possible inability to comply with
requirements of those instruments, and inability to access
capital markets;
(i) possible asset impairment charges;
(j) our inability to predict accurately the costs to be incurred,
time taken to complete, operating disruptions therefrom, or
savings to be achieved in connection with announced production
plant restructurings;
(k) adverse findings in significant legal or environmental
proceedings or our inability to comply with applicable
environmental laws and regulations;
(l) our inability to develop and launch new products successfully;
(m) possible weaknesses in internal controls; and
(n) our ability to successfully complete the implementation of a
new enterprise resource planning computer system and to obtain
expected benefits from our system.
We assume no responsibility to update our forward-looking statements except as required by law.
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited and dollars in thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
May 2, May 3, May 2, May 3,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $234,334 $367,347 $483,484 $702,453
Costs and expenses:
Cost of sales 198,855 331,140 425,523 643,137
Selling, general
and administrative
expenses 19,036 22,371 42,125 45,510
Amortization of
intangibles 1,161 1,308 2,329 2,641
Restructuring and
exit costs 3,688 617 4,515 841
----- --- ----- ---
222,740 355,436 474,492 692,129
------- ------- ------- -------
Operating earnings 11,594 11,911 8,992 10,324
Interest, net of
interest income
of $0,
Within this press release we have included operating earnings and net earnings (loss) per dilutive share excluding restructuring and exit costs and free cash flow, which are non-GAAP measurements. We use these measurements to assess our ongoing operating results without the effect of these adjustments and compare such results to our planned operating results. We believe these measurements are useful to investors because they help them compare our results to previous periods and provide an indication of underlying trends in the business. Such non-GAAP measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. The free cash flow is reconciled within the narrative of the release. The following reconciles GAAP to non-GAAP measures:
Three Months Ended Six Months Ended
------------------ ----------------
May 2, May 3, May 2, May 3,
2009 2008 2009 2008
---- ---- ---- ----
Operating
Earnings (GAAP) $11,594 $11,911 $8,992 $10,324
Restructuring
and exit costs 3,688 617 4,515 841
----- --- ----- ---
Operating earnings
excluding
restructuring and exit
costs (non-GAAP) $15,282 $12,528 $13,507 $11,165
======= ======= ======= =======
Net earnings (loss)
(GAAP) $3,764 $4,365 $(1,328) $875
Restructuring
and exit costs,
net of tax 2,426 443 2,958 599
----- --- ----- ---
Net earnings excluding restructuring and exit
costs (non-GAAP) $6,190 $4,808 $1,630 $1,474
====== ====== ====== ======
Net earnings (loss) per diluted share (GAAP) $.12 $.14 $(0.04) $.03
Restructuring
and exit costs,
net of tax .08 .02 .09 .02
--- --- --- ---
Net earnings
per diluted share
excluding
restructuring and exit
costs (non-GAAP)
$.20 $.16 $.05 $.05
==== ==== ==== ====
Three Months Ended Three Months Ended
May 2, 2009 May 3, 2008
----------------------------- -----------------------------
Operating
Operating Earnings
Earnings Excluding
Excluding Restructuring
Restruc- Restructuring Restruc- and
Operating turing and Operating turing Exit
Earnings and Exit Exit Costs Earnings and Exit Costs
(GAAP) Costs (non-GAAP) (GAAP) Costs (non-GAAP)
Custom Sheet
& Rollstock $4,030 $1,675 $5,705 $7,737 $214 $7,951
Packaging
Technologies 9,422 780 10,202 4,857 123 4,980
Color &
Specialty
Compounds 2,548 919 3,467 4,766 277 5,043
Engineered
Products 4,000 25 4,025 3,477 - 3,477
Corporate (8,406) 289 (8,117) (8,926) 3 (8,923)
------- --- ------ ------- --- -------
Total $11,594 $3,688 $15,282 $11,911 $617 $12,528
======= ====== ======= ======= ==== ======
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