Dynacast Reports Second Quarter 2012 Financial Results
CHARLOTTE, N.C., Aug. 17, 2012 /PRNewswire/ — As previously announced, the management of Dynacast International Inc. will hold a conference call at 11.30 a.m., Eastern Time, this morning, Friday, August 17, 2012, to review Dynacast’s results for the second quarter of 2012.
For the second quarter of 2012, net sales were $128.3 million, a 6.9% increase from $120.0 million for the second quarter of 2011. Net income decreased from $13.7 million in the second quarter of 2011 to $0.8 million in the second quarter of 2012. Adjusted EBITDA increased from $22.5 million for the second quarter of 2011 to $23.2 million for second quarter of 2012.
For the six months ended June 30, 2012, net sales increased 3.2% to $248.2 million, compared to $240.5 million for the same period in 2011. Net income for the six months ended June 30, 2011 was $26.3 million, compared to a net loss of $1.2 million for the same period in 2012. Adjusted EBITDA increased from $43.5 million for the six months ended June 30, 2011, to $44.1 million for the six months ended June 30, 2012.
Results for the second quarter of 2012 and six months ended June 30, 2012 were impacted by $4.1 million and $8.3 million, respectively, of additional depreciation and amortization expense related to the allocation of the purchase price paid in the acquisition of the Dynacast business from Melrose plc in July 2011. In addition, the three and six months ended June 30, 2012 were negatively impacted by the weakening of the average U.S. Dollar to Euro exchange rate. This resulted in a reduction to net sales of $5.0 million and $7.1 million and a reduction in net income of $1.0 million and $1.3 million for the three and the six months ended June 30, 2012, respectively.
Conference Call
The conference call will be held at 11.30 a.m., Eastern Time, on August 17, 2012 and may be accessed by dialing (877) 873-1192 for U.S. callers or (706) 643-1195 for international callers. Please reference conference ID# 20589668.
A telephonic replay of the call will be available after 2.00 p.m., Eastern Time, on August 17, 2012 and continue through September 17, 2012 and can be accessed by dialing (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers. Please reference conference ID# 20589668.
About Dynacast International Inc.
Dynacast International Inc. is a global manufacturer of small, engineered die cast components for thousands of companies in industries such as automotive, consumer electronics, healthcare, hardware, computers and peripherals and many others.
We engineer precision components by combining extensive engineering knowledge with our specialized manufacturing technologies. We provide cost effective solutions for our customers worldwide by identifying opportunities to redesign or consolidate products and assemblies through die-casting. We have a history of delivering value to our customers through our engineering expertise, efficient operations and Advanced Quality Planning systems.
With Global Headquarters in Charlotte, NC, Dynacast operates 20 manufacturing facilities in 16 countries around the world. Please visit www.dynacast.com to learn more.
Non-GAAP Measures
Adjusted EBITDA and Segment EBITDA, as used in this news release, are non-GAAP financial measures.
EBITDA is earnings before interest, other income, taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for certain items that we believe hinder comparison of the performance of our business either year-over-year or with other businesses, including non-controlling interests, management fees, stand-alone costs, restructuring costs, professional fees and transaction costs. Items are excluded from Adjusted EBITDA because they are individually or collectively material items that we do not consider to be representative of the performance of our core business during the periods under review. We believe that the presentation of Adjusted EBITDA enhances an investor’s understanding of our performance.
Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income. We measure and evaluate our reportable segments based on segment operating income, which is consistent with our chief operating decision maker’s assessment of segment performance. For the quarter and six months ended June 30, 2012 and 2011, we believe that Segment EBITDA is useful in evaluating operating profitability as it excludes the depreciation and amortization expenses resulting from the allocation of the purchase price paid in the July 2011 acquisition of the Dynacast business to the tangible and intangible assets acquired and liabilities assumed, which expenses were not present during the quarter and six months ended June 30, 2011. Segment EBITDA does not purport to be an alternative to segment operating income.
Adjusted EBITDA and Segment EBITDA are considered non-GAAP measures because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP or are calculated using financial measures that are not calculated in accordance with GAAP. Adjusted EBITDA and Segment EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include, but are not limited to the fact that Adjusted EBITDA and Segment EBITDA:
- do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
- do not reflect changes in, or cash requirements for, our working capital needs;
- do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debts;
- do not reflect any cash requirements that would be required for replacement of assets that are being depreciated or amortized; and
- may exclude items that reflect cash payments that were made, or will in the future be made.
The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies, which limits their usefulness as comparative measures.
For reconciliations of Adjusted EBITDA and Segment EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, see “Reconciliation of Non-GAAP Measures” in the accompanying tables.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains, and Dynacast and our management may make, certain statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “contemplate,” “believe,” “estimate,” “anticipate,” “continue,” “expect,” “intend,” “predict,” “project,” “potential,” “possible,” “may,” “plan,” “should,” “would,” “goal,” “target” or other similar expressions or, in each case, their negative or other variations or comparable terminology. Forward-looking statements express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, and include all matters that are not historical facts. Such statements include, in particular, statements about our plans, intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, earnings outlook, prospects, growth, strategies, the industry in which we operate, economic conditions and trends in the regions in which we operate, our potential for growth in specified markets or geographies, facility improvements and capital expenditures. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements involve certain risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Actual outcomes or results may differ materially from those made in or suggested by the forward-looking statements. In addition, even if actual outcomes or results are consistent with the forward-looking statements contained, those outcomes or results may not be indicative of outcomes or results in subsequent periods.
You should not place undue reliance on any forward-looking statement and you should consider the following factors that may cause actual outcomes or results to differ materially from forward-looking statements, as well as those discussed in any of our subsequent filings with the SEC:
- competitive risks from other zinc or aluminum diecast producers or self-manufacture by customers;
- relationships with, and financial or operating conditions of, our key customers, suppliers and other stakeholders;
- loss of, or an inability to attract, key management;
- fluctuations in the supply of, and prices for and raw materials in the areas in which we maintain production facilities;
- union disputes, labor unrest or other employee relations issues;
- availability of production capacity;
- environmental, health and safety costs;
- impact of future mergers, acquisitions, joint ventures or teaming agreements;
- our substantial level of indebtedness and ability to generate cash;
- changes in the availability and cost of capital;
- changes in or timing of our restructuring or plant development plans;
- restrictions in our debt agreements;
- fluctuations in the relative value of the U.S. dollar and the currencies of the countries and regions in which we operate and the effectiveness of our currency hedging activities;
- ability to repatriate cash held by our foreign subsidiaries;
- changes in political, economic, regulatory and business conditions, including changes in taxes, tax rates, duties or tariffs;
- acts of war or terrorist activities;
- existence or exacerbation of general political instability and uncertainty in the U.S. or in other countries or regions in which we operate;
- cyclical demand and pricing within the principal markets for our products;
- our separation from Melrose, transition to an independent company and ability to operate as a stand-alone entity; and
- other risks and factors identified in this news release and in our filings with the SEC.
Any forward-looking statements speak only as of the date of those statements. All subsequent written and oral forward-looking statements concerning the matters addressed in this news release and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this news release. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of the forward-looking statement or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
DYNACAST INTERNATIONAL INC.
Condensed Statements of Operations (Unaudited)
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months For the Period Six Months Six Months
Ended April 4, 2011 to Ended Ended
(in millions of dollars) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
Net sales $128.3 $120.0 $248.2 $240.5
Costs of goods sold (99.6) (90.4) (192.4) (183.1)
----- ----- ------ ------
28.7 29.6 55.8 57.4
Gross margin
Operating expenses:
Selling, general and
administrative expense (14.2) (10.7) (29.1) (20.8)
Restructuring (expense)
credit 0.1 1.1 (0.5) 0.9
(14.1) (9.6) (29.6) (19.9)
Total operating
expenses
14.6 20.0 26.2 37.5
Operating income
Other income (expense)
Interest expense (12.2) (0.4) (25.0) (1.2)
Other income 0.1 - 0.1 -
2.5 19.6 1.3 36.3
Income before income
taxes
Income tax expense (1.7) (5.9) (2.5) (10.0)
---- ---- ---- -----
Net income (loss) 0.8 13.7 (1.2) 26.3
Less: net income attributable to non-controlling interests (0.1) (0.1) (0.1) (0.2)
Less: Series A preferred stock dividends - - (0.2) -
--- ---
Net income (loss) attributable to controlling stockholders $0.7 $13.6 $(1.5) $26.1
==== ===== ===== =====
DYNACAST INTERNATIONAL INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in millions of dollars) June 30, 2012 December 31, 2011
------------- -----------------
Assets
Current assets
Cash and cash
equivalents $25.7 $21.1
Accounts
receivable, net 76.8 66.9
Income taxes
receivable 2.1 3.1
Inventory 43.3 39.0
Derivatives 1.5 1.3
Prepaid expenses 2.1 1.9
Other assets 3.3 3.2
Deferred income
taxes 5.8 5.8
160.6 142.3
Total current
assets
Property and equipment, net 118.2 119.9
Intangible assets, net 259.4 270.7
Income taxes receivable 0.3 0.3
Deferred financing costs 21.2 22.1
Other assets 1.8 1.9
Goodwill 234.1 238.4
Deferred income taxes 4.5 4.9
---
$800.1 $800.5
Total assets
Liabilities and Equity
Current liabilities
Accounts payable $59.7 $52.7
Income taxes
payable 6.7 6.8
Derivatives 0.2 0.2
Accrued expenses 30.2 31.7
Accrued interest 14.9 14.6
Other liabilities 14.4 11.2
Deferred revenue 8.2 8.4
Current portion of
accrued pension
and retirement
benefit
obligations 0.6 0.6
Current portion of
long-term debt 5.0 5.0
Deferred income
taxes 1.9 1.3
141.8 132.5
Total current
liabilities
Other accrued expenses 0.3 0.9
Income taxes payable 0.7 0.7
Accrued interest and dividends 7.4 3.4
Accrued pension and retirement benefit obligations 18.9 19.5
Long-term debt, net 390.0 392.5
Mandatorily redeemable preferred stock 53.0 26.5
Warrants 6.1 6.1
Deferred income taxes 68.5 72.2
686.7 654.3
Total
liabilities
Series A convertible mandatorily redeemable preferred stock - 26.5
Puttable common stock 1.5 1.5
Commitments and contingencies
Equity
Common stock 0.2 0.2
Additional paid-
in capital 167.5 166.6
Accumulated
foreign currency
translation
adjustment, net (33.4) (27.8)
Unrealized loss on
cash flow hedges,
net - (0.2)
Cumulative
unrealized
pension loss, net (0.8) (0.8)
Accumulated
deficit (25.1) (23.6)
108.4 114.4
Total equity
attributable
to
controlling
stockholders
Non-controlling interests 3.5 3.8
---
111.9 118.2
Total equity
$800.1 $800.5
Total
liabilities
and equity
DYNACAST INTERNATIONAL INC.
Condensed Statements of Cash Flows (Unaudited)
Consolidated Successor Company Combined Predecessor Company
Six Months Ended Six Months Ended
(in millions of dollars) June 30, 2012 June 30, 2011
------------- -------------
Cash flows from operating activities
Net (loss) income $(1.2) $26.3
Adjustments to reconcile net (loss) income to cash
provided by operating activities:
Depreciation and
amortization 16.0 7.6
Management fee
from Melrose - 0.5
Amortization of
deferred
financing costs 1.8 -
Deferred income
taxes (2.7) (1.3)
Beneficial
conversion value
for Series A
preferred stock 0.9 -
Other - 0.4
Changes in operating assets and liabilities:
Accounts
receivable (10.7) (10.6)
Inventory (5.1) (1.6)
Prepaid expenses (0.2) (1.1)
Other assets 0.4 (0.2)
Accounts payable 8.3 2.4
Income taxes
payable 1.1 7.2
Accrued expenses 0.3 (1.5)
Accrued interest
and dividends 4.2 -
Other 3.2 2.5
16.3 30.6
Net cash
flows
provided
by
operating
activities
Cash flows from investing activities
Capital expenditures (9.2) (6.2)
Settlement of derivative contracts 1.3 0.5
Repayment of notes receivable issued to affiliates - 26.2
(7.9) 20.5
Net cash
flows
(used in)
provided
by
investing
activities
Cash flows from financing activities
Draws on revolver 14.0 -
Repayments on revolver (14.0) -
Debt issuance costs (0.6) -
Notes payable from affiliates - (12.8)
Distributions to Melrose - (26.2)
Dividends paid to Melrose - (0.5)
Dividends paid to non-controlling interests (0.2) (0.1)
Repayment of long-term debt (2.5) (0.4)
(3.3) (40.0)
Net cash
flows used
in
financing
activities
Effect of exchange rate changes on cash and cash
equivalents (0.5) 0.3
4.6 11.4
Net change
in cash
and cash
equivalents
Cash and cash equivalents
Beginning of period 21.1 27.8
---- ----
End of period $25.7 $39.2
===== =====
Segment Information
Revenue
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months For the Period Six Months
Ended April 4, 2011 to Ended Six Months
Ended
(in millions of dollars) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
Asia Pacific $51.0 $36.1 $92.0 $70.0
Europe 43.4 49.7 89.3 101.5
North America 33.9 34.2 66.9 69.0
---- ---- ---- ----
Total $128.3 $120.0 $248.2 $240.5
Total Assets
Consolidated Successor
Company
----------------------
(in millions of
dollars) June 30, 2012 December 31, 2011
------------- -----------------
Asia Pacific $275.4 $267.5
Europe 331.1 347.3
North America 178.6 170.3
Corporate/Eliminations 15.0 15.4
---- ----
Total Assets $800.1 $800.5
====== ======
Segment Operating Income
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months For the Period Six Months Six Months
Ended April 4, 2011 to Ended Ended
(in millions of dollars) June 30, 2012 June 30, 2011 to June 30, 2012 to June 30, 2011
------------- ------------- ---------------- ----------------
Asia Pacific $6.5 $6.3 $10.7 $12.0
Europe 6.0 10.6 12.0 20.8
North America 5.3 5.0 10.2 10.0
--- --- ---- ----
Segment operating
income 17.8 21.9 32.9 42.8
Corporate (3.3) (1.4) (6.2) (2.7)
---- ---- ---- ----
14.5 20.5 26.7 40.1
Difference in basis of accounting - (0.2) - (0.9)
Restructuring expense 0.1 1.0 (0.5) 0.8
Melrose cost allocation - (0.3) - (0.5)
Intangible asset amortization - (1.0) - (2.0)
----
Operating income $14.6 $20.0 $26.2 $37.5
Depreciation and Amortization
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months For the Period Six Months Six Months
Ended April 4, 2011 to Ended Ended
(in millions of dollars) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
Asia Pacific $3.2 $1.0 $6.2 $1.9
Europe 3.0 1.1 6.1 2.1
North America 1.8 0.7 3.5 1.4
--- --- --- ---
Total segment 8.0 2.8 15.8 5.4
Corporate 0.1 0.1 0.2 0.2
Intangible asset amortization - 1.0 - 2.0
--- --- --- ---
Total $8.1 $3.9 $16.0 $7.6
Capital Expenditures
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months For the Period Six Months Six Months
Ended April 4, 2011 to Ended Ended
(in millions of dollars) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
Asia Pacific $3.2 $0.5 $5.2 $2.1
Europe 0.4 0.8 0.8 1.2
North America 1.1 1.3 2.0 1.3
--- --- --- ---
Total segment 4.7 2.6 8.0 4.6
Corporate 0.1 0.1 0.1 0.1
---
Total $4.8 $2.7 $8.1 $4.7
Reconciliation of Non-GAAP Measures
The following table reconciles our Segment EBITDA to our net income:
Consolidated Successor Company Combined Predecessor Company Consolidated Successor Company Combined Predecessor Company
Three Months Ended For the Period April 4, 2011 to Six Months Ended Six Months Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
(in millions of
dollars) Europe Asia North America Corporate Total Europe Asia North America Corporate Total Europe Asia North America Corporate Total Europe Asia North America Corporate Total
------ ---- ------------- --------- ----- ------ ---- ------------- --------- ----- ------ ---- ------------- --------- ----- ------ ---- ------------- --------- -----
Net Income $5.3 $5.5 $2.4 $(12.4) $0.8 $8.6 $5.1 $4.1 $(4.1) $13.7 $9.7 $9.0 $4.5 $(24.4) $(1.2) $17.0 $10.1 $8.6 $(9.4) $26.3
Income Taxes 0.5 1.0 3.0 (2.8) 1.7 2.1 1.2 0.9 1.7 5.9 1.8 1.7 5.8 (6.8) 2.5 4.1 1.8 2.4 1.7 10.0
Interest Expense 0.6 0.1 - 11.5 12.2 0.2 - 0.1 0.6 0.9 1.2 0.1 - 23.7 25.0 0.3 0.1 (0.2) 1.6 1.8
Other Income (0.4) (0.1) (0.1) 0.5 (0.1) (0.3) - (0.1) (0.1) (0.5) (0.7) (0.1) (0.1) 0.8 (0.1) (0.6) - (0.8) 0.8 (0.6)
---- ---- ---- --- ---- ---- --- ---- ---- ---- ---- ---- ---- --- ---- ---- --- ---- --- ----
Operating income 6.0 6.5 5.3 (3.2) 14.6 10.6 6.3 5.0 (1.9) 20.0 12.0 10.7 10.2 (6.7) 26.2 20.8 12.0 10.0 (5.3) 37.5
Depreciation &
amortization 3.0 3.2 1.8 0.1 8.1 1.1 1.0 0.7 1.1 3.9 6.1 6.2 3.5 0.2 16.0 2.1 1.9 1.4 2.2 7.6
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---- --- --- --- --- ---
EBITDA $9.0 $9.7 $7.1 $(3.1) $22.7 $11.7 $7.3 $5.7 $(0.8) $23.9 $18.1 $16.9 $13.7 $(6.5) $42.2 $22.9 $13.9 $11.4 $(3.1) $45.1
---- ---- ---- ----- ----- ----- ---- ---- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
The following table reconciles our Adjusted EBITDA to our net income:
Consolidated Successor Combined Predecessor Consolidated Successor Combined Predecessor
Company Company Company Company
Three Months For the Period April
4, 2011 to Six Months Six Months
Ended Ended Ended
(in millions of dollars) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
------------- ------------- ------------- -------------
Net income $0.8 $13.7 $(1.2) $26.3
Income taxes 1.7 5.9 2.5 10.0
Interest expense 12.2 0.4 25.0 1.2
Other income (0.1) - (0.1) -
Operating income 14.6 20.0 26.2 37.5
Depreciation & amortization 8.1 3.9 16.0 7.6
EBITDA 22.7 23.9 42.2 45.1
Non-controlling interests (0.2) (0.3) (0.4) (0.6)
Management fees 0.6 - 1.2 -
Stand-alone costs - (0.1) - (0.2)
Restructuring costs (0.1) (1.0) 0.5 (0.8)
Professional fees - - 0.3 -
Transaction costs 0.2 - 0.3 -
Adjusted EBITDA $23.2 $22.5 $44.1 $43.5
----- ----- ----- -----
Contact:
Richard Lehman
(980) 297-7354
SOURCE Dynacast International Inc.
