A. Schulman Reports First-Quarter 2002 Results -- Announces Improved Earnings --
AKRON, Ohio--Jan. 10, 2002--A. Schulman Inc. today announced a significant improvement in earnings for the first quarter of fiscal 2002.Net income for the first quarter ended November 30, 2001 was $5,210,000 or $.18 per common share compared with a net loss of $727,000 or $.03 per share in the same period last year. Last year's net loss included a provision of $4,635,000 or $.16 per share for costs of closing the Company's Akron, Ohio manufacturing facility.
The primary reasons for the increase in earnings were an improvement in gross profit margins and lower operating expenses, interest and income taxes.
Sales for the 2002 first quarter were $238.1 million, down $18.5 million or 7.2% from sales of $256.6 million for the same period last year. Tonnage declined 3.8% due to steep cuts in inventories of customers, especially in North America. Lower prices and product mix changes reduced sales by 5.5%. The lower prices were the result of declines in the cost of plastic resins due to weak demand and oversupply in the market.
Basic and diluted per share earnings are the same for all reported periods.
The translation effect of foreign currencies, primarily the Euro, increased sales by $5.3 million and net income by $236,000 or $.01 per share.
"We are pleased with the improvement in earnings for our first quarter, especially in light of the uncertainties created by the events of September 11," said Terry L. Haines, president and chief executive officer. "Although our European earnings have declined, North American operating profit improved due to better margins and a reduction in costs."
Review of First-Quarter Results
Gross profit margins were 15% compared with 13.9% in the same period last year. The improvement was attributable to higher margins in North America, which were 13.7% compared with 10.1% last year. Margins in Europe declined to 15.9% from 16.6% last year.
The improvement in the North American margins was the result of lower prices of plastic resins and an overall reduction in manufacturing costs, primarily due to the closing of the Akron, Ohio plant in December 2000.
Operating income in Europe was $9,516,000, down $1,075,000 or 10% from last year's first quarter. This decline was more than offset by operating income in North America, which improved from a loss of $1,406,000 for last year's first quarter to a profit of $237,000 in the current period.
Re-election of Directors
At A. Schulman's annual meeting in December 2001, stockholders re-elected Terry L. Haines, Dr. Paul Craig Roberts, James A. Karman and Joseph M. Gingo to three-year terms as directors.
Business Outlook
"Recently, there has been some softening in our European order level. There have also been some signs of weakening in Germany and France, and margins have been down due to competitive price pressures," Haines said. Although the current environment is challenging, we believe our European operations will continue to generate good earnings close to last year's levels. In addition, due to an improvement in the value of the Euro, there should be no adverse effect on earnings.
"In North America, gross margins are good and operating expenses are down. However, volume has been weaker than planned, mainly due to large reductions in the inventories of our customers."
Overall, Haines said, "We believe there are some positive signs that economic conditions may be improving. Customers' inventories are low, consumer confidence is better and manufacturing order levels are increasing. We believe business should improve in the months ahead and our core strengths will enable us to generate better second-quarter earnings compared with the year-ago period."
Conference Call on the Web
A live Internet broadcast of A. Schulman's conference call regarding fiscal 2002 first-quarter earnings can be accessed at 3:30 p.m. Eastern Time on Thursday, January 10, 2002 at www.vcall.com, where the webcast replay will be archived.
About A. Schulman Inc.
Headquartered in Akron, Ohio, A. Schulman is a leading international supplier of high-performance plastic compounds and resins. These materials are used in a variety of consumer, industrial, automotive and packaging applications. The Company employs about 2,300 people and has 13 manufacturing facilities in North America, Europe, Mexico and the Asia-Pacific region. Revenues for the fiscal year ended August 31, 2001 were approximately $975 million. Additional information about A. Schulman can be found on the World Wide Web at www.aschulman.com.
Forward-Looking Statements
Statements in this release which are not historical facts are forward-looking statements which involve risks and uncertainties and actual events or results could differ materially from those expressed or implied in this release. These "forward-looking statements" are based on currently available information. They are also inherently uncertain, and investors must recognize that events could turn out to be significantly different from what was expected. Examples of such uncertainties include, but are not limited to, the following:
| -- | Worldwide and regional economic, business and political conditions |
| -- | Fluctuations in the value of the currencies in major areas where the Company operates, i.e., the U.S. dollar, the Euro, U.K. pound sterling, Canadian dollar, Mexican peso and Indonesian rupiah |
| -- | Fluctuations in the prices of plastic resins and other raw materials |
| -- | Changes in customer demand and requirements |
In addition, this release contains time-sensitive information that reflects management's best analysis only as of the date of this release. A. Schulman does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in A. Schulman's periodic filings with the Securities and Exchange Commission.
A. Schulman, Inc. and Its Consolidated Subsidiaries
Financial Highlights
Three Months Ended
November 30, November 30,
2001 2000
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Net Sales $238,148,000 $256,616,000
Interest and Other Income 548,000 415,000
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238,696,000 257,031,000
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Cost of Sales 202,459,000 221,074,000
Cost of Plant Closure - Akron, Ohio - 4,635,000
Other Costs and Expenses 27,442,000 28,071,000
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229,901,000 253,780,000
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Income before Taxes 8,795,000 3,251,000
Provision for U.S. and Foreign
Income Taxes 3,585,000 3,978,000
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Net Income (Loss) $5,210,000 $(727,000)
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Weighted Average Number of
Shares Outstanding:
Basic 29,212,872 29,203,255
Diluted 29,212,872 29,203,255
Basic and Diluted Earnings
(Loss) per Share $0.18 $(0.03)
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Condensed Balance Sheet
November 30, August 31,
2001 2001
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Assets
Current Assets $388,701,000 $389,548,000
Other Assets 19,706,000 19,516,000
Net Property, Plant and Equipment 169,574,000 169,607,000
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$577,981,000 $578,671,000
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Liabilities and Stockholders' Equity
Current Liabilities $106,593,000 $100,260,000
Long-Term Debt 100,193,000 105,415,000
Deferred Credits and Other Long-Term
Liabilities, etc. 51,515,000 50,918,000
Stockholders' Equity 319,680,000 322,078,000
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$577,981,000 $578,671,000
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Supplemental Segment Information
North
America Europe Other Consolidated
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Three Months Ended
November 30, 2001:
Sales to unaffiliated
customers $94,124,000 $144,024,000 $ -- $238,148,000
------------ ------------ ---------- -------------
Gross profit 12,852,000 22,837,000 -- 35,689,000
------------ ------------ ---------- -------------
Operating income 237,000 9,516,000 -- 9,753,000
Interest expense,
net -- -- (958,000) (958,000)
------------ ------------ ---------- -------------
Income before taxes $ 237,000 $ 9,516,000 $ (958,000)$ 8,795,000
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Three Months Ended
November 30, 2000:
Sales to unaffiliated
customers $107,631,000 $148,985,000 $ - $256,616,000
------------ ------------ ---------- -------------
Gross profit 10,877,000 24,665,000 - 35,542,000
------------ ------------ ---------- -------------
Operating income
(loss) (1,406,000) 10,591,000 - 9,185,000
Cost of plant
closure- Akron, Ohio - - (4,635,000) (4,635,000)
Interest expense,
net
- - (1,299,000) (1,299,000)
------------ ------------ ---------- -------------
Income (loss) before
taxes $(1,406,000) $ 10,591,000$(5,934,000)$ 3,251,000
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