A. Schulman Posts Record Sales for First Quarter of Fiscal 2000
14 January 2000
A. Schulman Posts Record Sales for First Quarter of Fiscal 2000
AKRON, Ohio--Jan. 13, 2000--A. Schulman Inc. announced today that sales for the fiscal 2000 first quarter ended November 30, 1999 were the highest for any first quarter in the history of the Company. Sales were $273.7 million, an increase of approximately 6% over last year's first quarter sales of $258.6 million. Total tonnage was up approximately 9%.Net income was $11,942,000 or $.38 per common share compared with net income of $12,818,000 or $.40 per share for the corresponding quarter last year. Last year's per share earnings of $.40 was a first quarter record.
The translation effect of the weak Euro had an adverse effect on sales and net income. It reduced sales by $16 million and net income by $903,000 or $.03 per common share.
Basic and diluted per share earnings are the same for all reported earnings.
"We are encouraged by the results of our international operations and there are signs of overall improvement in economic conditions in the countries where we operate," said Terry L. Haines, president and chief executive officer. "It also appears that the value of the Euro could improve in the months ahead."
European sales of $157.3 million were up 3% and operating income grew by 9.2%. Tonnage was up 13.2% due to higher volume in merchant activities and a new manufacturing line put into service in the preceding quarter at A. Schulman's Givet, France facility. The higher volume and growth in income were negatively impacted by the translation effect of the weakness in the Euro.
Sales in North America were up 9.8%, however, operating profits declined $2.1 million due to lower profit margins resulting primarily from the higher costs of plastic resins.
Net income included a one time net gain of $787,000 or $.02 per share from the settlement of an insurance claim resulting from equipment problems at one of the A. Schulman's North American manufacturing facilities.
Gross profit margins were 17.1% compared with 19.1% last year. Capacity utilization was 84%, the same as last year's first quarter. The capacity level was quite good considering the large new manufacturing line in France which was put into service in the preceding quarter. This line increased our overall capacity by 6.5%. The lower margins were due to a significant increase in resin prices during the last six months.
"We have a good level of orders throughout our operations," Haines said. "In December there was a reduction in business activity which is normal for this period of the year. We did see continuing pressure on margins due to higher resin prices and the difficulty in obtaining sufficient price increases." Although margin pressures will continue in the near term, Haines noted that there are indications that resin prices have started to stabilize. "We have also recently had success in raising selling prices in a number of our large accounts. This will enable us to offset a portion of the higher cost of our resin feedstocks," commented Haines.
During the quarter, the Company repurchased 252,000 shares for approximately $4 million, at an average cost of $15.91 per share. The Company has 3.4 million shares remaining under authorization provided by A. Schulman's Board. As of November 30, 1999, there were 30,878,155 shares outstanding compared with 32,229,005 shares at the same period last year.
"We anticipate challenging conditions for the duration of this quarter," Haines said. "The second half of our fiscal year should reflect better pricing and a sequential improvement in earnings."
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 2,400 people and has 13 manufacturing facilities in North America, Europe, Mexico and the Asia-Pacific region. Revenues for the fiscal year ended August 31, 1999, were $986 million. Additional information about A. Schulman can be found on the World Wide Web at www.aschulman.com.
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 |
A. Schulman, Inc. and its Consolidated Subsidiaries
Financial Highlights
Three Months Ended
November 30, 1999 November 30, 1998
Net Sales $273,685,000 $258,646,000
Interest and Other Income 1,828,000 651,000
275,513,000 259,297,000
Cost of Sales 226,808,000 209,196,000
Other Costs and Expenses 29,215,000 28,985,000
256,023,000 238,181,000
Income before Taxes 19,490,000 21,116,000
Provision for U.S. and Foreign Income
Taxes 7,548,000 8,298,000
Net Income $11,942,000 $12,818,000
Weighted Average Number of Shares
Outstanding:
Basic 30,991,822 32,288,338
Diluted 30,991,822 32,288,338
Basic and Diluted Earnings per Share $0.38 $0.40
Condensed Balance Sheet
November 30, 1999 August 31, 1999
Assets
Current Assets $434,820,000 $408,096,000
Other Assets 22,457,000 23,088,000
Net Property, Plant and Equipment 156,031,000 160,343,000
$613,308,000 $591,527,000
Liabilities and Stockholders' Equity
Current Liabilities $134,446,000 $117,816,000
Long-Term Debt 75,011,000 65,000,000
Deferred Credits and Other
Long-Term Liabilities, etc. 51,537,000 52,465,000
Stockholders' Equity 352,314,000 356,246,000
$613,308,000 $591,527,000
Supplemental Information
North
America Europe
Three months ended November 30, 1999
Sales to unaffiliated customers $116,356,000 $157,329,000
Gross profit $ 16,563,000 $ 30,314,000
Operating income $ 4,345,000 $ 16,179,000
Interest expense, net $ - $ -
Income before taxes $ 4,345,000 $ 16,179,000
Three months ended November 30, 1998
Sales to unaffiliated customers $105,963,000 $152,683,000
Gross profit $ 18,902,000 $ 30,548,000
Operating income $ 6,485,000 $ 14,814,000
Interest expense, net $ - $ -
Income before taxes $ 6,485,000 $ 14,814,000
Other Consolidated
Three months ended November 30, 1999
Sales to unaffiliated customers $ - $273,685,000
Gross profit $ - $ 46,877,000
Operating income $ - $ 20,524,000
Interest expense, net $ (1,034,000) $ (1,034,000)
Income before taxes $ (1,034,000) $ 19,490,000
Three months ended November 30, 1998
Sales to unaffiliated customers $ - $258,646,000
Gross profit $ - $ 49,450,000
Operating income $ - $ 21,299,000
Interest expense, net $ (183,000) $ (183,000)
Income before taxes $ (183,000) $ 21,116,000