• 2017 net sales of $3.8 billion,
an increase of 5%; record net sales of $1.1 billion in Q4 2017, an
increase of 12% on a reported basis or 9% on an organic
basis • FY and Q4 2017 GAAP fully
diluted loss per share of $1.04 and $0.49,
respectively • 2017 reported net loss
attributable to common stockholders of $296 million •
2017 Adjusted EBITDA of $821 million, an increase of
7% • Increased 2018 Adjusted EBITDA guidance
range of $870 million to $900 million
Platform Specialty Products Corporation (NYSE:PAH) (“Platform” or
the “Company”), a global and diversified specialty chemicals
company, today announced its financial results for the three and
twelve months ended December 31, 2017.
Executive Commentary
Chief Executive Officer Rakesh Sachdev stated:
“I am pleased to report that both of our business segments achieved
their key objectives this year as we made good progress towards our
longer term financial growth targets of mid-single-digit organic
sales growth and high-single-digit adjusted EBITDA growth.
Overall, Platform achieved organic sales growth of 4% and constant
currency adjusted EBITDA growth of 7% in 2017 as both businesses
grew in most of their key end-markets and geographies. We
invested in market expansion opportunities and new product
development while at the same time driving incremental cost
improvements in our supply chain and our corporate functions,
leading to an enhanced adjusted EBITDA margin. This
improvement in sales and earnings came in a year that saw some
end-market and regional margin mix pressures as well as commodity
price inflation. We believe our 2017 performance speaks to
the strength and quality of our businesses and the commitment we
have to our customers.
We are committed to achieving another year of
strong operating results in 2018. Considering the recent
strengthening in currencies against the dollar, we are increasing
our previously announced adjusted EBITDA guidance range to $870
million to $900 million, which represents an increase of 8% at the
mid-point over 2017. We expect this earnings growth, the
benefit of our reduction in interest expense in 2017, and other
cash flow improvements to translate into strong free cash flow
generation. This should improve the Company's net debt ratio to
less than 5.5x adjusted EBITDA by the end of 2018 - before
considering any equity capital that may be raised in connection
with the separation of our businesses."
Mr. Sachdev continued, “While we are focused on
business execution in 2018, we are also committed to achieving the
separation of our two business segments. We made significant
progress against this objective in 2017. Our teams met our
operational separation efforts, and we believe that both companies
are ready to operate independently to a high standard with minimal
transition service requirements. We are also making headway
in our capital markets initiatives. We refinanced
expensive unsecured debt by raising $800 million of new senior
unsecured notes that can remain in place after the separation and
which reduced our annual interest expense by approximately $20
million. We continue to believe that our two companies will
be more valuable to our shareholders as separate entities with
focused end-market strategies, dedicated leadership teams and
healthier balance sheets.”
Fourth Quarter 2017 Highlights (compared
with fourth quarter 2016):
• Net sales on a reported basis for
the fourth quarter of 2017 were $1.1 billion, an increase of 12%
over the prior fourth quarter period. Organic sales, which
excludes the impact of currency changes, certain metal prices,
acquisitions and/ or divestitures, increased 9%.
- MacDermid Performance Solutions (the Performance Solutions
segment): net sales increased 7% to $489 million. Organic
sales increased 4%.
- Arysta LifeScience (the Agricultural Solutions segment): net
sales increased 18% to $580 million. Organic sales increased
15%.
• Fourth quarter 2017 earnings per share
performance:
- GAAP fully diluted loss per share in the fourth quarter of 2017
was $0.49, as compared to a loss of $0.01 in the fourth quarter of
2016.
- Adjusted earnings per share in the fourth quarter of 2017 was
$0.23, an improvement of $0.03 per share, or 15%.
• Reported net loss attributable to
common stockholders for the fourth quarter of 2017 was $142
million, as compared to a loss of $2 million for the fourth quarter
of 2016.
• Adjusted EBITDA for the fourth
quarter of 2017 was $226 million, an increase of 4%. On a
constant currency basis, adjusted EBITDA increased 1%.
- MacDermid Performance Solutions: Adjusted EBITDA was $112
million, an increase of 1%. On a constant currency basis,
adjusted EBITDA decreased 2%.
- Arysta LifeScience: Adjusted EBITDA was $114 million, an
increase of 6%. On a constant currency basis, adjusted EBITDA
increased 5%.
- Adjusted EBITDA margin for the combined company decreased by
190 basis points to 21%. On a constant currency basis,
adjusted EBITDA margin decreased by 170 basis points.
Full Year 2017 Highlights (compared with
full year 2016):
• Net sales on a reported basis for
the full year 2017 were $3.8 billion, an increase of 5% over the
prior full year period. Organic sales increased 4%.
- MacDermid Performance Solutions (the Performance Solutions
segment): net sales increased 6% to $1.9 billion. Organic
sales increased 4%.
- Arysta LifeScience (the Agricultural Solutions segment): net
sales increased 4% to $1.9 billion. Organic sales increased
3%.
• 2017 earnings per share performance:
- GAAP fully diluted loss per share in 2017 was $1.04, as
compared to a loss of $0.65 in 2016.
- Adjusted earnings per share in 2017 was $0.76, an improvement
of $0.13 per share, or 21%.
• Reported net loss attributable to
common stockholders for the full year 2017 was $296 million,
compared to a net loss of $41 million in 2016.
• Adjusted EBITDA in 2017 was $821
million, an increase of 7%. On a constant currency basis,
adjusted EBITDA increased 7%.
- MacDermid Performance Solutions: Adjusted EBITDA was $433
million, an increase of 8%. On a constant currency basis,
adjusted EBITDA increased 8%.
- Arysta LifeScience: Adjusted EBITDA was $388 million, an
increase of 5%. On a constant currency basis, adjusted EBITDA
increased 6%.
- Adjusted EBITDA margin for the combined company improved by 20
basis points to 22%. On a constant currency basis, adjusted
EBITDA margin improved by 50 basis points.
• Additional cost synergies of $18
million were achieved in 2017 from the ongoing integrations within
the Performance Solutions segment.
Increased 2018 Guidance
Based on the average foreign exchange rates in
January 2018 and considering the recent strengthening in currencies
against the dollar, Platform now expects adjusted EBITDA for 2018
in the range of $870 million to $900 million, an increase of $10
million at the mid-point from the previously-announced guidance for
2018. The mid-point of the guidance represents an increase of
8% over 2017. This guidance does not anticipate any new
acquisitions but does assume that the Company will achieve organic
revenue growth in the low to mid-single digits, consistent with its
long-term growth strategy.
Tax Reform
The U.S. Tax Cuts and Jobs Act of 2017 (the “Tax
Reform”) resulted in a one-time U.S. GAAP tax benefit of $46
million in the fourth quarter of 2017, resulting from the new lower
U.S. tax rate on our deferred tax liabilities and a partial release
of a U.S. valuation allowance. The Company did not
record any tax provision related to the transition tax on foreign
undistributed earnings, as it has foreign tax credits that are
expected to offset any estimated liability.
As a result of recent tax planning activities,
we are projecting a reduction in our overall 2018 adjusted
effective tax rate to approximately 34% for the purposes of
calculating adjusted EPS. This represents the expected tax costs on
statutory earnings from our foreign units and the anticipated
withholding taxes. We believe the Company has adequate net
operating loss carryforwards to offset any U.S. taxes in the
medium-term.
Conference Call
Platform will host a webcast/dial-in conference
call to discuss its fourth quarter and full year 2017 financial
results at 8:30 a.m. (Eastern Time) on Tuesday, February 27,
2018. Participants on the call will include Rakesh Sachdev,
Chief Executive Officer; John P. Connolly, Chief Financial Officer;
Benjamin Gliklich, Executive Vice President - Operations and
Strategy; Scot R. Benson, President - Performance Solutions and
Diego Lopez Casanello, President - Agricultural Solutions.
To listen to the call by telephone, please dial
(855) 357-3116 (domestic) or (484) 365-2867 (international) and
provide the Conference ID: 8879425. The call will be
simultaneously webcast
at www.platformspecialtyproducts.com. A replay of the
webcast will be available for three weeks shortly after completion
of the live call
at www.platformspecialtyproducts.com.
About Platform
Platform is a global and diversified producer of
high-technology specialty chemicals and provider of technical
services. The business involves the formulation of a broad
range of solutions-oriented specialty chemicals, which are sold
into multiple industries, including automotive, agriculture, animal
health, electronics, graphic, and offshore oil and gas production
and drilling. More information on Platform is available at
www.platformspecialtyproducts.com.
Forward-Looking Statements
This release is intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995 as it contains "forward-looking
statements" within the meaning of the federal securities
laws. These statements will often contain words such as
"expect," "anticipate," "project," "will," "should," "believe,"
"intend," "plan," "estimate," "predict," "seek," "continue,"
"outlook," "may," "might," "should," "can have," "likely,"
"potential," "target," and variations of such words and similar
expressions. Examples of forward-looking statements include,
but are not limited to, statements, beliefs, projections and
expectations regarding the proposed separation of our businesses,
the expected structure and timing of the proposed separation and
its anticipated benefits, as well as Platform's adjusted EBITDA and
adjusted earnings per share, expected or estimated organic and net
sales, meeting financial and/or strategic goals and objectives,
including Platform's full year 2018 guidance, segment adjusted
EBITDA, net interest expense, income tax provision, cash flow from
operations, full year cash interest, taxes and capital
expenditures, restructuring costs and other non-cash charges, free
cash flow, outlook for Platform's markets and the demand for its
products, and the anticipated impact of the Tax Reform on the
Company’s future earnings and effective tax rate. These
projections and statements are based on management's estimates and
assumptions with respect to future events and financial
performance, and are believed to be reasonable, though are
inherently uncertain and difficult to predict. Actual results
could differ materially from those projected as a result of certain
factors, which include, among others, Platform’s ability to
successfully complete the proposed separation and realize the
anticipated benefits from it, the final structure and timing for
completion of the proposed separation, adverse effects on the two
companies’ business operations or financial results and the market
price of Platform's shares as a result of the completion of the
proposed separation and/or announcement and completion of related
transactions, market volatility, legal, tax and regulatory
requirements, the impact of the Tax Reform on the proposed
separation and on our businesses, unanticipated delays and
transaction expenses, the impact of the proposed separation on
Platform's employees, customers and suppliers, the ability of the
two companies to operate independently following the proposed
separation, the diverting of management’s attention from Platform’s
ongoing business operations, overall global economic and business
conditions impacting the businesses of the two companies, as well
as capital markets and liquidity, the possibility of more
attractive strategic options arising in the future, and the impact
of any future acquisitions or additional divestitures,
restructurings, refinancings, and other unusual items, including
Platform's ability to raise new debt and equity and to integrate
and obtain the anticipated benefits, results and synergies from
these items or other related strategic initiatives. Forward-looking
statements regarding the anticipated impact of the Tax Reform on
the Company's businesses consist of preliminary estimates, which
are based on currently available information as well as
management's current interpretations, assumptions and expectations
relating to the Tax Reform, and subject to change, possibly
materially, as the Company completes its analysis. Additional
information concerning these and other factors that could cause
actual results to vary is, or will be, included in Platform's
periodic and other reports filed with the Securities and Exchange
Commission. Platform undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions, except
per share amounts) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Net
sales |
$ |
1,068.7 |
|
|
$ |
950.0 |
|
|
$ |
3,775.9 |
|
|
$ |
3,585.9 |
|
Cost of
sales |
629.1 |
|
|
554.1 |
|
|
2,186.9 |
|
|
2,078.2 |
|
Gross
profit |
439.6 |
|
|
395.9 |
|
|
1,589.0 |
|
|
1,507.7 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
technical, general and administrative |
303.2 |
|
|
299.8 |
|
|
1,109.3 |
|
|
1,123.3 |
|
Research
and development |
28.3 |
|
|
23.1 |
|
|
98.4 |
|
|
84.4 |
|
Goodwill
impairment |
160.0 |
|
|
46.6 |
|
|
160.0 |
|
|
46.6 |
|
Total
operating expenses |
491.5 |
|
|
369.5 |
|
|
1,367.7 |
|
|
1,254.3 |
|
Operating
(loss) profit |
(51.9 |
) |
|
26.4 |
|
|
221.3 |
|
|
253.4 |
|
Other (expense)
income: |
|
|
|
|
|
|
|
Interest
expense, net |
(81.6 |
) |
|
(86.0 |
) |
|
(341.6 |
) |
|
(375.7 |
) |
Foreign
exchange (loss) gain |
(10.1 |
) |
|
42.4 |
|
|
(107.5 |
) |
|
(14.1 |
) |
Other
(expense) income, net |
(62.8 |
) |
|
(20.0 |
) |
|
(61.2 |
) |
|
88.3 |
|
Total other
expense |
(154.5 |
) |
|
(63.6 |
) |
|
(510.3 |
) |
|
(301.5 |
) |
Loss before
income taxes and non-controlling interests |
(206.4 |
) |
|
(37.2 |
) |
|
(289.0 |
) |
|
(48.1 |
) |
Income
tax benefit (expense) |
60.7 |
|
|
37.1 |
|
|
(6.6 |
) |
|
(28.6 |
) |
Net
loss |
(145.7 |
) |
|
(0.1 |
) |
|
(295.6 |
) |
|
(76.7 |
) |
Net
(income) loss attributable to the non-controlling interests |
4.2 |
|
|
(1.7 |
) |
|
(0.6 |
) |
|
3.0 |
|
Net loss
attributable to stockholders |
(141.5 |
) |
|
(1.8 |
) |
|
(296.2 |
) |
|
(73.7 |
) |
Gain on
amendment of Series B Convertible Preferred Stock |
— |
|
|
— |
|
|
— |
|
|
32.9 |
|
Net loss
attributable to common stockholders |
$ |
(141.5 |
) |
|
$ |
(1.8 |
) |
|
$ |
(296.2 |
) |
|
$ |
(40.8 |
) |
Loss per share
attributable to common stockholders |
|
|
|
|
|
|
|
Basic |
$ |
(0.49 |
) |
|
$ |
(0.01 |
) |
|
$ |
(1.04 |
) |
|
$ |
(0.17 |
) |
Diluted |
$ |
(0.49 |
) |
|
$ |
(0.01 |
) |
|
$ |
(1.04 |
) |
|
$ |
(0.65 |
) |
Weighted
average common shares outstanding |
|
|
|
|
|
|
|
Basic |
287.2 |
|
|
279.7 |
|
|
286.1 |
|
|
243.3 |
|
Diluted |
287.4 |
|
|
287.5 |
|
|
286.1 |
|
|
272.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONSOLIDATED BALANCE
SHEETS(Unaudited)
|
December 31, |
|
December 31, |
(in millions) |
2017 |
|
2016 |
Assets |
|
|
|
Cash & cash
equivalents |
$ |
477.8 |
|
|
$ |
422.6 |
|
Accounts receivable,
net |
1,156.0 |
|
|
1,054.8 |
|
Inventories |
490.4 |
|
|
416.4 |
|
Prepaid expenses |
42.8 |
|
|
71.3 |
|
Other current
assets |
173.6 |
|
|
106.1 |
|
Total current assets |
2,340.6 |
|
|
2,071.2 |
|
Property, plant &
equipment, net |
452.3 |
|
|
460.5 |
|
Goodwill |
4,201.2 |
|
|
4,178.9 |
|
Intangible assets,
net |
3,137.3 |
|
|
3,233.3 |
|
Other assets |
121.0 |
|
|
110.2 |
|
Total assets |
$ |
10,252.4 |
|
|
$ |
10,054.1 |
|
Liabilities
& stockholders' equity |
|
|
|
Accounts payable |
$ |
461.8 |
|
|
$ |
383.6 |
|
Current installments of
long-term debt and revolving credit facilities |
38.9 |
|
|
116.1 |
|
Accrued expenses and
other current liabilities |
591.1 |
|
|
583.0 |
|
Total current liabilities |
1,091.8 |
|
|
1,082.7 |
|
Debt and capital lease
obligations |
5,440.6 |
|
|
5,122.9 |
|
Pension and
post-retirement benefits |
69.0 |
|
|
73.8 |
|
Deferred income
taxes |
579.6 |
|
|
663.2 |
|
Contingent
consideration |
79.2 |
|
|
75.8 |
|
Other liabilities |
132.2 |
|
|
145.9 |
|
Total liabilities |
7,392.4 |
|
|
7,164.3 |
|
Commitments and
contingencies |
|
|
|
Stockholders'
equity |
|
|
|
Preferred stock -
Series A |
— |
|
|
— |
|
Common stock, 400.0
shares authorized (2017: 287.4 shares issued; 2016: 284.2 shares
issued) |
2.9 |
|
|
2.8 |
|
Treasury stock (2017:
0.0 shares; 2016: 0.0 shares) |
(0.1 |
) |
|
— |
|
Additional paid-in
capital |
4,032.0 |
|
|
3,981.3 |
|
Accumulated
deficit |
(869.7 |
) |
|
(573.5 |
) |
Accumulated other
comprehensive loss |
(422.0 |
) |
|
(674.5 |
) |
Total stockholders' equity |
2,743.1 |
|
|
2,736.1 |
|
Non-controlling
interests |
116.9 |
|
|
153.7 |
|
Total equity |
2,860.0 |
|
|
2,889.8 |
|
Total liabilities and stockholders' equity |
$ |
10,252.4 |
|
|
$ |
10,054.1 |
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
|
2017 |
|
|
2016 |
(in millions) |
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
|
FY |
|
|
FY |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(23.6 |
) |
|
$ |
(60.0 |
) |
|
$ |
(66.3 |
) |
|
$ |
(145.7 |
) |
|
|
$ |
(295.6 |
) |
|
|
$ |
(76.7 |
) |
Reconciliations of net
loss to net cash flows (used in) provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
85.9 |
|
|
87.0 |
|
|
92.5 |
|
|
88.8 |
|
|
|
354.2 |
|
|
|
342.3 |
|
Deferred
income taxes |
(14.2 |
) |
|
(5.7 |
) |
|
(17.3 |
) |
|
(89.4 |
) |
|
|
(126.6 |
) |
|
|
(57.4 |
) |
Amortization of inventory step-up |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
11.7 |
|
Foreign
exchange loss |
13.7 |
|
|
56.5 |
|
|
39.3 |
|
|
4.5 |
|
|
|
114.0 |
|
|
|
43.8 |
|
Goodwill
impairment |
— |
|
|
— |
|
|
— |
|
|
160.0 |
|
|
|
160.0 |
|
|
|
46.6 |
|
Gain on
settlement agreement related to Series B Convertible Preferred
Stock |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(103.0 |
) |
Other,
net |
12.8 |
|
|
28.4 |
|
|
10.7 |
|
|
38.0 |
|
|
|
89.9 |
|
|
|
85.2 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
(120.1 |
) |
|
25.3 |
|
|
60.2 |
|
|
(18.5 |
) |
|
|
(53.1 |
) |
|
|
(18.9 |
) |
Inventory |
(83.9 |
) |
|
(2.6 |
) |
|
(13.2 |
) |
|
69.4 |
|
|
|
(30.3 |
) |
|
|
70.4 |
|
Accounts
payable |
32.9 |
|
|
8.2 |
|
|
(10.9 |
) |
|
19.6 |
|
|
|
49.8 |
|
|
|
(67.3 |
) |
Accrued
expenses |
(15.9 |
) |
|
1.2 |
|
|
19.4 |
|
|
(13.9 |
) |
|
|
(9.2 |
) |
|
|
25.4 |
|
Prepaid
expenses and other current assets |
(2.1 |
) |
|
(20.1 |
) |
|
7.1 |
|
|
(11.9 |
) |
|
|
(27.0 |
) |
|
|
(0.4 |
) |
Other
assets and liabilities |
(5.9 |
) |
|
(11.0 |
) |
|
(24.8 |
) |
|
(2.3 |
) |
|
|
(44.0 |
) |
|
|
(116.9 |
) |
Net cash
flows (used in) provided by operating activities |
(120.4 |
) |
|
107.2 |
|
|
96.7 |
|
|
98.6 |
|
|
|
182.1 |
|
|
|
184.8 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
(14.9 |
) |
|
(13.8 |
) |
|
(12.7 |
) |
|
(18.0 |
) |
|
|
(59.4 |
) |
|
|
(56.3 |
) |
Investment in registrations of products |
(12.9 |
) |
|
(5.2 |
) |
|
(7.7 |
) |
|
(14.7 |
) |
|
|
(40.5 |
) |
|
|
(36.4 |
) |
Proceeds
from disposal of property, plant and equipment |
4.0 |
|
|
— |
|
|
10.3 |
|
|
3.2 |
|
|
|
17.5 |
|
|
|
20.6 |
|
Acquisition of business, net of cash acquired |
— |
|
|
(0.3 |
) |
|
— |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
|
1.3 |
|
Restricted cash |
— |
|
|
(0.2 |
) |
|
(16.3 |
) |
|
11.3 |
|
|
|
(5.2 |
) |
|
|
(0.5 |
) |
Other,
net |
(1.6 |
) |
|
(3.1 |
) |
|
1.1 |
|
|
(0.9 |
) |
|
|
(4.5 |
) |
|
|
(3.4 |
) |
Net cash flows used in investing activities |
(25.4 |
) |
|
(22.6 |
) |
|
(25.3 |
) |
|
(19.3 |
) |
|
|
(92.6 |
) |
|
|
(74.7 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
proceeds (payments), net of discount and premium |
— |
|
|
1,927.6 |
|
|
(0.3 |
) |
|
2,215.4 |
|
|
|
4,142.7 |
|
|
|
3,300.9 |
|
Repayments of borrowings |
(9.0 |
) |
|
(1,937.7 |
) |
|
(8.8 |
) |
|
(2,166.6 |
) |
|
|
(4,122.1 |
) |
|
|
(3,340.1 |
) |
Change in
lines of credit, net |
89.0 |
|
|
(19.1 |
) |
|
(100.2 |
) |
|
(28.5 |
) |
|
|
(58.8 |
) |
|
|
54.0 |
|
Proceeds
from issuance of common stock, net |
— |
|
|
— |
|
|
0.9 |
|
|
0.5 |
|
|
|
1.4 |
|
|
|
391.5 |
|
Change in
on-balance sheet factoring arrangements |
6.0 |
|
|
(0.9 |
) |
|
(7.0 |
) |
|
(1.6 |
) |
|
|
(3.5 |
) |
|
|
(44.1 |
) |
Payment
of financing fees |
— |
|
|
(0.5 |
) |
|
— |
|
|
(13.3 |
) |
|
|
(13.8 |
) |
|
|
(1.1 |
) |
Settlement of Series B Convertible Preferred Stock |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(460.0 |
) |
Other,
net |
(6.0 |
) |
|
(2.1 |
) |
|
(1.2 |
) |
|
(4.0 |
) |
|
|
(13.3 |
) |
|
|
(3.3 |
) |
Net cash
flows provided by (used in) financing activities |
80.0 |
|
|
(32.7 |
) |
|
(116.6 |
) |
|
1.9 |
|
|
|
(67.4 |
) |
|
|
(102.2 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
9.6 |
|
|
8.8 |
|
|
9.0 |
|
|
5.7 |
|
|
|
33.1 |
|
|
|
(17.5 |
) |
Net (decrease)
increase in cash and cash equivalents |
(56.2 |
) |
|
60.7 |
|
|
(36.2 |
) |
|
86.9 |
|
|
|
55.2 |
|
|
|
(9.6 |
) |
Cash and
cash equivalents at beginning of period |
422.6 |
|
|
366.4 |
|
|
427.1 |
|
|
390.9 |
|
|
|
422.6 |
|
|
|
432.2 |
|
Cash and cash
equivalents at end of period |
$ |
366.4 |
|
|
$ |
427.1 |
|
|
$ |
390.9 |
|
|
$ |
477.8 |
|
|
|
$ |
477.8 |
|
|
|
$ |
422.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for interest |
$ |
93.4 |
|
|
$ |
69.9 |
|
|
$ |
90.5 |
|
|
$ |
69.0 |
|
|
|
$ |
322.8 |
|
|
|
$ |
360.1 |
|
Cash paid
for income taxes |
$ |
42.6 |
|
|
$ |
41.6 |
|
|
$ |
23.6 |
|
|
$ |
37.2 |
|
|
|
$ |
145.0 |
|
|
|
$ |
121.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONADDITIONAL FINANCIAL
INFORMATION(Unaudited)
I.
UNAUDITED SEGMENT RESULTS |
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
($ amounts in
millions) |
2017 |
|
2016 |
|
Reported |
|
Constant Currency |
|
Organic |
|
2017 |
|
2016 |
|
Reported |
|
Constant Currency |
|
Organic |
Net Sales |
Performance
Solutions |
$ |
488.6 |
|
|
$ |
457.2 |
|
|
7 |
% |
|
3 |
% |
|
4 |
% |
|
$ |
1,878.6 |
|
|
$ |
1,770.1 |
|
|
6 |
% |
|
6 |
% |
|
4 |
% |
Agricultural
Solutions |
580.1 |
|
|
492.8 |
|
|
18 |
% |
|
15 |
% |
|
15 |
% |
|
1,897.3 |
|
|
1,815.8 |
|
|
4 |
% |
|
3 |
% |
|
3 |
% |
Total |
$ |
1,068.7 |
|
|
$ |
950.0 |
|
|
12 |
% |
|
9 |
% |
|
9 |
% |
|
$ |
3,775.9 |
|
|
$ |
3,585.9 |
|
|
5 |
% |
|
4 |
% |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
Performance
Solutions |
$ |
112.2 |
|
|
$ |
110.6 |
|
|
1 |
% |
|
(2 |
%) |
|
|
|
$ |
432.7 |
|
|
$ |
401.3 |
|
|
8 |
% |
|
8 |
% |
|
|
Agricultural
Solutions |
113.8 |
|
|
107.5 |
|
|
6 |
% |
|
5 |
% |
|
|
|
388.2 |
|
|
368.2 |
|
|
5 |
% |
|
6 |
% |
|
|
Total |
$ |
226.0 |
|
|
$ |
218.1 |
|
|
4 |
% |
|
1 |
% |
|
|
|
$ |
820.9 |
|
|
$ |
769.5 |
|
|
7 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA excluding corporate costs |
Performance
Solutions |
$ |
120.8 |
|
|
$ |
118.9 |
|
|
2 |
% |
|
(2 |
%) |
|
|
|
$ |
464.1 |
|
|
$ |
434.1 |
|
|
7 |
% |
|
7 |
% |
|
|
Agricultural
Solutions |
$ |
122.4 |
|
|
$ |
116.0 |
|
|
6 |
% |
|
4 |
% |
|
|
|
$ |
419.6 |
|
|
$ |
401.1 |
|
|
5 |
% |
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31, |
|
Constant Currency |
|
Twelve Months
Ended December 31, |
|
Constant Currency |
($ amounts in
millions) |
2017 |
|
|
2016 |
|
|
Change |
|
2017 |
|
|
Change |
|
2017 |
|
|
2016 |
|
|
Change |
|
2017 |
|
|
Change |
Adjusted EBITDA Margin |
Performance
Solutions |
23.0 |
% |
|
24.2 |
% |
|
(120)bps |
|
22.9 |
% |
|
(130)bps |
|
23.0 |
% |
|
22.7 |
% |
|
30bps |
|
23.1 |
% |
|
40bps |
Agricultural
Solutions |
19.6 |
% |
|
21.8 |
% |
|
(220)bps |
|
19.9 |
% |
|
(190)bps |
|
20.5 |
% |
|
20.3 |
% |
|
20bps |
|
20.8 |
% |
|
50bps |
Total |
21.1 |
% |
|
23.0 |
% |
|
(190)bps |
|
21.3 |
% |
|
(170)bps |
|
21.7 |
% |
|
21.5 |
% |
|
20bps |
|
22.0 |
% |
|
50bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin excluding corporate
costs |
Performance
Solutions |
24.7 |
% |
|
26.0 |
% |
|
(130)bps |
|
24.8 |
% |
|
(120)bps |
|
24.7 |
% |
|
24.5 |
% |
|
20bps |
|
24.8 |
% |
|
30bps |
Agricultural
Solutions |
21.1 |
% |
|
23.5 |
% |
|
(240)bps |
|
21.4 |
% |
|
(210)bps |
|
22.1 |
% |
|
22.1 |
% |
|
—bps |
|
22.5 |
% |
|
40bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLATFORM SPECIALTY PRODUCTS
CORPORATIONADDITIONAL FINANCIAL INFORMATION
(continued)(Unaudited)
II. UNAUDITED CAPITAL STRUCTURE |
(in
millions) |
|
|
Maturity |
|
Coupon |
|
December 31, 2017 |
Instrument |
|
|
|
|
|
|
|
Corporate Revolver
($500M) |
|
|
6/7/2019 |
|
|
|
$ |
— |
|
Term Loan B6 - USD |
(1) (2) |
|
6/7/2023 |
|
L + 300 |
|
1,135.3 |
|
Term Loan B7 - USD |
(1) |
|
6/7/2020 |
|
L + 250 |
|
630.3 |
|
Term Loan C5 - EUR |
(1) (2) |
|
6/7/2023 |
|
E + 275 |
|
719.1 |
|
Term Loan C6 - EUR |
(1) |
|
6/7/2020 |
|
E + 250 |
|
700.5 |
|
Other Secured Debt |
|
|
|
|
|
|
14.7 |
|
Total First Lien Debt |
|
|
|
|
|
|
3,199.9 |
|
Senior Notes - USD |
|
|
12/1/2025 |
|
5.875% |
|
800.0 |
|
Senior Notes - USD |
|
|
2/1/2022 |
|
6.5% |
|
1,100.0 |
|
Senior Notes - EUR |
|
|
2/1/2023 |
|
6.0% |
|
419.9 |
|
Other Unsecured
Debt |
|
|
|
|
|
|
28.5 |
|
Total Unsecured Debt |
|
|
|
|
|
|
2,348.4 |
|
Total Debt |
|
|
|
|
|
|
5,548.3 |
|
Cash Balance as of
12/31/17 |
|
|
|
|
|
|
477.8 |
|
Net Debt |
|
|
|
|
|
|
$ |
5,070.5 |
|
Adjusted Shares
Outstanding |
(3) |
|
|
|
|
|
299.9 |
|
Market
Capitalization |
(4) |
|
|
|
|
|
2,975.0 |
|
Total Capitalization |
|
|
|
|
|
|
$ |
8,045.5 |
|
|
(1) |
|
Platform swapped certain of its floating term loans to fixed rate
including $1.14 billion of its USD tranches and €279 million of its
Euro tranches. At December 31, 2017, approximately 31% of
Platform's debt was floating and 69% was fixed. |
|
|
|
(2) |
|
These term loans mature on June 7, 2023, provided that the Company
prepays, redeems or otherwise retires and/or refinances in full its
6.50% USD Senior Notes due 2022, as permitted under its Amended and
Restated Credit Agreement, on or prior to November 2, 2021,
otherwise the maturity reverts to November 2, 2021. |
|
|
|
(3) |
|
See "Non-GAAP Adjusted Shares at December 31, 2017 and 2016
(Unaudited)" following the Adjusted Earnings Per Share
reconciliation table. |
|
|
|
(4) |
|
Based on Platform's closing price of $9.92 at December 29, 2017,
the last trading day of 2017. |
|
|
|
III. SELECTED FINANCIAL DATA |
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Interest Expense |
$ |
83.0 |
|
|
$ |
86.6 |
|
|
$ |
345.5 |
|
|
$ |
380.9 |
|
Interest Paid |
69.0 |
|
|
74.0 |
|
|
322.8 |
|
|
360.1 |
|
Income Tax Expense |
(60.7 |
) |
|
(37.1 |
) |
|
6.6 |
|
|
28.6 |
|
Income Taxes Paid |
37.2 |
|
|
35.5 |
|
|
145.0 |
|
|
121.2 |
|
Capital
Expenditures |
18.0 |
|
|
23.5 |
|
|
59.4 |
|
|
56.3 |
|
Investment in
Registrations of Products |
14.7 |
|
|
14.0 |
|
|
40.5 |
|
|
36.4 |
|
Proceeds from disposal
of property, plant and equipment (*) |
3.2 |
|
|
0.1 |
|
|
17.5 |
|
|
12.6 |
|
|
(*)
Twelve months ended December 31, 2016 adjusted to exclude a $8.0
million impact for proceeds received in connection with the
disposition of a joint venture. |
|
IV. Non-GAAP Measures
For purposes of Regulation G, a non-GAAP
financial measure is a numerical measure of a company’s historical
or future financial performance, financial position or cash flows
that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP
in the statements of operations, balance sheets, or statements of
cash flows of the company; or includes amounts, or is subject to
adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated
and presented.
To supplement the financial measures prepared in
accordance with GAAP, Platform has provided in this release the
following non-GAAP financial measures: EBITDA, adjusted EBITDA,
adjusted EBITDA margin, adjusted EBITDA guidance, adjusted earnings
(loss) per share, and organic sales growth. Platform also
evaluates and presents its results of operations on a constant
currency basis. Management internally reviews each of these
non-GAAP measures to evaluate performance on a comparative
period-to-period basis in terms of absolute performance, trends and
expected future performance with respect to the Company’s business,
and believes that these non-GAAP measures provide investors with an
additional perspective on trends and underlying operating results
on a period-to-period comparable basis. Platform also
believes that investors find this information helpful in
understanding the ongoing performance of its operations separate
from items that may have a disproportionate positive or negative
impact on Platform's financial results in any particular
period. These non-GAAP financial measures, however, have
limitations as analytical tools, and should not be considered in
isolation from, or a substitute for, or superior to, the related
financial information that Platform reports in accordance with
GAAP. The principal limitations of these non-GAAP financial
measures is that they exclude significant expenses and income that
are required by GAAP to be recorded in the Company’s financial
statements, and may not be completely comparable to similarly
titled measures of other companies due to potential differences in
the method of calculation between companies. In addition,
these measures are subject to inherent limitations as they reflect
the exercise of judgment by management about which items are
excluded or included in determining these non-GAAP financial
measures. Investors are encouraged to review the
reconciliations of these non-GAAP financial measures to their most
comparable GAAP financial measures included in this press release,
and not to rely on any single financial measure to evaluate
Platform’s businesses.
The Company only provides adjusted EBITDA
guidance and organic sales growth expectations on a non-GAAP basis
and does not provide reconciliations of such forward-looking
non-GAAP measures to GAAP due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations, including adjustments that could be made for
restructurings, refinancings, divestitures, integration and
acquisition-related expenses, share-based compensation amounts,
non-recurring, unusual or unanticipated charges, expenses or gains,
adjustments to inventory and other charges reflected in our
reconciliation of historic numbers, the amount of which, based on
historical experience, could be significant.
Constant Currency:
The Company discloses operating results from net
sales through operating profit on a constant currency basis by
adjusting to exclude the impact of changes due to the translation
of foreign currencies of its international locations into U.S.
dollar. Management believes this non-GAAP financial
information facilitates period-to-period comparison in the analysis
of trends in business performance, thereby providing valuable
supplemental information regarding its results of operations,
consistent with how the Company internally evaluates its financial
results.
The impact of foreign currency translation is
calculated by converting the Company's current-period local
currency financial results into U.S. dollar using the prior
period's exchange rates and comparing these adjusted amounts to its
prior period reported results. The difference between actual
growth rates and constant currency growth rates represents the
impact of foreign currency translation.
Organic Sales Growth:
Organic sales growth is defined as net sales
excluding the impact of foreign currency translation, changes due
to the price of certain metals, and acquisitions and/ or
divestitures, as applicable. Management believes this
non-GAAP financial measure provides investors with a more complete
understanding of the underlying net sales trends by providing
comparable sales over differing periods on a consistent basis.
The following tables reconcile GAAP net sales
growth to organic sales growth for the three and twelve months
ended December 31, 2017:
|
|
Three Months Ended December 31,
2017 |
|
|
Reported Net Sales Growth |
|
Impact of Currency |
|
Constant Currency |
|
Metals |
|
Acquisitions |
|
Organic Sales Growth |
Performance
Solutions |
|
7 |
% |
|
(4 |
)% |
|
3 |
% |
|
— |
% |
|
— |
% |
|
4 |
% |
Agricultural
Solutions |
|
18 |
% |
|
(3 |
)% |
|
15 |
% |
|
— |
% |
|
— |
% |
|
15 |
% |
Total |
|
12 |
% |
|
(3 |
)% |
|
9 |
% |
|
— |
% |
|
— |
% |
|
9 |
% |
NOTE: Totals may not sum due to rounding.
|
|
Twelve Months Ended December 31,
2017 |
|
|
Reported Net Sales Growth |
|
Impact of Currency |
|
Constant Currency |
|
Metals |
|
Acquisitions |
|
Organic Sales Growth |
Performance
Solutions |
|
6 |
% |
|
— |
% |
|
6 |
% |
|
(1 |
)% |
|
— |
% |
|
4 |
% |
Agricultural
Solutions |
|
4 |
% |
|
(2 |
)% |
|
3 |
% |
|
— |
% |
|
— |
% |
|
3 |
% |
Total |
|
5 |
% |
|
(1 |
)% |
|
4 |
% |
|
(1 |
)% |
|
— |
% |
|
4 |
% |
NOTE: Totals may not sum due to rounding.
For the three and twelve months ended
December 31, 2017, metals pricing benefited Performance
Solutions and our consolidated results by $1.7 million and $23.6
million, respectively. For the twelve months ended
December 31, 2017, acquisitions benefited Performance
Solutions and our consolidated results by $2.8 million.
Free Cash Flow:
Free cash flow is defined as net cash flows
provided by operating activities less net capital
expenditures. Net capital expenditures include capital
expenditures and investments in registrations of products less
proceeds from disposal of property, plant and equipment.
Adjusted Earnings Per
Share:
Adjusted earnings per share is defined as net
loss attributable to common stockholders adjusted to reflect
adjustments consistent with our definition of adjusted
EBITDA. Additionally, the Company eliminates the amortization
associated with (i) intangibles assets recognized in purchase
accounting for acquisitions and (ii) costs capitalized in
connection with obtaining regulatory approval of our products
(“registration rights”) as part of our ongoing operations, and
deducts capital expenditures associated with obtaining these
registration rights. Further, the Company adjusts its
effective tax rate to 35% as described in footnote (14) under the
reconciliation table below. The resulting adjusted net income
attributable to common stockholders is then divided by Platform's
outstanding number of shares of common stock plus the number of
shares that would be issued if all Platform's convertible stock was
converted to common stock, stock options were vested and exercised,
and awarded equity grants were vested at each period
presented. Adjusted earnings per share is a key metric used
by management to measure operating performance and trends as it
believes the exclusion of certain expenses in calculating adjusted
earnings per share facilitates operating performance comparisons on
a period-to-period basis.
The following table reconciles GAAP net loss
attributable to common stockholders to adjusted net income
attributable to common stockholders and presents the adjusted
number of common shares used in calculating adjusted earnings per
share for each period presented below:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(amounts in millions,
except per share amounts) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net loss
attributable to common stockholders |
|
$ |
(141.5 |
) |
|
$ |
(1.8 |
) |
|
$ |
(296.2 |
) |
|
$ |
(40.8 |
) |
Reversal
of amortization expense |
(1 |
) |
68.9 |
|
|
68.2 |
|
|
275.9 |
|
|
267.3 |
|
Adjustment for investment in registration of products |
(1 |
) |
(14.7 |
) |
|
(14.0 |
) |
|
(40.5 |
) |
|
(36.4 |
) |
Restructuring expense |
(2 |
) |
9.8 |
|
|
11.6 |
|
|
30.8 |
|
|
31.1 |
|
Amortization of inventory step-up |
(3 |
) |
— |
|
|
— |
|
|
— |
|
|
11.7 |
|
Acquisition and integration costs |
(4 |
) |
0.3 |
|
|
6.0 |
|
|
4.8 |
|
|
33.4 |
|
Non-cash
change in fair value of contingent consideration |
(5 |
) |
0.2 |
|
|
0.8 |
|
|
3.4 |
|
|
5.1 |
|
Legal
settlements |
(6 |
) |
(0.2 |
) |
|
— |
|
|
(10.8 |
) |
|
(2.8 |
) |
Foreign
exchange loss (gain) on foreign denominated external and internal
long-term debt |
(7 |
) |
7.1 |
|
|
(24.8 |
) |
|
102.5 |
|
|
33.9 |
|
Debt
refinancing costs |
(8 |
) |
68.5 |
|
|
19.7 |
|
|
83.2 |
|
|
19.7 |
|
Goodwill
impairment |
(9 |
) |
160.0 |
|
|
46.6 |
|
|
160.0 |
|
|
46.6 |
|
Gain on
settlement agreement related to Series B Convertible Preferred
Stock |
(10 |
) |
— |
|
|
— |
|
|
— |
|
|
(103.0 |
) |
Non-cash
change in fair value of preferred stock redemption liability |
(10 |
) |
— |
|
|
11.0 |
|
|
— |
|
|
5.0 |
|
Costs
related to Proposed Separation |
(11 |
) |
2.9 |
|
|
— |
|
|
12.1 |
|
|
— |
|
Pension
plan settlement and curtailment |
(12 |
) |
10.5 |
|
|
1.8 |
|
|
10.5 |
|
|
1.8 |
|
Other,
net |
(13 |
) |
2.9 |
|
|
9.2 |
|
|
17.6 |
|
|
17.1 |
|
Tax
effect of pre-tax non-GAAP adjustments |
(14 |
) |
(110.7 |
) |
|
(47.6 |
) |
|
(227.3 |
) |
|
(115.7 |
) |
Adjustment to estimated effective tax rate |
(14 |
) |
11.6 |
|
|
(24.1 |
) |
|
107.7 |
|
|
45.5 |
|
Gain on
amendment of Series B Convertible Preferred Stock |
(10 |
) |
— |
|
|
— |
|
|
— |
|
|
(32.9 |
) |
Adjustment to reverse loss attributable to certain non-controlling
interests |
(15 |
) |
(8.0 |
) |
|
(1.7 |
) |
|
(5.4 |
) |
|
(10.1 |
) |
Adjusted net
income attributable to common stockholders |
|
$ |
67.6 |
|
|
$ |
60.9 |
|
|
$ |
228.3 |
|
|
$ |
176.5 |
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share |
(16 |
) |
$ |
0.23 |
|
|
$ |
0.20 |
|
|
$ |
0.76 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
Adjusted common
shares outstanding |
(16 |
) |
299.9 |
|
|
298.6 |
|
|
300.2 |
|
|
282.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Company eliminates
amortization expense associated with (i) intangible assets
recognized in purchase accounting for acquisitions and (ii) costs
capitalized in connection with obtaining regulatory approval of its
products ("registration rights") as part of its ongoing operations,
and deducts capital expenditures associated with obtaining these
registration rights. The Company believes these adjustments
provide insight with respect to the cash flows necessary to
maintain and enhance its product portfolio. |
|
|
|
(2) |
|
Adjusted for costs related
to the restructuring of acquired businesses within both the
Agricultural Solutions and Performance Solutions segments.
The Company adjusts these costs because they are not considered to
be reflective of ongoing operations. |
|
|
|
(3) |
|
Adjustment for purchase
accounting fair value adjustment to inventory associated with the
acquisitions of Alent plc and OMG Electronic Chemicals (M) Sdn Bhd,
charged to cost of sales. The Company adjusts these costs
because they are not considered to be reflective of ongoing
operations. |
|
|
|
(4) |
|
The Company adjusts for
costs associated with acquisitions, including costs of obtaining
related financing such as investment banking, legal, and accounting
fees, and transfer taxes in 2017 and 2016. 2016 adjustments
also included costs associated with a closed investigation related
to certain past business practices of Arysta LifeScience Limited
and an acquisition as well as costs related to the integration of
acquisitions. The Company adjusts these costs because they
are not considered to be reflective of ongoing operations. |
|
|
|
(5) |
|
The Company adjusts for
the change in fair value of the contingent consideration related to
the acquisition of MacDermid, Incorporated (the "MacDermid
Acquisition"). The Company adjusts these costs because they
are not considered to be reflective of ongoing operations. |
|
|
|
(6) |
|
The Company adjusts for
certain legal settlements that are not considered to be reflective
of ongoing operations, including the adjustment related to a 2017
settlement agreement between MacDermid Printing Solutions LLC (now
known as MacDermid Graphics Solutions LLC) and E.I. du Pont de
Nemours and Company (now known as DowDuPont Inc.) which resulted in
a net gain in 2017 of $10.8 million. |
|
|
|
(7) |
|
The Company adjusts for
foreign exchanges gains and losses on long-term external and
internal debt because the period-to-period movement of these
currencies are out of its control, are expected to offset on a
long-term basis, and, due to their long-term nature, are not fully
realized. |
|
|
|
(8) |
|
The Company adjusts for
costs related to its senior note and term debt refinancings because
they are not considered to be reflective of ongoing
operations. These refinancings consisted of (i) $74.4 million
related to the write-off of deferred financing fees and original
issuance premiums and discounts, and $8.8 million of debt issuance
costs, each in 2017, and (ii) $11.3 million related to the
write-off of deferred financing fees and original issuance
discounts, and $8.4 million of debt issuance costs in 2016. |
|
|
|
(9) |
|
The Company recorded
non-cash impairment charges of $160 million related to its
Agricultural Solutions segment in 2017 and $46.6 million related to
its Performance Solutions segment in 2016. The Company
adjusts these charges because they are not considered to be
reflective of ongoing operations. |
|
|
|
(10) |
|
The Company accounted for
a settlement agreement amending its Series B Convertible Preferred
Stock and, as a result, recognized gains in net income of $103
million and income available to common stockholders of $32.9
million related to this amendment. Further, the Company
recognized a full-year net loss of $5.0 million related to the
adjustment of the Series B Convertible Preferred Stock to fair
value subsequent to this amendment. The Company adjusted
these gains and losses because they are not considered to be
representative of ongoing operations. These gains and
losses were included in income available to common
stockholders for the computation of GAAP basic earnings per share;
however, they were excluded for the calculation of GAAP diluted
earnings per share. |
|
|
|
(11) |
|
The Company adjusts for
costs related to the proposed separation of its businesses (the
"Proposed Separation"), which we expect to complete in 2018.
The Company adjusts these costs because they are not considered to
be reflective of ongoing operations. |
|
|
|
(12) |
|
The Company adjusts for
costs related to pension plan settlements and curtailments.
2017 adjustments related primarily to the settlement of the
Company's pension obligation in the United Kingdom. The
Company adjusts these costs because they are not considered to be
reflective of ongoing operations. |
|
|
|
(13) |
|
2017 adjustments
include non-recurring senior executive severance and costs
associated with non-recourse factoring programs that are not
included in interest expense. 2016 adjustments primarily
corresponded to the write down of certain fixed assets that were
subsequently disposed of, as gain on the disposal of an equity
investment as well as costs associated with non-recourse factoring
programs that are not included in interest expense. The
Company adjusts these costs because they are not considered to be
reflective of ongoing operations or are considered to be part of
its capital structure. |
|
|
|
(14) |
|
The Company adjusts its
effective tax rate to 35%. This adjustment does not reflect
the Company’s current or near-term tax structure, including
limitations on its ability to utilize net operating losses and
foreign tax credits in certain jurisdictions. These factors
significantly increase the Company's effective tax rate from
35%. As a result of current tax structure, the Company’s
effective tax rate in accordance with GAAP was (29.4)% and 2.3% for
the three and twelve months ended December 31, 2017,
respectively. The Company also applies an effective tax rate
of 35% to pre-tax non-GAAP adjustments. The Company adjusts
the effective tax rate because it believes it provides a meaningful
comparison of its performance between periods. |
|
|
|
(15) |
|
The Company adjusts for
the loss or income attributable to non-controlling interest created
at the time of the MacDermid Acquisition because holders of such
equity interest are expected to convert their holdings into shares
of Platform's common stock. Further, the Company adjusts for
the impact goodwill impairments or divestitures have on
non-controlling interests. The Company adjusts these costs
because they are not considered to be reflective of ongoing
operations. |
|
|
|
(16) |
|
The Company defines
"Adjusted common shares" as the outstanding shares of Platform's
common stock at December 31, 2017 or 2016, as
applicable, plus the number of shares that would be issued if
all convertible stock was converted into Platform's common stock,
stock options were vested and exercised, and awarded equity grants
were vested as of December 31, 2017 or 2016, as
applicable. The Company adjusts the number of outstanding
shares of Platform's common stock for this calculation to provide
an understanding of the Company’s results of operations on a per
share basis. |
|
|
|
NON-GAAP ADJUSTED SHARES AT
DECEMBER 31, 2017 AND 2016 (UNAUDITED)
The following table shows Platform's adjusted
common shares outstanding at each period presented which consists
of Platform's outstanding number of shares of common stock plus the
number of shares that would be issued if all Platform's convertible
stock was converted to common stock, stock options were vested and
exercised, and awarded equity grants were vested at each period
presented:
|
2017 |
|
2016 |
(amounts in
millions) |
Q4 |
|
FY Average |
|
Q4 |
|
FY Average |
Basic
outstanding common shares |
287.4 |
|
|
286.6 |
|
|
284.2 |
|
|
255.4 |
|
Number of
shares issuable upon conversion of Series B Convertible Preferred
Stock |
— |
|
|
— |
|
|
— |
|
|
16.6 |
|
Number of
shares issuable upon conversion of PDH Common Stock |
4.8 |
|
|
5.5 |
|
|
7.7 |
|
|
7.9 |
|
Number of
shares issuable upon conversion of Series A Preferred Stock |
2.0 |
|
|
2.0 |
|
|
2.0 |
|
|
2.0 |
|
Number of
shares issuable upon vesting and exercise of Stock Options |
0.7 |
|
|
0.7 |
|
|
0.6 |
|
|
0.6 |
|
Number of
shares issuable upon vesting of granted Equity Awards |
5.0 |
|
|
5.3 |
|
|
4.1 |
|
|
4.0 |
|
Net
impact of pending Series B Convertible Preferred Stock actions |
— |
|
|
— |
|
|
— |
|
|
(4.2 |
) |
Adjusted common shares outstanding |
299.9 |
|
|
300.2 |
|
|
298.6 |
|
|
282.3 |
|
NOTE: Totals may not sum due to rounding.
EBITDA and Adjusted EBITDA:
EBITDA represents earnings before interest,
provision for income taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA, excluding the impact of
additional items, which we believe are not representative or
indicative of our ongoing business or are considered to be part of
our capital structure, as described in the footnotes located under
the Adjusted Earnings Per Share reconciliation table above.
Adjusted EBITDA for each segment also includes an allocation of
corporate costs, such as compensation expense and professional
fees, as indicated in this press release under "I. Unaudited
Segment Results." Management believes adjusted EBITDA and
adjusted EBITDA margin provide investors with a more complete
understanding of the long-term profitability trends of Platform’s
business, and facilitate comparisons of its profitability to prior
and future periods. However, these measures, which do not
consider certain cash requirements, should not be construed as an
alternative to net income or cash flow from operations as a measure
of profitability or liquidity.
The following table reconciles GAAP net loss attributable to
common stockholders to adjusted EBITDA:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(amounts in
millions) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net loss
attributable to common stockholders |
|
$ |
(141.5 |
) |
|
$ |
(1.8 |
) |
|
$ |
(296.2 |
) |
|
$ |
(40.8 |
) |
Add
(subtract): |
|
|
|
|
|
|
|
|
Gain on
amendment of Series B Convertible Preferred Stock |
(10 |
) |
— |
|
|
— |
|
|
— |
|
|
(32.9 |
) |
Net
(loss) income attributable to the non-controlling interests |
|
(4.2 |
) |
|
1.7 |
|
|
0.6 |
|
|
(3.0 |
) |
Income
tax (benefit) expense |
|
(60.7 |
) |
|
(37.1 |
) |
|
6.6 |
|
|
28.6 |
|
Interest
expense, net |
|
81.6 |
|
|
86.0 |
|
|
341.6 |
|
|
375.7 |
|
Depreciation expense |
|
19.9 |
|
|
19.2 |
|
|
78.3 |
|
|
75.0 |
|
Amortization expense |
|
68.9 |
|
|
68.2 |
|
|
275.9 |
|
|
267.3 |
|
EBITDA |
|
(36.0 |
) |
|
136.2 |
|
|
406.8 |
|
|
669.9 |
|
Adjustments to
reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Restructuring expense |
(2 |
) |
9.8 |
|
|
11.6 |
|
|
30.8 |
|
|
31.1 |
|
Amortization of inventory step-up |
(3 |
) |
— |
|
|
— |
|
|
— |
|
|
11.7 |
|
Acquisition and integration costs |
(4 |
) |
0.3 |
|
|
6.0 |
|
|
4.8 |
|
|
33.4 |
|
Non-cash
change in fair value of contingent consideration |
(5 |
) |
0.2 |
|
|
0.8 |
|
|
3.4 |
|
|
5.1 |
|
Legal
settlements |
(6 |
) |
(0.2 |
) |
|
— |
|
|
(10.8 |
) |
|
(2.8 |
) |
Foreign
exchange (gain) loss on foreign denominated external and internal
long-term debt |
(7 |
) |
7.1 |
|
|
(24.8 |
) |
|
102.5 |
|
|
33.9 |
|
Debt
refinancing costs |
(8 |
) |
68.5 |
|
|
19.7 |
|
|
83.2 |
|
|
19.7 |
|
Goodwill
impairment |
(9 |
) |
160.0 |
|
|
46.6 |
|
|
160.0 |
|
|
46.6 |
|
Gain on
settlement agreement related to Series B Convertible Preferred
Stock |
(10 |
) |
— |
|
|
— |
|
|
— |
|
|
(103.0 |
) |
Non-cash
change in fair value of preferred stock redemption liability |
(10 |
) |
— |
|
|
11.0 |
|
|
— |
|
|
5.0 |
|
Costs
related to Proposed Separation |
(11 |
) |
2.9 |
|
|
— |
|
|
12.1 |
|
|
— |
|
Pension
plan settlement and curtailment |
(12 |
) |
10.5 |
|
|
1.8 |
|
|
10.5 |
|
|
1.8 |
|
Other,
net |
(13 |
) |
2.9 |
|
|
9.2 |
|
|
17.6 |
|
|
17.1 |
|
Adjusted EBITDA |
|
$ |
226.0 |
|
|
$ |
218.1 |
|
|
$ |
820.9 |
|
|
$ |
769.5 |
|
NOTE: For the footnote descriptions, please refer to the
footnotes located under the Adjusted Earnings Per Share
reconciliation table above.
Net Debt to Adjusted EBITDA Ratio:
Net Debt to Adjusted EBITDA Ratio is defined as
consolidated indebtedness, as defined in Platform's credit
agreement, less cash divided by Adjusted EBITDA.
CONTACT:
Investor Relations Contact:
Carey DormanSenior Director - Corporate DevelopmentPlatform
Specialty Products Corporation1-561-406-8465
Media Contact:
Liz CohenWeber Shandwick1-212-445-8044
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