Fiscal Third Quarter 2019 Financial Highlights
- Sales of $324 million, Net Loss of $87 million, or diluted
loss per share of $0.79
- Results include a $140 million termination fee paid to
Entegris, Inc.
- Adjusted Net Income of $59 million, or diluted EPS of
$0.54
- Adjusted EBITDA of $109 million, or Adjusted EBITDA Margin
of 34%
- Merger agreement with Merck KGaA approved by
stockholders
The results in this press release include Non-GAAP financial
measures. Refer to the section entitled “Non-GAAP Financial
Measures.”
Versum Materials, Inc. (NYSE: VSM), a leading specialty
materials and equipment supplier to the semiconductor industry,
today reported results for the fiscal third quarter ended June 30,
2019.
Sales were $324.3 million, compared to $350.0 million in the
prior year quarter. Net loss was $86.7 million, or $0.79 per
diluted share, compared to net income of $0.58 per diluted share in
the prior year, primarily due to the termination fee to Entegris
and transaction related expenses. Adjusted Net Income was $59.1
million, or $0.54 per diluted share, compared to $0.63 in the prior
year. Adjusted EBITDA was $108.7 million, compared to $116.9
million in the prior year.
Guillermo Novo, Versum Materials' President and Chief Executive
Officer said, "Our results were relatively consistent with prior
quarters, demonstrating stable demand for our materials and
equipment and continued operating discipline. Our portfolio has
delivered consistent gross margins through the cycle, and excluding
one-time charges associated with the two merger transactions, we
maintained strong EBITDA margins through operating and cost
discipline. As we look to the future, our teams have secured
significant POR wins which we believe will position us for
accelerated growth when demand normalizes. Our investments in
innovation, together with all of the capital investments that will
be coming on stream, are expected to begin to pay off in the near
future.”
Merger with Merck KGaA, Darmstadt, Germany
On June 17, 2019, the stockholders of Versum approved the merger
with Merck KGaA, Darmstadt, Germany. The business combination is
expected to create a leading electronic materials player focused on
the semiconductor and display industries. The combined companies
and their customers and employees are expected to benefit from
increased scale, product portfolio, innovation and services depth,
globally. Upon completion of the merger, Versum’s stockholders will
have the right to receive $53.00 per share in cash, without
interest and less any applicable withholding tax, for each share of
common stock that they own immediately prior to the completion of
the merger. The parties continue to work toward closing in the
second half of 2019. The closing is subject to regulatory
clearances and the satisfaction of other customary closing
conditions. The applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 for U.S.
antitrust purposes has expired, and the transaction has been
cleared by antitrust authorities or the waiting period has expired
in Austria, Germany, Ireland, Japan, Serbia, South Korea and
Taiwan.
No Fiscal Year 2019 Outlook or Earnings Conference
Call
In light of the announced transaction with Merck KGaA, Versum
Materials will not provide or update annual financial guidance and
will not hold a conference call to review quarterly earnings
results.
Business Segment Results
Materials
Sales were $214.3 million, compared to $218.5 million in the
prior year as volume growth in the Materials segment was more than
offset by negative price/mix and unfavorable currency impacts.
Operating income was $67.6 million, compared to $71.5 million in
the prior year. Segment Adjusted EBITDA was $81.6 million, compared
to $84.5 million in the prior year as overall volume growth and
positive cost performance was more than offset by negative
price/mix given the market weakness in memory and foundry.
Delivery Systems & Services (DS&S)
Sales were $109.4 million, compared to $130.7 million in the
prior year impacted by softer industry capital spending and delays
in customer shipments versus the record prior year quarter.
Operating income was $31.5 million, compared to $37.2 million in
the prior year. Segment Adjusted EBITDA was $32.2 million, compared
to $37.9 million in the prior year, driven by the softer equipment
demand and unfavorable mix and currency impacts.
Table 1: Segment Sales
Three Months Ended June
30,
2019
2018
% Change
(In millions, except
percentages)
Materials
$
214.3
$
218.5
(2
)%
DS&S
109.4
130.7
(16
)%
Corporate
0.6
0.8
(25
)%
Total Versum Materials Sales
$
324.3
$
350.0
(7
)%
Table 2: Segment Operating Income to
Segment Adjusted EBITDA
Three Months Ended June
30,
2019
2018
% Change
(In millions, except
percentages)
Materials
Operating income(A)
$
67.6
$
71.5
(5
)%
Add: Depreciation and amortization
14.0
13.0
8
%
Segment Adjusted EBITDA(A)
$
81.6
$
84.5
(3
)%
Segment Adjusted EBITDA
Margin(B)
38
%
39
%
DS&S
Operating income
$
31.5
$
37.2
(15
)%
Add: Depreciation and amortization
0.7
0.7
—
%
Segment Adjusted EBITDA
$
32.2
$
37.9
(15
)%
Segment Adjusted EBITDA
Margin(B)
29
%
29
%
Corporate
Operating loss
$
(5.2
)
$
(5.7
)
(9
)%
Add: Depreciation and amortization
0.1
0.2
(50
)%
Segment Adjusted EBITDA
$
(5.1
)
$
(5.5
)
(7
)%
(A) The fiscal third quarter
ended June 30, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost.
(B) Segment Adjusted EBITDA margin is
calculated by dividing Segment Adjusted EBITDA by sales.
Table 3: Reconciliation of Segment Operating Income to Total
Versum Materials Operating Income
Three Months Ended June
30,
2019
2018
% Change
(In millions, except
percentages)
Materials(A)
$
67.6
$
71.5
(5
)%
DS&S
31.5
37.2
(15
)%
Corporate
(5.2
)
(5.7
)
(9
)%
Total Segment Operating Income(A)
93.9
103.0
(9
)%
Less: Business separation, restructuring
and cost reduction actions
141.4
6.7
NM
Total Versum Materials Operating (Loss)
Income(A)
$
(47.5
)
$
96.3
(149
)%
(A) The fiscal third quarter ended June
30, 2018 amounts have been recast to reflect the retrospective
application of the company’s change in classification of the non
service components of net periodic pension cost.
About Versum Materials
Versum Materials, Inc. (NYSE: VSM) is a leading global specialty
materials company providing high-purity chemicals and gases,
delivery systems, services and materials expertise to meet the
evolving needs of the global semiconductor and display industries.
Derived from the Latin word for “toward,” the name “Versum”
communicates the company’s deep commitment to helping customers
move toward the future by collaborating, innovating and creating
cutting-edge solutions.
A global leader in technology, quality, safety and reliability,
Versum Materials is one of the world’s leading suppliers of
next-generation CMP slurries, ultra-thin dielectric and metal film
precursors, formulated cleans and etching products, and delivery
equipment that has revolutionized the semiconductor industry.
Versum reported fiscal year 2018 annual sales of about US $1.4
billion, has approximately 2,300 employees and operates fifteen
manufacturing and seven research and development facilities in Asia
and North America. It is headquartered in Tempe, Arizona. Versum
Materials had operated for more than three decades as a division of
Air Products and Chemicals, Inc. (NYSE: APD).
For additional information, please visit
http://www.versummaterials.com.
Non-GAAP Financial Measures
This earnings press release includes “non-GAAP financial
measures,” including Adjusted Net Income, Adjusted Net Income
Margin, Adjusted Diluted Earnings Per Share, Adjusted EBITDA,
Segment Adjusted EBITDA, Adjusted EBITDA margin, and Segment
Adjusted EBITDA margin. Adjusted Net Income is net income excluding
certain disclosed items which we do not believe to be indicative of
underlying business trends, including business separation,
restructuring and cost reduction actions, net of tax, the write-off
of financing costs, net of tax, and the impact of the Tax Act.
Adjusted Diluted Earnings Per Share uses Adjusted Net Income but
otherwise uses the same calculation used in arriving at diluted
earnings per share, the most directly comparable GAAP financial
measure. Adjusted EBITDA is net income excluding certain disclosed
items which we do not believe to be indicative of underlying
business trends, including interest expense, the write-off of
financing costs, non-service components of net periodic pension
cost, income tax provision, depreciation and amortization expense,
non-controlling interests, and business separation, restructuring
and cost reduction actions. Segment Adjusted EBITDA is segment
operating income excluding segment depreciation and amortization
expense. Adjusted Net Income Margin, Adjusted EBITDA margin and
Segment Adjusted EBITDA margin are calculated by dividing Adjusted
Net Income, Adjusted EBITDA and Segment Adjusted EBITDA,
respectively, by sales. In the accompanying tables, Versum
Materials has provided reconciliations of net income to Adjusted
EBITDA (see Appendix Table A-1), net income to Adjusted Net Income
(see Appendix Table A-2), diluted EPS to Adjusted Diluted EPS (see
Appendix A-3) and of segment operating income (loss) to Segment
Adjusted EBITDA by Quarter (see Appendix Table A-5), in each case
the most directly comparable GAAP financial measure. We encourage
investors to read these reconciliations.
The presentation of these non-GAAP financial measures is
intended to enhance the usefulness of financial information by
providing measures which management uses internally to evaluate our
operating performance. We use non-GAAP measures to assess our
operating performance by excluding certain disclosed items that we
believe are not representative of our underlying business.
Management may use these non-GAAP measures to evaluate our
performance period over period and relative to competitors in our
industry, to analyze underlying trends in our business and to
establish operational budgets and forecasts or for incentive
compensation purposes. We use Adjusted EBITDA to calculate
performance-based cash bonuses. We use Segment Adjusted EBITDA as
the primary measure to evaluate the ongoing performance of our
business segments.
We believe non-GAAP financial measures provide security
analysts, investors and other interested parties with meaningful
information to understand our underlying operating results and to
analyze financial and business trends; enables better comparison to
peer companies; and allows us to provide a long-term strategic view
of the business going forward. These non-GAAP financial measures
should not be viewed in isolation, are not a substitute for GAAP
measures, and have limitations which include but are not limited to
the following: (a) Adjusted Net Income and Adjusted EBITDA exclude
expenses related to business separation, restructuring and cost
reduction actions and the write-off of financing costs, each of
which we do not consider to be representative of our underlying
business operations, however, these disclosed items represent costs
to Versum Materials; (b) Adjusted EBITDA is not intended to be a
measure of cash available for management’s discretionary use, as it
does not consider certain cash requirements such as interest
payments, tax payments and debt service requirements; (c) though
not business operating costs, interest expense and income tax
provision represent ongoing costs of Versum Materials; (d)
depreciation and amortization charges represent the wear and tear
or reduction in value of the plant, equipment, and intangible
assets which permit us to manufacture and market our products; and
(e) other companies may define non-GAAP measures differently than
we do, limiting their usefulness as comparative measures. A reader
may find any one or all of these items important in evaluating our
performance. Management compensates for the limitations of using
non-GAAP financial measures by using them only to supplement our
GAAP results to provide a more complete understanding of the
factors and trends affecting our business. In evaluating these
non-GAAP financial measures, the reader should be aware that we may
incur expenses similar to those eliminated in this presentation in
the future.
Forward-Looking Information
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by references to future periods and include statements
about our financial outlook or guidance; statements about our
expectations or predictions of future financial or business
performance or conditions; statements about our anticipated growth,
profitability and margins; our ability to compete successfully as a
leading materials supplier to the semiconductor industry and obtain
next generation node opportunities; and other matters. The words
“believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,”
“intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,”
“forecast,” “guidance,” “outlook,” “opportunity” and similar
expressions, among others, generally identify forward-looking
statements, which are based on management’s reasonable expectations
and assumptions as of the date the statements were made. These
statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially,
including without limitation the following: Merck KGaA’s ability to
successfully complete the proposed acquisition of Versum or realize
the anticipated benefits of the proposed transaction in the
expected time-frames or at all; Merck KGaA’s ability to
successfully integrate Versum’s operations into those of Merck
KGaA; such integration may be more difficult, time-consuming or
costly than expected; the failure of any of the conditions to the
proposed transaction to be satisfied; revenues following the
proposed transaction may be lower than expected; operating costs,
customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) may be greater than
expected following the proposed transaction; the retention of
certain key employees at Versum; risks associated with the
disruption of management’s attention from ongoing business
operations due to the proposed transaction; the outcome of any
legal proceedings related to the proposed transaction; the impact
of the proposed transaction on Versum’s credit rating; the parties’
ability to meet expectations regarding the timing and completion of
the proposed transaction; delays in obtaining any approvals
required for the proposed transaction or an inability to obtain
them on the terms proposed or on the anticipated schedule; the
impact of indebtedness incurred by Merck KGaA in connection with
the proposed transaction; the effects of the business combination
of Versum and Merck KGaA, including the combined company’s future
financial condition, operating results, strategy and plans; events
beyond our control such as acts of terrorism; product supply versus
demand imbalances in the semiconductor industry or in certain
geographic markets may decrease the demand for our goods and
services; our concentrated customer base; the dependence of our
DS&S segment upon the capital expenditure cycles of our
customers; our ability to continue technological innovation and
successfully introduce new products to meet the evolving needs of
our customers; our ability to protect and enforce our intellectual
property rights and to avoid violating any third party intellectual
property or technology rights; unexpected interruption of or
shortages in our raw material supply; inability of sole source,
limited source or qualified suppliers to deliver to us in a timely
manner or at all; hazards associated with specialty chemical
manufacturing, such as fires, explosions and accidents, could
disrupt operations; increased competition and new product
development by our competitors, changing customer needs and price
increases in materials and components; operational, political and
legal risks of our international operations; increased costs due to
trade wars and the implementation of tariffs; the impact of changes
in tax laws; the impact of changes in environmental and health and
safety regulations, anticorruption enforcement, sanctions,
import/export controls, tax and other legislation and regulations
in the U.S. and other jurisdictions in which Versum Materials and
its affiliates operate; our available cash and access to additional
capital may be limited by substantial leverage and debt service
obligations; possible liability for contamination, personal injury
or third party impacts if hazardous materials are released into the
environment; cyber security threats may compromise our data or
disrupt our information technology applications or services;
fluctuation of currency exchange rates; costs and outcomes of
litigation or regulatory investigations; the timing, impact, and
other uncertainties of future acquisitions or divestitures; and
other risks, uncertainties and factors discussed in the company’s
Form 10-Qs, Form 10-K and in the company’s other filings with the
U.S. Securities and Exchange Commission available at www.sec.gov or
in materials incorporated therein by reference or in Merck KGaA’s
public reports which are available on the Merck KGaA, Darmstadt,
Germany, website at www.emdgroup.com. Any forward-looking statement
in this press release speaks only as of the date on which it is
made. The company assumes no obligation to update or revise any
forward-looking statements.
Versum Materials, Inc.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended June
30,
Nine Months Ended June
30,
2019
2018
% Change
2019
2018
% Change
(In millions, except per share data and
percentages)
Sales
$
324.3
$
350.0
(7
)%
$
990.0
$
1,021.5
(3
)%
Cost of sales (A),(B)
185.6
200.3
(7
)%
571.5
587.3
(3
)%
Selling and administrative (B)
34.5
35.2
(2
)%
102.6
107.0
(4
)%
Research and development
11.9
12.4
(4
)%
35.9
36.2
(1
)%
Business separation, restructuring and
cost reduction actions
141.4
6.7
NM
156.3
16.7
NM
Other (income) expense, net
(1.6
)
(0.9
)
78
%
(7.2
)
(0.9
)
NM
Operating (Loss) Income (B)
(47.5
)
96.3
(149
)%
130.9
275.2
(52
)%
Interest expense
13.0
12.5
4
%
39.0
35.7
9
%
Write-off of financing costs
—
—
NM
—
2.1
NM
Non-service components of net periodic
pension cost(B)
0.2
0.1
100
%
0.6
0.5
20
%
(Loss) Income Before Taxes
(60.7
)
83.7
(173
)%
91.3
236.9
(61
)%
Income tax provision (A)
24.5
19.6
25
%
62.3
88.8
(30
)%
Net (Loss) Income
(85.2
)
64.1
NM
29.0
148.1
(80
)%
Less: Net (Loss) Income Attributable to
Non-Controlling Interests
1.5
0.8
88
%
4.2
4.5
(7
)%
Net (Loss) Income Attributable to
Versum
$
(86.7
)
$
63.3
NM
$
24.8
$
143.6
(83
)%
Net (loss) income attributable to Versum
per common share:
Basic
$
(0.79
)
$
0.58
NM
$
0.23
$
1.32
(83
)%
Diluted
$
(0.79
)
$
0.58
NM
$
0.23
$
1.31
(82
)%
Shares used in computing per common share
amounts:
Basic
109.2
108.9
—
%
109.1
108.9
—
%
Diluted
109.2
109.8
(1
)%
110.0
109.7
—
%
(A) - The fiscal year to date ended June
30, 2018 amounts have been recast to reflect the retrospective
application of the company’s election to change its inventory
valuation method of accounting for its U.S. inventories from the
LIFO method to the FIFO method, which resulted in a decrease in
Cost of sales of $0.2 million for the fiscal year to date ended
June 30, 2018 and an increase in the Income tax provision of $0.1
million for the fiscal year to date ended June 30, 2018.
(B) - The fiscal third quarter and year to
date ended June 30, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost. This
resulted in a decrease in Cost of sales of $0.1 million and $0.4
million for the fiscal third quarter and year to date ended June
30, 2018, respectively, a decrease in Selling and administrative of
$0.0 million and $0.1 million for the fiscal third quarter and year
to date ended June 30, 2018, an increase to Operating Income of
$0.1 million and $0.5 million for the fiscal third quarter and year
to date ended June 30, 2018, respectively, and an increase to
non-service components of net periodic pension costs of $0.1
million and $0.5 million for the fiscal third quarter and year to
date ended June 30, 2018, respectively.
Versum Materials, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2019
September 30, 2018
(In millions)
Assets
Current Assets
Cash and cash items
$
272.2
$
399.8
Trade receivables, net
166.3
184.4
Inventories
206.3
177.1
Contracts in progress, less progress
billings
50.7
20.3
Prepaid expenses
21.2
13.6
Other current assets
18.5
17.9
Total Current Assets
735.2
813.1
Plant and equipment, net
438.7
405.1
Goodwill
182.4
183.0
Intangible assets, net
59.3
63.5
Other non-current assets
43.1
40.6
Total Non-Current Assets
723.5
692.2
Total Assets
$
1,458.7
$
1,505.3
Liabilities and
Stockholders’ Deficit
Current Liabilities
Payables and accrued liabilities
$
110.7
$
138.6
Accrued income taxes
53.1
43.3
Current portion of long-term debt
5.8
5.8
Total Current Liabilities
169.6
187.7
Long-term debt
971.2
974.2
Noncurrent income tax payable
30.9
37.3
Deferred tax liabilities
36.2
41.3
Other non-current liabilities
47.2
52.4
Total Non-Current Liabilities
1,085.5
1,105.2
Total Liabilities
1,255.1
1,292.9
Stockholders’ Equity
Common stock
109.3
109.0
Capital in excess of par
11.5
6.1
Retained earnings
80.1
81.6
Accumulated other comprehensive income
(loss)
(28.7
)
(18.2
)
Total Versum’s Stockholders’
Equity
172.2
178.5
Non-Controlling Interests
31.4
33.9
Total Stockholders' Equity
203.6
212.4
Total Liabilities and Stockholders’
Equity
$
1,458.7
$
1,505.3
Versum Materials, Inc.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
Nine Months Ended June
30,
2019
2018
(In millions)
Operating Activities
Net income
$
29.0
$
148.1
Less: Net income attributable to
non-controlling interests
4.2
4.5
Net income attributable to Versum
24.8
143.6
Adjustments to reconcile income to cash
provided by operating activities:
Depreciation and amortization
42.0
37.8
Deferred income taxes
(10.6
)
(3.9
)
Gain on sale of assets
(0.1
)
(0.3
)
Share-based compensation
7.9
7.4
Other adjustments
4.0
11.4
Working capital changes that provided
(used) cash:
Trade receivables
14.5
(52.3
)
Inventories
(31.1
)
(14.6
)
Contracts in progress, less progress
billings
(30.7
)
(21.8
)
Payables and accrued liabilities
(26.2
)
(7.7
)
Accrued income taxes
(1.6
)
35.9
Other working capital
(3.3
)
0.1
Cash (Used) Provided by Operating
Activities
(10.4
)
135.6
Investing Activities
Additions to plant and equipment
(75.4
)
(90.0
)
Proceeds from sale of assets
1.0
1.1
Cash Used by Investing
Activities
(74.4
)
(88.9
)
Financing Activities
Payments on long-term debt
(4.3
)
(4.3
)
Short-term borrowings
0.3
—
Payments on short-term borrowings
(0.3
)
—
Dividends paid to shareholders
(26.3
)
(17.4
)
Dividends paid to non-controlling
interests
(6.2
)
(6.1
)
Other financing activity
(2.2
)
(3.2
)
Cash Used for Financing
Activities
(39.0
)
(31.0
)
Effect of Exchange Rate Changes on
Cash
(3.8
)
2.4
(Decrease) Increase in Cash and Cash
Items
(127.6
)
18.1
Cash and Cash items - Beginning of
Year
399.8
271.4
Cash and Cash items - End of Period
$
272.2
$
289.5
APPENDIX TABLE A-1: RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
Three Months Ended June
30,
Nine Months Ended June
30,
2019
2018
2019
2018
(In millions, except
percentages)
Net (Loss) Income Attributable to
Versum (A)
$
(86.7
)
$
63.3
$
24.8
$
143.6
Add: Interest expense
13.0
12.5
39.0
35.7
Add: Write-off of financing costs
—
—
—
2.1
Add: Non-service components of net
periodic pension cost (B)
0.2
0.1
0.6
0.5
Add: Income tax provision (A)
24.5
19.6
62.3
88.8
Add: Depreciation and amortization
14.8
13.9
42.0
37.8
Add: Non-controlling interests
1.5
0.8
4.2
4.5
Add: Business separation, restructuring
and cost reduction actions
141.4
6.7
156.3
16.7
Adjusted EBITDA (B)
$
108.7
$
116.9
$
329.2
$
329.7
Adjusted EBITDA Margin
34
%
33
%
33
%
32
%
(A) - The fiscal year to date ended June
30, 2018 amounts have been recast to reflect the retrospective
application of the company’s election to change its inventory
valuation method of accounting for its U.S. inventories from the
LIFO method to the FIFO method, which resulted in an increase in
Net Income Attributable to Versum of $0.1 million and an increase
in the Income tax provision of $0.1 million for the fiscal year to
date ended June 30, 2018.
(B) - The fiscal third quarter and year to
date ended June 30, 2018 amounts have been recast to reflect the
retrospective application of the company’s change in classification
of the non-service components of net periodic pension cost, which
resulted in an increase to non-service components of net periodic
pension costs of $0.1 million and $0.5 million for the fiscal third
quarter and year to date ended June 30, 2018, respectively.
APPENDIX TABLE A-2: RECONCILIATION OF
NET INCOME TO ADJUSTED NET INCOME
Three Months Ended June
30,
Nine Months Ended June
30,
2019
2018
2019
2018
(In millions)
Net (Loss) Income Attributable to
Versum(A)
$
(86.7
)
$
63.3
$
24.8
$
143.6
Add: Business separation, restructuring
and cost reduction actions, net of tax(B)
147.2
4.9
160.0
13.0
Add: Write-off of financing costs, net of
tax(B)
—
—
—
1.5
Add: Impact of Tax Act
(1.4
)
0.7
(3.1
)
34.6
Adjusted Net Income
$
59.1
$
68.9
$
181.7
$
192.7
(A) - The fiscal year to date
ended June 30, 2018 amounts have been recast to reflect the
retrospective application of the company’s election to change its
inventory valuation method of accounting for its U.S. inventories
from the LIFO method to the FIFO method, which resulted in an
increase in Net Income Attributable to Versum of $0.1 million.
(B) - See Appendix Table A-1 for amounts
gross of tax.
APPENDIX TABLE A-3: RECONCILIATION OF
DILUTED EPS TO ADJUSTED DILUTED EPS
Three Months Ended June
30,
Nine Months Ended June
30,
2019
2018
2019
2018
(Per share data)
Diluted (Loss) Earnings Per
Share
$
(0.79
)
$
0.58
$
0.23
$
1.31
Add: Business separation, restructuring
and cost reduction actions per diluted share, net of tax
1.34
0.04
1.46
0.12
Add: Write-off of financing costs, net of
tax
—
—
—
0.01
Add: Impact of Tax Act
(0.01
)
0.01
(0.03
)
0.32
Adjusted Diluted Earnings Per
Share
$
0.54
$
0.63
$
1.66
$
1.76
APPENDIX TABLE A-4: SALES BY
SEGMENT
For the Quarter Ended
December 31, 2018
March 31, 2019
June 30, 2019
Total
(In millions)
Sales
Materials
$
221.7
$
216.5
$
214.3
$
652.5
DS&S
117.2
109.1
109.4
335.7
Corporate
0.6
0.6
0.6
1.8
Total Versum Sales
$
339.5
$
326.2
$
324.3
$
990.0
For the Quarter Ended
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
Total
(In millions)
Sales
Materials
$
214.6
$
218.9
$
218.5
$
233.6
$
885.6
DS&S
115.3
121.1
130.7
116.6
483.7
Corporate
0.9
0.7
0.8
0.6
3.0
Total Versum Sales
$
330.8
$
340.7
$
350.0
$
350.8
$
1,372.3
APPENDIX TABLE A-5: SEGMENT OPERATING
INCOME TO SEGMENT ADJUSTED EBITDA BY QUARTER
For the Quarter Ended
OPERATING INCOME TO ADJ EBITDA
December 31, 2018
March 31, 2019
June 30, 2019
Total
(In millions, except
percentages)
Materials
Operating income
$
67.6
$
65.4
$
67.6
$
200.6
Add: Depreciation and amortization
12.6
12.8
14.0
39.4
Segment Adjusted EBITDA
$
80.2
$
78.2
$
81.6
$
240.0
Segment Adjusted EBITDA
Margin(C)
36
%
36
%
38
%
37
%
DS&S
Operating income
$
34.7
$
34.9
$
31.5
$
101.1
Add: Depreciation and amortization
0.7
0.7
0.7
2.1
Segment Adjusted EBITDA
$
35.4
$
35.6
$
32.2
$
103.2
Segment Adjusted EBITDA
Margin(C)
30
%
33
%
29
%
31
%
Corporate
Operating loss
$
(5.4
)
$
(3.9
)
$
(5.2
)
$
(14.5
)
Add: Depreciation and amortization
0.2
0.2
0.1
0.5
Segment Adjusted EBITDA
$
(5.2
)
$
(3.7
)
$
(5.1
)
$
(14.0
)
Total Versum Materials Adjusted
EBITDA
$
110.4
$
110.1
$
108.7
$
329.2
For the Quarter Ended
OPERATING INCOME TO ADJ EBITDA
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
Total
(In millions, except
percentages)
Materials
Operating income(A),(B)
$
66.1
$
71.7
$
71.5
$
77.7
$
287.0
Add: Depreciation and amortization
11.0
11.6
13.0
12.1
47.7
Segment Adjusted EBITDA(A),(B)
$
77.1
$
83.3
$
84.5
$
89.8
$
334.7
Segment Adjusted EBITDA
Margin(C)
36
%
38
%
39
%
38
%
38
%
DS&S
Operating income(B)
$
33.5
$
32.9
$
37.2
$
32.0
$
135.6
Add: Depreciation and amortization
0.3
0.4
0.7
0.7
2.1
Segment Adjusted EBITDA(B)
$
33.8
$
33.3
$
37.9
$
32.7
$
137.7
Segment Adjusted EBITDA
Margin(C)
29
%
27
%
29
%
28
%
28
%
Corporate
Operating loss(B)
$
(8.5
)
$
(6.8
)
$
(5.7
)
$
(6.3
)
$
(27.3
)
Add: Depreciation and amortization
0.3
0.3
0.2
0.2
1.0
Segment Adjusted EBITDA
$
(8.2
)
$
(6.5
)
$
(5.5
)
$
(6.1
)
$
(26.3
)
Total Versum Materials Adjusted
EBITDA
$
102.7
$
110.1
$
116.9
$
116.4
$
446.1
(A) - The fiscal first quarter ended
December 31, 2018 amounts have been recast to reflect the
retrospective application of the company’s election to change its
inventory valuation method of accounting for its U.S. inventories
from the LIFO method to the FIFO method. This resulted in an
increase in operating income for the materials segment by $0.2
million for the fiscal first quarter ended December 31, 2018 and
the year ended September 30, 2018.
(B) - The fiscal full year ended September
30, 2018 amounts have been recast to reflect the retrospective
application of the company’s change in classification of the
non-service components of net periodic pension cost. This resulted
in an increase in operating income of $0.5 million, $0.1 million
and $0.1 million for the Materials, DS&S and Corporate
segments, respectively, for the fiscal year ended September 30,
2018. All quarters have been updated to reflect this change.
(C) - Segment Adjusted EBITDA margin is
calculated by dividing Segment Adjusted EBITDA by sales.
APPENDIX TABLE A-6: CONSOLIDATED AND
SEGMENT SALES MAJOR FACTORS
Versum Materials Total
Three Months Ended June 30,
2019
Nine Months Ended June 30,
2019
Sales
Volume
(2
)%
—
%
Price/Mix
(3
)%
(2
)%
Currency
(2
)%
(1
)%
Versum Materials Sales Change
(7
)%
(3
)%
Materials Segment
Three Months Ended June 30,
2019
Nine Months Ended June 30,
2019
Sales
Volume
5
%
4
%
Price/Mix
(6
)%
(3
)%
Currency
(1
)%
(1
)%
Materials Sales Change
(2
)%
—
%
DS&S Segment
Three Months Ended June 30,
2019
Nine Months Ended June 30,
2019
Sales
Volume
(13
)%
(7
)%
Currency
(3
)%
(2
)%
DS&S Sales Change
(16
)%
(9
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005251/en/
Investor Inquiries: Soohwan Kim, CFA, (602)-282-0957
Soohwan.Kim@versummaterials.com
Media Inquiries: Tiffany Elle, (480)-282-6475
Tiffany.Elle@versummaterials.com
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