Ferro Corporation (NYSE: FOE, the “Company”) today reported results for the second quarter ended June 30, 2016. Second-quarter income from continuing operations attributable to common shareholders was $0.29 per diluted share compared with $0.14 per diluted share in the second quarter of 2015. On an adjusted basis, earnings per diluted share from continuing operations were $0.34 compared with earnings of $0.20 per diluted share in the second quarter of 2015. Adjusted earnings exclude charges relating to, among other items, restructuring activities, transaction-related expenses and gains and losses on asset sales. Please refer to the supplemental tables at the end of this release for additional information concerning adjusted financial results.
2016 Second-Quarter Results from Continuing Operations
Second-quarter 2016 net sales increased 11.1% to $298 million, compared with $268 million in the year-ago quarter. Foreign currency translation reduced net sales by approximately $8 million. On a constant currency basis, net sales increased by 14.6%. Constant currency sales growth was due to acquisitions and increased sales in the Pigments, Powders and Oxides and the Performance Coatings segments, partially offset by lower sales in the Performance Colors and Glass segment. Excluding sales from acquisitions of approximately $39 million, associated with Nubiola, Al Salomi, Ferer and Pinturas Benicarló, constant currency sales increased by 2.2% in the Performance Coatings segment and by 1.0% in the Pigments, Powders and Oxides segment, while sales declined in the Performance Colors and Glass segment by 4.1%. Within the Performance Colors and Glass segment, demand for automotive glass coatings remained strong, with net sales increasing by 7.5%, while demand for products for electronics and decoration applications declined.
Reported Earnings from Continuing Operations: Second-quarter 2016 reported earnings per diluted share were $0.29 versus $0.14 in the same period last year. Results in the second quarter of 2016 benefited from the increase in net sales, a higher gross profit margin and a lower tax rate. Higher gross profit was partially offset by increases in selling, general and administrative (“SG&A”) expenses and increased other expenses, including interest expense, partially offset by lower restructuring and impairment charges.
The gross profit margin for the second quarter of 2016 increased by more than 400 basis points to 33.0%, while SG&A expenses increased by approximately $5 million to $58 million, primarily associated with the acquisitions of Nubiola, Al Salomi, Ferer and Pinturas Benicarló and a decrease in pension income. Other expenses were nearly $1 million higher in the second quarter of 2016 compared with 2015. For the second quarter of 2016 the effective tax rate was 25.4% compared with 31.4% in the same period last year.
Adjusted Earnings from Continuing Operations: Second-quarter 2016 adjusted earnings per diluted share were $0.34 versus $0.20 in the same period last year. Results in the second quarter of 2016 benefited from the increase in net sales coupled with a higher adjusted gross profit margin and lower adjusted effective tax rate. Higher gross profit was partially offset by increases in SG&A expenses and increased interest expense.
The adjusted gross profit margin for the second quarter of 2016 increased to 33.0% from 29.0% while the adjusted effective tax rates were 26.8% and 32.7% for the second quarters of 2016 and 2015, respectively. Adjusted SG&A expenses were approximately $4 million higher in the second quarter of 2016 compared with the prior year period. Adjusting for the effect of foreign currency translation, SG&A expenses increased by approximately $5 million. The increase in SG&A expenses was primarily associated with the acquisitions of Nubiola, Al Salomi, Ferer and Pinturas Benicarló and a decrease in pension income.
2016 Second-Quarter Cash Flow and Return on Invested Capital from Continuing Operations
For the second quarter of 2016, income from continuing operations was $25 million, compared with $12 million in the same period last year. In the second quarter of 2016, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $57 million, compared with $37 million in the prior year period. Adjusted EBITDA margins, represented as a percentage of net sales, were 19.0% and 13.9% in the second quarters of 2016 and 2015, respectively. The adjusted return on invested capital (“ROIC”), excluding acquisitions owned less than one year, was 11.6% for the second quarter of 2016 compared with 13.7% at December 31, 2015. The decline in ROIC was primarily due to the impact of reversing $63 million of tax valuation allowances at year-end 2015 and the inclusion of Vetriceramici. The Company anticipates ROIC will improve to approximately 12.0% during 2016.
In the second quarter of 2016, net cash provided by operating activities was approximately $8 million, while net cash used in investing activities was approximately $5 million and net cash used in financing activities was $8 million. For the period ended June 30, 2016 total debt was $496 million compared with $474 million at December 31, 2015, an increase of $22 million. During the first six months of 2016, net debt (debt less cash and cash equivalents) increased by $31 million. For the three months ended June 30, 2016 debt declined by $8 million, and net debt declined by $2 million.
In the second quarter of 2016, continuing operations generated approximately $13 million of free cash flow, with free cash flow defined as EBITDA less cash items used to operate the business, including cash taxes and interest, investment in working capital, capital expenditures and other cash items. The Company used the free cash flow in the quarter to invest in acquisitions ($3 million), restructure operations ($1 million) and fund discontinued operations ($7 million), resulting in a $2 million reduction in net debt
Peter Thomas, Chairman, President and CEO said, “Results for the quarter were very strong, with consolidated sales trending in line with our prior annual guidance of $1.140 to $1.155 billion and gross profit margins exceeding our expectations in all of our major business units. Sales trends continue to improve in Performance Coatings, where we experienced strong demand for our porcelain enamel products, and we continue to see improving demand for tile coatings in Egypt, Italy and Asia. While we experienced sequential sales improvement in the Performance Colors and Glass segment, demand continues to run below last year’s level, and we now expect full-year 2016 sales for this segment to be flat compared with 2015. Our consolidated gross profit margin, as a percent of net sales, improved by more than 400 basis points to 33%, which is the highest level attained since we began implementing our value creation strategy in late 2012. Higher sales volumes, improved manufacturing efficiencies and lower raw material costs contributed to the gross margin improvement. Although the quarter was strong, economic and geopolitical challenges remain, particularly in Indonesia, Brazil, Argentina and Turkey. Based on the strength of the quarter, but tempered by risks associated with economic weakness in certain regions, we are increasing our adjusted EPS guidance for 2016 to $1.00 - $1.05 per diluted share.”
Review of Strategic Alternatives
On May 9, 2016, Ferro announced that the Board of Directors was exploring possible strategic alternatives for the Company to enhance shareholder value and had engaged Lazard Frères & Co. as its financial advisor to assist in the review process. The review process was extensive, covering multiple options, including the sale of the Company, a merger, transformational acquisitions, and the continuation of the Company’s value creation strategy.
After exploring each alternative, the Board of Directors concluded that the best course of action for creating shareholder value was to continue executing Ferro’s value creation strategy, focusing on organic and inorganic growth and improving profitability. The Company has identified efficiency optimization opportunities that are expected to increase profitability by $20 - $30 million annually, when the projects are fully implemented, which is expected to be over the next three years. The Company intends to provide information concerning these new optimization initiatives as plans are finalized and being implemented. In addition, the Company will continue to actively pursue strategic acquisitions, including transformational opportunities, to propel future growth. In assessing the option to sell the Company, the Board of Directors determined that third party proposals undervalued the Company compared to the intrinsic value created by remaining an independent public company and pursuing the Company’s growth agenda and cost optimization initiatives.
Addressing the strategic alternatives review process, Mr. Thomas said, “The Board of Directors has been diligent in reviewing multiple options concerning the future of the Company. While we remain confident that shareholder value will be enhanced through our current strategy, as exemplified in our first half results, it was prudent that all other alternatives be thoroughly assessed and vetted. As we have consistently stated over the last four years, the Company remains open to strategic alternatives, including a sale of the Company, but not at a discount to intrinsic value.”
Stock Repurchase
The Company’s Board of Directors has approved a new stock repurchase program under which the Company is authorized to repurchase up to an additional $25 million of the Company’s outstanding common stock on the open market, including through a Rule 10b5-1 plan, in privately negotiated transactions, or otherwise. This new program is in addition to the $75 million of authorization previously approved and announced over the last 12 months. Of the $100 million authorized, the Company previously purchased 4,458,345 shares of common stock at an average price of approximately $11.21 per share, for a total cost of $50 million. The Company’s available repurchase authorization now stands at $50 million.
Outlook
Based on the strength of the second-quarter operating results, the Company is increasing its prior adjusted earnings per diluted share guidance to $1.00 - $1.05 from $0.93 - $0.98 (see adjusted earnings note below). This guidance assumes foreign exchange rates approximately in line with those at July 15, 2016.
The guidance reflects the following items shown below (for full-year 2016 metrics; margins calculated as percent of net sales):
Constant Currency Sales growth: | 10.5% - 11.5% | |
Consolidated gross profit margin: | 30.5% - 31.0% | |
Adjusted SG&A expenses as percent of sales: | 17.5% - 18.0% | |
Other income and (expense): | $(5) - $(6) million | |
Interest expense: | $20.0 - $20.5 million | |
Effective tax rate: | 27% - 28% |
Continuing operations are expected to generate free cash flow of $85 - $95 million, with free cash flow defined as adjusted EBITDA less cash items used to operate the business, including cash taxes and interest, investment in working capital, capital expenditures and other cash items.
Antwerp Belgium Disposition Update
Ferro continues to work toward divesting its Europe-based Polymer Additives assets, including the Antwerp Belgium dibenzoates manufacturing assets and the related Polymer Additives European headquarters and lab facilities. These assets are currently classified as held-for-sale and reported as a discontinued operation. The Company expects to complete the disposition during the third quarter of 2016. The resolution of the matter could result in an impairment charge and other related expenses of up to $25 - $30 million.
Adjusted Earnings Guidance
Adjusted earnings per diluted share guidance excludes the impact of certain items, primarily associated with restructuring activities, transaction-related expenses, gains and losses on asset sales, and mark-to-market adjustments to the Company’s pension and postretirement benefit liabilities. The impact of adjusting for these items for the first six months of 2016 was an increase to GAAP earnings per diluted share from continuing operations of $0.03, from $0.53 to $0.56. It is not possible at this time to identify the potential amount or significance of these items for the balance of the year, as they have not occurred yet. Therefore, the Company is unable to reconcile its full-year 2016 adjusted earnings per diluted share guidance.
Conference Call
The Company will host a conference call to discuss its second-quarter financial results and its current outlook for 2016 on Thursday, July 28, 2016, at 10:00 a.m. Eastern Time. To listen to the call, dial 800-622-2443 if calling from the United States or Canada, or dial 303-223-2682 if calling from outside North America. Please call approximately 10 minutes before the conference call is scheduled to begin.
An audio replay of the call will be available through noon Eastern Time on August 4, 2016. To access the replay, dial 800-633-8284 (toll free) if calling from the United States or Canada, or dial 402-977-9140 if calling from outside North America. Use the program ID #21814015 to access the audio replay.
The conference call will also be broadcast live over the Internet and will be available for replay through September 30, 2016. The live broadcast and replay can be accessed through the Investor Information portion of the Company’s Web site at www.ferro.com. A podcast of the conference call also will be available on the site.
About Ferro Corporation
Ferro Corporation (http://www.ferro.com) is a leading global functional coatings and color solutions company that supplies technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the Company has approximately 4,880 employees globally and reported 2015 sales of $1.1 billion.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of Federal securities laws. These statements are subject to a variety of uncertainties, unknown risks, and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following:
- the exploration of strategic alternatives and the potential results therefrom;
- Ferro’s ability to successfully implement and/or administer its cost-saving initiatives, including its restructuring programs, and to produce the desired results;
- demand in the industries into which Ferro sells its products may be unpredictable, cyclical, or heavily influenced by consumer spending;
- the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
- currency conversion rates and economic, social, political, and regulatory conditions around the world;
- Ferro’s ability to successfully introduce new products or enter into new growth markets;
- Ferro’s ability to complete acquisitions, effectively integrate the businesses and achieve the expected synergies (including the Pinturas Benicarló, Ferer, Al Salomi, Nubiola and Vetriceramici transactions), as well as the acquisitions being accretive and Ferro achieving the expected returns on invested capital;
- the impact of interruption, damage to, failure, or compromise of the Company’s information systems;
- restrictive covenants in the Company’s credit facilities could affect its strategic initiatives and liquidity;
- Ferro’s ability to access capital markets, borrowings, or financial transactions;
- the availability of reliable sources of energy and raw materials at a reasonable cost;
- increasingly aggressive domestic and foreign governmental regulations on hazardous materials and regulations affecting health, safety and the environment;
- sale of products into highly regulated industries;
- limited or no redundancy for certain of the Company’s manufacturing facilities and possible interruption of operations at those facilities;
- competitive factors, including intense price competition;
- Ferro’s ability to protect its intellectual property or to successfully resolve claims of infringement brought against it;
- the impact of operating hazards and investments made in order to meet stringent environmental, health and safety regulations;
- management of Ferro’s general and administrative expenses;
- Ferro’s multi-jurisdictional tax structure and its ability to reduce its effective tax rate, including the impact of the Company’s performance on its ability to utilize significant deferred tax assets;
- the effectiveness of strategies to increase Ferro’s return on invested capital, and the short-term impact that acquisitions may have on return on invested capital;
- stringent labor and employment laws and relationships with the Company’s employees;
- the impact of requirements to fund employee benefit costs, especially post-retirement costs;
- implementation of new business processes and information systems, including the outsourcing of functions to third parties;
- risks associated with the manufacture and sale of material into industries making products for sensitive applications;
- exposure to lawsuits in the normal course of business;
- risks and uncertainties associated with intangible assets;
- Ferro’s borrowing costs could be affected adversely by interest rate increases;
- liens on the Company’s assets by its lenders affect its ability to dispose of property and businesses;
- Ferro may not pay dividends on its common stock in the foreseeable future;
- amount and timing of any repurchase of Ferro’s common stock; and
- other factors affecting the Company’s business that are beyond its control, including disasters, accidents and governmental actions.
The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations.
This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. The Company 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. Additional information regarding these risks can be found in our Annual Report on Form 10-K for the period ended December 31, 2015.
Table 1 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Operations (unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net sales | $ | 297,977 | $ | 268,214 | $ | 575,428 | $ | 530,986 | ||||||||
Cost of sales | 199,604 | 190,574 | 392,826 | 382,711 | ||||||||||||
Gross profit | 98,373 | 77,640 | 182,602 | 148,275 | ||||||||||||
Selling, general and administrative expenses | 57,871 | 52,695 | 110,517 | 102,151 | ||||||||||||
Restructuring and impairment charges | 787 | 1,116 | 1,668 | 1,625 | ||||||||||||
Other expense (income): | ||||||||||||||||
Interest expense | 5,428 | 3,110 | 10,275 | 6,260 | ||||||||||||
Interest earned | (115 | ) | (57 | ) | (200 | ) | (94 | ) | ||||||||
Foreign currency losses, net | 389 | 2,827 | 2,000 | 4,555 | ||||||||||||
Miscellaneous expense (income), net | 669 | (161 | ) | (2,784 | ) | 238 | ||||||||||
Income before income taxes | 33,344 | 18,110 | 61,126 | 33,540 | ||||||||||||
Income tax expense | 8,484 | 5,679 | 16,502 | 8,138 | ||||||||||||
Income from continuing operations | 24,860 | 12,431 | 44,624 | 25,402 | ||||||||||||
(Loss) from discontinued operations, net of income taxes | (5,748 | ) | (5,646 | ) | (35,242 | ) | (9,602 | ) | ||||||||
Net income | 19,112 | 6,785 | 9,382 | 15,800 | ||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 143 | 186 | 379 | (1,769 | ) | |||||||||||
Net income attributable to Ferro Corporation common shareholders | $ | 18,969 | $ | 6,599 | $ | 9,003 | $ | 17,569 | ||||||||
Earnings (loss) per share attributable to Ferro Corporation common shareholders: | ||||||||||||||||
Basic earnings (loss): | ||||||||||||||||
Continuing operations | $ | 0.30 | $ | 0.14 | $ | 0.53 | $ | 0.31 | ||||||||
Discontinued operations | (0.07 | ) | (0.06 | ) | (0.42 | ) | (0.11 | ) | ||||||||
$ | 0.23 | $ | 0.08 | $ | 0.11 | $ | 0.20 | |||||||||
Diluted earnings (loss): | ||||||||||||||||
Continuing operations | $ | 0.29 | $ | 0.14 | $ | 0.53 | $ | 0.31 | ||||||||
Discontinued operations | (0.07 | ) | (0.06 | ) | (0.42 | ) | (0.11 | ) | ||||||||
$ | 0.22 | $ | 0.08 | $ | 0.11 | $ | 0.20 | |||||||||
Shares outstanding: | ||||||||||||||||
Weighted-average basic shares | 83,209 | 87,264 | 83,260 | 87,189 | ||||||||||||
Weighted-average diluted shares | 84,424 | 88,800 | 84,199 | 88,656 | ||||||||||||
End-of-period basic shares | 83,228 | 87,270 | 83,228 | 87,270 |
Table 2 | ||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||
Segment Net Sales and Gross Profit (unaudited) | ||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Segment Net Sales | ||||||||||||||
Performance Coatings | $ | 140,589 | $ | 139,460 | $ | 268,713 | $ | 276,246 | ||||||
Performance Colors and Glass | 95,933 | 98,729 | 184,103 | 198,193 | ||||||||||
Pigments, Powders and Oxides | 61,455 | 30,025 | 122,612 | 56,547 | ||||||||||
Total segment net sales | $ | 297,977 | $ | 268,214 | $ | 575,428 | $ | 530,986 | ||||||
Segment Gross Profit | ||||||||||||||
Performance Coatings | $ | 39,234 | $ | 35,144 | $ | 71,349 | $ | 64,019 | ||||||
Performance Colors and Glass | 36,705 | 33,389 | 68,543 | 67,878 | ||||||||||
Pigments, Powders and Oxides | 22,404 | 9,292 | 42,690 | 17,146 | ||||||||||
Other costs of sales | 30 | (185 | ) | 20 | (768 | ) | ||||||||
Total gross profit | $ | 98,373 | $ | 77,640 | $ | 182,602 | $ | 148,275 | ||||||
Selling, general and administrative expenses | ||||||||||||||
Strategic services | $ | 29,012 | $ | 26,261 | $ | 57,416 | $ | 51,982 | ||||||
Functional services | 23,487 | 20,496 | 44,118 | 40,465 | ||||||||||
Incentive compensation | 3,161 | 72 | 5,146 | 1,724 | ||||||||||
Stock-based compensation | 2,211 | 5,866 | 3,837 | 7,980 | ||||||||||
Total selling, general and administrative expenses | $ | 57,871 | $ | 52,695 | $ | 110,517 | $ | 102,151 | ||||||
Restructuring and impairment charges | 787 | 1,116 | 1,668 | 1,625 | ||||||||||
Other expense, net | 6,371 | 5,719 | 9,291 | 10,959 | ||||||||||
Income before income taxes | $ | 33,344 | $ | 18,110 | $ | 61,126 | $ | 33,540 |
Table 3 | |||||||
Ferro Corporation and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets (unaudited) | |||||||
(Dollars in thousands) | June 30, | December 31, | |||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 49,416 | $ | 58,380 | |||
Accounts receivable, net | 278,931 | 231,970 | |||||
Inventories | 207,299 | 184,854 | |||||
Deferred income taxes | - | 12,088 | |||||
Other receivables | 32,008 | 34,088 | |||||
Other current assets | 15,479 | 15,695 | |||||
Current assets held-for-sale | 18,648 | 16,215 | |||||
Total current assets | 601,781 | 553,290 | |||||
Other assets | |||||||
Property, plant and equipment, net | 252,548 | 260,429 | |||||
Goodwill | 141,162 | 145,669 | |||||
Intangible assets, net | 110,493 | 106,633 | |||||
Deferred income taxes | 100,126 | 87,385 | |||||
Other non-current assets | 48,206 | 48,767 | |||||
Non-current assets held-for-sale | 370 | 23,178 | |||||
Total assets | $ | 1,254,686 | $ | 1,225,351 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Loans payable and current portion of long-term debt | $ | 10,451 | $ | 7,446 | |||
Accounts payable | 129,946 | 120,380 | |||||
Accrued payrolls | 28,713 | 28,584 | |||||
Accrued expenses and other current liabilities | 60,525 | 54,664 | |||||
Current liabilities held-for-sale | 4,165 | 7,156 | |||||
Total current liabilities | 233,800 | 218,230 | |||||
Other liabilities | |||||||
Long-term debt, less current portion | 485,436 | 466,108 | |||||
Postretirement and pension liabilities | 147,820 | 148,249 | |||||
Other non-current liabilities | 65,080 | 66,990 | |||||
Non-current liabilities held-for-sale | 1,643 | 1,493 | |||||
Total liabilities | 933,779 | 901,070 | |||||
Equity | |||||||
Total Ferro Corporation shareholders’ equity | 312,826 | 316,459 | |||||
Noncontrolling interests | 8,081 | 7,822 | |||||
Total liabilities and equity | $ | 1,254,686 | $ | 1,225,351 |
Table 4 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 19,112 | $ | 6,785 | $ | 9,382 | $ | 15,800 | ||||||||
Loss (gain) on sale of assets and business | 309 | 694 | (3,774 | ) | 988 | |||||||||||
Depreciation and amortization | 11,257 | 8,332 | 21,929 | 16,146 | ||||||||||||
Interest amortization | 329 | 289 | 644 | 586 | ||||||||||||
Restructuring and impairment | (513 | ) | 775 | 23,651 | (32 | ) | ||||||||||
Devaluation of Venezuela | - | - | - | 3,343 | ||||||||||||
Accounts receivable | (18,105 | ) | (5,912 | ) | (41,687 | ) | (17,757 | ) | ||||||||
Inventories | (9,989 | ) | (274 | ) | (17,695 | ) | 1,153 | |||||||||
Accounts payable | (2,329 | ) | (2,432 | ) | 3,226 | (1,511 | ) | |||||||||
Other current assets and liabilities, net | 1,092 | 2,840 | 2,968 | (20,786 | ) | |||||||||||
Other adjustments, net | 7,023 | 3,106 | (619 | ) | 6,004 | |||||||||||
Net cash provided by (used in) operating activities | 8,186 | 14,203 | (1,975 | ) | 3,934 | |||||||||||
Cash flows from investing activities | ||||||||||||||||
Capital expenditures for property, plant and equipment and other long lived assets | (6,679 | ) | (11,675 | ) | (14,044 | ) | (26,554 | ) | ||||||||
Proceeds from sale of assets | 11 | 34 | 3,597 | 125 | ||||||||||||
Business acquisitions, net of cash acquired | 1,270 | - | (6,639 | ) | (5,479 | ) | ||||||||||
Net cash (used in) investing activities | (5,398 | ) | (11,641 | ) | (17,086 | ) | (31,908 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Net (repayments) borrowings under loans payable | (530 | ) | 1,636 | 3,031 | (931 | ) | ||||||||||
Proceeds from revolving credit facility | 45,682 | 105,000 | 163,516 | 105,000 | ||||||||||||
Principal payments on revolving credit facility | (52,494 | ) | - | (92,706 | ) | - | ||||||||||
Principal payments on term loan facility | (750 | ) | (750 | ) | (51,500 | ) | (1,500 | ) | ||||||||
Payment of debt issuance costs | - | - | (301 | ) | - | |||||||||||
Purchase of treasury stock | - | - | (11,429 | ) | - | |||||||||||
Other financing activities | (286 | ) | (950 | ) | 211 | (181 | ) | |||||||||
Net cash (used in) provided by financing activities | (8,378 | ) | 104,936 | 10,822 | 102,388 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (859 | ) | (1,260 | ) | (725 | ) | (3,501 | ) | ||||||||
(Decrease) increase in cash and cash equivalents | (6,449 | ) | 106,238 | (8,964 | ) | 70,913 | ||||||||||
Cash and cash equivalents at beginning of period | 58,380 | 105,175 | 58,380 | 140,500 | ||||||||||||
Cash and cash equivalents at end of period | $ | 51,931 | $ | 211,413 | $ | 49,416 | $ | 211,413 | ||||||||
Cash paid during the period for: | ||||||||||||||||
Interest | $ | 4,520 | $ | 3,636 | $ | 9,283 | $ | 7,045 | ||||||||
Income taxes | $ | 4,763 | $ | 3,341 | $ | 7,432 | $ | 9,482 |
Table 5 | |||||||||||||||||||||||||
Ferro Corporation and Subsidiaries | |||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||
Reconciliation of Reported Income to Adjusted Income | |||||||||||||||||||||||||
For the Three Months Ended June 30 (unaudited) | |||||||||||||||||||||||||
(Dollars in | Selling | Restructuring | Other | Net income | |||||||||||||||||||||
thousands, | general and | and | expense | attributable | Diluted | ||||||||||||||||||||
except per | Cost of | administrative | impairment | (income), | Income tax | to common | earnings | ||||||||||||||||||
share amounts) | sales | expenses | charges | net | expense3 | shareholders | per share | ||||||||||||||||||
2016 | |||||||||||||||||||||||||
As reported | $ | 199,604 | $ | 57,871 | $ | 787 | $ | 6,371 | $ | 8,484 | $ | 18,969 | $ | 0.22 | |||||||||||
Special items: | |||||||||||||||||||||||||
Restructuring | - | - | (787 | ) | - | 244 | 543 | 0.01 | |||||||||||||||||
Other1 | - | (4,810 | ) | - | (700 | ) | 1,902 | 3,608 | 0.04 | ||||||||||||||||
Discontinued operations | - | - | - | - | - | 5,748 | 0.07 | ||||||||||||||||||
Total special items4 | - | (4,810 | ) | (787 | ) | (700 | ) | 2,146 | 9,899 | 0.12 | |||||||||||||||
As adjusted | $ | 199,604 | $ | 53,061 | $ | - | $ | 5,671 | $ | 10,630 | $ | 28,868 | $ | 0.34 | |||||||||||
2015 | |||||||||||||||||||||||||
As reported | $ | 190,574 | $ | 52,695 | $ | 1,116 | $ | 5,719 | $ | 5,679 | $ | 6,599 | $ | 0.08 | |||||||||||
Special items: | |||||||||||||||||||||||||
Restructuring | - | - | (1,116 | ) | - | 325 | 791 | 0.01 | |||||||||||||||||
Other2 | (116 | ) | (3,982 | ) | - | (2,703 | ) | 2,498 | 4,303 | 0.05 | |||||||||||||||
Discontinued operations | - | - | - | - | - | 5,646 | 0.06 | ||||||||||||||||||
Total special items4 | (116 | ) | (3,982 | ) | (1,116 | ) | (2,703 | ) | 2,823 | 10,740 | 0.12 | ||||||||||||||
As adjusted | $ | 190,458 | $ | 48,713 | $ | - | $ | 3,016 | $ | 8,502 | $ | 17,339 | $ | 0.20 |
(1) | The adjustments to “Selling general and administrative expenses” primarily relate to certain business development activities; and, the adjustment to “Other expense (income), net” relates to a change on the finalization of the purchase price for the acquisition of Vetriceramici. | |
(2) | The adjustments to “Selling general and administrative expenses” primarily relate to certain business development activities; and, the adjustments to “Other expense (income), net” primarily relate to the impact of the loss on a foreign currency contract associated with the purchase of Nubiola. | |
(3) | The tax rate reflects the reported tax rate, adjusted for pro forma adjustments being tax effected at the respective statutory rate where the item originated. | |
(4) | Due to rounding, total earnings per share related to special items does not always add to the total adjusted earnings per share. |
It should be noted that adjusted income, earnings per share and other adjusted items referred to above are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted income, earnings per share and other adjusted items presented above exclude certain special items including restructuring charges, certain business development activities, gains on sale of assets, the overall financial impact of currency related items in Venezuela and discontinued operations. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 6 | |||||||||||||||||||||||||||
Ferro Corporation and Subsidiaries | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||
Reconciliation of Reported Income to Adjusted Income | |||||||||||||||||||||||||||
For the Six Months Ended June 30 (unaudited) | |||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||
(Dollars in | Selling | Restructuring | Other | (loss) | Diluted | ||||||||||||||||||||||
thousands, | general and | and | expense | Income | attributable | earnings | |||||||||||||||||||||
except per | Cost of | administrative | impairment | (income), | tax | to common | (loss) per | ||||||||||||||||||||
share amounts) | sales | expenses | charges | net | expense3 | shareholders | share | ||||||||||||||||||||
2016 | |||||||||||||||||||||||||||
As reported | $ | 392,826 | $ | 110,517 | $ | 1,668 | $ | 9,291 | $ | 16,502 | $ | 9,003 | $ | 0.11 | |||||||||||||
Special items: | |||||||||||||||||||||||||||
Restructuring | - | - | (1,668 | ) | - | 515 | 1,153 | 0.01 | |||||||||||||||||||
Other1 | - | (6,241 | ) | - | 3,065 | 1,267 | 1,909 | 0.02 | |||||||||||||||||||
Discontinued operations | - | - | - | - | - | 35,242 | 0.42 | ||||||||||||||||||||
Total special items4 | - | (6,241 | ) | (1,668 | ) | 3,065 | 1,782 | 38,304 | 0.45 | ||||||||||||||||||
As adjusted | $ | 392,826 | $ | 104,276 | $ | - | $ | 12,356 | $ | 18,284 | $ | 47,307 | $ | 0.56 | |||||||||||||
2015 | |||||||||||||||||||||||||||
As reported | $ | 382,711 | $ | 102,151 | $ | 1,625 | $ | 10,959 | $ | 8,138 | $ | 17,569 | $ | 0.20 | |||||||||||||
Special items: | |||||||||||||||||||||||||||
Restructuring | - | - | (1,625 | ) | - | 487 | 1,138 | 0.01 | |||||||||||||||||||
Other2 | (2,754 | ) | (6,397 | ) | - | (4,763 | ) | 3,460 | 10,454 | 0.12 | |||||||||||||||||
Discontinued operations | - | - | - | - | - | 9,602 | 0.11 | ||||||||||||||||||||
Noncontrolling interest | - | - | - | - | - | (1,453 | ) | (0.02 | ) | ||||||||||||||||||
Total special items4 | (2,754 | ) | (6,397 | ) | (1,625 | ) | (4,763 | ) | 3,947 | 19,741 | 0.22 | ||||||||||||||||
As adjusted | $ | 379,957 | $ | 95,754 | $ | - | $ | 6,196 | $ | 12,085 | $ | 37,310 | $ | 0.42 |
(1) | The adjustments to “Selling general and administrative expenses” primarily relate to certain business development activities; and, the adjustment to “Other expense (income), net” primarily relates to the gain on an asset sale that was recognized during the first quarter and to a change on the finalization of the purchase price for the acquisition of Vetriceramici. | |
(2) | The adjustments to “Cost of sales” relate to impacts of currency-related items in Venezuela; the adjustments to “Selling general and administrative expenses” primarily relate to certain business development activities; and, the adjustments to “Other expense (income), net” primarily relate to impacts of currency-related items in Venezuela and the impact of the loss on a foreign currency contract associated with the purchase of Nubiola. | |
(3) | The tax rate reflects the reported tax rate, adjusted for pro forma adjustments being tax effected at the respective statutory rate where the item originated. | |
(4) | Due to rounding, total earnings per share related to special items does not always add to the total adjusted earnings per share. |
It should be noted that adjusted income, earnings per share and other adjusted items referred to above are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted income, earnings per share and other adjusted items presented above exclude certain special items including restructuring charges, certain business development activities, gains on sale of assets, the overall financial impact of currency related items in Venezuela and discontinued operations. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 7 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Supplemental Information | ||||||||||||||||
Schedule of Adjusted Gross Profit (unaudited) | ||||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Performance Coatings | $ | 140,589 | $ | 139,460 | $ | 268,713 | $ | 276,246 | ||||||||
Performance Colors and Glass | 95,933 | 98,729 | 184,103 | 198,193 | ||||||||||||
Pigments, Powders and Oxides | 61,455 | 30,025 | 122,612 | 56,547 | ||||||||||||
Total net sales | $ | 297,977 | $ | 268,214 | $ | 575,428 | $ | 530,986 | ||||||||
Total net sales | $ | 297,977 | $ | 268,214 | $ | 575,428 | $ | 530,986 | ||||||||
Adjusted cost of sales1 | 199,604 | 190,458 | 392,826 | 379,957 | ||||||||||||
Adjusted gross profit | $ | 98,373 | $ | 77,756 | $ | 182,602 | $ | 151,029 | ||||||||
Adjusted gross profit percentage | 33.0 | % | 29.0 | % | 31.7 | % | 28.4 | % |
(1) | The adjustments primarily relate to the impact of the loss on a foreign currency contract associated with the purchase of Nubiola for the three and six months ended June 30, 2015, and the impact of currency-related items in Venezuela in the six months ended June 30, 2015. |
It should be noted that adjusted cost of sales and adjusted gross profit are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted gross profit and adjusted cost of sales excludes certain items, primarily comprised of the impact of the loss on a foreign currency contract associated with the purchase of Nubiola and currency-related items in Venezuela in 2015. We believe this data provides investors with additional useful information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 8 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Supplemental Information | ||||||||||||||||
Constant Currency Schedule of Adjusted Operating Profit (unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
(Dollars in thousands) | June 30, | |||||||||||||||
Adjusted | 2016 vs | |||||||||||||||
2015 | 2015(1) | 2016 | Adjusted 2015 | |||||||||||||
Segment net sales | ||||||||||||||||
Performance Coatings | $ | 139,460 | $ | 131,883 | $ | 140,589 | $ | 8,706 | ||||||||
Performance Colors and Glass | 98,729 | 98,144 | 95,933 | (2,211 | ) | |||||||||||
Pigments, Powders and Oxides | 30,025 | 29,981 | 61,455 | 31,474 | ||||||||||||
Total segment net sales | $ | 268,214 | $ | 260,008 | $ | 297,977 | $ | 37,969 | ||||||||
Segment adjusted gross profit | ||||||||||||||||
Performance Coatings | $ | 35,144 | $ | 33,523 | $ | 39,234 | $ | 5,711 | ||||||||
Performance Colors and Glass | 33,389 | 33,280 | 36,705 | 3,425 | ||||||||||||
Pigments, Powders and Oxides | 9,292 | 9,287 | 22,404 | 13,117 | ||||||||||||
Other costs of sales | (69 | ) | (69 | ) | 30 | 99 | ||||||||||
Total adjusted gross profit | $ | 77,756 | $ | 76,021 | $ | 98,373 | $ | 22,352 | ||||||||
Adjusted selling, general and administrative expenses | ||||||||||||||||
Strategic services | $ | 26,261 | $ | 25,968 | $ | 29,012 | $ | 3,044 | ||||||||
Functional services | 16,514 | 16,224 | 18,677 | 2,453 | ||||||||||||
Incentive compensation | 72 | 40 | 3,161 | 3,121 | ||||||||||||
Stock-based compensation | 5,866 | 5,866 | 2,211 | (3,655 | ) | |||||||||||
Total adjusted selling, general and administrative expenses | $ | 48,713 | $ | 48,098 | $ | 53,061 | $ | 4,963 | ||||||||
Adjusted operating profit | $ | 29,043 | $ | 27,923 | $ | 45,312 | $ | 17,389 | ||||||||
Adjusted operating profit as a % of net sales | 10.8 | % | 10.7 | % | 15.2 | % |
(1) | Reflects the remeasurement of 2015 reported and adjusted local currency results using 2016 exchange rates, resulting in constant currency comparative figures to 2016 reported and adjusted results. See Table 5 for pro forma adjustments applicable to the three-month comparative periods, respectively. |
It should be noted that the adjusted 2015 results is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted 2015 results are remeasured using the respective 2016 exchange rates. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 9 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Supplemental Information | ||||||||||||||||
Constant Currency Schedule of Adjusted Operating Profit (unaudited) | ||||||||||||||||
Six Months Ended | ||||||||||||||||
(Dollars in thousands) | June 30, | |||||||||||||||
Adjusted | 2016 vs | |||||||||||||||
2015 | 2015(1) | 2016 | Adjusted 2015 | |||||||||||||
Segment net sales | ||||||||||||||||
Performance Coatings | $ | 276,246 | $ | 253,704 | $ | 268,713 | $ | 15,009 | ||||||||
Performance Colors and Glass | 198,193 | 194,840 | 184,103 | (10,737 | ) | |||||||||||
Pigments, Powders and Oxides | 56,547 | 56,156 | 122,612 | 66,456 | ||||||||||||
Total segment net sales | $ | 530,986 | $ | 504,700 | $ | 575,428 | $ | 70,728 | ||||||||
Segment adjusted gross profit | ||||||||||||||||
Performance Coatings | $ | 66,657 | $ | 62,368 | $ | 71,349 | $ | 8,981 | ||||||||
Performance Colors and Glass | 67,878 | 66,835 | 68,543 | 1,708 | ||||||||||||
Pigments, Powders and Oxides | 17,146 | 17,039 | 42,690 | 25,651 | ||||||||||||
Other costs of sales | (652 | ) | (652 | ) | 20 | 672 | ||||||||||
Total adjusted gross profit | $ | 151,029 | $ | 145,590 | $ | 182,602 | $ | 37,012 | ||||||||
Adjusted selling, general and administrative expenses | ||||||||||||||||
Strategic services | $ | 51,982 | $ | 50,565 | $ | 57,416 | $ | 6,851 | ||||||||
Functional services | 34,068 | 32,914 | 37,877 | 4,963 | ||||||||||||
Incentive compensation | 1,724 | 1,600 | 5,146 | 3,546 | ||||||||||||
Stock-based compensation | 7,980 | 7,980 | 3,837 | (4,143 | ) | |||||||||||
Total adjusted selling, general and administrative expenses | $ | 95,754 | $ | 93,059 | $ | 104,276 | $ | 11,217 | ||||||||
Adjusted operating profit | $ | 55,275 | $ | 52,531 | $ | 78,326 | $ | 25,795 | ||||||||
Adjusted operating profit as a % of net sales | 10.4 | % | 10.4 | % | 13.6 | % |
(1) | Reflects the remeasurement of 2015 reported and adjusted local currency results using 2016 exchange rates, resulting in constant currency comparative figures to 2016 reported and adjusted results. See Table 6 for pro forma adjustments applicable to the six-month comparative periods, respectively. |
It should be noted that the adjusted 2015 results is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted 2015 results are remeasured using the respective 2016 exchange rates. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 10 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Supplemental Information | ||||||||||||||||
Reconciliation of Net income attributable to Ferro Corporation | ||||||||||||||||
common shareholders to Adjusted EBITDA (unaudited) | ||||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income attributable to Ferro Corporation common shareholders | $ | 18,969 | $ | 6,599 | $ | 9,003 | $ | 17,569 | ||||||||
Net income (loss) attributable to noncontrolling interest | 143 | 186 | 379 | (1,769 | ) | |||||||||||
Loss from discontinued operations, net of income taxes | 5,748 | 5,646 | 35,242 | 9,602 | ||||||||||||
Restructuring and impairment charges | 787 | 1,116 | 1,668 | 1,625 | ||||||||||||
Other (income) expense, net | 943 | 2,609 | (984 | ) | 4,699 | |||||||||||
Interest expense | 5,428 | 3,110 | 10,275 | 6,260 | ||||||||||||
Income tax expense | 8,484 | 5,679 | 16,502 | 8,138 | ||||||||||||
Depreciation and amortization | 11,586 | 8,621 | 22,573 | 16,732 | ||||||||||||
Less: interest amortization expense and other | (329 | ) | (289 | ) | (644 | ) | (586 | ) | ||||||||
Cost of sales adjustments | - | 116 | - | 2,754 | ||||||||||||
SG&A Adjustments | 4,810 | 3,982 | 6,241 | 6,397 | ||||||||||||
Adjusted EBITDA | $ | 56,569 | $ | 37,375 | $ | 100,255 | $ | 71,421 | ||||||||
Net sales | $ | 297,977 | $ | 268,214 | $ | 575,428 | $ | 530,986 | ||||||||
Adjusted EBITDA as a % of net sales | 19.0 | % | 13.9 | % | 17.4 | % | 13.5 | % |
It should be noted that adjusted EBITDA is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted EBITDA is net income attributable to Ferro Corporation common shareholders before the effects of net income (loss) attributable to noncontrolling interest, discontinued operations, restructuring and impairment charges, other (income) expense, net, interest expense, income tax expense, depreciation and amortization, nonrecurring adjustments to cost of sales and nonrecurring adjustments to SG&A. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.
Table 11 | |||||||||
Ferro Corporation and Subsidiaries | |||||||||
Supplemental Information | |||||||||
Return on Invested Capital | |||||||||
For the Rolling Twelve Months Ended (unaudited) | |||||||||
(Dollars in thousands) | June 30, | December 31, | |||||||
2016 | 2015 | ||||||||
Gross profit | $ | 336,007 | $ | 301,680 | |||||
Selling, general and administrative expenses | 225,265 | 216,899 | |||||||
Total operating income | 110,742 | 84,781 | |||||||
Pro forma adjustments1 | 26,639 | 29,539 | |||||||
Adjusted operating profit before tax | 137,381 | 114,320 | |||||||
Less: Tax at pro forma rate2 | (35,719 | ) | (29,723 | ) | |||||
Net operating profit after tax | $ | 101,662 | $ | 84,597 | |||||
Recent acquisitions3 NOPAT gain | 16,223 | 11,083 | |||||||
Net operating profit after tax excluding recent acquisitions | $ | 85,439 | $ | 73,514 | |||||
Equity | 320,907 | 324,281 | |||||||
Equity - discontinued operations | (13,210 | ) | (30,744 | ) | |||||
Debt | 495,887 | 473,554 | |||||||
Off balance sheet precious metal leases | 26,599 | 20,464 | |||||||
Postretirement and pension liabilities | 147,820 | 148,249 | |||||||
Environmental liabilities | 14,903 | 13,824 | |||||||
Release of valuation allowance | - | (63,289 | ) | ||||||
Cash | (49,416 | ) | (58,380 | ) | |||||
Invested capital | $ | 943,490 | $ | 827,959 | |||||
Return on invested capital | 10.8 | % | 10.2 | % | |||||
Less: recent acquisitions invested capital | 208,720 | 292,543 | |||||||
Invested capital excluding recent acquisitions | $ | 734,770 | $ | 535,416 | |||||
Return on invested capital excluding recent acquisitions | 11.6 | % | 13.7 | % |
(1) | Primarily includes adjustments for the annual remeasurement of our pension and other postretirement benefit plans, certain business development activities, currency-related items in Venezuela and costs associated with certain reorganization projects. | |
(2) | Operating profit is tax effected at 26.0%, as this represents a normalized tax rate reflecting our current mix of business. This tax rate deviates from our full year 2016 estimate and 2015 due to certain discrete items that would not be considered normalized, as well as certain tax planning opportunities to be implemented. | |
(3) | For the rolling twelve months ended June 30, 2016, the recent acquisitions include Nubiola, Al Salomi, Ferer and Pinturas. For the rolling twelve months ended December 31, 2015, the recent acquisitions include Vetriceramici, Nubiola and Al Salomi. |
It should be noted that adjusted operating profit and return on invested capital are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted operating profit is operating profit before the effects of discontinued operations, non-recurring adjustments to cost of sales, and non-recurring adjustments to SG&A. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees.
Table 12 | ||||||||||||||||
Ferro Corporation and Subsidiaries | ||||||||||||||||
Supplemental Information | ||||||||||||||||
Adjusted EBITDA Cash Flow (unaudited) | ||||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
As Adjusted | ||||||||||||||||
Adjusted EBITDA(1) | $ | 56,569 | $ | 37,375 | $ | 100,255 | $ | 71,421 | ||||||||
Capital expenditures | (6,016 | ) | (3,741 | ) | (13,222 | ) | (8,228 | ) | ||||||||
Working capital | (28,833 | ) | (10,844 | ) | (51,517 | ) | (26,346 | ) | ||||||||
Cash income taxes | (4,763 | ) | (3,341 | ) | (7,432 | ) | (9,482 | ) | ||||||||
Cash interest | (4,520 | ) | (3,636 | ) | (9,283 | ) | (7,045 | ) | ||||||||
Pension | (1,576 | ) | (1,726 | ) | (2,498 | ) | (4,644 | ) | ||||||||
Incentive compensation payments | - | - | (8,802 | ) | (14,584 | ) | ||||||||||
Other | 2,155 | 318 | 2,558 | (994 | ) | |||||||||||
Total Free Cash Flow from Continuing Operations | $ | 13,016 | $ | 14,405 | $ | 10,059 | $ | 98 | ||||||||
Discontinued operations | (7,146 | ) | (9,875 | ) | (15,729 | ) | (18,137 | ) | ||||||||
Restructuring/Other | (1,271 | ) | (511 | ) | (2,076 | ) | (1,657 | ) | ||||||||
(Outflows) from M&A activity | (2,575 | ) | (3,305 | ) | (12,122 | ) | (11,381 | ) | ||||||||
Stock repurchase | - | - | (11,429 | ) | - | |||||||||||
Change in Net Debt | $ | 2,024 | $ | 714 | $ | (31,297 | ) | $ | (31,077 | ) |
(1) | See table 10 for the reconciliation of net income attributable to Ferro Corporation common shareholders to adjusted EBITDA. |
It should be noted that total free cash flow from continuing operations and change in net debt are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted EBITDA is net income before the effects of income (loss) attributable to noncontrolling interest, discontinued operations, restructuring and impairment charges, other (income) expense net, interest expense, income tax expense, depreciation and amortization, nonrecurring adjustments to cost of sales, and nonrecurring adjustments to SG&A. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160727006540/en/
Contacts:
Investor Contact:
John Bingle, 216-875-5411
Treasurer
and Director of Investor Relations
john.bingle@ferro.com
or
Media
Contact:
Mary Abood, 216-875-5401
Director, Corporate
Communications
mary.abood@ferro.com