PRESS RELEASE
OM GROUP ANNOUNCES FOURTH QUARTER 2012 FINANCIAL RESULTS
Strong operating cash flow; Debt levels reduced; Significant cost reduction actions underway; 2013 EBITDA levels forecasted
CLEVELAND, Feb. 19, 2013 /PRNewswire/ -- OM Group, Inc. (NYSE: OMG) today announced financial results for the fourth quarter ended December 31, 2012. The Company reported a loss of $(1.06) of diluted earnings per share from continuing operations, which included $(0.38) relating to its Advanced Materials business. On January 21, 2013, the Company announced the sale of this business with an expected close before the end of April. Fourth quarter 2012 results also include accelerated debt repayment charges of $(0.17), a $(0.39) lower-of-cost-or-market charge, $(0.18) resulting from the final impact of inventory step-up charges related to the 2011 acquisition of Vacuumschmelze, and a $0.19 favorable purchase price settlement for the 2010 acquisition of EaglePicher Technologies. Excluding these items, the Company reported adjusted diluted earnings per share from continuing operations of $(0.13).
OM Group also reported $19 million of adjusted EBITDA, excluding the results of Advanced Materials and the LCM charge, and $51 million of cash flow from operations in the fourth quarter of 2012. The Company ended the year with $228 million of cash and $467 million of debt. The Company expects initial cash proceeds of $325 million from the sale of its Advanced Materials business and potential proceeds of up to an additional $110 million based on the business achieving certain revenue targets over three years. The Company is targeting the proceeds from the sale, along with available cash on hand, to repay a substantial portion of its debt and significantly reduce future interest expense.
"Our fourth quarter performance was highlighted by continued strong cash flow performance, enabling us to again accelerate our debt repayment," said Joe Scaminace, Chairman and Chief Executive Officer of OM Group, Inc. "The pending sale of the Advanced Materials business further strengthens our balance sheet, providing us with the capacity and flexibility to execute our plans in spite of challenging business conditions and to support our recently announced share repurchase program."
Fourth quarter 2012 sales of $340 million were 22 percent lower than in the prior year comparable quarter, primarily due to lower prices and volumes in the Advanced Materials business and lower rare-earth pricing effects in the Magnetic Technologies business. The Battery Technologies business achieved higher sales levels than in the fourth quarter of 2011, and Specialty Chemicals sales levels were slightly lower.
"We previously announced a broad range of cost reduction initiatives to improve our financial performance and cost structure," said Mr. Scaminace. "These initiatives are expected to contribute $10-20 million of EBITDA in 2013, and will better position the Company for expanded profitability as macroeconomic conditions improve."
Due to the significant positive change in its profile following the expected sale of its Advanced Materials business, the Company provided a 2013 forecast of $120-140 million of adjusted EBITDA. Results are expected to strengthen in the second half of the year, paced to track anticipated macroeconomic improvements in the Company's primary geographic markets and applications, and benefitting from organic growth initiatives and cost reduction efforts. This forecast excludes Advanced Materials business results and divestiture impacts, related accelerated amortization of deferred financing fees, and restructuring costs associated with cost reduction actions.
Mr. Scaminace concluded, "This is an exciting time at OM Group. We are exiting our commodity business, building a rock-solid balance sheet, improving our cost structure, implementing organic growth programs, and sharpening our focus on synergistic acquisitions. We are well-positioned to execute our strategy and create long-term shareholder value."
Webcast Information
OM Group has scheduled a conference call and live audio broadcast on the Web for 10 AM EST today. Investors may access the live audio broadcast by logging on to http://investor.omgi.com. A copy of management's presentation materials will be available on OMG's website before the call. The company recommends visiting the website at least 15 minutes prior to the webcast to download and install any necessary software. A webcast audio replay will be available on the "Investor Relations - Presentations" page of the company's website three hours after the call.
About OM Group
OM Group is a technology-based industrial growth company serving attractive global markets, including automotive systems, electronic devices, aerospace, general industrial and renewable energy. Its business platforms use innovative technologies and expertise to address customers' complex applications and demanding requirements. For more information, visit the Company's website at www.omgi.com.
Forward-Looking Statements
The foregoing discussion may include forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions and are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the company. These uncertainties and factors could cause actual results of the company to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. Such uncertainties and factors include: successful completion of the sale of our Advanced Materials business; successful execution of the GTL supply agreement signed in connection with the Advanced Materials sale; risks arising from uncertainty in worldwide economic conditions; extended business interruption at our facilities; fluctuations in the price and uncertainties in the supply of rare earth materials and other raw materials; our ability to identify, complete and
integrate acquisitions aligned with our strategy; restrictive covenants in our Senior Secured Credit Facility which may affect our ability to operate our business successfully; indebtedness may impair our ability to operate our business successfully; changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns; the majority of our operations are outside the United States, which subjects us to risks that may adversely affect our operating results; level of returns on pension plan assets and changes in the actuarial assumptions; the majority of our cash is generated and held outside the United States; the timing and amount of common share repurchases, if any; fluctuations in foreign exchange rates; unanticipated costs or liabilities for compliance with environmental regulation; changes in environmental, health and safety regulatory requirements; technological changes in our industry or in our customers' products; our ability to adequately protect or enforce our intellectual property rights; disruption of our relationship with key customers or any material adverse change in their businesses; and the risk factors set forth in Part 1, Item 1a of our Annual Report on Form 10-K for the year ended December 31, 2011.
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| | | | | | | | |
| OM Group, Inc. and Subsidiaries |
| Unaudited Condensed Consolidated Balance Sheets |
| | | | | |
| | | December 31, 2012 |
| | December 31, 2011 |
|
| (In thousands) | | | | |
| ASSETS |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 227,612 |
| | $ | 292,146 |
|
| Restricted cash on deposit | | 22,793 |
| | 92,813 |
|
| Accounts receivable, net | | 174,613 |
| | 212,152 |
|
| Inventories | | 463,093 |
| | 615,018 |
|
| Refundable and prepaid income taxes | | 3,207 |
| | 42,480 |
|
| Other current assets | | 48,258 |
| | 54,833 |
|
| Total current assets | | 939,576 |
| | 1,309,442 |
|
| Property, plant and equipment, net | | 496,755 |
| | 482,313 |
|
| Goodwill | | 543,269 |
| | 544,471 |
|
| Intangible assets, net | | 429,672 |
| | 433,275 |
|
| Notes receivable from joint venture partner | | 16,015 |
| | 16,015 |
|
| Other non-current assets | | 74,140 |
| | 88,316 |
|
| Total assets | | $ | 2,499,427 |
| | $ | 2,873,832 |
|
| | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current liabilities | | | | |
| Current portion of long-term debt | | $ | 13,309 |
| | $ | 13,265 |
|
| Accounts payable | | 128,381 |
| | 170,466 |
|
| Liability related to joint venture partner injunction | | 22,793 |
| | 92,813 |
|
| Accrued income taxes | | 23,913 |
| | 19,806 |
|
| Accrued employee costs | | 41,762 |
| | 49,699 |
|
| Deferred income taxes | | 4,724 |
| | 23,449 |
|
| Purchase price of VAC payable to seller | | 75,351 |
| | — |
|
| Other current liabilities | | 69,012 |
| | 79,026 |
|
| Total current liabilities | | 379,245 |
| | 448,524 |
|
| Long-term debt | | 454,054 |
| | 663,167 |
|
| Deferred income taxes | | 121,451 |
| | 129,945 |
|
| Pension liabilities | | 233,823 |
| | 204,248 |
|
| Purchase price of VAC payable to seller | | 11,259 |
| | 86,513 |
|
| Other non-current liabilities | | 55,446 |
| | 62,032 |
|
| Stockholders’ equity: | | | | |
| Total OM Group, Inc. stockholders’ equity | | 1,206,710 |
| | 1,234,902 |
|
| Noncontrolling interests | | 37,439 |
| | 44,501 |
|
| Total equity | | 1,244,149 |
| | 1,279,403 |
|
| Total liabilities and equity | | $ | 2,499,427 |
| | $ | 2,873,832 |
|
| | | | | |
|
| | | | | | | | | | | | | | | | |
| OM Group, Inc. and Subsidiaries |
| Unaudited Condensed Statements of Consolidated Operations |
| | | Three Months Ended December 31, | | Year Ended December 31, |
| (In thousands, except per share data) | | 2012 | | 2011 | | 2012 | | 2011 |
| Net sales | | $ | 340,413 |
| | $ | 438,611 |
| | $ | 1,637,791 |
| | $ | 1,514,535 |
|
| Cost of goods sold | | 311,069 |
| | 347,067 |
| | 1,381,441 |
| | 1,258,649 |
|
| Gross profit | | 29,344 |
| | 91,544 |
| | 256,350 |
| | 255,886 |
|
| Selling, general and administrative expenses | | 64,407 |
| | 75,401 |
| | 260,519 |
| | 229,052 |
|
| Gain on sale of property | | — |
| | — |
| | (2,857 | ) | | (9,693 | ) |
| Operating profit (loss) | | (35,063 | ) | | 16,143 |
| | (1,312 | ) | | 36,527 |
|
| Other income (expense): | | | | | | | | |
| Interest expense | | (9,781 | ) | | (11,941 | ) | | (45,798 | ) | | (23,268 | ) |
| Accelerated amortization of deferred financing fees | | (5,275 | ) | | — |
| | (6,524 | ) | | — |
|
| Interest income | | 244 |
| | 459 |
| | 774 |
| | 1,440 |
|
| Foreign exchange gain (loss) | | 877 |
| | 3,300 |
| | (1,007 | ) | | 10,564 |
|
| Other, net | | 4,789 |
| | 2,585 |
| | 5,418 |
| | 3,680 |
|
| | | (9,146 | ) | | (5,597 | ) | | (47,137 | ) | | (7,584 | ) |
| Income (loss) from continuing operations before income tax expense | | (44,209 | ) | | 10,546 |
| | (48,449 | ) | | 28,943 |
|
| Income tax benefit | | 4,063 |
| | 42,293 |
| | 2,771 |
| | 17,796 |
|
| Income (loss) from continuing operations, net of tax | | (40,146 | ) | | 52,839 |
| | (45,678 | ) | | 46,739 |
|
| Income (loss) from discontinued operations, net of tax | | (156 | ) | | 36 |
| | (266 | ) | | (59 | ) |
| Consolidated net income (loss) | | (40,302 | ) | | 52,875 |
| | (45,944 | ) | | 46,680 |
|
| Net (income) loss attributable to noncontrolling interests | | 6,303 |
| | 147 |
| | 7,063 |
| | (4,669 | ) |
| Net income (loss) attributable to OM Group, Inc. common stockholders | | $ | (33,999 | ) | | $ | 53,022 |
| | $ | (38,881 | ) | | $ | 42,011 |
|
| Earnings per common share — basic: | | | | | | | | |
| Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders | | $ | (1.06 | ) | | $ | 1.66 |
| | $ | (1.21 | ) | | $ | 1.35 |
|
| Loss from discontinued operations attributable to OM Group, Inc. common stockholders | | (0.01 | ) | | — |
| | (0.01 | ) | | — |
|
| Net income (loss) attributable to OM Group, Inc. common stockholders | | $ | (1.07 | ) | | $ | 1.66 |
| | $ | (1.22 | ) | | $ | 1.35 |
|
| Earnings per common share — assuming dilution: | | | | | | | | |
| Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders | | $ | (1.06 | ) | | $ | 1.66 |
| | $ | (1.21 | ) | | $ | 1.35 |
|
| Loss from discontinued operations attributable to OM Group, Inc. common stockholders | | (0.01 | ) | | — |
| | (0.01 | ) | | — |
|
| Net income (loss) attributable to OM Group, Inc. common stockholders | | $ | (1.07 | ) | | $ | 1.66 |
| | $ | (1.22 | ) | | $ | 1.35 |
|
| Weighted average shares outstanding | | | | | | | | |
| Basic | | 31,896 |
| | 31,856 |
| | 31,885 |
| | 31,079 |
|
| Assuming dilution | | 31,896 |
| | 31,989 |
| | 31,885 |
| | 31,244 |
|
| Amounts attributable to OM Group, Inc. common stockholders: | | | | | | | | |
| Income (loss) from continuing operations, net of tax | | $ | (33,843 | ) | | $ | 52,986 |
| | $ | (38,615 | ) | | $ | 42,070 |
|
| Income (loss) from discontinued operations, net of tax | | (156 | ) | | 36 |
| | (266 | ) | | (59 | ) |
| Net income (loss) | | $ | (33,999 | ) | | $ | 53,022 |
| | $ | (38,881 | ) | | $ | 42,011 |
|
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| | | | | | | | | | | | | | | | |
| OM Group, Inc. and Subsidiaries |
| Unaudited Condensed Statements of Consolidated Cash Flows |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31 | | Year Ended December 31 |
| (In thousands) | | 2012 | | 2011 | | 2012 | | 2011 |
| Operating activities | | | | | | | | |
| Consolidated net income (loss) | | $ | (40,302 | ) | | $ | 52,875 |
| | $ | (45,944 | ) | | $ | 46,680 |
|
| Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: | | | | | | | | |
| (Income) loss from discontinued operations | | 156 |
| | (36 | ) | | 266 |
| | 59 |
|
| Depreciation and amortization | | 22,914 |
| | 23,103 |
| | 89,276 |
| | 70,367 |
|
| Amortization of deferred financing fees | | 1,267 |
| | 774 |
| | 5,405 |
| | 2,305 |
|
| Accelerated amortization of deferred financing fees | | 5,275 |
| | — |
| | 6,524 |
| | — |
|
| Share-based compensation expense | | 398 |
| | 1,392 |
| | 5,548 |
| | 6,510 |
|
| Foreign exchange (gain) loss | | (877 | ) | | (3,300 | ) | | 1,007 |
| | (10,564 | ) |
| Deferred income tax provision (benefit) | | (10,634 | ) | | (4,245 | ) | | (30,573 | ) | | (31,567 | ) |
| VAC lower of cost or market ("LCM") charges (a) | | 24,648 |
| | (47,910 | ) | | 78,399 |
| | 14,534 |
|
| Allowance on GTL prepaid tax asset | | (5,645 | ) | | — |
| | (5,645 | ) | | (6,225 | ) |
| Gain on sale of property | | — |
| | — |
| | (2,857 | ) | | (9,693 | ) |
| Other non-cash items | | 199 |
| | (2,330 | ) | | (2,954 | ) | | (6,173 | ) |
| Changes in operating assets and liabilities, excluding the effect of business acquisitions | | | | | | | | |
| Accounts receivable | | 30,888 |
| | 31,569 |
| | 37,752 |
| | 19,391 |
|
| Inventories (b) | | (12,916 | ) | | (129 | ) | | 75,586 |
| | (1,702 | ) |
| Accounts payable | | 7,069 |
| | 38,203 |
| | (42,406 | ) | | 24,718 |
|
| Refundable, prepaid and accrued income taxes | | 35,196 |
| | (45,914 | ) | | 40,889 |
| | (1,345 | ) |
| Other, net | | (6,824 | ) | | (5,759 | ) | | (1,906 | ) | | 7,501 |
|
| Net cash provided by operating activities | | 50,812 |
| | 38,293 |
| | 208,367 |
| | 124,796 |
|
| Investing activities | | | | | | | | |
| Expenditures for property, plant and equipment | | (24,708 | ) | | (30,077 | ) | | (71,725 | ) | | (56,482 | ) |
| Proceeds from sale of property | | — |
| | — |
| | 5,138 |
| | 9,693 |
|
| Cash (paid) received for acquisitions or purchase price settlements | | 6,045 |
| | (55,493 | ) | | 6,045 |
| | (729,401 | ) |
| Other, net | | — |
| | (2,976 | ) | | — |
| | (2,976 | ) |
| Net cash used for investing activities | | (18,663 | ) | | (88,546 | ) | | (60,542 | ) | | (779,166 | ) |
| Financing activities | | | | | | | | |
| Payments on revolving line of credit | | — |
| | — |
| | — |
| | (120,000 | ) |
| Payments of long-term debt | | (130,878 | ) | | — |
| | (213,532 | ) | | — |
|
| Proceeds from long-term debt | | — |
| | — |
| | — |
| | 697,975 |
|
| Debt issuance costs | | — |
| | (893 | ) | | — |
| | (30,176 | ) |
| Payment related to surrendered shares | | — |
| | — |
| | (254 | ) | | (193 | ) |
| Proceeds from exercise of stock options | | 1 |
| | — |
| | 1 |
| | 361 |
|
| Net cash provided by (used for) financing activities | | (130,877 | ) | | (893 | ) | | (213,785 | ) | | 547,967 |
|
| Effect of exchange rate changes on cash | | 987 |
| | (3,077 | ) | | 1,426 |
| | (2,048 | ) |
| Cash and cash equivalents | | | | | | | | |
| Decrease in cash and cash equivalents | | (97,741 | ) | | (54,223 | ) | | (64,534 | ) | | (108,451 | ) |
| Balance at the beginning of the period | | 325,353 |
| | 346,369 |
| | 292,146 |
| | 400,597 |
|
| Balance at the end of the period | | $ | 227,612 |
| | $ | 292,146 |
| | $ | 227,612 |
| | $ | 292,146 |
|
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(a) See footnote to segment table. Amounts are VAC purchase accounting lower of cost or market ("LCM") plus additional LCM charges. (b) See footnote to segment table. Amounts include VAC inventory purchase accounting step-up amortization. |
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| OM Group, Inc. and Subsidiaries |
| Unaudited Segment Information |
| | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| (In thousands) | 2012 | | 2011 | | 2012 | | 2011 |
| Net Sales | | | | | | | |
| Magnetic Technologies(a) | $ | 128,657 |
| | $ | 169,574 |
| | $ | 631,582 |
| | $ | 276,147 |
|
| Advanced Materials | 82,158 |
| | 142,002 |
| | 447,049 |
| | 640,879 |
|
| Specialty Chemicals | 98,265 |
| | 100,068 |
| | 417,028 |
| | 470,022 |
|
| Battery Technologies | 31,644 |
| | 27,317 |
| | 143,038 |
| | 128,814 |
|
| Intersegment items | (311 | ) | | (350 | ) | | (906 | ) | | (1,327 | ) |
| | $ | 340,413 |
| | $ | 438,611 |
| | $ | 1,637,791 |
| | $ | 1,514,535 |
|
| | | | | | | | |
| Operating profit (loss) | | | | | | | |
| Magnetic Technologies(a)(b) | $ | (21,991 | ) | | $ | 10,987 |
| | $ | (22,265 | ) | | $ | (66,914 | ) |
| Advanced Materials | (9,266 | ) | | 11,438 |
| | 6,427 |
| | 81,186 |
|
| Specialty Chemicals(c)(d) | 4,696 |
| | 5,940 |
| | 37,990 |
| | 62,251 |
|
| Battery Technologies | 1,943 |
| | (442 | ) | | 19,587 |
| | 12,125 |
|
| Corporate(e) | (10,445 | ) | | (11,780 | ) | | (43,051 | ) | | (52,121 | ) |
| | $ | (35,063 | ) | | $ | 16,143 |
| | $ | (1,312 | ) | | $ | 36,527 |
|
| | | | | | | | |
| (a) Includes the activity of VAC since the acquisition on August 2, 2011. |
| (b) Three months and year ended December 31, 2012 include: |
| | | | | | Q4 | | Full Year |
| VAC inventory purchase accounting step-up amortization | | $ | 1.8 |
| | $ | 17.9 |
|
| VAC purchase accounting LCM | | 6.6 |
| | 38.0 |
|
| Total VAC purchase accounting step-up and LCM charges | | 8.4 |
| | 55.9 |
|
| Additional VAC LCM | | 18.0 |
| | 40.4 |
|
| Total VAC purchase accounting step-up amortization and LCM | | $ | 26.4 |
| | $ | 96.3 |
|
| | | | | | | | |
| Three months and year ended December 31, 2011: |
| | | | | | Q4 | | Full Year |
| VAC inventory purchase accounting step-up amortization | | $ | 61.0 |
| | $ | 92.1 |
|
| VAC purchase accounting LCM | | (47.9 | ) | | 14.5 |
|
| Total VAC purchase accounting step-up and LCM charges | | 13.1 |
| | 106.6 |
|
| Acquisition-related charges | | 2.2 |
| | 4.6 |
|
| Total VAC purchase accounting, LCM, and acquisition-related charges | | $ | 15.3 |
| | $ | 111.2 |
|
| | | | | | | | |
(c) Year ended December 31, 2012 includes a $2.9 million property sale gain. (d) Year ended December 31, 2011 includes a $9.7 million property sale gain. (e) Includes a $2.5 million settlement charge associated with the lump-sum cash settlement to certain participants in one of our US defined benefit pension plans in the year ended December 31, 2012 and $2.6 million and $15.4 million of acquisition-related fees related to VAC in the three months and year ended December 31, 2011, respectively. |
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| OM Group, Inc. and Subsidiaries |
| Unaudited Non-U.S. GAAP Financial Measures, Adjusted Operating Profit and Adjusted EBITDA |
| | | | | | | | | | | | |
| Three Months Ended December 31, 2012 |
| (in thousands) | Magnetic Technologies | | Advanced Materials | | Specialty Chemicals | | Battery Technologies | | Corporate | | Consolidated |
| Operating profit (loss) - as reported | $ | (21,991 | ) | | $ | (9,266 | ) | | $ | 4,696 |
| | $ | 1,943 |
| | $ | (10,445 | ) | | $ | (35,063 | ) |
| VAC inventory purchase accounting step-up and LCM charges | 8,377 |
| | — |
| | — |
| | — |
| | — |
| | 8,377 |
|
| Adjusted operating profit | (13,614 | ) | | (9,266 | ) |
| 4,696 |
|
| 1,943 |
|
| (10,445 | ) |
| (26,686 | ) |
| Depreciation and amortization | 10,777 |
| | 4,174 |
| | 5,210 |
| | 2,554 |
| | 199 |
| | 22,914 |
|
| Adjusted EBITDA | $ | (2,837 | ) | | $ | (5,092 | ) | | $ | 9,906 |
| | $ | 4,497 |
| | $ | (10,246 | ) | | $ | (3,772 | ) |
| | | | | | | | | | | | |
| Three Months Ended December 31, 2011 |
| (in thousands) | Magnetic Technologies | | Advanced Materials | | Specialty Chemicals | | Battery Technologies | | Corporate | | Consolidated |
| Operating profit (loss) - as reported | $ | 10,987 |
| | $ | 11,438 |
| | $ | 5,940 |
| | $ | (442 | ) | | $ | (11,780 | ) | | $ | 16,143 |
|
| VAC inventory purchase accounting step-up and LCM charges | 13,083 |
| | — |
| | — |
| | — |
| | — |
| | 13,083 |
|
| Acquisition-related charges | 2,245 |
| | — |
| | — |
| | — |
| | 2,600 |
| | 4,845 |
|
| Adjusted operating profit | 26,315 |
| | 11,438 |
| | 5,940 |
| | (442 | ) | | (9,180 | ) | | 34,071 |
|
| Depreciation and amortization | 9,864 |
| | 5,239 |
| | 5,362 |
| | 2,533 |
| | 105 |
| | 23,103 |
|
| Adjusted EBITDA | $ | 36,179 |
| | $ | 16,677 |
| | $ | 11,302 |
| | $ | 2,091 |
| | $ | (9,075 | ) | | $ | 57,174 |
|
| | | | | | | | | | | | |
| Year Ended December 31, 2012 |
| (in thousands) | Magnetic Technologies | | Advanced Materials | | Specialty Chemicals | | Battery Technologies | | Corporate | | Consolidated |
| Operating profit (loss) - as reported | $ | (22,265 | ) | | $ | 6,427 |
| | $ | 37,990 |
| | $ | 19,587 |
| | $ | (43,051 | ) | | $ | (1,312 | ) |
| VAC inventory purchase accounting step-up and LCM charges | 55,874 |
| | — |
| | — |
| | — |
| | — |
| | 55,874 |
|
| Pension settlement expense | — |
| | — |
| | — |
| | — |
| | 2,469 |
| | 2,469 |
|
| Gain on sale of property | — |
| | — |
| | (2,857 | ) | | — |
| | — |
| | (2,857 | ) |
| Adjusted operating profit | 33,609 |
| | 6,427 |
| | 35,133 |
| | 19,587 |
| | (40,582 | ) | | 54,174 |
|
| Depreciation and amortization | 40,832 |
| | 16,897 |
| | 20,768 |
| | 10,091 |
| | 688 |
| | 89,276 |
|
| Adjusted EBITDA | $ | 74,441 |
| | $ | 23,324 |
| | $ | 55,901 |
| | $ | 29,678 |
| | $ | (39,894 | ) | | $ | 143,450 |
|
| | | | | | | | | | | | |
| Year Ended December 31, 2011 |
| (in thousands) | Magnetic Technologies(a) | | Advanced Materials | | Specialty Chemicals | | Battery Technologies | | Corporate | | Consolidated |
| Operating profit (loss) - as reported | $ | (66,914 | ) | | $ | 81,186 |
| | $ | 62,251 |
| | $ | 12,125 |
| | $ | (52,121 | ) | | $ | 36,527 |
|
| VAC inventory purchase accounting step-up and LCM charges | 106,600 |
| | — |
| | — |
| | — |
| | — |
| | 106,600 |
|
| Acquisition-related charges | 4,600 |
| | — |
| | — |
| | — |
| | 15,400 |
| | 20,000 |
|
| Gain on sale of property | — |
| | — |
| | (9,693 | ) | | — |
| | — |
| | (9,693 | ) |
| Adjusted operating profit | 44,286 |
| | 81,186 |
| | 52,558 |
| | 12,125 |
| | (36,721 | ) | | 153,434 |
|
| Depreciation and amortization | 17,202 |
| | 20,687 |
| | 22,406 |
| | 9,592 |
| | 480 |
| | 70,367 |
|
| Adjusted EBITDA | $ | 61,488 |
| | $ | 101,873 |
| | $ | 74,964 |
| | $ | 21,717 |
| | $ | (36,241 | ) | | $ | 223,801 |
|
| | | | | | | | | | | | |
| (a) Includes activity of VAC since the acquisition on August 2, 2011. |
| | | | | | | | | | | | |
| In order to assist readers of our financial statements in understanding the operating results that the Company's management uses to evaluate the business, we are providing adjusted operating profit and adjusted EBITDA, both of which are non-U.S. GAAP financial measures. The Company's management believes that these are important metrics in evaluating the performance of the Company's business, providing a baseline for evaluating and comparing our operating results and isolating the impact of certain items on our results. The table above presents a reconciliation of the Company's U.S. GAAP operating profit - as reported to adjusted operating profit and adjusted EBITDA. The non-U.S. GAAP financial information set forth in the table above should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. |
|
| | | | | | | | | | | | | | | |
| OM Group, Inc. and Subsidiaries |
| Unaudited Non-U.S. GAAP Financial Measures |
| | Three Months Ended | | Three Months Ended |
| | December 31, 2012 | | December 31, 2011 |
| (in thousands, except per share data) | $ | | Diluted EPS | | $ | | Diluted EPS |
| Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders - as reported | $ | (33,843 | ) | | $ | (1.06 | ) | | $ | 52,986 |
| | $ | 1.66 |
|
| | | | | | | | |
| VAC inventory purchase accounting step-up and lower of cost or market charges, net of tax | 5,791 |
| | 0.18 |
| | 9,244 |
| | 0.29 |
|
| | | | | | | | |
| Acquisition-related charges, net of tax | — |
| | — |
| | 4,150 |
| | 0.13 |
|
| | | | | | | | |
| Accelerated amortization of deferred financing fees, net of tax | 5,275 |
| | 0.17 |
| | — |
| | — |
|
| | | | | | | | |
| EPT escrow settlement, net of tax | (6,045 | ) | | (0.19 | ) | | — |
| | — |
|
| | | | | | | | |
| Other discrete tax items, net | — |
| | — |
| | (40,927 | ) | | (1.28 | ) |
| Adjusted income (loss) from continuing operations attributable to OM Group, Inc. common stockholders | $ | (28,822 | ) | | $ | (0.90 | ) | | $ | 25,453 |
| | $ | 0.80 |
|
| | | | | | | | |
| Weighted average shares outstanding - diluted | | | 31,896 |
| | | | 31,989 |
|
| | | | | | | | |
| | Year Ended | | Year Ended |
| | December 31, 2012 | | December 31, 2011 |
| (in thousands, except per share data) | $ | | Diluted EPS | | $ | | Diluted EPS |
| Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders - as reported | $ | (38,615 | ) | | $ | (1.21 | ) | | $ | 42,070 |
| | $ | 1.35 |
|
| | | | | | | | |
| VAC inventory purchase accounting step-up and lower of cost or market charges, net of tax | 38,623 |
| | 1.21 |
| | 75,425 |
| | 2.41 |
|
| | | | | | | | |
| Acquisition-related charges, net of tax | — |
| | — |
| | 18,195 |
| | 0.58 |
|
| | | | | | | | |
| Pension settlement expense, net of tax | 2,469 |
| | 0.08 |
| | — |
| | — |
|
| | | | | | | | |
| Gain on sale of property, net of tax | (2,857 | ) | | (0.09 | ) | | (8,568 | ) | | (0.27 | ) |
| | | | | | | | |
| Accelerated amortization of deferred financing fees, net of tax | 6,524 |
| | 0.20 |
| | — |
| | — |
|
| | | | | | | | |
| EPT escrow settlement, net of tax | (6,045 | ) | | (0.19 | ) | | — |
| | — |
|
| | | | | | | | |
| Adjustment of GTL's prepaid tax allowance (OMG's 55% share) | — |
| | — |
| | (3,424 | ) | | (0.11 | ) |
| | | | | | | | |
| Other discrete tax items, net | — |
| | — |
| | 1,327 |
| | 0.04 |
|
| Adjusted income from continuing operations attributable to OM Group, Inc. common stockholders | $ | 99 |
| | $ | — |
| | $ | 125,025 |
| | $ | 4.00 |
|
| | | | | | | | |
| Weighted average shares outstanding - diluted | | | 32,011 |
| | | | 31,244 |
|
| | | | | | | | |
| In order to assist readers of our financial statements in understanding the operating results that the Company's management uses to evaluate the business, we are providing adjusted income from continuing operations attributable to OM Group, Inc. common stockholders and adjusted earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution, both of which are non-U.S. GAAP financial measures. The Company's management believes that these are important metrics in evaluating the performance of the Company's business, providing a baseline for evaluating and comparing our operating results and isolating the impact of certain items on our results. The table above presents a reconciliation of the Company's U.S. GAAP income from continuing operations attributable to OM Group, Inc. common stockholders - as reported to adjusted income from continuing operations attributable to OM Group, Inc. common stockholders and earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution - as reported to adjusted earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution. The non-U.S. GAAP financial information set forth in the table above should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. |
|
| | | | |
| OM Group, Inc. and Subsidiaries |
| Unaudited Non-U.S. GAAP Financial Measures, Pro Forma Adjusted EBITDA |
| |
| Three Months Ended December 31, 2012 |
| (in thousands) | | EBITDA(a) |
| Operating profit (loss) - as reported | | $ | (35,063 | ) |
| Non-GAAP items: | | |
| VAC inventory purchase accounting step-up and LCM charges | | 8,377 |
|
| Adjusted operating profit (loss) | | (26,686 | ) |
| Depreciation and amortization | | 22,914 |
|
| Adjusted EBITDA | | (3,772 | ) |
| Exclude: | | |
| Advanced Materials loss | | 5,092 |
|
| VAC LCM charge (non-purchase accounting related) | | 18,011 |
|
| Pro forma adjusted EBITDA | | $ | 19,331 |
|
| | | |
| (a) EBITDA is defined as adjusted operating profit plus depreciation and amortization. For purposes of this definition, amortization excludes amortization of deferred financing fees, which is recorded in interest expense below the Operating profit line. |
| | | |
| Unaudited Non-U.S. GAAP Financial Measures, Pro Forma Adjusted EPS |
| |
| Three Months Ended December 31, 2012 |
| | | Diluted EPS |
| Diluted EPS - as reported | | $ | (1.06 | ) |
| Non-GAAP items: | | |
| VAC inventory purchase accounting step-up and LCM charges | | 0.18 |
|
| Accelerated amortization of deferred financing fees(b) | | 0.17 |
|
| EPT escrow settlement(b) | | (0.19 | ) |
| Adjusted diluted EPS | | $ | (0.90 | ) |
| Exclude: | | |
| Advanced Materials loss | | 0.38 |
|
| VAC LCM charge (non-purchase accounting related) | | 0.39 |
|
| Pro forma adjusted diluted EPS | | $ | (0.13 | ) |
| | | |
| (b) Items are below Operating profit. No impact on EBITDA. |
| | | |
In order to assist readers of our financial statements in understanding the operating results that the Company's management uses to evaluate the business, we are providing adjusted EBITDA and adjusted earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution, both of which are non-U.S. GAAP financial measures. The table above presents a reconciliation of the Company's U.S. GAAP EBITDA and earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution - as reported to adjusted EBITDA and adjusted earnings per common share attributable to OM Group, Inc. common stockholders - assuming dilution, and then further to the pro-forma results excluding both the results from the Advanced Materials business and the VAC LCM charge. The Company's management believes that these are important metrics in evaluating the performance of the Company's business, providing a baseline for evaluating and comparing our operating results and isolating the impact of certain items on our results. The non-U.S. GAAP financial information set forth in the table above should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. |
CONTACT: OM Group Contact: Rob Pierce, Vice President, Finance, +1-216-263-7489
