LOGO
MACDERMID INCORPORATED NEWSLINE
245 FREIGHT STREET
WATERBURY, CT 06702
TEL (203) 575-5700
Earnings Announcement
WATERBURY, CONNECTICUT
October 29, 2003
FOR IMMEDIATE RELEASE
Third Quarter diluted earnings per share of $0.43 including special gain on
repurchase of shares
Owner Earnings $13.8 million
MacDermid, Incorporated, a worldwide manufacturer of proprietary specialty
chemical products and materials for the electronics, metal finishing and graphic
arts industries, today reports earnings for its quarter ended September 30,
2003.
Quarter ended September 30, 2003 compared to September 30, 2002
Earnings for the third quarter were $13.4 million or $0.43 per share. Included
in earnings is $1.0 million for accounting change and $2.2 million of gain as a
result of the share purchase from Citicorp Venture Capital Ltd (CVC). In
addition the earnings include a tax charge of $0.7 million over and above the
Company's effective tax rate of 32%. Earnings not including the foregoing items
were $.36 per share compared to $0.27 per share in the prior year quarter.
Proprietary sales of $137.6 million decreased by 2% or $3.1 million, and total
sales were $167.8 down $0.4 million or 0.2%. Favorable currency exchange rates
aided total sales by $8.8 million, proprietary sales by $5.8 million, and
earnings by $0.7 million or $0.02 per share. Owner Earnings, a measure of free
cash flow, were $13.8 million.
Quarter ended September 30, 2003 compared to Quarter ended June 30, 2003
Diluted earnings per share were $0.43 ($ 0 .36 after net gains described
above) for the quarter ended September 2003 compared to the previous sequential
quarter of $0.38. Proprietary sales were lower by $5.9 million and total sales
decreased by $7.9 million (4.5%). There was no currency effect on sales between
quarters.
Affect of accounting change and SFAS 150
The company adopted SFAS 150 as required during the current quarter. The SFAS
requires MacDermid to recognize in the Income Statement the gain on the call and
put for the repurchase of stock arising from the previously announced agreement
with CVC.
Daniel Leever, Chairman and CEO said, "The cash flow strategy of the company was
demonstrated in the quarter. Even though the quarter was affected by normal
seasonal slowness and the continued difficult external environment, we were able
to use our strong cash flow to repay debt, thereby lowering our interest costs,
reduce our line of credit which reduced the amortization of financing fees,
increased our dividend, and bought back $21 million in our own stock ($52
million for the year), without increasing our bank borrowing.
The quarter started off soft and picked up momentum as it progressed. We are
reluctant to call this a trend as we saw a similar pattern in the March quarter
that proved short lived. Nevertheless we do feel more optimistic than we have
in some time.
The external environment continues to be difficult. Recent industrial
production indices showed declines for USA, Europe, and Japan, all important
markets for us. These declines affect our Industrial product lines, as well as
our Printing business. We are more optimistic about the short term for our
electronic product lines, cautioned by previous false starts.
Owner earnings for the quarter were a solid $13.8 million after payment of bond
interest. Inventories and receivables improved modestly in the quarter. Even
after buying back $52 million in stock this year we ended the quarter with net
debt to EBITDA of 2.4, below our internal "not to exceed" target of 2.5X"
Note:
Owner Earnings is calculated as Net Cash flows provided by operating activities
(GAAP definition) less net capital expenditures. This press release and
additional financial information together with our reconciliation of GAAP to
Non-GAAP numbers are available on our website.
Website: http://www/macdermid.com
------------------------
MacDermid, Incorporated
NYSE - MRD
CUSIP 554273 10 2
October 29, 2003
This report and other Corporation reports and statements describe many of the
positive factors affecting the Corporation's future business prospects.
Investors should also be aware of factors that could have a negative impact on
those prospects. These include political, economic or other conditions such as
currency exchange rates, inflation rates, recessionary or expansive trends,
taxes and regulations and laws affecting the business; competitive products,
advertising, promotional and pricing activity; the degree of acceptance of new
product introductions in the marketplace; technical difficulties which may arise
with new product introductions; and the difficulty of forecasting sales at
certain times in certain markets.
MacDermid, Incorporated
Condensed Consolidated Summary of Earnings
$ inThousands, except share and per share amounts
Three
Three Months Nine
Months Ended Ended Months Ended
Sep. 30th Sep. 30th Jun. 30th Sep. 30th Sep. 30th
2003 2002 2003 2003 2002
------------ ------------ ------------ ------------ ------------
Proprietary sales. . . . . . . . . . . . . . . . . . . . . . $ 137,638 $ 140,703 $ 143,546 $ 421,962 $ 422,988
Other sales. . . . . . . . . . . . . . . . . . . . . . . . . 30,152 27,443 32,193 93,997 88,836
------------ ------------ ------------ ------------ ------------
Total net sales. . . . . . . . . . . . . . . . . . . . . . . $ 167,790 $ 168,146 $ 175,739 $ 515,959 $ 511,824
------------ ------------ ------------ ------------ ------------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . 71,619 70,964 75,915 221,784 216,355
GM % . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.7% 42.2% 43.2% 43.0% 42.3%
Selling,technical,administrative expense . . . . . . . . . . 47,773 46,723 49,354 146,249 145,108
__________________________________________________________________________________________________________________________________
subtotal operating profit before amortization. . . . . . . 23,846 24,241 26,561 75,535 71,247
OP % . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2% 14.4% 15.1% 14.6% 13.9%
__________________________________________________________________________________________________________________________________
Amortization . . . . . . . . . . . . . . . . . . . . . . . . 794 1,558 852 2,416 4,696
------------ ------------ ------------ ------------ ------------
Operating profit (loss). . . . . . . . . . . . . . . . . . . 23,052 22,683 25,709 73,119 66,551
Net other (income) expense . . . . . . . . . . . . . . . . . (2,830) 1,136 (142) (3,320) 1,689
Net interest expense . . . . . . . . . . . . . . . . . . . . 7,607 8,659 8,013 23,316 26,326
------------ ------------ ------------ ------------ ------------
Earnings (loss) before income taxes, minority interest
and cumulative effect of accounting change. 18,275 12,888 17,838 53,123 38,536
Income tax (expense) benefit . . . . . . . . . . . . . . . . (5,848) (4,123) (5,708) (17,000) (12,331)
Minority interest. . . . . . . . . . . . . . . . . . . . . . 0 (100) 0 0 (535)
------------ ------------ ------------ ------------ ------------
Net earnings before cumulative effect of accounting change . 12,427 8,665 12,130 36,123 25,670
Cumulative effect of accounting change . . . . . . . . . . . 1,014 0 0 1,014 0
------------ ------------ ------------ ------------ ------------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . $ 13,441 $ 8,665 $ 12,130 $ 37,137 $ 25,670
============ ============ ============ ============ ============
Diluted earnings (loss) per share. . . . . . . . . . . . . . $ 0.43 $ 0.27 $ 0.38 $ 1.17 $ 0.79
Diluted average common shares outstanding. . . . . . . . . . 31,059,431 32,480,682 31,720,959 31,743,571 32,496,043
__________________________________________________________________________________________________________________________________
Net earnings excluding accounting change . . . . . . . . . . $ 12,427 $ 8,665 $ 12,130 $ 36,123 $ 25,670
Diluted EPS excluding accounting change. . . . . . . . . . . $ 0.40 $ 0.27 $ 0.38 $ 1.14 $ 0.79
__________________________________________________________________________________________________________________________________
MacDermid, Incorporated
Sales and Margins by Region
inThousands
Three
Three Months Nine
Months Ended Ended Months Ended
Sep. 30th Sep. 30th Jun. 30th Sep. 30th Sep. 30th
2003 2002 2003 2003 2002
----------- ----------- ----------- ----------- -----------
Americas
Sales. . . . . . . . . . . . $ 64,216 $ 70,981 $ 67,148 $ 199,881 $ 224,148
Operating Profit * . . . . . $ 9,658 $ 10,606 $ 12,363 $ 32,927 $ 34,490
OP % . . . . . . . . . . . . 15.0% 14.9% 18.4% 16.5% 15.4%
Europe
Sales. . . . . . . . . . . . $ 69,568 $ 65,443 $ 76,817 $ 220,849 $ 201,579
Operating Profit * . . . . . $ 7,389 $ 6,893 $ 7,867 $ 23,421 $ 21,681
OP % . . . . . . . . . . . . 10.6% 10.5% 10.2% 10.6% 10.8%
Asia
Sales. . . . . . . . . . . . $ 34,006 $ 31,722 $ 31,774 $ 95,229 $ 86,097
Operating Profit * . . . . . $ 6,799 $ 6,742 $ 6,331 $ 19,187 $ 15,076
OP % . . . . . . . . . . . . 20.0% 21.3% 19.9% 20.1% 17.5%
Consolidated Total
Sales. . . . . . . . . . . . $ 167,790 $ 168,146 $ 175,739 $ 515,959 $ 511,824
Operating Profit * . . . . . $ 23,846 $ 24,241 $ 26,561 $ 75,535 $ 71,247
OP % . . . . . . . . . . . . 14.2% 14.4% 15.1% 14.6% 13.9%
MacDermid, Incorporated
Sales and Margins by Group
inThousands Three
Three Months Nine
Months Ended Ended Months Ended
Sep. 30th Sep. 30th Jun. 30th Sep. 30th Sep. 30th
2003 2002 2003 2003 2002
----------- ----------- ----------- ----------- -----------
Advanced Surface Finishing
Sales. . . . . . . . . . . . $ 84,466 $ 80,476 $ 84,256 $ 252,536 $ 239,465
Operating Profit * . . . . . $ 13,238 $ 11,233 $ 13,204 $ 39,343 $ 32,131
OP % . . . . . . . . . . . . 15.7% 14.0% 15.7% 15.6% 13.4%
Printing Solutions
Sales. . . . . . . . . . . . $ 64,214 $ 69,959 $ 69,693 $ 201,740 $ 211,810
Operating Profit * . . . . . $ 10,332 $ 12,455 $ 13,081 $ 35,672 $ 36,277
OP % . . . . . . . . . . . . 16.1% 17.8% 18.8% 17.7% 17.1%
Electronics Manufacturing
Sales. . . . . . . . . . . . $ 19,110 $ 17,711 $ 21,790 $ 61,683 $ 60,549
Operating Profit * . . . . . $ 276 $ 553 $ 276 $ 520 $ 2,839
OP % . . . . . . . . . . . . 1.4% 3.1% 1.3% 0.8% 4.7%
Consolidated Total
Sales. . . . . . . . . . . . $ 167,790 $ 168,146 $ 175,739 $ 515,959 $ 511,824
Operating Profit * . . . . . $ 23,846 $ 24,241 $ 26,561 $ 75,535 $ 71,247
OP % . . . . . . . . . . . . 14.2% 14.4% 15.1% 14.6% 13.9%
<FN>
* before amortization or special charges.
MacDermid, Incorporated
Condensed Consolidated Balance Sheets
inThousands
Sep. 30th Jun. 30th Dec. 31st
2003 2003 2002
----------- ----------- -----------
Cash and Equivalents . . . . $ 30,105 $ 38,303 $ 32,019
Accounts Receivable, net . . 142,921 146,706 142,806
Inventories, net . . . . . . 88,312 91,965 85,738
Other Current Assets . . . . 30,822 28,955 28,055
----------- ----------- -----------
292,160 305,929 288,618
Property, Plant &
Equipment, net. . . . . . . 127,635 129,879 132,581
Goodwill . . . . . . . . . . 194,200 194,200 194,200
Intangibles. . . . . . . . . 30,626 31,095 31,825
Other Long Lived Assets. . . 57,500 58,691 60,669
----------- ----------- -----------
Total Assets . . . . . . . . $ 702,121 $ 719,794 $ 707,893
Payables and Accruals. . . . $ 134,806 $ 145,602 $ 136,008
Short Term Debt. . . . . . . 10,978 9,132 11,354
Long Term Debt . . . . . . . 310,103 310,641 310,238
Other Long Term Liabilities. 30,538 30,338 29,682
Minority Interest. . . . . . 2,873 2,873 2,873
Shareholders' Equity . . . . 212,823 221,208 217,738
----------- ----------- -----------
Total Liabilities &
Shareholders' Equity. . . . $ 702,121 $ 719,794 $ 707,893
Debt to Total Capital. . . . 60% 59% 60%
MacDermid, Incorporated
Condensed Consolidated Summary of Cash Flows
Three
Three Months Nine
Months Ended Ended Months Ended
inThousands Sep. 30th Sep. 30th Jun. 30th Sep. 30th Sep. 30th
2003 2002 2003 2003 2002
----------- ----------- ----------- ----------- -----------
Net Income (Loss). . . . . . . . . . . . . . . $ 13,441 $ 8,665 $ 12,130 $ 37,137 $ 25,670
Depreciation . . . . . . . . . . . . . . . . . 4,968 5,128 5,357 15,571 15,828
Amortization . . . . . . . . . . . . . . . . . 794 1,558 852 2,416 4,696
Provision for Bad Debt . . . . . . . . . . . . 1,078 460 890 3,757 4,451
Stock Compensation Expense . . . . . . . . . . 915 599 1,154 3,100 2,143
Impact of adopting SFAS150 . . . . . . . . . . (3,228) 0 0 (3,228) 0
Working Capital changes. . . . . . . . . . . . (1,338) 12,526 5,203 2,860 26,101
----------- ----------- ----------- ----------- -----------
Cash from Operations . . . . . . . . . . . . . 16,630 28,936 25,586 61,613 78,889
Capital Spending (Net) . . . . . . . . . . . . (2,790) 3 (1,722) (5,491) (2,277)
Owner Earnings . . . . . . . . . . . . . . . . $ 13,840 $ 28,939 $ 23,864 $ 56,122 $ 76,612
----------- ----------- ----------- ----------- -----------
Dividends to Shareholders. . . . . . . . . . . (934) (645) (620) (2,200) (1,935)
Increase/(Decrease) in Debt. . . . . . . . . . (940) (20,996) (2,022) (6,532) (69,309)
Treasury Shares. . . . . . . . . . . . . . . . (21,293) (341) (30,510) (51,753) (444)
Currency Translation/Other . . . . . . . . . . 1,129 (334) 957 2,449 325
----------- ----------- ----------- ----------- -----------
Increase/(Decrease) in Cash. . . . . . . . . . ($8,198) $ 6,623 ($8,331) ($1,914) $ 5,249
=========== =========== =========== =========== ===========
_______________________________________________________________________________________________________________
**Note: Pro forma owner earnings
adjusted for semi-annual bond interest
payments would have been as follows:. . $ 20,740 $ 35,839 $ 16,964 $ 63,022 $ 83,512
=========== =========== =========== =========== ===========
_______________________________________________________________________________________________________________