EXHIBIT 99.1
[LOGO - NOVEON (TM)] NEWS
Noveon, Inc.
9911 Brecksville Road
Cleveland, Ohio 44141-3247
216.447.5000
For more information, contact:
Media Contact: Investor Relations Contact:
Rob Jewell Sean Stack
(216) 447-5255 (216) 447-6494
NOVEON REPORTS 4% SALES GROWTH AND 27% INCREASE IN EBITDA
Cleveland, Ohio, November 14 - Noveon, Inc. today reports selected
financial results for the third quarter of 2002.
THREE Months Ended NINE Months Ended
September 30 September 30
Actual Actual Pro forma(1) Actual
2001 2002 2001 2002
---- ---- ---- ----
(dollars in millions)
Unaudited Unaudited
Sales $262.4 $273.2 $815.2 $813.5
Gross Profit $70.8 $89.0 $217.8 $266.0
Operating Income $15.0 $33.1 $45.1 $100.9
Net Income (Loss) $(6.0) $12.3 $(32.0) $36.6
Adjusted EBITDA(2) $44.3 $56.2 $130.7 $167.8
Free Cash Flow(3) $69.7 $47.5 $128.1 $132.0
Cash Balance $78.5 $151.9 $78.5 $151.9
- -----------------------
(1) The pro forma amounts reflect the effect of the acquisition of the
Performance Materials Segment of Goodrich on February 28, 2001 as
if the acquisition occurred on January 1, 2001.
(2) Adjusted EBITDA is defined as income from continuing operations
before interest and taxes plus depreciation and amortization,
investor management fees, consolidation costs and non-cash cost of
sales impact of inventory write-up from purchase accounting.
Adjusted EBITDA (unaudited) is not a measure of operating income,
net income, operating performance or liquidity under GAAP.
(3) Free cash flow (unaudited) is adjusted EBITDA less capex plus/less
changes in accounts receivable, inventory and accounts payable.
Third Quarter 2002
For the quarter, Noveon reports sales of $273.2 million, adjusted
EBITDA of $56.2 million and net income of $12.3 million. For the third
quarter of 2001, Noveon reported sales of $262.4 million, adjusted EBITDA
of $44.3 million and a net loss of $6.0 million.
Sales increased 4% from the prior year reflecting stronger volumes
within Noveon's personal care, Estane(R) TPU and specialty coatings product
lines, incremental acquisition-related revenue and the impact of the
stronger Euro; partially offset by the impact of discontinued product lines
at our Cincinnati colorants operation and a product mix shift coupled with
competitive pricing pressure within our Estane(R) TPU product line.
Adjusted EBITDA increased 27% over the prior year primarily due to lower
raw material and utility costs, higher sales volumes and lower
manufacturing costs resulting from productivity initiatives; partially
offset by higher selling, general and administrative expenses from the
addition of resources in sales and marketing as well as higher costs
associated with our variable incentive plans due to improved financial
performance and the participation of substantially all employees. Net
income increased by $18.3 million from a loss of $6.0 million in 2001 to
income of $12.3 million in 2002. Also, free cash flow decreased 32% from
$69.7 million to $47.5 million as higher adjusted EBITDA was offset by
increased capital spending and lower cash generation from working capital
in 2002 versus the significant cash generated from working capital
reductions in the third quarter of 2001. During the quarter, net debt
decreased $19.6 million due to continued cash generation and debt
repayment.
Steve Demetriou, Noveon president and chief executive officer, said,
"We are very pleased with our third quarter results despite the weakness in
the overall economy. Our growth is indicative of the diversity of Noveon's
portfolio. Our personal care product lines continue to grow as we focus on
expanding uses for Carbopol(R) and successfully add new products to the
line-up. Despite continued slow industrial demand, Estane(R) TPU
demonstrated year-over-year improvements in the quarter, capitalizing on
share shift opportunities and solid growth in Asia. Going into the fourth
quarter, I would characterize our customer base as hesitant given the
ongoing economic uncertainty, but we will continue to drive productivity
improvements, focus on generating strong free cash flow and invest in
growth opportunities."
CONSUMER SPECIALTIES
Noveon's Consumer Specialties segment reported a sales increase of 5%
from $72.9 million to $76.4 million compared with the prior year third
quarter driven by higher Carbopol(R) acrylic thickener volume and the
impact of new product introductions within the personal care product lines,
a better product mix within pharmaceuticals and the impact of the stronger
Euro; partially offset by the impact of discontinued product lines at our
Cincinnati colorants operation. Adjusted EBITDA increased by 30% or $4.5
million from $14.8 million in 2001 to $19.3 million in 2002, principally
due to higher Carbopol(R) sales, favorable raw material and utility costs
and productivity benefits.
SPECIALTY MATERIALS
Noveon's Specialty Materials segment reported a sales increase of 5%
from $97.1 million to $101.7 million compared to the third quarter of the
prior year due to higher volume in Estane(R) TPU, TempRite's(R)
BlazeMaster(R) fire sprinkler and flexible piping applications, polymer
additive's reactive liquid polymer product lines and the impact of the
stronger Euro; partially offset by a product mix shift along with
competitive pricing pressure within our Estane(R) TPU product lines and
lower volumes and pricing in polymer additives' rubber chemical and
antioxidant product lines. Adjusted EBITDA increased by 30% or $7.4 million
from $25.0 million in 2001 to $32.4 million in 2002 due to lower raw
material and utility costs and higher volume; partially offset by higher
selling, general and administrative costs due to increased growth resources.
PERFORMANCE COATINGS
Performance Coatings sales increased by 3% from $92.4 million to $95.1
million compared to the third quarter of the prior year due to higher
volume within the specialty coatings and graphic arts product lines and the
impact of the stronger Euro; partially offset by volume declines in textile-
related applications. Adjusted EBITDA increased by 13% or $2.1 million from
$16.0 million to $18.1 million due to lower raw material and utility costs
and higher volume.
CORPORATE
In the third quarter, corporate overhead expenses excluding
depreciation, management fees and restructuring costs increased by $2.1
million from $11.5 million in 2001 to $13.6 million in 2002. The increase
is primarily the result of the costs associated with variable incentive
compensation plans driven by Noveon's improved financial performance and
the participation of substantially all employees.
NINE MONTH RESULTS
For the nine months ended September 30, 2002, Noveon reports sales of
$813.5 million, adjusted EBITDA of $167.8 million and net income of $36.6
million. For the pro forma nine months ended September 30, 2001, Noveon
reported sales of $815.2 million, adjusted EBITDA of $130.7 million and a
net loss of $32.0 million. Pro forma nine-month results for 2001 reflect
the effects of the acquisition of the Performance Materials Segment of
Goodrich on February 28, 2001 as if the acquisition occurred on January 1,
2001.
Sales decreased $1.7 million from the prior year pro forma period for
the nine months ended September 30, 2002, reflecting lower volumes in
textile coatings and other industrial and automotive related applications,
lower European demand, competitive pricing pressure and the impact of the
discontinued product lines at our Cincinnati colorants operation; partially
offset by strong volume growth within our TempRite(R) and personal care
product lines and the incremental impact of acquisitions. Adjusted EBITDA
increased 28% from the prior year pro forma period due to lower raw
material and utility costs, lower manufacturing spending from productivity
initiatives and the impact of higher volumes in TempRite(R) and personal
care. Net income improved $68.6 million from a pro forma net loss of $32.0
million to net income of $36.6 million. Free cash flow improved by 3% from
$128.1 million from pro forma 2001 to $132.0 million in 2002 due primarily
to higher adjusted EBITDA; partially offset by higher capital spending and
incremental working capital related to improved sales in the third quarter
versus the significant cash generated from working capital in 2001. Net
debt decreased $44.7 million since December 31, 2001 due to continued
strong cash generations and debt reductions.
Noveon will be hosting a conference call to discuss third quarter
results today, November 14, 2002 at 3:00 PM ET. Domestic callers should
dial 1 (800) 446-1671 and international callers should dial 1 (847)
413-3362 and ask to be connected to the Noveon third quarter earnings call
(confirmation code 6423081). A replay of the call will be available through
Thursday, November 21 by calling (domestic) 1 (888) 843-8996 or
(international) 1 (630) 652-3044 with the above confirmation code.
Noveon is a leading global producer and marketer of technologically
advanced specialty chemicals for a broad range of consumer and industrial
applications. Noveon is headquartered in Cleveland, Ohio, with regional
centers in Brussels, Belgium, and Hong Kong.
This release contains forward-looking statements that relate to future
events or performance. These statements reflect the Company's current
expectations, and the Company does not undertake to update or revise these
forward-looking statements, even if experience or future changes make it
clear that any projected results express or implied in this or other
Company statements will not be realized. Furthermore, investors are
cautioned that these statements involve risks and uncertainties, many of
which are beyond the Company's control, which could cause actual results to
differ materially from the forward-looking statements. Further information
about these risks can be found in the Company's filings with the Securities
and Exchange Commission.
Investors are cautioned not to place undue reliance on any
forward-looking statements contained herein, which speak only as of the
date hereof. The Company undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements that may be
made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
# # #
Noveon, Inc.
Condensed Consolidated Statement of Operations
(dollars in millions)
(unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2001 2002
----------------------------
Sales $ 262.4 $ 273.2
Cost of sales 191.6 184.2
----------------------------
Gross profit 70.8 89.0
Selling and administrative expenses 46.7 51.3
Amortization expense 8.4 3.5
Consolidation costs 0.7 1.1
----------------------------
Operating income 15.0 33.1
Interest income (expense)--net (21.7) (18.9)
Other income (expense)--net (0.2) (0.1)
----------------------------
Income (loss) before income taxes (6.9) 14.1
Income tax benefit (expense) 0.9 (1.8)
----------------------------
Net income (loss) $ (6.0) $ 12.3
============================
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Condensed Consolidated Statement of Operations
(dollars in millions)
BFGOODRICH
PERFORMANCE
MATERIALS NOVEON, INC.
-------------- -------------------------------------------------------
ACTUAL ACTUAL PRO FORMA ACTUAL
TWO MONTHS SEVEN MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2001 2001 2001 2002
-------------- -------------------------------------------------------
(unaudited)
Sales $ 187.0 $ 629.3 $ 815.2 $ 813.5
Cost of sales 137.3 460.0 597.4 547.5
-------------- -------------------------------------------------------
Gross profit 49.7 169.3 217.8 266.0
Selling and administrative expenses 35.2 111.4 146.6 151.7
Amortization expense 4.0 19.4 24.7 10.5
Consolidation costs - 1.4 1.4 2.9
-------------- -------------------------------------------------------
Operating income 10.5 37.1 45.1 100.9
Interest income (expense)--net 0.6 (54.6) (69.9) (57.4)
Other income (expense)--net (1.5) (1.9) (3.4) (0.2)
-------------- -------------------------------------------------------
Income (loss) before income taxes 9.6 (19.4) (28.2) 43.3
Income tax benefit (expense) (4.0) 5.9 (3.8) (6.7)
-------------- -------------------------------------------------------
Net income (loss) $ 5.6 $ (13.5) $ (32.0) $ 36.6
============== =======================================================
Note: The pro forma results for the nine months ended September 30,
2001 reflect the effect of the acquisition of the Performance
Materials Segment of Goodrich on February 28, 2001 as if the
acquisition occurred on January 1, 2001.
Noveon, Inc.
Condensed Consolidated Balance Sheet
(dollars in millions)
DECEMBER 31, 2001 SEPTEMBER 30, 2002
----------------------------------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 120.0 $ 151.9
Accounts and notes receivable, less allowances for doubtful
receivables ($8.7 and $8.9 at December 31, 2001
and September 30, 2002, respectively) 133.8 153.9
Inventories 140.2 136.9
Prepaid expenses and other current assets 4.5 6.9
----------------------------------------
TOTAL CURRENT ASSETS 398.5 449.6
Property, plant and equipment--net 672.5 656.4
Goodwill--net 346.9 369.6
Identifiable intangible assets--net 192.0 183.0
Other assets 51.9 45.7
----------------------------------------
TOTAL ASSETS $ 1,661.8 $ 1,704.3
========================================
CURRENT LIABILITIES
Short-term bank debt $ 1.3 $ 0.1
Accounts payable 97.1 105.8
Accrued expenses 74.2 67.9
Income taxes payable 1.0 4.0
Current maturities of long-term debt 23.2 24.0
----------------------------------------
TOTAL CURRENT LIABILITIES 196.8 201.8
Long-term debt 876.2 863.8
Postretirement benefits other than pensions 5.3 5.7
Accrued pensions 32.8 32.4
Deferred income taxes 24.6 26.8
Accrued environmental 20.7 20.8
Other non-current liabilities 9.2 17.7
STOCKHOLDER'S EQUITY
Common stock - -
Paid in capital 527.0 527.0
Retained earnings (deficit) (20.6) 16.0
Accumulated other comprehensive loss (10.2) (7.7)
----------------------------------------
TOTAL STOCKHOLDER'S EQUITY 496.2 535.3
----------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,661.8 $ 1,704.3
========================================
Noveon, Inc.
and
BFGoodrich Performance Materials
(The Predecessor Company and a Segment of The BFGoodrich Company)
Condensed Consolidated Statement of Cash Flow
(dollars in millions)
BFGOODRICH
PERFORMANCE
MATERIALS NOVEON, INC.
--------------- ------------------------------------
TWO MONTHS SEVEN MONTHS NINE MONTHS
ENDED ENDED ENDED
FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
2001 2001 2002
--------------- ------------------------------------
(unaudited)
OPERATING ACTIVITIES
Net income (loss) $ 5.6 $ (13.5) $ 36.6
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 14.4 62.5 61.3
Deferred income taxes (5.2) (10.4) 2.2
Debt issuance cost amortization in interest expense - 5.2 4.2
Change in assets and liabilities, net of effects of
acquisitions and dispositions of businesses (46.4) 48.2 (7.5)
--------------- ------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (31.6) 92.0 96.8
INVESTING ACTIVITIES
Purchases of property, plant and equipment (7.6) (16.0) (27.7)
Payments made in connection with acquisitions, net of cash (20.6)
acquired - (1,187.3)
--------------- ------------------------------------
NET CASH (USED) BY INVESTING ACTIVITIES (7.6) (1,203.3) (48.3)
FINANCING ACTIVITIES
Decrease in short-term debt (3.7) (25.9) (0.4)
Payments on long-term borrowings - (5.2) (18.9)
Proceeds from issuance of long-term debt - 910.0 -
Proceeds from sale of receivables, net 0.5 - -
Debt issuance costs - (44.3) -
Equity contribution from stockholder - 355.0 -
Transfers from Parent 40.7 - -
--------------- ------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 37.5 1,189.6 (19.3)
Effect of exchange rate changes on cash and cash equivalents - 0.2 2.7
--------------- ------------------------------------
Net increase (decrease) in cash and cash equivalents (1.7) 78.5 31.9
Cash and cash equivalents at beginning of period 15.7 - 120.0
--------------- ------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14.0 $ 78.5 $ 151.9
=============== ====================================
Non-cash transactions
Equity contribution $ - $ 172.0 $ -
====================================================