Borden Chemical Reports Net Income of $4.9 Million, 189 Percent Increase in Operating Income for First Quarter.Business Editors COLUMBUS, Ohio--(BUSINESS WIRE)--May 7, 2004 Borden Chemical today reported net income of $4.9 million, or 2 cents per diluted share, for the first quarter ended March 31, 2004, compared with a first quarter 2003 loss of $3.4 million, or 2 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter rose to $20.8 million, up 189 percent from $7.2 million recorded in the prior year period. Results for the quarter were driven by strong sales volumes, reduced expenses due to productivity initiatives and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix. Sales for the period totaled $385.4 million, up 10 percent from first quarter 2003 sales of $349.3 million as a result of increased sales volumes, higher selling prices, favorable product mix and the positive impact of foreign currency translation. Sales volumes for the quarter increased 4 percent versus the prior year period, with growth across most major segments. A recovering domestic economy, continued strength in construction markets and improved results from international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. all contributed to the sales volume increase. The company's efforts to reduce costs and improve productivity were reflected in a reduction in general and administrative expenses for the quarter of more than $6 million compared to last year's period. Gross margins improved to 19.7 percent from 18.8 percent in the previous year period as the company was able to recover higher costs for the key raw materials of methanol methanol, methyl alcohol, or wood alcohol, CH3OH, a colorless, flammable liquid that is miscible with water in all proportions. Methanol is a monohydric alcohol. It melts at −97. , phenol phenol (fē`nōl), C6H5OH, a colorless, crystalline solid that melts at about 41°C;, boils at 182°C;, and is soluble in ethanol and ether and somewhat soluble in water. and urea, and benefited from growth in higher margin business segments. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (as defined below) was $34.8 million, a 71 percent improvement over first quarter 2003. (Adjusted EBITDA is considered by management to be the key measure of operating performance. Additional detail regarding this metric and a reconciliation of Adjusted EBITDA to net income (loss) under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , is included as part of this press release.) "Our positive first quarter results continue to build on the momentum we generated in 2003, when we returned the company to profitability," said Craig O. Morrison, president and chief executive officer. "Our core businesses are strong, our growth initiatives in key segments such as international are making solid contributions, and we are beginning to see significant savings as a result of our Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. program, other productivity initiatives and our realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. program initiated in mid-2003." Last year the company earned $23 million, or 11 cents per share, reversing a 2002 loss of $37 million, or 18 cents per share. The company has not hosted investor or analyst conference calls in the past and no such call is scheduled in conjunction with this press release. BUSINESS SEGMENT RESULTS North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Forest Products North American Forest Products net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased $15.9 million or 8.9 percent in the first quarter of 2004 compared to the first quarter of 2003, while Adjusted EBITDA was up $5.6 million, or 31 percent. The sales increase resulted from improved volumes driven by the strong construction market, improved pricing reflecting strong demand for phenolic-based resins, and favorable foreign currency translation due to the stronger Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents versus the US dollar. The Adjusted EBITDA increase reflects improved volumes and the positive impact of a realignment program announced in June 2003. Higher selling prices and improved margins also contributed to the Adjusted EBITDA increase. North American Performance Resins North American Performance Resins net sales increased $6.4 million, or 6.7 percent, in the first quarter of 2004 compared to 2003. Increased drilling activity and improved conditions in the non-automotive castings sector drove improved volumes in the oilfield and foundry businesses, respectively. Adjusted EBITDA increased $229,000, or 2.1%, as increased processing costs and investments supporting geographic expansion and new product development substantially offset the positive earnings impact of the increased volume. International Operations International net sales increased $13.7 million, or 18.4 percent, in the first quarter of 2004 compared to the first quarter of 2003. The positive impact of foreign currency translation, the 2003 acquisition of Fentak Pty. Ltd. and improved volumes in the Latin American forest product sector were the key drivers. Adjusted EBITDA increased $540,000, or 6.4%, reflecting improved volumes and favorable product mix. EBITDA to GAAP Reconciliation We use Adjusted EBITDA as the primary measure of our performance because we believe it gives us a more complete understanding of our financial condition and operating results. We calculate Adjusted EBITDA as net income before depreciation and amortization, interest expense, other non-operating income, investment impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , income taxes, income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , cumulative effect of change in accounting principle and other adjustments (including costs associated with business realignment activities and dispositions). We use Adjusted EBITDA to calculate various financial ratios and to measure our performance, and we believe some debt and equity investors also utilize this metric for similar purposes. Adjusted EBITDA is intended to show unleveraged, pre-tax operating results. This is the profitability measure we use to set management and executive compensation. Adjusted EBITDA is not intended to represent any measure of performance in accordance with generally accepted accounting principles, or GAAP, and our calculation and use of this measure may differ from other companies. This non-GAAP measure should not be used in isolation or as a substitute for a measure of performance or liquidity and should not be considered an alternative to net income under GAAP for purposes of evaluating our results of operations, prepared in accordance with GAAP.
Reconciliation of Adjusted EBITDA to Net Income (Loss)
(in thousands)
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Three Months ended March 31,
2004 2003
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Adjusted EBITDA $34,847 $20,343
Depreciation and amortization (11,943) (11,363)
Adjustments to EBITDA (2,102) (1,775)
Interest expense (11,841) (11,340)
Affiliated interest expense (49) (194)
Other non-operating expense (61) (467)
Income tax (expense) benefit (3,937) 1,391
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Net income (loss) $4,914 ($3,405)
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About Borden Chemical Based in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. , Borden Chemical is a global source for industrial resins and adhesives, formaldehyde formaldehyde (fôrmăl`dəhīd'), HCHO, the simplest aldehyde. It melts at −92°C;, boils at −21°C;, and is soluble in water, alcohol, and ether; at STP, it is a flammable, poisonous, colorless gas with a suffocating , UV light-curable coatings and adhesives, and other specialty products serving a broad range of markets including the forest products, construction, oilfield, composites, electronics, automotive and foundry industries. You can find Borden Chemical on the web at www.bordenchem.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Language Statements contained in this press release may not be based on historical facts and are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " under the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties that may affect the company's operations, markets, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. There is no assurance that the company's expectations will be realized. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law. |
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