MacDermid Q1 Earnings Release; First Quarter earnings per share $0.36 up 57% Owner Earnings $18.4 million.Business Editors WATERBURY Waterbury, industrial city (1990 pop. 108,961), New Haven co., W Conn., on the Naugatuck River; settled 1674, inc. as a city 1853. The city, once famous for its brass industry, is a financial and commercial center of W Connecticut. , Conn.--(BUSINESS WIRE)--April 28, 2003 MacDermid, Incorporated, a worldwide manufacturer of proprietary specialty chemical A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. products and materials for the electronics, metal finishing and graphic arts graphic arts: see aquatint; drawing; drypoint; engraving; etching; illustration; linoleum block printing; lithography; mezzotint; niello; pastel; poster; silk-screen printing; silhouette; silverpoint; sketch; stencil; woodcut and wood engraving. industries, today reports earnings for its quarter ended March 31, 2003. Quarter ended March 31 2003 compared to March 31 2002. Earnings for the first quarter were $11.6 million or $0.36 per share compared to $7.3 million, $0.23 in the prior year quarter. Proprietary sales of $140.8 million increased by 3% or $3.7 million, and total sales were $172.4 up $5.5 million or 3%. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency exchange rates had the effect of increasing total sales by $13.5 million. Excluding the effect of foreign currency exchange rate changes, proprietary sales would have decreased 3.6% and total sales would have been down 4.8%. Owner Earnings In 1986, Warren Buffett detailed his valuation method. He stated that what he used to determine income was something called Owner Earnings. He defined owner earnings as follows: Quarter ended March compared to Quarter ended December December: see month. 31, 2002. Earnings per share were $0.36 for the quarter ended March 2003 compared to the previous sequential One after the other in some consecutive order such as by name or number. quarter loss of $0.51 per share. Earnings in the December quarter were $0.35, excluding the effect of special charges amounting to $40.6 million. In this quarter Proprietary sales were lower by $0.5 million but were assisted by favorable currency exchange rates to the extent of $3.2 million or 2%. Total sales declined by $3.3 million (2%) and by $8.2 million (4.7%) on a constant $ basis compared to December 2002. Dan Leever, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "The March quarter was similar in feel to the December quarter. Economic head winds continued and we experienced seasonal weakness this quarter. Weak advertising revenues impacted our Printing Solutions volume. The electronics market continued to bump along the bottom, although we experienced the first signs of demand pick up in Asia. The soft macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. situation in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the Americas A·mer·i·cas , theSee America. made comparisons difficult for our Industrial Products product lines, but we experienced share gain, especially in Europe and Asia which offset the decline. MacDermid continued to control what we could. We are especially gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. to report a significant increase in gross profit percentage which allowed us to entirely offset the revenue weakness. SG&A control was important as well. Adjusted for currency, total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were down 4.2% against the prior year quarter. Our visibility remains limited. Were it not for the SARS epidemic epidemic, outbreak of disease that affects a much greater number of people than is usual for the locality or that spreads to regions where it is ordinarily not present. in China, we would be more confident. Any sustained improvement from the level experienced this quarter will require a world wide return to economic prosperity and or a sustained return to growth in the electronics markets." Owner Earnings is calculated as Net Cash flows provided by operating activities (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). definition) less net capital expenditures. Web site: http://www/macdermid.com MacDermid, Incorporated NYSE NYSE See: New York Stock Exchange - MRD MRD or mrd abbr. minimal reacting dose CUSIP CUSIP See: Committee on Uniform Securities Identification Procedures CUSIP See Committee on Uniform Securities Identification Procedures. 554273 10 2 April 28, 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 which 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 Months Ended Three Months Ended
Mar. 31st Mar. 31st Dec. 31st
2003 2002 2002
--------- --------- ---------
Proprietary Sales $140,777 $137,073 $141,300
Other Sales 31,653 29,883 34,437
-------- -------- --------
Total Net Sales $172,430 $166,956 $175,737
-------- -------- --------
Gross Margin 74,250 69,421 69,622
GM % 43.1% 41.6% 39.6%
Selling,Technical,
Administrative Expense 49,122 47,063 42,322
----------------------------------------------------------------------
subtotal operating profit
before amortization -------- -------- --------
or special charges 25,128 22,358 27,300
OP % 14.6% 13.4% 15.5%
----------------------------------------------------------------------
Amortization 770 1,568 1,530
Impairment charges, asset
write-off and other special
charges 0 0 40,566
-------- -------- --------
Operating Profit (Loss) 24,358 20,790 (14,796)
Net Other (Income) Expense (348) 193 918
Net Interest Expense 7,696 9,060 8,898
-------- -------- --------
Earnings (Loss) before
Income Taxes and
Minority Interest 17,010 11,537 (24,612)
Income Tax (Expense)
Benefit (5,444) (4,039) 7,876
Minority Interest 0 (166) 415
-------- -------- --------
Net Earnings (Loss) $11,566 $7,332 ($16,321)
======== ======== ========
Diluted Earnings
(Loss) Per Share $0.36 $0.23 ($0.51)
Diluted Average Common
Shares Outstanding 32,467,172 32,492,880 32,234,427
----------------------------------------------------------------------
Net earnings excluding
special charges $11,566 $7,332 $11,264
Diluted EPS excluding
special charges $0.36 $0.23 $0.35
----------------------------------------------------------------------
MacDermid, Incorporated
Sales and Margins by Region
$ inThousands
Three Months Ended Three Months Ended
Mar. 31st Mar. 31st Dec. 31st
2003 2002 2002
--------- --------- ---------
Americas
Sales $68,517 $76,064 $70,987
Operating Profit(a) $12,902 $13,432 $15,757
OP % 18.8% 17.7% 22.2%
Europe
Sales $74,464 $65,391 $73,601
Operating Profit(a) $8,165 $6,973 $6,305
OP % 11.0% 10.7% 8.6%
Asia
Sales $29,449 $25,501 $31,149
Operating Profit(a) $4,061 $1,953 $5,238
OP % 13.8% 7.7% 16.8%
Consolidated Total
Sales $172,430 $166,956 $175,737
Operating Profit(a) $25,128 $22,358 $27,300
OP % 14.6% 13.4% 15.5%
MacDermid, Incorporated
Sales and Margins by Group
$ inThousands
Three Months Ended Three Months Ended
Mar. 31st Mar. 31st Dec. 31st
2003 2002 2002
--------- --------- ---------
Advanced Surface Finishing
Sales $83,814 $78,431 $84,716
Operating Profit(a) $12,901 $10,092 $15,351
OP % 15.4% 12.9% 18.1%
Printing Solutions
Sales $67,833 $68,353 $71,086
Operating Profit(a) $12,259 $11,269 $12,772
OP % 18.1% 16.5% 18.0%
Electronics Manufacturing
Sales $20,783 $20,172 $19,935
Operating Profit(a) ($32) $997 ($823)
OP % -0.2% 4.9% -4.1%
Consolidated Total
Sales $172,430 $166,956 $175,737
Operating Profit(a) $25,128 $22,358 $27,300
OP % 14.6% 13.4% 15.5%
(a) before amortization or special charges.
MacDermid, Incorporated
Condensed Consolidated Balance Sheets
$ inThousands
Mar. 31st Dec. 31st
2003 2002
--------- ---------
Cash and Equivalents $46,634 $32,019
Accounts Receivable, net 141,277 142,806
Inventories, net 85,952 85,738
Other Current Assets 26,432 28,055
--------- ---------
300,295 288,618
Property, Plant & Equipment, net 130,018 132,581
Goodwill 194,200 194,200
Intangibles 31,600 31,825
Other Long Lived Assets 58,961 60,669
--------- ---------
Total Assets $715,074 $707,893
Payables and Accruals $132,032 $137,754
Short Term Debt 9,459 11,354
Long Term Debt 311,586 311,813
Other Long Term Liabilities 26,542 26,361
Minority Interest 2,873 2,873
Shareholders' Equity 232,582 217,738
--------- ---------
Total Liabilities & Shareholders' Equity $715,074 $707,893
Debt to Total Capital 58% 60%
MacDermid, Incorporated
Condensed Consolidated Summary of Cash Flows
$ inThousands
Three Months Ended Three Months Ended
Mar. 31st Mar. 31st Dec. 31st
2003 2002 2002
--------- --------- ---------
Net Income (Loss) $11,566 $7,332 ($16,321)
Depreciation 5,246 5,291 5,131
Amortization 770 1,568 1,530
Provision for Bad Debt 1,789 1,521 841
Stock Compensation Expense 1,031 729 1,002
Working Capital changes (1,005) (3,564) 26,750
Impairment Charges - - 28,371
-------- -------- ---------
Cash from Operations 19,397 12,877 47,304
Capital Spending (Net) (979) (1,156) (2,110)
-------- -------- ---------
Owner Earnings $18,418 $11,721 $45,194
Acquisitions of Business
(Net) - - -
Dividends to Shareholders (646) (645) (646)
Increase/(Decrease) in
Debt (3,570) (13,615) (34,712)
Currency Translation/Other 413 (114) (133)
------- -------- ---------
Increase/(Decrease) in
Cash $14,615 ($2,653) $9,703
======= ======== =========
MacDermid, Inc.
GAAP to Non- GAAP Reconciliation
----------------------------------------------------------------------
Gross Profit Before Special Charges
-----------------------------------
(In thousands)
March 01 June 01 Sept 01 Dec 01
--------------------------------------------
Net Sales as
reported 211,742 185,094 171,663 177,103
Less Electronics Mfg. 26,603 23,338 18,184 21,779
-----------------------------------------
Net Sales excl elect.
Mfg. 185,139 161,756 153,479 155,324
------------------------------------------
Gross Margin as reported 81,840 72,670 66,303 68,667
Less Electronic Mfg. 247 395 445 2,288
------------------------------------------
Gross margin excl Elect
Mfg. 81,593 72,275 65,858 66,379
------------------------------------------
Gross Margin as reported 81,840 72,670 66,303 68,667
Add: Special Charges 0 0 0 0
Less Electronic Mfg. 247 395 445 2,288
------------------------------------------
Gross margin excl EM and
SC 81,593 72,275 65,858 66,379
------------------------------------------
GM % excluding EM
and SC 44.1% 44.7% 42.9% 42.7%
Gross margin
as reported 81,840 72,670 66,303 68,667
Add: Special Charges 0 0 0 0
------------------------------------------
Gross margin WC excluding
special charges 81,840 72,670 66,303 68,667
------------------------------------------
GM % WC excluding Special
Charges 38.7% 39.3% 38.6% 38.8%
March 02 June 02 Sep-02 Dec-02 Mar-03
--------------------------------------------
Net Sales as
reported 166,956 176,722 168,146 175,737 172,430
Less Electronics Mfg. 20,172 22,666 17,711 19,935 20,783
--------------------------------------------
Net Sales excl elect.
Mfg. 146,784 154,056 150,435 155,802 151,647
--------------------------------------------
Gross Margin as reported 69,421 75,970 70,965 66,411 74,250
Less Electronic Mfg. 2,481 3,119 1,898 791 1,708
--------------------------------------------
Gross margin excl Elect
Mfg. 66,940 72,851 69,067 65,620 72,542
--------------------------------------------
Gross Margin as reported 69,421 75,970 70,965 66,411 74,250
Add: Special Charges 0 0 0 3,211 0
Less Electronic Mfg. 2,481 3,119 1,898 791 1,708
--------------------------------------------
Gross margin excl EM and
SC 66,940 72,851 69,067 68,831 72,542
--------------------------------------------
GM % excluding
EM and SC 45.6% 47.3% 45.9% 44.2% 47.8%
Gross margin as reported 69,421 75,970 70,965 66,411 74,250
Add: Special Charges 0 0 0 3,211 0
--------------------------------------------
Gross margin WC excluding
special charges 69,421 75,970 70,965 69,622 74,250
--------------------------------------------
GM % WC excluding Special
Charges 41.6% 43.0% 42.2% 39.6% 43.1%
----------------------------------------------------------------------
Operating Profit Before Special Charges
---------------------------------------
(In thousands)
March 01 June 01 Sept 01 Dec 01
-------------------------------------
Net Sales $211,744 $185,646 $171,663 $177,103
Earnings Before Interest
and Taxes $16,006 $20,772 $15,810 ($53,404)
Add: Amortization 4,867 1,983 2,246 1,855
Add: Other Expenses 624 658 888 (343)
----------------------------------------
Operating Profit 21,497 23,413 18,944 (51,892)
Add: Special Charges 5,874 0 0 73,066
Operating Profit before
Special Charges $27,371 $23,413 $18,944 $21,174
=========================================
% to Net Sales 12.9% 12.6% 11.0% 12.0%
March 02 June 02 Sep-02 Dec-02 Mar-03
----------------------------------------------
Net Sales $166,956 $176,722 $168,146 $175,737 $172,430
Earnings Before
Interest and
Taxes $20,596 $22,718 $21,547 ($15,714) $24,706
Add: Amortization 1,568 1,570 1,558 1,530 770
Add: Other Expenses 194 359 1,136 918 (348)
-----------------------------------------------
Operating Profit 22,358 24,647 24,241 (13,266) 25,128
Add: Special Charges 0 0 0 40,566 0
Operating Profit before
Special Charges $22,358 $24,647 $24,241 $27,300 $25,128
===============================================
% to Net Sales 13.4% 13.9% 14.4% 15.5% 14.6%
MacDermid, Inc.
GAAP to Non-GAAP Reconciliation
----------------------------------------------------------------------
EPS before Special Charges & Stock Compensation
-----------------------------------------------
(In thousands, except share and per share
amounts)
March 01 June 01 Sept 01 Dec 01
-----------------------------------------
Net Income (Loss) $4,612 $7,899 $4,170 ($40,981)
Impairment 4,800 0 0 51,802
Asset W/O 0 0 0 0
Restructuring 1,074 0 0 21,264
Other Charges to
Cost of Sales 0 0 0 0
-------------------------------------------
Total Special Charges 5,874 0 0 73,066
After Tax Effect of
Special Charges 3,818 0 0 47,493
-------------------------------------------
Net Income Before
Special Charges
Tax Effected $8,430 $7,899 $4,170 $6,512
===========================================
Stock Compensation
Expense 0 0 247 372
After Tax Effect
Stock Compensation 0 0 161 242
-------------------------------------------
Net Income Before Special
Charges and Stock
Compensation Tax
Effected $8,430 $7,899 $4,331 $6,754
===========================================
Earnings Per Share
before Special
Charges $0.26 $0.24 $0.13 $0.20
===========================================
Earnings Per Share before
Special Charges
and Stock Compensation $0.26 $0.24 $0.13 $0.21
===========================================
Diluted Average
Common Shares
Outstanding 32,394,869 32,389,340 32,393,205 32,364,378
March 02 June 02 Sep-02 Dec-02 Mar-03
-----------------------------------------------
Net Income
(Loss) $7,332 $9,673 $8,665 ($16,321)$11,566
Impairment 0 0 0 28,372 0
Asset W/O 0 0 0 7,593 0
Restructuring 0 0 0 1,390 0
Other Charges to
Cost of Sales 0 0 0 3,211 0
------------------------------------------------------
Total Special Charges 0 0 0 40,566 0
After Tax Effect of
Special Charges 0 0 0 27,585 0
------------------------------------------------------
Net Income Before
Special Charges
Tax Effected $7,332 $9,673 $8,665 $11,264 $11,566
=====================================================
Stock Compensation
Expense 729 815 599 1,002 1,031
After Tax Effect
Stock Compensation 474 530 389 651 670
-----------------------------------------------------
Net Income Before Special
Charges and Stock
Compensation Tax
Effected $7,806 $10,203 $9,054 $11,915 $12,236
=====================================================
Earnings Per Share
before Special
Charges $0.23 $0.30 $0.27 $0.35 $0.36
=====================================================
Earnings Per Share before
Special Charges
and Stock
Compensation $0.24 $0.31 $0.28 $0.37 $0.38
=====================================================
Diluted Average
Common Shares
Outstanding 32,492,880 32,514,702 32,480,682 32,234,427 32,467,172
----------------------------------------------------------------------
EBITDA before Special Charges
(In thousands)
March 01 June 01 Sept 01 Dec 01
------------------------------------------
Earnings Before
Interest and
Taxes $16,006 $20,772 $15,810 ($53,404)
Impairment 4,800 0 0 51,802
Asset W/O 0 0 0 0
Restructuring 1,074 0 0 21,264
Other Charges to
Cost of Sales 0 0 0 0
-------------------------------------------
Total Special
Charges 5,874 0 0 73,066
Amortization 4,867 1,983 2,246 1,855
Depreciation 6,353 5,853 5,882 6,250
-------------------------------------------
EBITDA Before
Special Charges $33,100 $28,608 $23,938 $27,767
============================================
March 02 June 02 Sep-02 Dec-02 Mar-03
----------------------------------------------
Earnings Before
Interest and
Taxes $20,596 $22,718 $21,547 ($15,714) $24,706
Impairment 0 0 0 28,372 0
Asset W/O 0 0 0 7,593 0
Restructuring 0 0 0 1,390 0
Other Charges to
Cost of Sales 0 0 0 3,211 0
-----------------------------------------------
Total Special
Charges 0 0 0 40,566 0
Amortization 1,568 1,570 1,558 1,530 770
Depreciation 5,131 5,411 5,128 5,131 5,246
-----------------------------------------------
EBITDA Before
Special Charges $27,295 $29,699 $28,233 $31,513 $30,722
===============================================
Owners Earnings
---------------
(In thousands)
As Reported Mar-01 Jun-01 Sep-01 Dec-01
----------- --------------------------------------
Net cash flow provided
by operating
activities $19,405 $16,715 $30,077 $34,159
Capital expenditures,
net 9,711 2,406 1,540 556
---------------------------------------
Owner Earnings $9,694 $14,309 $28,537 $33,603
========================================
Adjustment for Bond
Interest assumed to
be paid quarterly
------------------
Owners Earnings
per above $9,694 $14,309 $28,537 $33,603
Assumed if Bond
Interest was
paid quarterly 0 0 (6,900) (6,900)
-----------------------------------------
Adjusted Owner
Earnings $9,694 $14,309 $21,637 $26,703
=========================================
As Reported Mar-02 Jun-02 Sep-02 Dec-02 Mar-03
----------- ---------------------------------------------
Net cash flow provided
by operating
activities $12,877 $37,076 $28,936 $47,304 $19,397
Capital expenditures,
net 1,156 1,124 (3) 2,110 979
----------------------------------------------
Owner Earnings $11,721 $35,952 $28,939 $45,194 $18,418
==============================================
Adjustment for Bond
Interest assumed to
be paid quarterly
------------------
Owners Earnings
per above $11,721 $35,952 $28,939 $45,194 $18,418
Assumed if Bond
Interest was
paid quarterly 6,900 (6,900) 6,900 (6,900) 6,900
------------------------------------------------
Adjusted Owner
Earnings $18,621 $29,052 $35,839 $38,294 $25,318
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