2014

Dynacast Reports Second Quarter 2012 Financial Results

CHARLOTTE, N.C., Aug. 17, 2012 /PRNewswire/ -- As previously announced, the management of Dynacast International Inc. will hold a conference call at 11.30 a.m., Eastern Time, this morning, Friday, August 17, 2012, to review Dynacast's results for the second quarter of 2012.

For the second quarter of 2012, net sales were $128.3 million, a 6.9% increase from $120.0 million for the second quarter of 2011. Net income decreased from $13.7 million in the second quarter of 2011 to $0.8 million in the second quarter of 2012. Adjusted EBITDA increased from $22.5 million for the second quarter of 2011 to $23.2 million for second quarter of 2012.

For the six months ended June 30, 2012, net sales increased 3.2% to $248.2 million, compared to $240.5 million for the same period in 2011. Net income for the six months ended June 30, 2011 was $26.3 million, compared to a net loss of $1.2 million for the same period in 2012. Adjusted EBITDA increased from $43.5 million for the six months ended June 30, 2011, to $44.1 million for the six months ended June 30, 2012.

Results for the second quarter of 2012 and six months ended June 30, 2012 were impacted by $4.1 million and $8.3 million, respectively, of additional depreciation and amortization expense related to the allocation of the purchase price paid in the acquisition of the Dynacast business from Melrose plc in July 2011.  In addition, the three and six months ended June 30, 2012 were negatively impacted by the weakening of the average U.S. Dollar to Euro exchange rate. This resulted in a reduction to net sales of $5.0 million and $7.1 million and a reduction in net income of $1.0 million and $1.3 million for the three and the six months ended June 30, 2012, respectively.

Conference Call

The conference call will be held at 11.30 a.m., Eastern Time, on August 17, 2012 and may be accessed by dialing (877) 873-1192 for U.S. callers or (706) 643-1195 for international callers. Please reference conference ID# 20589668.

A telephonic replay of the call will be available after 2.00 p.m., Eastern Time, on August 17, 2012 and continue through September 17, 2012 and can be accessed by dialing (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers. Please reference conference ID# 20589668.

About Dynacast International Inc.

Dynacast International Inc. is a global manufacturer of small, engineered die cast components for thousands of companies in industries such as automotive, consumer electronics, healthcare, hardware, computers and peripherals and many others.

We engineer precision components by combining extensive engineering knowledge with our specialized manufacturing technologies.  We provide cost effective solutions for our customers worldwide by identifying opportunities to redesign or consolidate products and assemblies through die-casting. We have a history of delivering value to our customers through our engineering expertise, efficient operations and Advanced Quality Planning systems.

With Global Headquarters in Charlotte, NC, Dynacast operates 20 manufacturing facilities in 16 countries around the world. Please visit www.dynacast.com to learn more.

Non-GAAP Measures

Adjusted EBITDA and Segment EBITDA, as used in this news release, are non-GAAP financial measures.

EBITDA is earnings before interest, other income, taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for certain items that we believe hinder comparison of the performance of our business either year-over-year or with other businesses, including non-controlling interests, management fees, stand-alone costs, restructuring costs, professional fees and transaction costs. Items are excluded from Adjusted EBITDA because they are individually or collectively material items that we do not consider to be representative of the performance of our core business during the periods under review. We believe that the presentation of Adjusted EBITDA enhances an investor's understanding of our performance.

Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income. We measure and evaluate our reportable segments based on segment operating income, which is consistent with our chief operating decision maker's assessment of segment performance. For the quarter and six months ended June 30, 2012 and 2011, we believe that Segment EBITDA is useful in evaluating operating profitability as it excludes the depreciation and amortization expenses resulting from the allocation of the purchase price paid in the July 2011 acquisition of the Dynacast business to the tangible and intangible assets acquired and liabilities assumed, which expenses were not present during the quarter and six months ended June 30, 2011. Segment EBITDA does not purport to be an alternative to segment operating income.

Adjusted EBITDA and Segment EBITDA are considered non-GAAP measures because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP or are calculated using financial measures that are not calculated in accordance with GAAP. Adjusted EBITDA and Segment EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include, but are not limited to the fact that Adjusted EBITDA and Segment EBITDA:

  • do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • do not reflect changes in, or cash requirements for, our working capital needs;
  • do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debts;
  • do not reflect any cash requirements that would be required for replacement of assets that are being depreciated or amortized; and
  • may exclude items that reflect cash payments that were made, or will in the future be made.

The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies, which limits their usefulness as comparative measures.

For reconciliations of Adjusted EBITDA and Segment EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, see "Reconciliation of Non-GAAP Measures" in the accompanying tables.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains, and Dynacast and our management may make, certain statements that constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "contemplate," "believe," "estimate," "anticipate," "continue," "expect," "intend," "predict," "project," "potential," "possible," "may," "plan," "should," "would," "goal," "target" or other similar expressions or, in each case, their negative or other variations or comparable  terminology. Forward-looking statements express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, and include all matters that are not historical facts. Such statements include, in particular, statements about our plans, intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, earnings outlook, prospects, growth, strategies, the industry in which we operate, economic conditions and trends in the regions in which we operate, our potential for growth in specified markets or geographies, facility improvements and capital expenditures. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements involve certain risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Actual outcomes or results may differ materially from those made in or suggested by the forward-looking statements. In addition, even if actual outcomes or results are consistent with the forward-looking statements contained, those outcomes or results may not be indicative of outcomes or results in subsequent periods.

You should not place undue reliance on any forward-looking statement and you should consider the following factors that may cause actual outcomes or results to differ materially from forward-looking statements, as well as those discussed in any of our subsequent filings with the SEC:

  • competitive risks from other zinc or aluminum diecast producers or self-manufacture by customers;
  • relationships with, and financial or operating conditions of, our key customers, suppliers and other stakeholders;
  • loss of, or an inability to attract, key management;
  • fluctuations in the supply of, and prices for and raw materials in the areas in which we maintain production facilities;
  • union disputes, labor unrest or other employee relations issues;
  • availability of production capacity;
  • environmental, health and safety costs;
  • impact of future mergers, acquisitions, joint ventures or teaming agreements;
  • our substantial level of indebtedness and ability to generate cash;
  • changes in the availability and cost of capital;
  • changes in or timing of our restructuring or plant development plans;
  • restrictions in our debt agreements;
  • fluctuations in the relative value of the U.S. dollar and the currencies of the countries and regions in which we operate and the effectiveness of our currency hedging activities;
  • ability to repatriate cash held by our foreign subsidiaries;
  • changes in political, economic, regulatory and business conditions, including changes in taxes, tax rates, duties or tariffs;
  • acts of war or terrorist activities;
  • existence or exacerbation of general political instability and uncertainty in the U.S. or in other countries or regions in which we operate;
  • cyclical demand and pricing within the principal markets for our products;
  • our separation from Melrose, transition to an independent company and ability to operate as a stand-alone entity; and
  • other risks and factors identified in this news release and in our filings with the SEC.

Any forward-looking statements speak only as of the date of those statements. All subsequent written and oral forward-looking statements concerning the matters addressed in this news release and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this news release. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of the forward-looking statement or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

  

DYNACAST INTERNATIONAL INC.






Condensed Statements of Operations (Unaudited)

















Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company












Three Months

Ended


For the Period

April 4, 2011 to


Six Months

Ended


Six Months

Ended

(in millions of dollars)


 June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011



















Net sales


$                                 128.3


$                                120.0


$                                 248.2


$                                240.5

Costs of goods sold


(99.6)


(90.4)


(192.4)


(183.1)




Gross margin


28.7


29.6


55.8


57.4

Operating expenses:










Selling, general and administrative expense


(14.2)


(10.7)


(29.1)


(20.8)


Restructuring (expense) credit


0.1


1.1


(0.5)


0.9




Total operating expenses


(14.1)


(9.6)


(29.6)


(19.9)




Operating income 


14.6


20.0


26.2


37.5

Other income (expense)










Interest expense


(12.2)


(0.4)


(25.0)


(1.2)


Other income


0.1


-


0.1


-




Income before income taxes


2.5


19.6


1.3


36.3

Income tax expense 


(1.7)


(5.9)


(2.5)


(10.0)

Net income (loss)


0.8


13.7


(1.2)


26.3

Less: net income attributable to non-controlling interests


(0.1)


(0.1)


(0.1)


(0.2)

Less: Series A preferred stock dividends


-


-


(0.2)


-

Net income (loss) attributable to controlling stockholders


$                                     0.7


$                                  13.6


$                                    (1.5)


$                                  26.1






































 

DYNACAST INTERNATIONAL INC.





Condensed Consolidated Balance Sheets (Unaudited)





(in millions of dollars)


June 30, 2012


December 31, 2011











Assets




Current assets






Cash and cash equivalents


$           25.7


$                    21.1


Accounts receivable, net


76.8


66.9


Income taxes receivable


2.1


3.1


Inventory


43.3


39.0


Derivatives


1.5


1.3


Prepaid expenses


2.1


1.9


Other assets


3.3


3.2


Deferred income taxes 


5.8


5.8



Total current assets


160.6


142.3

Property and equipment, net 


118.2


119.9

Intangible assets, net 


259.4


270.7

Income taxes receivable


0.3


0.3

Deferred financing costs


21.2


22.1

Other assets


1.8


1.9

Goodwill


234.1


238.4

Deferred income taxes 


4.5


4.9



Total assets


$           800.1


$                  800.5

Liabilities and Equity 





Current liabilities






Accounts payable


$           59.7


$                    52.7


Income taxes payable


6.7


6.8


Derivatives


0.2


0.2


Accrued expenses


30.2


31.7


Accrued interest


14.9


14.6


Other liabilities


14.4


11.2


Deferred revenue  


8.2


8.4


Current portion of accrued pension and retirement benefit obligations


0.6


0.6


Current portion of long-term debt


5.0


5.0


Deferred income taxes


1.9


1.3



Total current liabilities


141.8


132.5

Other accrued expenses


0.3


0.9

Income taxes payable


0.7


0.7

Accrued interest and dividends


7.4


3.4

Accrued pension and retirement benefit obligations


18.9


19.5

Long-term debt, net


390.0


392.5

Mandatorily redeemable preferred stock 


53.0


26.5

Warrants 


6.1


6.1

Deferred income taxes


68.5


72.2



Total liabilities


686.7


654.3

Series A convertible mandatorily redeemable preferred stock


-


26.5

Puttable common stock


1.5


1.5

Commitments and contingencies





Equity






Common stock


0.2


0.2


Additional paid-in capital


167.5


166.6


Accumulated foreign currency translation adjustment, net


(33.4)


(27.8)


Unrealized loss on cash flow hedges, net


-


(0.2)


Cumulative unrealized pension loss, net


(0.8)


(0.8)


Accumulated deficit


(25.1)


(23.6)



Total equity attributable to controlling stockholders


108.4


114.4

Non-controlling interests


3.5


3.8



Total equity


111.9


118.2



Total liabilities and equity


$          800.1


$                  800.5











 

DYNACAST INTERNATIONAL INC.


Condensed Statements of Cash Flows (Unaudited)









Consolidated Successor Company


Combined Predecessor Company








Six Months Ended


Six Months Ended

(in millions of dollars)


June 30, 2012


June 30, 2011

Cash flows from operating activities





Net (loss) income


$                                    (1.2)


$                                  26.3

Adjustments to reconcile net (loss) income to cash





 provided by operating activities:






Depreciation and amortization


16.0


7.6


Management fee from Melrose


-


0.5


Amortization of deferred financing costs


1.8


-


Deferred income taxes


(2.7)


(1.3)


Beneficial conversion value for Series A preferred stock


0.9


-


Other


-


0.4

Changes in operating assets and liabilities:






Accounts receivable


(10.7)


(10.6)


Inventory


(5.1)


(1.6)


Prepaid expenses


(0.2)


(1.1)


Other assets


0.4


(0.2)


Accounts payable


8.3


2.4


Income taxes payable


1.1


7.2


Accrued expenses


0.3


(1.5)


Accrued interest and dividends


4.2


-


Other 


3.2


2.5




Net cash flows provided by operating activities


16.3


30.6

Cash flows from investing activities





Capital expenditures


(9.2)


(6.2)

Settlement of derivative contracts


1.3


0.5

Repayment of notes receivable issued to affiliates


-


26.2




Net cash flows (used in) provided by investing activities


(7.9)


20.5

Cash flows from financing activities





Draws on revolver


14.0


-

Repayments on revolver


(14.0)


-

Debt issuance costs


(0.6)


-

Notes payable from affiliates


-


(12.8)

Distributions to Melrose


-


(26.2)

Dividends paid to Melrose


-


(0.5)

Dividends paid to non-controlling interests


(0.2)


(0.1)

Repayment of long-term debt


(2.5)


(0.4)




Net cash flows used in financing activities


(3.3)


(40.0)

Effect of exchange rate changes on cash and cash equivalents


(0.5)


0.3




Net change in cash and cash equivalents


4.6


11.4

Cash and cash equivalents





Beginning of period


21.1


27.8

End of period


$                                   25.7


$                                  39.2











 

Segment Information

Revenue  




































Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company








Three Months

Ended


For the Period

April 4, 2011 to


Six Months

Ended


Six Months

Ended

(in millions of dollars)


 June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011















Asia Pacific


$                                  51.0


$                                  36.1


$                                   92.0


$                                  70.0

Europe


43.4


49.7


89.3


101.5

North America


33.9


34.2


66.9


69.0


Total


$                                128.3


$                                120.0


$                                 248.2


$                               240.5






























 

Total Assets












Consolidated Successor Company





(in millions of dollars)

June 30, 2012


December 31, 2011



















Asia Pacific

$                    275.4


$                        267.5





Europe




331.1


347.3





North America

178.6


170.3





Corporate/Eliminations

15.0


15.4






Total Assets

$                    800.1


$                        800.5





























 

Segment Operating Income








Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company








Three Months

Ended


For the Period

April 4, 2011 to


Six Months

Ended


Six Months

Ended

(in millions of dollars)


 June 30, 2012


June 30, 2011


to June 30, 2012


to June 30, 2011















Asia Pacific


$                                     6.5


$                                   6.3


$                                   10.7


$                                 12.0

Europe


6.0


10.6


12.0


20.8

North America


5.3


5.0


10.2


10.0


Segment operating income


17.8


21.9


32.9


42.8

Corporate


(3.3)


(1.4)


(6.2)


(2.7)








14.5


20.5


26.7


40.1

Difference in basis of accounting


-


(0.2)


-


(0.9)

Restructuring expense


0.1


1.0


(0.5)


0.8

Melrose cost allocation


-


(0.3)


-


(0.5)

Intangible asset amortization


-


(1.0)


-


(2.0)


Operating income


$                                   14.6


$                                 20.0


$                                   26.2


$                                 37.5















 

Depreciation and Amortization








Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company








Three Months

Ended 


For the Period

April 4, 2011 to


Six Months

Ended


Six Months

Ended

(in millions of dollars)


June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011















Asia Pacific


$                                      3.2


$                                      1.0


$                                     6.2


$                                     1.9

Europe


3.0


1.1


6.1


2.1

North America


1.8


0.7


3.5


1.4


Total segment


8.0


2.8


15.8


5.4

Corporate


0.1


0.1


0.2


0.2

Intangible asset amortization


-


1.0


-


2.0


Total


$                                     8.1


$                                      3.9


$                                     16.0


$                                      7.6















 

Capital Expenditures








Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company








Three Months

Ended


For the Period

April 4, 2011 to


Six Months

Ended


Six Months

Ended

(in millions of dollars)


June 30, 2012


June 30, 2011


June 30, 2012


 June 30, 2011















Asia Pacific


$                                     3.2


$                                     0.5


$                                     5.2


$                                     2.1

Europe




0.4


0.8


0.8


1.2

North America


1.1


1.3


2.0


1.3


Total segment


4.7


2.6


8.0


4.6

Corporate


0.1


0.1


0.1


0.1


Total




$                                     4.8


$                                     2.7


$                                     8.1


$                                      4.7















 

Reconciliation of Non-GAAP Measures

The following table reconciles our Segment EBITDA to our net income:




























Consolidated Successor Company


Combined Predecessor Company


Consolidated Successor Company


Combined Predecessor Company



Three Months Ended


For the Period April 4, 2011 to


Six Months Ended


Six Months Ended



June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011


























 (in millions of dollars) 


 Europe 

 Asia 

 North America 

 Corporate 

 Total 


 Europe 

 Asia 

 North America 

 Corporate 

 Total 


 Europe 

 Asia 

 North America 

 Corporate 

 Total 


 Europe 

 Asia 

 North America 

 Corporate 

 Total 


























Net Income


$      5.3

$  5.5

$       2.4

$       (12.4)

$    0.8


$      8.6

$  5.1

$       4.1

$         (4.1)

$  13.7


$      9.7

$    9.0

$       4.5

$       (24.4)

$  (1.2)


$   17.0

$  10.1

$       8.6

$         (9.4)

$  26.3

Income Taxes


0.5

1.0

3.0

(2.8)

1.7


2.1

1.2

0.9

1.7

5.9


1.8

1.7

5.8

(6.8)

2.5


4.1

1.8

2.4

1.7

10.0

Interest Expense


0.6

0.1

-

11.5

12.2


0.2

-

0.1

0.6

0.9


1.2

0.1

-

23.7

25.0


0.3

0.1

(0.2)

1.6

1.8

Other Income


(0.4)

(0.1)

(0.1)

0.5

(0.1)


(0.3)

-

(0.1)

(0.1)

(0.5)


(0.7)

(0.1)

(0.1)

0.8

(0.1)


(0.6)

-

(0.8)

0.8

(0.6)

Operating income


6.0

6.5

5.3

(3.2)

14.6


10.6

6.3

5.0

(1.9)

20.0


12.0

10.7

10.2

(6.7)

26.2


20.8

12.0

10.0

(5.3)

37.5

Depreciation & amortization

3.0

3.2

1.8

0.1

8.1


1.1

1.0

0.7

1.1

3.9


6.1

6.2

3.5

0.2

16.0


2.1

1.9

1.4

2.2

7.6

EBITDA


$      9.0

$  9.7

$       7.1

$         (3.1)

$  22.7


$   11.7

$  7.3

$       5.7

$         (0.8)

$  23.9


$   18.1

$  16.9

$    13.7

$         (6.5)

$  42.2


$   22.9

$  13.9

$    11.4

$         (3.1)

$  45.1


























 

The following table reconciles our Adjusted EBITDA to our net income:




























Consolidated Successor Company

Combined Predecessor Company

Consolidated Successor Company

Combined Predecessor Company


Three Months

Ended

For the Period April 4, 2011 to

Six Months

Ended

Six Months

Ended

(in millions of dollars)

June 30, 2012

June 30, 2011

June 30, 2012

June 30, 2011














Net income


$                 0.8



$               13.7



$               (1.2)



$               26.3


Income taxes


1.7



5.9



2.5



10.0


Interest expense


12.2



0.4



25.0



1.2


Other income


(0.1)



-



(0.1)



-


Operating income


14.6



20.0



26.2



37.5


Depreciation & amortization


8.1



3.9



16.0



7.6


EBITDA


22.7



23.9



42.2



45.1















Non-controlling interests


(0.2)



(0.3)



(0.4)



(0.6)


Management fees


0.6



-



1.2



-


Stand-alone costs


-



(0.1)



-



(0.2)


Restructuring costs


(0.1)



(1.0)



0.5



(0.8)


Professional fees


-



-



0.3



-


Transaction costs


0.2



-



0.3



-


Adjusted EBITDA


$               23.2



$               22.5



$               44.1



$               43.5




























Contact:
Richard Lehman
(980) 297-7354

SOURCE Dynacast International Inc.



RELATED LINKS
http://www.dynacast.com

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