Kraton announces 35% improvement in gross profit
Kraton Polymers LLC (Kraton), a leading global producer of engineered polymers, announces interim 2008 preliminary results for the two and five months ended May 31, 2008.
Total revenues amounted to $225 million for the two months ended May 31, 2008, an increase of $32 million, or, 17%, from $193 million in the two months ended May 31, 2007. For the five months ended May 31, 2008, revenue amounted to $492 million, an increase of $52 million, or 12%, from $440 million through May 31, 2007.
Gross profit amounted to $40 million for the two months ended May 31, 2008, an increase of $7 million or 21% from $33 million in 2007. For the five months ended May 31, 2008, gross profit amounted to $89 million compared to $66 million in 2007, an increase of $23 million, or 35%.
Net income (loss) for the two and five months ended May 31, 2008 was $6 million and $(3) million, respectively, compared to $2 million and $(11) million for the comparable periods in 2007.
Through May 31, 2008 we incurred approximately $7.3 million of costs associated with previously announced senior executive and other management changes, and the cost associated with the realignment of our research and technical service organizations. In the comparable 2007 period, we incurred $0.3 million of similar charges associated with 2007 initiatives.
Last Twelve Months (LTM) Bank EBITDA, a measure used to determine compliance with our debt covenants, totaled $111 million for the period ended May 31, 2008, an increase of $7 million and $13 million from the LTM periods ended March 31, 2008 and December 31, 2007, respectively. A reconciliation of net loss to LTM Bank EBITDA is attached.
Kraton currently expects that its $75.5 million revolving credit facility will be undrawn at June 30, 2008 and that it will be in compliance with its financial covenants, taking into account our previously disclosed $9.6 million equity cure. Kraton is, however, exploring refinancing options to improve financial flexibility.
“While our improved financial results indicate progress relative to the comparable periods, our organization globally is committed to continue implementing previously communicated actions to improve pricing and margins, optimize our production assets, and enhance organizational productivity, to mitigate the headwinds associated with unprecedented rising energy and feedstock costs,” said Kevin M. Fogarty, President and Chief Executive Officer.
“By doing so, we will continue to provide industry-leading solutions to our innovative customers, to propel our respective growth expectations.”
• Announced June 1 and July 1 price increases in Asia and North America, and July 1 price increases in Europe.
• On June 20, 2008, received $4.6 million of proceeds associated with the sale of its interest rate swap secured in the first quarter.
• Experienced allocation from our butadienesuppliers that we believe is affecting the industry in general. The significant factors causing the shortfall are the continued run-up in the cost of crude oil and planned and unplanned outages by certain producers of butadiene. As a result, as of June 2008, we have had to allocate certain products among our customers. We are currently unable to estimate how long this situation will continue or if or when it might improve.
Kraton Polymers LLC