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PGI nonwovens business performance strong in Q2
07 Aug '08
7 min read
These gains were offset by lower volumes in the U.S. and Europe due to plants that were consolidated in the second half of 2007.
The company's year-to-date gross profit was $88.8 million compared to $90.3 million the prior year due primarily to higher raw material costs net of selling price increases and lower volumes on a consolidated basis, partially offset by improved product mix in the U.S. and Asia, lower depreciation expense and improved manufacturing efficiencies in the U.S. and Europe.
Operating income in the first six months of 2008 was $26.5 million compared to $24.6 million for the first six months of the previous year due primarily to the factors discussed above, combined with lower special charges and higher SG&A costs which was negatively impacted by $3.1 million associated with unfavorable foreign currency exchange rates and $1.2 million of increased freight and export costs as volumes increased in Latin America.
Additionally, non-cash stock compensation for the first six months which was $2.2 million compared to $1.6 million for the same period the prior year. For the first six months of 2008, the company recognized special charges of $2.8 million, compared to $9.9 million for the first six months of 2007.
Net income for the first six months of 2008 amounted to $3.8 million compared to $1.5 million for the first six months of 2007.
Polymer Group's chief executive officer, Veronica (Ronee) M. Hagen, stated, "The underlying performance of the majority of our Nonwovens business has been strong. Our business in Asia has improved significantly during the year as high value medical volumes have increased and our U.S. business has improved through new product development and exceptional operating efficiencies.
Also, our industrial business in Europe has remained strong and we continue to grow cable volumes. These improvements have been tempered somewhat by start-up issues in Latin America associated with the Reticulon line in Mexico and the new spunbond line in Argentina and the intensely competitive environment that exists in South America due to new capacity installations into the market.
The Oriented Polymers segment has been relatively stable for the first half of 2008 after a tumultuous second half of last year.
The largest single impact to our business in the second quarter, and expected for the third quarter of 2008, is the dramatic increases we have experienced in raw material costs. Certain raw material prices, specifically polypropylene, have lagged the increase in underlying oil prices and increased dramatically in the recent months.
The company is aggressively addressing the situation through a number of initiatives, including the recent global price increase announcements.
We believe that these efforts, along with continued improvement in our base business and new capacity expansions, will enable the company to improve profitability in the second half of the year," Hagen said.
Adjusted EBITDA, a non-GAAP financial measure defined below, for the second quarter of 2008 was $28.9 million compared to $27.5 million in the first quarter of 2008 and $30.8 for the second quarter of 2007. For the six months ended June 28, 2008, Adjusted EBITDA was $56.4 million compared to $63.6 million for the first half of 2007.
The company reported it expects raw material costs to increase significantly in the third quarter based on increases in polypropylene experienced in July. Due to the lag provision that exists in certain customer agreements to pass along such increases and related competitive pressures, the company expects profitability and working capital levels to be negatively impacted in the third quarter.
The company expects Adjusted EBITDA for the third quarter to be consistent with second quarter levels. Based on current market expectations for raw materials, the company expects profit improvement in the fourth quarter and Adjusted EBITDA for the second half of 2008 to improve compared to the first half of 2008.
However, while the company expects to meet or exceed its revenue growth targets for the year, it does not expect Adjusted EBITDA to be in the previousl
The company's year-to-date gross profit was $88.8 million compared to $90.3 million the prior year due primarily to higher raw material costs net of selling price increases and lower volumes on a consolidated basis, partially offset by improved product mix in the U.S. and Asia, lower depreciation expense and improved manufacturing efficiencies in the U.S. and Europe.
Operating income in the first six months of 2008 was $26.5 million compared to $24.6 million for the first six months of the previous year due primarily to the factors discussed above, combined with lower special charges and higher SG&A costs which was negatively impacted by $3.1 million associated with unfavorable foreign currency exchange rates and $1.2 million of increased freight and export costs as volumes increased in Latin America.
Additionally, non-cash stock compensation for the first six months which was $2.2 million compared to $1.6 million for the same period the prior year. For the first six months of 2008, the company recognized special charges of $2.8 million, compared to $9.9 million for the first six months of 2007.
Net income for the first six months of 2008 amounted to $3.8 million compared to $1.5 million for the first six months of 2007.
Polymer Group's chief executive officer, Veronica (Ronee) M. Hagen, stated, "The underlying performance of the majority of our Nonwovens business has been strong. Our business in Asia has improved significantly during the year as high value medical volumes have increased and our U.S. business has improved through new product development and exceptional operating efficiencies.
Also, our industrial business in Europe has remained strong and we continue to grow cable volumes. These improvements have been tempered somewhat by start-up issues in Latin America associated with the Reticulon line in Mexico and the new spunbond line in Argentina and the intensely competitive environment that exists in South America due to new capacity installations into the market.
The Oriented Polymers segment has been relatively stable for the first half of 2008 after a tumultuous second half of last year.
The largest single impact to our business in the second quarter, and expected for the third quarter of 2008, is the dramatic increases we have experienced in raw material costs. Certain raw material prices, specifically polypropylene, have lagged the increase in underlying oil prices and increased dramatically in the recent months.
The company is aggressively addressing the situation through a number of initiatives, including the recent global price increase announcements.
We believe that these efforts, along with continued improvement in our base business and new capacity expansions, will enable the company to improve profitability in the second half of the year," Hagen said.
Adjusted EBITDA, a non-GAAP financial measure defined below, for the second quarter of 2008 was $28.9 million compared to $27.5 million in the first quarter of 2008 and $30.8 for the second quarter of 2007. For the six months ended June 28, 2008, Adjusted EBITDA was $56.4 million compared to $63.6 million for the first half of 2007.
The company reported it expects raw material costs to increase significantly in the third quarter based on increases in polypropylene experienced in July. Due to the lag provision that exists in certain customer agreements to pass along such increases and related competitive pressures, the company expects profitability and working capital levels to be negatively impacted in the third quarter.
The company expects Adjusted EBITDA for the third quarter to be consistent with second quarter levels. Based on current market expectations for raw materials, the company expects profit improvement in the fourth quarter and Adjusted EBITDA for the second half of 2008 to improve compared to the first half of 2008.
However, while the company expects to meet or exceed its revenue growth targets for the year, it does not expect Adjusted EBITDA to be in the previousl
Polymer Group Inc
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